EXHIBIT 10.3


EXECUTIVE EMPLOYMENT AGREEMENT


 


THIS  AGREEMENT is dated April 3, 2002,  between:


 


                                                BIOJECT MEDICAL TECHNOLOGIES
INC. (“BMT”), a Corporation
incorporated under the laws of the State of Oregon having its principal offices
at 7620 SW Bridgeport Rd., Portland, Oregon 97224


 


                                                BIOJECT INC., a Corporation incorporated
under the laws of the State of Oregon having its principal offices at 7620 S.W.
Bridgeport Road, Portland, Oregon, 97224 (collectively referred to as the
“Company”)


 


AND:


 


                                                Christopher Pugh


                                                130 Davenport Road


                                                Kennett Square,
PA   19348


                                                (the “Executive”)


 


RECITALS:


 


1.                                      The Company desires to secure
the services and expertise of the Executive and to ensure the availability of
the Executive to the Company;


 


2.                                      The Executive desires to serve
in the employ of the Company on a full-time basis for the period and upon the
terms and conditions provided for in this Agreement; and


 


3.                                      The Executive and the Company
desire to execute an agreement entered into between them.


 


NOW
THEREFORE, in consideration of the premises and mutual covenants contained
herein, the parties noted above agree as follows:


 


SECTION 1


 


1.1          Employment


 


                                                The Company
appoints the Executive to and retains the Executive for the position of Vice
President of Business Development for the Company, and the Executive accepts
such appointment.  This appointment
becomes effective on May 1,  2002.


 


1.2          Approval
by the Board


 


                                                The Company
represents, if required by its Bylaws, that the appointment of the Executive to
the position referred to in Section 1.1 will be approved by the Board of
Directors of the Company (the “Board”) and that all corporate action required
to effect the appointment will be taken.


 


1.3          Definitions


 


                                                As used in this
agreement:


 


                                                a.                                      “Confidential
Information”  means any of
the Company’s customers, employees, products, processes, services, financial
information, marketing techniques, merchandising, business strategies, or
plans, research, development, systems, inventions or any other trade secret or
information pertaining to any of the preceding terms.


 


 

















 


                                                b.                                     “Conflicting
Product”  means any
device, process or service of any person or organization other than the
Company, in existence or under development, which resembles or competes with
the current or projected products, processes or services of the Company.


 


                                                c.                                      “Conflicting
Organization”  means any
person or organization engaged or about to become engaged in research,
development, production, marketing or selling of a Conflicting Product.


 


                                                d.                                     “Inventions”
means discoveries, concepts, and ideas, whether patentable or not, including
but not limited to, procedures, processes, methods, formulas, and techniques,
as well as improvements thereof or know-how related thereto, concerning any
present or prospective activities of the Company with which the Employee
becomes acquainted as a result of his employment by the Company.


 


 


SECTION 2 -
DUTIES/RESPONSIBILITIES


 


2.1          Duties/Responsibilities


 


                                                During the
employment term and any renewals thereof, the Executive will devote such time,
attention, skill and efforts as may be necessary to assure the full performance
of his duties and responsibilities, to the best of his abilities, with such
authority as is customarily associated with the position of Vice President of
Business Development.  The Executive
hereby accepts and agrees to such engagement of services, and will devote
himself solely to the operation of the Company’s business.  The Executive may continue his existing
involvement in an advisory or board capacity with non-competing organizations.


 


2.2          Reporting


 


                                                In conducting his
duties under this Agreement, the Executive shall report to the Chief Executive
Officer and Chairman of the Board of Directors of the Company.


 


2.3          Location of Employment


 


                                                During the first
year of the Executive’s employment with the Company, the Executive’s primary
office shall be in or near Kennett Square, PA in office space to be leased by
the Company for this purpose at reasonable cost which, including administrative
support costs, shall not exceed $1,500 per month.  Thereafter, the Executive shall conduct his duties under this
Agreement primarily at the offices of the Company in New Jersey, or such other
geographical locations as shall be reasonably required in order to assure the
efficient and proper operation of the Company. 
In the event that the primary location of the Executive’s conducting his
duties is moved outside the state of New Jersey, the Executive will be offered
a choice to either relocate to the new location, or to accept a severance package
as described in Section 4.2(b)(ii).


