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
BIOJECT MEDICAL TECHNOLOGIES INC.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
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2) Aggregate number of securities to which transaction applies:
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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
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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4) Date Filed:
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Bioject Medical Technologies Inc.
7620 SW Bridgeport Road
Portland OR 97224
August 6, 1998
Dear Shareholders:
You are cordially invited to attend the 1998 annual meeting of the
shareholders of BIOJECT MEDICAL TECHNOLOGIES INC., to be held at the Oregon
Convention Center, 777 NE Martin Luther King Jr. Blvd., Room C120-122, Portland,
Oregon, on Thursday, September 10, 1998 at 9:00 a.m., Pacific Daylight Time.
The matters to be acted upon at the meeting -- to elect the Board of
Directors; to amend the Articles of Incorporation to provide for a classified
Board of Directors and a super majority vote to amend certain portions of the
Articles of Incorporation; to amend the 1992 Stock Incentive Plan to increase
the number of shares available for issuance under the plan; and to transact such
other business as may properly come before the meeting -- are described in the
attached Notice of Meeting and Proxy Statement.
We believe the annual meeting provides an excellent opportunity for
shareholders to become better acquainted with BIOJECT and its board members and
officers. Although we would like very much to have each shareholder attend the
1998 meeting, we realize this is not possible. Whether or not you plan to be
present at the meeting, it is important that your shares be represented.
Therefore, we urge you to complete, sign and return the enclosed proxy as soon
as possible.
If you return your proxy promptly, you can help BIOJECT avoid the expense
of follow-up mailings to ensure a quorum so that the meeting can be held. If you
decide between now and September that you can attend the meeting in person, you
may revoke your proxy at that time and vote your shares at the meeting.
We appreciate your continued support of Bioject and look forward to either
greeting you personally at the meeting or receiving your proxy.
Sincerely,
/S/ JAMES C. O'SHEA
---------------------------------
James C. O'Shea
Chairman of the Board, President
and Chief Executive Officer
BIOJECT MEDICAL TECHNOLOGIES INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
NOTICE IS HEREBY GIVEN that the annual meeting (the "Meeting") of the
shareholders of BIOJECT MEDICAL TECHNOLOGIES INC. (the "Company") will be held
on Thursday, September 10, 1998, at 9:00 a.m., Pacific Daylight Time, at the
Oregon Convention Center, 777 NE Martin Luther King Jr. Blvd., Room C120-122,
Portland, Oregon, for the following purposes:
1. To elect eight directors for the ensuing year;
2. To amend the Articles of Incorporation to provide for a classified
Board of Directors and to provide for a super majority vote to amend
certain provisions of the Articles of Incorporation;
3. To amend the 1992 Stock Incentive Plan to increase the number of
shares available for issuance under the plan; and
4. To transact such other business as may properly come before the
Meeting or any adjournment thereof.
These matters are more fully described in the proxy statement accompanying
this Notice.
Accompanying this Notice of Meeting is a proxy statement and a form of
proxy, together with the annual report of the Company. A copy of the Company's
Annual Report on Form 10-K/A containing the consolidated financial statements
for the year ended March 31, 1998, and the auditors' report on the financial
statements is also included. Only holders of common stock of record at the close
of business on July 24, 1998 will be entitled to vote at the Meeting and any
adjournments thereof.
Shareholders who are unable to attend the Meeting in person are requested
to complete, sign, date and return the enclosed form of proxy directly to
American Stock Transfer and Trust Co., postage prepaid. A proxy will not be
valid unless it is received at the office of American Stock Transfer and Trust
Co., 40 Wall Street, 46th Floor, New York, New York 10005 before the time fixed
for the Meeting.
DATED at Portland, Oregon, this 6th day of August, 1998.
BY ORDER OF THE BOARD
/S/ MICHAEL A. TEMPLE
-------------------------------
Michael A. Temple
Vice President, Chief Financial
Officer and Secretary/Treasurer
BIOJECT MEDICAL TECHNOLOGIES INC.
TABLE OF CONTENTS
MANAGEMENT SOLICITATION
APPOINTMENT AND REVOCABILITY OF PROXIES
VOTING OF PROXIES
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
PROPOSAL #1: ELECTION OF DIRECTORS
Board of Directors Composition, Compensation and Committees
EXECUTIVE COMPENSATION AND OTHER TRANSACTIONS
Biographical Information
Executive Compensation
Grant of Stock Options
Option Exercises and Fiscal Year End Values
Ten-Year Option/SAR Repricings
Employment Contracts
Escrowed Shares
SEC Filings
REPORT OF COMPENSATION AND STOCK OPTION COMMITTEES ON EXECUTIVE COMPENSATION
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
STOCK PERFORMANCE CHART
PROPOSAL #2: AMENDMENT OF ARTICLES OF INCORPORATION
PROPOSAL #3: AMENDMENT TO 1992 STOCK INCENTIVE PLAN
OTHER MATTERS TO BE ACTED UPON
SHAREHOLDER PROPOSAL AND NOMINATION PROCEDURES FOR THE MEETING
ANNUAL REPORT
INDEPENDENT ACCOUNTANTS
PROPOSALS OF SHAREHOLDERS FOR THE 1999 ANNUAL MEETING OF SHAREHOLDERS
BIOJECT MEDICAL TECHNOLOGIES INC.
PROXY STATEMENT
as of August 6, 1998
MANAGEMENT SOLICITATION
This proxy statement and accompanying form of proxy are furnished in
connection with the solicitation of proxies by the Board of Directors of BIOJECT
MEDICAL TECHNOLOGIES INC. (the "Company"), for use at the annual general meeting
(the "Meeting") of shareholders of the Company to be held on September 10, 1998,
at the time and place and for the purposes set forth in the Notice of Meeting.
The form of proxy accompanying this proxy statement is solicited by the
Board of Directors of the Company. Proxies may be solicited by officers,
directors and regular supervisory and executive employees of the Company, none
of whom will receive any additional compensation for their services. In
addition, the Company has retained the services of Allen Nelson & Co. to assist
in the solicitation of proxies. Proxies may be solicited personally or by mail,
telephone, telex, facsimile, telegraph or messenger. The Company estimates it
will pay Allen Nelson & Co. its customary and reasonable fees not expected to
exceed $3,500, plus reimbursement of certain out-of-pocket expenses, for its
services in soliciting proxies. The Company will also pay persons holding shares
of the common stock in their names or in the names of nominees, but not owning
such shares beneficially, such as brokerage houses, banks and other fiduciaries,
for the expense of forwarding soliciting materials to their principals. The cost
of this solicitation will be borne directly by the Company.
The approximate mailing date of the Notice of Meeting, proxy statement and
form of proxy is August 6, 1998.
APPOINTMENT AND REVOCABILITY OF PROXIES
The persons named in the accompanying form of proxy are officers of the
Company.
In addition to revocation in any other manner permitted by law, a proxy may
be revoked by:
(i) signing another proxy bearing a later date and depositing it in the
manner set forth in the Notice of Meeting;
(ii) signing and dating a written notice of revocation (in the same manner
as a proxy is required to be executed) and either depositing it in the manner
set forth in the Notice of Meeting at any time before the time fixed for the
Meeting or an adjournment thereof or with the chairman of the Meeting on the day
of the Meeting or an adjournment thereof; or
(iii) attending the Meeting or an adjournment thereof, and casting a ballot
in person.
Such revocation will have effect only in respect of those matters which
have not already been acted upon. Additional proxy forms may be obtained by
calling or writing to American Stock Transfer & Trust Co., Shareholder Services,
40 Wall Street, 46th Floor, New York, NY 10005. Telephone: (718) 921-8200.
VOTING OF PROXIES
The securities represented by the proxy will be voted or withheld from
voting in accordance with the instructions of the shareholder on any ballot that
may be called for, and if the shareholder specifies a choice with respect to any
matter to be acted upon, the securities shall be voted accordingly. The form of
proxy confers authority upon the named proxyholder with respect to matters
identified in the accompanying Notice of Meeting. If a choice with respect to
such matters is not specified, it is intended that the person designated by
management in the form of proxy will vote the securities represented by the
proxy in favor of each matter identified in the proxy statement and for election
to the Board of Directors the nominees named in this proxy statement. The proxy
confers discretionary authority upon the named proxyholder with respect to
amendments to or variations in matters identified in the accompanying Notice of
Meeting and other matters which may properly come before the Meeting.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
The voting securities of the Company consist of common stock, without par
value (the "Common Shares"). The Record Date has been fixed in advance by the
directors as July 24, 1998, for the purpose of determining shareholders entitled
to a notice of and to vote at the Meeting. Each share issued at the time of the
Record Date carries the right to one vote at the Meeting. As of July 24, 1998, a
total of 28,449,558 shares of the Company's common stock were issued and
outstanding.
The presence in person or by proxy of holders of record of a majority of
the outstanding Common Shares is required to constitute a quorum for the
transaction of business at the Meeting. If a quorum is present, the eight
nominees for election to the Board of Directors who receive the greatest number
of votes cast at the Meeting shall be elected directors. For all other matters
to come before the Meeting, a proposal will be approved only upon the
affirmative vote of shareholders owning in the aggregate at least a majority of
the Company's Common Shares represented at the Meeting in person or by proxy and
entitled to vote. With regard to the election of directors, votes may be cast
for or withheld from each nominee. Votes that are withheld will have no effect
on the outcome of the election because directors will be elected by a plurality
of the votes cast. An abstention may be specified in the proposals to approve
the amendments to the Articles of Incorporation and the increase of shares
available under the Company's 1992 Stock Incentive Plan. An abstention will be
counted as present for purposes of determining the existence of a quorum on such
proposal and, therefore, have the effect of a negative vote. Shares represented
by duly executed and returned proxies of brokers or other nominees which are
expressly not voted upon the proposal ("broker non-votes") will have no effect
on the required vote.
