SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act
of 1934 (Amendment No. )
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted
by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
BIOJECT MEDICAL TECHNOLOGIES INC.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No Fee Required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
- -------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
- -------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (set forth the amount on which the filing fee
is calculated and state how it was determined):
- -------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
- -------------------------------------------------------------------------
5) Total fee paid:
- -------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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<PAGE>
Bioject Medical Technologies Inc.
7620 SW Bridgeport Road
Portland OR 97224
August 12, 1999
Dear Shareholders:
You are cordially invited to attend the 1999 annual meeting of the
shareholders of BIOJECT MEDICAL TECHNOLOGIES INC., to be held at the Oregon
Convention Center, 777 NE Martin Luther King Jr. Blvd., Room C123, Portland,
Oregon, on Thursday, September 16, 1999 at 9:00 a.m., Pacific Daylight Time.
The matters to be acted upon at the meeting -- to elect the Board of
Directors, to adopt an amendment to the Company's Articles of Incorporation
which would amend the terms of the Company's Series A Preferred Stock, to adopt
an amendment to the Company's Articles of Incorporation to effect a reverse
split of the Company's common stock and to transact such other business as may
properly come before the meeting -- are described in the attached Notice of
Meeting and Proxy Statement.
We believe the annual meeting provides an excellent opportunity for
shareholders to become better acquainted with BIOJECT and its board members and
officers. Although we would like very much to have each shareholder attend the
1999 meeting, we realize this is not possible. Whether or not you plan to be
present at the meeting, it is important that your shares be represented.
Therefore, we urge you to complete, sign and return the enclosed proxy as soon
as possible.
If you return your proxy promptly, you can help BIOJECT avoid the expense
of follow-up mailings to ensure a quorum so that the meeting can be held. If you
decide between now and September that you can attend the meeting in person, you
may revoke your proxy at that time and vote your shares at the meeting.
We appreciate your continued support of Bioject and look forward to either
greeting you personally at the meeting or receiving your proxy.
Sincerely,
/S/ JAMES C. O'SHEA
---------------------------------
James C. O'Shea
Chairman of the Board, President
and Chief Executive Officer
<PAGE>
BIOJECT MEDICAL TECHNOLOGIES INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
NOTICE IS HEREBY GIVEN that the annual meeting (the "Meeting") of the
shareholders of BIOJECT MEDICAL TECHNOLOGIES INC. (the "Company") will be held
on Thursday, September 16, 1999, at 9:00 a.m., Pacific Daylight Time, at the
Oregon Convention Center, 777 NE Martin Luther King Jr. Blvd., Room C123,
Portland, Oregon, for the following purposes:
1. To elect three directors, each to serve a three-year term;
2. To approve an amendment to the Articles of Incorporation to amend the
terms of the Series A Preferred Stock;
3. To approve an amendment to the Articles of Incorporation and
grant the Board of Directors the authority to effect a reverse
stock split of the Company's Common Stock;
4. To transact such other business as may properly come before the
Meeting or any adjournment thereof.
These matters are more fully described in the proxy statement accompanying
this Notice.
Accompanying this Notice of Meeting is a proxy statement and a form of
proxy, together with the annual report of the Company. A copy of the Company's
10-K containing the consolidated financial statements for the year ended March
31, 1999, and the auditors' report on the financial statements is also included.
Only holders of common stock of record at the close of business on July 23,
1999, will be entitled to vote at the Annual Meeting of Shareholders and any
adjournments thereof.
Shareholders who are unable to attend the Meeting in person are requested
to complete, sign, date and return the enclosed form of proxy directly to
American Stock Transfer and Trust Co., postage prepaid. A proxy will not be
valid unless it is received at the office of American Stock Transfer and Trust
Co., 40 Wall Street, 46th Floor, New York, New York 10005 before the time fixed
for the Meeting.
DATED at Portland, Oregon, this 12th day of August, 1999.
BY ORDER OF THE BOARD
/S/ MICHAEL A. TEMPLE
-------------------------------
Michael A. Temple
Vice President, Chief Financial
Officer and Secretary/Treasurer
<PAGE>
BIOJECT MEDICAL TECHNOLOGIES INC.
TABLE OF CONTENTS
MANAGEMENT SOLICITATION
APPOINTMENT AND REVOCABILITY OF PROXIES
VOTING OF PROXIES
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
PROPOSAL #1: ELECTION OF DIRECTORS
Board of Directors Composition, Compensation and Committees
EXECUTIVE COMPENSATION AND OTHER TRANSACTIONS
Biographical Information
Executive Compensation
Grant of Stock Options
Option Exercises and Fiscal Year End Values
Ten-Year Option/SAR Repricings
Employment Contracts
SEC Filings
REPORT OF COMPENSATION AND STOCK OPTION COMMITTEES ON EXECUTIVE COMPENSATION
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
STOCK PERFORMANCE CHART
PROPOSAL #2: AMENDMENT TO THE ARTICLES OF INCORPORATION TO AMEND THE CONVERSION
TERMS OF THE COMPANY'S SERIES A PREFERRED STOCK
PROPOSAL #3: TO AMEND THE COMPANY'S ARTICLES OF INCORPORATION TO EFFECT A ONE
FOR FIVE REVERSE COMMON STOCK SPLIT
OTHER MATTERS TO BE ACTED UPON
SHAREHOLDER PROPOSAL AND NOMINATION PROCEDURES FOR THE MEETING
ANNUAL REPORT
INDEPENDENT ACCOUNTANTS
PROPOSALS OF SHAREHOLDERS FOR THE 2000 ANNUAL MEETING OF SHAREHOLDERS
<PAGE>
BIOJECT MEDICAL TECHNOLOGIES INC.
PROXY STATEMENT
as of August 12, 1999
MANAGEMENT SOLICITATION
This proxy statement and accompanying form of proxy are furnished in
connection with the solicitation of proxies by the Board of Directors of BIOJECT
MEDICAL TECHNOLOGIES INC. (the "Company"), for use at the annual general meeting
(the "Meeting") of shareholders of the Company to be held on September 16, 1999,
at the time and place and for the purposes set forth in the Notice of Meeting.
The form of proxy accompanying this information circular is solicited by
the Board of Directors of the Company. Proxies may be solicited by officers,
directors and regular supervisory and executive employees of the Company, none
of whom will receive any additional compensation for their services. In
addition, the Company has retained the services of Allen Nelson & Co. to assist
in the solicitation of proxies. Proxies may be solicited personally or by mail,
telephone, telex, facsimile, telegraph or messenger. The Company estimates it
will pay Allen Nelson & Co. its customary and reasonable fees not expected to
exceed $4,000, plus reimbursement of certain out-of-pocket expenses, for its
services in soliciting proxies. The Company will also pay persons holding shares
of the common stock in their names or in the names of nominees, but not owning
such shares beneficially, such as brokerage houses, banks and other fiduciaries,
for the expense of forwarding soliciting materials to their principals. The cost
of this solicitation will be borne directly by the Company.
The approximate mailing date of the Notice of Meeting, proxy statement and
form of proxy is August 12, 1999.
APPOINTMENT AND REVOCABILITY OF PROXIES
The persons named in the accompanying form of proxy are officers of the
Company.
In addition to revocation in any other manner permitted by law, a proxy may
be revoked by:
(i) signing another proxy bearing a later date and depositing it in the
manner set forth in the Notice of Meeting;
(ii) signing and dating a written notice of revocation (in the same manner
as a proxy is required to be executed) and either depositing it in the manner
set forth in the Notice of Meeting at any time before the time fixed for the
Meeting or an adjournment thereof or with the chairman of the Meeting on the day
of the Meeting or an adjournment thereof; or
(iii) attending the Meeting or an adjournment thereof, and casting a ballot
in person.
Such revocation will have effect only in respect of those matters which
have not already been acted upon. Additional proxy forms may be obtained by
calling or writing to American Stock Transfer & Trust Co., Shareholder Services,
40 Wall Street, 46th Floor, New York, NY 10005. Telephone: (718) 921-8200.
VOTING OF PROXIES
The securities represented by the proxy will be voted or withheld from
voting in accordance with the instructions of the shareholder on any ballot that
may be called for, and if the shareholder specifies a choice with respect to any
matter to be acted upon, the securities shall be voted accordingly. The form of
proxy confers authority upon the named proxyholder with respect to matters
identified in the accompanying Notice of Meeting. If a choice with respect to
such matters is not specified, it is intended that the person designated by
management in the form of proxy will vote the securities represented by the
proxy in favor of each matter identified in the proxy statement and for election
to the Board of Directors the nominees named in this proxy statement. The proxy
confers discretionary authority upon the named proxyholder with respect to
amendments to or variations in matters identified in the accompanying Notice of
Meeting and other matters which may properly come before the Meeting.
<PAGE>
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
The voting securities of the Company consist of common stock, without par
value (the "Common Shares"). The Record Date has been fixed in advance by the
directors as July 23, 1999, for the purpose of determining shareholders entitled
to a notice of and to vote at the Meeting. Each share issued at the time of the
Record Date carries the right to one vote at the Meeting. As of July 23, 1999, a
total of 29,011,236 shares of the Company's common stock were issued and
outstanding.
The presence in person or by proxy of holders of record of a majority of
the outstanding Common Shares is required to constitute a quorum for the
transaction of business at the Meeting. If a quorum is present, the three
nominees for election to the Board of Directors who receive the greatest number
of votes cast at the Meeting shall be elected directors. For all other matters
to come before the Meeting, a proposal will be approved only upon the
affirmative vote of shareholders owning in the aggregate at least a majority of
the Company's Common Shares represented at the Meeting in person or by proxy and
entitled to vote. In addition, Proposal #2 requires the affirmative vote of
shareholders owning in the aggregate at least a majority of the Company's Series
A Preferred Stock, voting as a class. With regard to the election of directors,
votes may be cast for or withheld from each nominee. Votes that are withheld
will have no effect on the outcome of the election because directors will be
elected by a plurality of the votes cast. An abstention may be specified in the
proposals to approve the amendments to the Articles of Incorporation. An
abstention will be counted as present for purposes of determining the existence
of a quorum on such proposal and, therefore, have the effect of a negative vote.
Shares represented by duly executed and returned proxies of brokers or other
nominees which are expressly not-voted upon the proposal ("broker non-votes")
will have no effect on the required vote.
The following tables set forth certain information concerning the
beneficial ownership of the Company's common stock at June 30, 1999, by: (i)
each person known by the Company to own beneficially more than 5 percent of the
outstanding capital stock of the Company; (ii) each of the directors and named
executive officers; and (iii) all directors and officers as a group. Each
shareholder listed below has sole voting and investment power with respect to
the shares beneficially owned, except as indicated:
<TABLE>
NUMBER OF SHARES PERCENTAGE
BENEFICIALLY BENEFICIALLY
NAME OF BENEFICIAL OWNER OWNED (1) OWNED
- -------------------------------- ---------------- -----------
<S> <C> <C>
Elan International Service, Ltd. (2) 4,477,273 14.55%
Flatt Smiths SL04
Bermuda
Hambrecht & Quist (3) 2,468,400 8.17
50 Rowes Wharf,
Boston, Massachusetts 02110
Ed Flynn 1,470,695 5.07
Flynn Meyer Company
75-11 Myrtle Avenue
Glendale, NY 11385
James C. O'Shea (4) 712,457 2.40
David H. de Weese (5) 53,750 *
Grace Keeney Fey (6) 53,500 *
William A. Gouveia (7) 70,000 *
Eric T. Herfindal (8) 83,750 *
Richard J. Plestina (9) 208,000 *
John Ruedy, MD (10) 144,450 *
Michael T. Sember (11) 26,250 *
Michael A. Temple (12) 69,798 *
J. Michael Redmond (13) 144,527 *
Richard R. Stout (14) 104,879 *
All Directors, Executive and
Officers as a Group (11 persons) (15) 1,671,361 5.51%
- -----------------------------------------
* Less than one percent.
</TABLE>
<PAGE>
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and includes shares over which the indicated
beneficial owner exercises voting and/or investment power. Shares of common
stock subject to options currently exercisable or exercisable within 60 days are
deemed outstanding for computing the percentage ownership of the person holding
the options but not deemed outstanding for computing the percentage of ownership
of any other person. Except as indicated, and subject to community property laws
where applicable, the persons names in the table above have sole voting and
investment power with respect to all shares of common stock as shown as
beneficially owned by them.
(2) Includes warrants to purchase 1,750,000 shares of common stock which are
presently exercisable. Does not include 692,694 shares of Series A Convertible
Preferred Stock, 3,790,000 shares of Series B Convertible Preferred Stock and
391,830 shares of Series C Convertible Preferred Stock.
(3) Includes warrants to purchase 1,190,000 shares of common stock which are
presently exercisable.
(4) Includes options to purchase 670,226 shares of common stock which are
presently exercisable. Does not include 333,334 option shares which become
exercisable after 60 days.
(5) Includes options to purchase 43,750 shares of common stock which are
presently exercisable. Does not include 8,750 option shares that become
exercisable after 60 days.
(6) Includes options to purchase 52,500 shares of common stock which are
presently exercisable. Does not include 8,750 option shares that become
exercisable after 60 days.
(7) Includes options to purchase 70,000 shares of common stock which are
presently exercisable. Does not include 8,750 option shares that become
exercisable after 60 days.
(8) Includes options to purchase 43,750 shares of common stock which are
presently exercisable. Does not include 8,750 option shares that become
exercisable after 60 days.
(9) Includes options to purchase 43,750 shares of common stock which are
presently exercisable. Does not include 8,750 option shares that become
exercisable after 60 days.
(10) Includes options to purchase 78,750 shares of common stock which are
presently exercisable. Does not include 8,750 option shares that become
exercisable after 60 days.
(11) Includes options to purchase 26,250 shares of common stock which are
presently exercisable. Does not include 8,750 option shares that become
exercisable after 60 days.
(12) Includes options to purchase 58,386 shares of common stock which are
presently exercisable. Does not include 112,500 option shares which become
exercisable after 60 days.
(13) Includes options to purchase 134,757 shares of common stock which are
presently exercisable. Does not include 16,667 option shares which become
exercisable after 60 days.
(14) Includes options to purchase 101,632 shares of common stock which are
presently exercisable. Does not include 6,667 options which become vested and
exercisable after 60 days.
(15) Includes options to purchase 1,323,751 shares of common stock which are
presently exercisable. Does not include 530,418 option shares which become
exercisable after 60 days.
All of the outstanding capital stock of both Bioject Inc. and Marathon
Medical Technologies Inc. (formerly Bioject JV Subsidiary Inc.) is owned by the
Company.
<PAGE>
PROPOSAL #1: ELECTION OF CLASS ONE DIRECTORS
The Articles of Incorporation of the Company provide for the holders of Common
Shares to elect the Class One members of the Board of Directors at the 1999
Meeting. The Company's Amended Articles of Incorporation provide for a Board of
Directors to serve in three classes having staggered terms of three years each.
At this Annual Meeting, three persons will be nominated to serve as Class One
directors until the Annual Meeting in 2002 and until their successors are
elected and shall have qualified. The three nominees are: Mr. William Gouveia,
Mr. David de Weese and Mr. Edward L. Flynn.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE CLASS 1
NOMINEES LISTED BELOW.
