SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
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
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(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
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
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[_] 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
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Notes:
MEDI-JECT CORPORATION
161 CHESHIRE LANE, SUITE 100
PLYMOUTH, MINNESOTA 55441
612-475-7700
April 15, 1998
Dear Shareholder:
You are cordially invited to attend the Annual Meeting of Shareholders to be
held at 10:30 a.m. on Tuesday, May19, 1998 at the Company's offices located at
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 approve the
Medi-Ject Corporation 1998 Stock Option Plan for Non-Employee Directors (the
"Directors' Plan"). The Directors' Plan is a stock-based incentive plan intended
to motivate non-employee 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 25, 1998 are
entitled to notice of and to vote at the annual meeting and any adjournment
thereof.
We hope you will join us on May 19th 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
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
MAY 19, 1998
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of Medi-Ject
Corporation, a Minnesota corporation, will be held on Tuesday, May 19, 1998 at
10:30 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 Medi-Ject Corporation 1998 Stock Option Plan for
Non-Employee Directors (the "Directors' 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, March25, 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 15, 1998
PROXY STATEMENT OF
MEDI-JECT CORPORATION
161 Cheshire Lane, Suite 100, Plymouth, Minnesota 55441
-----------------------------------
Annual Meeting of Shareholders to be held
May 19, 1998
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 19, 1998.
The approximate date on which this Proxy Statement and accompanying proxy were
first sent or given to shareholders was April15, 1998. 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 approval of the Medi-Ject Corporation 1998 Stock Option Plan
for Non-Employee Directors (the "Directors' 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 25, 1998 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 25, 1998, 7,071,589 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 Geoffrey Guy and Fred
Shapiro will expire at the 1998 Annual Meeting of Shareholders; the terms of
Franklin Pass, Stanley Goldberg and Norman Jacobs will expire at the 1999 Annual
Meeting of Shareholders; and the terms of Kenneth Evenstad and Karl Groth expire
at the 2000 Annual Meeting of Shareholders. Vacancies on the Board of Directors
and newly created directorships can be filled by the vote of a majority of the
directors then in office.
The Board of Directors has nominated and recommended that Geoffrey Guy and Fred
Shapiro be elected as Directors at the 1998 Annual Meeting of Shareholders, each
to hold office until the Annual Meeting of Shareholders in the year 2001 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 Annual 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:
Nominations for Election at the 1998 Annual Meeting of Shareholders
AGE
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GEOFFREY GUY, M.D. 43 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 founded Ethical
Holdings plc ("Ethical"), a company that
develops new transdermal and oral drug
delivery systems and was its Chairman and
Chief Executive Officer until December
1997. Dr. Guy holds a Diploma of
Pharmaceutical Medicine from the British
Royal College of Physicians.
FRED L. SHAPIRO, M.D. 63 Dr. Shapiro joined the Board of Directors
in September 1992. He is Chairman of the
Compensation Committee and a member of the
Audit 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 was also a co-founder of
Minntech, a company that designs and
manufactures
-2-
medical equipment. He has been a director
of Minntech since its incorporation in
1974.
Directors Whose Terms Continue Until the 1999 Annual Meeting of Shareholders
FRANKLIN PASS, M.D. 61 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 leading
manufacturer of garden pesticides.
Norman A. Jacobs 60 Mr. Jacobs joined the Board of Directors in
January 1996. Since March 1998, Mr. Jacobs
has been Vice President, Business
Development, Worldwide Injection Systems,
Becton Dickinson and Company ("Becton
Dickinson"). From 1990 to 1998, Mr.Jacobs
had been the President of Becton Dickinson
Transdermal Systems and Becton Dickinson
Advanced Injection Systems, both of which
are divisions of Becton Dickinson. Mr.
Jacobs also serves on the board of
directors of Seragen, Inc., a
biopharmaceutical company.
STANLEY GOLDBERG 51 Mr. Goldberg joined the Board of Directors
in February 1998. Mr. Goldberg has been the
Chairman of Ringer Corporation since 1996,
Chief Executive Officer since 1993 and its
President since September 1992. From 1990
to 1992, Mr. Goldberg was Vice President
and General Manager of Thomson, S.A., World
Wide Audio Division, and, from 1988 to
1990, General Manager of Thomson S.A.,
Audio Americas Operations. Thomson, S.A. is
a defense and electronics company. From
1986 to 1988, Mr. Goldberg was Manager of
Product Development for General Electric
Company, a consumer and industrial products
and defense company. Mr. Goldberg also held
various positions in marketing and
management at General Electric. Mr.