The following tables set forth certain information concerning the beneficial
ownership of the Company's common stock at June 30, 1998, by: (i) each person
known by the Company to own beneficially more than 5 percent of the outstanding
capital stock of the Company; (ii) each of the directors and named executive
officers; and (iii) all directors and officers as a group. Each shareholder
listed below has sole voting and investment power with respect to the shares
beneficially owned, except as indicated:
NUMBER OF SHARES PERCENTAGE
BENEFICIALLY BENEFICIALLY
NAME OF BENEFICIAL OWNER OWNED (1) OWNED
- -------------------------------- ---------------- -----------
Elan International Service, Ltd. (2) 4,477,273 15.15%
Flatt Smiths SL04
Bermuda
Hambrecht & Quist (3) 2,193,400 7.56
50 Rowes Wharf,
Boston, Massachusetts 02110
DeSpain & Coby, Inc. (4) 1,416,364 5.07
1011 SW Emkay Dr., Suite 103
Bend, Oregon 97702
James C. O'Shea (5) 500,086 1.77
David H. de Weese (6) 36,250 *
Grace Keeney Fey (7) 36,000 *
William A. Gouveia (8) 52,500 *
Eric T. Herfindal (9) 66,250 *
Richard J. Plestina (10) 170,500 *
John Ruedy, MD (11) 126,950 *
Michael T. Sember (12) 8,750 *
J. Michael Redmond (13) 93,234 *
Peggy J. Miller (14) 46,120 *
Robert Gonnelli (15) 537,243 1.90
All Directors, Executive and
Officers as a Group (13 persons) (16) 1,761,505 6.03%
- -----------------------------------------
* Less than one percent.
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and includes shares over which the indicated
beneficial owner exercises voting and/or investment power. Shares of common
stock subject to options currently exercisable or exercisable within 60 days are
deemed outstanding for computing the percentage ownership of the person holding
the options but not deemed outstanding for computing the percentage of ownership
of any other person. Except as indicated, and subject to community property laws
where applicable, the persons named in the table above have sole voting and
investment power with respect to all shares of common stock as shown as
beneficially owned by them.
(2) Includes warrants to purchase 1,750,000 shares of common stock which are
presently exercisable. Does not include 692,694 shares of Series A Convertible
Preferred Stock and 134,333 shares of Series B Convertible Preferred Stock.
(3) Includes warrants to purchase 1,190,000 shares of common stock which are
presently exercisable.
(4) Includes warrants to purchase 116,280 shares of common stock which are
presently exercisable.
(5) Includes options to purchase 456,250 shares of common stock which are
presently exercisable and 12,500 which are vested but are not exercisable until
October 1, 1998. Does not include 500,000 option shares which become exercisable
after 60 days.
(6) Includes options to purchase 26,250 shares of common stock which are
presently exercisable. Does not include 8,750 option shares that become
exercisable after 60 days.
(7) Includes options to purchase 8,750 shares of common stock which are
presently exercisable and 26,250 shares of common stock which are vested but are
not exercisable until September 11, 1998. Does not include 8,750 option shares
that become exercisable after 60 days.
(8) Includes options to purchase 8,750 shares of common stock which are
presently exercisable and 43,750 shares of common stock which are vested but are
not exercisable until September 11, 1998. Does not include 8,750 option shares
that become exercisable after 60 days.
(9) Includes options to purchase 26,250 shares of common stock which are
presently exercisable. Does not include 8,750 option shares that become
exercisable after 60 days.
(10) Includes options to purchase 26,250 shares of common stock which are
presently exercisable. Does not include 8,750 option shares that become
exercisable after 60 days.
(11) Includes options to purchase 8,750 shares of common stock which are
presently exercisable and 52,500 shares of common stock which are vested but are
not exercisable until September 11, 1998. Does not include 8,750 option shares
that become exercisable after 60 days.
(12) Does not include 8,750 option shares that become exercisable after 60 days.
(13) Includes options to purchase 81,250 shares of common stock which are
presently exercisable and 6,250 shares of common stock which are vested but are
not exercisable until October 1, 1998. Does not include 50,000 option shares
which become exercisable after 60 days.
(14) Includes options to purchase 10,000 shares of common stock exercisable
immediately and 6,250 shares of common stock which vested but are exercisable
until October 1, 1998 and 15,000 shares which vest and become exercisable
one-third on July 1, August 1, and September 1, 1998, respectively.
(15) Includes warrants to purchase 480,243 shares of common stock which are
presently exercisable.
(16) Includes 741,875 options and 480,243 warrants, which are presently
exercisable, 122,500 options which are vested but are not exercisable until
September 11, 1998 and 43,750 options which are vested but are not exercisable
until October 1, 1998. Does not include 771,250 options which become exercisable
after 60 days.
All of the outstanding capital stock of Bioject Inc. is owned by the Company and
80.1 percent of the outstanding stock of Bioject JV Subsidiary Inc. is owned by
the Company.
PROPOSAL #1
ELECTION OF DIRECTORS
The Articles of Incorporation of the Company provide for the holders of
Common Shares to elect a Board of Directors at the 1998 Meeting.
If Proposal #2, which provides for a classified Board, is not approved,
each director elected will hold office until the next annual general meeting or
until his successor is duly elected or appointed, unless his office is earlier
vacated in accordance with the articles of the Company or he becomes
disqualified to act as a director. If Proposal #2 is approved, the directors
will be elected to the class indicated below. See Proposal #2 for a description
of their terms.
The following table sets forth the names and ages of the Company's current
directors, each of whom is nominated for election.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE NOMINEES
LISTED BELOW.
PROPOSED YEAR ELECTED
NAME CLASS AGE POSITION DIRECTOR
- ------------------ ----- ----- ------------------------ ------------
James C. O'Shea 3 53 Chairman, Chief Executive
Officer and President 1995
John Ruedy, M.D. 3 66 Director(b)(c) 1987
William A. Gouveia 1 56 Director(c)(d) 1994
Grace Keeney Fey 2 52 Director(a)(b)(e) 1995
Eric T. Herfindal 2 57 Director(b)(d) 1996
Richard J. Plestina 2 52 Director(a)(c)(e) 1997
David H. de Weese 1 56 Director(d)(e) 1997
Michael T. Sember 3 48 Director(e) 1997
- -------------
(a) Member of Stock Option Committee
(b) Member of Compensation Committee
(c) Member of Nominating Committee
(d) Member of Audit Committee
(e) Member of Ad Hoc-Financing Committee
JAMES C. O'SHEA has served as Chairman and Chief Executive Officer of the
Company since March 1995. Prior to joining Bioject, he was President and Chief
Operating Officer of Biopure Corporation, a developer of red blood cell
substitutes. Prior to 1989, Mr. O'Shea was Executive Vice President of Marketing
and Scientific Affairs at Delmed Inc., a manufacturer of peritoneal dialysis
solutions and parenteral products. He is a member of the Board of Directors of
PSC, Inc., serving as Chairman of the Compensation Committee and previously
serving as Chairman of the Executive Committee.
JOHN RUEDY, M.D. has served as a director of the Company since 1987. Since
July 1992, he has served as Dean of the Faculty of Medicine at Dalhousie
University in Halifax, Nova Scotia. From 1978 through June 1992, Dr. Ruedy
served as Professor of Medicine at the University of British Columbia and Head
of the Department of Medicine at St. Paul's Hospital, Vancouver, British
Columbia. Since 1966, he has held an appointment to the Department of Medicine
and Pharmacology at McGill University and was Chairman of the Department of
Pharmacology and Therapeutics from 1975 through 1978. Dr. Ruedy is also serving
as a director for the Canadian AIDS Clinical Trials Network.
WILLIAM A. GOUVEIA was elected a director of the Company in January 1994.
Mr. Gouveia serves in two capacities at Boston's New England Medical Center:
Director of Pharmacy (1972 to present) and Special Assistant for Pharmaceutical
Research and Development (1989 to present). He has the following faculty
appointments: Associate Professor of Medicine at Tufts University School of
Medicine (1995), Adjunct Clinical Professor of Pharmacy at Massachusetts College
of Pharmacy and Allied Health Professions, and Adjunct Professor at Northeastern
University Bouve College of Pharmacy and Health Sciences. He has published over
75 articles in leading healthcare journals, as well as numerous book chapters,
and has delivered presentations in the U.S. and international health care
organizations and colleges. In 1984, he founded the Massachusetts-based
Chartwell Home Therapies. He is a Fellow of the American Society of
Health-System Pharmacists (ASHP) and has served as chair and member of various
committees of the ASHP.
GRACE KEENEY FEY, CFA, was elected a director of the Company in October
1995. Ms. Fey is Executive Vice President and Director of Frontier Capital
Management Company, a Boston-based investment management firm (1988 to present).
From 1986 to 1988, she was a Senior Vice President of Investment Management
Associates, an investment management firm. From 1980 to 1986, Ms. Fey was Vice
President of Winchester Capital Management, also an investment management firm.
