-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, QK3ikB33x8293AVcts7MQwQ1djf+a49o0rSV0gK+C2B5aG1CoLzHZU2Z0El+jrXA FpPAjGbwA+75Qr0U0I4OAQ== /in/edgar/work/20000810/0001045969-00-000591/0001045969-00-000591.txt : 20000921 0001045969-00-000591.hdr.sgml : 20000921 ACCESSION NUMBER: 0001045969-00-000591 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20000630 FILED AS OF DATE: 20000810 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MEDI JECT CORP /MN/ CENTRAL INDEX KEY: 0001016169 STANDARD INDUSTRIAL CLASSIFICATION: [3841 ] IRS NUMBER: 411350192 STATE OF INCORPORATION: MN FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-20945 FILM NUMBER: 691319 BUSINESS ADDRESS: STREET 1: 161 CHESHIRE LANE STREET 2: SUITE 100 CITY: MINNEAPOLIS STATE: MN ZIP: 55441 BUSINESS PHONE: 6124757700 MAIL ADDRESS: STREET 1: 161 CHESHIRE LANE STREET 2: SUITE 100 CITY: MINNEAPOLIS STATE: MN ZIP: 55441 10-Q 1 0001.txt FORM 10-Q ================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934. For the quarterly period ended June 30, 2000 Commission File Number 0-20945 MEDI-JECT CORPORATION 161 Cheshire Lane, Suite 100 Minneapolis, Minnesota 55441 (763) 475-7700 A Minnesota Corporation IRS Employer ID No. 41-1350192 ------------------------------------ Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No --- --- The number of shares outstanding of the Registrant's Common Stock, $.01 par value, as of August 9, 2000, was 1,427,149. ================================================================================ 1 MEDI-JECT CORPORATION INDEX PAGE ---- PART I. FINANCIAL INFORMATION ITEM 1. Financial Statements (Unaudited) Balance Sheets as of December 31, 1999 and June 30, 2000....................................................3 Statements of Operations for the six and three months ended June 30, 1999 and 2000...........................................4 Statements of Cash Flows for the six months ended June 30, 1999 and 2000...........................................5 Notes to Financial Statements....................................6 ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations........................................8 ITEM 3. Quantitative and Qualitative Disclosures About Market Risk......10 PART II. OTHER INFORMATION ITEM 6. Exhibits and Reports on Form 8-K................................11 SIGNATURES ..............................................................14 2 MEDI-JECT CORPORATION BALANCE SHEETS (UNAUDITED)
December 31, June 30, 1999 2000 ------------ ------------ ASSETS Current assets: Cash and cash equivalents .......................................... $ 85,136 $ 141,497 Accounts receivable, less allowance for doubtful accounts of $25,000 and $20,384, respectively .............................. 167,301 379,681 Inventories ........................................................ 429,472 432,063 Prepaid expenses and other assets .................................. 23,263 39,844 ------------ ------------ 705,172 993,085 ------------ ------------ Equipment, furniture and fixtures, net ...................................... 1,002,554 848,502 ------------ ------------ Patent rights, net .......................................................... 302,410 288,381 ------------ ------------ $ 2,010,136 $ 2,129,968 ============ ============ LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable ................................................... $ 337,927 $ 207,335 Accrued expenses and other liabilities ............................. 551,104 529,516 Convertible notes payable .......................................... 0 1,950,000 Note payable obligations - current maturities ...................... 14,156 15,040 ------------ ------------ 903,187 2,701,891 ------------ ------------ Note payable, less current maturities ....................................... 54,094 48,774 ------------ ------------ Total liabilities ........................................................... 957,281 2,750,665 ------------ ------------ Shareholders' equity: Preferred Stock: $0.01 par; authorized 1,000,000 shares: Series A Convertible Preferred Stock: $0.01 par; authorized 10,000 shares; 1,000 and 1,100 issued and outstanding at December 31,1999, and June 30, 2000, respectively; aggregate liquidation preference of $1 million and $1.1 million at December 31, 1999 and June 30, 2000, respectively .............................................. 10 11 Series B Convertible Preferred Stock: $0.01 par; authorized 250 shares; 250 issued and outstanding at December 31, 1999 and June 30, 2000, respectively; aggregate liquidation preference of $250,000 .................................... 3 3 Common Stock: $0.01 par; authorized 3,400,000 shares; 1,424,729 and 1,424,869 issued and outstanding at December 31, 1999 and June 30, 2000, respectively .............. 14,247 14,249 Additional paid-in capital ......................................... 25,186,430 25,194,610 Accumulated deficit ................................................ (24,147,835) (25,829,570) ------------ ------------ 1,052,855 (620,697) ------------ ------------ $ 2,010,136 $ 2,129,968 ============ ============
See accompanying notes to financial statements. 3 MEDI-JECT CORPORATION STATEMENTS OF OPERATIONS (UNAUDITED)
For Three Months Ended For Six Months Ended ---------------------------- ---------------------------- June 30, June 30, June 30, June 30, 1999 2000 1999 2000 ----------- ----------- ----------- ----------- Revenues: Product Sales ................... $ 407,285 $ 766,854 $ 959,275 $ 1,228,113 Licensing & product development.. 185,291 0 1,209,608 22,788 ----------- ----------- ----------- ----------- 592,576 766,854 2,168,883 1,250,901 ----------- ----------- ----------- ----------- Operating Expenses: Cost of sales ................... 350,370 563,799 820,839 885,370 Research and development ........ 525,063 288,840 1,185,585 562,708 General and administrative ...... 488,526 661,828 974,209 1,219,427 Sales and marketing ............. 237,433 167,425 488,235 339,380 ----------- ----------- ----------- ----------- 1,601,392 1,681,892 3,468,868 3,006,885 ----------- ----------- ----------- ----------- Net operating loss .................... (1,008,816) (915,038) (1,299,985) (1,755,984) ----------- ----------- ----------- ----------- Other income (expense): Interest and other income ....... 23,347 0 49,446 26 Interest and other expense ...... (12,538) (2,002) (12,589) (3,554) ----------- ----------- ----------- ----------- 10,809 (2,002) 36,857 (3,528) ----------- ----------- ----------- ----------- Net loss .............................. $ (998,007) $ (917,040) $(1,263,128) $(1,759,512) =========== =========== =========== =========== Preferred stock dividends ............. (25,000) (17,460) (50,000) (17,460) ----------- ----------- ----------- ----------- Net loss applicable to common shares... $(1,023,007) $ (934,500) $(1,313,128) $(1,776,972) =========== =========== =========== =========== Basic and diluted net loss per common share ............. $ (.72) $ (.66) $ (.92) $ (1.25) =========== =========== =========== =========== Basic and diluted weighted average common shares outstanding ....... 1,424,729 1,424,832 1,424,733 1,424,781
See accompanying notes to financial statements. 4 MEDI-JECT CORPORATION STATEMENTS OF CASH FLOWS (UNAUDITED)
For Six Months Ended --------------------------------- June 30, 1999 June 30, 2000 ------------- ------------- Cash flows from operating activities: Net loss ......................................... $(1,263,128) $(1,759,512) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization ............... 211,655 215,555 Loss from disposal of assets ................ 35,444 3,646 Non-cash compensation ..................................... 14,443 7,963 Changes in operating assets and liabilities: Accounts receivable ......................... 64,245 (212,380) Inventories ................................. 217,849 (2,591) Prepaid expenses and other assets ........... (4,840) (16,581) Accounts payable ............................ 74 (130,592) Accrued expenses and other liabilities ...... (102,317) 56,188 Deferred revenue ............................ (216,000) ----------- ----------- Net cash used in operating activities ..................... (1,042,575) (1,838,304) ----------- ----------- Cash flows from investing activities: Purchases of equipment, furniture and fixtures (144,755) (36,178) Purchases of patent rights ....................... (17,879) (14,940) ----------- ----------- Net cash used in investing activities ..................... (162,634) (51,118) ----------- ----------- Cash flows from financing activities: Proceeds from convertible notes payable .......... -- 1,950,000 Principal payments on capital lease obligations... (1,129) (4,436) Proceeds from issuance of common stock ........... -- 219 ----------- ----------- Net cash provided by (used in) financing activities ....... (1,129) 1,945,783 ----------- ----------- Net increase (decrease) in cash and cash equivalents ...... (1,206,338) 56,361 Cash and cash equivalents: Beginning of period .............................. 2,852,285 85,136 ----------- ----------- End of period .................................... $ 1,645,947 $ 141,497 =========== ===========
See accompanying notes to financial statements. 5 MEDI-JECT CORPORATION NOTES TO FINANCIAL STATEMENTS (UNAUDITED) 1. BASIS OF PRESENTATION The accompanying unaudited financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. The accompanying financial statements and notes should be read in conjunction with the Company's 1999 audited financial statements and notes thereto. 2. INTERIM FINANCIAL STATEMENTS Operating results for the three-month and six-month periods ended June 30, 2000, are not necessarily indicative of the results that may be expected for the year ending December 31, 2000. 3. INVENTORIES Inventories consist of the following: December 31, 1999 June 30, 2000 ----------------- ------------- Raw Material $219,903 $285,079 Work in-process 60,998 ? Finished goods 148,571 146,984 -------- -------- $429,472 $432,063 ======== ======== 4. SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION Cash paid for interest during the six-month periods ended June 30, 1999 and 2000 was $84 and $4,070, respectively. Cash paid for taxes during the six-month periods ended June 30, 1999 and 2000 was $250. 5. NEW ACCOUNTING PRONOUNCEMENTS In December 1999 the Securities and Exchange Commission issued Staff Accounting Bulletin No. 101 which provides the staff's views in applying generally accepted accounting principles to selected revenue recognition issues. We will be required to adopt the new standard beginning with the fourth quarter of fiscal 2000. The impact of adoption on our financial statements is not yet quantifiable. 6 In March 2000, the Financial Accounting Standards Board issued Interpretation No. 44 (FIN 44), Accounting for Certain Transactions involving Stock Compensation, an interpretation of APB Opinion No. 25, which clarifies the accounting consequence of various modifications to the terms of a previously fixed stock option or award. Our stock option repricing in January 2000 will be accounted for, as a variable plan, on a prospective basis on July 1, 2000, in accordance with FIN 44. See note 6 for further details. 6. STOCK OPTION REPRICING On December 21, 1999, our Board of Directors approved the repricing, as of January 3, 2000, of all outstanding Qualified and Non-Qualified Stock Options held by our employees and directors, which had an exercise price greater than $1.5625 per share. This repricing action reduced the exercise price to $1.5625 per share for all such Stock Option Agreements representing 252,517 shares which had exercise prices ranging from $1.75 to $25.00 per share. Following the repricing, all other terms and conditions of these option agreements were unchanged, including the vesting schedules. Beginning in the third quarter of 2000 and in accordance with Financial Accounting Standards Board Interpretation No. 44 (FIN 44), the Company will be recognizing expense on the remaining 250,417 unexpired repriced shares. Expense of at least $234,512 relates to 87,260 shares of repriced unvested stock options and will be recognized over a maximum period of five years. Future expense related to vested and unvested stock option shares is dependent on the market value of the shares at the end of each quarter until the repriced stock options are exercised, forfeited or expire and is therefore unknown at this time. 7. SHARE TRANSACTION AGREEMENT On January 25, 2000, we signed a non-binding letter of intent with Permatec Holding AG, a privately-held drug delivery company located in Basel, Switzerland, to purchase three subsidiaries from Permatec in exchange for our Common Stock representing up to approximately 67% of our outstanding Common Stock (the "Share Transaction"). On July 14, 2000, we signed a definitive Stock Purchase Agreement involving the Share Transaction. These subsidiaries develop and license certain pharmaceutical formulation technologies, including transdermal patches and topical gels. In the first half of 2000, Permatec invested a total of $1,950,000 in Medi-Ject convertible notes, which will convert at the closing of the Share Transaction into a number of shares of Series C Convertible Preferred Stock equal to the outstanding principal balance of the notes divided by $200. The Medi-Ject Series C Convertible Preferred Stock will convert, at the option of the holder, into shares of Medi-Ject common stock at any time after the closing of the Share Transaction or after October 31, 2000, if the Share Transaction is not completed by such date. If the Share Transaction is not completed by October 31, 2000, 7 the outstanding balance of the notes will accrue interest at an annual rate of 10%. Upon conversion of these notes, a one-time interest expense charge of approximately $1,764,000 related to the in-the-money conversion features of the outstanding convertible notes will be recorded by the Company. 8. NASDAQ LISTING REQUIREMENTS On April 7, 2000, we were notified by Nasdaq/Amex that we no longer met certain requirements for continued listing on The Nasdaq SmallCap Market. As a result, our eligibility for continued listing on The Nasdaq Stock Market is being reviewed. In May we provided to Nasdaq a plan for achieving compliance during the second and third quarter of this year. This plan included, among other things, the business combination agreement with Permatec Holding AG and additional equity financing. If the plan is not accepted by Nasdaq, our stock will be taken off the Nasdaq SmallCap Market and we will seek to have it traded in the over-the-counter market. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Results of Operations Three and Six Months Ended June 30, 2000 and 1999 Total revenues for the three and six months ended June 30, 2000 were $766,854 and $1,250,901, respectively. These figures reflect an increase of $174,278, or 29% for the same three month period in 1999 and a decrease of $917,982, or 42% compared to the same six month period in 1999. Product sales increased $359,569 or 88% in the three month period and $268,838 or 28% in the six month period ended June 30, 2000, compared to the same periods in the prior year. The increase in product sales in the three-month period is primarily attributable to a 201% increase in revenue from sales in the human growth hormone market. Licensing and product development fee income decreased by $185,291 in the three-month period and $1,186,820 or 98% in the six-month period ended June 30, 2000, as compared to the prior-year periods. This decrease results from having received funds from Schering-Plough Corporation during the first quarter of 1999 to settle mutual obligations of the parties under a contract dated January 20, 1998. We received a one-time payment from Schering-Plough in exchange for cancellation of a product purchase order and as reimbursement for certain non-cancelable manufacturing expenses. The Company expects that licensing and product development fee income will fluctuate on a quarterly basis, depending on a variety of factors; including the timing of execution of potential development and licensing agreements and the timing, nature and size of fee payments to be made under existing and new agreements. In addition, since the Company does not, in general, recognize project-based fee income until related development work has been performed, quarterly results will fluctuate with the timing of the Company's research and development efforts. 