 


 


SECTION 3 -
COMPENSATION


 


3.1          Salary


 


                                                For the Executive’s
services to the Company, the Executive shall be entitled to receive a minimum
annual gross salary of $165,000.  Not
less than once during each year of employment and based upon the Company’s
fiscal year, the Chief Executive Officer shall review the Executive’s
performance, duties and compensation (including both base pay and annual stock
options) for the purpose of promotion and/or increasing the compensation
payable to the Executive.  Executive’s
salary shall be paid in bi-weekly installments during the calendar year for the
term of this Agreement.  The Company
shall deduct or withhold from such payments to the Executive the sums as are


 


2

















 


required under applicable laws for worker’s compensation, income taxes
and other benefits in accordance with Company policy.


 


3.2                               Bonus Program


 


The Executive will receive a signing bonus of $13,750.00, which is
payable within 10 days of the date the Executive begins his employment with the
Company.


 


                                                Exclusive of the
signing bonus described above, the Executive shall be eligible to earn a cash
bonus.  The executive’s cash bonus
potential shall be up to 45% of his annual salary.  Specific bonus requirements and objectives will be determined by
the Chief Executive Officer, and are subject to approval by the Board.


 


3.3          Reimbursement
of Expenses


 


                                                The Company shall
reimburse the Executive for all reasonable out-of-pocket expenses, including,
without limitation, all travel and entertainment expenses payable or incurred
by the Executive in connection with his duties as an employee of the Company
under this Agreement.  It is the policy
of the Company for employees to travel as inexpensively as possible, utilizing
economy airfare and standard rental cars. 
All payments or reimbursements shall be made promptly upon submission by
the Executive of vouchers, bills or receipt for all expenses.


 


3.4          Other Benefits


 


                                                The Executive will
be entitled to participate in the Company’s employee benefit programs for
medical, dental, life, long and short term disability insurance, employee stock
purchase, and 401(k) Plan according to the terms, conditions and eligibility
requirements set forth in the individual plan provisions.  The Executive will accrue flexible time off
(FTO) at 10 hours per month.  This
equates to three weeks of vacation for the first year.  One additional week of annual FTO will be
added on the first
anniversary of the Executive’s
employment by the Company.


 


3.5          Disability


 


                                                Should Executive
become disabled and unable to perform substantially all of his duties under
this Agreement, as documented by an independent physician selected jointly by
the Executive and the Company, the Company will continue paying the Executive
any bonus earned and previously awarded, together with his then-current salary
at seventy-five percent (75%) of current salary for a period of not greater
than six (6) months from the disability date. 
Should the disability continue, payments by the Company will then be
reduced to fifty percent (50%) of current salary for any remaining period of
disability not to exceed an additional six (6) months.  Health and dental insurance and other
benefit coverage will continue for the duration of these payments, for a
maximum time period not to exceed twelve (12) months.  Should payments to Executive under worker’s compensation and/or
disability insurance programs, when combined with Company payments, exceed
seventy-five percent (75%) of employee’s current salary, the Company will
reduce its payment by the excess amount.


 


3.6          Relocation Expenses


 


                                                On or before the
first anniversary of the Executive’s employment under this Agreement, the
Executive’s primary office will be moved to the Company’s executive office in
New Jersey.  The Company will pay the
reasonable moving expenses (including but not limited to the cost of realtor
fees, title, reasonable legal fees, needed inspections, all grossed for tax) of
moving the Executive’s principal residence from its present location in Kennett
Square, PA to a location closer to the Company’s executive office.