ERIC T. HERFINDAL has served as a director of the Company since September
1996. He was Senior Vice President of Axion Healthcare, Inc., a disease
management company, from 1993 to 1996 and continues as a director of that
company, and has also served as Executive Vice President of OnCare Inc., an
oncology physician practice management company and subsidiary of Axion, since
1993. Prior to joining Axion, he served for over 20 years as a Professor of
Clinical Pharmacy, School of Pharmacy, at the University of California Medical
Center in San Francisco, where he is currently a Professor Emeritus. He holds a
Doctorate in Pharmacy from the University of California, San Francisco, and a
Masters in Public Health from the University of California, Berkeley. He is the
author of twenty-five articles and the editor or co-editor of ten books in the
field of pharmacy, including the TEXTBOOK OF THERAPEUTICS: DRUG AND DISEASE
MANAGEMENT, currently in its sixth edition. Dr. Herfindal has been active in
various professional organizations, serves on a number of editorial and advisory
boards, and is a frequent lecturer at national and international healthcare
meetings.
RICHARD J. PLESTINA was elected a director of the Company in April 1997.
Mr. Plestina is President of Quelah Corporation, NW, a family owned investment
firm (1986 to present). In 1988, he was a consultant for Cologon, Inc. DBA
Alpine Glass Company, a large commercial and residential glass company. From
1979 to 1986, he was an Executive Vice President of Orion Capital Corporation, a
multiline insurance company and President of EBI Companies, which was later
acquired by Orion Corporation. From 1974 to 1979 he served as the Vice President
and Marketing Manager of EBIC. Mr. Plestina has served in previous directorships
for Orion Capital Corporation, EBI Companies, Associated Oregon Industries and
Northwest Employer's Council.
DAVID H. DE WEESE was elected a director of the Company in June 1997. Mr.
de Weese is currently a general partner of Paul Capital Partners, a private
equity investment firm. He served as Chairman of the Board of Directors,
President and Chief Executive Officer of the SIGA Pharmaceuticals, Inc., a
developer of vaccines and antibiotics from November 1996 to April 1998. Prior to
joining the SIGA, Mr. de Weese served as a director and a consultant to
Biovector Therapeutics, S.A., a developer of drug delivery technology based in
France, and as an advisor to Paul Capital Partners. From 1993 to 1995, Mr. de
Weese was President, Chief Executive Officer and a Director of M6
Pharmaceuticals, Inc., a biopharmaceutical company. From 1986 to 1992, Mr. de
Weese was the President, Chief Executive Officer, a Director and a founder of
Cygnus Therapeutic Systems (now Cygnus, Inc.), a developer and manufacturer of
transdermal drug delivery systems. Prior to that, Mr. de Weese co-founded
Medical Innovations Corporation, a medical device business currently a division
of Ballard Medical Products, Inc., and was Chairman of the Board, President and
Chief Executive Officer of Machine Intelligence Corporation, a developer of
computer software and hardware.
MICHAEL T. SEMBER has served as a director of the Company since October
1997. Mr. Sember is Executive Vice President, Business Development for Elan
Corporation, plc. Mr. Sember was with Marion Laboratories, then Marion Merrell
Dow, from 1973 to 1991. Mr. Sember also serves as a director of Elan
Pharmaceutical Research Corporation, Acorda Therapeutics, Inc., Iomed, Inc., and
as Chairman and CEO of Targon Corporation, a joint venture company of Elan and
Cytogen Corporation.
BIOJECT JV SUBSIDIARY INC. LIST OF DIRECTORS
ROBERT GONNELLI was elected Chairman of Bioject JV Subsidiary, Inc. in
October 1997. In May, 1998, Mr. Gonnelli was appointed the interim president of
the Subsidiary, while the Subsidiary actively seeks a full-time president. Mr.
Gonnelli has served as President and CEO of PDN Investments since 1995 which was
established to fund and manage startup companies, many of which are in the
medical technology industry. Some of these include US Medical Labs, a clinical
blood laboratory, MCS, a neurological device company, ProKool, an orthopedic
company specializing in sports injury products based on MCS's technology, and
DAC, a dental practice management company. Previously Mr. Gonnelli was founder,
CEO and President of TSM, Inc., a leading manufacturer of broadcast and
videoconferencing automation systems. TSM, Inc. was sold in 1993. Mr. Gonnelli
has also been national sales manager of Canon Broadcast, a systems engineer at
the National Broadcasting Company and has authored three patents.
JAMES C. O'SHEA, Director of Bioject JV Subsidiary, Inc. Please see
biography information in section "ELECTION OF DIRECTORS."
TODD DAVIS, Director of Bioject JV Subsidiary, Inc. Mr. Davis was elected
Secretary/Treasurer of the Subsidiary in October 1997. He is the Director of
Investments and Planning at Elan Pharmaceuticals Research Corporation, a
diversified pharmaceutical company headquartered in Dublin, Ireland. Prior to
joining Elan, Mr. Davis held various sales and marketing positions at Abbott
Laboratories from 1990 to 1995.
BOARD OF DIRECTORS COMPOSITION, COMPENSATION AND COMMITTEES. The Board of
Directors is currently composed of eight members, one of whom is an employee of
the Company. Following the shareholder vote, the Board will be composed of eight
members, one of whom is an employee of the Company.
All directors hold office for one year or until their successors have been
elected and qualified. See Proposal #2 seeking shareholder approval to implement
a classified Board. There are no family relationships between any of the
directors or executive officers of the Company.
The Company pays its directors no annual cash or per meeting compensation
for services. Under the terms of the 1992 Stock Incentive Plan, each
non-employee director is automatically awarded an option to purchase 17,500
shares of the Company's common stock immediately following the close of each
annual shareholders' meeting at an exercise price equal to the fair market value
on the date of the grant. Such options are vested and exercisable with respect
to one-half of the shares at six months from the date of grant with the
remaining shares vested and exercisable six months thereafter. The options
expire eight years after grant unless previously exercised or terminated due to
termination of service.
There were nine meetings of the Board of Directors during the last fiscal
year. Except for Ms. Fey and Mr. Gouveia, each of the incumbent directors being
nominated for re-election attended at least 75% of all of the meetings of the
Board of Directors and committees on which they served.
There are five standing committees of the Board of Directors: the Audit
Committee, Stock Option Committee, Compensation Committee, Nominating Committee
and the Ad Hoc-Financing Committee. The Audit Committee meets with the Company's
independent accountants to review the scope and findings of the annual audit and
accounting policies and procedures of the Company which are then reported by the
committee to the directors of the Company. The Stock Option Committee
administers the 1992 Stock Incentive Plan. The Compensation Committee
administers cash compensation for the executive officers. The Nominating
Committee reviews and recommends to the full Board nominees for directors of the
Company to be submitted for election at the next annual shareholders' meeting.
The Ad Hoc-Financing Committee monitors the Company's cash reserves and develops
strategies for procuring additional capital. The Audit Committee met once during
fiscal 1998. The Stock Option Committee took action by written consent
resolution four times. The Nominating Committee and Compensation Committee each
met once during fiscal 1998. The Ad Hoc-Financing Committee met twice during
fiscal 1998.
EXECUTIVE COMPENSATION AND OTHER TRANSACTIONS
The following individuals comprise the executive officers of the Company:
Year Elected
Name Age Position Officer
- --------------------- --- -------------------------------- ----------
James C. O'Shea 53 Chairman, Chief Executive
Officer and President 1995
Michael A. Temple 48 Vice President, Chief Financial
Officer and Secretary/Treasurer 1998
Peggy J. Miller 51 Former Vice President, Chief Financial
Officer and Secretary/Treasurer 1993
Richard R. Stout, M.D. 45 Vice President of Clinical Affairs
of Bioject Inc. 1994
J. Michael Redmond 38 Vice President, Business
Development of Bioject Inc. 1996
Robert Gonnelli 43 Chairman and Interim President
of Bioject JV Subsidiary, Inc. 1997
BIOGRAPHICAL INFORMATION.
JAMES C. O'SHEA. Please see biographical information in section "ELECTION
OF DIRECTORS."
MICHAEL A. TEMPLE joined Bioject as Vice President, Chief Financial Officer
and Secretary/Treasurer in April 1998. From December 1996 until January 1998 Mr.
Temple was Chief Financial Officer for Graziano Produce Co., Inc. a northwest
regional processor of fresh-cut produce products. From October 1993 until
November 1996 he was Vice President of Finance and Chief Financial Officer for
Instromedix, Inc., an Oregon-based medical technology company that designs and
manufactures transtelephonic cardiac event monitors. From April 1989 until
September 1993 he was Vice President of Finance and Chief Financial Officer for
the Yoshida Group, a Portland-based conglomerate with business activities in
manufacturing, services and real estate development. Prior to joining the
Yoshida Group, Mr. Temple was a principal in the accounting and business
advisory services practice of Laventhol & Horwath, a national public accounting
firm.
PEGGY J. MILLER formerly served Bioject as Chief Financial Officer, Vice
President and Secretary/Treasurer, from February 1993 to April 1998.
RICHARD R. STOUT, M.D. joined the Company in April 1994 as Director of
Clinical and Regulatory Affairs. He was promoted to Vice President of Clinical
Affairs in December 1994. From 1992-1993 he was the Director of Clinical and
Regulatory Affairs at EndoVascular Instruments, Inc., a developer of surgical
devices and methods for endarterectomy and intraluminal graft placement. Dr.
Stout acted as the Manager of Tachycardia Clinical Studies at Telectronics
Pacing Systems from 1990-1992, an international medical device company involved
in manufacturing and distributing cardiac pacemakers and implantable
defibrillators. From 1987 to 1989, Dr. Stout was Director of Medical Programs at
Biotronic Inc., also a manufacturer and distributor of implantable cardiac
pacemakers.
J. MICHAEL REDMOND joined Bioject in February 1996 as Vice President of
Sales and Marketing. He was appointed Vice President of Business Development in
February 1998. Mr. Redmond has fifteen years of experience in medical marketing
and product sales. Prior to joining Bioject he was Director of Business
Development and Director of Sales and Marketing for Kollsman Manufacturing
Company. Kollsman is a private label developer and manufacturer of medical
instrumentation. He also held various sales and marketing positions with Abbott
Laboratories Diagnostic division.
