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:
[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
MEDI-JECT CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(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)(4) 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:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-------------------------------------------------------------------------
(3) Filing Party:
-------------------------------------------------------------------------
(4) Date Filed:
-------------------------------------------------------------------------
MEDI-JECT CORPORATION
161 Cheshire Lane, Suite 100
Plymouth, Minnesota 55441
612-553-1102
April 4, 1997
Dear Shareholder:
You are cordially invited to attend the Annual Meeting of Shareholders to be
held at 11:00 a.m. on May 15, 1997 at the Company's new facility, 161 Cheshire
Lane, Suite 100, Plymouth, Minnesota.
The Notice of Annual Meeting and the Proxy Statement which follow describe the
matters on which action will be taken. During the meeting we will also review
the activities of the past year and items of general interest about the Company.
In addition to electing two members of the Board of Directors and approving the
independent auditors, you are being asked to vote on one other proposal. This
proposal relates to your Board of Directors recommendation to amend the 1996
Incentive and Stock Option Plan (the "1996 Plan") to increase the number of
shares authorized to be issued thereunder from 500,000 to 1,200,000. The Medi-
Ject Corporation 1996 Plan is a stock-based incentive plan intended to motivate
employees, consultants and directors and to promote the long-term value of the
Company.
The Board of Directors unanimously recommends that you vote for all three
proposals.
Only shareholders of record at the close of business on March 26, 1997 are
entitled to notice of and to vote at the annual meeting and any adjournment
thereof.
We hope you will join us on May 15th for our Annual Meeting, but we know that
every shareholder may not be able to do so. Whether or not you plan to attend,
please return your signed proxy as soon as possible.
Sincerely,
/s/ Franklin Pass
Franklin Pass, M.D.,
Chairman, President and Chief Executive Officer
MEDI-JECT CORPORATION
161 Cheshire Lane, Suite 100
Plymouth, Minnesota 55441
_______________________________________
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
MAY 15, 1997
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of Medi-Ject
Corporation, a Minnesota corporation, will be held on Thursday, May 15, 1997 at
11:00 a.m. at the offices of the Company located at 161 Cheshire Lane, Plymouth,
Minnesota 55441, for the following purposes:
1. To elect two (2) directors.
2. To ratify the selection of KPMG Peat Marwick LLP as independent
auditors for the Company.
3. To approve the proposal to amend the 1996 Incentive and Stock Option
Plan.
4. To transact such other business as may properly come before the
meeting or any adjournment thereof.
All shareholders of record on the transfer books of the Company as of the close
of business on Wednesday, March 26, 1997 will be entitled to vote at the
meeting.
Your attention is directed to the enclosed Proxy. Whether or not you intend to
be present at the meeting, please complete, sign and return the Proxy in the
enclosed envelope.
By order of the Board of Directors,
/s/ Mark S. Derus
Mark S. Derus
Secretary
Dated: April 4, 1997
PROXY STATEMENT OF
MEDI-JECT CORPORATION
161 Cheshire Lane, Suite 100, Plymouth, Minnesota 55441
___________________________________
Annual Meeting of Shareholders to be held
May 15, 1997
This Proxy Statement is furnished in connection with the solicitation of proxies
by the Board of Directors of Medi-Ject Corporation (the "Company") to be used at
the Annual Meeting of Shareholders of the Company to be held on May 15, 1997.
The approximate date on which this Proxy Statement and accompanying proxy were
first sent or given to shareholders was April 4, 1997. Each shareholder who
signs and returns a proxy in the form enclosed with this Proxy Statement may
revoke the same at any time prior to use by giving notice of such revocation to
the Company in writing or in open meeting. Unless so revoked, the shares
represented by such proxy will be voted at the meeting and at any adjournment or
adjournments thereof in the manner specified. If no direction is made, the
proxy will be voted for the election of the nominees for directors named in this
Proxy Statement, for the amendment to the 1996 Incentive and Stock Option Plan
(the "1996 Plan") and for the ratification of KPMG Peat Marwick LLP as the
Company's independent auditors. Presence at the meeting of a shareholder who
has signed a proxy does not alone revoke the proxy. Only shareholders of record
at the close of business on March 26, 1997 will be entitled to vote at the
meeting or any adjournment or adjournments thereof.
Under Minnesota law, each item of business properly presented at a meeting of
shareholders generally must be approved by the affirmative vote of the holders
of a majority of the voting power of the shares present, in person or by proxy,
and entitled to vote on that item of business. However, if the shares present
and entitled to vote on that item of business would not constitute a quorum for
the transaction of business at the meeting, then the item must be approved by a
majority of the voting power of the minimum number of shares that would
constitute such a quorum. Votes cast by proxy or in person at the Annual
Meeting of Shareholders will be tabulated by the election inspectors appointed
for the meeting and such inspectors will determine whether or not a quorum is
present. The election inspectors will treat abstentions as shares that are
present and entitled to vote for purposes of determining the presence of a
quorum and in tabulating votes cast on proposals presented to shareholders for a
vote but as unvoted for purposes of determining the approval of the matter from
which the shareholder abstains. Consequently, an abstention will have the same
effect as a negative vote. If a broker indicates on the proxy that it does not
have discretionary authority as to certain shares to vote on a particular
matter, those shares will not be considered as present and entitled to vote with
respect to that matter.
The Company has outstanding only one class of voting securities, common stock,
$.01 par value ("Common Stock"). As of the close of business on the record
date, March 26, 1997, 6,959,627 shares of Common Stock were outstanding. Each
share of Common Stock is entitled to one vote. Cumulative voting for the
election of directors is not permitted.
-1-
ELECTION OF DIRECTORS
(Item 1 on the Proxy Card)
The Company's Second Amended and Restated Articles of Incorporation provide that
the Board of Directors be divided into three classes of directors of as nearly
equal size as possible. The members of each class are elected to serve a three-
year term, and the terms are staggered. The terms of Louis Cosentino and
Kenneth Evenstad expire at the 1997 Annual Meeting of Shareholders; the terms of
Geoffrey Guy and Fred Shapiro will expire at the 1998 Annual Meeting of
Shareholders; and the terms of Franklin Pass, Peter Sjostrand and Norman Jacobs
will expire at the 1999 Annual Meeting of Shareholders. Vacancies on the Board
of Directors and newly created directorships can be filled by the vote of the
majority of the directors then in office.
The Board of Directors has nominated and recommended that Louis Cosentino and
Kenneth Evenstad be elected as Directors at the 1997 Annual Meeting of
Shareholders, each to hold office until the Annual Meeting of Shareholders in
the year 2000 or until his respective successor is duly elected and qualified.