 


 


3

















 


SECTION 4 -
TERMS  OF  EMPLOYMENT


 


4.1                               Duration


 


                                                The term of this
Agreement shall commence on May 1, 2002. 
It shall continue for an initial term of two consecutive one-year
periods, subject to the early termination provisions of this Section 4.  Upon expiration of the initial term, this
Agreement will be automatically renewed for successive one-year terms unless
either the Executive or the Company shall, upon three months written notice to
the other, elect not to renew this Agreement for any year.  Non-renewal of the Agreement by the Company
shall be deemed a termination pursuant to Section 4.2(a)(ii), and shall be
subject to the severance compensation provisions related to termination under
that Section.


 


4.2                               Termination by the Company


 


                                                (a)                                  The Company may
terminate this Agreement:


 


                                                                                                (i)                                     Immediately if it
is determined by the Board of Directors that the Executive’s actions:  (1) constitute a material breach of his
duties hereunder, followed by Executive’s failure to cure such breach within a
reasonable period of time after receiving written notice thereof, or (2)
constitute a criminal act reflecting adversely on the business or reputation of
the Company or (3) have resulted in the Executive, in his personal capacity,
being indicted or sanctioned or his entering into a consent decree, in
connection with any investigation of, allegation of wrongdoing by, or other
formal proceeding against the Executive, by the United States Food and Drug
Administration or the United States Securities and Exchange Commission, whether
related to the business of the Company or to any other past employment or
activity of the Executive; or


 


                                                                                                (ii)                                  With or without
other cause at any time by giving written notice to the Executive.


 


                                                (b)                                 Upon termination of
this Agreement by the Company:


 


                                                                                                (i)                                     Pursuant to Section
4.2(a)(i):


 


                                                                                                                                                A.                                   The salary and
Company sponsored benefits payable to the Executive pursuant to Section 3.1
shall be paid in regular bi- weekly installments for sixty (60) days following
the date of termination; and


 


                                                                                                                                                B.                                     All other forms of
compensation payable to the Executive pursuant to Section 3 shall terminate on
the date of termination, except that as expeditiously as possible following the
termination, the Company shall pay or reimburse the Executive for all expenses
incurred prior to the termination pursuant to Section 3.3, together with any
bonuses earned by and previously awarded to the Executive pursuant to Section
3.2 prior to the date of termination.


 


                                                                                                (ii)                                  Pursuant to Section
4.2(a)(ii), Section 2.3, Section 4.1 or Section 4.5:


 


                                                                                                                                                A.                                   The salary and
Company sponsored benefits payable to the Executive pursuant to Section 3.1
shall be paid for the period commencing on the date of the termination and
continuing for twelve (12) months following the date of termination; and


 


                                                                                                                                                B.                                     All other forms of
compensation payable to the Executive pursuant to Section 3 shall terminate,
except that as expeditiously as possible after the termination, the Company
shall pay or reimburse the Executive for all


 


4

















 


expenses incurred prior to the
termination pursuant to Section 3.3, together with any bonuses earned by and
previously awarded to the Executive pursuant to Section 3.2 prior to the date
of termination.


 


4.3                               Termination by Executive


 


                                                The Executive may
terminate this Agreement at any time by giving written notice to the
Company.  Upon termination of this
Agreement by the Executive pursuant to this Section:


 


                                                (a)                                  The salary payable
to the Executive pursuant to Section 3.1 shall be prorated to the date of the
termination; and


 


                                                (b)                                 Except for the
severance package made available to the Executive pursuant to Section 2.3 and
Section 4.2(b)(ii), all other forms of compensation payable to the Executive
pursuant to Section 3 shall terminate on the date of the termination.  As expeditiously as possible after termination
of the Executive’s employment, the Company shall pay or reimburse the Executive
for all expenses incurred prior to the termination pursuant to Section 3.3.