BOB GONNELLI. Please see biographical information in section "BIOJECT JV
SUBSIDIARY INC. LIST OF DIRECTORS."
EXECUTIVE COMPENSATION. The following table sets forth the cash compensation
paid by the Company to its Chief Executive Officer and to the other executive
officers having salary and bonus compensation greater than $100,000
(collectively the "named executive officers"), for services rendered to the
Company during the fiscal years ended March 31, 1998, 1997 and 1996.
Summary Compensation Table
Long-Term
Annual Compensation Compensation Awards
- ------------------- ------------------- ----------------------------------
Fiscal Options Other
Name and Principal Position(1) Year Salary Bonus Other Shares(2) Other(3) Compensation
- ------------------------- ------- ------- ------ ----- -------- ------- ------------
James C. O'Shea 1998 $195,000 - $5,930(5) 575,000(6) $3,565 $ -
Chairman, Chief Executive 1997 195,000 - 5,225(5) 18,750(7) 3,017 -
Officer and President 1996 192,737(4) - 4,117(5) 375,000(8) - 146,996(9)
Peggy J. Miller 1998 105,000 - 62,500(10) 2,404 -
Former Vice President, 1997 105,000 - 9,375(11) 1,983 -
Chief Financial Officer 1996 105,000 - 95,625(12) - -
and Secretary / Treasurer
J. Michael Redmond 1998 100,000 - 6,000(14) 62,500(15) 2,409 -
Vice President of 1997 100,000 6,000(14) 75,000(16) 1,616 -
Business Development 1996 14,231(13) 1,000(14) - - -
- ------------------------
(1) No other executive officers had salary and bonus compensation greater than
$100,000 in fiscal 1998.
(2) The Company has in effect one major long-term compensation plan, the 1992
Stock Incentive Plan, through which all employees, officers and non-employee
consultants of the Company may be awarded incentive and non-statutory stock
options, stock bonuses, stock appreciation rights and restricted stock under
terms and performance criteria as determined by a committee of the Board of
Directors. Non-employee directors are also awarded options to purchase a fixed
number of shares on an annual basis. The 1992 Stock Incentive Plan was approved
by the Company's shareholders on November 20, 1992. Amounts listed reflect the
number of options granted in the respective fiscal years, the exercise prices
for which were greater than or equal to the fair market value of the Company's
common stock on the date of grant.
(3) The Company has a 401(k) Retirement Benefit Plan for its employees including
its executive officers which provides for voluntary employer matches of employee
contributions up to 6% of salary and for discretionary profit sharing
contributions to all employees. Such employer contributions may be made in cash
or common stock. In fiscal 1998, the Company made all employer matching
contributions in shares of the Company's common stock based on fair market value
in the period of match.
(4) Mr. O'Shea was appointed Chairman and Chief Executive Officer on March 28,
1995 and commenced his salaried employment with the Company on April 10, 1995.
(5) Represents supplemental life and disability insurance premiums paid pursuant
to an employment agreement with Mr. O'Shea. No other executive officers are
entitled to this benefit.
(6) In fiscal 1998, Mr. O'Shea was granted 575,000 option shares: 50,000 options
granted on April 3, 1997 and vesting immediately but not exercisable until
October 3, 1997; 25,000 options granted on June 11, 1997 vesting on March 31,
1998 with 12,500 options immediately exercisable and 12,500 options exercisable
on October 1, 1998; and 500,000 options granted on September 19, 1997, one-third
vesting and exercisable on September 19, 1998, one-third on September 19, 1999,
and one-third on September 19, 2000.
(7) In fiscal 1997, Mr. O'Shea was granted 18,750 options vesting immediately
and exercisable on April 3, 1998. These options replaced 25,000 options granted
in fiscal 1997 and were repriced in fiscal 1998 with a 25% forfeiture of
options.
(8) In connection with his employment, Mr. O'Shea was granted options to
purchase 375,000 shares of common stock of which 112,500 option shares vested
immediately, 112,500 option shares vested one-half on April 10, 1996 and
one-half on April 10, 1997, and 150,000 option shares vesting one-half on April
10, 1997 and one-half on April 10, 1998. These options replaced 500,000 options
granted in fiscal 1996 and were repriced in fiscal 1998 with a 25% forfeiture of
options.
(9) In connection with the commencement of Mr. O'Shea's employment with the
Company, he was reimbursed his moving expenses including the costs of selling
his former residence, transportation and storage of household goods, certain
other incidental moving expenses and a gross-up for federal and state income
taxes incurred on these reimbursements.
(10) In fiscal 1998, Ms. Miller was granted 62,500 options: 25,000 granted on
April 3, 1997 and vesting immediately and exercisable October 3,1997; 12,500
options granted on June 11, 1997 vesting on March 31, 1998 with 6,250 options
immediately exercisable and 6,250 options exercisable on October 1, 1998; and
25,000 options granted on September 19, 1997, one-fifth vesting and exercisable
each month beginning May 1, 1998 and ending September 1, 1998.
(11) In fiscal 1997, Ms. Miller was granted 9,375 options vesting immediately
but not exercisable until April 3, 1998. These options replaced 12,500 options
granted in fiscal 1997 and were repriced in fiscal 1998 with a 25% forfeiture of
options.
(12) On January 26, 1996, Ms. Miller was granted 95,625 options with 75,938
vesting immediately but not exercisable until April 3, 1998, 9,375 vesting on
February 1, 1996 and becoming exercisable on April 3, 1998, 937 vesting on July
31, 1996 and becoming exercisable on April 3, 1998, and 9,375 vesting and
becoming exercisable on April 3, 1998. These options replaced 75,000 options
granted in fiscal 1995, 5,000 options granted in fiscal 1994 and 90,000 options
granted in fiscal 1993 and repriced in fiscals 1996 and 1998 with a 25%
forfeiture of options.
(13) Mr. Redmond commenced employment with the Company on February 8, 1996.
(14) Mr. Redmond receives an automobile allowance of $500 per month.
(15) In fiscal 1998, Mr. Redmond was granted 62,500 options: 25,000 granted on
April 3, 1997 and vesting immediately but not exercisable until October 3,1997;
12,500 options granted on June 11, 1997 vesting on March 31, 1998 with 6,250
options immediately exercisable and 6,250 options exercisable on October 1,
1998; and 25,000 options granted on September 19, 1997, one-third vesting and
exercisable on September 19, 1998, one-third on September 19, 1999, and
one-third on September 19, 2000.
(16) In connection with his employment, Mr. Redmond was granted 75,000 options
with one-third vesting on each anniversary of his employment with the Company,
with two-thirds exercisable April 3, 1998 and one-third exercisable February 8,
1999. These options replaced 100,000 options granted in fiscal 1997 and were
repriced in fiscal 1998 with a 25% forfeiture of options.
GRANT OF STOCK OPTIONS. Shown below is information on grants of stock options
pursuant to the Company's 1992 Stock Incentive Plan during the fiscal year ended
March 31, 1998 to the named executive officers. No stock appreciation rights
were granted during fiscal 1998.
OPTION GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
-------------------------------------------------
Potential Realizable
Percentage of Values at Assumed
Total Options Annual Rates of Stock
Granted to Exercise or Price Appreciation
Options Employees Base Price Expiration for Option Term (10)
Name Granted in Fiscal 1997 (per share) Date 5% 10%
- --------------- ------- -------------- ----------- ---------- -------- --------
James C. O'Shea 50,000(1) 5 .75 04/02/04 11,045 29,731
25,000(2) 2 .625 03/31/05 6,361 14,824
500,000(3) 48 .6875 09/18/04 162,806 357,788
Peggy J. Miller 25,000(4) 2 .75 04/02/04 5,522 14,865
12,500(5) 1 .625 03/31/05 3,180 7,412
25,000(6) 2 .6875 09/18/04 8,140 17,889
J. Michael Redmond 25,000(7) 2 .75 04/02/04 5,522 14,865
12,500(8) 1 .625 03/31/05 3,180 7,412
25,000(9) 2 .6875 09/18/04 8,140 17,889
- ---------------------
(1) These options vested immediately upon grant and became exercisable on
October 3, 1997. The fair market value of the Company's common stock on the date
of grant was $0.69 per share.
(2) 12,500 became vested and exercisable immediately and 12,500 become
exercisable on October 1, 1998. The fair market value of the Company's common
stock on the date of grant was $0.625.
(3) Of this total, 166,666 become vested and exercisable on September 19, 1998,
166,667 become vested and exercisable on September 19, 1999, and the remaining
balance of 166,667 become vested and exercisable on September 19, 2000. The fair
market value of the Company's common stock on the date of grant was $0.72.
(4) These options vested immediately upon grant and became exercisable on
October 3, 1997. The fair market value of the Company's common stock on the date
of grant was $0.69 per share.
(5) These options vested on March 31, 1998, 6,250 became exercisable immediately
and 6,250 become exercisable on October 1, 1998. The fair market value of the
Company's common stock on the date of grant was $0.625.
(6) Of this total, one-fifth vest and are exercisable each month beginning May
1, 1998 and ending September 1, 1998. The fair market value of the Company's
common stock on the date of grant was $0.72.
(7) These options vested immediately upon grant and became exercisable on
October 3, 1997. The fair market value of the Company's common stock on the date
of grant was $0.69 per share.
(8) These options vested on March 31, 1998, 6,250 became exercisable immediately
and 6,250 become exercisable on October 1, 1998. The fair market value of the
Company's common stock on the date of grant was $0.625.