8 Cost of sales in the three months and six months ended June 30, 2000 reflect increases of $213,429 or 61% and $64,531 or 8% respectively when compared to prior-year periods. The increases are the result of higher product sales, primarily products used with human growth hormone applications. Research and development expenses totaled $288,840 and $562,708 in the three- and six-month periods ended June 30, 2000, respectively. These figures reflect decreases from the prior-year periods of $236,223 or 45% and $622,877 or 53%, respectively mainly due to lower utilization of certain production employees for development activities and lower clinical study expenses. General and administrative expenses totaled $661,828 and $1,219,427 in the three- and six-month periods ended June 30, 2000, respectively. These figures represent an increase of $173,302 or 35% and $245,218 or 25% when compared to the same periods in 1999. The largest component of the increase is attributable to expenses associated with the Permatec Share Transaction activities totaling $202,189 for the six months ended June 30, 2000. Sales and marketing expenses totaled $167,425 and $339,380 in the three and six month periods ended June 30, 2000, respectively. These figures reflect a decrease in the three month period of $70,008 or 29% and a decrease in the six month period of $148,855 or 30%. The main components of these decreases are a decrease in outside marketing services of approximately $33,000 and a decrease in payroll expense of approximately $66,000. Payroll decreases resulted from staffing reassignments to the general and administrative department and some staffing reductions as a result of outsourcing our domestic insulin direct sales process. We anticipate these staffing levels to remain consistent for the remainder of the year. Net other income for the three and six months ended June 30, 2000 decreased by $12,811 or 119% and $40,385 or 110% relative to the prior-year three-month and six-month periods ending June 30. This decrease primarily reflects a decrease in interest income attributable to lower average cash balances. Liquidity and Capital Resources Cash and cash equivalents totaled $85,136 on December 31, 1999, compared to $141,497 on June 30, 2000. This increase of $56,361 results primarily from proceeds from convertible notes payable in the amount of $1,950,000 offset by a net loss of $1,759,512 adjusted for charges for depreciation and amortization and changes in operating and treasury activities. Significant components of changes in operating assets and liabilities include an increase in accounts receivable of $212,380 and a decrease in accounts payable of $130,592. We expect to report a net loss for the year ended December 31, 2000 as we continue to incur marketing and development cost related to bringing future generations of products to market. Our long-term capital requirements will depend on numerous factors, including the status of collaborative arrangements, the progress of research and development programs and the receipt of revenues from sales of products. 9 To continue our existence, we will be required to raise additional working capital or combine with another entity or both. We are currently pursuing the share transaction with Permatec Holding AG, as more fully explained in Item 1, Note 7 above. Regarding this transaction, we have been financing our operations through advances from Permatec under convertible promissory notes described above. To date, Permatec has provided $1,950,000 to us under such notes. Even with such share transaction, we will be required to raise additional capital to continue operations. There can be no assurance that we will be able to raise the needed additional capital on acceptable terms or at all. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Market Risk Disclosure There have been no material changes in reported market risks faced by the Company since December 31, 1999. 10 PART II - OTHER INFORMATION Item 1. Legal Proceedings. None. Item 2. Changes in Securities None. Item 3. Defaults Upon Senior Securities. None Item 4. Submission of Matters to a Vote of Securities Holders. None Item 5. Other Information. None Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits 3.1 Second Amended and Restated Articles of Incorporation.(a) 3.2 Second Amended and Restated Bylaws.(a) 3.3 Certificate of Designations for Series A Convertible Preferred Stock. 3.4 Certificate of Designations for Series B Convertible Preferred Stock. 4.1 Form of Certificate for Common Stock.(a) 4.2 Stock Warrant, dated January 25, 1996, issued to Becton Dickinson and Company.(a) 4.3 Stock Option, dated January 25, 1996, issued to Becton Dickinson and Company.(a) 4.4 Reserved. 4.5 Reserved. 11 4.6 Preferred Stock, Option and Warrant Purchase Agreement, dated January 25, 1996, with Becton Dickinson and Company (filed herewith as Exhibit 10.7).(a) 4.7 Warrant issued to Elan International Services, Ltd. on November 10, 1998. 4.8 Warrant issued to Grayson & Associates, Inc. on September 23, 1999. 10.1 Office/Warehouse/Showroom Lease, dated January 2, 1995, including amendments thereto.(a) 10.3 Development and Supply Agreement with Ferring N.V., dated December 31, 1993 and amendments. 10.4 Exclusive License & Supply Agreement with Bio-Technology General Corporation, dated December 22, 1999. 10.5 Preferred Stock Purchase Agreement with Bio-Technology General Corporation, dated December 22, 1999. 10.6 Reserved. 10.7 Preferred Stock, Option and Warrant Purchase Agreement, dated January 25, 1996, with Becton Dickinson and Company.(a) 10.8* Employment Agreement, dated December 21, 1999, with Franklin Pass, M.D. 10.9* Employment Agreement, dated December 21, 1999 with Lawrence Christian. 10.9.1* Employment Agreement, dated May 1, 2000, with Lawrence Christian. 10.10* Reserved. 10.11* Employment Agreement, dated December 21, 1999, with Peter Sadowski. 10.11.1* Employment Agreement, dated May 1, 2000, with Peter Sadowski. 10.12* 1993 Stock Option Plan.(a) 10.13* Form of incentive stock option agreement for use with 1993 Stock Option Plan.(a) 10.14* Form of non-qualified stock option agreement for use with 1993 Stock Option Plan.(a) 10.15* 1996 Stock Option Plan, with form of stock option agreement.(a) 12 10.20+ Development and License Agreement with Becton Dickinson and Company, effective January 1, 1996 (terminated January 1, 1999). See Exhibit 10.24 (a) 10.21 Office-Warehouse lease with Carlson Real Estate Company, dated February 11, 1997.(b) 10.22* 1998 Stock Option Plan for Non-Employee Directors.(c) 10.23* Letter consulting agreement dated February 20, 1998 with Geoffrey W. Guy.(c) 10.24# Agreement with Becton Dickinson dated January 1, 1999 10.25 Securities Purchase Agreement with Elan International Services, Ltd. dated November 10, 1998 10.26# License & Development Agreement with Elan Corporation, plc, dated November 10, 1998 27 Financial Data Schedule 99 Cautionary Statement (b) * Indicates management contract or compensatory plan or arrangement. + Pursuant to Rule 406 of the Securities Act of 1933, as amended, confidential portions of Exhibit 10.20 were deleted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment, which was subsequently granted by the Securities and Exchange Commission. # Pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended, confidential portions of Exhibits 10.24 and 10.26 were deleted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment. (a) Incorporated by reference to our Registration Statement on Form S-1 (File No. 333-6661), filed with the Securities and Exchange Commission on October 1, 1996. (b) Incorporated by reference to our Form 10-K for the year ended December 31, 1996. (c) Incorporated by reference to our Form 10-K for the year ended December 31, 1997. (b) Reports on Form 8-K No reports on Form 8-K were filed during the quarter ended June 30, 2000. 13 SIGNATURES Pursuant to the requirements of the securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. MEDI-JECT CORPORATION August 9, 2000 /s/ Franklin Pass - ---------------------------------- ------------------------------------------ Date Franklin Pass, MD, Chairman/CEO August 9, 2000 /s/ Lawrence M. Christian - ---------------------------------- ------------------------------------------ Date Lawrence M. Christian, Vice President- Finance & Administration/CFO (principal financial & accounting officer) 14 EX-10.3 2 0002.txt AGREEMENT DATED 12.31.1993 Exhibit 10.3 Agreement dated as of December 31, 1993, between Medi-Ject Corporation, 1840 Berkshire Lane, Minneapolis, Minnesota, USA 55441 ("Medi-Ject"), and Ferring N.V., Pietermaai 15, Willemstad, Curacao, Netherlands Antilles ("Ferring"). Medi-Ject is the owner of rights with respect to a needle-free device for subcutaneous administration of pharmaceutical drugs, the specifications for which are attached as Schedule A. Ferring wishes to have Medi-Ject further develop such device for the administration of recombinant human growth hormone ("hGH") in accordance with the specifications attached as Schedule B and, in connection therewith, to have exclusive rights with respect to the use and sale of such modified device in the Territory (as hereafter defined) for the administration of hGH. The parties agree as follows: 1) Definitions. As used in this Agreement, the following definitions will ----------- apply: (a) "Affiliate: means any person or entity that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, another person or entity. (b) "Health Regulatory Agencies" means health regulatory agencies in the various countries in the Territory and the United States Food and Drug Administration. (c) "Product" means a device for subcutaneous administration of hGH meeting the specifications set forth in Schedules A and B with such modifications as may result from the development work to be carried out by Medi- Ject pursuant to Section 2 hereof and as submitted to and approved by Health Regulatory Agencies, and including any improvements thereon hereafter made by Medi-Ject or with respect to which Medi-Ject obtains rights. 1 (d) "Regulatory Filings" means those registrations, applications and other filings with Health Regulatory Agencies by Medi-Ject or its Affiliates, or by Ferring or its Affiliates, now or hereafter existing during the term of this Agreement relating to the Product. (e) "Technology" means any proprietary information, including, without limitation, all techniques, processes, know-how, methods of analysis, formulations and any other information now or hereafter owned by Medi-Ject or its Affiliates, or in the possession of Medi-Ject or its Affiliates and with respect to which they have the right to license, which relate to the Product. (f) "Territory" means each and every country of Europe, now existing or hereafter created, and each and every country which was once a part of the U.S.S.R. 2. Development Stage. ----------------- (a) In consideration of the payments by Ferring pursuant to Section 2 (b) , Medi-Ject will use its best efforts diligently to develop the Product to meet the specifications set forth in Schedule B with a target completion date on or before July 1, 1994. During such development stage, Medi-Ject will provide Ferring with needle-free administration devices for the purpose of laboratory tests and pre-clinical trials. Ferring will provide Medi-Ject with the results of such tests and trials, which Medi-Ject may use as part of a Drug Master File in device applications with Health Regulatory Agencies. (b) Attached as Schedule C is a description of milestones for the development stage as well as performance criteria for the various milestones. In full consideration of the development work to be performed hereunder by Medi- Ject, Ferring will pay the following amounts: (i) $50,000 upon execution of this Agreement, receipt of which is acknowledged, which amount will be non-refundable; 2 (ii) $50,000 upon successful completion of Stage 3 as set forth in Schedule C or May 1, 1994, whichever is earlier, which amount will be non- refundable; (iii) $50,000 upon successful completion of either Stage 4 or 5 as set forth in Schedule C, or if this has not occurred by December 31, 1994, $25,000 on December 31, 1994 and $25,000 upon such successful completion or June 30, 1995, whichever is earlier, which amounts will be non-refundable; and (iv) with respect to each of the following countries, the amount set forth opposite the name of the country upon the receipt of all technical and other regulatory approvals required in that country for the commercial introduction of the Product for the administration of hGH: (A) France $10,000 (B) Germany $10,000 (C) Italy $15,000 (D) Spain $15,000 If such approvals have not been received in France by January 31, 1995, in Germany by January 31, 1996 or in Italy or Spain by July 31, 1996, then one-half of the amount listed above shall be paid on the applicable respective date and the balance shall be paid upon receipt of approval or December 1, 1996, whichever is earlier. Such amounts will be non-refundable. (c) At any time prior to the receipt of all technical and other regulatory approvals referred to in Section 2(b)(iv) in one of the four countries listed in that Section, Ferring may, upon written notice to Medi-Ject terminate this Agreement, in which event neither party will have any further obligation to the other except with respect to Section 11 hereof, which obligation will survive the termination. 3. Grant of Rights. ---------------- 3 (a) Medi-Ject grants to Ferring the exclusive rights in the Territory with respect to the Product and the Technology to use and market, but not manufacture, the Product for the administration of hGH, as well as the exclusive rights to cross-reference all Regulatory Filings relating to such use of the Product. Medi-Ject agrees to notify Health Regulatory Agencies of Ferring's right to cross-reference and to file all necessary documents required to allow Ferring to exercise such right. (b) Medi-Ject will communicate and deliver to Ferring all of the information, data and know-how relating to the Technology presently under Medi- Ject's control or that may come under the control of Medi-Ject hereafter during the term of this Agreement. (c) Medi-Ject will provide such technical assistance as may be reasonably requested by Ferring and shall cooperate with Ferring's efforts to obtain the necessary information, and to develop the necessary experience, to permit Ferring to utilize effectively the Technology and to obtain from Health Regulatory Agencies the necessary registrations to market the Product. Any reasonable out-of-pocket expenses incurred by Medi-Ject in providing such assistance or cooperation will be reimbursed by Ferring. 