The following table sets forth the names and ages of the Company's current
directors. Directors are classified alphabetically except for Mr. O'Shea who was
classified with the longest initial term, Mr. Gouveia who was classified with
the shortest initial term so that the nominating committee would be composed of
one director from each class, and Mr. Flynn who was nominated in 1999. Class 1
directors, Messrs. Gouveia and de Weese, have terms of office expiring at the
1999 Annual Meeting; Class 2 directors, Ms. Fey and Messrs. Herfindal and
Plestina, have terms of office expiring at the 2000 Annual Meeting; and Class 3
directors, Messrs. O'Shea, Ruedy, and Sember, (one of whom is an officer of the
Company) have terms of office expiring at the 2001 Annual Meeting.
Certain biographical and other information about the nominees for election as
directors and the directors continuing in office is presented as follows:
<TABLE>
YEAR ELECTED
NAME Class AGE POSITION DIRECTOR
- ------------------ ----- ----- ------------------------ ------------
<S> <C> <C> <C> <C>
William Gouveia 1 57 Director(c)(d) 1994
David de Weese 1 57 Director(d)(e) 1997
Edward L. Flynn 1 Director Nominee
Grace Keeney Fey 2 53 Director(a)(b)(e) 1995
Eric T. Herfindal 2 58 Director(b)(d) 1996
Richard J. Plestina 2 53 Director(a)(c)(e) 1997
James C. O'Shea 3 54 Chairman, Chief Executive
Officer and President 1995
John Ruedy, M.D. 3 67 Director(b)(c) 1987
Michael Sember 3 49 Director(a)(e) 1997
- -------------
(a) Member of Stock Option Committee
(b) Member of Compensation Committee
(c) Member of Nominating Committee
(d) Member of Audit Committee
(e) Member of Ad Hoc-Financing Committee
</TABLE>
Nominees for directors to be elected by holders of Voting Shares for a
three-year term expiring in 2002:
- --------------------------------------------------------------------------------
WILLIAM A. GOUVEIA was elected a director of the Company in January 1994.
Mr. Gouveia serves in two capacities at Boston's New England Medical Center:
Director of Pharmacy (1972 to present) and Special Assistant for Pharmaceutical
Research and Development (1989 to present). He has the following faculty
appointments: Associate Professor of Medicine at Tufts University School of
Medicine (1995), Adjunct Clinical Professor of Pharmacy at Massachusetts College
of Pharmacy and Allied Health Professions, and Adjunct Professor at Northeastern
University Bouve College of Pharmacy and Health Sciences. He holds an M.S. in
Hospital Pharmacy from Northeastern University (1966). He has published over 100
articles in leading healthcare journals, as well as numerous book chapters, and
has delivered presentations in the U.S. and international health care
organizations and colleges. He is a Fellow of the American Society of
Health-System Pharmacists (ASHP) and has served as Board member of the ASHP.
DAVID H. DE WEESE was elected a director of the Company in June 1997. Mr.
de Weese is currently a general partner of Paul Capital Partners, a private
equity investment firm. He served as Chairman of the Board of Directors,
President and Chief Executive Officer of the SIGA Pharmaceuticals, Inc., a
developer of vaccines and antibiotics from November 1996 to April 1998. Prior to
joining SIGA, Mr. de Weese served as a director and a consultant to Biovector
Therapeutics, S.A., a developer of drug delivery technology based in France, and
as an advisor to Paul Capital Partners. From 1993 to 1995, Mr. De Weese was
President, Chief Executive Officer and a Director of M6 Pharmaceuticals, Inc., a
biopharmaceutical company. From 1986 to 1992, Mr. De Weese was the President,
Chief Executive Officer, a Director and a founder of Cygnus Therapeutic Systems
(now Cygnus, Inc.), a developer and manufacturer of transdermal drug delivery
systems. Prior to that, Mr. de Weese co-founded Medical Innovations Corporation,
a medical device business currently a division of Ballard Medical Products,
Inc., and was Chairman of the Board, President and Chief Executive Officer of
Machine Intelligence Corporation, a developer of computer software and hardware.
EDWARD L. FLYNN was nominated for director of the Company in July 1999.
Directors whose terms expire in 2000:
- --------------------------------------------------------------------------------
GRACE K. FEY, CFA, was elected a director of the Company in October 1995. Ms.
Fey is currently Executive Vice President and Director of Frontier Capital
Management Company, a Boston-based investment management firm. From 1986 to
1988, she was a Senior Vice President of Investment Management Associates, an
investment management firm. From 1980 to 1986, Ms. Fey was Vice President of
Winchester Capital Management, also an investment management firm.
ERIC T. HERFINDAL has served as a director of the Company since September
1996. He is Executive Vice President of OnCare Inc., an oncology physician
practice management company, since 1993. Prior to joining OnCare, he served for
over 20 years as a Professor of Clinical Pharmacy, School of Pharmacy, at the
University of California Medical Center in San Francisco, where he is currently
a Professor Emeritus. He holds a Doctorate in Pharmacy from the University of
California, San Francisco, and a Masters in Public Health from
<PAGE>
the University of California, Berkeley. He is the author of twenty-five articles
and the editor or co-editor of ten books in the field of pharmacy, including the
TEXTBOOK OF THERAPEUTICS: DRUG AND DISEASE MANAGEMENT, currently in its sixth
edition. Dr. Herfindal has been active in various professional organizations,
serves on a number of editorial and advisory boards, and is a frequent lecturer
at national and international healthcare meetings.
RICHARD J. PLESTINA was elected a director of the Company in April 1997.
Since 1986, Mr. Plestina has served as President of Quelah Corporation, NW, a
family owned investment firm. In 1988, he was a consultant for Cologon, Inc. DBA
Alpine Glass Company, a large commercial and residential glass company. From
1979 to 1986, he was an Executive Vice President of Orion Capital Corporation, a
multiline insurance company and President of EBI Companies, which was later
acquired by Orion Corporation in 1979. From 1974 to 1979 he served as the Vice
President and Marketing Manager of EBIC. Mr. Plestina has served previous
directorships for Orion Capital Corporation, EBI Companies, Associated Oregon
Industries and Northwest Employer's Council.
Directors whose terms expire 2001:
- --------------------------------------------------------------------------------
JAMES C. O'SHEA has served as Chairman and Chief Executive Officer of the
Company since March 1995. Prior to joining Bioject, he was President and Chief
Operating Officer of Biopure Corporation, a developer of red blood cell
substitutes. Prior to 1989, Mr. O'Shea was Executive Vice President of Marketing
and Scientific Affairs at Delmed Inc., a manufacturer of peritoneal dialysis
solutions and parenteral products. He is a member of the Board of Directors of
PSC, Inc., serving as Chairman of the Compensation Committee and previously
serving as Chairman of the Executive Committee.
JOHN RUEDY, M.D. has served as a director of the Company since 1987. Since
July 1992, he has served as Dean of the Faculty of Medicine at Dalhousie
University in Halifax, Nova Scotia. From 1978 through June 1992, Dr. Ruedy
served as Professor of Medicine at the University of British Columbia and Head
of the Department of Medicine at St. Paul's Hospital, Vancouver, British
Columbia. Since 1966, he has held an appointment to the Department of Medicine
and Pharmacology at McGill University and was Chairman of the Department of
Pharmacology and Therapeutics from 1975 through 1978.
MICHAEL T. SEMBER has served as a director of the Company since October
1997. Mr. Sember is Executive Vice President, of Business Development for Elan
Corporation, plc. Prior to joining Elan, Mr. Sember was with Marion
Laboratories, then Marion Merrell Dow from 1973 to 1991. Mr. Sember also serves
as a director of Elan Pharmaceutical Research Corporation, Acorda Therapeutics,
Inc., Iomed, Inc., and Delsys, Inc.
MARATHON MEDICAL TECHNOLOGIES INC. LIST OF DIRECTORS AND OFFICERS
BRAD ENEGREN joined Marathon Medical Technologies Inc. in September 1998
and was elected Chairman of Marathon Medical Technologies Inc. in January 1999.
Prior to joining Marathon Medical Technologies Inc., he was Managing Director of
the Implantable Drug Delivery Division of Arrow International. From 1987 to
1995, Mr. Enegren was President and Managing Director of Therex Corporation. His
experience also includes two years as Director of Marketing and Business
Development for Boston Scientific, Inc.
<PAGE>
JAMES C. O'SHEA, Vice Chairman and Director of Marathon Medical
Technologies Inc. Please see biography information in section "ELECTION OF
DIRECTORS."
MIKE TEMPLE, was elected the Secretary/Treasurer of Marathon Medical
Technologies Inc. in June 1998 and elected a Director of Marathon Medical
Technologies Inc. in July 1999. Please see biography information in section
"EXECUTIVE COMPENSATION AND OTHER TRANSACTIONS."
BOARD OF DIRECTORS COMPOSITION, COMPENSATION AND COMMITTEES. The Board of
Directors is currently composed of eight members, one of whom is an employee of
the Company. Following the shareholder vote, the Board will be composed of nine
members, one of whom is an employee of the Company.
All directors hold office for three years or until their successors have
been elected and qualified. The Board is divided into three classes. Directors
are classified alphabetically except for Mr. O'Shea who was classified with the
longest initial term, Mr. Gouveia who was classified with the shortest initial
term so that the nominating committee would be composed of one director from
each class and Mr. Flynn who was nominated in 1999. There are no family
relationships between any of the directors or executive officers of the Company.
The Company pays its directors no annual cash or per meeting compensation
for services. Under the terms of the 1992 Stock Incentive Plan, each
non-employee director is automatically awarded an option to purchase 17,500
shares of the Company's common stock immediately following the close of each
annual shareholders' meeting, at an exercise price equal to the fair market
value on the date of the grant. Such options are vested and exercisable with
respect to one-half of the shares at six months from the date of grant with the
remaining shares vested and exercisable six months thereafter. The options
expire eight years after grant unless previously exercised or terminated due to
termination of service.
There were nine meetings of the Board of Directors and two actions by
written consent during the last fiscal year. Except for Mr. de Weese, each of
the incumbent directors being nominated for re-election attended at least 75% of
all of the meetings of the Board of Directors and committees on which they
served.
There are five standing committees of the Board of Directors: the Audit
Committee, Stock Option Committee, Compensation Committee, Nominating Committee
and the Ad Hoc-Financing Committee. The Audit Committee meets with the Company's
independent accountants to review the scope and findings of the annual audit and
accounting policies and procedures of the Company which are then reported by the
committee to the directors of the Company. The Stock Option Committee
administers the 1992 Stock Incentive Plan. The Compensation Committee
administers cash compensation for the executive officers. The Nominating
Committee reviews and recommends to the full Board nominees for directors of the
Company to be submitted for election at the next annual shareholders' meeting.
The Ad Hoc-Financing Committee monitors the Company's cash reserves and develops
strategies for procuring additional capital. The Audit Committee and Nominating
Committee met two times during fiscal 1999. The Stock Option Committee met two
times during fiscal 1999 and took action by written consent
<PAGE>
resolution three times. The Compensation Committee met three times during fiscal
1999. The Ad Hoc-Financing Committee met one time during fiscal 1999.
EXECUTIVE COMPENSATION AND OTHER TRANSACTIONS
The following individuals comprise the executive officers of the Company:
<TABLE>
Year Elected
Name Age Position Officer
- --------------------- --- -------------------------------- ----------
<S> <C> <C> <C>
James C. O'Shea 54 Chairman, Chief Executive
Officer and President 1995
Michael A. Temple 49 Vice President, Chief Financial
Officer and Secretary/Treasurer 1998
J. Michael Redmond 39 Vice President, Business
Development of Bioject Inc. 1996
Richard R. Stout, M.D. 46 Vice President of Clinical Affairs
of Bioject Inc. 1994
</TABLE>
BIOGRAPHICAL INFORMATION.
JAMES C. O'SHEA. Please see biography information in section "ELECTION OF
DIRECTORS."
MICHAEL A. TEMPLE joined Bioject as Vice President, Chief Financial Officer
and Secretary/Treasurer in April 1998. From December 1996 until January 1998 Mr.
Temple was Chief Financial Officer for Graziano Produce Co., Inc. a northwest
regional processor of fresh-cut produce products. From October 1993 until
November 1996 he was Vice President of Finance and Chief Financial Officer for
Instromedix, Inc., an Oregon-based medical technology company that designs and
manufactures transtelephonic cardiac event monitors. From April 1989 until
September 1993 he was Vice President of Finance and Chief Financial Officer for
the Yoshida Group, a Portland-based conglomerate with business activities in
manufacturing, logistics and real estate development. Prior to joining the
Yoshida Group, Mr. Temple was a principal in the accounting and business
advisory services practice of Laventhol & Horvath, a national public accounting
firm.
J. MICHAEL REDMOND joined Bioject in February 1996 as Vice President of
Sales and Marketing. He was appointed Vice President of Business Development in
February 1998. Mr. Redmond has fifteen years experience in medical marketing and
product sales. Prior to joining Bioject he was Director of Business Development
and Director of Sales and Marketing for Kollsman Manufacturing Company. Kollsman
is a private label developer and manufacturer of medical instrumentation. He
also held various sales and marketing positions with Abbott Laboratories
Diagnostic division.
RICHARD R. STOUT, M.D. joined the Company in April 1994 as Director of
Clinical and Regulatory Affairs. He was promoted to Vice President of Clinical
Affairs in December 1994. From 1992-1993 he was the Director of Clinical and
Regulatory Affairs at EndoVascular Instruments, Inc., a developer of surgical
devices and methods for endarterectomy and intraluminal graft placement. Dr.
Stout acted as the Manager of Tachycardia Clinical Studies at Telectronics
Pacing Systems from 1990-1992, an international medical device company involved
in manufacturing and distributing cardiac pacemakers and implantable
<PAGE>
defibrillators. From 1987 to 1989, Dr. Stout was Director of Medical Programs at
Biotronic Inc., also a manufacturer and distributor of implantable cardiac
pacemakers.
EXECUTIVE COMPENSATION. The following table sets forth the cash compensation
paid by the Company to its Chief Executive Officer and to the other executive
officers having salary and bonus compensation greater than $100,000
(collectively the "named executive officers"), for services rendered to the
Company during the fiscal years ended March 31, 1999, 1998 and 1997.
Summary Compensation Table
<TABLE>
<CAPTION>
Long-Term
Annual Compensation Compensation Awards
- ------------------- ------------------- ----------------------------------
Fiscal Options Other
Name and Principal Position(1) Year Salary Bonus Other Shares(2) Other(3) Compensation
- ------------------------- ------- ------- ------ ----- -------- ------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
James C. O'Shea 1999 $220,000 $6,634(4) 34,810(5) $3,875 $ -
Chairman, Chief Executive 1998 195,000 - 5,930(4) 575,000(6) 3,565 -
Officer and President 1997 195,000 - 5,225(4) 18,750(7) 3,017 -
Michael A. Temple, Vice 1999 104,274(8) - - 170,886(9) 1,820 -
President, Chief Financial
Officer and Secretary/Treasurer
J. Michael Redmond 1999 102,286(10)15,000(11) 6,000(12) 13,924(13) 2,819 -
Vice President of 1998 100,000 - 6,000(12) 62,500(14) 2,409 -
Business Development 1997 100,000 - 6,000(12) 75,000(15) 1,616 -
Richard R. Stout, MD 1999 100,000(16) - - 13,924(17) - -
Vice President of 1998 93,000 - - 32,500(18) - -
Clinical Affairs 1997 93,000 - - 5,625(19) - -
</TABLE>
- ------------------------
(1) All executive officers had salary and bonus compensation greater than
$100,000 in fiscal 1999.