Goldberg also is a director of
Destron-Fearing.
Directors Whose Terms Continue Until the 2000 Annual Meeting of Shareholders
KENNETH EVENSTAD 54 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 also is a director of Nutrition
Medical, Inc.
KARL E. GROTH 50 Mr. Groth joined the Board of Directors in
February 1998. Mr. Groth is the
President/Chief Executive Officer of First
Circle Medical Inc., a medical device
company that produces equipment related to
the treatment of AIDS and hepatitis using
hyperthermia. From 1996 to 1997, he was the
President and Chief Executive Officer of
Browne Medical Systems, Inc., a medical
device company that produces equipment for
the urodynamic market. From 1992 to 1996,
Mr.Groth was the Director of Clinical and
Regulatory Affairs & Vice President
-3-
Sales and Marketing of InStent Inc., a
medical products company. He also has held
positions with Medtronic, Inc., the
University of Minnesota and Upjohn
Pharmaceutical Company.
None of the above directors are related to one another or to any executive
officer of the Company.
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 five times during 1997. The Board of Directors did
not act by written action during 1997. The Board of Directors has an Audit and a
Compensation Committee.
The Audit Committee, consisting of Mr. Evenstad and Dr. Shapiro, met two times
during 1997. 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 and Guy, met once during
1997. 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 Incentive and Stock Option Plan (the "1996
Plan"). A committee composed of members of the Board of Directors will
administer the Directors' Plan, if it is approved by the shareholders.
During 1997, 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 Geoffrey Guy who attended 40% of the Board of Directors
meetings held during the year and who did not attend the only Compensation
Committee meeting held during 1997.
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 the Company's 1996 Plan to certain members of the
Board of Directors. The size of these grants has varied from year to year. If
the Directors' Plan is approved by the shareholders at the Annual Meeting, each
eligible non-employee director will receive an automatic grant of (1) an option
to purchase 5,000 shares of the Company's Common Stock as of the day the
Directors' Plan was adopted by the Board of Directors (February 11, 1998), (2)
an option to purchase 10,000 shares of the Company's Common Stock on the day
that the director is first elected to the Board of Directors and (3) an option
to purchase 5,000 shares of the Company's Common Stock on the first business day
of each calendar year thereafter so long as the director is still a director of
the Company on such day.
-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.
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, 1997.
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 used to reward executive officers for achievement of financial
and technical milestones, as well as for individual performance. No bonuses were
awarded to executive officers during 1997.
STOCK OPTIONS
Stock options awarded under the Company's 1993 Plan and the 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 10,000, 157,500 and 445,000 were granted to two consultants, 39
employees and four executive officers, respectively, during 1997. These grants
were made to provide ongoing incentives to the Company's consultants, employees
and management.
-5-
CHIEF EXECUTIVE OFFICER'S COMPENSATION
Compensation for Dr. Franklin Pass during 1997, as reflected in the Summary
Compensation Table on page 9 herein, consisted of base compensation, the grant
of one stock option and certain employee benefits. Dr.Pass's base compensation
for 1997 was increased 9% from his base salary in 1996 pursuant to the terms of
his new employment contract, which was effective in January 1997. An option to
purchase 400,000 shares of the Company's Common Stock was granted to him in
February 1997. The salary increase and the stock option award reflected the
Committee's judgment as to Dr. Pass's individual performance and the overall
performance of the Company during 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
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.
Employment Agreement with Dr. Pass. Dr. Pass executed a new employment agreement
with the Company, effective as of January 1, 1997 (the "1997 Agreement").
The 1997 Agreement provided for a base salary of $210,000 for 1997 and, as to
subsequent years, provides 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 provided for 1997 base salaries of $120,000, $110,000 and $112,000
for Messrs. Derus, Leonard and Sadowski, respectively, and, as to subsequent
years, provides 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
-6-
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
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 these loans, together
with an aggregate of $747 in interest, on October 9, 1993.