4. Supplies. --------- (a) Requirements. Subject to the terms and conditions hereof, and ------------ following successful development of the Product, Medi-Ject will sell to Ferring, on an exclusive basis, for subcutaneous administration of hGH all of Ferring's requirements of the Product in the Territory. (b) Forecasts. At least 120 days prior to the first requested shipment --------- date to Ferring and at six month intervals thereafter, Ferring will provide Medi-Ject with a forecast of its purchase requirements for the Product for the succeeding twelve months. Such forecasts will not be legally binding on Ferring but will be prepared in good faith and will represent Ferring's reasonable expectation of its purchase requirements for the forecasted year and Ferring will attempt, in good faith, to purchase the volume of the Product projected by such forecasts, it being understood, 4 however, that there will be no minimum purchase obligation hereunder. The forecasts will be broken down on a quarterly basis and Medi-Ject will maintain an inventory sufficient to cover the forecasted requirements of Ferring for two quarterly periods. (c) Maintenance of Supply. If at any time Medi-Ject does not satisfy the --------------------- requirements of the last sentence of Section 4 (b) , it shall immediately advise Ferring. If Medi-Ject is unable to cure the deficiency within ninety days following such advice, Medi-Ject shall immediately arrange for Ferring to receive the Product from an alternative source which shall be able to maintain an inventory of the Product sufficient to satisfy Ferring's requirements for a six month period as required pursuant to Section 4 (b). At such time as the inventory of the Product of Medi-Ject and of any alternative source arranged for by Medi-Ject aggregates less than the equivalent of Ferring's requirements of the Product for a period of three months, Ferring shall have the right to obtain an alternative source of its choice. In such event, Medi-Ject agrees to give Ferring such technical assistance on a confidential basis as is necessary to permit Ferring to obtain the benefits of this Section 4 (c), and shall reimburse Ferring for all reasonable expenses incurred by it in arranging for an alternative supply source including, without limitation, expenses incurred with respect to required regulatory approvals. Medi-Ject shall, 'in any event, give Ferring notice as far in advance as possible of any circumstances which have arisen or may arise which may cause the provisions of this Section 4 (c) to become operative. Ferring shall use reasonable efforts to terminate its purchase obligations relating to any agreement it may enter into with an alternate supplier selected by Ferring as promptly as possible after Medi-Ject has cured any supply deficiency. 5. Product Price and Payments. --------------------------- (a) Transfer Price. The initial transfer price per unit of the Product --------------- will be $225. Prices may be modified, but in no event more often than once every twelve months commencing one year after the initial order by Ferring for commercial sale. Any price increase shall in no event exceed the lesser of (i) three percent and (ii) the increase in the Producer Price Index, All Commodities, Not Seasonally Adjusted, as reported by the U.S. Department of Labor, Bureau of 5 Labor Statistics for the period from the date of this Agreement or the date of the last increase, whichever is later. (b) Payment. Payment of invoices will be in U.S. Dollars net thirty days -------- after receipt of goods. 6. Orders and Shipment. Following the initial order by Ferring for commercial -------------------- sale, orders for the Product will be placed by Ferring at six month intervals. All orders for the Product will be initiated by a purchase order sent to Medi- Ject by Ferring, it being understood that the terms of this Agreement take precedence over any terms contained in any purchase order. All orders within the current forecast will be deemed accepted by Medi-Ject upon receipt. For orders in excess of the forecast, any order not rejected by Medi-Ject within thirty days of receipt will be deemed accepted. Accepted orders will be shipped within ninety days after receipt or by the shipment request date set forth in the purchase order, whichever is later. 7. Quality of Products. -------------------- (a) Quality. The Products sold by Medi-Ject to Ferring pursuant hereto ------- will meet the respective specifications therefor submitted to and approved by the applicable Health Regulatory Agencies. (b) Applicable Laws. The Products sold pursuant hereto will conform in all ---------------- respects to the applicable laws, regulations and approvals governing the manufacture of the Product, and Medi-Ject will assume full responsibility in connection therewith, provided that Medi-Ject's obligation under this Section 7(b) as to any labelling of the Product is limited to conforming to the labelling instructions specified by Ferring to Medi-Ject. (c) Manufacturing Practices. Medi-Ject agrees that the manufacture of the ------------------------ Products will be in accordance with good manufacturing practices as the same are established by applicable statutes and regulations. 6 (d) Quality Control Protocol. Each shipment of the Products to Ferring ------------------------ will be accompanied by a quality control protocol certified as being in accordance with good manufacturing practices and a certificate specifying that the Products conform to the specifications therefor. (e) Non-Conforming Product. In the event that any quantity of the Products ------------------------ delivered to Ferring pursuant hereto fails to satisfy the requirements of this Section or fails to meet specifications agreed in writing by the parties Ferring may reject the same by giving notice to Medi-Ject within thirty days of Ferring's receipt of such Products. Such notice will specify the manner in which the Products fail to meet specifications or are otherwise defective. In the event of any dispute as to whether any quantity of the Products sold to Ferring fails to meet such requirements or such specifications or is otherwise defective, such dispute will be resolved by an independent testing organization acceptable to both Ferring and Medi-Ject, the costs of which will be borne by the losing party. 8. Use of Name and Advertising. In the event the parties subsequently agree to ----------------------------- a design change in the outside sleeve for the Product solely for use by Ferring, all sales of the Product by Ferring, and all advertising related thereto, will be under a trademark, tradename or servicemark owned or approved by Ferring, and Medi-Ject will have no claim or right to any name, trademark, tradename, servicemark, goodwill or other intangible value resulting from such sales or advertising. If such change is not made, the Product will bear the name "Medi- Jector" which is solely the property of Medi-Ject. 9. Representations, Warranties and Covenants of Medi-Ject. Medi-Ject ------------------------------------------------------- represents, warrants and covenants that: (a) Corporate Power. Medi-Ject has all requisite corporate power and --------------- authority to enter into this Agreement and to consummate the transactions contemplated hereby. 7 (b) Rights. Medi-Ject has the right to grant to Ferring the rights granted ------ hereunder and to sell the Product to Ferring as contemplated hereby. Medi-Ject has not granted and will not grant any other right or license to use the Technology or use or sell the Product in the Territory for the administration of hGH during the term of validity of this Agreement. (c) No Other Sales. Neither Medi-Ject nor any of its Affiliates will sell -------------- the Product or any products competitive with the Product to any other person, firm or corporation in the Territory for the administration of hGH during the term of validity of this Agreement, using its best endeavors to satisfy itself that any such usage is not intended by any prospective purchaser. (d) No Infringement. The sale of the Product by Medi-Ject to Ferring, or --------------- the use or sale of the Product by Ferring as contemplated hereby, will not involve, to the best knowledge of Medi-Ject, any infringement of any patent or other rights of any other person or entity. (e) Independent Contractor. Medi-Ject is not authorized to and will not ---------------------- incur any liability for which Ferring may become directly, indirectly or contingently liable, nor will Medi-Ject hold itself out as having authority to represent or act on behalf of Ferring in any capacity whatsoever, nor will the relationship between Ferring and Medi-Ject be construed as a co-partnership, joint verture or principal-agent relationship. 10. Representations, Warranties and Covenants of Ferring. Ferring represents, ----------------------------------------------------- warrants and covenants that: (a) Corporate Power. Ferring has all requisite corporate power and --------------- authority to enter into this Agreement and to consummate the transactions contemplated hereby. (b) Regulatory Affairs. etc. Ferring will be responsible for the ----------------------- maintenance of product licenses for the Product and other regulatory affairs. Medi-Ject will have no property rights with respect to any such licenses. Medi- Ject will have the right to cross-reference Ferring's Regulatory Filings solely for the purposes of a Drug Master File for the Product for 8 administration of hGH in device applications with Health Regulatory Agencies. Ferring agrees to notify Health Regulatory Agencies of Medi-Ject's right to cross-reference and to file all necessary documents required to allow Medi-Ject to exercise such right. (c) Independent Contractor. Ferring is not authorized to and will not ---------------------- incur any liability for which Medi-Ject may become directly, indirectly or contingently liable, nor will Ferring hold itself out as having authority to represent or act on behalf of Medi-Ject in any capacity whatsoever, nor will the relationship between Ferring and Medi-Ject be construed as a co-partnership, joint venture or principal-agent relationship. 11. Confidentiality. ---------------- (a) Each of the parties agrees to hold in confidence any confidential or proprietary information disclosed to it by the other. Each party will take such precautions as it normally takes with its own confidential or proprietary information to prevent the improper disclosure to an independent third party of information disclosed to it pursuant to this Agreement. Notwithstanding the preceding provision, the obligation of confidence with respect to information disclosed does not include: (i) information which, at the time of disclosure, is known to the recipient, as evidenced by records of the recipient; (ii) information which, at the time of disclosure, is published, known publicly, or is otherwise in the public domain; (iii) information which, after disclosure, is published, becomes known publicly or otherwise becomes part of the public domain through no fault of the recipient; 9 (iv) information which has been or is disclosed to the recipient in good faith by 4 third party who was not and is not under any obligation of confidence or secrecy at the time of such disclosure; and (v) information which is required to be submitted to a governmental agency f or the purpose of obtaining product approval, provided that the recipient will make a good faith attempt to obtain confidential treatment by such agency. (b) Upon termination of this Agreement, each party will promptly return to the other any confidential or proprietary information disclosed to it by the other prior to termination and agrees to keep confidential such information for a period of five years after the effective date of such termination. 12. Indemnification. Each party will indemnify and hold the other party --------------- harmless from and against any and all claims, judgments, costs, awards, expenses (including reasonable attorneys' fees) and liabilities of every kind arising out of any breach by such party of its warranties and covenants or other obligations contained herein; provided that, with respect to product liability, Medi-Ject's liability will be limited to claims arising from its fault or negligence in manufacturing or delivering the Product and Ferring will be liable for any other such claims. Any party asserting a right to indemnification hereunder will notify the other party within thirty days of receiving notice of any third party claim, provide the other party with all available information and assistance and afford the other party the opportunity, at such other party's expense, to defend or settle the claim. 13. Term and Termination. --------------------- (a) Term. Subject to Section 2 (c) the term of this Agreement shall be for ---- a period of ten years from the date on which all necessary approvals and registrations have been obtained by Ferring to permit the marketing of the Product in France, Germany, Italy and Spain and may be extended at Ferring's option for additional periods of two years each, provided that not later than 10 one year prior to the expiration date of any such period the parties will begin discussion of any appropriate modifications for the subsequent extension term. (b) Termination. Subject to Section 2 (c), this Agreement may be ----------- terminated immediately upon written notice of termination given by: (i) the non-defaulting party in the event that the other party: (1) commits a material breach or default under this Agreement (other than the payment of money when due), which breach or default is not remedied within 45 days after receipt of written notice thereof by the party in breach or default; (2) has made a material misrepresentation of any representation or warranty contained herein; or (3) under the laws of The Netherlands Antilles or the United States, (A) makes an assignment for the benefit of creditors, (B) permits the appointment of a trustee or receiver of all or a substantial part of its assets, (C) admits in writing its inability to meet its obligations when due or commits any other act of bankruptcy or (D) institutes voluntary proceedings in bankruptcy or insolvency, or permits voluntary institution of such proceedings against it; (ii) Medi-Ject in the event that Ferring fails to make any payment of money to Medi-Ject when due and such failure continues for thirty days after receipt of written notice thereof, for purposes of this subparagraph (ii) each payment received from Ferring being credited against its longest past due payment obligation; or (iii) Ferring in the event that the use and sale of the Product by Ferring under the circumstances contemplated hereby results in an infringement of any patent or other proprietary right of any other person, firm or corporation. 11 (c) Continuation of Certain Rights. Termination of this Agreement or any ------------------------------ of the rights granted hereunder will be without prejudice to any rights of either party against the other that may have accrued to the date of such termination. Upon such termination, Medi-Ject will have the option, exercisable within twenty days of the effective date of such termination by notice thereof, to repurchase from Ferring any unsold Product at Ferring's total cost in connection therewith, including shipping costs, duties, taxes, and the like. If Medi-Ject does not repurchase the unsold Product from Ferring, Ferring will thereafter have the right to sell, for the sole purpose of subcutaneous administration of hGH, any units of the Product then remaining unsold. 