(2) The Company has in effect one major long-term compensation plan, the 1992
Stock Incentive Plan, through which all employees, officers and non-employee
consultants of the Company may be awarded incentive and non-statutory stock
options, stock bonuses, stock appreciation rights and restricted stock under
terms and performance criteria as determined by a committee of the Board of
Directors. Non-employee directors are also awarded options to purchase a fixed
number of shares on an annual basis. The 1992 Stock Incentive Plan was approved
by the Company's shareholders on November 20, 1992. Amounts listed reflect the
number of options granted in the respective fiscal years, the exercise prices
for which were greater than or equal to the fair market value of the Company's
common stock on the date of grant.
(3) The Company has a 401(k) Retirement Benefit Plan for its employees including
its executive officers which provides for voluntary employer matches of employee
contributions up to 6% of salary and for discretionary profit sharing
contributions to all employees. Such employer contributions may be made in cash
or common stock. In fiscal 1999, the Company made all employer matching
<PAGE>
contributions in shares of the Company's common stock based on fair market value
in the period of match.
(4) Represents supplemental life and disability insurance premiums paid pursuant
to an employment agreement with Mr. O'Shea. No other executive officers are
entitled to this benefit.
(5) In fiscal 1999, Mr. O'Shea was granted 34,810 option shares on July 6, 1998,
vesting and exercisable on June 29, 1999.
(6) In fiscal 1998, Mr. O'Shea was granted 575,000 option shares, 50,000 options
granted on April 3, 1997 and vested immediately and exercisable October 3,1997.
25,000 options granted on June 11, 1997 vesting on March 31, 1998 with 12,500
options immediately exercisable and 12,500 options exercisable on October 1,
1998. 500,000 options granted on September 19, 1997, one-third vesting and
exercisable on September 19, 1998, one-third on September 19, 1999, and
one-third on September 19, 2000.
(7) In fiscal 1997, Mr. O'Shea was granted 18,750 options vesting immediately
and exercisable on April 3, 1998. These options replaced 25,000 options granted
in fiscal 1997 and were repriced in fiscal 1998 with a 25% forfeiture of
options.
(8) Mr. Temple was appointed Vice President and Chief Financial Officer on April
20, 1998 and receives an annual salary of $110,000.
(9) In connection with his employment, Mr. Temple was granted 150,000 options
with one-quarter vesting on each anniversary of his employment with the Company,
with one-quarter exercisable April 20, 1999, one-quarter exercisable April 20,
2000, one-quarter exercisable on April 20, 2001 and one-quarter exercisable on
April 20, 2002. In fiscal 1999, Mr. Temple was granted 20,886 option shares on
July 6, 1998, vesting and exercisable on June 29, 1999.
(10) Mr. Redmond received an increase in annual salary to $110,000, effective
January 4, 1999.
(11) Mr. Redmond received a $15,000 commission in conjunction with results
achieved through his business development efforts.
(12) Mr. Redmond receives an automobile allowance of $500 per month.
(13) In fiscal 1999, Mr. Redmond was granted 13,924 option shares on July 6,
1998, vesting and exercisable on June 29, 1999.
(14) In fiscal 1998, Mr. Redmond was granted 62,500 options: 25,000 granted on
April 3, 1997 and vesting immediately and exercisable October 3,1997. 12,500
options granted on June 11, 1997 vesting on March 31, 1998 with 6,250 options
immediately exercisable and 6,250 options exercisable on October 1, 1998. 25,000
options granted on September 19, 1997, one-third vesting and exercisable on
September 19, 1998, one-third on September 19, 1999, and one-third on September
19, 2000.
(15) In connection with his employment, Mr. Redmond was granted 75,000 options
with one-third vesting on each anniversary of his employment with the Company,
with two-thirds exercisable April 3, 1998 and one-third exercisable February 8,
1999. These options replaced 100,000 options granted in fiscal 1997 and were
repriced in fiscal 1998 with a 25% forfeiture of options.
<PAGE>
(16) Dr. Stout received an increase in annual salary to $100,000, effective
April 1, 1998.
(17) In fiscal 1999, Dr. Stout was granted 13,924 option shares on July 6, 1998,
vesting and exercisable on June 29, 1999.
(18) In fiscal 1998, Dr. Stout was granted 32,500 options: 15,000 granted on
April 3, 1997 and vesting immediately and exercisable October 3,1997. 7,500
options granted on June 11, 1997 vesting on March 31, 1998 with 3,750 options
immediately exercisable and 3,750 options exercisable on October 1, 1998. 10,000
options granted on September 19, 1997, one-third vesting and exercisable on
September 19, 1998, one-third on September 19, 1999, and one-third on September
19, 2000.
(19) In fiscal 1997, Dr. Stout was granted 5,625 options vesting immediately and
exercisable on April 3, 1998. These options replaced 7,500 options granted in
fiscal 1997 and were repriced in fiscal 1998 with a 25% forfeiture of options.
GRANT OF STOCK OPTIONS. Shown below is information on grants of stock options
pursuant to the Company's 1992 Stock Incentive Plan during the fiscal year ended
March 31, 1999 to the named executive officers. No stock appreciation rights
were granted during fiscal 1999.
OPTION GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
-------------------------------------------------
<TABLE>
<CAPTION>
Potential Realizable
Percentage of Values at Assumed
Total Options Annual Rates of Stock
Granted to Exercise or Price Appreciation
Options Employees Base Price Expiration for Option Term (3)
Name Granted in Fiscal 1999 (per share) Date 5% 10%
- --------------- ------- -------------- ----------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
James O'Shea 34,810(1) 7% $1.78 03/31/06 $ 25,225 $ 58,784
Michael A. Temple 150,000(2) 32 1.75 04/19/05 106,864 249,038
20,886(1) 4 1.78 03/31/06 15,135 35,271
J. Michael Redmond 13,924(1) 3 1.78 03/31/06 10,090 23,514
Richard R. Stout, MD 13,924(1) 3 1.78 03/31/06 10,090 23,514
</TABLE>
- ---------------------
(1) These options vested and became exercisable on June 29, 1999. The fair
market value of the Company's common stock on the date of grant was $1.78.
(2) Of this total, 37,500 became vested and exercisable on April 20, 1999,
37,500 become vested and exercisable on April 20, 2000, 37,500 become vested and
exercisable on April 20, 2001 and the remaining balance of 37,500 become vested
and exercisable on April 20, 2002. The fair market value of the Company's common
stock on the date of grant was $1.75.
<PAGE>
(3) Potential realizable value is based on the assumption that the stock price
of the common stock appreciates at the annual rate shown (compounded annually)
from the date of grant until the end of the applicable option term. These
numbers are calculated based on the requirements promulgated by the Securities
and Exchange Commission and do not reflect the Company's estimate of future
stock price performance. The actual value, if any, which may be realized by any
officer will vary based on exercise date and the market price of the related
common stock when sold.
OPTION EXERCISES AND FISCAL YEAR END VALUES. Shown below is information with
respect to exercised options and unexercised options to purchase the company's
common stock granted in fiscal 1999 and prior years to the named executive
officers and held by them at March 31, 1999. None of the named executive
officers exercised any stock options during fiscal 1999. No stock appreciation
rights were outstanding or exercised during fiscal 1999.
Aggregated Option Exercises in Last Fiscal Year
and Fiscal Year End Option Values
<TABLE>
Number of Unexercised Value of Unexercised
Options held at In-the-Money Options
March 31, 1999 March 31, 1999(1)
---------------------------- --------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
- ------------- ----------- ------------- ------------ -------------
<S> <C> <C> <C> <C>
James C. O'Shea 670,226 333,334 $ -- $ --
Michael A. Temple 58,386 112,500 -- --
J. Michael Redmond 134,757 16,667 -- --
Richard R. Stout, MD 101,632 6,667 -- --
- ---------------
</TABLE>
(1) Based on the difference between the exercise price and the average of the
bid and ask price on NASDAQ of the Company's common stock on that date ($0.625).
The actual value, if any, which may be realized by any officer will vary based
on exercise date and the market price of the related common stock when sold.
REPORT ON REPRICING OF OPTIONS/SAR'S. Shown below is information with respect to
the Company's ten-year history on the repricing of stock options and stock
appreciation rights (SAR's) held by executive officers.
<TABLE>
<CAPTION>
Ten-Year Option/SAR Repricings
Length of
Market Price Exercise Original
Number of of Stock Price Option Term
Options/SAR's at Time of at Time of New Date of
Repriced or Repricing or Repricing or Exercise Repricing or
Name Date Amended Amendment Amendment Price Amendment
- ------------------- -------- ------------- ------------ ------------ -------- ------------
<S> <C> <C> <C> <C> <C> <C>
James C. O'Shea 04/03/97(a) 112,500(1) $ .6875 $2.69 $ .75 5 years
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
President and 04/03/97(a) 112,500(1) .6875 3.50 .75 5 years
Chief Operating 04/03/97(a) 150,000(1) .6875 4.50 .75 5 years
Officer 04/03/97(a) 18,750(1) .6875 1.313 .75 6 years
Peggy J. Miller 04/03/97(a) 50,625(2) .6875 1.25 .75 4 years
Former Vice President 04/03/97(a) 2,813(2) .6875 1.25 .75 3.5 years
and Chief Financial 04/03/97(a) 42,188(2) .6875 1.25 .75 5 years
Officer 04/03/97(a) 9,375(2) .6875 1.313 .75 6 years
01/26/96(a) 67,500(2) 1.25 4.00 1.25 5 years
01/26/96(a) 3,750(2) 1.25 4.00 1.25 4.5 years
01/26/96(a) 56,250(2) 1.25 4.00 1.25 6 years
Michael Redmond 04/03/97(a) 75,000(3) .6875 1.00 .75 6 years
Vice President of
Business Development
Richard R. Stout, MD 04/03/97(a) 5,625(4) .6875 1.313 .75 6 years
Vice President of 04/03/97(a) 56,250(4) .6875 1.25 .75 4 years
Clinical Affairs 01/26/96(a) 75,000(4) 1.25 3.75 1.25 6 years
</TABLE>
- ----------------
(1) Replaces 150,000, 150,000, 200,000 and 25,000 options, respectively.
(2) Replaces 67,500, 3,750, 56,250, 12,500, 90,000, 5,000 and 75,000 options,
respectively.
(3) Replaces 100,000 options.
(4) Replaces 7,500, 75,000 and 100,000 options, respectively.
(a) These options were repriced based on the Compensation and Stock Option
Committees' belief that the difference between the current fair market value of
the Company's common stock and the option exercise prices before repricing did
not meaningfully align employees' and shareholders' interests and, therefore,
did not serve the long-term interests of the Company. In order to be eligible
for this repricing, the named executive officers were required to forfeit 25% of
option shares previously granted.
The foregoing report has been furnished by the Compensation and Stock
Option Committees consisting of Ms. Fey and Messrs. Herfindal, Plestina, Ruedy
and Sember.
EMPLOYMENT CONTRACTS. The Company entered into an employment agreement with Mr.
O'Shea to serve as Chairman and Chief Executive Officer. His salary, at March
31, 1999, was $220,000 per annum, is subject to annual adjustment by the Board
of Directors. In addition to his base salary, Mr. O'Shea was granted a total of
500,000 incentive stock options at prices ranging from $2.69 to $4.50 per share
which vest variously over a three year period. These options were replaced in
April 1997 by 375,000 options at an exercise price of $0.75 per share. He will
receive 100,000 shares of common stock when the Company first achieves two
consecutive quarters of positive earnings per share. He received relocation
expense reimbursements grossed-up for withholding taxes and will receive annual
payment of certain disability and life insurance policy premiums. His agreement
continues until terminated. In the event he is terminated, he will receive his
base salary for up to two years. If he becomes disabled, he will continue at 75%
of his then current salary for not less than six months and at 50% of such
salary for the successive six months. In the event of his death, his salary will
continue for 60 days following the end of the month of his death. Under the
<PAGE>
agreement, he is permitted to participate in any net profit sharing, deferred
compensation or other programs. In addition, he is prohibited from competing
with the Company for three years following termination of the agreement.
The Company has entered into an employment agreement with Mr. Temple to serve as
Vice President and Chief Financial Officer. His salary, currently $110,000 per
annum, is subject to annual adjustment by the Board of Directors. In addition to
his base salary, Mr. Temple was granted a total of 150,000 incentive stock
options at $1.75 per share which vest over a four year period. He will also
receive 15,000 shares of common stock when the Company first achieves two
consecutive quarters of positive earnings per share. His agreement continues
until terminated. In the event he is terminated, he will receive his base salary
for up to four months. In the event he is disabled, he will continue at 75% of
his then current salary for not less than six months and then at 50% of such
salary through the end of the current term. In the event of his death, his
salary will continue for 120 days following the end of the month of his death.
Under the agreement, he is permitted to participate in any net profit sharing,
deferred compensation or other programs. In addition, he is prohibited from
competing with the Company for two years following termination of the agreement.
The Company entered into an employment agreement with Mr. Redmond to serve as
Vice President of Sales and Marketing. In February 1998, he was appointed Vice
President of Business Development. His salary, currently $110,000 per annum,
plus $500 per month car allowance, is subject to annual adjustment by the Board
of Directors. In addition to his base salary, Mr. Redmond was granted a total of
100,000 incentive stock options at $1.00 per share which vest over a three year
period. These options were replaced April 1997 by 75,000 options at an exercise
price of $0.75 per share. His agreement continues until terminated. In the event
he is terminated, he will receive his base salary for up to four months. In the
event he is disabled, he will continue at 75% of his then current salary for not
less than six months and then at 50% of such salary through the end of the
current term. In the event of his death, his salary will continue for 60 days
following the end of the month of his death. Under the agreement, he is
permitted to participate in any net profit sharing, deferred compensation or
other programs. In addition, he is prohibited from competing with the Company
for three years following termination of the agreement.
The Company does not have an employment agreement with Dr. Stout.
SEC FILINGS. Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's officers, directors and 10 percent shareholders to file reports of
ownership and changes in ownership with the Securities and Exchange Commission
(the "Commission"). Officers, directors and 10 percent shareholders are required
by Commission regulations to furnish the Company with all Section 16(a) reports
they file.
Based solely on the Company's review of the copies of such reports the
Company received and written representations from the Company's officers and
directors, the Company believes that all required reports were timely filed in
fiscal 1999.
REPORT OF COMPENSATION AND STOCK OPTION COMMITTEES ON EXECUTIVE COMPENSATION
The Company has maintained a philosophy of seeking to attract and retain a
key group of experienced executives capable of successfully managing product
<PAGE>
development, manufacturing, marketing and sales, while providing strong
financial management. Mindful of conserving cash resources, the Company has
provided a combination of annual cash compensation and stock option grants which
emphasizes lower cash compensation in exchange for potential long-term gains
through stock option appreciation. The Company believes such a strategy is in
the best interests of the shareholders and provides proper incentives to
increase long-term shareholder value. The Company's Compensation Committee is
responsible for reviewing cash compensation paid to the Company's executive
officers and makes recommendations to the Stock Option Committee for stock
option and common stock grants. The Stock Option Committee is responsible for
administering all stock option and common stock grants including awards to the
Company's executive officers.