(9) Of this total, 8,333 become vested and exercisable on September 19, 1998,
8,333 become vested and exercisable on September 19, 1999, and the remaining
balance of 8,334 become vested and exercisable on September 19, 2000. The fair
market value of the Company's common stock on the date of grant was $0.72.
(10) Potential realizable value is based on the assumption that the stock price
of the common stock appreciates at the annual rate shown (compounded annually)
from the date of grant until the end of the applicable option term. These
numbers are calculated based on the requirements promulgated by the Securities
and Exchange Commission and do not reflect the Company's estimate of future
stock price performance. The actual value, if any, which may be realized by any
officer will vary based on exercise date and the market price of the related
common stock when sold.
OPTION EXERCISES AND FISCAL YEAR END VALUES. Shown below is information with
respect to exercised options and unexercised options to purchase the company's
common stock granted in fiscal 1998 and prior years to the named executive
officers and held by them at March 31, 1998. None of the named executive
officers exercised any stock options during fiscal 1998. No stock appreciation
rights were outstanding or exercised during fiscal 1998.
Aggregated Option Exercises in Last Fiscal Year
and Fiscal Year End Option Values
Number of Unexercised Value of Unexercised
Options held at In-the-Money Options
March 31, 1998 March 31, 1998(1)
---------------------------- --------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
- ------------- ----------- ------------- ------------ -------------
James C. O'Shea 62,500 906,250 $ 48,438 $ 712,500
Peggy J. Miller 31,250 136,250 24,219 104,531
J. Michael Redmond 31,250 106,250 24,219 82,031
- ---------------
(1) Based on the difference between the exercise price and the average of the
bid and ask price on NASDAQ of the Company's common stock on that date ($1.50).
The actual value, if any, which may be realized by any officer will vary based
on exercise date and the market price of the related common stock when sold.
REPORT ON REPRICING OF OPTIONS/SAR'S. Shown below is information with respect to
the Company's ten-year history on the repricing of stock options and stock
appreciation rights (SAR's) held by executive officers.
Ten-Year Option/SAR Repricings
Length of
Market Price Exercise Original
Number of of Stock Price Option Term
Options/SAR's at Time of at Time of New Date of
Repriced or Repricing or Repricing or Exercise Repricing or
Name Date Amended Amendment Amendment Price Amendment
- ------------------- -------- ------------- ------------ ------------ -------- ------------
James C. O'Shea 04/03/97(a) 112,500(1) $ .6875 $2.69 $ .75 5 years
President and 04/03/97(a) 112,500(1) .6875 3.50 .75 5 years
Chief Operating 04/03/97(a) 150,000(1) .6875 4.50 .75 5 years
Officer 04/03/97(a) 18,750(1) .6875 1.313 .75 6 years
Peggy J. Miller 04/03/97(a) 50,625(2) .6875 1.25 .75 4 years
Former Vice President 04/03/97(a) 2,813(2) .6875 1.25 .75 3.5 years
and Chief Financial 04/03/97(a) 42,188(2) .6875 1.25 .75 5 years
Officer 04/03/97(a) 9,375(2) .6875 1.313 .75 6 years
01/26/96(a) 67,500(2) 1.25 4.00 1.25 5 years
01/26/96(a) 3,750(2) 1.25 4.00 1.25 4.5 years
01/26/96(a) 56,250(2) 1.25 4.00 1.25 6 years
Michael Redmond 04/03/97(a) 75,000(3) .6875 1.00 .75 6 years
Vice President of
Business Development
- ----------------
(1) Replaces 150,000, 150,000, 200,000 and 25,000 options, respectively.
(2) Replaces 67,500, 3,750, 56,250, 12,500, 90,000, 5,000 and 75,000 options,
respectively.
(3) Replaces 100,000 options.
(a) These options were repriced based on the Compensation and Stock Option
Committees' belief that the difference between the current fair market value of
the Company's common stock and the option exercise prices before repricing did
not meaningfully align employees' and shareholders' interests and, therefore,
did not serve the long-term interests of the Company. In order to be eligible
for this repricing, the named executive officers were required to forfeit 25% of
option shares previously granted.
The foregoing report has been furnished by the Compensation and Stock
Option Committees consisting of Ms. Fey and Messrs. Herfindal, Plestina and
Ruedy.
EMPLOYMENT CONTRACTS. The Company entered into an employment agreement with Mr.
O'Shea to serve as Chairman and Chief Executive Officer. His salary, at March
31, 1998 was $195,000 per annum and is subject to annual adjustment by the Board
of Directors. His agreement continues until terminated. In addition to his base
salary, Mr. O'Shea was granted a total of 500,000 incentive stock options at
prices ranging from $2.69 to $4.50 per share which vest variously over a three
year period. These options were replaced in April 1997 by 375,000 options at an
exercise price of $0.75 per share. He will receive 100,000 shares of common
stock when the Company first achieves two consecutive quarters of positive
earnings per share. He received relocation expense reimbursements grossed-up for
withholding taxes and will receive annual payment of certain disability and life
insurance policy premiums. In the event he is terminated, he will receive his
base salary for up to two years. If he becomes disabled, he will continue at 75%
of his then current salary for not less than six months and at 50% of such
salary for the successive six months. In the event of his death, his salary will
continue for 60 days following the end of the month of his death. Under the
agreement, he is permitted to participate in any net profit sharing, deferred
compensation or other programs. In addition, he is prohibited from competing
with the Company for three years following termination of the agreement.
The Company has entered into an employment agreement with Mr. Temple to serve as
Vice President and Chief Financial Officer. In the event he is terminated, he
will receive his base salary for up to four months. His salary, currently
$110,000 per annum, is subject to annual adjustment by the Board of Directors.
His agreement continues until terminated. In the event he is disabled, he will
continue at 75% of his then current salary for not less than six months and then
at 50% of such salary through the end of the current term. In the event of his
death, his salary will continue for 120 days following the end of the month of
his death. Under the agreement, he is permitted to participate in any net profit
sharing, deferred compensation or other programs. In addition, he is prohibited
from competing with the Company for two years following termination of the
agreement.
Ms. Miller resigned her position at the Company effective April 30, 1998. In
connection with that termination, the Company agreed to continue to pay Ms.
Miller's base salary for a period of two months beyond the date of her
termination; to make her a lump-sum payment equal to four months base salary and
to pay Ms. Miller's health and dental insurance premiums through October 31,
1998. In addition, the Company extended the expiration date of 130,000 vested
stock options held by Ms. Miller from April 30, 1999 to April 30, 2000. In
consideration of Ms. Miller's assistance in the transition of responsibilities
to a new chief financial officer, the Company exchanged 25,000 unvested stock
options held by Ms. Miller for 25,000 identically priced stock options which
vest and are exercisable at the rate of 5,000 per month, beginning May 1, 1998.
The Company has entered into an employment agreement with Mr. Redmond to
serve as Vice President of Sales and Marketing. In the event he is terminated,
he will receive his base salary for up to four months. His salary, currently
$100,000 per annum, plus $500 per month car allowance, is subject to annual
adjustment by the Board of Directors. His agreement continues until terminated.
In the event he is disabled, he will continue at 75% of his then current salary
for not less than six months and then at 50% of such salary through the end of
the current term. In the event of his death, his salary will continue for 60
days following the end of the month of his death. Under the agreement, he is
permitted to participate in any net profit sharing, deferred compensation or
other programs. In addition, he is prohibited from competing with the Company
for three years following termination of the agreement.
SEC FILINGS. Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's officers, directors and 10 percent shareholders to file reports of
ownership and changes in ownership with the Securities and Exchange Commission
(the "Commission"). Officers, directors and 10 percent shareholders are required
by Commission regulations to furnish the Company with all Section 16(a) reports
they file.
Based solely on the Company's review of the copies of such reports the
Company received and written representations from the Company's officers and
directors, the Company believes that all required reports were timely filed in
fiscal 1998.
REPORT OF COMPENSATION AND STOCK OPTION COMMITTEES ON EXECUTIVE COMPENSATION
The Company has maintained a philosophy of seeking to attract and retain a
key group of experienced executives capable of successfully completing product
development, ramping up manufacturing, launching marketing and sales, and
providing strong financial management. Mindful of conserving cash resources, the
Company has provided a combination of annual cash compensation and stock option
grants which emphasizes lower cash compensation in exchange for potential
long-term gains through stock option appreciation. The Company believes such a
strategy is in the best interests of the shareholders and provides proper
incentives to increase long-term shareholder value. The Company's Compensation
Committee is responsible for reviewing cash compensation paid to the Company's
executive officers and makes recommendations to the Stock Option Committee for
stock option and common stock grants. The Stock Option Committee is responsible
for administering all stock option and common stock grants including awards to
the Company's executive officers.
Overall, the Company's executive compensation is composed of the following
key elements:
Base Salary. This is an amount of annual cash compensation which the
Company believes is the minimum necessary to attract and retain qualified
executives and is administered on behalf of the Board of Directors by the Chief
Executive Officer for all executive officers other than the C.E.O. As can be
determined from the Summary Compensation Table preceding, under this policy only
three of the Company's four executive officers have cash compensation exceeding
$100,000 per year. Until the Company achieves significant revenues, it has been
the Board's policy to hold base salaries to at or below market, determined based
on the Company's experience in recruiting key executives, relying instead on
stock option incentives to attract and retain qualified executive officers. In
fiscal 1998, the Company's Chief Executive Officer, Mr. O'Shea, was paid an
annual salary of $195,000. This remained unchanged until June 12, 1998, when Mr.