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 Common Stock at $4.60 per share and purchased, for
$125,000, a warrant (the "Becton Dickinson Warrant") to purchase 1,904,037
shares of Common Stock at $5.91 per share.
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.
-7-
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 25, 1998 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) 1,036,600 14.7%
Ethical Holdings plc (3) 1,224,199 17.3%
Becton Dickinson and Company (4) 3,046,460 32.6%
Enskilda Kapitalforvaltning (5) 542,994 7.7%
Franklin Pass, M. D. (6)(7) 391,243 5.3%
Fred L. Shapiro, M. D. (6)(8) 91,744 1.3%
Karl Groth (6) 0 *
Kenneth Evenstad (6)(9) 15,131 *
Stanley Goldberg (6) 0 *
Geoffrey Guy, M.D. (6)(10) 15,131 *
Norman A. Jacobs (6)(11) 0 *
Mark Derus (6)(12) 83,764 1.2%
Todd Leonard (6)(13) 59,816 *
Peter Sadowski (6)(14) 59,477 *
All directors and executive officers
as a group (10 persons) (15) 716,306 9.4%
- -------------------
* 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 25, 1998, 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 Gemini House, Bartholomew's Walk, Ely,
Cambridgeshire, CB74EA, 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 161 Cheshire Lane, Suite100,
Plymouth, MN 55441.
(7) Includes 290,617 shares of Common Stock issuable to Dr.Pass upon the
exercise of outstanding options.
(8) Includes 33,029 shares of Common Stock issuable to Dr.Shapiro upon the
exercise of outstanding options.
(9) Includes 11,322 shares of Common Stock issuable to Mr.Evenstad upon the
exercise of outstanding options.
(10) Includes 11,322 shares of Common Stock issuable to Dr.Guy upon the exercise
of outstanding options. Dr. Guy is an approximately 3.8% shareholder of
Ethical.
(11) Mr. Jacobs is the Vice President, Business Development, Worldwide Injection
Systems of Becton Dickinson.
(12) Includes 72,339 shares of Common Stock issuable to Mr.Derus upon the
exercise of outstanding options.
(13) Includes 59,816 shares of Common Stock issuable to Mr.Leonard upon the
exercise of outstanding options.
(14) Includes 59,477 shares of Common Stock issuable to Mr. Sadowski upon the
exercise of outstanding options.
(15) Includes 537,922 shares of Common Stock issuable to all directors and
executive officers as a group upon the exercise of outstanding options.
-8-
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, 1997 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
POSITION YEAR ($) ($) ($)(1) (#)
- ------------------------- ------ ------ ----- ------------ ------------
Franklin Pass, M.D., 1997 210,000 -- 15,698 400,000
Chairman, President 1996 192,500 57,500 7,967 131,425
and Chief Executive 1995 175,000 -- 5,174 45,697
Officer
Mark Derus, Vice 1997 120,000 -- 5,000 15,000
President, Finance, 1996 98,450 33,950 -- 45,617
Chief Financial 1995 89,500 -- -- 22,819
Officer and Secretary
Todd Leonard, Vice 1997 110,000 -- -- 15,000
President, Business 1996 107,280 14,745 -- 40,117
Development 1995 85,500 12,000 -- 34,274
Peter Sadowski, Vice 1997 112,000 -- -- 15,000
President, Product 1996 98,450 18,950 4,700 34,617
Development 1995 89,500 -- -- 19,041
- --------------------
(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.
-9-
STOCK OPTIONS
OPTION GRANTS DURING 1997
The following table sets forth individual grants of stock options made to the
Named Executive Officers during the year ended December 31, 1997:
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(1) 400,000 66.4 $5.38 2/21/07 1,353,381 3,430,288
Mark Derus(2) 15,000 2.5 2.19 12/17/07 20,663 52,363
Todd Leonard(2) 15,000 2.5 2.19 12/17/07 20,663 52,363
Peter Sadowski(2) 15,000 2.5 2.19 12/17/09 20,663 52,363
- ------------------------------
(1) Incentive stock option granted pursuant to the Company's 1996 Incentive and
Stock Option Plan on February 21, 1997. Such options vest in equal monthly
installments over 48 months.