14. Information and Improvements. ---------------------------- (a) Medi-Ject Information. If at any time during the term of this --------------------- Agreement Medi-Ject has any information concerning the Product or its use, including protocols, clinical studies, case records, statistical analyses and other pertinent information relating thereto, or develops any improvements to the Product, it will promptly communicate all details in respect thereof to Ferring, which will be entitled to use the same during the term of this Agreement. (b) Ferring Information. If at any time during the term of this Agreement ------------------- Ferring has any information concerning the Product or its use, including protocols, clinical studies, case records, statistical analyses and other pertinent information relating thereto, or develops any improvements to the Product, it will promptly communicate all details in respect thereof to ----------- Medi-Ject which will be entitled to use the same. 15. Force Majeure. Neither party hereto will be liable for damages or otherwise ------------- for failure to satisfy or perform any obligation or duty to be satisfied or performed pursuant to the terms and provisions of this Agreement, if such failure is occasioned by act of God, war, civil disorder, strikes, labor disputes, acts or regulations of governmental agencies and authorities, or similar circumstances beyond the control of the party hereto who has failed to satisfy or perform. However, any such obligation or duty, although the satisfaction or performance thereof has been 12 postponed pursuant to this Section, will remain in force and will be satisfied and performed pursuant to this Agreement as soon as such satisfaction and performance becomes legally and practicably possible. 16. Arbitration. All disputes and controversies arising out of or relating to ----------- this Agreement, other than as provided in Section 7(e) hereof will be determined by arbitration in London, England in accordance with the Rules and Regulations of the International Chamber of Commerce by three arbitrators appointed in accordance with such Rules and judgment on the award rendered in such arbitration may be entered by any court having jurisdiction thereof. Any such arbitration shall be conducted in the English language. 17. General Provisions. ------------------ (a) Assignability. This Agreement will be binding upon and inure to the ------------- benefit of the parties hereto and their successors and assigns. Neither the rights nor the obligations of Ferring and Medi-Ject hereunder may be assigned or delegated without the prior written consent of the other party, except that Ferring may, without consent, assign this Agreement to an Affiliate, and Ferring may also sublicense to an Affiliate the rights granted to it pursuant to Section 3 hereof. (b) Governing Law. This Agreement will be governed by and construed in ------------- accordance with the laws of the State of Minnesota. (c) Counterparts. This Agreement may be executed simultaneously in two or ------------ more counterparts, each of which will be deemed an original, but all of which together will constitute one and the same instrument. (d) Section Headings. All section headings herein are inserted for ---------------- convenience only and will not modify or affect the construction or interpretation of any provision of this Agreement. 13 (e) Amendment. This Agreement may be modified, amended and supplemented by --------- mutual written agreement of the parties. Each party may waive any condition intended to be for its benefit. Each amendment, modification, supplement or waiver will be in writing signed by the party to be charged. (f) Entire Agreement. This Agreement contains the entire agreement of the ---------------- parties regarding the subject matter contained herein. All prior agreements, negotiations and discussions between the parties which are not reflected or set forth in this Agreement are merged into this Agreement and have no force or effect. (g) Severability. In case any one or more of the provisions of this ------------ Agreement should be invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions will not in any way be affected or impaired thereby. (h) Notices. All notices, requests, demands and other communications ------- hereunder will be addressed to the addresses set forth at the head of this Agreement and deemed to have been duly given upon receipt when delivered personally, mailed by registered mail, return receipt requested, or telexed or telefaxed with confirmed answer back or to such other -address designated in accordance with the foregoing. IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above. Medi-Ject Corporation By____________________________ Ferring N.V. By____________________________ 14 SCHEDULE A Product Specifications ---------------------- Medi-Ject has provided to Ferring technical drawings for the Medi-Jector EZ, copies of which are attached. This model is currently under modification; the modified device is presently as the MJ6. Medi-Ject will, prior to March 31, 1994, provide Ferring, subject to Ferring's approval, comparable technical drawings for the MJ6, which drawings will then constitute Schedule A of this Agreement. 15 SCHEDULE B Ferring Specifications ---------------------- Dose reading in International Units (IU) of hGH. The number scale will reflect 0.5 IU up to a total of 5.0 IU increasing in 0.5 unit increments. Total volume capacity will remain 0.50 ml. Size of numbers in the dosage window will be increased at least fifteen percent. Pictograms for dose reading, power setting and locked/unlocked function will be provided. Any other modifications requested by Ferring will be agreed in writing by the parties. Ferring will pay all agreed costs for such modifications. 16 SCHEDULE C Milestones ---------- Stage 1: Successful completion of an investigation regarding the formation of antibodies: --------------------------- In a clinical setting, patients should be treated with jet injected growth hormone for several months and the anti-GH antibody tiers determined. Sufficient patients (30-50) should be treated with 6-7 administrations per week for at least 3 months (the shortest time antibody formation can be expected and successfully determined). Antibody formation is defined as 15% or more binding of the administered growth hormone to antibodies, corrected for the value at the start of the study. Stage 2: Successful completion of an investigation regarding local tolerance: --------------- Normally this test is performed in rabbits. Since this is impossible to perform with the Medi-Jector, human data should be collected. These should come from 2 sources; in the antibody study the local injection site should be inspected and no reaction of the skin may occur. The other source is comparable data, generated by Medi-Ject with jet injected insulin. Stage 3: Successful completion of an investigation regarding the effects of high pressure on hGH integrity: --------------------------------------------- In a laboratory experiment the Medi-Jector loaded with reconstituted GH solution should be emptied in a suitable receptacle. The integrity of the collected GH, with regard to dimer, polymer, oxidized and diamidated forms, should be determined. This should be identical to those of the freshly reconstituted solution or at least fall within the limits as set for the final product. 17 Stage 4: Successful completion of an investigation studying the bioequivalence of hGH by a s.c. injection as --------------- compared to the administration with the product. Bioequivalence should be proven between Medi-Ject injected and needle injected growth hormone. The study should be performed double blind, cross-over in 12-18 healthy volunteers as stated in the guidelines issued by the EC. Stage 5: Successful completion of a clinical efficacy study. --------------- This multicentre study should show the clinical efficacy of hGH delivered with the product in at least 100 patients with growth retardation due to growth hormone deficiency over a treatment period of at least 6 months. Stage 6: Receipt of all technical and other regulatory approvals in France, Germany, Italy and Spain. 18 Amendment dated as of October 26, 1994 to Agreement dated as of December 31, 1993 between Medi-Ject Corporation ("Medi-Ject") and Ferring NV ("Ferring") (the "Agreement"). Medi-Ject is developing the Product (as defined in the Agreement) to meet the specifications set forth in Schedules A and B of the Agreement. The parties wish to provide for the development of additional modifications and to expand the Territory covered by the Agreement. The parties agree as follows: 1) Section 1 (c) of the Agreement is amended to read as follows: "(c) 'Product' means a device for subcutaneous administration of hGH meeting the specifications set forth in Schedules A and B hereof and Exhibit A to the Amendment dated as of October 26, 1994, with such modifications as may result from the development work to be carried out by Medi-Ject pursuant to Section 2 hereof and pursuant to paragraph 2 of the Amendment dated as of October 26, 1994, and as submitted to and approved by Health Regulatory Agencies, and including any improvements thereon hereafter made by Medi-Ject or with respect to which Medi-Ject obtains rights." 2) In consideration of the payment by Ferring to Medi-Ject of $150, 000 upon execution of this Amendment, receipt of which is acknowledged, Medi-Ject will use its best efforts diligently to develop the Product to meet the specifications set forth in Exhibit A hereto with a target completion date for a prototype model on or before October 24, 1995 and for a final production model on or before July 24, 1996. All costs in excess of $150,000, including for production molds and tooling, will be borne by Medi-Ject. 3) The second sentence of Section 2(a) of the Agreement is amended to read as follows: 19 "During such development stage and the additional development under paragraph 2 of the Amendment dated as of October 26, 1994, Medi-Ject will provide Ferring with needle-free administration devices for the purpose of laboratory tests and pre-clinical trials." 4) Section 1(f) of the Agreement is amended to read as follows: "(f) 'Territory' means each and every country of the world other than the United States, Canada, Japan and Korea; provided, however, that Medi-Ject will afford Ferring a first right of refusal with respect to Korea before granting to any third party the rights in such country with respect to the Product and the Technology to use and market the Product f or the administration of hGH." 5) In consideration of the amendment referred to in paragraph 4 hereof, Ferring is paying to Medi-Ject $50,000 upon execution of this Amendment, receipt of which is acknowledged. Subject to the last sentence of this paragraph, Ferring will use its best efforts to obtain regulatory approvals for the Product and to commercialize the Product after obtaining such regulatory approvals in the countries in the Territory. Ferring will pay to Medi-Ject $40,000 upon the first commercial sale of the Product in each country not included in the definition of the Territory as originally defined in the Agreement (the "New Countries") (such payment is herein referred to as a "Commercialization Licensing Fee"). Upon Ferring paying to Medi-Ject five such Commercialization Licensing Fees, a cumulative amount of $200,000, no further Commercialization Licensing Fee shall be payable. If, after one year following the completion date f or the final production model f or the Product, commercial introduction of the Product has not taken place in. at least five New Countries, Ferring will pay to Medi-Ject the amount of $100,000 less the sum of any payments previously made pursuant to the preceding provisions of this paragraph 5, and the balance with respect to such number of New Countries less than five in which commercial introduction has not taken place will be paid on commercial introduction. Any payment pursuant to the preceding sentence will be applied pro rata to the number of New Countries less than five for which no payment had previously been made during the one-year period. If, however, prior to the end of one year following the completion date for the final 20 production model for the Product, there have occurred significant changes in the market for hGH such that commercial introduction of the Product is not, in the reasonable judgment of Ferring, commercially viable, Ferring may, without further payment of any Commercialization Licensing terminate its rights with respect to the New Countries. 6) In all other respects the Agreement shall remain in full force and effect. Medi-Ject Corporation By____________________________ Ferring NV By____________________________ 21 EXHIBIT A --------- SPECIFICATIONS FOR A "POWER SETTING" READING IN THE FERRING SPECIFIC MEDI-JECTOR MJ6-F Functional specification - ------------------------ The power setting reading should allow, through mechanical or electronic means, reading of the set power of penetration, in a window or comparable device, on the outside of the Medi-Jector. Setting the power - Power settings will cover the range of power settings currently in the Medi-Jector device with discrete power setting stepped readout or a continuum of adjust ability with not less than 5 discrete steps as a readout. Specification of design - ----------------------- The power setting readout should be in a window, comparable to that for dose readout, and adjacent to the existing readout or as a LCD window that incorporates both dosage and power as unique and separate readouts. A mechanical readout of the power setting is desired for regulatory reasons if feasible within the existing or modified housing of the device. However, either an electrical or a mechanical solution is acceptable. The design of the MJ-6F will be compatible and consistent with the targeted patient population of children from six (6) to eighteen (18) years of age. It is understood that the current Medi-Jector EZ device is considered consistent with the targeted patient population. 22 Amendment dated as of June 30, 1997 to Agreement dated as of December 31, 1993, as amended, between Medi-Ject Corporation ("Medi-Ject") and Ferring GmbH ("Ferring") (as successor in interest) (the "Agreement"). The parties agree that the Agreement is amended as follows: 1. Section 1 (c) of the Agreement is amended to read as follows: "(c) 'Product' means a device for subcutaneous administration of hGH meeting the specifications for the components thereof set forth in Exhibits A (MJ6-B or Zomajet 2), B (needle-free syringe for the device described in Exhibit A), C (adapter for the device described in Exhibit A) and D (adapter cap for the device described in Exhibit A) to the Amendment dated as of June 30, 1997, with such modifications as may result from the development work to be carried out by Medi-Ject pursuant to Section 2 hereof, and as submitted to and approved by Health Regulatory Agencies, and including any improvements thereon hereafter made by Medi-Ject or with respect to which Medi-Ject obtains rights, excluding any such improvements which result in a device materially smaller than the device described in Exhibits A and B. Until first delivery of the Product as defined in the preceding sentence to Ferring, expected January 1, 1998, the Product shall meet the specifications set forth in Schedules A and B (MJ4) to the Agreement as initially executed as of December 31, 1993." 