SCHEDULE 14A
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INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
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MIM CORPORATION
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MIM CORPORATION
100 Clearbrook Road
Elmsford, New York 10523
(914) 460-1600
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NOTICE OF
ANNUAL MEETING OF STOCKHOLDERS
To be Held on June 28, 2001
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To Our Stockholders:
The 2001 Annual Meeting of Stockholders of MIM Corporation, a
Delaware Corporation (the "Company"), will be held at 10:00 a.m., local time, on
June 28, 2001 at the Westchester Marriott Hotel, 670 White Plains Road,
Tarrytown, New York 10591, for the following purposes:
1. To elect seven (7) Directors to the Board of Directors of the Company,
each to hold office for a term of one (1) year or until their
respective successors shall have been duly elected and qualified;
2. To approve and ratify the adoption of the MIM Corporation 2001
Incentive Stock Plan;
3. To ratify the appointment of Arthur Andersen LLP as the Company's
independent accountants for the Company's current fiscal year; and
4. To transact such other business as may properly come before the
meeting or any adjournments or postponements thereof.
The Board of Directors has fixed the close of business on Friday, May
18, 2001 as the record date for the determination of stockholders entitled to
receive notice of, and to vote at, the meeting and any adjournments or
postponements thereof (together with any such adjournments or postponements, the
"Meeting"). All stockholders of the Company are cordially invited to attend the
Meeting in person. However, whether or not you plan to attend, please promptly
sign, date and mail the enclosed proxy card in the enclosed return envelope,
which requires no postage if mailed in the United States. Alternatively, you may
vote electronically via the Internet or telephone as described in greater detail
in the Proxy Statement. Returning your proxy card does not deprive you of your
right to attend the Meeting and vote your shares in person.
By order of the Board of Directors,
/s/ Barry A. Posner
Elmsford, New York Barry A. Posner
May 25, 2001 Vice President, Secretary and
General Counsel
Even though you may plan to attend the Meeting in person, please vote by
telephone or the Internet, or complete and execute the enclosed proxy card and
mail it promptly. A return envelope (which requires no postage if mailed in the
United States) is enclosed for your convenience. Telephone and Internet voting
information is provided on your proxy card. Should you attend the Meeting in
person, you may revoke your Proxy and vote in person.
MIM CORPORATION
100 Clearbrook Road
Elmsford, New York 10523
(914) 460-1600
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PROXY STATEMENT
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This proxy statement (this "Proxy Statement"), which is being sent to
stockholders of MIM Corporation, a Delaware corporation (the "Company"), on or
about May 25, 2001 is furnished in connection with the solicitation of proxies
by the Board of Directors of the Company (the "Board of Directors") for use at
the 2001 Annual Meeting of Stockholders (the "Meeting") to be held on June 28,
2001 at 10:00 a.m., local time, at the Westchester Marriott Hotel, 670 White
Plains Road, Tarrytown, New York 10591, and at any adjournments or postponements
thereof.
Instead of submitting your proxy with the paper proxy card, you may be
able to vote electronically by telephone or via the Internet. If you vote by
telephone or Internet, it is not necessary to return your proxy card. See
"Voting Via the Internet or By Telephone" on page 24 of this Proxy Statement, or
the instructions on the proxy card, for further details. Please note that there
are separate Internet and telephone voting arrangements depending upon whether
your shares are registered in your name or in the name of a broker or bank.
Proposals; Record Date
At the Meeting, the Company's stockholders will be asked:
1. To elect seven (7) Directors to the Board of Directors, each to
hold office for a term of one (1) year or until their respective
successors shall have been duly elected and qualified;
2. To approve and ratify the adoption of the MIM Corporation 2001
Incentive Stock Plan;
3. To ratify the appointment of Arthur Andersen LLP as the Company's
independent accountants for the Company's current fiscal year;
and
4. To transact such other business as may properly come before the
Meeting and any adjournments or postponements thereof.
At the close of business on May 18, 2001, the record date (the "Record
Date") set by the Board of Directors for the determination of stockholders
entitled to receive notice of, and to vote at the Meeting, there were issued and
outstanding an aggregate of 20,431,620 shares of Company common stock, par value
$0.0001 per share (the "Common Stock"), which constitute the only outstanding
securities of the Company entitled to vote at the Meeting. On the Record Date,
the outstanding shares of Common Stock (the "Shares") were held by approximately
126 holders of record in addition to approximately 2,602 stockholders whose
Shares were held in nominee name.