Each of the nominees is currently a member of the Company's Board of Directors
and has indicated a willingness to serve as a director if elected. In case any
nominee is not a candidate for any reason, the proxies named in the enclosed
form of proxy may vote for a substitute nominee in their discretion, unless an
instruction to the contrary is indicated on the proxy. The Company has no
reason to believe that any nominee will be unable to serve as a director if
elected.
The accompanying proxy will be voted in favor of the election of the nominees of
directors, unless the shareholder giving the proxy indicates to the contrary on
the proxy. The affirmative vote of the holders of a majority of the voting
power of the outstanding shares of Common Stock entitled to vote on the election
of directors and present, in person or by proxy, at the Meeting is required for
election to the Board of Directors of each of the two nominees named below.
The affirmative vote of a majority of the outstanding shares of the Company's
Common Stock, represented in person or by proxy at the Annual Meeting, is
necessary for approval of the amendment to elect two (2) directors. The Board
of Directors recommends a vote FOR the election of the director nominees.
Certain information concerning the nominees and other directors follows:
Nominees for Election at the 1997 Meeting as Class I Directors
Age
---
Louis C. Cosentino, 53 Dr. Cosentino joined the Board of Directors in January
Ph.D. 1995 and is a member of the Audit Committee of the
Board of Directors. Dr. Cosentino co-founded Minntech
Corporation ("Minntech") in 1975, is currently a
director and served as its President and Chief
Executive Officer until resigning in January 1997.
Minntech designs and manufactures medical equipment.
Dr. Cosentino holds a Ph.D. in biomedical engineering
and has authored or co-authored nine scientific
publications.
Kenneth Evenstad 53 Mr. Evenstad joined the Board of Directors in May 1993
and is a member of the Audit Committee of the Board of
Directors. Since 1969, Mr. Evenstad has been the
Chairman and Chief Executive Officer of Upsher-Smith
Laboratories, Inc., a private pharmaceutical company
specializing in branded generic cardiovascular drugs.
Mr. Evenstad is a trained pharmacist. Mr. Evenstad is
also a director of Nutrition Medical, Inc.
-2-
Class II Directors Whose Terms Continue Until the 1998 Annual Meeting of
Shareholders
Geoffrey Guy, M.D. 42 Dr. Guy joined the Board of Directors in November 1993
and is a member of the Compensation Committee of the
Board of Directors. In 1985, Dr. Guy co-founded Ethical
Holdings plc ("Ethical"), a company that develops new
transdermal and oral drug delivery systems, and has
served as its Chief Executive Officer since that time.
Dr. Guy has been Ethical's Chairman of the Board since
1992. Dr. Guy is also the Chairman of Phytopharm plc.
Dr. Guy holds a Diploma of Pharmaceutical Medicine from
the British Royal College of Physicians.
Fred L. Shapiro, 62 Dr. Shapiro joined the Board of Directors in September
M.D. 1992 and is Chairman of the Compensation Committee of
the Board of Directors. Dr. Shapiro is currently a
consultant to Hennepin Faculty Associates, an
organization of the medical staff of the Hennepin County
Medical Center in Minneapolis, Minnesota, of which he
was President from 1983 until his retirement in 1995.
Dr. Shapiro is a nephrologist who has authored or co-
authored more than 100 published medical and scientific
articles. Dr. Shapiro is also a director and co-founder
of Minntech, a company that designs and manufactures
medical equipment.
Class III Directors Whose Terms Continue Until the 1999 Annual Meeting of
Shareholders
Franklin Pass, M.D. 60 Dr. Pass joined the Company as a director and consultant
in January 1992 and has served as the Company's
President, Chief Executive Officer and Chairman of the
Board of Directors since February 1993. From 1990 to
1992, Dr. Pass served as President of International
Agricultural Investments, Ltd., an agricultural
technology consulting and investment company. Dr. Pass,
a physician and scientist, was Director of the Division
of Dermatology at Albert Einstein College of Medicine
from 1967 to 1973, the Secretary and Treasurer of the
American Academy of Dermatology from 1978 to 1981 and
the co-founder and Chief Executive Officer of Molecular
Genetics, Inc., now named MGI Pharma, Inc., from 1979 to
1986. He is the author of more than 40 published medical
and scientific articles. Dr. Pass also serves on the
board of directors of Ringer Corporation, a producer of
lawn and garden care products.
Norman A. Jacobs 59 Mr. Jacobs joined the Board of Directors in January
1996. Since 1990, Mr.Jacobs has been the President of
Becton Dickinson Transdermal Systems, a division of
Becton Dickinson and Company ("Becton Dickinson"), and
in 1996 he also became President of Becton Dickinson's
Advanced Injection Systems, a recently formed division
of Becton Dickinson. Mr. Jacobs also serves on the board
of directors of Seragen, Inc., a biopharmaceutical
company.
Peter Sjostrand 50 Dr. Sjostrand joined the Board of Directors in December
1995. He is Chairman of the Audit Committee of the Board
of Directors and also serves as a member of the
Compensation Committee. Dr. Sjostrand is a board member
of Pharma Vision, a Swiss investment company. From 1975
to 1993, he served in various capacities with the Astra
Group, a Swedish pharmaceutical firm, most recently as
deputy board member, Executive Vice President and Chief
Financial Officer. Dr. Sjostrand holds a Swedish medical
degree. Dr. Sjostrand also is Chair of Trygg Hansa, a
major insurance company in Sweden.
None of the above directors are related to one another or to any executive
officer of the Company.
-3-
Mr. Jacobs was elected to the Board of Directors as the designee of Becton
Dickinson under an agreement between Becton Dickinson and the Company. The
relevant terms of the agreement with Becton Dickinson provide that, so long as
Becton Dickinson controls, directly or indirectly, not less than 5% of the
capital stock of the Company, the Company shall use its best efforts to nominate
and elect to the Board of Directors a person designated by Becton Dickinson and
that the Board of Directors shall consist of at least a majority of members who
are not employed by the Company. In the event that a person designated by
Becton Dickinson shall not be a member of the Board of Directors, Becton
Dickinson shall be entitled to notice of and to attend all meetings of the Board
of Directors and its committees and shall receive all information distributed to
the directors at the same time as the directors and shall receive the same
notice of meetings as the directors.
Information Concerning the Board of Directors
The Board of Directors met nine times and acted by written action two times
during 1996. The Board of Directors has an Audit and a Compensation Committee.