2. Section 2(a) of the Agreement is amended to read as follows: "(a) Medi-Ject will use its best efforts diligently to develop the Product to meet the specifications set forth in Exhibits A, B C and D to the Amendment dated as of June 30, 1997 with a target completion date on or before January 1, 1998. Medi-Ject will provide Ferring with such number of needle-free administration devices as the parties may reasonably agree for the purpose of laboratory tests and 23 pre-clinical trials. Ferring will provide Medi-Ject with the results of such tests and trials, which Medi-Ject may use as part of a Drug Master File in device applications with Health Regulatory Agencies." 3. Section 5(a) of the Agreement is amended by deleting the first sentence and inserting in lieu thereof the following: "(a) Effective July 1, 1997, the transfer price per unit of the Product as defined in the second sentence of Section 1(c) will be $230.40. The initial transfer price per unit for each component of the Product as defined in the first sentence of Section 1(c) will be $230.40 for the Zomajet 2, $2.00 for the needle-free syringe, and $1.40 for the adapter and $.25 for the adapter cap, with the adapter and adapter cap packaged sterile together in a one to one ratio." 4. Section 5(b) of the Agreement is amended to read as follows: "(b) Payment. Payment of invoices will be in U.S. Dollars net thirty ------- days after receipt of goods meeting the applicable specifications." 5. Section 7 of the Agreement is amended by adding a new subsection (f) to read as follows: "(f) Warranty. Notwithstanding anything to the contrary contained -------- Medi-Ject warrants that for a period of one year from the date a Product is delivered to the end user thereof (but, with respect to any Product delivered to Ferring after June 30, 1997, in no event more than two years from the date of delivery to Ferring) such Product shall be free from defects in material and workmanship. Medi-Ject will replace any defective Product free of charge." 24 6. The Agreement is amended by adding a new Section 8A to read as follows: "SA. Adapter Molds. Ferring has paid Medi-Ject for expenses related to ------------- the production of cavity molds for the manufacture of adapters and adapter caps meeting the specifications set forth in Exhibits C and D to the Amendment dated as of June 30, 1997, which molds shall be the property of Ferring (subject to Medi-Ject's rights under the following two sentences) but shall remain in the control of Medi-Ject. Medi-Ject shall retain the right to use adapters and adapter caps produced from such molds for research and development purposes. Medi-Ject shall also have the right to sell adapters and adapter caps produced from such molds to third parties for resale or use with drugs other than human growth hormone drugs with Medi-Ject needle-free drug delivery systems other than the Product; provided that Medi-Ject shall pay to Ferring a fee of $.10 per unit sold to third parties on all sales in excess of 100,000 units. Such fees shall be paid by Medi-Ject within 45 days after the end of the semi-annual period to which such fees apply accompanied by a report showing the amount and calculation of the fees." 7. If in any country of the Territory in which Ferring is not marketing recombinant human growth hormone, Medi-Ject has the opportunity to sell the Product to a third party for the administration of human growth hormone, the parties will in good faith discuss appropriate terms under which Medi-Ject may market the Product in such country. In all other respects, the Agreement shall remain in full force and effect. Medi-Ject Corporation By: ______________________ Ferring GmbH By: ______________________ 25 EXHIBIT A --------- SPECIFICATIONS FOR A MEDI-JECTOR 6B (or Zomajet 2) POWER PACK Functional specification, power pack - ------------------------------------ The power pack will be cylindrically shaped with no exposed external metal body housing components at either the fully compressed or at the fully unwound spring setting. The cylindrical portion of the power pack proximal to the connection point for the disposable front end chamber (DFEC) will at the dosage window be approximately 1. 15 inches along its smallest diameter and approximately 1.20 inches at its biggest diameter. These diameters represent approximate measurements close to the dosage label display window and indicate a slight deformation of the cylindrical shape by increasing the diameter in one orientation to accommodate the lens. The device will accept a plastic disposable front end chamber that will connect to the power pack via a bayonet connection requiring less than 90(degrees) of rotation. Power settings will cover the range of power settings currently in the Medi- Jector device with discrete power setting stepped readout or a continuum of adjustability with not less than five (5) discrete steps as a readout. Design specification, power pack - -------------------------------- The dosage display will be mechanical and will require the viewing of a dosage label through a lens. The display will be at least equal to the MJ4 dosage display in terms of the size of the numbers displayed. The power setting, if adjusted, will change the dosage displayed, and this may happen without changing the actual dosage that the device will deliver. The design of the device will be compatible and consistent with targeted patient population of children from six (6) to eighteen (18) years of age. It is understood that the current MJ4 device 26 (Medi-Jector EZ device) is consistent with this specification and a similar device would be also consistent with this intended use and patient population. Attached part drawing is for reference only and subsequent revision level changes to such drawing will not invalidate contract or reference to such part drawing. 27 EXHIBIT B --------- SPECIFICATIONS OF DISPOSABLE FRONT END CHAMBER ("DFEC") FOR MEDI-JECTOR 6B (or Zomajet 2) Functional specification, disposable front end chamber (DFEC) - ------------------------------------------------------------- The disposable front end chamber (DFEC) will consist of three parts: the injector tip, the plunger and the seal. The injector tip and plunger will be made of polycarbonate plastic resin and the seal will be made of nitrile rubber. The DFEC will serve as the means with which the power pack holds drug to be injected. The DFEC is the part of the needle-free injection system which comes in contact with the injection site. The DFEC assembly will be singly packaged and provided sterile and pyrogen free. The DFEC will be used for seven (7) injections or one week, whichever comes first. The components of the DFEC include the injector tip, the plunger and the seal, which will each be biocompatible as appropriate for a transient contact, blood path indirect, medical device. The DFEC will be compatible with recombinant human growth hormone, The materials used for the components and packaging of the DFEC will be compatible with the sterilization method chosen for the assembly. Design specification, disposable front end chamber (DFEC) - --------------------------------------------------------- The disposable front end chamber (DFEC) will be designed such that it can connect to the Medi-Jector 6B (Zomajet2) power pack. The DFEC will allow approximately 1/3 of a total dose to be visible to the user. In general, the DFEC will be cylindrical in form, with pronounced variations in diameter to accommodate a means for adapter connection and positioning as well as positioning on the power pack. The adapter connection with the DFEC will be via a rotational motion. The design of the DFEC will be compatible and consistent with targeted patient population of children from six (6) to eighteen (18) years of age. It is understood that the current MJ4 device 28 (Medi-Jector EZ device) front end chamber is consistent with this specification and a similar disposable system would be also consistent with this intended use and patient population. Attached part drawing is for reference only and subsequent revision level changes to such drawing will not invalidate contract or reference to such part drawing. 29 EXHIBIT C --------- SPECIFICATIONS OF ADAPTER FOR MEDI-JECTOR 6B (or Zomajet 2) Functional specification, adapter - --------------------------------- One end of the adapter is intended to connect with the drug vial will have a hollow spike. The opposite end of the adapter will connect to the DFEC to serve as a connection to facilitate the aspiration of human growth hormone from a vial (or bottle) into the DFEC. The adapter components will be made of polycarbonate plastic resin and elastomeric silicone. The adapter will be singly packaged and provided sterile and pyrogen free. The adapter components will be compatible with human growth hormone under the usage conditions currently in practice with the MJ4 adapter. The materials used for the components and the packaging of the adapter will be compatible with the sterilization method chosen for this assembly. Design specification, adapter - ----------------------------- The adapter will be cylindrical in shape and will connect to a drug vial with a 20-mm finish. The sides of the adapter will shroud a spike that is intended to penetrate the drug vial, and this spike will allow the aspiration of drug out of the drug vial. The adapter portion that is designed to connect with the DFEC shall create a liquid path allowing the aspiration of drug into the DFEC. The design of the adapter will be compatible and consistent with targeted patient population of children from six (6) to eighteen (18) years of age. It is understood that the current MJ4 device (Medi-Jector EZ device) has an adapter that is consistent with this specification and a similar assembly would be also consistent with this intended use and patient population. Attached part drawing is for reference only and subsequent revision level changes to such drawing will not invalidate contract or reference to such part drawing. 30 EXHIBIT D --------- SPECIFICATIONS OF ADAPTER CAP FOR MEDI-JECTOR 6B (or Zomajet 2) Functional specification, adapter cat) - -------------------------------------- The adapter cap will connect to the adapter, opposite to the adapter/vial connection and it will serve as a closure to prevent access to the drug and vial. The adapter cap will be made of polycarbonate plastic resin. The adapter cap will be singly packaged and provided sterile and pyrogen free. The adapter components will be compatible with human growth hormone under the usage or packaging conditions in practice during 1997 with the MJ4 adapter assembly. The materials used for the components and the packaging of the adapter assembly will be compatible with the sterilization method chosen for this assembly. Design specification, adapter cap - --------------------------------- The adapter cap will be cylindrical in shape and will connect to the adapter end that is designed to connect with the DFEC. The connection is intended to prevent any liquid from expelling from the adapter when it is connected to a vial (or bottle) of human growth hormone under normal storage conditions. The design of the adapter cap will be compatible and consistent with targeted patient population of children from six (6) to eighteen (18) years of age. It is understood that the current MJ4 device (Medi-Jector EZ device) has an adapter cap that is consistent with this specification and a similar assembly would be also consistent with this intended use and patient population. Attached part drawing is for reference only and subsequent revision level changes to such drawing will not invalidate contract or reference to such part drawing. 31 Amendment dated as of August 15, 1998 to Agreement dated as of December 31, 1993, 29 amended, between Medi-Ject Corporation ("Medi-Ject) and Ferring GmbH ("Ferring") (the "Agreement). The parties agree that the Agreement is amended as follows: 1. Section I (f) of the Agreement is amended to read as follows: "(f) "Territory" means each and every country of Europe now existing or hereafter created, and each and every country which was once port of the USSR." 2. Section 5 of the Amendment dated as of October 26, 199A to the Agreement is deleted in its entirety. 3. In consideration of the foregoing amendments, Medi-Ject is paying to Ferring $75,000 upon execution of this Amendment As additional consideration Medi-Ject agrees to pay to Ferring a fee equal to 10% of Medi-Ject's Net Sales of the Product in countries outside of the Territory, other than the United States, Canada, Japan and Korea, until Ferring has received an aggregate amount of $75,000. "Net Sales" means the gross amount invoiced on sales of the Product less returns. sales taxes and cash and trade discounts. Such fees shall be paid by Medi-Ject within 45 days after the and of the quarterly annual period to which such fees apply accompanied by a report showing a calculation of the amount and fees. Medi-Ject will afford access to Ferring and its representatives, not more often than once in any calendar year, upon reasonable notice, to the books and records of Medi-Ject as they relate to Net Sales solely for the purpose of verifying the correctness of such information. 4. Medi-Ject acknowledges that Ferring has provided to it certain highly confidential technical information relating to Ferring's application of the Product for the administration of human growth hormone, which information, subject to the provisions of Section 11 of the Agreement, may be useful to Medi- Ject in registering the Product with Health Regulatory Agencies in countries outside of the Territory or for related purposes. Medi-Ject will give Ferring written notice prior to using any such information for such purposes and will cooperate with Ferring in devising procedures to maintain strict confidential treatment of such information. In all other respect the Agreement shall remain in full force and effect. Medi-Ject Corporation By_____________________________ Ferring GmbH By_____________________________ 32 Agreement, may be useful to Medi-Ject in registering the Product with Health Regulatory Agencies in countries outside of the Territory or for related purposes. Medi-Ject will give Ferring written notice prior to using any such information for such purposes and will cooperate with Ferring in devising procedures to maintain strict confidential treatment of such information. In all other respect the Agreement shall remain in full force and effect. Medi-Ject Corporation By_____________________________ Ferring GmbH By_____________________________ 33 EX-10.9.1 3 0003.txt LAWRENCE CHRISTIAN EMPLOYMENT AGREEMENT Exhibit 10.9.1 MEDI-JECT CORPORATION EMPLOYMENT AGREEMENT THIS AGREEMENT, dated as of May 1, 2000, by and between Medi-Ject Corporation, a Minnesota corporation (the "Company"), and Lawrence M. Christian, an individual resident of Ramsey County in the State of Minnesota ("Executive"). WHEREAS, the Company wishes to employ Executive to render services for the Company on the terms and conditions set forth in this Agreement, and Executive wishes to be retained and employed by the Company on such terms and conditions. NOW, THEREFORE, in consideration of the premises and the respective undertakings of the Company and Executive set forth below, the Company and Executive agree as follows: 1. Employment. The Company hereby employs Executive, and Executive accepts ---------- such employment and agrees to perform services for the Company, for the period and upon the other terms and conditions set forth in this Agreement. 