O'Shea's salary was increased to $220,000 per year by the Board. Mr. O'Shea's
salary increase was determined based on a review of competitive salaries by the
recruitment consultants engaged by the Company to assist it in identifying and
screening candidates for the position of President of Bioject JV Subsidiary Inc.
and is considered, as being at or below market for the position. As part of Mr.
O'Shea's compensation package, the Board agreed to pay premiums on certain life
and disability policies owned by Mr. O'Shea. Payment of these premiums is
similar to supplemental policy premiums paid by the Company on behalf of its
former chief executive officer.
Annual Incentives. As circumstances are appropriate, the Company has annual
incentive programs for individual executives or for the executive officer group
as a whole. These programs have specific performance criteria and awards
determined based on Company business goals for the period. In fiscal 1998, the
Company had an incentive program under the 1992 Stock Incentive Plan with
respect to certain executive officers whereby (i) up to a specified number of
stock options would be automatically granted based on attainment of certain
sales and operating performance targets and (ii) a specified number of stock
options were available for award at the discretion of the Compensation
Committee. After taking into account the Company's performance in a variety of
areas, no options were granted relative to achieving sales and operating
performance targets. Based on non-financial performance and the attainment of
the Elan Pharmaceuticals joint venture, the Stock Option Committee granted
one-half of the specified discretionary stock options.
The Company may also award cash, stock and option grants on a discretionary
basis to its executive officers where, in the opinion of the Company's Stock
Option Committee, performance merited such compensation. With respect to fiscal
1998, Mr. O'Shea received a discretionary stock option award which entitles him
to purchase 500,000 shares of the Company's common stock at $0.6875. Such award
was made to Mr. O'Shea for his leadership in improving financial community
relations, increasing potential strategic partnership opportunities and
completing the joint venture with Elan Pharmaceuticals for developing and
marketing the blood glucose monitor device.
Long-Term Incentives. At present, the Company's primary long-term incentive
program is the 1992 Stock Incentive Plan which is available to all employees,
executive officers and non-employee consultants of the Company. The Board of
Directors' Stock Option Committee grants all options pursuant to this plan.
Generally, executive officers upon joining the Company are granted options
vesting over a three to four year period at current fair market value in amounts
which, in the Stock Option Committee's opinion, are consistent with their
positions and responsibilities with the Company. In addition, based on
individual annual performance and contribution to the long-term goals of the
Company, executive officers and other company employees may receive additional
stock option grants. The amount and terms of such options are discretionary and
are determined subjectively by the Stock Option Committee taking into account
Company and individual performance. These options vest over varying periods and
are intended to focus executive officers on achieving the long-term goals of the
Company and to directly reward them for corresponding increases in shareholder
value.
The Company also has a 401(k) Retirement Benefit Plan for its employees
including its executive officers which provides for voluntary employer matches
of employee contributions up to 6% of salary and for discretionary profit
sharing contributions to all employees. In fiscal 1998, Mr. O'Shea received
$3,565 (or 6,779 shares) of Company common stock under the matching provisions
of the 401(k) Plan.
Due to the availability of operating loss carryforwards, the Compensation
and Stock Option Committees determined Mr. O'Shea's compensation package without
regard to the limitations of deductibility imposed by Internal Revenue Code
Section 162(m).
The Company is engaged in a highly competitive industry. In order to
succeed, the Company believes that it must be able to attract and retain
qualified executives. The Board of Directors believes that the above described
compensation structure will help the Company to achieve these objectives.
The foregoing report has been furnished by the following directors: for the
Compensation Committee, John Ruedy, Grace K. Fey, and Eric T. Herfindal, and for
the Stock Option Committee, Grace K. Fey and Richard J. Plestina.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Executive compensation is administered by two committees of the Board: the
Compensation Committee and the Stock Option Committee. Jim O'Shea, the Company's
Chairman, President, Chief Executive Officer and a Director, participated in
deliberations concerning executive officer compensation, but abstained from
deliberations concerning his own compensation.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On January 12, 1995, the Board of Directors announced the resignation of
the Company's Chairman and Chief Executive Officer, Carl E. Wilcox. In
consideration for Mr. Wilcox's long service to the Company, the Board granted
Mr. Wilcox 100,000 shares of common stock valued at $241,000 and cash
compensation totaling $247,000. The Board also vested 200,000 previously granted
option shares at $4.00 per share and extended the expiration date to January 14,
1998. The Board granted Mr. Wilcox a special power of attorney to exclusively
perform all acts necessary to obtain extension and/or release of the WAM
Partnership escrow shares. In addition, the Board agreed to pay up to $10,000 of
costs associated with such extension and/or release. On June 3, 1996, the
British Columbia Securities Commission informed the Company that release of the
escrow shares had been granted. The Board also agreed to pay Mr. Wilcox $20,000
per year for two years under a covenant not-to-compete. Mr. Wilcox continued to
serve as a Director of the Company until October 25, 1995.
October 22, 1997, Robert Gonnelli was elected Chairman of Bioject JV
Subsidiary Inc.'s Board of Directors. From October 1997 through April 1998 he
received no fees for such services but will participate in any future Subsidiary
director compensation programs including any Subsidiary stock incentive plans.
Effective May 1, 1998, Mr. Gonnelli became interim president of the Subsidiary
and will receive compensation totaling $15,000 per month.
Addition to his position on the Subsidiary Board, Mr. Gonnelli serves as a
consultant to the Company for which he received monthly consulting fees of
$8,500 per month, aggregating to $50,500, in fiscal 1998. He was also issued
350,000 five year warrants in connection with a private placement of the
Company's preferred stock completed with Elan International Services, Ltd. and
130,243 warrants for his services related to investor relations and sales
consulting. In fiscal 1999, in addition to his monthly fees through April 30,
1998, the Company has committed to issue 100,000 warrants for his investor
relations and sales consulting services.
STOCK PERFORMANCE CHART
The following chart compares the yearly stock market (U.S.) percentage
change in the cumulative total stockholder return on the Company's common stock
during the five fiscal years ended March 31, 1998 with the cumulative total
return on the NASDAQ Stock Market (U.S.) Index and the Hambrecht and Quist
Healthcare Index (exclusive of biotechnology companies). The comparison assumes
$100 was invested on March 31, 1993, in the Company's common stock and in each
of the foregoing indices and assumes reinvestment of dividends.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
AMONG BIOJECT MEDICAL TECHNOLOGIES INC., NASDAQ STOCK INDEX
AND HAMBRECHT AND QUIST HEALTH CARE FUND EXCLUDING BIOTECH INDEX
BIOJECT MEDICAL TECHNOLOGIES, INC.
H&Q HEALTHCARE EXCLUDING BIOTECH INDEX
NASDAQ STOCK MARKET-U.S. INDEX
[THE FOLLOWING DATA REPRESENTS PICTORIAL INFORMATION]
H&Q
Bioject Medical Nasdaq Stock Healthcare
DATES Technologies, Inc. Market-U.S. Excluding
----- ------------------ ----------- ---------
Mar-93 100.00 100.00 100.00
Apr-93 102.94 95.73 85.96
May-93 105.88 101.45 92.86
Jun-93 141.18 101.92 90.27
Jul-93 129.41 102.04 85.49
Aug-93 114.71 107.31 84.95
Sep-93 114.71 110.51 85.99
Oct-93 117.65 112.99 93.87
Nov-93 117.65 109.62 92.89
Dec-93 117.65 112.68 96.14
Jan-94 108.82 116.10 105.05
Feb-94 102.94 115.01 96.87
Mar-94 91.18 107.94 88.72
Apr-94 70.59 106.54 86.66
May-94 64.71 106.80 89.55
Jun-94 54.40 102.89 85.92
Jul-94 85.29 105.00 89.23
Aug-94 88.24 111.70 101.61
Sep-94 92.64 111.41 102.67
Oct-94 72.05 113.60 100.00
Nov-94 82.35 109.83 99.70
Dec-94 70.59 110.14 102.16
Jan-95 52.94 110.76 108.67
Feb-95 54.40 116.62 111.18
Mar-95 47.06 120.07 119.33
Apr-95 47.06 123.86 117.81
May-95 41.18 127.05 118.38
Jun-95 35.29 137.35 122.58
Jul-95 32.35 147.44 133.07
Aug-95 50.00 150.43 141.18
Sep-95 66.92 153.89 153.35
Oct-95 50.00 153.01 156.04
Nov-95 47.06 156.60 159.54
Dec-95 44.12 155.77 170.09
Jan-96 43.39 156.54 181.94
Feb-96 38.24 162.49 181.94
Mar-96 30.87 163.03 181.96
Apr-96 30.87 176.56 178.47
May-96 30.87 184.67 178.56
Jun-96 33.08 176.34 171.02
Jul-96 30.14 160.64 156.64
Aug-96 25.74 169.64 166.87
Sep-96 23.53 182.61 187.68
Oct-96 16.16 180.60 177.91
Nov-96 20.59 191.76 183.40
Dec-96 16.16 191.59 188.84
Jan-97 17.65 205.21 199.14
Feb-97 18.38 193.86 195.87
Mar-97 18.38 181.21 179.38
Apr-97 12.49 186.87 183.36
May-97 21.32 208.06 201.51
Jun-97 16.16 214.42 214.75
Jul-97 17.65 237.05 226.57
Aug-97 16.16 236.69 215.22
Sep-97 23.53 250.70 225.08
Oct-97 33.08 237.71 213.96
Nov-97 36.02 238.90 217.95
Dec-97 30.14 235.15 225.05
Jan-98 28.68 242.55 225.49
Feb-98 30.87 265.26 246.34
Mar-98 35.29 275.03 255.90
PROPOSAL #2
APPROVAL OF ARTICLES
OF AMENDMENT OF ARTICLES OF INCORPORATION
The Board of Directors unanimously proposes and recommends the approval of
Articles of Amendment to the Company's Articles of Incorporation (the
"Amendment"), which would amend two Articles of the Company's current Articles
of Incorporation. Each amended provision is being voted on separately.