Voting
Each holder of Common Stock on the Record Date (each, a "Stockholder")
is entitled to cast one vote per Share at the Meeting on each matter properly
brought before the Meeting, exercisable in person or by properly executed proxy
(each, a "Proxy"). The presence, in person or by Proxy, of the holders of Shares
entitled to cast a majority of the votes of all outstanding Shares entitled to
vote will constitute a quorum at the Meeting. A Stockholder who abstains from a
vote by registering an abstention vote will be deemed present at the Meeting for
quorum purposes, but such abstention will have the same effect as a vote against
the particular matter under consideration. In the event a nominee holding Shares
for beneficial
owners votes on certain matters pursuant to discretionary authority or
instructions from a beneficial owner, but with respect to one or more other
matters does not receive instructions from beneficial owners and does not
exercise discretionary authority (a so-called "non-vote"), the Shares held by
the nominee will be deemed present at the Meeting for quorum purposes but will
be disregarded. Thus, on the proposal to elect directors, which requires the
vote of a plurality of the Shares present in person or represented by proxy and
entitled to vote on the election of directors, abstentions and non-votes will
have no effect. However, (i) the approval and ratification of the MIM
Corporation 2001 Incentive Stock Plan and (ii) the ratification of the
appointment of Arthur Andersen LLP as independent accountants for the Company
for 2001 each requires the affirmative vote of the holders of a majority of the
Shares having voting power on such matters present, in person or by proxy, and
entitled to vote at the Meeting. Accordingly, abstentions will have the same
effect as votes against these matters, while non-votes will be disregarded and
have no effect on the outcome of these matters.
Proxies
A Proxy, in the accompanying form, which is properly executed and duly
returned to the Company, or a Proxy which is submitted electronically via the
Internet or by telephone, and which Proxy is not revoked or superceded, will be
voted in accordance with the instructions contained therein and, in the absence
of specific instructions, will be voted as follows: (i) for the nominees for
director named in this Proxy Statement; (ii) for the adoption and ratification
of the MIM Corporation 2001 Incentive Stock Plan; (iii) for ratification of the
appointment of Arthur Andersen LLP as independent accountants for the Company
for 2001; and (vi) in accordance with the judgment of the person or persons
voting the Proxies on any other matter that may properly be brought before the
Meeting and any adjournments or postponements thereof. Each such Proxy granted
may be revoked at any time thereafter by writing to the Secretary of the Company
prior to the Meeting, by executing and delivering a subsequent Proxy or by
attending the Meeting and voting in person at the Meeting, except as to any
matter or matters properly brought before the Meeting and upon which, prior to
such revocation, a vote will have been cast pursuant to the authority conferred
by such Proxy. Those voting via the Internet or by telephone may also revoke
their Proxy by attending the Meeting or by voting again, at a later time, via
the Internet, by telephone, or by submitting the Proxy in accordance with the
instructions thereon.
Other Matters; Adjournments
The Board of Directors is not currently aware of any business to be
acted upon at the Meeting other than as described in this Proxy Statement. If
other matters are properly brought before the Meeting or any adjournments or
postponements thereof, the persons appointed as proxies will, to the extent
permitted by the applicable rules and regulations of the United States
Securities and Exchange Commission (the "Commission"), have discretion to vote
or act thereon according to their judgment. Adjournments may be made for the
purpose of, among other things, soliciting additional proxies. Any adjournment
may be made from time to time by approval of the holders of a majority of the
Shares present in person or by proxy at the Meeting (whether or not a quorum
exists) without further notice other than by an announcement made at the
Meeting. The Company does not currently intend to seek an adjournment of the
Meeting.
PROPOSAL 1.