Overall, the Company's executive compensation is composed of the following
key elements:
Base Salary. This is an amount of annual cash compensation which the
Company believes is necessary to attract and retain qualified executives and is
administered on behalf of the Board of Directors by the Chief Executive Officer
for all executive officers other than the C.E.O. As can be determined from the
Summary Compensation Table preceding, under this policy, the Company's four
executive officers have cash compensation exceeding $100,000 per year. In fiscal
1999, the Company's Chief Executive Officer, Mr. O'Shea, was paid an annual
salary of $220,000. As part of Mr. O'Shea's compensation package, the Board
agreed to pay premiums on certain life and disability policies owned by Mr.
O'Shea. Payment of these premiums is similar to supplemental policy premiums
paid by the Company on behalf of its former chief executive officer.
Annual Incentives. As circumstances are appropriate, the Company has annual
incentive programs for individual executives or for the executive officer group
as a whole. These programs have specific performance criteria and awards
determined based on Company business goals for the period. In fiscal 1999, the
Company had an incentive program under the 1992 Stock Incentive Plan with
respect to certain executive officers whereby up to a specified number of stock
options would be automatically granted based on attainment of certain sales and
operating performance targets. No options were granted relative to achieving
sales targets. Seventy per cent of targeted awards were granted with respect to
the Company achieving targeted operating results.
Long-Term Incentives. At present the Company's primary long-term incentive
program is the 1992 Stock Incentive Plan which is available to all employees,
executive officers and non-employee consultants of the Company. The Board of
Directors' Stock Option Committee grants all options pursuant to this plan.
Generally, executive officers upon joining the Company are granted options
vesting over a three to four year period at current fair market value in amounts
which, in the Stock Option Committee's opinion, are consistent with their
positions and responsibilities with the Company. In addition, based on
individual annual performance and contribution to the long-term goals of the
Company, executive officers and other company employees may receive additional
stock option grants. The amount and terms of such options are discretionary and
are determined by the Stock Option Committee taking into account Company and
individual performance. These options vest over varying periods and are intended
to focus all employees on achieving the long-term goals of the Company and to
directly reward them for corresponding increases in shareholder value.
The Company also has a 401(k) Retirement Benefit Plan for its employees
including its executive officers which provides for voluntary employer matches
<PAGE>
of employee contributions up to 6% of salary and for discretionary profit
sharing contributions to all employees. In fiscal 1999, Mr. O'Shea received
$3,875 (or 4,864 shares) of Company common stock under the matching provisions
of the 401(k) Plan. Mr. Temple received $1,820 (or 3,412 shares) of Company
common stock and Mr. Redmond received $2,819 (or 3,273 shares) of Company common
stock.
Due to the availability of operating loss carryforwards, the Compensation
and Stock Option Committees determined Mr. O'Shea's compensation package without
regard to the limitations of deductibility imposed by Internal Revenue Code
Section 162(m).
The Company is engaged in a highly competitive industry. In order to
succeed, the Company believes that it must be able to attract and retain
qualified executives. The Board of Directors believes that the above described
compensation structure will help the Company to achieve these objectives.
The foregoing report has been furnished by the following directors: for the
Compensation Committee, John Ruedy, Grace K. Fey, and Eric T. Herfindal, and for
the Stock Option Committee, Grace K. Fey, Richard J. Plestina and M. Sember.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION.
Executive compensation is administered by two committees of the Board: the
Compensation Committee and the Stock Option Committee. Jim O'Shea, the Company's
Chairman, President, Chief Executive Officer and a Director, participated in
deliberations concerning executive officer compensation, but abstained from
deliberations concerning his own compensation.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On April 30, 1998, Peggy Miller announced her resignation as the Company's
Vice President and Chief Financial Officer. In consideration for Ms. Miller's
service to the Company, the Company extended the expiration date of 130,000
vested stock options held by Ms. Miller from April 30, 1999 to April 30, 2000.
In consideration of Ms. Miller's assistance in the transition of
responsibilities to a new chief financial officer, the Company exchanged 25,000
unvested stock options held by Ms. Miller for 25,000 identically priced stock
options which were vested and exercisable. At March 31, 1999, Ms. Miller held
16,250 vested and exercisable stock options.
STOCK PERFORMANCE CHART
The following chart compares the yearly stock market (U.S.) percentage
change in the cumulative total stockholder return on the Company's common stock
during the five fiscal years ended March 31, 1999 with the cumulative total
return on the NASDAQ Stock Market (U.S.) Index and the Hambrecht and Quist
Healthcare Index (exclusive of biotechnology companies). The comparison assumes
$100 was invested on March 31, 1994, in the Company's common stock and in each
of the foregoing indices and assumes reinvestment of dividends.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
AMONG BIOJECT MEDICAL TECHNOLOGIES INC., NASDAQ STOCK INDEX
AND HAMBRECHT AND QUIST HEALTH CARE FUND EXCLUDING BIOTECH INDEX
<PAGE>
BIOJECT MEDICAL TECHNOLOGIES, INC.
H&Q HEALTHCARE EXCLUDING BIOTECH INDEX
NASDAQ STOCK MARKET-U.S. INDEX
[THE FOLLOWING DATA REPRESENTS PICTORIAL INFORMATION]
<TABLE>
H&Q
Bioject Medical Nasdaq Stock Healthcare
DATES Technologies, Inc. Market-U.S. Excluding
----- ------------------ ----------- ---------
<S> <C> <C> <C>
Mar-94 100.00 100.00 100.00
Apr-94 77.42 98.70 97.67
May-94 70.97 98.94 100.94
Jun-94 59.66 95.32 96.84
Jul-94 93.55 97.28 100.58
Aug-94 96.77 103.48 114.52
Sep-94 101.60 103.22 115.72
Oct-94 79.02 105.25 112.71
Nov-94 90.32 101.76 112.37
Dec-94 77.42 102.04 115.14
Jan-95 58.06 102.62 122.49
Feb-95 59.66 108.05 125.32
Mar-95 51.61 111.25 134.50
Apr-95 51.61 114.76 132.79
May-95 45.16 117.72 133.43
Jun-95 38.71 127.26 138.17
Jul-95 35.48 136.62 149.99
Aug-95 54.84 139.39 159.13
Sep-95 73.39 142.59 172.84
Oct-95 54.84 141.77 175.87
Nov-95 51.61 145.10 179.82
Dec-95 48.39 144.33 191.72
Jan-96 47.59 145.04 205.07
Feb-96 41.94 150.57 205.07
Mar-96 33.86 151.06 205.09
Apr-96 33.86 163.59 201.15
May-96 33.86 171.10 201.26
Jun-96 36.28 163.39 192.76
Jul-96 33.06 148.82 176.56
Aug-96 28.23 157.16 188.08
Sep-96 25.81 169.18 211.54
Oct-96 17.73 167.31 200.53
Nov-96 22.58 177.65 206.72
Dec-96 17.73 177.49 212.85
Jan-97 19.35 190.11 224.46
Feb-97 20.15 179.56 220.77
Mar-97 20.15 167.83 202.18
Apr-97 13.70 173.08 206.66
May-97 23.38 192.69 227.12
Jun-97 17.73 198.60 242.04
Jul-97 19.35 219.54 255.37
Aug-97 17.73 219.21 242.58
Sep-97 25.81 232.14 253.69
Oct-97 36.28 220.08 241.16
Nov-97 39.51 221.20 245.66
Dec-97 33.06 217.41 253.66
Jan-98 31.46 224.32 254.16
Feb-98 33.86 245.41 277.66
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
Mar-98 38.71 254.43 288.43
Apr-98 50.81 258.63 297.52
May-98 43.55 244.25 285.75
Jun-98 46.77 261.37 293.87
Jul-98 44.35 258.25 288.45
Aug-98 25.81 207.27 239.85
Sep-98 40.32 236.10 259.41
Oct-98 40.32 246.29 273.22
Nov-98 32.26 271.22 289.90
Dec-98 34.68 306.36 308.21
Jan-99 33.87 351.00 294.83
Feb-99 17.74 319.37 286.43
Mar-99 16.13 342.44 293.65
</TABLE>
<PAGE>
PROPOSAL #2: AMENDMENT TO THE ARTICLES OF INCORPORATION TO AMEND THE CONVERSION
TERMS OF THE COMPANY'S SERIES A PREFERRED STOCK
The Board of Directors unanimously proposes and recommends the approval of an
amendment to the Company's Articles of Incorporation which would amend two
provisions of the Company's current Articles of Incorporation relating to the
conversion terms of the Company's Series A Preferred Stock. If the shareholders
approve the proposed amendment, the conversion price of the Company's Series A
Preferred Stock will be fixed at $1.50, thereby eliminating the possibility that
the Series A Preferred Stock might be converted into shares of the Company's
common stock at a price less than $1.50.
This proposal comes about as a result of a June, 1999 transaction in which
Marathon Medical Technologies Inc. ("Marathon") sold its license to certain
blood glucose monitoring technology to an unrelated third party. The sale was
facilitated by Elan Corporation plc. ("Elan"), which at the time of the sale
owned a 19.9% interest in Marathon. In conjunction with the sale, certain
changes in the provisions of Elan's Preferred Stock ownership in the Company
were negotiated. One of the negotiated changes involves fixing the price at
which Elan may convert its Series A Preferred Stock into shares of the Company's
common stock. In order to put into effect this change in the conversion terms of
the Company's Series A Preferred Stock, the Company's shareholders as well as
the holder of the Series A Preferred Stock, must approve this amendment to the
Company's Articles of Incorporation.
Under the current terms of the Series A Preferred Stock, Elan may convert its
Series A Preferred Stock into the Company's common stock according to a formula.
The formula provides that the total price at which the Series A Preferred Stock
was originally issued, plus the amount of dividends that have accrued on that
stock up to the time of conversion, will be divided by the lesser of i) 80% of
the average closing price of the Company's stock for the ten trading days prior
to conversion or ii) if such average trading price is greater than $1.80, by
$1.50. This means that in no event will the Series A Preferred Stock be
converted into shares of the Company's common stock at a conversion price
greater than $1.50. However, if the Company's average trading price prior to
conversion is less than $1.80, the Series A Preferred Stock would be converted
into common stock of the Company at a price less than $1.50. The change in the
terms of the Series A Preferred Stock that was negotiated in conjunction with
the sale of the blood glucose monitoring technology would fix the conversion
price of the Series A Preferred Stock at $1.50, thereby avoiding the potential
<PAGE>
of the Series A Preferred Stock being converted at a price less than $1.50. (See
Article IV, Section 2.6(a) of the Amended and Restated Articles of
Incorporation)
The amendment also gives the Company the right but not the obligation in certain
circumstances to redeem the accrued but unpaid dividends on the Series A
Preferred Stock in cash in lieu of having the amount of such dividends converted
into shares of the Company's common stock.
A copy of the Company's Amended and Restated Articles of Incorporation including
the proposed amendment to Article IV, Section 2.6(a) and conforming changes to
Section 2.6(e) is attached and the foregoing summary is qualified by reference
to the proposed Articles. If the proposal is not approved, the Company will file
Restated Articles of Incorporation without the language from the proposal.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDER VOTE "FOR" THE AMENDMENT TO
THE ARTICLES OF INCORPORATION TO AMEND THE CONVERSION TERMS OF THE COMPANY'S
SERIES A PREFERRED STOCK.
PROPOSAL #3: TO AMEND THE COMPANY'S ARTICLES OF INCORPORATION
TO EFFECT A ONE-FOR-FIVE REVERSE COMMON STOCK SPLIT
On July 9, 1999, the last sale price of the Company's common stock as reported
on the NASDAQ National Market System was ($0.50) per share. The Board of
Directors believes that the recent per share price of the Common Stock has
affected the marketability of the existing shares, increased the amount and
percentage of transaction costs paid by individual stockholders, and affected
the potential ability of the Company to raise capital by issuing additional
shares. The Company believes there are several reasons for these effects, as
summarized below.
As a means of improving marketability of the Common Stock, reducing
stockholders' transaction costs, increasing the number of shares available for
future issuances, and other considerations, on July 15, 1999, the Board of
Directors approved, subject to the shareholder approval solicited hereby, a
proposal to amend the Articles of Incorporation to effect a reverse stock split
by exchanging five outstanding shares of the Company's common stock for one new
share of the Company's common stock (the "Reverse Stock Split").
Although the Company's Board of Directors believes as of the date of this Proxy
Statement that the one-for-five Reverse Stock Split is advisable, the Reverse
Stock Split may be abandoned by the Board of Directors at any time before,
during, or after the Meeting. In addition, depending upon prevailing market
conditions, the Board of Directors may deem it advisable to implement the
Reverse Stock Split and concurrently declare a stock-for-stock dividend in a
ratio to be determined at that time. A stock-for-stock dividend does not require
shareholder approval. Depending upon the amount of any such stock-for-stock
dividend, this would partially offset the decrease in the number of issued
shares resulting from the one-for-five Reverse Stock Split, potentially to the
extent that the result will be the same as if a one-for-three, one-for-two, or
other reverse stock split ratio had been approved by the Company's shareholders.
The net effect of implementation of the Reverse Stock Split and any subsequent
dividend declarations described herein will not result in more than five shares
being surrendered for each share of New Common Stock.
<PAGE>
REASONS FOR THE REVERSE STOCK SPLIT PROPOSAL. The rules of the NASDAQ National
Market System require that shares traded on the system must maintain, in
addition to certain tangible asset and other requirements, a share trading price
in excess of $1.00 per share. During the preceding five months, the Company's
trading price as determined by the last trade at the close of each trading day
did not exceed the required share price. The consequences of the failure to meet
the minimum stock price requirements may be the delisting of the Company's
Common Stock from NASDAQ. In such event, trading, if any, in the Common Stock
may then continue to be conducted in the non-NASDAQ over-the-counter market. As
a result, an investor may find it more difficult to dispose of, or to obtain
accurate quotations as to the market value of, the Company's Common Stock. In
addition, if the Common Stock was delisted from trading on NASDAQ and the
trading price of the Common Stock was less than $5.00 per share, trading in the
Common Stock would also be subject to the requirements of certain rules
promulgated under the Exchange Act, which require additional disclosure by
broker-dealers in connection with any trades involving a stock defined as a
penny stock. The additional burdens imposed upon broker-dealers may discourage
broker-dealers from effecting transactions in penny stocks, which could reduce
the liquidity of the shares of Common Stock and thereby have a material adverse
effect on the trading market for the securities.
The Board of Directors believes that the relatively low per share market price
of the Common Stock may impair the acceptability of the Common Stock to certain
institutional investors and other members of the investing public.
Theoretically, the number of shares outstanding should not, by itself, affect
the marketability of the stock, the type of investor who acquires it, or the
Company's reputation in the financial community. However, in practice this is
not necessarily the case, as certain investors view low-priced stock as
unattractive or, as a matter of policy, will not extend margin credit on stock
trading at low prices, although certain other investors may be attracted to
low-priced stock because of the greater trading volatility sometimes associated
with such securities. Many brokerage houses are reluctant to recommend
lower-priced stock to their clients or to hold it in their own portfolios.