If the shareholders approve all the proposed changes, the Amendment would:
(a) fix the size of the Board of Directors, with changes in the number of
directors to be made only by the Board of Directors, provide for a classified
(i.e., staggered) Board of Directors, and allow for the removal of directors
only for cause; (b) require a vote of 75 percent of the outstanding shares to
change or repeal provision (a) listed above. The Company's current Articles of
Incorporation do not include the above director provisions and do not include
any super-majority voting requirements. If approved by shareholders, the
provisions listed above may make certain acquisitions of the Company and the
removal of directors more difficult. The classified Board of Directors will
provide for a longer commitment to service by each director. The Board of
Directors has approved changes to the Bylaws to conform them to the provisions
contained in the Amendment. Such amendments to the Bylaws are subject to
shareholder approval of Proposal 2(a) and 2(b).
A copy of the Amendment is attached as Exhibit A and the following summary
is qualified by reference to the attached Amendment.
Vote Required
Shareholders will vote on each of the proposed changes as a separate
matter. If a quorum is present at the annual meeting of shareholders, the
proposal will be adopted if it receives the affirmative votes of the holders of
a majority of the shares present, or represented, and entitled to vote upon the
proposal at the meeting. Shareholders may expressly abstain from voting upon the
proposal; such shares will have the effect of voting against the Amendment.
Broker non-votes will have no effect on the required vote.
If Proposal 2(a) is not approved, Proposal 2(b) will not be voted upon at
the meeting. If Proposal 2(a) is approved, but Proposal 2(b) is not approved,
only the provisions in Proposal 2(a) will be retained in the Amendment. The
Amendment, including each provision approved by shareholders, will become
effective when filed with Oregon's Secretary of State, which is expected to
occur as soon as practicable after the shareholder meeting.
Proposal 2(a): Approval of Provisions Setting Size of Board of Directors,
Classifying the Board of Directors and Permitting Directors to be Removed Only
for Cause
Article X of the proposed Amendment fixes the number of directors at not
less than six nor more than eleven, provides for a staggered Board of Directors
and permits the removal of directors only for "cause." For purposes of the
Amendment, "cause" means that the director has: (i) committed an act of fraud or
embezzlement against the Company; (ii) been convicted of, or plead nolo
contendere to, a crime involving moral turpitude; or (iii) failed to perform the
duties of a director, and such failure constitutes a breach of the director's
duty or loyalty to the Company or provides an improper personal benefit to the
director.
The Board will be divided into three classes. As shown in Proposal #1, the
directors will be classified alphabetically except for Mr. O'Shea who was
classified with the longest initial term and Mr. Gouveia who was classified with
the shortest initial term so that the nominating committee would be composed of
one director from each class. The Board chose to classify directors
alphabetically in recognition of contributions made by each director. The term
of office of directors of Class 1 would expire at the first annual meeting of
shareholders after their election, that of Class 2 would expire at the second
annual meeting after their election, and that of Class 3 would expire at the
third annual meeting after their election. Oregon law requires that the term of
any director elected to fill a vacancy must expire at the next shareholder
meeting. The Board of Directors currently consists of eight members. If this
provision is approved, at subsequent annual meetings, only those directors in
the class of directors whose terms expires at the time of the annual meeting
will be considered for election at that annual meeting of shareholders.
The Board of Directors is authorized to increase or decrease the size of
the Board of Directors (within the range described above) by the affirmative
vote of two-thirds of the directors. Under the terms of the Amendment,
shareholders no longer have the ability to change the size of the Board of
Directors. Without the unanimous consent of the directors then in office: (i) no
more than two additional directors may be added to the Board of Directors within
any 12-month period; and (ii) no person who is affiliated as an owner, director,
officer, employee or consultant of a company or business deemed by the Board of
Directors to be competitive with that of the Company is eligible to serve on the
Board of Directors of the Company.
By classifying the Board of Directors, limiting the ability to change the
size of the Board to the Board of Directors and allowing for removal of
directors only for cause, it will become more difficult to change the Board of
Directors. In addition, including the super-majority voting provision in the
Amendment as described in Proposal 2(b) will make it more difficult to amend
this provision.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROVISIONS SETTING THE
SIZE OF THE BOARD OF DIRECTORS, CLASSIFYING THE BOARD OF DIRECTORS, AND
PERMITTING THE REMOVAL OF DIRECTORS ONLY FOR CAUSE.
Proposal 2(b): Approval of a Super-Majority Vote for Future Amendments to
Certain Provisions in the Amendment
Article XII of the proposed Amendment requires a super-majority shareholder
vote to amend the provisions in the Articles of Incorporation relating to the
Board of Directors and to amend Article XII itself.
Such amendments must be approved by: (i) the affirmative vote of 75 percent
of all the outstanding shares of the Company entitled to vote on the matter,
voting as a single class; and (ii) if any shares of the Company are entitled to
vote on the matter as a separate voting group, the affirmative vote of 75
percent of such shares voting separately. Article XII increases the vote
otherwise required for the Company's shareholders to approve such amendments,
and correspondingly makes it more difficult for such changes to be effected,
even if desired by a majority of the Company's shareholders.
If Proposal 2(a) is not approved, Proposal 2(b) will not be considered.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPROVAL OF THE
SUPER-MAJORITY VOTE FOR FUTURE AMENDMENTS OF CERTAIN PROVISIONS IN THE ARTICLES
OF INCORPORATION.
PROPOSAL #3
AMENDMENT TO 1992 STOCK INCENTIVE PLAN
The 1992 Stock Incentive Plan (the "Plan") was initially adopted by the
Board on July 30, 1992 and was approved by the shareholders of the Company at
the annual meeting held on November 20, 1992. The Plan was later amended in 1995
to increase the number of shares available under the Plan and in 1996 to extend
the time awards may be made under the Plan. The Plan authorized the grant of
options to purchase up to 3,000,000 shares of the Company's common stock.
Management believes that the ability to grant incentive options is crucial
to its continuing ability to attract and retain qualified employees.
Historically, the Company has preserved its cash reserves by holding base
salaries to at, or below market and relying on stock option incentives to
recruit and retain qualified directors, officers and employees. On September 10,
1997, the Board approved, subject to shareholder approval, an increase in the
number of shares of Common Stock reserved for issuance pursuant to Awards (as
defined below) by 650,000 shares to 3,650,000 shares, subject to adjustment for
changes in capitalization. On July 28, 1998, after reviewing the proposed stock
option issuances to employees in fiscal 1999, the Board further increased the
number of shares reserved for issuance under the Plan to 4,500,000 shares,
subject to adjustment for changes in capitalization. Shares outstanding under
the Plan which expire or are otherwise terminated or not issued pursuant to
Awards will become available for grants of new Awards under the Plan. As of June
30, 1998, only 364 options were available to be granted to current or future
employees. A stock option grant under the Plan to Jim O'Shea for 165,000 shares
with an exercise price of $0.6875 per share is subject to shareholder approval
of this proposal. A summary description of certain terms and provisions of the
amended Plan follows.
AWARDS AND ELIGIBILITY. The Plan provides for stock-based awards to (i)
employees and officers of the Company and its subsidiaries, (ii) selected
non-employee agents, consultants, advisors and independent contractors of the
Company or any parent or subsidiary, and (iii) outside (non-employee) directors
of the Company. Awards which may be granted under the Plan include stock
options, stock bonuses, stock appreciation rights, and specified sales of stock
(collectively, "Awards"). The Stock Option Committee of the Board of Directors
(the "Committee") administers the Plan and determines the key employees and
non-employee advisors of the Company and its subsidiaries who are to receive
Awards under the Plan and the types, amounts, and terms of such Awards. The
Committee currently consists of Ms. Fey and Mr. Plestina. No Awards may be
granted under the Plan on or after July 29, 2002.
At May 31, 1998, a total of 31 persons were eligible for Awards under the
Plan, including each of the Company's executive officers, 27 other employees,
and each of the Company's seven outside (non-employee) directors. At that date,
these persons represented the pool of individuals considered to be eligible to
participate in the Plan. Outside directors may receive only the
non-discretionary options described under "Election of Directors -Board of
Directors Composition, Compensation and Committees."
PURPOSES. The purpose of the Plan is to promote and advance the interests of the
Company and its shareholders by enabling the Company to attract, retain, and
reward key employees, non-employee advisors, and directors. The Plan is also
intended to strengthen the commonality of interests between the Company's
shareholders and such employees, non-employee advisors, and directors by
offering equity-based incentive Awards to promote a proprietary interest in
pursuing the long-term growth, profitability, and financial success of the
Company.
OPTIONS. Options granted under the Plan may be either incentive stock options
meeting the requirements of Section 422 of the Internal Revenue Code (the
"Code") or nonqualified options. The Committee determines the number of shares
of Common Stock subject to options granted, the option price, the term of the
option, the time or times at which the option may be exercised and whether an
option is an incentive or nonqualified stock option. Incentive stock options,
however, may be exercisable not more than ten years from the date of grant. The
Plan does not limit the maximum term or amount of award for nonqualified
options. The exercise price per share for options granted under the Plan
generally must be at least 100 percent (for incentive stock options) or 75
percent (for nonqualified options) of the fair market value of a share of Common
Stock on the date the option is granted. The purchase price for options may be
paid in cash or, at the discretion of the Committee, in whole or in part in
shares of Common Stock. In the event that the employment or service of the
optionee with the Company or a parent or subsidiary corporation of the Company
terminates for any reason other than for death or physical disability, vested
options may be exercised at any time prior to the earlier of the expiration date
of the option or the expiration of 90 days after the date of such termination.