(2) Incentive stock option granted pursuant to the Company's 1996 Incentive and
Stock Option Plan on December 17, 1997. Such options vest in five equal
installments on December 17 of each of 1998, 1999, 2000, 2001 and 2002.
(3) The 5% and 10% assumed annual rates of compounded stock price appreciation
are mandated by rules of the Securities and Exchange Commission and do not
represent the Company's estimate or projection of the Company's future
Common Stock prices.
AGGREGATED OPTION EXERCISES IN 1997 AND YEAR END OPTION VALUES
The following table provides information concerning stock option exercises and
the value of unexercised options at December 31, 1997 for the Named Executive
Officers:
NUMBER OF VALUE OF
SHARES SECURITIES UNDERLYING UNEXERCISED
ACQUIRED UNEXERCISED IN-THE-MONEY OPTIONS
ON VALUE OPTIONS AT YEAR END(#) AT YEAR END($)(1)
EXERCISE REALIZED ----------------------------- -----------------------------
NAME (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- -------------- -------- -------- ----------- ------------- ----------- -------------
Franklin Pass 0 0 257,284 396,000 52,552 52,552
Mark Derus 0 0 72,339 45,400 23,648 23,648
Todd Leonard 11,425 28,730 59,816 41,000 15,767 15,767
Peter Sadowski 0 0 59,477 36,600 9,597 9,597
- -----------------
(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 $2.00 at December 31, 1997) and the exercise price of
the options at year end.
-10-
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, 1997. 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 OMITTED]
OCTOBER 3, DECEMBER 31, DECEMBER 31,
1996 1996 1997
----------- ------------ ------------
Medi-Ject $100.00 $ 69.05 $ 38.10
Nasdaq Composite Index 100.00 104.47 128.20
Nasdaq Non-Financial Stocks 100.00 103.41 121.35
-11-
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, 1998. 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.
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.
APPROVAL OF THE MEDI-JECT CORPORATION 1998 STOCK
OPTION PLAN FOR NON-EMPLOYEE DIRECTORS
(Item 3 on the Proxy Card)
On February 11, 1998, the Board of Directors approved the Medi-Ject Corporation
1998 Stock Option Plan for Non-Employee Directors (the "Directors' Plan"),
subject to shareholder approval. No awards have been granted under the
Directors' Plan.
The Board of Directors believes that stock option grants under the Directors'
Plan are an important element in attracting and retaining highly skilled and
qualified non-employee directors, and, furthermore, that stock option grants are
highly effective in aligning the interests of such directors with those of the
shareholders. Therefore, the Board of Directors believes that it is desirable to
adopt and approve the Directors' Plan.
DIRECTORS' PLAN
The purpose of the Directors' Plan is to promote the interests of the Company
and its shareholders by aiding the Company in attracting and retaining
non-employee directors capable of contributing to the growth and success of, and
providing strategic direction to, the Company, and by offering such non-employee
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
non-employee directors with those of the Company's shareholders. The following
is a description of the material terms and conditions of the Directors' Plan.
The Directors' Plan will be administered by a committee of the Board of
Directors. A total of 150,000 shares of Common Stock currently are available and
reserved for issuance upon the exercise of options granted under the Directors'
Plan. All members of the Board of Directors who are not otherwise employees of
the Company or any subsidiary of the Company are eligible to receive awards
under the Directors' Plan. There are currently six directors eligible to
participate in the Directors' Plan. Awards will be in the form of nonqualified
stock options ("Nonqualified Stock Options") and may not have a term greater
than 10 years.
Awards granted under the Directors' Plan will be as follows: (1) an option to
purchase 5,000 shares of the Company's Common Stock as of the day the Directors'
Plan was adopted by the Board of Directors (February11, 1998), (2) an option to
purchase 10,000 shares of the Company's Common Stock will be granted
automatically to each eligible director on the day that any eligible director is
first elected to the Board of Directors (provided that no director who was a
director of the Company on the day the Board of Directors approved the
Directors' Plan is eligible to receive such award) and (3) an option to purchase
5,000 shares of the Company's Common Stock will be granted automatically on the
first business day of each calendar year to each eligible director in office on
such day. The
-12-
committee administering the Directors' Plan has the power to interpret and
administer the Directors' Plan and establish rules under the Directors' Plan.