The Audit Committee, consisting of Dr. Sjostrand, Dr. Cosentino and Mr. Evenstad
met once in 1996. The Audit Committee reviews the results and scope of the
audit and other services provided by the Company's independent auditors, as well
as the Company's accounting principles and its systems of internal controls, and
reports the results of its review to the full Board of Directors and to
management.
The Compensation Committee, consisting of Drs. Shapiro, Guy and Sjostrand, met
three times during 1996. The Compensation Committee makes recommendations
concerning executive salaries and incentive compensation for employees and
administers the Company's 1993 Stock Option Plan (the "1993 Plan"). The Board
of Directors as a whole administers the Company's 1996 Plan pertaining to stock
options and the administration of the Company's stock option plans.
During 1996, each of the directors attended at least 75% of the aggregate number
of meetings of the Board of Directors and of the Committees on which he serves
with the exception of Kenneth Evenstad who attended 70% of the Board of
Directors and Audit Committee meetings held during the year.
Compensation of Directors
The Company has not in the past paid directors' fees. All directors may be
reimbursed for expenses actually incurred in attending meetings of the Board of
Directors and its committees. In the past, the Board of Directors has made
annual discretionary grants of options to purchase shares of Common Stock under
the Company's 1993 Plan and 1996 Plan to certain members of the Board of
Directors. The size of these grants has varied from year to year.
-4-
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
Overview
The Compensation Committee is responsible for establishing compensation policies
for all executive officers of the Company, including the four most highly
compensated executive officers named in the accompanying tables (the "Named
Executives Officers"). The members of the Compensation Committee are Drs.
Sjostrand, Shapiro and Guy. The Compensation Committee establishes the total
compensation for the executives officers in light of these policies. The
Compensation Committee is composed entirely of outside Directors.
The objectives of the Company's executive compensation program are:
1. to attract and retain superior talent and reward individual performance;
2. to support the achievement of the Company's financial and strategic
goals; and
3. through stock based compensation, align the executive officers'
interests with those of the shareholders of the Company.
The following report addresses the Company's executive compensation policies and
discusses factors considered by the Compensation Committee in determining the
compensation of the Company's President and Chief Executive Officer and other
executive officers for the year ended December 31, 1996.
Compensation Policies for Executive Officers
The Compensation Committee's executive compensation policies are designed to
provide competitive levels of compensation that integrate pay with the Company's
annual and long term performance goals, reward above average corporate
performance, recognize individual initiative and achievements, and assist the
Company in attracting and retaining qualified executives. To that end, the
Compensation Committee has established certain parameters of corporate
performance that must be met before the discretionary features of its executive
compensation plans apply. These discretionary features include stock option
grants and performance bonuses based upon an executive officer's base salary.
Absent the discretionary features, the Company's executive officers are paid
base salaries that are subject to annual cost-of-living increases, along with
periodic adjustments to make such salaries competitive with other similar sized
companies in the drug delivery industry. The Company's executive officers are
also given the opportunity to participate in certain other broad-based employee
benefit plans. As a result of the Company's increased emphasis on tying
executive compensation to corporate performance, in any particular year the
Company's executives may be paid more or less than the executives of other
companies in the drug delivery industry. The Company's use of stock option
grants as a key component of its executive compensation plans reflects the
Compensation Committee's position that stock ownership by management and stock
based compensation arrangements are beneficial in aligning management's and
shareholders' interests to enhance shareholder value.
Bonuses
Cash bonuses are awarded annually and are used to reward executive officers for
achievement of financial and technical milestones, as well as for individual
performance. Bonuses awarded to executive officers during 1996 were based on a
Compensation Committee-approved total dollar amount, which was apportioned among
the executive officers. The size of the awards actually granted to each
executive was determined by corporate performance and the Compensation
Committee's evaluation of performance by individual executives. The awards
granted to the Named Executive Officers during the year totaled $125,145.
-5-
Stock Options
Stock options awarded under the Company's 1993 Plan and 1996 Plan are intended
as incentive compensation and have historically been granted annually to
officers and other key employees based on the Company's financial performance
and achievement of technical and regulatory milestones. Stock option grants
totaling 22,202 and 34,273 were granted to 27 employees and 4 executive officers
respectively, in March 1996 as a reward for 1995 performance. An additional
43,500 and 262,500 stock options were granted to 28 employees and 5 executive
officers respectively, in October and December 1996 as a reward for 1996
achievements.
Chief Executive Officer's Compensation
Compensation for Dr. Franklin Pass during 1996, as reflected in the Summary
Compensation Table on page 11 herein, consisted of base compensation, two
separate cash bonuses and the grant of two separate stock options. Dr. Pass's
base compensation for 1996 was increased 10% from his base salary in 1995 to
reflect a cost-of-living increase and to recognize favorable corporate and
individual performance. In February 1996, Dr. Pass received a cash bonus equal
to approximately 10% of his 1995 salary in recognition of performance during
1995. In December 1996, Dr. Pass received a bonus totaling approximately 21% of
his 1996 salary in recognition of achievements during 1996. Stock options also
were granted to him in both March and December. The March grant totaled 11,425
shares and the December grant totaled 120,000 shares. These cash and stock
option awards reflected the Committee's judgment as to Dr. Pass's individual
performance and the overall performance of the Company in completing its
financing and strategic licensing arrangement with Becton Dickinson and Company
in January 1996, the completion of a licensing agreement with TEVA
Pharmaceuticals in July 1996, the achievement of regulatory and technical
milestones and the completion of the Company's initial public offering in
October 1996.
At this time the Committee has no formal written plan for CEO compensation
separate and apart from the Company's general compensation philosophy. Until a
plan specific to the CEO is developed, CEO compensation will be based on
corporate and individual performance, consistent with guidelines applicable to
all key employees.
SUBMITTED BY THE COMPENSATION COMMITTEE OF THE COMPANY'S BOARD OF DIRECTORS:
Fred Shapiro Geoffrey Guy Peter Sjostrand
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Employment Agreements with Executive Officers
The Company has written employment agreements with Franklin Pass, M.D., Mark
Derus, Todd Leonard and Peter Sadowski. No other executive officer has a
written employment agreement with the Company.
Employment Agreement with Dr. Pass. Dr. Pass entered into an employment
agreement with the company as of January 1, 1995 (the "1995 Agreement"). Dr.
Pass has executed a new employment agreement with the Company, effective as of
January 1, 1997 (the "1997 Agreement"), which replaced the 1995 Agreement.