In the event of termination of employment due to death or disability, the
options may be exercised at any time prior to the earlier of the expiration date
of the option or the expiration of one year after the date of such termination.
STOCK BONUSES. The Committee may award Shares under the Plan as stock bonuses.
Shares awarded as a stock bonus shall be subject to such terms, conditions, and
restrictions as shall be determined by the Committee, all of which shall be
evidenced in a writing signed by the recipient prior to receiving the bonus
Shares.
STOCK SALES. The Committee may issue Shares under the Plan for such
consideration (including promissory notes and services) as determined by the
Committee, provided that in no event shall the consideration be less than 75
percent of the fair market value of the Shares at the time of issuance. Shares
so issued shall be subject to the terms, conditions and restrictions determined
by the Committee. The restrictions may include restrictions concerning
transferability, repurchase by the Company and forfeiture of the Shares issued,
together with such other restrictions as may be determined by the Committee.
STOCK APPRECIATION RIGHTS. The Committee may grant stock appreciation rights
("SARs") under the Plan. A recipient of SARs will receive, upon exercise, a
payment (in cash or in shares of Common Stock) based on the increase in the
price of a share of Common Stock between the date of grant and the date of
exercise. SARs may be granted in connection with options or other Awards granted
under the Plan or may be granted as independent Awards. If a SAR is granted in
connection with an option, the SAR shall be exercisable only to the extent and
on the same conditions that the related option could be exercised. Upon exercise
of a SAR, any option or portion thereof to which the SAR relates terminates. If
a SAR is granted in connection with an option, upon exercise of the option, the
SAR or portion thereof to which the option relates terminates.
TAX CONSEQUENCES TO THE COMPANY AND ITS SUBSIDIARIES. To the extent participants
qualify for capital gains treatment with respect to the sale of shares acquired
pursuant to exercise of an incentive stock option, the Company or its
subsidiaries will not be entitled to any tax deductions in connection with
incentive stock options. In all other cases, the Company or its subsidiaries may
be entitled to receive a federal income tax deduction at the same time and in
the same amount as the amount which is taxable to participants as ordinary
income with respect to Awards; provided such amount when added to all other
compensation paid to a participant is reasonable and otherwise deductible under
the Code and the Company complies with the tax withholding or reporting
obligations, if any.
TAX CONSEQUENCES TO RECIPIENT. Incentive Stock Options. Incentive stock options
under the Plan are intended to meet the requirements of Section 422 of the
Internal Revenue Code. No income results to a participant upon the grant of an
incentive stock option or upon the issuance of shares when the option is
exercised. The difference between the fair market value of the stock at such
time and the exercise price, however, is included in income for purposes of
calculating a participant's alternative minimum tax. The amount realized on the
sale or taxable exchange of such shares in excess of the exercise price will be
considered a capital gain, except that if such disposition occurs within one
year after exercise of the option or two years after grant of the option, the
participant will recognize taxable compensation at ordinary income tax rates
measured by the lesser of (i) the fair market value on the date of exercise
minus the exercise price or (ii) the amount realized on the sale of the share
minus the exercise price.
Nonqualified Options. No taxable income is recognized upon the grant of a
nonqualified option. In connection with the exercise of a nonqualified option, a
participant will generally realize ordinary income measured by the difference
between the exercise price and the fair market value of the shares acquired on
the date of exercise. Notwithstanding the foregoing, an optionee would not
recognize income at the time such option is exercised if the sale of the option
shares would subject him or her to possible liability under Section 16(b) of the
Securities Exchange Act of 1934. In this case, the optionee generally would not
recognize ordinary income until six months following the date on which the
Option was granted. The amount of ordinary income recognized will be the excess
of the fair market value of the option shares at that time over the price paid
for such shares. An optionee may avoid this result by filing an election under
Section 83(b) of the Code within thirty days after exercise of an Option. If
such an election is filed, the optionee will be taxed at the same time and in
the same manner as would a holder of an Option who is not subject to the
provisions of Section 16(b) of the Securities Exchange Act of 1934.
Bonus Shares and Stock Sales. Bonus shares awarded under the Plan and
shares sold outright under the Plan, which are transferable or not subject to a
substantial risk of forfeiture, are taxable as ordinary income equal to the
excess of the fair market value of the shares received (determined as of the
date of settlement) over the amount, if any, paid for the shares by the
participant. In the case of shares that are not transferable and are subject to
a substantial risk of forfeiture on the date of issuance, the participant will
generally recognize ordinary income equal to the excess of the fair market value
of shares received (determined as of the date on which the shares either become
transferable or are not subject to a substantial risk of forfeiture) over the
amount, if any, paid for the shares. In this case, a participant may elect to
recognize income when the shares are received, rather than upon the expiration
of the transfer restriction or risk of forfeiture, and, in such event, the
amount of ordinary income will be determined as of the date of issuance rather
than upon expiration of the applicable restriction.
Stock Appreciation Rights. The grant of a SAR to a participant will not
cause the recognition of income by the participant. Upon exercise of a SAR, the
participant will realize ordinary income equal to the amount of cash payable to
the participant plus the fair market value of any shares of Common Stock or
other property delivered to the participant.
CHANGES IN CAPITAL STRUCTURE. If the outstanding shares of Common Stock of the
Company are hereafter increased or decreased or are changed into or exchanged
for a different number or kind of shares or other securities of the Company or
of another corporation by reason of any recapitalization, reclassification,
stock split, combination of shares or dividend payable in shares, the Committee
shall make appropriate adjustments (i) in the number and kind of shares
available for awards under the Plan; and (ii) in the number and kind of shares
as to which outstanding options and stock appreciation rights, or portions
thereof then unexercised, shall be exercisable, so that the participant's
proportionate interest before and after the occurrence of the event is
maintained.
The Board recommends a vote FOR the proposed Amendment to the Plan. In the
event the Amendment is not approved by the shareholders, the Plan will remain in
effect as to the 3,000,000 shares of Common Stock previously authorized for
issuance.
OTHER MATTERS TO BE ACTED UPON
It is not known whether any other matters will come before the Meeting
other than as set out above and in the Notice of Meeting. However, if such
should occur, the person named in the accompanying form of proxy intends to vote
in accordance with his best judgment exercising discretionary authority with
respect to amendments or variations on matters identified in the Notice of
Meeting and other matters which may properly come before the Meeting or an
adjournment thereof.
SHAREHOLDER PROPOSAL AND NOMINATION PROCEDURES FOR THE MEETING
Article II of the Company's Bylaws provides that advance notice of
nominations for the election of directors or proposals for an amendment to the
Company's Bylaws must be received by the Company thirty (30) days prior to the
date of the shareholder meeting at which the shareholder wishes to present such
nomination or proposal or, if less than 40 days' notice of the date of the
meeting is given to shareholders, by the close of business on the 10th day
following the date on which notice of the meeting was mailed to shareholders.
Each notice of a nomination or proposal of a Bylaw amendment must contain,
among other things, (i) the name and address of the shareholder who intends to
make the nomination or proposal; (ii) a representation that the shareholder is a
holder of record of common stock of the Company entitled to vote at such meeting
and intends to appear in person or by proxy at the meeting to present the
nomination or proposal; (iii) certain biographical information concerning each
person to be nominated for election as a director, the number of shares of
common stock beneficially owned by such nominee, and the consent of such person
to serve as a director if so elected; (iv) a description of all arrangements or
understandings between the shareholder and each nominee and any other person or
persons (naming such person or persons) pursuant to which the nomination or
nominations are to be made by the shareholder; (v) the provisions of any
proposed Bylaw amendment and any financial interest of the shareholder in the
proposal; and (vi) such other information regarding each nominee or proposal as
would be required to be included in a proxy statement filed pursuant to the
proxy rules of the Securities and Exchange Commission.
ANNUAL REPORT
The Company's Annual Report to Shareholders for the fiscal year ended March
31, 1998 and the Company's Form 10-K/A for the fiscal year ended March 31, 1998
(the "10-K/A"), accompanies this proxy statement. On written request, the
Company will provide, without charge, a copy of its 10-K/A filed with the
Securities and Exchange Commission (including a list briefly describing the
exhibits thereto), to any record holder or beneficial owner of the Company's
Common Stock on July 24, 1998, the record date for the 1998 Annual Meeting of
Shareholders, or to any person who subsequently becomes such a record holder or
beneficial owner. Requests should be directed to the attention of the Secretary
of the Company at the address of the Company set forth in the Notice of Annual
Meeting of Shareholders immediately preceding this proxy statement.
INDEPENDENT ACCOUNTANTS
Arthur Andersen LLP, independent public accountants, examined the financial
statements of the Company for fiscal 1998. No change in independent public
accountants is contemplated for fiscal 1999. The Company expects representatives
of Arthur Andersen LLP to be present at the 1998 annual meeting of shareholders
and to be available to respond to appropriate questions from shareholders. The
accountants will have the opportunity to make a statement at the meeting if they
desire to do so.
PROPOSALS OF SHAREHOLDERS FOR THE 1999 ANNUAL MEETING OF SHAREHOLDERS
Proposals of shareholders to be presented at the Meeting to be held in
September 1999 must be received at the Company's executive offices by April 4,
1999, in order to be included in the Company's proxy statement and form of proxy
concerning that meeting.
DATED at Portland, Oregon, this 6th day of August, 1998.
BY ORDER OF THE BOARD
/S/ MICHAEL A. TEMPLE
-----------------------
Michael A. Temple
Vice President, Chief Financial
Officer and Secretary