 


4.4                               Termination Upon Death


 


                                                This Agreement
shall terminate immediately upon the Executive’s death.  In the event of the Executive’s death:


 


                                                (a)                                  The Company shall
pay to the Executive’s estate the salary otherwise payable to the Executive
pursuant to Section 3.1 through the last day of the calendar month in which the
Executive’s death occurs and for a period of 
sixty (60) days thereafter; and


 


                                                (b)                                 As expeditiously as
possible after the Executive’s death, the Company shall pay or reimburse the
Executive’s estate for all expenses incurred pursuant to Section 3.3 prior to
such death, together with any bonuses earned by and awarded to the Executive
pursuant to Section 3.2 prior to the date of such death.


 


4.5                               Change in Control


 


                                                If at any time
during the term of this Agreement a Change in Control (as defined below) of the
Company occurs, then, as to such Change in Control, the Company will utilize
its best efforts to make appropriate provisions to preserve the rights and
interests of the Executive pursuant to this Agreement.  Failure of the Company to preserve such
rights and interests of the Executive will, at the Executives option, be deemed
a termination pursuant to Section 4.2(a)(ii), and will be subject to the
severance compensation provisions related to termination under that
Section.  For purposes of this
Agreement, a “Change in Control” shall mean the occurrence of any of the
following events:


 


                                                (a)           The approval by the shareholders of
BMT of:


 


(1)                                  any consolidation,
merger or plan of share exchange involving BMT (a “Merger”) as a result of
which the holders of outstanding securities of BMT ordinarily having the right
to vote for the election of directors (“Voting Securities”) immediately prior
to the Merger do not continue to hold at least 50% of the combined voting power
of the outstanding Voting Securities of the surviving or continuing corporation
immediately after the Merger, disregarding any Voting Securities issued or
retained by such holders in respect of securities of any other party to the
Merger;


 


(2)                                  any sale, lease,
exchange or other transfer (in one transaction or a series of related
transactions) of all, or substantially all, the assets of BMT; or


 


(3)                                  the adoption of any
plan or proposal for the liquidation or dissolution of BMT; or


 


5

















 


                                                (b)           Any “person” or “group” (within the
meaning of Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934,
as amended (the “Act”)) shall, as a result of a tender or exchange offer, open
market purchases or privately negotiated purchases from anyone other than BMT,
have become the beneficial owner (within the meaning of Rule 13d-3 under the
Act), directly or indirectly, of Voting Securities representing fifty percent
(50%) or more of the combined voting power of the then outstanding Voting
Securities.


 


4.6                               Acts Upon Termination


 


                                                Upon termination of
Executive’s employment with the Company, all computers, equipment, documents,
records, notebooks, and similar repositories of or containing Confidential
Information, including copies thereof, then in the Executive’s possession,
whether prepared by himself or others, will be delivered to the Company within
thirty (30) days of such termination. 
The obligations of the Executive in Sections 6.1 and 6.2 of this
Agreement shall survive any termination of the Executive.


 


 


SECTION 5 -
STOCK


 


5.1          Grant of Stock Options


 


                                                As soon as possible
following the execution hereof, the Executive and the Company shall execute an
Incentive Stock Option Agreement granting the Executive 40,000 options to
purchase shares of BMT at a strike price equal to the fair market value of the Company’s stock on
the date of grant.  These options vest as follows:  33.3% (13,333) on each of the Executive’s
first three annual anniversaries of employment with the Company, provided he
remains employed by the Company during each year.  All options granted will be subject to the same terms and
conditions as typically provided in options granted under the Company’s 1992
Stock Incentive Plan.


 


The Executive will
also receive an additional grant of 20,000 options to purchase shares of BMT on
the first anniversary of his employment by the Company; provided, however, that
if prior to such first anniversary, a Change in Control occurs or the Company
publicly announces that it has entered into an agreement or letter of intent
for a transaction that will constitute a Change in Control if completed, the
additional options shall be immediately granted with a strike price equal to
the closing price of the Company’s stock on the trading day preceding such
Change in Control or announcement.  These options vest as follows:  33.3% on each of the Executive’s next three
annual anniversaries of employment with the Company, provided he remains
employed by the Company during each year. 
All options granted will be subject to the same terms and conditions as
typically provided in options granted under the Company’s 1992 Stock Incentive
Plan.