Under the Directors' Plan, participants exercising options may surrender shares
of Common Stock (previously owned by the participant) to the Company in payment
of the exercise price thereunder. In the event any dividend, distribution,
recapitalization, stock split, merger, consolidation, or other event occurs that
affects the options granted under the Directors' Plan such that an adjustment is
appropriate to prevent dilution or enlargement of benefits under the Directors'
Plan, the committee administering the Directors' Plan may make such adjustments
to awards under the Directors' Plan as it deems necessary to preserve the
benefits intended under the Directors' Plan and such awards. Awards granted
under the Directors' Plan are not transferable.
The Directors' Plan will expire on February 11, 2008, unless terminated earlier
by the Board of Directors. No option may be granted after such termination, but
termination of the Directors' Plan shall not, without the consent of the
optionee, alter or impair any rights or obligations under any option previously
granted.
Tax Matters. The following is a summary of the principal federal income tax
consequences generally applicable to options granted under the Directors' Plan.
The grant of an option will result in no tax consequences for the recipient or
the Company. Upon exercise of a stock option, the optionee must recognize
ordinary income equal to the excess of the fair market value of the shares of
Common Stock acquired on the date of exercise over the option price, and the
Company will then be entitled at that time to a tax deduction for the same
amount. The tax consequences to an optionee of a disposition of shares acquired
through the exercise of an option will depend on how long the shares have been
held. Generally, there will be no tax consequence to the Company in connection
with a disposition of shares acquired under an option.
Special rules apply in the case of individuals subject to Section 16(b) of the
Securities Exchange Act of 1934. In particular, under current law, shares
received pursuant to the exercise of a stock option may be treated as restricted
as to transferability and subject to a substantial risk of forfeiture for a
period of up to six months after the date of exercise. Accordingly, unless a
special tax election is made, the amount of ordinary income recognized and the
amount of the Company's deduction may be determined as of such date.
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 DIRECTORS' PLAN. THE BOARD OF DIRECTORS RECOMMENDS
A VOTE FOR THE APPROVAL OF THE DIRECTORS' 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, 1997, all
Section 16(a) filing requirements applicable to its officers, directors and
-13-
ten percent shareholders were complied with except that (1) the statement of
changes in beneficial ownership of securities (Form 4) for Mr. Shapiro and (2)
the annual statement of beneficial ownership reports (Form 5) for Messrs. Derus,
Leonard and Sadowski were not filed on a timely basis due to administrative
errors.
OTHER MATTERS
The Board of Directors does not intend to present to the Annual 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
Annual 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, 1997, 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 1997 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, 1998 is expected to be
held on or about May 19, 1999, and the proxy materials in connection with that
meeting are expected to be mailed on or about April 15, 1999. Shareholder
proposals for that meeting must be prepared in accordance with the proxy rules
and received by the Company on or before December 16, 1998.
-14-
MEDI-JECT CORPORATION
1998 STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS
1. PURPOSE OF PLAN
This plan shall be known as the "Medi-Ject Corporation 1998 Stock Option
Plan For Non-Employee Directors" and is hereinafter referred to as the "Plan."
The purpose of the Plan is to promote the interests of Medi-Ject Corporation, a
Minnesota corporation (the "Company"), by enhancing its ability to attract and
retain the services of experienced and knowledgeable non-employee directors and
by providing additional incentive for such directors to increase their interest
in the Company's long-term success and progress. Options granted under this Plan
shall be nonqualified stock options which do not qualify as incentive stock
options within the meaning of Section 422A of the Internal Revenue Code of 1986,
as amended (the "Code").
2. STOCK SUBJECT TO PLAN
Subject to the provisions of Section 10 hereof, the stock to be subject
to options under the Plan shall be authorized but unissued shares of the
Company's common stock, $.01 par value per share (the "Common Stock"). Subject
to the adjustment as provided in Section 10 hereof, the maximum number of shares
for which options may be exercised under this Plan shall be 150,000 shares. If
an option under the Plan expires, or for any reason is terminated or unexercised
with respect to any shares, such shares shall again be available for options
thereafter granted during the term of the Plan.