The 1995 Agreement provided for a base salary of $175,000 for 1995 and, as to
subsequent years, for a base salary to be mutually agreed upon between the
Company and Dr. Pass prior to the beginning of each year. For 1996, the parties
agreed that Dr. Pass's base salary would be $192,500. The 1995 Agreement also
contained provisions regarding participation in benefits plans, repayment of
expenses, participation in projects and ventures involving the Company and third
parties (which is permitted), protection of confidential information and
ownership of intellectual property. In addition, the 1995 Agreement contained
covenants that Dr. Pass would not compete with the Company during the term of
his employment and that he would not solicit or interfere with the Company's
customers, suppliers or employees during the term of his employment and for a
period of two years thereafter. The 1995 Agreement had an initial term through
December 31, 1995. Thereafter, the term of the Agreement automatically
-6-
extended for successive one-year periods unless either party objects by written
notice at least 90 days prior to the end of the current term.
Effective January 1, 1997, the Company and Dr. Pass mutually agreed to terminate
the 1995 Agreement and to replace it with the 1997 Agreement. The 1997
Agreement provides for a base salary of $210,000 for 1997 and, as to subsequent
years, for a base salary to be mutually agreed upon prior to the beginning of
each year but, in no event, shall his salary for subsequent years be less than
his 1997 salary as adjusted for inflation. Pursuant to the terms of the 1997
Agreement, the Company granted to Dr. Pass an option to purchase 400,000 shares
of Common Stock at an exercise price equal to $5.38 per share. The option vests
in equal monthly installments over a period of four years. The option shall
become 100% vested upon Dr. Pass's death or Disability or upon a Change in
Control (as such terms are defined in the 1997 Agreement). The 1997 Agreement
also contains provisions regarding participation in benefits plans, repayment of
expenses, participation as a director or consultant to other companies (which is
permitted provided that such participation does not materially detract from his
obligations to the Company or violate the terms of the 1997 Agreement),
protection of confidential information, noncompetition and ownership of
intellectual property. In addition, the 1997 Agreement contains covenants that
Dr. Pass will devote substantially all of his time to the Company during the
term of his employment. The 1997 Agreement has an initial term through December
31, 2000, which term automatically shall be extended for successive one-year
periods unless either party objects by written notice at least 90 days prior to
the end of the current term. The 1997 Agreement may be terminated prior to the
end of the initial term or any extension thereof upon, among other things, (i)at
least 90 days' prior written notice of the Company's intent to terminate the
1997 Agreement or (ii)a material breach by the Company of the 1997 Agreement.
In the event that Dr. Pass's employment is terminated based upon events
described in (i) or (ii) above, the Company shall pay Dr. Pass severance pay
equal to the lesser of (a) his then-current salary for a period of two years or
(b) the salary he would otherwise receive for the remainder of the initial four-
year term of the 1997 Agreement.
Employment Agreements with Mark Derus, Todd Leonard and Peter Sadowski. Messrs.
Derus, Leonard and Sadowski entered into employment agreements with the company
as of January 1, 1997 (each, an "Employment Agreement"). The Employment
Agreements provide for 1997 base salaries of $120,000, $110,000 and $112,000 for
Messrs. Derus, Leonard and Sadowski, respectively, and, as to subsequent years,
for a base salary to be mutually agreed upon prior to the beginning of each year
but, in no event, shall the salary for subsequent years be less than the 1997
salary as adjusted for inflation. The Employment Agreements also contain
provisions regarding participation in benefits plans, repayment of expenses,
participation as a director or consultant to other companies (which is permitted
provided that such participation does not materially detract from their
respective obligations to the Company or otherwise violate the terms of their
Employment Agreements), protection of confidential information and ownership of
intellectual property. In addition, the Employment Agreements contain covenants
not to compete and covenants with respect to non-solicitation and non-
interference with the Company's customers, suppliers or employees. The
Employment Agreements each have one-year terms which automatically shall be
extended for successive one-year periods unless either party objects by written
notice at least 90 days prior to the end of the current term. The Employment
Agreements may be terminated upon 90 days' notice by the Company.
Transactions with Affiliates
Cherry Tree Ventures II. On April 16 and June 4, 1993, Cherry Tree Ventures II,
a former affiliate of the Company, loaned the Company an aggregate of $40,000
pursuant to the terms of certain loan agreements. In partial consideration for
these loans, Cherry Tree Ventures II received warrants to purchase an aggregate
of 30,466 shares of Common Stock at $1.31 per share, which warrants expire on
April 16, 1998 and June 3, 1998. The principal amount of these loans was
converted into 30,465 shares of Series A Convertible Preferred Stock in November
1993 which was in turn converted into 30,465 shares of Common Stock in January
1996. The Company paid Cherry Tree Ventures, II an aggregate of $2,017 interest
in cash on these loans.
Fred L. Shapiro, M.D. On April 16 and June 4, 1993, Fred L. Shapiro, M.D., a
director of the Company, loaned the Company an aggregate of $20,000 pursuant to
the terms of certain loan agreements. In partial consideration for these loans,
Dr. Shapiro received warrants to purchase an aggregate of 15,234 shares of
Common Stock at $1.31 per share, which warrants expire on April 16, 1998 and
June 3, 1998. The Company repaid the principal amount of
-7-
these loans, together with an aggregate of $747 in interest, on October 9, 1993.
On August 29, 1994, Dr. Shapiro loaned the Company $100,000 pursuant to the
terms of a promissory note due August 29, 1995, bearing interest at 12% per
year; Dr. Shapiro also received a warrant to purchase 7,617 shares of Common
Stock at $3.28 per share, which warrant expires on August 31, 1997. In August
1995, the Company and Dr. Shapiro agreed to extend the term of the loan and to
amend the terms of the loan to permit Dr. Shapiro to convert the principal
amount of the loan into shares of Common Stock. On February 29, 1996, Dr.
Shapiro elected to convert the outstanding principal amount of this loan into
30,465 shares of Common Stock. The Company paid Dr. Shapiro an aggregate of
$18,000 interest in cash on the loan.