Further, a variety of brokerage house policies and practices discourage
individual brokers within those firms from dealing in low-priced stock because
of the time-consuming procedures that make the handling of low-priced stock
unattractive to brokerage houses from an economic standpoint.
Also, since the broker's commissions on low-priced stock generally represent a
higher percentage of the stock price than commissions on higher priced stock,
the current share price of the Common Stock can result in individual
stockholders paying transaction costs (commissions, markups, or markdowns) which
are a higher percentage of their total share value than would be the case if the
share price were substantially higher. This factor is also believed to limit the
willingness of institutions to purchase the Common Stock at its current
relatively low per share market price. If implemented, the Reverse Stock Split
may result in some stockholders owning "odd-lots" of less than 100 shares of New
Common Stock. Brokerage commissions and other costs of transactions in odd-lots
may be higher, particularly on a per-share basis, than the cost of transactions
in even multiples of 100 shares.
The Board of Directors believes that the decrease in the number of shares
outstanding as a consequence of the proposed Reverse Stock Split and the
resulting anticipated increased price level of the New Common Stock compared to
the Common Stock will encourage greater interest in the New Common Stock
compared to the Common Stock by the financial community and the investment
public and possibly promote greater liquidity for the Company's stockholders.
<PAGE>
However, it is possible that such liquidity could be affected adversely by the
reduced number of shares outstanding after the Reverse Stock Split. Also,
although any increase in the market price of the New Common Stock resulting from
the Reverse Stock Split may be proportionately less than the decrease in the
number of shares outstanding, the proposed Reverse Stock Split could result in a
market price for the shares that would be high enough to overcome the
reluctance, policies and practices of brokerage houses and investors referred to
above and to diminish the adverse impact of correspondingly higher trading
commissions on the market for the shares.
There can be no assurance, however, that the foregoing effects will occur or
that the market price of the New Common Stock immediately after implementation
of the proposed Reverse Stock Split will be maintained for any period of time,
that such market price will approximate five times (or some other multiple of)
the market price of the Common Stock before the proposed Reverse Stock Split, or
that such market price of the New Common Stock will exceed or remain in excess
of the current market price of the Common Stock.
Another reason for the Reverse Stock Split is to increase the number of shares
available for future issuances. The Company is authorized to issue 100 million
shares of Common Stock. As of July 15,1999, 29,011,236 shares of Common Stock,
including options, warrants and convertible preferred stock to acquire an
additional 21,932,262 shares of Common Stock, were outstanding. The Reverse
Stock Split, by decreasing the number of outstanding shares of Common Stock and
the number of shares of Common Stock the holders of outstanding options,
warrants and convertible preferred stock are entitled to acquire, but not
changing the number of authorized shares, has the effect of increasing the
number of shares available for future issuances.
If the Reverse Stock Split is approved, the total number of shares of Common
Stock held by each stockholder would be converted automatically into a right to
receive a number of shares and fractions thereof of New Common Stock equal to
the number of shares of Common Stock owned immediately prior to the Reverse
Stock Split divided by five. No fractional shares or scrip would be issued and,
in lieu thereof, each stockholder who would otherwise have been entitled to a
fraction of a share of New Common Stock would receive a whole share of New
Common Stock.
Approval of the Reverse Stock Split would not affect any stockholder's
percentage ownership interest in the Company or proportional voting power except
for minor differences resulting from fractional shares. The Reverse Stock Split
should not reduce the number of shareholders of the Company. The shares of New
Common Stock which will be issued upon approval of the Reverse Stock Split will
be fully paid and nonassessable. The voting rights and other privileges of the
holders of Common Stock will not be affected substantially by adoption of the
Reverse Stock Split or subsequent implementation thereof. If for any reason the
Board of Directors deems it advisable to do so, the Reverse Stock Split may be
abandoned by the Board of Directors at any time before, during, or after the
Meeting and prior to filing of the Amended and Restated Articles of
Incorporation with the Secretary of State of the State of Oregon, pursuant to
Section 60.447 of the Oregon Revised Statutes, without further action by the
shareholders of the Company. In addition, the effect of the Reverse Stock Split
may be partially offset if the Board of Directors elects to declare a
stock-for-stock dividend as described above.
EFFECTIVE TIME. If the Reverse Stock Split is approved by the Shareholders at
the Meeting, and upon a determination by the Board of Directors that the Reverse
Stock Split is in the best interest of the Company and its shareholders, the
<PAGE>
Amended and Restated Articles of Incorporation, containing the provision
effecting the Reverse Stock Split, would be filed with the Secretary of State of
the State of Oregon on any date selected by the Board of Directors on or prior
to the Company's next Annual Meeting of Shareholders, providing that the Reverse
Stock Split would become effective as of 5:00 p.m. Pacific Time on the date of
such filing (the "Effective Time"). Without any further action on the part of
the Company or the shareholders, the shares of Common Stock held by shareholders
of record as of the Effective Time will be converted at the Effective Time into
the right to receive a number of shares and fraction thereof of New Common Stock
equal to the number of their shares of Common Stock divided by five, with an
additional whole share of New Common Stock in lieu of any fractional share.
EXCHANGE OF STOCK CERTIFICATES. As soon as practicable after the Effective Time,
the Company will send a letter of transmittal to each shareholder of record at
the Effective Time for use in transmitting certificates representing shares of
Common Stock ("old certificates") to the Company's transfer agent, American
Stock Transfer and Trust Company (the "Exchange Agent"). The letter of
transmittal will contain instructions for the surrender of old certificates to
the Exchange Agent in exchange for certificates representing the appropriate
number of whole shares of New Common Stock and an additional share in lieu of
any fractional share. No new certificates will be issued to a shareholder until
such shareholder has surrendered all old certificates together with a properly
completed and executed letter of transmittal to the Exchange Agent.
Upon proper completion and execution of the letter of transmittal and return
thereof to the Exchange Agent, together with all old certificates, shareholders
will receive a new certificate or certificates representing the number of whole
shares of New Common Stock into which their shares of Common Stock represented
by the old certificates have been converted as a result of the Reverse Stock
Split rounded up to the next whole share in lieu of any fractional share. Until
surrendered, outstanding old certificates held by shareholders will be deemed
for all purposes to represent the number of whole shares of New Common Stock to
which such shareholders are entitled as a result of the Reverse Stock Split.
Shareholders should not send their old certificates to the Exchange Agent until
they have received the letter of transmittal. Shares not presented for surrender
as soon as is practicable after the letter of transmittal is sent shall be
exchanged at the first time they are presented for transfer.
No service charges will be payable by shareholders in connection with the
exchange of certificates, all expenses of which will be borne by the Company.
EFFECT OF THE REVERSE STOCK SPLIT. If the Reverse Stock Split is approved at the
Meeting and the Company's Board of Directors subsequently determines that it is
advisable to proceed with the Reverse Stock Split, the result (without giving
effect to the stock dividend, if any, referred to above) would be that each
Company shareholder will receive one share of New Common Stock for each five
shares of Common Stock held at the Effective Time, and, if such shareholder
would otherwise be entitled to receive a fractional share of New Common Stock,
an additional share of New Common Stock in lieu of the issuance of such
fractional share.
If the Reverse Stock Split is implemented, no stock-for-stock dividend is
declared, and no shares, options, or warrants are issued between July 15, 1999
and the Effective Time, at the Effective Time approximately 5,802,248 shares of
New Common Stock will be outstanding, approximately 4,386,453 shares will be
reserved for issuance upon exercise of outstanding options, warrants and
conversion of convertible preferred stock, and approximately 89,811,299 shares
will be available for future issuances.
<PAGE>
Dissenting shareholders have no appraisal rights under Oregon law or under the
Company's Articles of Incorporation or Bylaws in connection with the Reverse
Stock Split.
FEDERAL INCOME TAX CONSEQUENCES. The following is a summary of the material
anticipated Federal income tax consequences of the Reverse Stock Split to
shareholders of the Company. This summary is based on the Federal income tax
laws now in effect and as currently interpreted; it does not take into account
possible changes in such laws or interpretations, including amendments to
applicable statutes, regulations, and proposed regulations or changes in
judicial or administrative rulings, some of which may have retroactive effect.
This summary is provided for general information only and does not purport to
address all aspects of the possible Federal income tax consequences of the
Reverse Stock Split and IS NOT INTENDED AS TAX ADVICE TO ANY PERSON. In
particular, and without limiting the foregoing, this summary does not consider
the Federal income tax consequences to shareholders of the Company in light of
their individual investment circumstances or to holders subject to special
treatment under the Federal income tax laws (for example, life insurance
companies, regulated investment companies, and foreign taxpayers). The summary
does not address any consequence of the Reverse Stock Split under any state,
local, or foreign tax laws.
No ruling from the Internal Revenue Service ("Service") or opinion of counsel
will be obtained regarding the Federal income tax consequences to the
shareholders of the Company as a result of the Reverse Stock Split. ACCORDINGLY
EACH SHAREHOLDER IS ENCOURAGED TO CONSULT HIS OR HER TAX ADVISOR REGARDING THE
SPECIFIC TAX CONSEQUENCES OF THE PROPOSED TRANSACTION TO SUCH SHAREHOLDER,
INCLUDING THE APPLICATION AND EFFECT OF STATE, LOCAL, AND FOREIGN INCOME AND
OTHER TAX LAWS.
The Company believes that the Reverse Stock Split would be a tax-free
recapitalization to the Company and its shareholders. If the Reverse Stock Split
qualifies as a recapitalization under Section 368(a) (1) (E) of the Internal
Revenue Code of 1986, as amended, a shareholder of the Company who exchanges his
or her Common Stock solely for New Common Stock should recognize no gain or loss
for Federal income tax purposes. A shareholder's aggregate tax basis in his or
her shares of New Common Stock received from the Company should be the same as
his or her aggregate tax basis in the Common Stock exchanged therefor. The
holding period of the New Common Stock received by such stockholder should
include the period during which the Common Stock surrendered in exchange
therefor was held, provided all such Common Stock was held as a capital asset at
the Effective Time.
VOTE REQUIRED. In order to effect the Reverse Stock Split, the Articles of
Incorporation must be amended, which requires, under Oregon law, the affirmative
vote of holders of a majority of the outstanding shares of Common Stock.
<PAGE>
A copy of the Company's Amended and Restated Articles of Incorporation including
the proposed amendment adding Article IV, Section 1.1 is attached and the
foregoing summary is qualified by reference to the proposed Articles. If the
proposal is not approved, or if it is approved and the Board of Directors
determine not to proceed with the reverse stock split, the Company will file
Restated Articles of Incorporation without the language from the proposal.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THE PROPOSAL TO AMEND THE
ARTICLES OF INCOPORATION TO EFFECT THE ONE-FOR-FIVE REVERSE STOCK SPLIT
OTHER MATTERS TO BE ACTED UPON
It is not known whether any other matters will come before the Meeting
other than as set out above and in the Notice of Meeting. However, if such
should occur, the person named in the accompanying form of proxy intends to vote
on the matters in accordance with his best judgment exercising discretionary
authority with respect to amendments or variations or matters identified in the
Notice of Meeting and other matters which may properly come before the Meeting
or an adjournment thereof.
SHAREHOLDER PROPOSAL AND NOMINATION PROCEDURES FOR THE MEETING
Article II of the Company's Bylaws provides that advance notice of
nominations for the election of directors or proposals for an amendment to the
Company's Bylaws must be received by the Company thirty (30) days prior to the
date of the shareholder meeting at which the shareholder wishes to present such
nomination or proposal or, if less than 40 days' notice of the date of the
meeting is given to shareholders, by the close of business on the 10th day
following the date on which notice of the meeting was mailed to shareholders.
Each notice of a nomination or proposal of a Bylaw amendment must contain,
among other things, (i) the name and address of the shareholder who intends to
make the nomination or proposal; (ii) a representation that the shareholder is a
holder of record of common stock of the Company entitled to vote at such meeting
and intends to appear in person or by proxy at the meeting to present the
nomination or proposal; (iii) certain biographical information concerning each
person to be nominated for election as a director, the number of shares of
common stock beneficially owned by such nominee, and the consent of such person
to serve as a director if so elected; (iv) a description of all arrangements or
understandings between the shareholder and each nominee and any other person or
persons (naming such person or persons) pursuant to which the nomination or
nominations are to be made by the shareholder; (v) the provisions of any
proposed Bylaw amendment and any financial interest of the shareholder in the
proposal; and (vi) such other information regarding each nominee or proposal as
would be required to be included in a proxy statement filed pursuant to the
proxy rules of the Securities and Exchange Commission.
ANNUAL REPORT
The Company's Annual Report to Shareholders for the fiscal year ended March
31, 1999 and the Company's Form 10-K for the fiscal year ended March 31, 1999
(the "10-K"), accompanies this proxy statement. On written request, the Company
<PAGE>
will provide, without charge, a copy of its 10-K filed with the Securities and
Exchange Commission (including a list briefly describing the exhibits thereto),
to any record holder or beneficial owner of the Company's Common Stock on July
23, 1999, the record date for the 1999 Annual Meeting of Shareholders, or to any
person who subsequently becomes such a record holder or beneficial owner.
Requests should be directed to the attention of the Secretary of the Company at
the address of the Company set forth in the Notice of Annual Meeting of
Shareholders immediately preceding this proxy statement.
INDEPENDENT ACCOUNTANTS
Arthur Andersen LLP, independent public accountants, examined the financial
statements of the Company for fiscal 1999. No change in independent public
accountants is contemplated for fiscal 2000. The Company expects representatives
of Arthur Andersen LLP to be present at the 1999 annual meeting of shareholders
and to be available to respond to appropriate questions from shareholders. The
accountants will have the opportunity to make a statement at the meeting if they
desire to do so.
PROPOSALS OF SHAREHOLDERS FOR THE 2000 ANNUAL MEETING OF SHAREHOLDERS
Proposals of shareholders to be presented at the Meeting to be held in September
2000 must be received at the Company's executive offices by April 14, 2000, in
order to be included in the Company's proxy statement and form of proxy
concerning that meeting.
In accordance with Rule 14a-4(c) promulgated by the Securities and Exchange
Commission pursuant to the Securities Exchange Act of 1934, as amended, the
holders of the proxies solicited by the Board of Directors in connection with
the 2000 Annual Meeting of Shareholders may vote such proxies in their
discretion on certain matters as more fully described in such rule, including
without limitation on any matter coming before the meeting as to which the
Corporation does not have notice on or before June 28, 2000. This notice period
does not apply to director nominations or amendments to the Bylaws which are
governed by the Company's Bylaws and explained under the heading "Shareholder
Proposal and Nomination Procedures for the Meeting."
DATED at Portland, Oregon, this 12th day of August, 1999.
BY ORDER OF THE BOARD
/S/ MICHAEL A. TEMPLE
-----------------------
Michael A. Temple
Vice President, Chief Financial
Officer and Secretary
<PAGE>
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
BIOJECT MEDICAL TECHNOLOGIES INC.
ARTICLE I
Name
----
The name of the corporation (the "Corporation") shall be Bioject
Medical Technologies Inc.