2. Term. Unless terminated at an earlier date in accordance with Section 9 of ---- this Agreement, the term of Executive's employment hereunder shall be for a period commencing on the date of this Agreement and continuing as set forth in the Term and Compensation Addendum applicable to each year. 3. Position and Duties. ------------------- 3.01 Service with Company. During the term of this Agreement, Executive agrees to perform such reasonable employment duties as the Board of Directors of the Company shall assign to him from time to time. As of the date of this Agreement, Executive has been elected to serve as Vice President, Finance and Administration/ Chief Financial Officer/Secretary/Treasurer of the Company, with responsibility for managing the financial and administrative affairs of the Company. 3.02 Performance of Duties. Executive agrees to serve the Company faithfully and to the best of his ability and to devote his full time, attention and efforts to the business and affairs of the Company during the term of this Agreement. Executive hereby confirms that, other than as set forth herein, he is under no contractual commitments inconsistent with his obligations set forth in this Agreement, and that for the term of this Agreement, he will not render or perform services for any other corporation, firm, entity or person that are inconsistent with the provisions of this Agreement. 4. Compensation. ------------ 4.01 Salary. Compensation shall be set by the Board of Directors subject ------ to adjustment annually by same Board of Directors and subject to any additional incentive(s) and/or bonus(es) approved by same Board of Directors as set out annually in the Term and Compensation Addendum applicable to each year. 4.02 Participation in Benefit Plans. Executive shall also be entitled to ------------------------------ participate in all employee benefit plans or programs (including vacation time) of the Company to the extent that his position, title, tenure, salary, age, health and other qualifications make him eligible to participate. The Company does not guarantee the adoption or continuance of any particular employee benefit plan or program during the term of this Agreement, and Executive's participation in any such plan or program shall be subject to the provisions, rules and regulations applicable thereto. 4.03 Expenses. The Company will pay or reimburse Executive for all -------- reasonable and necessary out-of-pocket expenses incurred by him in the performance of his duties under this Agreement, subject to the presentment of appropriate vouchers in accordance with the Company's normal policies for expense verification. 5. Confidential Information. Except as permitted or directed by the Company's ------------------------ Board of Directors, during the term of this Agreement and for a period of five years thereafter, Executive shall not divulge, furnish or make accessible to anyone or use in any way (other than in the ordinary course of the business of the Company) any confidential or secret knowledge or information of the Company which Executive has acquired or become acquainted with or will acquire or become acquainted with prior to the termination of the period of his employment by the Company (including employment by the Company or any affiliated companies prior to the date of this Agreement), whether developed by himself or by others, concerning any trade secrets, confidential or secret designs, processes, formulae, plans, devices or material (whether or not patented or patentable) directly or indirectly useful in any aspect of the business of the Company, any customer or supplier lists of the Company, any confidential or secret development or research work of the Company, or any other confidential information or secret aspects of the business of the Company. Executive acknowledges that the above-described knowledge or information constitutes a unique and valuable asset of the Company and represents a substantial investment of time and expense by the Company and its predecessors, and that any disclosure or other use of such knowledge or information other than for the sole benefit of the Company would be wrongful and would cause irreparable harm to the Company. Both during and after the term of this Agreement, Executive will refrain from any acts or omissions that would reduce the value of such knowledge or information to the Company. The foregoing obligations of confidentiality, however, shall not apply to any knowledge or information which is now published or which subsequently becomes generally publicly known in the form in which it was obtained from the Company, other than as a direct or indirect result of the breach of this Agreement by Executive. 6. Ventures. During the term of this Agreement, it is anticipated that -------- Executive will be engaged in or associated with the planning and implementing of projects, programs and ventures involving the Company and third parties, and Executive hereby expressly acknowledges and agrees that all rights in such projects, programs and ventures shall belong to the Company. Except as formally approved by the Company's Board of Directors, Executive shall not be entitled to any interest in such projects, programs and ventures or to any commission, finder's fee or other compensation in connection therewith, other than the salary and compensation to be paid to Executive as provided in this Agreement, described in Section 4.01 of this Agreement. 7. Noncompetition and Nonsolicitation Covenants. -------------------------------------------- 7.01 Agreement Not to Compete. Executive agrees that, during the term of ------------------------ his employment by the Company he shall not, directly or indirectly, engage in competition with the Company in any manner or capacity (e.g., as an advisor, principal, agent, partner, officer, director, stockholder, employee, member of any association, or otherwise) in any phase of the business that the Company is conducting during the term of this Agreement, including the design, development, manufacture, distribution, marketing, leasing or selling of accessories, devices, or systems related to the products or services being sold by the Company. 7.02 Geographic Extent of Covenant. The obligations of Executive under ----------------------------- Section 7.01 shall apply to any geographic area in which the Company: (a) has engaged in business during the term of this Agreement through production, promotional sales or marketing activity, or otherwise; or (b) has otherwise established its goodwill, business reputation, or any customer or supplier relations. 7.03 Limitation on Covenant. Ownership by Executive, as a passive ---------------------- investment, of less than one percent (1%) of the outstanding shares of capital stock of any corporation listed on a national securities exchange or publicly traded in the over-the-counter market shall not constitute a breach of this Section 7. 7.04 Nonsolicitation and Noninterference. During the term of this ----------------------------------- Agreement and for a period of two years thereafter, Executive shall not: (a) induce or attempt to induce any employee of the Company to leave the employ of the Company, or in any way interfere adversely with the relationship between any such employee and the Company; (b) induce or attempt to induce any employee of the Company to work for, render services to, provide advise to or supply confidential business information or trade secrets of the Company to any third person, firm or corporation; or (c) induce or attempt to induce any customer, supplier, licensee, licensor or other business relation of the Company to cease doing business with the Company, or in any way interfere with the relationship between any such customer, supplier, licensee, licensor or other business relation and the Company. 7.05 Indirect Competition and Interference. Executive further agrees that, ------------------------------------- during the term of this Agreement and, solely with respect to Section 7.04, the period covered by Section 7.04, he will not, directly or indirectly, assist or encourage any other person in carrying out, directly or indirectly, any activity that would be prohibited by the above provisions of this Section 7 if such activity were carried out by Executive, either directly or indirectly; and, in particular, Executive agrees that he will not, directly or indirectly, induce any employee of the Company to carry out, directly or indirectly, any such activity. 8. Patent and Related Matters. -------------------------- 8.01 Disclosure and Assignment. Executive will promptly disclose in ------------------------- writing to the Company complete information concerning each and every invention, discovery, improvement, device, design, apparatus, practice, process, method or product, whether patentable or not, made, developed, perfected, devised, conceived or first reduced to practice by Executive, either solely or in collaboration with others, during the term of this Agreement, or within six months thereafter, whether or not during regular working hours, relating either directly or indirectly to the business, products, practices, or techniques of the Company (hereinafter referred to as "Developments"). Executive, to the extent that he has the legal right to do so, hereby acknowledges that any and all of said Developments are the property of the Company and hereby assigns and agrees to assign to the Company any and all of Executive's right, title and interest in and to any and all of such Developments. Without limiting the foregoing, any and all original works of authorship which are created by Executive (solely or jointly with others) within the scope of Executive's employment and which are protectable by copyright law shall be deemed "works made for hire," as that term is defined in the U.S. Copyright Act (17 U.S.C. Section 101). 8.02 Future Developments. As to any future Developments made by Executive ------------------- that relate to the business, products or practices of the Company and that are first conceived or reduced to practice during the term of this Agreement, or within six months thereafter, but that are claimed for any reason to belong to an entity or person other than the Company, Executive will promptly disclose the same in writing to the Company and shall not disclose the same to others if the Company, within twenty (20) days thereafter, shall claim ownership of such Developments under the terms of this Agreement. If the Company makes such claim, Executive agrees that, insofar as the rights (if any) of Executive are involved, it will be settled by arbitration in accordance with the rules of the American Arbitration Association. The locale of the arbitration shall be Minneapolis, Minnesota (or other locale convenient to the Company's principal executive offices). If the Company makes no such claim, Executive hereby acknowledges that the Company has made no promise to receive and hold in confidence any such information disclosed by Executive. 8.03 Limitation on Sections 8.01 and 8.02. The provisions of Sections 8.01 ------------------------------------ and 8.02 shall not apply to any Development meeting the following conditions: (a) such Development was developed entirely on Executive's own time; (b) such Development was made without the use of any Company equipment, supplies, facility or trade secret information; (c) such Development does not relate: (i) directly to the business of the Company; or (ii) to the Company's actual or demonstrable anticipated research; (d) such Development does not result from any work performed by Executive for the Company. 8.04 Assistance of Executive. Upon request and without further ----------------------- compensation therefor, but at no expense to Executive, and whether during the term of this Agreement or thereafter, Executive will do all lawful acts, including, but not limited to, the execution of papers and lawful oaths and the giving of testimony, that in the opinion of the Company, its successors and assigns may be necessary or desirable in obtaining, sustaining, reissuing, extending and enforcing United States and foreign Letters Patent, including, but not limited to, design patents, on any and all of such Developments, and for perfecting, affirming and recording the Company's complete ownership and title thereto, and to cooperate otherwise in all proceedings and matters relating thereto. 8.05 Records. Executive will keep complete, accurate and authentic ------- accounts, notes, data and records of all Developments in the manner and form requested by the Company. Such accounts, notes, data and records shall be the property of the Company, and, upon its request, Executive will promptly surrender the same to it or, if not previously surrendered upon its request or otherwise, Executive will surrender the same, and all copies thereof, to the Company upon the conclusion of his employment. 8.06 Obligations, Restrictions and Limitations. Executive understands that ----------------------------------------- the Company may enter into agreements or arrangements with agencies of the United States Government, and that the Company may be subject to laws and regulations which impose obligations, restrictions and limitations on it with respect to inventions and patents that may be acquired by it or that may be conceived or developed by employees, consultants or other agents rendering services to it. Executive agrees that he shall be bound by all such obligations, restrictions and limitations applicable to any such invention conceived or developed by him during the term of this Agreement and shall take any and all further action that may be required to discharge such obligations and to comply with such restrictions and limitations. 9. Termination. ------------ 9.01 Grounds for Termination. This Agreement shall terminate prior to the ----------------------- expiration of the initial term set forth in Section 2 or any extension thereof in the event that at any time during the initial term or any extension thereof: (a) Executive shall die; (b) the Board of Directors of the Company shall determine that: (i) Executive has become disabled; (ii) Executive had breached this Agreement in any material respect, which breach is not cured by Executive or is not capable of being cured by Executive within thirty (30) days after written notice of such breach is delivered to Executive; or (iii) Executive has engaged in willful and material misconduct, including willful and material failure to perform his duties as an officer or employee of the Company. Notwithstanding any termination of this Agreement, Executive, in consideration of his employment hereunder to the date of such termination, shall remain bound by the provisions of this Agreement that specifically relate to periods, activities or obligations upon or subsequent to the termination of Executive's employment. 9.02 "Disability" Defined. The Board of Directors may determine that ------------------- Executive has become disabled, for the purpose of this Agreement, in the event that Executive shall fail, because of illness or incapacity, to render services of the character contemplated by this Agreement over a period of ninety (90) days during any one hundred and eighty (180) day period. The existence or nonexistence of grounds for termination because of disability shall be made in good faith by the Board of Directors after notice in writing given to Executive at least thirty (30) days prior to such determination. During such thirty (30) day period, Executive shall be permitted to make a presentation to the Board of Directors for its consideration. 