Ethical Holdings PLC. On September 27, 1993, Ethical and the Company entered
into a Preferred Stock Purchase Agreement pursuant to which Ethical purchased
380,808 shares of Series B Convertible Preferred Stock for a price of $1.31 per
share. At the same time, the Company and Ethical also entered into (i) an Option
Agreement (the "Ethical Option") pursuant to which Ethical obtained the right to
purchase 761,615 shares of Series B Convertible Preferred Stock at a price of
$1.31 per share (subject to adjustment to $2.62 per share upon the occurrence of
certain events) at any time before the first to occur of March 10, 1995, or the
effectiveness of a registration statement under the Securities Act registering
the Common Stock and (ii) a Technology License and Co-Development Agreement (the
"Ethical License Agreement"). In a letter dated December 10, 1993, Ethical and
the Company amended the Ethical Option to provide that the $1.31 per share price
should in all events remain valid as to 380,808 shares through September 30,
1994. On September 16, 1994, Ethical and the Company executed a Waiver and
Notice of Exercise Agreement pursuant to which (i) the parties agreed to waive a
380,808 share minimum exercise amount provision in the Ethical Option, (ii) the
parties agreed to a 152,323 share minimum exercise amount for the Ethical
Option, (iii) the parties agreed to extend the $1.31 per share exercise price on
380,808 shares subject to the Ethical Option through October 31, 1994, and (iv)
Ethical exercised the Ethical Option as to 152,323 shares of Series B
Convertible Preferred Stock for $1.31 per share. On February 10, 1995, in return
for a commitment by Ethical to exercise $100,000 worth of the Ethical Option
under certain circumstances, the Company and Ethical amended the Ethical Option
to extend its term through September 10, 1995. Ethical exercised the Ethical
Option as to 76,161 shares of Series B Convertible Preferred Stock in February
1995, at a price of $1.31 per share. On March 24, 1995, pursuant to the terms of
the Ethical Option, the exercise price was adjusted to $2.62 upon the Company
raising in excess of $1,000,000 through the sale of additional shares of capital
stock at a price of at least $2.62 per share. Pursuant to an Agreement dated
September 1, 1995, between Ethical and the Company, (i) the parties agreed to
waive the 380,808 share minimum exercise increment in the Ethical Option, (ii)
the Company agreed to extend the Ethical Option through February 29, 1996,
provided that Ethical exercise the Ethical Option as to at least 152,323 shares
by September 1, 1995, (iii) Ethical exercised the Ethical Option as to 152,323
shares of Series B Convertible Preferred Stock for $1.64 per share (with the
Company agreeing to such price) and (iv) the parties agreed that the Company
would have the unilateral right to terminate the Ethical License Agreement at
any time. In January 1996, the Company terminated the Ethical License Agreement.
On December 22, 1995, Ethical and the Company entered into a Loan Agreement (the
"Ethical Loan") pursuant to which the Company borrowed $312,500 from Ethical in
three installments in December 1995 and January 1996; amounts outstanding under
the Ethical Loan bore interest at the rate of 10% per year. In connection with
the Ethical Loan, the Company and Ethical again amended the Ethical Option to
reduce the per share exercise price on 190,404 of the shares of Series B
Convertible Preferred Stock subject to the Ethical Option from $2.62 to $1.64
and to extend the term of the Ethical Option through the later of February 29,
1996, or the repayment date of the Ethical Loan. On February 28, 1996, the
Company issued 190,404 shares of Series B Convertible Preferred Stock to Ethical
at a price of $1.64 per share in repayment of all principal amounts advanced
under the Ethical Loan and paid $1,301 interest in cash. On the same date,
Ethical exercised the remainder of the Ethical Option and purchased 190,404
shares of Series B Convertible Preferred Stock for $2.62 per share.
As the result of certain anti-dilution protections applicable to the Series B
Convertible Preferred Stock sold to Ethical, these shares converted into
1,224,198 shares of Common Stock upon the effectiveness of the Company's initial
public offering of Common Stock on October 2, 1996 (the "IPO").
Enskilda Kapitalforvaltning. On December 28, 1993, the Company and Enskilda
Kapitalforvaltning ("Enskilda") entered into a Preferred Stock Purchase
Agreement pursuant to which Enskilda purchased 57,121 shares of Series B
-8-
Convertible Preferred Stock at a purchase price of $1.31 per share. At the same
time, the Company and Enskilda orally agreed that Enskilda should be allowed to
purchase an additional 399,848 shares of Series B Convertible Preferred Stock.
On February 1, 1994, the Company and Enskilda entered into a Preferred Stock
Agreement pursuant to which Enskilda purchased 399,848 shares of Non-Voting
Series B Convertible Preferred Stock for $1.31 per share. On December 29, 1994,
Enskilda purchased 30,465 shares of Series B Convertible Preferred Stock for
$3.28 per share as part of a private placement of such shares. On May 31, 1995,
Enskilda purchased 22,848 shares of Series B Convertible Preferred Stock for
$3.28 per share as part of a private placement of such shares.
As the result of certain anti-dilution protections applicable to the Series B
Convertible Preferred Stock sold to Enskilda, these shares converted into
542,992 shares of Common Stock upon the effectiveness of the IPO.
Becton Dickinson and Company. On January 25, 1996, the Company and Becton
Dickinson entered into a Preferred Stock, Option and Warrant Purchase Agreement
pursuant to which Becton Dickinson purchased 761,615 shares of Series C
Convertible Preferred Stock for $3.94 per share. Becton Dickinson also
received, for no additional consideration, an option (the "Becton Dickinson
Option") to purchase 380,808 shares of Series D Convertible Preferred Stock at
$4.60 per share and purchased, for $125,000, a warrant (the "Becton Dickinson
Warrant") to purchase 1,904,037 shares of Series E Convertible Preferred Stock
at $5.91 per share. All shares of Series C converted 1-for-1 into, and the
Becton Dickinson Option and the Becton Dickinson Warrant became exercisable for,
shares of Common Stock upon the closing of the IPO.
At the same time, the Company and Becton Dickinson entered into a Development
and License Agreement relating to the further development of the Company's
needle-free injection systems and Becton Dickinson's development of certain
disposables for use with the Company's systems. The terms of the Development
and License Agreement include the grant to Becton Dickinson during the term of
the agreement of an exclusive, world-wide license to (i)sell and use certain of
the Company's needle-free injection systems that are not designed or calibrated
for use with a specific drug made by a specific drug company and that are
intended to be distributed primarily through pharmacies for non-professional use
and (ii) make, have made, use, sell and import single- or multiple-use
disposable needle-free syringes or other related drug-containing or drug-
contacting components for use with certain of the Company's needle-free
injection systems.
-9-
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERSHIP AND MANAGEMENT
The following table sets forth certain information concerning beneficial
ownership of the Common Stock of the Company as of March 26, 1997 with respect
to (i) all persons known by the Company to be the beneficial owners of more than
5% of the outstanding Common Stock of the Company, (ii) each director of the
Company, (iii) each Named Executive Officer, and (iv) all directors and
executive officers as a group.