3. ADMINISTRATION OF PLAN
The Plan shall be administered by a committee composed of members of the
Board of Directors of the Company (the "Committee"). The Committee shall have
plenary authority in its discretion, subject to the express provisions of this
Plan including the restrictions contained in Section 11 below, to interpret the
Plan, to prescribe, amend, and rescind rules and regulations relating to the
Plan, and to make all other determinations necessary or advisable for the
administration of the Plan. The Committee's determinations on the foregoing
matters shall be final and conclusive.
4. ELIGIBILITY
(a) Each director of the Company who is not otherwise an employee of the
Company or any subsidiary of the Company (an "Eligible Director") shall be
eligible to participate in the Plan.
(b) An option to purchase 10,000 shares of Common Stock shall be granted
automatically on the day that any Eligible Director is first elected to the
Board of Directors; provided, however, that if such day is not a business day,
such grant shall be effective on the first business day following such election.
Such grants shall only be made to Eligible Directors who were not directors of
the Company on the date this Plan is adopted by the Board of Directors.
(c) An option to purchase 5,000 shares of Common Stock shall be granted
automatically on the date this Plan is adopted by the Board of Directors
(February 11, 1998) subject to shareholder approval of this Plan as provided in
Section 13 hereof, and, thereafter, an option to purchase 5,000 shares of Common
Stock shall be granted automatically on the first business day of each calendar
year (the "Annual Option Grant Date") during the term of the Plan, beginning on
January 4, 1999, to each Eligible Director in office on such Annual Option Grant
Date.
(d) Notwithstanding the above, any Eligible Director may elect not to
receive any option, in whole or in part, which would otherwise be granted to
such Eligible Director pursuant to the terms hereof by giving notice of such
election to the Company.
5. PRICE
The option price for all options granted under the Plan shall be the fair
market value of the shares covered by the option on the date the option is
granted. For purposes of this Plan, the fair market value of the Common Stock on
a given date shall be (i) the last sale price of the Common Stock as reported on
the Nasdaq Stock Market on such date, if the Common Stock is then quoted on the
Nasdaq Stock Market or (ii) the closing price of the Common Stock on such date
on a national securities exchange, if the Common Stock is then being traded on a
national securities exchange. If on the date as of which the fair market value
is being determined the Common Stock is not publicly traded, the Committee shall
make a good faith attempt to determine such fair market value and, in connection
therewith, shall take such actions and consider such factors as it deems
necessary or advisable.
6. TERM
Each option shall, subject to the provisions of Section 8 hereof, expire
10 years from the date on which the option was granted.
7. EXERCISE OF OPTION
2
(a) Options granted under the Plan shall not be initially exercisable by
the optionee but shall become exercisable in full on the first anniversary of
the date of grant.
(b) The exercise of any option granted hereunder shall only be effective
at such time as counsel to the Company shall have determined that the issuance
and delivery of Common Stock pursuant to such exercise will not violate any
state or federal securities or other laws. An optionee desiring to exercise an
option may be required by the Company, as a condition of the effectiveness of
any exercise of an option granted hereunder, to agree in writing that all Common
Stock to be acquired pursuant to such exercise shall be held for his or her own
account without a view to any further distribution thereof, that the
certificates for such shares shall bear an appropriate legend to that effect and
that such shares will not be transferred or disposed of except in compliance
with applicable federal and state securities laws.
(c) An optionee electing to exercise an option shall give written notice
to the Company of such election and of the number of shares subject to such
exercise. The full purchase price of such shares shall be tendered with such
notice of exercise. Payment shall be made to the Company either (i) in cash
(including check, bank draft or money order), or (ii) by delivering the
Company's Common Stock already owned by the optionee having a fair market value
on the date of exercise equal to the full purchase price of the shares, or (iii)
by any combination of cash and the method specified in (ii) of this sentence.
For purposes of the preceding sentence, the fair market value of Common Stock
tendered shall be determined as provided in Section 5 hereof as of the date of
exercise. Until such person has been issued a certificate or certificates for
the shares subject to such exercise, he or she shall possess no rights as a
shareholder with respect to such shares.