ARTICLE II
Duration
--------
The Corporation's duration shall be perpetual.
ARTICLE III
Purposes
--------
The purposes for which the Corporation is organized are:
Section 1. In general, to carry on any lawful business whatsoever which
is calculated, directly or indirectly, to promote the interests of the
Corporation or to enhance the value of its properties.
Section 2. To engage in and carry on any lawful business or trade and
exercise all powers granted to a corporation formed under the Oregon Business
Corporation Act, including any amendments thereto or successor statute that may
hereinafter be enacted.
ARTICLE IV
Authorized Capital Stock
------------------------
Section 1. Classes. The Corporation shall be authorized to issue two
classes of stock to be designated, respectively, "Common Stock" and "Preferred
Stock"; the total number of shares which the Corporation shall have authority to
issue is One Hundred Ten Million (110,000,000) ; the authorized number of shares
of Common Stock shall be One Hundred Million (100,000,000), without par value;
the authorized number of shares of Preferred Stock shall be Ten Million
(10,000,000), without par value.
Section 1.1. Each five shares of issued and outstanding Common Stock
of this Corporation are, on the effective date hereof, automatically
reclassified into one share of
<PAGE>
Common Stock of this Corporation, thereby giving effect to a one-for-five
reverse stock split (the "Reverse Stock Split"). All outstanding rights and
obligations (including option plans, stock options and the exercise price
thereof, stock purchase warrants and the exercise prices thereof and the
conversion terms of the Corporation's shares of Series A Convertible Preferred
Stock, Series B Convertible Preferred Stock and Series C Convertible Preferred
Stock) relating to this Corporation's Common Stock shall be mathematically
adjusted to reflect the Reverse Stock Split so that the proportionate ratio of
such rights and obligations to the reclassified shares will be equal to the
proportionate ratio of such rights and obligations to the shares outstanding
immediately prior to such reclassification. In lieu of the issuance of any
fractional shares that would otherwise result from the Reverse Stock Split, the
Corporation shall issue to any shareholder that would otherwise receive
fractional shares one whole share, the additional shares hereby issued being
taken from authorized but theretofore unissued shares of Common Stock.
Section 2. Preferred Stock. Shares of Preferred Stock may be issued
from time to time in one or more series. Shares of Preferred Stock which may be
redeemed, purchased or acquired by the Corporation may be reissued except as
otherwise provided by law. The board of directors of the Corporation is hereby
authorized to fix the designations and powers, preferences and relative
participating, optional or other rights, if any, and qualifications, limitations
or other restrictions thereof, including, without limitation, the dividend rate
(and whether or not dividends are cumulative), conversion rights, if any, voting
rights, rights and terms of redemption (including sinking fund provisions, if
any), redemption price and liquidation preferences of any wholly unissued series
of Preferred Stock and the number of shares constituting any such series and the
designation thereof, or any of them; and to increase or decrease the number of
shares of any series subsequent to the issue of shares of that series, but not
below the number of shares of such series then outstanding.
Designation of Rights and Preferences of Series A Convertible Preferred Stock,
Series B Convertible Preferred Stock and Series C Convertible Preferred Stock
Section 2.1. Definitions. The following terms shall have the respective
meanings ascribed to them below.
"Board" shall mean the Board of Directors of the Corporation.
"Business Day" shall mean any day other than Saturday, Sunday or a day on
which federally-chartered banks located in New York, New York or Portland,
Oregon are permitted by law to be closed.
"Closing Date" shall mean October 15, 1997.
"Closing Price" at any date shall mean the last reported sale price of the
Common Stock on the NASDAQ Stock Market or other principal market of the
Common Stock on such date.
"Common Stock" shall mean, collectively, the Corporation's Common Stock and
<PAGE>
any capital stock of any class of the Corporation (other than any Preferred
Stock) hereafter authorized that is not limited to a fixed amount of percentage
of par or stated value in respect of the rights of the holders thereof to
participate in dividends or in the distribution of assets upon any liquidation,
dissolution or winding up of the Corporation.
"Conversion Stock" shall mean shares of the Corporation's Common Stock
issuable upon the conversion of any shares of Preferred Stock.
"Excluded Stock" shall mean (i) shares of Common Stock issued or
reserved for issuance by the Corporation as a stock dividend payable in shares
of Common Stock, or upon any subdivision or split-up of the outstanding shares
of Common Stock, or upon conversion of shares of the Preferred Stock, (ii) up to
3,650,000 shares of Common Stock (or Rights (as defined below)) therefor issued
to directors, officers or employees of the Corporation or its affiliates (or in
the case of options, granted at an exercise price) at less than Fair Value under
a duly-enacted stock option or compensation plan, or (iii) any shares of Common
Stock issuable upon exercise of any warrants currently outstanding or warrants
which the Corporation has committed, as of October 15, 1997, to issue in the
future.
"Fair Value" shall mean the fair market value of any securities or
assets as reasonably and in good faith determined by the Board.
"Junior Securities" shall mean any of the Corporation's equity
securities (whether or not currently authorized) that are junior in liquidation
preference to the Preferred Stock.
"Liquidation Value" of any share of Series A Preferred Stock or Series
B Preferred Stock as of any particular date shall be equal to $15.00 per share.
Liquidation Value of Series C Preferred Stock is the Series C Issuance Price.
"Market Price" of any security shall mean the average of the closing
prices of such security's sales on all securities exchanges on which such
security may at the time be listed, or, if there have been no sales on any such
exchange on any day, the average of the highest bid and lowest asked prices on
all such exchanges at the end of such day, or, if on any day such security is
not so listed, the average of the representative bid and asked prices quoted in
the NASDAQ Stock Market as of 4:00 p.m., New York time, or, if on any day such
security is not quoted in the NASDAQ Stock Market, the average of the highest
bid and lowest asked prices on such day in the domestic over-the-counter market
as reported by the National Quotation Bureau, Incorporated, or any similar
successor organization, in each such case averaged over a period of the 10
trading days preceding the determination date. If at any time such security is
not listed on any securities exchange or quoted in the NASDAQ Stock Market or
the over-the-counter market, the "Market Price" shall be the Fair Value thereof.
"Person" shall mean an individual, a partnership, a corporation, an
association, a joint stock company, a trust, a joint venture, an unincorporated
organization and a governmental entity or any department, agency or political
subdivision thereof.
<PAGE>
"Preferred Stock" shall mean the Series A Preferred Stock, the Series B
Preferred Stock and the Series C Preferred Stock, or, as the context requires,
all such series of preferred stock of the Corporation.
"Preferred Issuance Price" shall mean the purchase price per share for
the Series A Preferred Stock, which is $15.00, and the purchase price per share
for the Series B Preferred Stock, which is $15.00.
"Series C Issuance Price" means the original price per share at which
Series C Preferred Stock is issued.
"Subsidiary" shall mean any Person of which the shares of outstanding
capital stock or other equity interests, as the case may be, possessing the
voting power under ordinary circumstances in electing the board of directors
are, at the time as of which any determination is being made, owned by the
Corporation either directly or indirectly through subsidiaries.
Section 2.2. Preferred Stock. (a) Series A Preferred Stock. 1,235,000
shares of the preferred stock, without par value, of the Corporation are hereby
constituted as a series of preferred stock of the Corporation designated as
Series A Convertible Preferred Stock (the "Series A Preferred Stock"). Such
amount shall be adjusted by the Corporation in the event that any adjustments to
the Series A Preferred Stock are required as set forth herein, including Section
2.7 hereof, and, in connection therewith, the Corporation shall promptly take
all necessary or appropriate actions and make all necessary or appropriate
filings in connection therewith.
(b) Series B Preferred Stock. 200,000 shares of the preferred stock,
without par value, of the Corporation are hereby constituted as a series of
preferred stock of the Corporation designated as Series B Convertible Preferred
Stock (the "Series B Preferred Stock"). Such amount shall be adjusted by the
Corporation in the event that any adjustments to the Series B Preferred Stock
are required as set forth herein, including Section 2.7 hereof, and, in
connection therewith, the Corporation shall promptly take all necessary or
appropriate action and make all necessary or appropriate filings in connection
therewith.
(c) Series C Preferred Stock. 500,000 shares of the preferred stock,
without par value, of the Corporation are hereby constituted as a series of
preferred stock of the Corporation designated as Series C Convertible Preferred
Stock (the "Series C Preferred Stock"). Such amount shall be adjusted by the
Corporation in the event that any adjustments to the Series C Preferred Stock
are required as set forth herein, including Section 2.7 hereof, and, in
connection therewith, the Corporation shall promptly take all necessary or
appropriate action and make all necessary or appropriate filings in connection
therewith.
Section 2.3. Dividends. (a) General. (1) Series A Preferred Stock. Each
outstanding share of Series A Preferred Stock shall accrue a dividend equal to
9% per annum of the Preferred Issuance Price of Series A Preferred Stock,
compounded semi-
<PAGE>
annually beginning six months from the date of first issuance of Series A
Preferred Stock; such dividend shall be paid by issuance of additional shares of
Series A Preferred Stock, based upon a value equal to the Preferred Issuance
Price.
(2) Series B Preferred Stock. The holder of each share of Series B
Preferred Stock shall be entitled to receive, pro rata among such holders and on
a pari passu basis with the holders of the Series C Preferred Stock and the
holders of Common Stock, as if the Series B Preferred Stock had been converted
into Common Stock immediately prior to the record date in respect thereof, when
and as declared by the Board out of funds legally available for the declaration
and payment of dividends, cash dividends at the same rate and in the same amount
per share as any and all dividends declared and paid in respect of the Common
Stock. Except as set forth above, such holders shall not be entitled to receive
any dividends.
(3) Series C Preferred Stock. The holder of each share of Series C
Preferred Stock shall be entitled to receive, pro rata among such holders and on
a pari passu basis with the holders of the Series B Preferred Stock and the
holders of Common Stock, as if the Series C Preferred Stock had been converted
into Common Stock immediately prior to the record date in respect thereof, when
and as declared by the Board out of funds legally available for the declaration
and payment of dividends, cash dividends at the same rate and in the same amount
per share as any and all dividends declared and paid in respect of the Common
Stock. Except as set forth above, such holders shall not be entitled to receive
any dividends.
(b) Payment of Dividends. (1) Series A Preferred Stock. Dividends accrued
and unpaid on shares of Series A Preferred Stock as of the Mandatory Conversion
Date (as defined in Section 2.6(a)(1) below) shall be payable in accordance with
Section 2.6 below.
(2) Series B Preferred Stock. Dividends payable in respect of the Series B
Preferred Stock shall be paid as and when dividends are paid in respect of the
Common Stock.
(3) Series C Preferred Stock. Dividends payable in respect of the Series C
Preferred Stock shall be paid as and when dividends are paid in respect of the
Common Stock.
(4) Change in Dividend Rate. If the Corporation shall fail to declare or
pay a dividend on a date on which dividends are to be compounded pursuant to
Section 2.3(a)(1) hereof, dividends on each share of Series A Preferred Stock
shall thereupon begin to accrue at the rate of 9% of the sum of (a) the
Preferred Issuance Price and (b) accrued and unpaid dividends on such date. If a
dividend that was accrued and unpaid on a date dividends are to be compounded is
subsequently paid, the rate at which dividends accrue shall thereupon be lowered
to reflect such payment.
Section 2.4. Liquidation. Upon any liquidation, dissolution or winding up
of the Corporation, each holder of Preferred Stock shall be entitled to receive
from amounts
<PAGE>
remaining after satisfaction of creditors and holders of securities (if any)
with liquidation preferences senior to the Preferred Stock, and pro rata based
on the respective outstanding liquidation preferences with holders of securities
with a liquidation preference pari passu to the Preferred Stock, an amount equal
to the Liquidation Value, plus accrued and unpaid dividends thereon, per share
multiplied by the number of shares of Preferred Stock, held by such holder,
until paid in full, in preference and priority to any distribution to any holder
of Junior Securities. The Corporation shall provide written notice of such
liquidation, dissolution or winding up, not less than 30 days prior to the
payment date stated therein, to each record holder of any shares of Preferred
Stock.
Section 2.5. Voting Rights. (a) No Voting. Except as provided in Section
2.5(b) below or as required by the Oregon Business Corporation Act, the
outstanding shares of Preferred Stock shall not be entitled to vote on any
matter as to which stockholders of the Corporation shall be entitled to vote.
(b) Special Voting Rights. The Corporation shall not, without first
obtaining the affirmative vote or written consent of a majority in interest of
the Series A Preferred Stock, voting as a class:
(1) amend or repeal any provision of, or add any provision to, the
Corporation's Articles of Incorporation or By-laws if such action would
adversely alter preferences, rights, privileges or powers of, or the
restrictions provided herein for the benefit of, the Series A Preferred Stock;
(2) create a series of Preferred Stock with a liquidation preference senior
to the Series A Preferred Stock;
(3) effect any merger, consolidation or similar transaction; or
(4)increase or decrease the number of authorized shares of Series A
Preferred Stock, except as required by Section 2.2 hereof.
Section 2.6. Conversion. (a) Series A Preferred Stock. (1) Mandatory
Conversion. All holders of Series A Preferred Stock shall be required to convert
all of the outstanding shares of Series A Preferred Stock as of the seventh
anniversary of the Closing Date (the "Mandatory Conversion Date"), in which case
the aggregate Preferred Issuance Price of all shares of the Series A Preferred
Stock plus accrued and unpaid dividends thereon held by each holder shall be
converted into a number of shares of Common Stock determined by dividing such
sum by a price per share of Common Stock equal to $1.50 per share (the "Fixed
Mandatory Conversion Rate"). In the event that any holder shall provide notice
to the Corporation of its intention to convert such holder's shares of Series A
Preferred Stock, as provided above, the Corporation shall have the right, within
90 days of receipt of such notice and upon five business days' notice to the
holders, to cause to be redeemed for cash the shares of Series A Preferred Stock
subject to such notice, at a price equal to aggregate purchase price for such
shares of Series A Preferred Stock plus mandatory dividends thereon at a rate
equal to 9% per annum, from the date of issuance until the date redeemed in
full. In the event that such cash amount is
<PAGE>
not paid within such 90-day period, such redemption right shall lapse and be of
no further force and effect, and the holders shall thereupon have the right once
again to convert such shares of Series A Preferred Stock into shares of the
Corporation's Common Stock. During such 90-day (or shorter, if redeemed, as set
forth above) period, the holders of Series A Preferred Stock shall not convert
such stock into the Corporation's Common Stock, whether or not the Corporation
exercises its right of redemption.
(2) Conversion Prior to Mandatory Conversion Date. Prior to the Mandatory
Conversion Date, all holders of Series A Preferred Stock shall have the right to
convert each share of Series A Preferred Stock into ten shares of Common Stock,
without giving effect to accrued and unpaid dividends, but subject to Section
2.6(e) below (the "Anti-dilution Adjustments").
(b) Series B Preferred Stock. Series B Preferred Stock is convertible in
the same manner and subject to the same terms and conditions as provided for in
Section 2.6(a) above with respect to the holders of Series A Preferred Stock.