9.03 Surrender of Records and Property. Upon termination of his --------------------------------- employment with the Company, Executive shall deliver promptly to the Company all records, manuals, books, blank forms, documents, letters, memoranda, notes, notebooks, reports, data, tables, calculations or copies thereof, which are the property of the Company or which relate in any way to the business, products, practices or techniques of the Company, and all other property, trade secrets and confidential information of the Company, including, but not limited to, all documents which in whole or in part contain any trade secrets or confidential information of the Company, which in any of these cases are in his possession or under his control. 10. Miscellaneous. -------------- 10.01 Governing Law. This Agreement is made under and shall be governed by ------------- and construed in accordance with the laws of the State of Minnesota. 10.02 Prior Agreements. This Agreement contains the entire Agreement of ---------------- the parties relating to the subject matter hereof and supersedes all prior Agreements and understandings with respect to such subject matter, and the parties hereto have made no Agreements, representations or warranties relating to the subject matter of this Agreement which are not set forth herein. 10.03 Withholding Taxes. The Company may withhold from any benefits ----------------- payable under this Agreement all federal, state, city or other taxes as shall be required pursuant to any law or governmental regulation or ruling. 10.04 Amendments. No amendment or modification of this Agreement shall be ---------- deemed effective unless made in writing and signed by the parties hereto. 10.05 No Waiver. No term or condition of this Agreement shall be deemed to --------- have been waived, nor shall there be any estoppel to enforce any provisions of this Agreement, except by a statement in writing signed by the party against whom enforcement of the waiver or estoppel is sought. Any written waiver shall not be deemed a continuing waiver unless specifically stated, shall operate only as to the specific term or condition waived and shall not constitute a waiver of such term or condition for the future or as to any act other than that specifically waived. 10.06 Severability. To the extent any provision of this Agreement shall be ------------ invalid or unenforceable, it shall be considered deleted here from and the remainder of such provision and of this Agreement shall be unaffected and shall continue in full force and effect. In furtherance and not in limitation of the foregoing, should the duration or geographical extent of, or business activities covered by, any provision of this Agreement be in excess of that which is valid and enforceable under applicable law, then such provision shall be construed to cover only that duration, extent or activities which may validly and enforceably be covered. Executive acknowledges the uncertainty of the law in this respect and expressly stipulates that this Agreement be given the construction which renders its provisions valid and enforceable to the maximum extent (not exceeding its express terms) possible under applicable law. 10.07 Assignment. This Agreement shall not be assignable, in whole or in ---------- part, by either party without the written consent of the other party, except that the Company may, without the consent of Executive, assign its rights and obligations under this Agreement to any corporation, firm or other business entity with or into which the Company may merge or consolidate, or to which the Company may sell or transfer all or substantially all of its assets, or of which 50% or more of the equity investment and of the voting control is owned, directly or indirectly, by, or is under common ownership with, the Company. After any such assignment by the Company, the Company shall be discharged from all further liability hereunder and such assignee shall thereafter be deemed to be the Company for the purposes of all provisions of this Agreement including this Section 10. 10.08 Injunctive Relief. Executive agrees that it would be difficult to ----------------- compensate the Company fully for damages for any violation of the provisions of this Agreement, including without limitation the provisions of Sections 5, 7, 8 and 9.03. Accordingly, Executive specifically agrees that the Company shall be entitled to temporary and permanent injunctive relief to enforce the provisions of this Agreement and that such relief may be granted without the necessity of proving actual damages. This provision with respect to injunctive relief shall not, however, diminish the right of the Company to claim and recover damages in addition to injunctive relief. IN WITNESS WHEREOF, Executive and the Company have executed this Agreement as of the date set forth in the first paragraph. MEDI-JECT CORPORATION EXECUTIVE By: /s/ Franklin Pass /s/ Lawrence M. Christian ------------------------------- --------------------------------- Franklin Pass Lawrence M. Christian Its: Chairman/CEO TERM AND COMPENSATION ADDENDUM FOR 2000 TO AMEND EMPLOYMENT AGREEMENT DATED MAY 1, 2000 AS OF MAY 1, 2000 THIS AGREEMENT, effective as of May 1, 2000, by and between Medi-Ject Corporation, a Minnesota corporation (the "Company") and Lawrence Christian, an individual resident of the State of Minnesota (the "Executive"), WHEREAS, the Company and the Executive are parties to an Employment Agreement dated May 1, 2000 (the "Agreement"), and PURSUANT to the approval of the Board of Directors on June 5, 2000, and WHEREAS, the Company and the Executive each wish to agree to the following: 1. The Agreement term shall begin on May 1, 2000. 2. The Agreement term shall be for 365 days continuing each day on a rolling 365-day basis. 3. Annual base compensation shall be $124,000 beginning May 1, 2000. 4. A $25,000 cash bonus upon signing a development and distribution agreement and/or product and technology rights agreement with either Disetronic or Pharmacia & Upjohn. 5. A bonus payable upon closing a merger agreement with Permatec comprising two (2) parts: Part A: A $12,000 cash bonus upon closing of the merger agreement. Subject bonus to be payable 25% at close of business on the next business day following the closing day of subject merger and 25% payable on the last business day of each of the next three (3) successive calendar quarters. If employee termination occurs, for any reason, prior to completion of the payout schedule, as stated above, all amounts are due and payable as of the termination date. Part B: A 5,000 share stock option grant with grant date established as closing date of subject merger described above. All other terms of the Agreement and all amendments applicable thereto are to remain in full force and effect. AGREED: MEDI-JECT CORPORATION: EXECUTIVE: By: /s/ Franklin Pass /s/ Lawrence Christian ------------------------------- ---------------------------------- Franklin Pass, Chairman & CEO Lawrence Christian Dated: 5-01-00 Dated: 05-01-00 ---------------- ---------------------------- EX-10.11.1 4 0004.txt PETER SADOWSKI EMPLOYMENT AGREEMENT Exhibit 10.11.1 MEDI-JECT CORPORATION EMPLOYMENT AGREEMENT THIS AGREEMENT, dated as of May 1, 2000, by and between Medi-Ject Corporation, a Minnesota corporation (the "Company"), and Peter L. Sadowski, an individual resident of Ramsey County in the State of Minnesota ("Executive"). WHEREAS, the Company wishes to employ Executive to render services for the Company on the terms and conditions set forth in this Agreement, and Executive wishes to be retained and employed by the Company on such terms and conditions. NOW, THEREFORE, in consideration of the premises and the respective undertakings of the Company and Executive set forth below, the Company and Executive agree as follows: 1. Employment. The Company hereby employs Executive, and Executive accepts ---------- such employment and agrees to perform services for the Company, for the period and upon the other terms and conditions set forth in this Agreement. 2. Term. Unless terminated at an earlier date in accordance with Section 9 of ---- this Agreement, the term of Executive's employment hereunder shall be for a period commencing on the date of this Agreement and continuing as set forth in the Term and Compensation Addendum applicable to each year. 3. Position and Duties. ------------------- 3.01 Service with Company. During the term of this Agreement, Executive ------------------- agrees to perform such reasonable employment duties as the Board of Directors of the Company shall assign to him from time to time. As of the date of this Agreement, Executive has been elected to serve as Executive Vice President and Chief Technology Officer. 3.02 Performance of Duties. Executive agrees to serve the Company --------------------- faithfully and to the best of his ability and to devote his full time, attention and efforts to the business and affairs of the Company during the term of this Agreement. Executive hereby confirms that, other than as set forth herein, he is under no contractual commitments inconsistent with his obligations set forth in this Agreement, and that for the term of this Agreement, he will not render or perform services for any other corporation, firm, entity or person that are inconsistent with the provisions of this Agreement. 4. Compensation. ------------ 4.01 Salary. Compensation shall be set by the Board of Directors subject ------ to adjustment annually by same Board of Directors and subject to any additional incentive(s) and/or bonus(es) approved by same Board of Directors as set out annually in the Term and Compensation Addendum applicable to each year. 4.02 Participation in Benefit Plans. Executive shall also be entitled to ------------------------------ participate in all employee benefit plans or programs (including vacation time) of the Company to the extent that his position, title, tenure, salary, age, health and other qualifications make him eligible to participate. The Company does not guarantee the adoption or continuance of any particular employee benefit plan or program during the term of this Agreement, and Executive's participation in any such plan or program shall be subject to the provisions, rules and regulations applicable thereto. 4.03 Expenses. The Company will pay or reimburse Executive for all -------- reasonable and necessary out-of-pocket expenses incurred by him in the performance of his duties under this Agreement, subject to the presentment of appropriate vouchers in accordance with the Company's normal policies for expense verification. 5. Confidential Information. Except as permitted or directed by the Company's ------------------------ Board of Directors, during the term of this Agreement and for a period of five years thereafter, Executive shall not divulge, furnish or make accessible to anyone or use in any way (other than in the ordinary course of the business of the Company) any confidential or secret knowledge or information of the Company which Executive has acquired or become acquainted with or will acquire or become acquainted with prior to the termination of the period of his employment by the Company (including employment by the Company or any affiliated companies prior to the date of this Agreement), whether developed by himself or by others, concerning any trade secrets, confidential or secret designs, processes, formulae, plans, devices or material (whether or not patented or patentable) directly or indirectly useful in any aspect of the business of the Company, any customer or supplier lists of the Company, any confidential or secret development or research work of the Company, or any other confidential information or secret aspects of the business of the Company. Executive acknowledges that the above-described knowledge or information constitutes a unique and valuable asset of the Company and represents a substantial investment of time and expense by the Company and its predecessors, and that any disclosure or other use of such knowledge or information other than for the sole benefit of the Company would be wrongful and would cause irreparable harm to the Company. Both during and after the term of this Agreement, Executive will refrain from any acts or omissions that would reduce the value of such knowledge or information to the Company. The foregoing obligations of confidentiality, however, shall not apply to any knowledge or information which is now published or which subsequently becomes generally publicly known in the form in which it was obtained from the Company, other than as a direct or indirect result of the breach of this Agreement by Executive. 6. Ventures. During the term of this Agreement, it is anticipated that -------- Executive will be engaged in or associated with the planning and implementing of projects, programs and ventures involving the Company and third parties, and Executive hereby expressly acknowledges and agrees that all rights in such projects, programs and ventures shall belong to the Company. Except as formally approved by the Company's Board of Directors, Executive shall not be entitled to any interest in such projects, programs and ventures or to any commission, finder's fee or other compensation in connection therewith, other than the salary and compensation to be paid to Executive as provided in this Agreement, described in Section 4.01 of this Agreement. 7. Noncompetition and Nonsolicitation Covenants. -------------------------------------------- 7.01 Agreement Not to Compete. Executive agrees that, during the term of ------------------------ his employment by the Company he shall not, directly or indirectly, engage in competition with the Company in any manner or capacity (e.g., as an advisor, principal, agent, partner, officer, director, stockholder, employee, member of any association, or otherwise) in any phase of the business that the Company is conducting during the term of this Agreement, including the design, development, manufacture, distribution, marketing, leasing or selling of accessories, devices, or systems related to the products or services being sold by the Company. 7.02 Geographic Extent of Covenant. The obligations of Executive under ----------------------------- Section 7.01 shall apply to any geographic area in which the Company: (a) has engaged in business during the term of this Agreement through production, promotional sales or marketing activity, or otherwise; or (b) has otherwise established its goodwill, business reputation, or any customer or supplier relations. 7.03 Limitation on Covenant. Ownership by Executive, as a passive ---------------------- investment, of less than one percent (1%) of the outstanding shares of capital stock of any corporation listed on a national securities exchange or publicly traded in the over-the-counter market shall not constitute a breach of this Section 7. 7.04 Nonsolicitation and Noninterference. During the term of this ----------------------------------- Agreement and for a period of two years thereafter, Executive shall not: (a) induce or attempt to induce any employee of the Company to leave the employ of the Company, or in any way interfere adversely with the relationship between any such employee and the Company; (b) induce or attempt to induce any employee of the Company to work for, render services to, provide advise to or supply confidential business information or trade secrets of the Company to any third person, firm or corporation; or (c) induce or attempt to induce any customer, supplier, licensee, licensor or other business relation of the Company to cease doing business with the Company, or in any way interfere with the relationship between any such customer, supplier, licensee, licensor or other business relation and the Company. 