8. EFFECT OF TERMINATION OF DIRECTORSHIP OR DEATH OR DISABILITY
(a) In the event that an optionee shall resign or be removed without
cause as a member of the Board of Directors of the Company or its subsidiaries,
such optionee shall have the right to exercise the option for a period of ninety
(90) days after such resignation or removal to the extent of the full number of
shares he or she was entitled to purchase under the option on the date of
termination, subject to the condition that no option shall be exercisable after
the expiration of the term of the option.
(b) In the event that an optionee shall die or become disabled while a
Director of the Company or its subsidiaries, such optionee (or such optionee's
guardian, administrators or personal representative) shall have the right to
exercise the option for a period of one year after the date of such death or
disability to the extent of the full number of shares he or she was entitled to
purchase under the
3
option on the date of death or disability, subject to the condition that no
option shall be exercisable after the expiration of the term of the option.
(c) In the event that an optionee shall cease to be a director of the
Company by reason of his or her gross and willful misconduct during the course
of his or her service as a director of the Company, including but not limited to
wrongful appropriation of funds of the Company, or the commission of a gross
misdemeanor or felony, the option shall be terminated as of the date of the
misconduct.
(d) Nothing in this Plan or in any agreement hereunder shall confer on
any optionee any right to continue as a director of the Company or affect in any
way any legal rights with respect to termination of such directorship or removal
of such optionee as a director.
9. NON-TRANSFERABILITY
No option granted under the Plan shall be transferable by an optionee,
otherwise than by will or the laws of descent or distribution. Except as
provided in Section 8 herein with respect to disability of the optionee, during
the lifetime of an optionee, the option shall be exercisable only by such
optionee.
10. DILUTION OR OTHER ADJUSTMENTS
If there shall be any change in the Common Stock through merger,
consolidation, reorganization, recapitalization, stock dividend (of whatever
amount), stock split or other change in the corporate structure, appropriate
adjustments in the Plan and outstanding options shall be made. In the event of
any such changes, adjustments shall include, where appropriate, changes in the
aggregate number of shares subject to the Plan, the number of shares subject to
outstanding options and the exercise prices thereof in order to prevent dilution
or enlargement of option rights.
11. AMENDMENT OR DISCONTINUANCE OF PLAN
If there shall be any change in the Common Stock through merger,
consolidation, reorganization, recapitalization, stock dividend (of whatever
amount), stock split or other change in the corporate structure, appropriate
adjustments in the Plan and outstanding options shall be made. In the event of
any such changes, adjustments shall include, where appropriate, changes in the
aggregate number of shares subject to the Plan, the number of shares subject to
outstanding options and the option exercise prices thereof in order to prevent
dilution or enlargement of option rights.
4
12. TIME OF GRANTING
Unless the Plan shall have been discontinued as provided in Section 12
hereof, the Plan shall terminate upon the expiration of 10 years from the date
upon which it takes effect as provided in Section 13 hereof. No option may be
granted after such termination, but termination of the Plan shall not, without
the consent of the optionee, alter or impair any rights or obligations under any
option theretofore granted.
13. EFFECTIVE DATE AND TERMINATION OF PLAN
(a) The Plan was approved by the Board of Directors on February 11, 1998,
and shall be effective from that date, subject to the approval by shareholders
of the Company. In the event shareholder approval is not obtained, this Plan
shall be of no force or effect, and any option previously granted hereunder
shall terminate. The Plan shall be submitted for approval to shareholders of the
Company within 12 months of the effective date.
(b) Unless the Plan shall have been discontinued as provided in Section
11 hereof, the Plan shall terminate on February 11, 2008. No option may be
granted after such termination, but termination of the Plan shall not, without
the consent of the optionee, alter or impair any rights or obligations under any
option theretofore granted.
14. GOVERNING LAW
The Plan and all determinations made and actions taken pursuant hereto
shall be governed by the laws of the State of Minnesota and construed
accordingly.
5
MEDI-JECT CORPORATION
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 19, 1998
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 19, 1998, 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
2001 Annual Meeting
Geoffrey Guy, M.D.
Fred L. Shapiro, M.D.
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 1998 Stock Option Plan for Non-Employee Directors
[_] FOR [_] AGAINST [_] ABSTAIN
(continued, and to be dated and signed, on other side)
P
R
O
X
Y
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: _______________________, 1998
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.