(c) Series C Preferred Stock. (1) Mandatory Conversion. All holders of
Series C Preferred Stock shall be required to convert all of the outstanding
shares of Series C Preferred Stock as of the Mandatory Conversion Date, in which
case the aggregate Preferred Issuance Price of all shares of the Series C
Preferred Stock plus accrued and unpaid dividends thereon held by each holder
shall be converted into a number of shares of Common Stock determined by
dividing such sum by one-tenth of the Series C Issuance Price.
(2) Conversion Prior to Mandatory Conversion Date. Prior to the Mandatory
Conversion Date, all holders of Series C Preferred Stock shall have the right to
convert each share of Series C Preferred Stock into ten shares of Common Stock,
without giving effect to accrued and unpaid dividends, but subject to the
Anti-dilution Adjustments.
(c) Conversion Procedure. (1) Before any holder of shares of Preferred
Stock shall be entitled to convert any of such shares into shares of Common
Stock, such holder shall surrender the certificate or certificates, duly
endorsed, at the office of the Corporation or of any transfer agent for the
Preferred Stock, and shall give written notice to the Corporation at its
principal corporate office of the election to convert such shares and shall
state therein the name or names in which the certificate or certificates for
shares of Common Stock are to be issued.
(2) Each conversion of any shares of Preferred Stock shall be deemed to
have been effected on the close of business on the date on which the certificate
or certificates representing such Preferred Stock to be converted have been
surrendered at the principal corporate office of the Corporation or the office
of any transfer agent for the Preferred Stock. At such time as such conversion
has been effected, the rights of the holder of such Preferred Stock as a holder
shall cease, the Person or Persons in whose name or names any certificate or
certificates for shares of Conversion Stock are to be issued upon such
conversion shall be deemed to have become the holder or holders of record of the
shares of Conversion Stock represented thereby.
<PAGE>
(3) As soon as possible after a conversion has been effected (but in any
event within five business days in the case of clause (6) below), the
Corporation or its transfer agent shall deliver to the converting holder:
(i) a certificate or certificates representing the number of shares of
Conversion Stock issuable by reason of such conversion in such name or names and
such denomination or denominations as the converting holder has specified; and
(ii)payment in an amount equal to the amount payable under clause (6) below
with respect to such conversion.
(4) The issuance of certificates for shares of Conversion Stock upon
conversion of the Preferred Stock shall be made without charge to the holders of
such Preferred Stock for any cost incurred by the Corporation in connection with
such conversion and the related issuance of shares of Conversion Stock. Upon
conversion of each share of Preferred Stock, the Corporation shall take all such
actions as are necessary in order to ensure that the Conversion Stock issuable
with respect to such conversion shall be validly issued, fully paid and
nonassessable.
(5) The Corporation shall not close its books against the transfer of the
Preferred Stock or of Conversion Stock issued or issuable upon conversion of the
Preferred Stock in any manner which interferes with the timely conversion of the
Preferred Stock. The Corporation shall assist and cooperate with any holder of
the Preferred Stock or Conversion Stock required to make any governmental
filings or obtain any governmental approval prior to or in connection with any
conversion of shares hereunder (including, without limitations, making any
filings required to be made by the Corporation).
(6) If any fractional interest in a share of Conversion Stock would, except
for the provisions of this clause (6), be deliverable upon any conversion of the
Preferred Stock, the Corporation, in lieu of delivering the fractional share
therefor, shall pay an amount to the holder thereof equal to the Market Price of
such fractional interest as of the date of conversion.
(7) The Corporation shall at all times reserve and keep available out of
its authorized but unissued shares of Conversion Stock, solely for the purpose
of issuance upon the conversion of the Preferred Stock, such number of shares of
Conversion Stock issuable upon the conversion of all outstanding shares of
Preferred Stock. All shares of Conversion Stock which are so issuable shall,
when issued, be duly and validly issued, fully paid and nonassessable and free
from all taxes, liens and charges. The Corporation shall take all such actions
as may be necessary to ensure that all such shares of Conversion Stock may be so
issued without violation of any applicable law or governmental regulation or any
requirements of any domestic securities exchange or market upon which shares of
Conversion Stock may be listed (except for official notice of issuance which
shall be immediately delivered by the Corporation upon each such issuance and
except for filings, notices of applicability and permissions solely within the
control of, or laws and regulations solely applicable to, the holders of the
Preferred Stock).
<PAGE>
(e) Anti-dilution Adjustments. (1) Changes in Common Stock. In case the
Corporation shall at any time or from time to -------------------------
- ----------------------- time after the date of filing these Articles of
Amendment (i) pay a dividend or make any other distribution with respect to its
Common Stock in shares of Common Stock, (ii) subdivide its outstanding shares of
Common Stock into a greater number of shares of Common Stock, (iii) combine its
outstanding shares of Common Stock or (iv) issue any shares of its capital stock
or other assets in a reclassification or reorganization of the Common Stock
(including any such reclassification in connection with a consolidation or
merger in which the Corporation is the continuing entity), then the number and
kind of shares of capital stock of the Corporation or other assets that may be
received upon the conversion of the Preferred Stock shall be adjusted to the
number of shares of Conversion Stock and amount of any such securities, cash or
other property of the Corporation which the holders would have owned or have
been entitled to receive after the happening of any of the events described
above had the Preferred Stock been converted immediately prior to the record
date (or, if there is no record date, the effective date) for such event. An
adjustment made pursuant to this clause (1) shall become effective upon the
effective date of such payment, sub-division, combination or issuance as
described above. Any Conversion Stock or other assets to be acquired as a result
of such adjustment shall not be issued prior to the effective date of such
event. For the purposes of this clause (1), the number of shares of Common Stock
at any time outstanding shall not include shares held in the treasury of the
Corporation. Notwithstanding any other provision of this Section 2.6(e)(1), an
action described in Section 2.6(e)(1)(i), (ii) or (iii) hereof shall not affect
the number of shares of Conversion Stock issued upon mandatory conversion of the
Preferred Stock except by operation of Section 2.6(e)(5) hereof.
(2) Issuance of Rights. In case the Corporation shall issue to all holders
of its Common Stock rights, options or warrants to subscribe for or purchase, or
other securities exchangeable for or convertible into, shares of Common Stock
that are not distributed to holders of Preferred Stock (any such rights,
options, warrants or other securities, collectively, "Rights") (excluding rights
to purchase Common Stock pursuant to a Corporation plan for reinvestment of
dividends or interest and excluding any Excluded Stock) at a subscription
offering, exercise or conversion price per share (as defined below, the
"offering price per share") which, before deduction of customary discounts and
commissions, is lower than the current Market Price per share of Common Stock on
the record date of such issuance or grant, whether or not, in the case of
Rights, such Rights are immediately exercisable or convertible, then the number
of shares of Conversion Stock issuable upon conversion of the Preferred Stock
shall be adjusted by multiplying the number of shares of Conversion Stock
issuable upon conversion of the Preferred Stock immediately prior to any
adjustment in connection with such issuance or grant by a fraction, the
denominator of which shall be the number of shares of Common Stock outstanding
(exclusive of any treasury shares) on the record date of issuance or grant of
such Rights plus the number of shares which the aggregate offering price (as
defined below) of the total number of shares of Common Stock so offered would
purchase at the current Market Price per share of Common Stock on the record
date, and the numerator of which is the number of shares of Common Stock
outstanding plus the aggregate number of shares of Common Stock issuable upon
exercise of the rights. Such adjustment shall be made immediately after the
record date for the issuance or granting of
<PAGE>
such Rights. For purposes of this clause, the "offering price per share" of
Common Stock shall, in the case of Rights, be determined by dividing (x) the
total amount received or receivable by the Corporation in consideration of the
issuance of such Rights plus the total consideration payable to the Corporation
upon exercise thereof (the "aggregate offering price"), by (y) the total number
of shares of Common Stock covered by such Rights.
(3) Dividends and Distributions. In case the Corporation shall distribute
to all holders of Common Stock any dividend or other distribution of evidences
of its indebtedness or other assets (in each case other than cash dividends and
other than as provided in clause (1) above in which the holders of the Preferred
Stock are otherwise entitled to share, as provided herein) or Rights, then, in
each case, all holders of the Preferred Stock shall be entitled to receive all
of the same dividends, distributions or Rights, as the case may be, as the
holders of Common Stock, on an as-converted basis, as and when distributed to
the holders of Common Stock, at such time, if any, that the holders of the
Preferred Stock shall have elected to convert such stock to Common Stock, as
provided herein.
(4) Computations. For the purpose of any computation under clauses (1) and
(2) above, the current Market Price per share of Common Stock at any date shall
be as set forth in (i) the definition of Market Price for the 10 consecutive
trading days commencing 20 trading days prior to the earlier to occur of (A) the
date as of which the Market Price is to be computed or (B) the last full trading
day before the commencement of "ex-dividend" trading in the Common Stock
relating to the event giving rise to the adjustment required by clause (1) or
(2) or (ii) any other arm's-length adjustment formula that the Board may use in
good faith. In the event the Common Stock is not then publicly traded or if for
any other reason the current market price per share cannot be determined
pursuant to the foregoing provisions of this clause (4) the current market price
per share shall be the Fair Value thereof.
(5) Adjustment. Whenever the number of shares of Conversion Stock issuable
upon voluntary conversion of the Series A Preferred Stock and Series B Preferred
Stock is adjusted as provided under clause (1) or (2), the Fixed Mandatory
Conversion Rate shall be adjusted by multiplying such prices immediately prior
to such adjustment by a fraction, the numerator of which shall be the number of
shares of Conversion Stock issuable upon voluntary conversion of any shares of
Series A Preferred Stock or Series B Preferred Stock immediately prior to such
adjustment, and the denominator of which shall be the number of shares of
Conversion Stock issuable upon voluntary conversion of any shares of Series A
Preferred Stock or Series B Preferred Stock immediately thereafter. Whenever the
number of shares of Conversion Stock issuable upon voluntary conversion of the
Series C Preferred Stock is adjusted as provided under clause (1) or (2), the
Series C Issuance Price shall be adjusted by multiplying such prices immediately
prior to such adjustment by a fraction, the numerator of which shall be the
number of shares of Conversion Stock issuable upon voluntary conversion of any
shares of Series C Preferred Stock immediately prior to such adjustment, and the
denominator of which shall be the number of shares of Conversion Stock issuable
upon voluntary conversion of any shares of Series C Preferred Stock immediately
thereafter.
<PAGE>
(6) Securities. For the purpose of this Section 2.6, the term "shares of
Common Stock" shall mean (i) the class of stock designated as Common Stock,
without par value, of the Corporation on the date of filing this Certificate or
(ii) any other class of stock resulting from successive changes or
reclassifications of such shares consisting solely of changes in par value, or
from par value to no par value, or from no par value to par value.
(7) Re-Adjustment. If, at any time after any adjustment to the number of
Shares of Conversion Stock issuable upon conversion of the Preferred Stock and
the Conversion Price shall have been made pursuant to clause (2) of this Section
2.6, any rights, options, warrants or other securities convertible into or
exchangeable for shares of Common Stock shall have expired, or any thereof shall
not have been exercised, the Conversion Price and the number of shares of
Conversion Stock issuable upon conversion of the Preferred Stock shall, upon
such expiration, be readjusted and shall thereafter be such as it would have
been had it been originally adjusted (or had the original adjustment not been
required, as the case may be) as if (A) the only shares of Common Stock offered
were the shares of Common Stock, if any, actually issued or sold upon the
exercise of such rights, options or warrants and (B) such shares of Common
Stock, if any, were issued or sold for the consideration actually received by
the Corporation for the issuance, sale or grant of all such rights, options or
warrants whether or not exercised; provided, further that no such readjustment
shall have the effect of increasing the Conversion Price or decreasing the
number of shares of Conversion Stock issuable upon conversion of the Preferred
Stock by an amount (calculated by adjusting such increase or decrease as
appropriate to account for all other adjustments pursuant to this Section 2.6
following the date of the original adjustment referred to above) in excess of
the amount of the adjustment initially made in respect of the issuance, sale or
grant of such rights, options or warrants.
(e) Reorganization, Reclassification Consolidation, Merger or Sale. Any
recapitalization, reorganization, reclassification, consolidation, merger, sale
of all or substantially all of the Corporation's assets to another Person or
other transaction which is effected in such a manner that holders of Common
Stock are entitled to receive (either directly or upon subsequent
liquidation)stock, securities or assets with respect to or in exchange for
Common Stock is referred to herein as an "Organic Change". Prior to the
consummation of any Organic Change, the Corporation shall make appropriate
provisions to ensure that each of the holders of each share of the Preferred
Stock shall thereafter have the right to acquire and receive, in lieu of or in
addition to (as the case may be) the shares of Conversion Stock immediately
theretofore acquirable and receivable upon the conversion of such holder's
Preferred Stock, such shares of stock, securities or assets as such holder would
have received in connection with such Organic Change if such holder had
converted its Preferred Stock immediately prior to such Organic Change. In each
such case, the Corporation shall also make appropriate provisions to ensure that
the provisions of this Section 2.6 hereof shall thereafter be applicable to the
Preferred Stock. The Corporation shall not effect any such consolidation, merger
or sale, unless prior to the consummation thereof, the successor corporation (if
other than the Corporation) resulting from consolidation or merger or the
corporation purchasing such assets assumes by written instrument the obligation
to deliver to each such holder such shares of stock, securities or assets as, in
accordance with the foregoing provisions, such holder may be entitled to
acquire.
<PAGE>
(f) Notices. (1) Immediately upon any adjustment of the number of shares
issuable upon conversion of the Preferred Stock, the Corporation shall give
written notice thereof to all holders of the Preferred Stock, setting forth in
reasonable detail and certifying the calculation of such adjustment.
(2) The Corporation shall give written notice to all holders of the
Preferred Stock at least 10 days prior to the date on which the Corporation
closes its books or takes a record of determining rights to receive any
dividends or distributions. The Corporation shall also give written notice to
the holders of the Preferred Stock at least 30 days prior to the date on which
Organic Change shall occur.
Section 2.7. Redemption. (a) Series A Preferred Stock. (i) General.
Subject to the provisions of Section 2.6 above, shares of Series A Preferred
Stock may be redeemed by the Corporation, as follows, upon at least 45 days' and
no more than 90 days' prior written notice, at a price equal to the sum of the
aggregate Preferred Issuance Price of the Series A Preferred Stock plus accrued
and unpaid dividends. From and after the third anniversary of the Closing Date,
if the Closing Price shall be equal to or greater than $2.25 (subject to the
anti-dilution adjustments described in Section 2.6(e)(1) above) for 20 out of
any 30 consecutive trading days on or prior to any such applicable date (or, if
thereafter, prior to any date for such a redemption if not effected prior
thereto) (the "Redemption Price Condition"), the Corporation shall have the
right to redeem one-third of the Series A Preferred Stock (as to the Preferred
Issuance Price thereof), together with one-third of the then-accrued and unpaid
dividends through such date. From and after the fourth anniversary of the
Closing Date, if the Redemption Price Condition is met, the Corporation shall
have the right to redeem an additional one-third of the Series A Preferred Stock
(as to the Preferred Issuance Price thereof), together with one-half of the
then-accrued and unpaid dividends at such date (or two-thirds of then-accrued
and unpaid dividend at the second date if no Series A Preferred Stock was
previously redeemed at or after the first such date). From and after the fifth
anniversary of the Closing Date, if the Redemption Price Condition is met, the
Corporation shall have the right to redeem the balance of the Series A Preferred
Stock, together with the remaining accrued and unpaid dividends at such date.