Shares Percentage of
Beneficially Outstanding
Name of Beneficial Owner Owned(1) Shares
- ----------------------------------------------------------- ---------------- ----------------
J.P. Morgan & Co. Incorporated (2) 753,400 10.8%
Ethical Holdings plc (3) 1,224,198 17.6%
Becton Dickinson and Company (4) 3,046,460 33.0%
Enskilda Kapitalforvaltning (5) 542,994 7.8%
Franklin Pass, M. D. (6)(7) 242,376 3.4%
Fred L. Shapiro, M. D. (6)(8) 73,120 1.0%
Louis C. Cosentino, Ph.D. (6)(9) 20,947 *
Kenneth Evenstad (6)(10) 19,804 *
Peter Sjostrand (6)(11) 20,947 *
Geoffrey Guy, M.D. (6)(12) 13,331 *
Norman A. Jacobs (6)(13) 0 *
Mark Derus (6)(14) 76,164 1.1%
Todd Leonard (6)(15) 64,741 *
Peter Sadowski (6)(16) 45,028 *
All directors and executive officers as a group (11 persons) (17) 576,458 7.8%
- ---------------------------
* Less than 1%.
(1) Beneficial ownership is determined in accordance with rules of the
Securities and Exchange Commission, and includes generally voting power
and/or investment power with respect to securities. Shares of Common Stock
subject to options or warrants currently exercisable or exercisable within
60 days of March 26, 1997, are deemed outstanding for computing the
percentage of the person holding such options but are not deemed
outstanding for computing the percentage of any other person. Except as
indicated by footnote, the Company believes that the persons named in this
table, based on information provided by such persons, have sole voting and
investment power with respect to the shares of Common Stock indicated.
(2) The address of J.P. Morgan & Co. Incorporated is 60 Wall Street, New York,
NY 10260.
(3) The address of Ethical is Corpus Christi House, 9 West Street,
Godmanchester, Huntingdon, Cambs., PE18 8HG, United Kingdom.
(4) Includes 2,284,845 shares of Common Stock issuable to Becton Dickinson upon
the exercise of outstanding options and warrants. The address of Becton
Dickinson is 1 Becton Drive, Franklin Lakes, NJ 07417.
(5) The address of Enskilda is c/o Skandinaviska Enskilda Banken,
Jakobsbergsgatan 17, Box 16053, 103 21 Stockholm, Sweden. Enskilda is a
wholly owned subsidiary of S-E-Banken Fonder AB.
(6) The director's or officer's address is 161Cheshire Lane, Suite100,
Plymouth, MN 55441.
(7) Includes 133,284 shares of Common Stock issuable to Dr.Pass upon the
exercise of outstanding options.
(8) Includes 38,846 shares of Common Stock issuable to Dr.Shapiro upon the
exercise of outstanding options.
(9) Includes 13,330 shares of Common Stock issuable to Dr.Cosentino upon the
exercise of outstanding options.
(10) Includes 15,995 shares of Common Stock issuable to Mr.Evanstad upon the
exercise of outstanding options.
(11) Includes 13,330 shares of Common Stock issuable to Dr. Sjostrand upon the
exercise of outstanding options.
(12) Dr. Guy is the Chairman and Chief Executive Officer and an approximately
11% shareholder of Ethical.
(13) Mr. Jacobs is the President of Becton Dickinson Transdermal Systems and of
Advanced Injection Systems, both of which are divisions of Becton
Dickinson.
(14) Includes 64,739 shares of Common Stock issuable to Mr.Derus upon the
exercise of outstanding options.
(15) Includes 64,741 shares of Common Stock issuable to Mr.Leonard upon the
exercise of outstanding options.
(16) Includes 45,028 shares of Common Stock issuable to Mr. Sadowski upon the
exercise of outstanding options.
(17) Includes 389,293 shares of Common Stock issuable to all directors and
executive officers as a group upon the exercise of outstanding options.
-10-
EXECUTIVE COMPENSATION
Summary of Cash and Certain Other Compensation
The following table provides certain summary information concerning compensation
paid or accrued by the Company to or on behalf of the Chief Executive Officer
and the three other most highly compensated executive officers (the "Named
Executive Officers") as of the year ended December 31, 1996 for services in all
capacities as well as compensation earned by such person for the previous two
fiscal years (if the person was an executive officer during any part of such
fiscal year):
SUMMARY COMPENSATION TABLE
Long-Term
Annual Compensation Compensation
------------------------------------ --------------
Name and Other Annual Stock
Principal Fiscal Salary Bonus Compensation Options All Other
Position Year ($) ($) ($)(1) (#) Compensation
- ---------------------- -------- -------- --------- -------------- -------------- --------------
Franklin Pass, M.D., 1996 192,500 57,500 7,967 131,425 1,200(2)
Chairman, President 1995 175,000 -- 5,174 45,697 --
and Chief Executive 1994 150,000 20,000 3,879 -- --
Officer
Mark Derus, Vice 1996 98,450 33,950 -- 45,617 --
President, Finance, 1995 89,500 -- -- 22,819 --
Chief Financial 1994 82,500 -- -- -- --
Officer and Secretary
Todd Leonard, Vice 1996 107,280 14,745 -- 40,117 --
President, Business 1995 85,500 12,000 -- 34,274 --
Development 1994 72,500 21,000 -- 11,425 --
Peter Sadowski, Vice 1996 98,450 18,950 4,700 34,617 --
President, Product 1995 89,500 -- -- 19,041 --
Development 1994 85,000 -- -- 27,419 --
- ----------------------------
(1) Represents premiums paid for disability and life insurance policies with
coverage limits in excess of those provided under the Company's employee
insurance policy.
(2) Implied compensation associated with a grant of 19,040 shares of Common
Stock.
-11-
STOCK OPTIONS
Option Grants During 1996
The following table sets forth individual grants of stock options made to the
Named Executive Officers during the year ended December 31, 1996:
Potential Realizable
Value at Assumed
Percent of Annual Rates
Number of Total Options Exercise of Stock Price
Securities Granted to Price or Appreciation
Underlying Employees Base for Option Term(3)
Options During Price/sh. Expiration ------------------
Name Granted(#) the Year(%) ($) Date 5%($) 10%($)
- -------------- ------------- -------------- ----------- ------------ ---------- --------
Franklin Pass 120,000 (1) 33.3% 5.00 10/22/06 376,800 955,200
11,425 (2) 3.2% 3.94 01/01/06 28,334 71,749
Mark Derus 38,000 (1) 10.5% 5.00 10/22/06 119,320 302,480
7,617 (2) 2.1% 3.94 01/01/06 18,890 47,835
Todd Leonard 32,500 (1) 9.0% 5.00 10/22/06 102,050 258,700
7,617 (2) 2.1% 3.94 01/01/06 18,890 47,835
Peter Sadowski 27,000 (1) 7.4% 5.00 10/22/06 84,780 214,920
7,617 (2) 2.1% 3.94 01/01/06 18,890 47,835
- ---------------------------
(1) Incentive stock option granted pursuant to the Company's 1996 Incentive and
Stock Option Plan on October 27, 1996. Such options vest in five equal
installments on October 22 of each of 1997, 1998, 1999, 2000 and 2001.