ELECTION OF DIRECTORS
The By-Laws of the Company provide that the number of directors shall
be such number, currently seven (7), as shall be designated from time to time by
resolution of the Board of Directors. Each director shall hold office for a term
of one (1) year or until his successor is elected at the Company's next annual
meeting of Stockholders and duly qualified, or until his earlier death,
resignation or removal. The Board of Directors has nominated and recommends the
election of Richard H. Friedman, Richard A. Cirillo, Esq., Dr. Louis DiFazio,
Harold Ford, Michael Kooper, Dr. Louis A. Luzzi and Ronald K. Shelp, all of
whom, with the exception of Harold Ford, currently serve as directors of the
Company.
-2-
Although the Board of Directors has no reason to believe that any of
the nominees will be unable to serve, if such event should occur, Proxies will
be voted (unless marked to the contrary) for such person or persons, if any, as
shall be recommended by the Board of Directors. However, Proxies will not be
voted for the election of more than seven directors.
The following table sets forth, as of May 22, 2001, certain information
with respect to each nominee for director, including biographical data for at
least the last five years:
Name Age Position
- ---- --- --------
Richard H. Friedman 50 Chairman of the Board
and Chief Executive Officer
Richard A. Cirillo, Esq. 50 Director
Louis DiFazio, Ph.D. 63 Director
Harold Ford 56 Nominee for Director
Michael Kooper 65 Director
Louis A. Luzzi, Ph.D. 69 Director
Ronald K. Shelp 59 Director
Richard H. Friedman is currently the Chairman and Chief Executive
Officer of the Company. He joined the Company in April 1996 and was elected a
director of the Company and appointed Chief Financial Officer and Chief
Operating Officer in May 1996. He served as Chief Operating Officer and Chief
Financial Officer until April 1998. Mr. Friedman also served as the Company's
Treasurer from April 1996 until February 1998.
Richard A. Cirillo, Esq. has served as a director of the Company since
April 1998. Since June 21, 1999, Mr. Cirillo has been a partner of the law firm
of King & Spalding. From 1983 until June 1999, Mr. Cirillo was a member of the
law firm of Rogers & Wells LLP, with which he had been associated since 1975.
Since Mr. Cirillo joined King & Spalding, that firm has served as the Company's
outside general counsel. Prior to that time, Rogers & Wells LLP had served in
such capacity.
Louis DiFazio, Ph.D. has served as a director of the Company since May
1998. From 1990 through March 1997, Dr. DiFazio served as President of Technical
Operations for the Pharmaceutical Group of Bristol-Myers Squibb and from March
1997 until his retirement in June 1998 served as Group Senior Vice President.
Dr. DiFazio also serves as a member of the Board of Trustees of Rutgers
University and the University of Rhode Island. Dr. DiFazio received his B.S. in
Pharmacy at Rutgers University and his Ph.D. in Pharmaceutical Chemistry from
the University of Rhode Island.
Harold Ford serves as President of Harold Ford and Company, a
consulting and federal and state lobbying firm which specializes in advising
business clients on regulatory, legislative and business related matters. Prior
to founding Harold Ford and Company in early 1997, Mr. Ford served as a
Congressman in the United States House of Representatives for 22 years
representing the 9th District of Tennessee.
Martin ("Michael") Kooper has served as a director of the Company since
April 1998. Mr. Kooper has served as the President of The Kooper Group since
December 1997, a successor to Michael Kooper Enterprises, an insurance and risk
management consultant firm. From 1980 through December 1997, Mr. Kooper served
as President of Michael Kooper Enterprises.
-3-
Louis A. Luzzi, Ph.D. has served as a director of the Company since
July 1996. Dr. Luzzi is the Dean of Pharmacy and Provost for Health Science
Affairs of the University of Rhode Island College of Pharmacy. He has been a
Professor of Pharmacy at the University of Rhode Island since 1981.
Ronald K. Shelp has served as a director of the Company since July
2000. Since June 1999, Mr. Shelp has been affiliated with b2bstreet.com, a
business-to-business auction site for small businesses, and currently serves as
its President and Chief Executive Officer. From 1996 to 1999, Mr. Shelp served
as Chairman of Kent Global Strategies, a consulting firm specializing in
communications, marketing for businesses and not-for-profit organizations, and
domestic and international business transactions.
Information Concerning Meetings and Certain Committees
The Company has standing Audit, Nominating and Compensation Committees
of the Board of Directors. The Audit Committee, currently comprised of Messrs.