 


The Executive will
also receive an additional grant of 20,000 options to purchase shares of BMT on
the second anniversary of his employment by the Company; provided, however,
that if prior to such second anniversary, a Change in Control occurs or the
Company publicly announces that it has entered into an agreement or letter of
intent for a transaction that will constitute a Change in Control if completed,
the additional options shall be immediately granted with a strike price equal
to the closing price of the Company’s stock on the trading day preceding such
Change in Control or announcement.  These options vest as follows:  33.3% on each of the Executive’s next three
annual anniversaries of employment with the Company, provided he remains
employed by the Company during each year. 
All options granted will be subject to the same terms and conditions as
typically provided in options granted under the Company’s 1992 Stock Incentive
Plan.


 


                                                The Stock Option
Agreements related to such options will provide that, in the event of (A) a
Change in Control, (B) termination of employment pursuant to Section 4.2(a)(ii)
(including deemed termination pursuant to such section pursuant to Section
4.1), or (C) the Executive’s having opted to receive a severance package in
lieu of relocating pursuant to Section 2.3, all stock options which have been
awarded to the Executive, but are not yet vested, will vest immediately.


 


6

















 


5.2          Registration


 


                                                It is understood
that BMT is a reporting company within the requirements of the Securities and
Exchange Commission (“SEC”) and has elected to register the options granted
hereunder with the SEC.


 


 


SECTION 6 - MISCELLANEOUS


 


6.1          Disclosure of Information and
Employee Restrictions


 


                                                Executive agrees to
the following:


 


                                                a.                                       Executive agrees
that he shall not, during his employment, either as an individual or as part of
an organization, throughout North America or Europe, compete with the Company
or render services directly or indirectly, to any Conflicting Organization or
himself establish or acquire any interest, directly or indirectly, in a
Conflicting Organization, nor will he assist any other person or entity to do
so;


 


                                                b.                                      Executive will not
during his employment solicit or sell to any of the Company’s present or future
customers, a Conflicting Product or service nor will he assist any other person
or entity to do so;


 


                                                c.                                       Except as required
in his duties to the Company, the Executive will not, during or for five years
after his employment, directly or indirectly use, disseminate, disclose,
lecture upon, or publish any Confidential Information without Company’s written
consent.


 


                                                In the event this
Agreement is terminated, for whatever reason, Executive agrees that he shall
not, for two years following the date of termination:


 


                                                a.                                       Either as an
individual or as part of an organization, throughout Canada or the United
States, compete with the Company or render services directly or indirectly, to
the companies listed in exhibit A, or to any Conflicting Organization (unless
the services are not directed towards a conflicting product) or himself
establish or acquire any interest, directly or indirectly, in a Conflicting Organization,
nor will he assist any other person or entity to do so; and


 


                                                b.                                      He will not employ,
without the consent of the Company, directly or indirectly, any past or present
employees of the Company, nor will he assist any other person or entity to do so;
and


 


6.2                               Arbitration and Jurisdiction


 


                                                As a matter of
operating practice, the Company expects to resolve disagreements or conflicts
by mutual negotiation in good faith. 
Any controversy or claim arising out of or relating to this Agreement or
any breach of this Agreement shall be finally settled by arbitration in
accordance with the provisions of the Commercial Arbitration Rules of the
American Arbitration Association.  Such
arbitration shall be conducted in Portland, Oregon by one arbitrator, with one
discovery allowed by each party to this agreement.  This agreement is entered into and shall be interpreted and
enforced according to the laws of the State of Oregon; both parties consent to
personal jurisdiction for that purpose.


 


6.3          Notices


 


7

















 


                                                Any notice or other
communication required or permitted to be given under this Agreement shall be
in writing, given by personal delivery or sent by first class mail, postage
prepaid, addressed as follows:


 


                                                To the Executive:                                                    Christopher Pugh


                                                                                                                                                                                                130 Davenport Road


                                                                                                                                                                                                Kennett Square,
PA   19348


 


                                                To the Company:                                                    Secretary to the
Board of Directors


                                                                                                                                                                                                Bioject Medical
Technologies Inc.