(2) Incentive stock option granted pursuant to the Company's 1996 Incentive and
Stock Option Plan on March 14, 1996. Such options vests as to all shares on
December 31, 1996.
(3) The 5% and 10% assumed annual rates of compounded stock price appreciation
are mandated by rules of the Securities and Exchange Commission and do not
represent the Company's estimate or projection of the Company's future
Common Stock prices.
-12-
Aggregated Option Exercises in 1996 and Year End Option Values
The following table provides information concerning stock option exercises and
the value of unexercised options at December 31, 1996 for the Named Executive
Officers:
Number of Value of
Shares Securities Underlying Unexercised
Acquired Unexercised In-The-Money Options
on Value Options at Year End(#) at Year End($)(1)
Exercise Realized ----------------------------- -----------------------------
Name (#) ($) Exercisable Unexercisable Exercisable Unexercisable
- -------------- ---------- --------- ------------- --------------- ------------- ---------------
Franklin Pass 0 0 133,284 120,000 192,232 0
Mark Derus 0 0 64,739 38,000 87,510 0
Todd Leonard 0 0 64,741 32,500 66,950 0
Peter Sadowski 0 0 45,028 36,049 42,847 17,917
- ------------------------
(1) The dollar values shown are calculated by determining the difference between
the fair market value of the Common Stock underlying the option at year end
(equal to $3.63 at December 31, 1996) and the exercise price of the options
at year end.
-13-
Performance Graph
The graph below provides an indication of cumulative total shareholder returns
("Total Return") for the Company as compared with the Nasdaq Composite Index and
the Nasdaq Non-Financial Stock Index weighted by market value at each
measurement point.
This graph covers the period beginning October 3, 1996, when the Company's
Common Stock was first traded on the Nasdaq National Market, through December
31, 1996. The graph assumes $100 was invested in each of the Company's Common
Stock, the Nasdaq Composite Index and the Nasdaq Non-Financial Stock Index on
October3, 1996 (based upon the closing price of each). Total Return assumes
reinvestment of dividends.
[GRAPH APPEARS HERE]
October 3 December 31
--------- -----------
Medi-Ject $100.00 $ 69.05
Nasdaq Composite Index 100.00 104.42
Nasdaq Non-Financial Stocks 100.00 103.32
APPOINTMENT OF AUDITORS
(Item 2 on the Proxy Card)
At the meeting, a vote will be taken by the Board of Directors on a proposal to
ratify the appointment of KPMG Peat Marwick LLP ("KPMG") as independent auditors
of the Company for the year ending December 31, 1997. KPMG has audited the
Company's financial statements since 1995.
A representative of KPMG is expected to be present at the Annual Meeting to make
a statement if he or she so desires and to respond to appropriate questions.
The affirmative vote of a majority of the outstanding shares of the Company's
Common Stock, represented in person or by proxy at the Annual Meeting, is
necessary to ratify the appointment of KPMG as independent auditors of the
Company.
-14-
The affirmative vote of a majority of the outstanding shares of the Company's
Common Stock, represented in person or by proxy at the Annual Meeting, is
necessary for approval of the selection of KPMG Peat Marwick LLP as independent
auditors for the Company. The Board of Directors recommends a vote FOR the
above proposal to select KPMG Peat Marwick LLP as independent auditors for the
Company.
INCREASE OF SHARES AUTHORIZED UNDER THE
1996 INCENTIVE AND STOCK OPTION PLAN
(Item 3 on the Proxy Card)
On February 21, 1997, the Board of Directors approved an amendment to the 1996
Plan, subject to shareholder approval, to increase the number of shares of
Common Stock authorized for issuance thereunder from 500,000 shares to 1,200,000
shares.
As of December 31, 1996, the Company had issued and outstanding options to
purchase 351,000 shares of Common Stock under the 1996 Plan. On February 21,
1997, the Company granted to Dr. Pass, CEO, an option to purchase 400,000 shares
of Common Stock at an exercise price of $5.38 per share pursuant to his
employment agreement with the Company, dated January 1, 1997. This option will
be issued under the 1996 Plan if this proposal to amend the 1996 Plan to
increase the number of shares available thereunder is approved by the
shareholders at the Annual Meeting. This option was granted to Dr. Pass in
order to provide him with an additional incentive to add shareholder value to
the Company. One twenty-fourth (1/24) of this option will vest immediately upon
the date of grant and the remainder of the option will vest in equal monthly
installments over the forty-six-month period following the date of grant.
The Board of Directors believes that stock option grants under the 1996 Plan are
an important element in attracting and retaining highly skilled and qualified
employees and officers, and, furthermore, that stock option grants are highly
effective in aligning the interests of management with those of the
shareholders. Therefore, the Board of Directors believes that it is desirable
to amend the 1996 Plan to authorize an additional 700,000 shares of Common Stock
to be available in order to permit the option grant to Dr. Pass described above
to be issued under the 1996 Plan and to provide for future option grants to
employees, officers and directors.
1996 Plan
On July 9, 1996, the Board of Directors adopted, and on July 25, 1996, the
shareholder approved, the 1996 Plan. The purpose of the 1996 Plan is to promote
the interests of the Company and its shareholders by aiding the Company in
attracting and retaining employees and directors capable of contributing to the
growth and success of, and providing strategic direction to, the Company, and by
offering such employees and directors an opportunity to acquire a proprietary
interest in the Company, thereby providing them with incentives to put forth
maximum efforts for the success of the Company's business and aligning the
interests of such employees and directors with those of the Company's
shareholders. The following is a description of the material terms and
conditions of the 1996 Plan.
The 1996 Plan is administered by the board of Directors. A total of 500,000
shares of Common Stock currently are available and reserved for issuance upon
the exercise of options granted under the 1996 Plan. Full and part-time
employees, members of the Board of Directors, consultants and independent
contractors providing valuable services to the Company or any eligible affiliate
of the Company are eligible to receive awards under the 1996 Plan. Awards may
be either incentive stock option ("Incentive Stock Options"), which comply with
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"), or
nonqualified stock options ("Nonqualified Stock Options"); provided, however,
that Incentive Stock Options may only be granted to employees and may not have a
term greater than 10 years.