Cirillo and Shelp and Dr. DiFazio, makes recommendations to the Board of
Directors regarding the selection of independent auditors, reviews the results
and scope of the audit and other services provided by the Company's independent
accountants, reviews and evaluates the Company's internal accounting controls
and performs such other functions as directed by the Board of Directors. The
Compensation Committee, currently comprised of Mr. Cirillo and Drs. DiFazio and
Louis A. Luzzi, administers the Company's Amended and Restated 1996 Stock
Incentive Plan and the Company's 1996 Non-Employee Directors Stock Option Plan
(the "Directors Plan"), makes recommendations to the Board of Directors
concerning executive compensation matters and performs such other duties as from
time to time are designated by the Board of Directors. The Nominating Committee,
currently comprised of Dr. DiFazio, Mr. Kooper and Dr. Luzzi, makes
recommendations from time to time, on the selection of nominees for directors.
The Nominating Committee will consider nominees recommended from time to time by
Stockholders who comply with the procedures set forth in the Company's Bylaws.
See "Stockholder Proposals" on page 24 of this Proxy Statement.
During 2000, the Board of Directors held four meetings and acted by
unanimous written consent six times, the Audit Committee held two meetings. The
Nominating Committee did not meet in 2000, but held two meetings in May 2001 to
discuss the nomination of Harold Ford and the six incumbent directors and
recommended the nomination of Mr. Ford and the six incumbent directors to the
entire Board of Directors. The Board of Directors, based on the recommendation
of the Nominating Committee, approved the nomination of Mr. Ford and the six
incumbent directors for election by the Stockholders at the Meeting. Each
director attended more than 75% of the meetings of the Board of Directors and
all applicable committee meetings during the period that such director served as
a director in 2000.
Report of the Audit Committee
The Company's Audit Committee of (the "Audit Committee") is comprised
of three directors who meet the independence requirements of Rule 4200(a)(14) of
the National Association of Securities Dealers ("NASD") listing standards. Since
June 6, 2000, the Committee has operated under a Charter adopted by the Board of
Directors which is attached to this Proxy Statement as Exhibit A.
The Audit Committee submits the following report that was presented on
March 14, 2001 to the Board of Directors under Regulation S-K promulgated by the
Commission:
"We have reviewed and discussed with management the Company's audited and
consolidated financial statements of the Company for the year ended
December 31, 2000.
We have discussed with the independent auditors the matters required to be
discussed by Statement on Auditing Standards No. 61, Communication with
Audit Committees, as amended, by the Auditing Standards Board of the
American Institute of Certified Public Accountants.
We have received and reviewed the written disclosures from the independent
auditors required by Independent Standards Board Standard No. 1,
Independence Discussions with Audit Committees, as amended, and have
discussed with auditors the auditors' independence.
-4-
Based on the reviews and discussions referred to above, we recommend to
the Board of Directors that the financial statements referred to above be
included in the Company's Annual Report on Form 10-K for the year ended
December 31, 2000.
Richard A. Cirillo, Chairman
Louis DiFazio, Ph.D.
Ronald K. Shelp"
Compensation of Directors
Directors who are not officers or employees of the Company ("Outside
Directors") receive fees of $1,500 per month and $500 per meeting of the Board
of Directors and any committee thereof and are reimbursed for expenses incurred
in connection with attending such meetings. In addition, upon being elected to
the Board of Directors, each Outside Director automatically receives
non-qualified stock options to purchase 20,000 shares of the Common Stock under
the Directors Plan. Directors who are also officers of the Company are not paid
any director fees or granted any options under the Directors Plan.
The exercise price of options granted to a new director under the
Directors Plan is equal to the fair market value of Common Stock on the date of
grant. Options granted under the Directors Plan vest over three years, in three
equal annual installments following the anniversary dates of the grant date. The
Company has reserved 300,000 shares of Common Stock for issuance under the
Directors Plan. Through May 22, 2001, options to purchase 20,000 shares have
been granted under the Directors Plan to Dr. Luzzi at an exercise price of $13
per share, options to purchase 20,000 shares have been granted to Mr. Cirillo at
an exercise price of $4.35 per share, options to purchase 20,000 shares have
been granted to each of Mr. Kooper and Dr. DiFazio at an exercise price of
$4.6875 per share and options to purchase 20,000 shares have been granted to Mr.