                                                                                                                                                                                                7620 S.W.
Bridgeport Road


                                                                                                                                                                                                Portland,
Oregon  97224


 


                                                Either party, by notice
as provided above, may change the address to which subsequent notice shall be
given.  Any notice given herein shall be
deemed received seven (7) days after posting in a post office box; PROVIDED,
HOWEVER, that if there should be a postal strike, slow-down or other labor
dispute which may effect the delivery of such notice through the mail between
the time of mailing and the actual receipt of the notice, then such notice
shall be effective only if actually delivered.


 


6.4          Assignment


 


                                                This Agreement is a
personal employment agreement addressing services, compensation and
benefits.  It may not be assigned by
either party without the prior written consent of the other party; however,
during his employment term, the Executive may by written assignment assign all
or any portion of the compensation or benefits to which he is entitled under
Section 3 to any member of his immediate family or to any corporation,
partnership or other business entity controlled by the Executive.  Except as required by law, no right to
receive payments under this Agreement shall be subject to anticipation,
commutation, alienation, sale, assignment, encumbrance, charge, pledge or
hypothecation or to execution, attachment, levy or similar process or
assignment by operation of law and any attempt, voluntary or involuntary, to
affect any such action shall be null, void, and of no effect.


 


6.5          Indemnity


 


                                                The Executive, his
heirs, executors, administrators, estate and effects, shall at all times be
indemnified and held harmless by the Company from and against:


 


                                                a.                                      All costs, charges
and expenses whatsoever sustained or incurred as a result of any action, suit
or proceeding, whether civil, criminal, administrative, or investigative, that
is brought, commenced or prosecuted for or in respect of any act, deed, matter
or thing whatsoever made, done or permitted in or about the execution of the
Executive’s duties; and


 


                                                b.                                     All other costs,
charges and expenses sustained or incurred in or about or in relation to the
affairs of the Company;


 


                                                Except such costs,
charges or expenses as are occasioned by the criminal act, willful gross
neglect or default of duties by the Executive. 
At all such times that the Company obtains and maintains directors and
officers errors and omissions insurance, Executive shall be a beneficiary of
such policy(ies).


 


6.6          Amendment
and Severability


 


                                                This Agreement may
not be amended or otherwise modified except by an instrument in writing signed
by both parties.  All agreements and
covenants herein contained in this Agreement are deemed to be severable, and in
the event any portion of this Agreement is declared to be invalid, this


 


8

















 


Agreement shall be interpreted as if such invalid portion or covenant
were severed and not contained herein, with all other terms of this Agreement
remaining valid and binding on the parties hereto.


 


6.7                               Entire Agreement


 


                                                This agreement
specifies all of the terms and conditions of an employment agreement entered
into between the parties on April 1, 2002, which terms and conditions have been
negotiated prior to that date.


 


6.8          Binding Effect


 


                                                This Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective heirs, personal representatives, successors and assigns, except as
otherwise expressly provided herein.


 


6.9                               Review of Legal Counsel


 


                                                The Executive
acknowledges that he has had adequate time and opportunity to consult with
legal counsel of his own selection prior to entering into and executing this
Agreement.


 


IN
WITNESS WHEREOF the parties have executed this Agreement effective on the day
and year first written above.


 


 


                                                                                                


                Christopher Pugh


 


 


BIOJECT MEDICAL TECHNOLOGIES INC.


 


By:                                                                                          


Name:                                                                                     


Title:                                                                                       


 


 


BIOJECT INC.


 


By:                                                                                          


Name:                                                                                     


Title:                                                                                       


 


9

















Exhibit
A 


BIOJECT
INC. COMPETITORS


 


 


1)              Becton Dickinson


 


2)              Powderject, plc


 


3)              Weston, plc


 


4)              Antares Pharma (Medi-jet)


 


5)              Equidyne


 


6)              National Medical


 


 


10