-15-
The Board of Directors has the power to determine the number of shares to be
covered by awards under the 1996 Plan, determine the terms and conditions of an
award, amend the terms of an award, interpret and administer the 1996 Plan and
establish rules under the 1996 Plan. The exercise price of each Incentive Stock
Option granted under the 1996 Plan shall not be less than the fair market value
of the Common Stock on the date the option is granted. Under the 1996 Plan, the
Board of Directors may permit participants receiving or exercising options,
subject to the discretion of the Board of Directors and upon such terms and
conditions as it may impose, to surrender shares of Common Stock (either shares
received upon the receipt or exercise of the option or shares previously owned
by the optionee) to the Company in payment of the exercise price thereunder or
to satisfy federal and state tax obligations. in the event any dividend,
distribution, recapitalization, stock split, merger, consolidation, or other
event occurs that affects the Shares such that an adjustment is determined by
the Board of Directors to be appropriate to prevent dilution or enlargement of
benefits under the 1996 Plan, the Board may make such adjustments to awards
under the 1996 Plan as it deems necessary to preserve the benefits intended
under the 1996 Plan and such awards. Awards granted under the 1996 Plan are not
transferable.
The 1996 Plan will expire on July 10, 2006, unless terminated earlier by the
Board of Directors. No option may be granted after such termination, but
termination of the 1996 Plan shall not, without the consent of the optionee,
alter or impair any rights or obligations under any option previously granted.
The affirmative vote of a majority of the outstanding shares of the Company's
Common Stock, represented in person or by proxy at the Annual Meeting, is
necessary for approval of the amendment to the 1996 Plan. The Board of
Directors recommends a vote FOR the proposal to increase the number of shares
available under the 1996 Plan.
OTHER MATTERS
Solicitation
The Company will bear the cost of preparing, assembling and mailing the proxy,
Proxy Statement, annual report and other material which may be sent to the
shareholders in connection with this solicitation. Brokerage houses and other
custodians, nominees and fiduciaries may be requested to forward soliciting
material to the beneficial owners of stock, in which case they will be
reimbursed by the Company for their expenses in doing so. Proxies are being
solicited primarily by mail but, in addition, officers of the Company may
solicit proxies personally by telephone or special letter but such persons will
not receive extra compensation from the Company for doing so.
Compliance with Section 16(a) of the Securities Exchange Act of 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors, certain officers and persons who own more than ten percent of a
registered class of the Company's equity securities, to file reports of
ownership on Form 3 and changes in ownership on Forms 4 or 5 with the SEC. Such
officers, directors and ten percent shareholders are also required by the SEC's
rules to furnish the Company with copies of all Section 16(a) reports they file.
Specific due dates for such reports have been established by the SEC and the
Company is required to disclose in this Proxy Statement any failure to file
reports by such dates during 1996. Based solely on its review of the copies of
such reports received by it or by written representations from certain reporting
persons, the Company believes that during the year ended December 31, 1996, all
Section 16(a) filing requirements applicable to its officers, directors and ten
percent shareholders were complied with except that the initial ownership report
for Ethical Holdings, plc was not filed on a timely basis.
-16-
Other Matters
The Board of Directors does not intend to present to the meeting any matter not
referred to above and does not presently know of any matters that may be
presented to the meeting by others. However, if other matters come before the
meeting, it is the intention of the persons named in the enclosed form of proxy
to vote the proxy in accordance with their best judgment.
The Company is including with this Proxy Statement its Annual Report to
Shareholders for the year ended December 31, 1996, which includes an audited
balance sheet as of that date and the related statements of earnings, cash flows
and stockholders' equity, as well as other financial information relating to the
Company, including Management's Discussion and Analysis of Financial Condition
and Results of Operations. Shareholders may receive, without charge, a copy of
the Company's 1996 Form 10-K Report as filed with the Securities and Exchange
Commission by writing to Medi-Ject Corporation, 161 Cheshire Lane, Suite 100,
Plymouth, Minnesota 55441, Attention: Chief Financial Officer.
PROPOSALS OF SHAREHOLDERS
The proxy rules of the Securities and Exchange Commission permit shareholders,
after timely notice to issuers, to present proposals for shareholder action in
issuer proxy statements where such proposals are consistent with applicable law,
pertain to matters appropriate for shareholder action, and are not properly
omitted by company action in accordance with proxy rules. The Company's annual
meeting of shareholders for the year ending December 31, 1997 is expected to be
held on or about May 15, 1998, and the proxy materials in connection with that
meeting are expected to be mailed on or about April 4, 1998. Shareholder
proposals for that meeting must be prepared in accordance with the proxy rules
and received by the Company on or before December 11, 1997.
-17-
- --------------------------------------------------------------------------------
PROXY
MEDI-JECT CORPORATION
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 15, 1997
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Franklin Pass, M.D. and Mark S. Derus as
proxies, each with the power to appoint a substitute, and hereby authorizes
them to present and to vote, as designated below, all shares of capital stock
of the Company the undersigned is entitled to vote at the Annual Meeting of
Shareholders of the Company, to be held on May 15, 1997, and at all
adjournments thereof:
1. Election of Directors
[_] FOR all nominees listed below (except as marked to the contrary below)
[_] WITHHOLD AUTHORITY to vote for all nominees listed below
To withhold authority to vote for any nominee, strike a line through the name
in the list below:
For Term Expiring at
2000 Annual Meeting
Louis Cosentino, Ph.D.
Kenneth Evenstad
2. Proposal to ratify the selection of KPMG Peat Marwick LLP as the Company's
independent auditors
[_] FOR [_] AGAINST [_] ABSTAIN
3. Proposal to approve the amendment to increase the number of shares of Common
Stock available for issuance under the 1996 Incentive and Stock Option Plan
[_] FOR [_] AGAINST [_] ABSTAIN
(continued, and to be dated and signed, on other side)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED FOR ALL OF THE ABOVE ITEMS.
------------------------------------
Signature
------------------------------------
Please print name
------------------------------------
Signature if held jointly
------------------------------------
Please print name
Dated: _______________________, 1997
INSTRUCTIONS: Please sign exactly
as your name appears on the label
affixed hereto. When shares are
held by joint tenants, both should
sign. When signing as attorney, ex-
ecutor, administrator, trustee or
guardian, please give full title as
such. If a corporation, please sign
in the full corporate name by an
authorized officer. If a partner-
ship, please sign in partnership
name by authorized person.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY. A RETURN ENVELOPE IS
ENCLOSED FOR YOUR CONVENIENCE.
- --------------------------------------------------------------------------------