Shelp at an exercise price of $2.13 per share.
Vote Required and Recommendation of the Board of Directors
If a quorum is present and voting, the seven nominees receiving the
highest number of votes duly cast at the Meeting will be elected.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" EACH OF
THE ABOVE-NAMED NOMINEES.
PROPOSAL 2.
APPROVAL AND RATIFICATION OF THE MIM CORPORATION 2001 INCENTIVE STOCK PLAN
The Board of Directors has adopted and unanimously recommends that the
Stockholders approve the Company's 2001 Incentive Stock Plan (the "2001 Plan"),
covering the issuance of 950,000 shares of Common Stock.
The 2001 Plan will be approved upon receiving the affirmative vote of
holders of a majority of the Shares voting at the Meeting. Proxies will be voted
in accordance with the specifications marked thereon, and, if no specification
is made, will be voted "FOR" approval of the 2001 Plan.
The primary purpose of the 2001 Plan is to (i) attract and retain key
employees, (ii) provide an incentive to key employees and (iii) to provide key
employees with a stake in the future of the Company which corresponds to the
stake of each of the Company's Stockholders. The Company's 1996 Incentive Stock
Option Plan, as amended (the "1996 Plan"), which was previously approved by
Stockholders of the Company has an insufficient number of shares remaining
available for grant under it for the Company to successfully achieve the three
goals stated above on a long term basis. The Company intends to continue to
issue grants under the 1996 Plan until and to the extent that shares of Common
Stock under the 1996 Plan remain available for grant.
-5-
The following discussion summarizes the material terms of the 2001
Plan. This discussion does not comport to be complete and is qualified in its
entirety by reference to the 2001 Plan, a copy of which is attached to this
proxy statement as Exhibit B.
Administration
The 2001 Plan will be administered by a committee of two or more
members of the Company's Board of Directors (the "Committee"). Each director,
while serving as a member of the Committee, must satisfy the requirements for a
"non-employee director" under Rule 16(b)-(3) of the Securities Exchange Act of
1934 (the "Exchange Act") and an "outside director " under Section 162(m) of the
Internal Revenue Code of 1986, as amended (the "Code"). All grants under the
2001 Plan will be evidenced by a certificate that will incorporate such terms
and conditions, as the Committee deems necessary or appropriate.
Coverage Eligibility and Annual Grant Limits
The 2001 Plan will provide for the issuance of stock options
("Options") to key employees, for the issuance of stock appreciation rights
("SAR") to key employees and for the making of stock grants ("Stock Grants") to
key employees and for the issuance of performance units to key employees
("Performance Units"). A key employee will be any employee of the Company or any
subsidiary, parent or affiliate of the Company designated by the Committee who,
in the judgment of the Committee, acting in its absolute discretion, is a key
directly or indirectly to the success of the Company. The Company estimates that
there currently are approximately 25 such key employees. No key employee in
any calendar year may be granted an Option to purchase more than 350,000 shares
of Common Stock, an SAR with respect to more than 350,000 shares of Common
Stock, Stock Grants for more than 150,000 shares of Common Stock, or any
combination of such awards covering, in the aggregate, 500,000 shares of Common
Stock.
Shares Reserved for Issuance Under Plan
There shall be 950,000 new shares of Common Stock reserved for issuance
under the 2001 Plan. These shares shall be reserved to the extent that the
Company deems appropriate from authorized but unissued shares of Common Stock
and from shares of Common Stock that have been reacquired by the Company.
Any shares of Common Stock subject to an Option or Stock Grant that
remain unissued after the cancellation, expiration or exchange of such Option or
Stock Grant, or that are forfeited after issuance, and any shares of Common
Stock subject to a SAR that remain unissued after the cancellation or expiration
of such SAR will again be available for issuance under the 2001 Plan.