Prior to redemption, the Corporation must provide the applicable redemption
notice within 60 days of the achievement of the Redemption Price Condition.
(ii)Early Redemption. The Series A Preferred Stock (or any portion thereof)
may be redeemed by the Corporation prior to such three, four or five-year
period, as applicable, only in the event the Corporation shall have reasonably
determined, in good faith, after consultation with the original holder of shares
of Series A Preferred Stock to abandon the development of the Technology (as
defined in the Securities Purchase Agreement dated as of the Closing Date among
the Corporation and Elan International Services, Ltd., a Bermuda corporation) or
products based on the Technology.
(iii) Notice of Redemption. Not less than 45 days but not more than 90 days
prior to the date of any redemption (each, a "Redemption Date"), as permitted by
this Section 2.7(a), the Corporation shall send a written notice of redemption
(the "Notice") to each holder of Series A Preferred Stock to be redeemed in the
manner provided herein. The notice shall identify:
<PAGE>
(1) the Redemption Date;
(2) the redemption price to be paid to such holder, as provided above (the
"Redemption Price"), and applicable to such Series A Preferred Stock;
(3) the number of shares of Common Stock into which a share of Series A
Preferred Stock, Series B Preferred Stock or Series C Preferred Stock, as the
case may be, is convertible;
(4) the name and address of the transfer agent, if any, in respect of the
Series A Preferred Stock;
(5) that Series A Preferred Stock called for redemption may be converted by
the holder, as otherwise provided herein, at any time before the close of
business on the Redemption Date; and
(6) that Series A Preferred Stock called for redemption must be surrendered
to the transfer agent at the office of the Corporation or its transfer agent to
collect the Redemption Price.
(iv)Effect of Notice of Redemption. Upon the Notice, Series A Preferred
Stock called for redemption shall become due and payable on the Redemption Date,
unless converted prior to such date, and at the Redemption Price stated in the
Notice. Upon surrender to the Corporation or transfer agent shares shall be
redeemed and the Redemption Price stated in the Notice shall be paid in cash in
full.
(b) Series B Preferred Stock. Shares of Series B Preferred Stock shall be
redeemable by the Corporation in the same manner and subject to the same terms
and conditions as set forth for redemption of shares of Series A Preferred Stock
in Section 2.7(a) above.
(c) Series C Preferred Stock. Shares of Series C Preferred Stock shall be
redeemable by the Corporation in the same manner and subject to the same terms
and conditions as set forth for redemption of shares of Series A Preferred Stock
in Section 2.7(a) above, except that shares of Series C Preferred Stock shall be
redeemed at a price equal to the sum of the aggregate Series C Issuance Price
plus accrued and unpaid dividends.
Section 2.8. Registration of Transfer. The Corporation shall keep a
register for the registration of the record holders of the Preferred Stock. Upon
the surrender of any certificate representing any shares of Preferred Stock, the
Corporation shall, at the request of the record holder of such certificate,
execute and deliver (at the Corporation's expense, provided that the holder will
be responsible for any transfer taxes if the certificate is register in a new
name) a new certificate or certificates in exchange therefore representing in
the aggregate the number of shares of the Preferred Stock, as applicable,
represented by the surrendered certificate. Each such new certificate shall be
registered in such name and shall represent such number of shares of the
Preferred Stock, as applicable, as is requested by the holder of the surrendered
certificate and shall be
<PAGE>
substantially identical in form to the surrendered certificate, and dividends
shall accrue on the Preferred Stock represented by such new certificate from the
date to which dividends have been fully paid on such Preferred Stock represented
by the surrendered certificate.
Section 2.9. Replacement. Upon receipt of evidence reasonably satisfactory
to the Corporation (an affidavit of the registered holder and an undertaking of
indemnity from a creditworthy indemnitor shall be satisfactory) of the ownership
and the loss, theft, destruction or mutilation of any certificate evidencing
shares of the Preferred Stock, and in the case of any such loss, theft or
destruction, upon receipt of indemnity reasonably satisfactory to the
Corporation, or, in the case of any such mutilation upon surrender of such
certificate, the Corporation shall (at its expense) execute and deliver in lieu
of such certificate a new certificate of like kind representing the number of
shares of such series represented by such lost, stolen, destroyed or mutilated
certificate and dated the date of such lost, stolen, destroyed or mutilated
certificate, and dividends shall accrue on the Preferred Stock represented by
such new certificate from the date to which dividends have been fully paid on
such lost, stolen, destroyed or mutilated certificate.
Section 2.10. Amendment and Waiver. No amendment, modification or waiver
shall be binding or effective with respect to any provision of these Articles of
Amendment without the prior written consent of a Majority in Interest of each of
the Series A Preferred Stock, Series B Preferred Stock or Series C Preferred
Stock outstanding at the time such action is taken.
Section 2.11. Notices. Except as otherwise expressly provided hereunder,
all notices referred to herein shall be in writing and shall be delivered by
registered or certified mail, return receipt requested and postage prepaid, or
by reputable overnight courier or telecopy service, charges prepaid, and shall
be deemed to have been given when so mailed or sent (a) to the Corporation, at
its principal executive offices and (b) to any stockholder, at such holder's
address as it appears in the stock records of the Corporation (unless otherwise
indicated by any such holder).
ARTICLE V
Preemptive Rights
-----------------
The owners of shares of stock of the Corporation shall not have
preemptive rights to subscribe for or purchase any part of new or additional
issues of stock, or securities convertible into stock, of any class whatsoever,
whether now or hereafter authorized, and whether issued for cash, property,
services, by way of dividends, or otherwise.
ARTICLE VI
Cumulative Voting
-----------------
Each shareholder entitled to vote at any election for directors shall
have the right to vote, in person or by proxy, the number of shares owned by him
for as many persons
<PAGE>
as there are directors to be elected and for those election he has a right to
vote, and no shareholder shall be entitled to cumulate his votes.
ARTICLE VII
Limitation of Directors' Liability
----------------------------------
A director shall have no liability to the Corporation or its shareholders
for monetary damages for conduct as a director, except for (a) any breach of the
director's duty of loyalty to the Corporation or its shareholders; (b) acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law by the director; (c) conduct violating ORS 60.367; or (d) any
transaction from which the director derives an improper personal benefit. If the
Oregon Business Corporation Act is hereafter amended to authorize corporate
action further eliminating or limiting the personal liability of directors, then
the liability of a director shall be eliminated or limited to the full extent
permitted by the Oregon Business Corporation Act as so amended. Any repeal or
modification of this Article shall not adversely affect any right or protection
of a director that exists at the time of such repeal or modification and that
extends to an act or omission of such director occurring prior to such repeal or
modification.
ARTICLE VIII
Bylaws; Amendment of Articles
-----------------------------
Section 1. Bylaws. The board of directors shall have full power to adopt,
alter, amend or repeal the Bylaws or adopt new Bylaws. Nothing herein shall deny
the concurrent power of the shareholders to adopt, alter, amend or repeal the
Bylaws. Section 2. Amendment of Articles. The Corporation reserves the right to
amend, alter, change or repeal any provisions contained in its Articles of
Incorporation in any manner now or hereafter prescribed or permitted by statute.
All rights of shareholders of the Corporation are granted subject to this
reservation.
ARTICLE IX
Registered Office and Agent
---------------------------
The address of the initial registered office of the Corporation is 1400
KOIN Center, 222 S.W. Columbia, Portland, Oregon 97201, and the name of the
initial registered agent at such address is Bogle & Co. (Oregon). The registered
office and registered agent of the Corporation may be changed from time to time
by the Board of Directors but may not be located outside of the State of Oregon.
The mailing address for notices from the Corporation Division is: Bogle & Gates,
Two Union Square, Suite 700, 601 Union Street, Seattle, WA 98101-2346.
ARTICLE X
<PAGE>
Directors
---------
Section 1. Number of Directors. The Board of Directors shall consist of not
less than six nor more than eleven, the exact number to be set as provided
herein. Until increased or decreased as provided herein, the Board of Directors
shall consist of eight members. The Board of Directors is authorized to increase
or decrease the size of the Board of Directors (within the range specified
above) at any time by the affirmative vote of two-thirds of the directors then
in office. Without the unanimous consent of the directors then in office, no
more than two additional directors shall be added to the Board of Directors in
any 12-month period. Without the unanimous approval of the directors then in
office, no person who is affiliated as an owner, director, officer, employee or
consultant of a company or business deemed by the Board of Directors to be
competitive with that of the Corporation shall be eligible to serve of the Board
of Directors of the Corporation.
Section 2. Classified Board.
The Board shall be divided into three classes: Class I Directors, Class II
Directors and Class III Directors. Each such class of directors shall be nearly
equal in number of directors as possible. Each director shall serve for a term
ending at the third annual shareholders' meeting following the annual meeting at
which such director was elected; provided, however, that the directors first
elected as Class I Directors shall serve for a term ending at the annual meeting
to be held in the year following the first election of directors by classes, the
directors first elected as Class II Directors shall serve for a term ending at
the annual meeting to be held in the second year following the first election of
directors by classes and the directors first elected as Class III directors
shall serve for a term ending at the annual meeting to be held in the third year
following the first election of directors by classes. Notwithstanding the
foregoing, each director shall serve until his or her successor shall have been
elected and qualified or until his or her earlier death, resignation or removal.
At each annual election, the directors chosen to succeed those whose terms
then expire shall be identified as being of the same class as the directors they
succeed, unless, by reason of any intervening changes in the authorized number
of directors, the Board shall designate one or more directorships whose term
then expire as directorships of another class in order more nearly to achieve
equality in the number of directors among the classes. When the Board fills a
vacancy resulting from the death, resignation or removal of a director, the
director chosen to fill that vacancy shall be of the same class as the director
he or she succeeds, unless, by reason of any previous changes in the authorized
number of directors, the Board shall designate the vacant directorship as a
directorship of another class in order more nearly to achieve equality in the
number of directors among the classes. The terms of any director elected by the
Board to fill a vacancy will expire at the next shareholders meeting at which
directors are elected, despite the class such director has been elected to fill.
<PAGE>
Notwithstanding the rule that the three classes shall be as nearly equal in
number of directors as possible, upon any change in the authorized number of
directors, each director then continuing to serve as such will nevertheless
continue as a director of the class of which he or she is a member, until the
expiration of his or her current term or his or her earlier death, resignation
or removal.
Newly created directorships resulting from any increase in the number of
directors and any vacancies on the Board of Directors resulting from death,
resignation, removal or other cause shall be filled by the affirmative vote of a
majority of the remaining directors then in office, even though less than a
quorum of the Board of Directors. No decrease in the number of directors
constituting the Board of Directors shall shorten the term of any incumbent
director.
Section 3. Initial Directors as Classified.
The directors of the Corporation first elected to classes are eight (8) in
number and their names and class are: Name Class
Name Class
- ---- -----
James C. O'Shea III
John Ruedy, MD III
William A. Gouveia I
Grace Keeney Fey II
Eric T. Herfindal II
Richard Plestina II
David H. DeWeese I
Michael T. Sember III
Section 4. Removal of Directors.
Directors may be removed only for cause. For purposes of this
Amendment,"cause" shall mean that the director has: (i) committed an act of
fraud or embezzlement against the Corporation; (ii) been convicted of, or plead
nolo contendre to a crime involving moral turpitude; (iii) failed to perform the
director's duties as a directorand such failure constitutes a breach of the
director's duty of loyalty to the Corporation or provides an improper personal
benefit to the director.
ARTICLE XI
Incorporator
------------
The name and address of the incorporator are:
Name Address
---- -------
<PAGE>
Benjamin F. Stephens c/o Bogle & Gates
Two Union Square
601 Union Street
Seattle, Washington 98101-2346
ARTICLE XII
Shareholder Approval Of Certain Events
--------------------------------------
Notwithstanding any provision of Articles of Incorporation, as amended,
or Bylaws of the Corporation, and notwithstanding the fact that some lesser
percentage may be allowed by law, any amendment, change or repeal of Articles X
or XII, or any other amendment of the Articles of Incorporation, as amended,
which would have the effect of modifying or permitting circumvention of the
provisions of Articles X or XII, shall require the following shareholder votes:
(i) the affirmative votes of 75 percent of all outstanding shares of the
Corporation entitled to vote on the matter, voting together as a single class;
and (ii) if any shares of the Corporation are entitled to vote on the matter as
a separate group, the affirmative vote of 75 percent of such shares, voting
separately.
DATED: September __, 1999.
------------------------------
<PAGE>
NOTICE OF
ANNUAL SHAREHOLDERS' MEETING
AND
PROXY STATEMENT
-----------------------------
August 12, 1999
PORTLAND, OREGON
-----------------------------
(BIOJECT LOGO)
<PAGE>
BIOJECT MEDICAL TECHNOLOGIES INC.
ANNUAL MEETING OF SHAREHOLDERS
September 16, 1999
This Proxy is Solicited on Behalf of the Board of Directors
James C. O'Shea and Michael A. Temple and each of them, as proxies, with full
power of substitution in each of them, are hereby authorized to represent and to
vote, as designated on the reverse of this proxy card, on all proposals and in
the discretion of the proxies on such other matters as may properly come before
the annual meeting of shareholders of Bioject Medical Technologies Inc. to be
held on September 16, 1999 or any adjournment(s), postponement(s), or other
delay(s) thereof (the "Meeting"), all shares of stock of Bioject Medical
Technologies Inc. (the "Company") to which the undersigned is entitled to vote
at the Meeting. Receipt of the Notice of Meeting and Proxy Statement is hereby
acknowledged by the undersigned.
(To be Signed on Reverse Side)
/X/ Please mark your votes as in this example.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE
NOMINEES LISTED BELOW:
1. Election of the following nominee(s) as directors to serve in such
capacities until their successors are duly elected and qualified.
/ / FOR ALL (Except as marked / / WITHHELD FOR ALL
to the contrary below)
Nominees: David H. de Weese
William A. Gouveia
Edward L. Flynn
* Authority to vote for any nominee(s) may be withheld by lining through the
name(s) of any such nominee(s).
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" PROPOSALS 2 AND 3
BELOW:
<PAGE>
2. To Approve an amendment to the Company's Articles of Incorporation to
modify the conversion terms of the Company's Series A Preferred Stock.
[ ]For [ ]Against [ ]Abstain
3. To approve an amendment to the Company's Articles of Incorporation to
effect a one for five reverse stock split.
[ ]For [ ]Against [ ]Abstain
4. To transact such other business as may properly come before the Meeting
or any adjournments thereof.
UNLESS OTHERWISE DIRECTED, THIS PROXY WILL BE VOTED "FOR" THE NOMINEES AND WILL
BE VOTED IN THE DISCRETION OF THE PROXIES ON SUCH OTHER MATTERS AS MAY PROPERLY
COME BEFORE THE MEETING.
PLEASE SIGN, DATE, AND MAIL YOUR PROXY TODAY.
SIGNATURE: ______________________________ DATE: _________________________
SIGNATURE: ______________________________ DATE: _________________________
(SIGNATURE, IF HELD JOINTLY)
NOTE: _____________________________________________________
Capacity (Title of Authority, i.e., Executor, Trustee)