7.05 Indirect Competition and Interference. Executive further agrees that, ------------------------------------- during the term of this Agreement and, solely with respect to Section 7.04, the period covered by Section 7.04, he will not, directly or indirectly, assist or encourage any other person in carrying out, directly or indirectly, any activity that would be prohibited by the above provisions of this Section 7 if such activity were carried out by Executive, either directly or indirectly; and, in particular, Executive agrees that he will not, directly or indirectly, induce any employee of the Company to carry out, directly or indirectly, any such activity. 8. Patent and Related Matters. --------------------------- 8.01 Disclosure and Assignment. Executive will promptly disclose in ------------------------- writing to the Company complete information concerning each and every invention, discovery, improvement, device, design, apparatus, practice, process, method or product, whether patentable or not, made, developed, perfected, devised, conceived or first reduced to practice by Executive, either solely or in collaboration with others, during the term of this Agreement, or within six months thereafter, whether or not during regular working hours, relating either directly or indirectly to the business, products, practices, or techniques of the Company (hereinafter referred to as "Developments"). Executive, to the extent that he has the legal right to do so, hereby acknowledges that any and all of said Developments are the property of the Company and hereby assigns and agrees to assign to the Company any and all of Executive's right, title and interest in and to any and all of such Developments. Without limiting the foregoing, any and all original works of authorship which are created by Executive (solely or jointly with others) within the scope of Executive's employment and which are protectable by copyright law shall be deemed "works made for hire," as that term is defined in the U.S. Copyright Act (17 U.S.C. Section 101). 8.02 Future Developments. As to any future Developments made by Executive ------------------- that relate to the business, products or practices of the Company and that are first conceived or reduced to practice during the term of this Agreement, or within six months thereafter, but that are claimed for any reason to belong to an entity or person other than the Company, Executive will promptly disclose the same in writing to the Company and shall not disclose the same to others if the Company, within twenty (20) days thereafter, shall claim ownership of such Developments under the terms of this Agreement. If the Company makes such claim, Executive agrees that, insofar as the rights (if any) of Executive are involved, it will be settled by arbitration in accordance with the rules of the American Arbitration Association. The locale of the arbitration shall be Minneapolis, Minnesota (or other locale convenient to the Company's principal executive offices). If the Company makes no such claim, Executive hereby acknowledges that the Company has made no promise to receive and hold in confidence any such information disclosed by Executive. 8.03 Limitation on Sections 8.01 and 8.02. The provisions of Sections ------------------------------------ 8.01 and 8.02 shall not apply to any Development meeting the following conditions: (a) such Development was developed entirely on Executive's own time; (b) such Development was made without the use of any Company equipment, supplies, facility or trade secret information; (c) such Development does not relate: (i) directly to the business of the Company; or (ii) to the Company's actual or demonstrable anticipated research; (d) such Development does not result from any work performed by Executive for the Company. 8.04 Assistance of Executive. Upon request and without further ----------------------- compensation therefor, but at no expense to Executive, and whether during the term of this Agreement or thereafter, Executive will do all lawful acts, including, but not limited to, the execution of papers and lawful oaths and the giving of testimony, that in the opinion of the Company, its successors and assigns may be necessary or desirable in obtaining, sustaining, reissuing, extending and enforcing United States and foreign Letters Patent, including, but not limited to, design patents, on any and all of such Developments, and for perfecting, affirming and recording the Company's complete ownership and title thereto, and to cooperate otherwise in all proceedings and matters relating thereto. 8.05 Records. Executive will keep complete, accurate and authentic ------- accounts, notes, data and records of all Developments in the manner and form requested by the Company. Such accounts, notes, data and records shall be the property of the Company, and, upon its request, Executive will promptly surrender the same to it or, if not previously surrendered upon its request or otherwise, Executive will surrender the same, and all copies thereof, to the Company upon the conclusion of his employment. 8.06 Obligations, Restrictions and Limitations. Executive understands that ----------------------------------------- the Company may enter into agreements or arrangements with agencies of the United States Government, and that the Company may be subject to laws and regulations which impose obligations, restrictions and limitations on it with respect to inventions and patents that may be acquired by it or that may be conceived or developed by employees, consultants or other agents rendering services to it. Executive agrees that he shall be bound by all such obligations, restrictions and limitations applicable to any such invention conceived or developed by him during the term of this Agreement and shall take any and all further action that may be required to discharge such obligations and to comply with such restrictions and limitations. 9. Termination. ------------ 9.01 Grounds for Termination. This Agreement shall terminate prior to the ----------------------- expiration of the initial term set forth in Section 2 or any extension thereof in the event that at any time during the initial term or any extension thereof: (a) Executive shall die; (b) the Board of Directors of the Company shall determine that: (i) Executive has become disabled; (ii) Executive had breached this Agreement in any material respect, which breach is not cured by Executive or is not capable of being cured by Executive within thirty (30) days after written notice of such breach is delivered to Executive; or (iii) Executive has engaged in willful and material misconduct, including willful and material failure to perform his duties as an officer or employee of the Company. Notwithstanding any termination of this Agreement, Executive, in consideration of his employment hereunder to the date of such termination, shall remain bound by the provisions of this Agreement that specifically relate to periods, activities or obligations upon or subsequent to the termination of Executive's employment. 9.02 "Disability" Defined. The Board of Directors may determine that ------------------- Executive has become disabled, for the purpose of this Agreement, in the event that Executive shall fail, because of illness or incapacity, to render services of the character contemplated by this Agreement over a period of ninety (90) days during any one hundred and eighty (180) day period. The existence or nonexistence of grounds for termination because of disability shall be made in good faith by the Board of Directors after notice in writing given to Executive at least thirty (30) days prior to such determination. During such thirty (30) day period, Executive shall be permitted to make a presentation to the Board of Directors for its consideration. 9.03 Surrender of Records and Property. Upon termination of his --------------------------------- employment with the Company, Executive shall deliver promptly to the Company all records, manuals, books, blank forms, documents, letters, memoranda, notes, notebooks, reports, data, tables, calculations or copies thereof, which are the property of the Company or which relate in any way to the business, products, practices or techniques of the Company, and all other property, trade secrets and confidential information of the Company, including, but not limited to, all documents which in whole or in part contain any trade secrets or confidential information of the Company, which in any of these cases are in his possession or under his control. 10. Miscellaneous. -------------- 10.01 Governing Law. This Agreement is made under and shall be governed by ------------- and construed in accordance with the laws of the State of Minnesota. 10.02 Prior Agreements. This Agreement contains the entire Agreement of ---------------- the parties relating to the subject matter hereof and supersedes all prior Agreements and understandings with respect to such subject matter, and the parties hereto have made no Agreements, representations or warranties relating to the subject matter of this Agreement which are not set forth herein. 10.03 Withholding Taxes. The Company may withhold from any benefits payable ----------------- under this Agreement all federal, state, city or other taxes as shall be required pursuant to any law or governmental regulation or ruling. 10.04 Amendments. No amendment or modification of this Agreement shall be ---------- deemed effective unless made in writing and signed by the parties hereto. 10.05 No Waiver. No term or condition of this Agreement shall be deemed to --------- have been waived, nor shall there be any estoppel to enforce any provisions of this Agreement, except by a statement in writing signed by the party against whom enforcement of the waiver or estoppel is sought. Any written waiver shall not be deemed a continuing waiver unless specifically stated, shall operate only as to the specific term or condition waived and shall not constitute a waiver of such term or condition for the future or as to any act other than that specifically waived. 10.06 Severability. To the extent any provision of this Agreement shall be ------------ invalid or unenforceable, it shall be considered deleted here from and the remainder of such provision and of this Agreement shall be unaffected and shall continue in full force and effect. In furtherance and not in limitation of the foregoing, should the duration or geographical extent of, or business activities covered by, any provision of this Agreement be in excess of that which is valid and enforceable under applicable law, then such provision shall be construed to cover only that duration, extent or activities which may validly and enforceably be covered. Executive acknowledges the uncertainty of the law in this respect and expressly stipulates that this Agreement be given the construction which renders its provisions valid and enforceable to the maximum extent (not exceeding its express terms) possible under applicable law. 10.07 Assignment. This Agreement shall not be assignable, in whole or in ---------- part, by either party without the written consent of the other party, except that the Company may, without the consent of Executive, assign its rights and obligations under this Agreement to any corporation, firm or other business entity with or into which the Company may merge or consolidate, or to which the Company may sell or transfer all or substantially all of its assets, or of which 50% or more of the equity investment and of the voting control is owned, directly or indirectly, by, or is under common ownership with, the Company. After any such assignment by the Company, the Company shall be discharged from all further liability hereunder and such assignee shall thereafter be deemed to be the Company for the purposes of all provisions of this Agreement including this Section 10. 10.08 Injunctive Relief. Executive agrees that it would be difficult to ----------------- compensate the Company fully for damages for any violation of the provisions of this Agreement, including without limitation the provisions of Sections 5, 7, 8 and 9.03. Accordingly, Executive specifically agrees that the Company shall be entitled to temporary and permanent injunctive relief to enforce the provisions of this Agreement and that such relief may be granted without the necessity of proving actual damages. This provision with respect to injunctive relief shall not, however, diminish the right of the Company to claim and recover damages in addition to injunctive relief. IN WITNESS WHEREOF, Executive and the Company have executed this Agreement as of the date set forth in the first paragraph. MEDI-JECT CORPORATION EXECUTIVE By: /s/ Franklin Pass /s/ Peter L. Sadowski ----------------------------- ----------------------------- Franklin Pass Peter L. Sadowski Its: Chairman/CEO TERM AND COMPENSATION ADDENDUM FOR 2000 TO AMEND EMPLOYMENT AGREEMENT DATED MAY 1, 2000, AS OF MAY 1, 2000 THIS AGREEMENT, effective as of May 1, 2000, by and between Medi-Ject Corporation, a Minnesota corporation (the "Company") and Peter Sadowski, an individual resident of the State of Minnesota (the "Executive"), WHEREAS, the Company and the Executive are parties to an Employment Agreement dated May 1, 2000 (the "Agreement"), and PURSUANT to the approval of the Board of Directors on June 5, 2000, and WHEREAS, the Company and the Executive each wish to agree to the following: 1. The Agreement term shall begin on May 1, 2000, and extend through and include December 31, 2002. 2. Base compensation for year 2000 shall be $135,820. 3. A $25,000 cash bonus upon signing a development and distribution agreement and/or product and technology rights agreement with either Disetronic or Pharmacia & Upjohn. 4. A bonus payable upon closing a merger agreement with Permatec comprising two (2) parts: Part A: A $17,000 cash bonus upon closing of the merger agreement. Subject bonus to be payable 25% at close of business on the next business day following the closing day of subject merger and 25% payable on the last business day of each of the next three (3) successive calendar quarters. If employee termination occurs, for any reason, prior to completion of the payout schedule, as stated above, all amounts are due and payable as of the termination date. Part B: A 5,000 share stock option grant with grant date established as closing date of subject merger described above. All other terms of the Agreement and all amendments applicable thereto are to remain in full force and effect. AGREED: MEDI-JECT CORPORATION: EXECUTIVE: By: /s/ Franklin Pass /s/ Peter Sadowski --------------------------------- -------------------------------- Franklin Pass, Chairman & CEO Peter Sadowski Dated: 5-01-00 Dated: 5/1/00 ------------------------------- -------------------------- EX-27 5 0005.txt FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM AUDITED AND UNAUDITED INTERNAL FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 12-MOS 6-MOS DEC-31-1999 DEC-31-1999 JAN-01-2000 JAN-01-2000 DEC-31-2000 JUN-30-2000 85,136 141,497 0 0 192,301 400,065 25,000 20,384 429,472 432,063 705,172 993,085 2,406,878 2,443,056 1,404,324 1,594,554 2,010,136 2,129,968 957,281 2,750,665 0 0 0 0 13 14 14,247 14,249 1,038,595 (634,960) 2,010,136 2,129,968 2,100,735 1,228,113 3,547,880 1,250,927 1,785,464 885,370 5,307,372 2,121,515 154,056 0 0 0 4,427 3,554 (3,703,439) (1,759,512) 0 0 (3,703,439) (1,759,512) 0 0 0 0 0 0 (3,703,439) (1,759,512) (2.70) (1.24) (2.70) (1.24) includes interest income of $66,018
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