Options
Under the 2001 Plan, either incentive stock options ("ISOs"), which are
intended to qualify for special tax treatment under Code Section 422 may be
granted to key employees of the Company or a subsidiary or parent of the
Company. Non-qualified incentive stock options ("Non-ISOs") may be granted to
any key employees. Each Option granted under the 2001 Plan entitles the holder
thereof to purchase the number of shares of Common Stock specified in the grant
at the exercise price specified in the related stock option certificate. At the
discretion of the Committee, the stock option certificate can provide for
payment of the exercise price either in cash, by check, or in Common Stock which
has been held for at least 6 months and is acceptable to the Committee or in any
combination of cash, check and such Common Stock. The exercise price in addition
may be paid through any cashless exercise procedure which is acceptable to the
Committee or its delegate and which is facilitated through a sale of Common
Stock. The terms and conditions of each Option granted under the 2001 Plan will
be determined by the Committee, but no Option will be granted at an exercise
price which is less than the fair market value of the Common Stock as determined
on the grant date in accordance with the 2001 Plan. In addition, if the Option
is an ISO that is granted to a 10% shareholder of the Company, the Option
exercise price will be no less than 110% of the fair market value of the shares
of Common Stock on the grant date. No Option may be exercisable more
-6-
than 10 years from the grant date, or, if the Option is an ISO granted to a 10%
shareholder of the Company, it may not be exercisable more than five years from
the grant date. Moreover, no key employee may be granted ISOs which are first
exercisable in any calendar year for stock having an aggregate fair market value
(determined as of the date the ISO was granted) that exceeds $100,000. The
Committee as part of an Option grant may in its discretion provide for an Option
reload feature whereby a key employee will receive an automatic grant of an
additional Option as of the date the key employee exercises the original Option
if the key employee uses Common Stock to pay all or a part of the option
exercise price or uses Common Stock to satisfy all or part of any related tax
withholding requirement. Options, once issued, may not be repriced without first
obtaining the approval of the Stockholders of the Company.
Stock Appreciation Rights
SARs may be granted by the Committee to key employees under the 2001
Plan, either as part of an Option or as stand-alone SARs. The terms and
conditions for an SAR granted as part of an Option will be set forth in the
related stock option certificate while the terms and conditions of a stand-alone
SAR will be set forth in a related SAR certificate. SARs entitle the holder to
receive an amount (in cash, Common Stock, or a combination of cash and Common
Stock) equal to the excess of the fair market value of one share of Common Stock
as of the date such right is exercised over the initial stock price specified in
the stock option or SAR certificate (the "SAR Value"), multiplied by the number
of shares of Common Stock in respect of which the SAR is being exercised. The
SAR Value for an SAR will be no less than the fair market value of share of a
Common Stock as determined on the grant date in accordance with the 2001 Plan.
Stock Grants
A Stock Grant may be made by the Committee to key employees under the
2001 Plan. The terms and conditions for a Stock Grant made will be set forth in
the related stock grant certificate and will be determined by the Committee,
acting in its sole discretion. The Committee may make the issuance of Common
Stock under a Stock Grant subject to the satisfaction of one or more employment,
performance, purchase or other conditions and may make the forfeiture of Common
Stock issued pursuant to such a grant subject to similar conditions. The
Committee may, at the time a Stock Grant is made, prescribe corporate,
divisional, and/or individual performance goals, applicable to all or any
portion of the shares subject to the Stock Grant. Performance goals may be based
on achieving a certain level of total revenue, earnings, earnings per share or
return on equity of the Company and its subsidiaries and affiliates, or on the
extent of changes in such criteria. Upon the satisfaction of any applicable
forfeiture conditions and performance goals, the Shares underlying the Stock
Grant will be transferred to the key employee.
Performance Units
Performance Units may be granted to key employees under the 2001 Plan.
The terms and conditions for the Performance Units, including the performance
goals, the performance period and a value for each Performance Unit (or a
formula for determining such value), shall be established by the Committee
acting in its sole discretion and shall be set forth in a written agreement
covering such Performance Units. The Committee shall specify corporate, division
and/or individual performance goals which the key employee must satisfy in order
to receive payment for such Performance Unit. Performance goals may be based on
achieving a certain level of total revenue, earnings, earnings per share or
return on equity of the Company and its subsidiaries and affiliates, or on the
extent of changes in such criteria. Different performance goals may be
established for different Performance Units, and a key employee may be granted
more than one award of Performance Units at the same time. If the performance
goals are satisfied, the Company shall pay the key employee an amount in cash
equal to the value of each Performance Unit at the time of payment. In no event
shall a key employee receive an amount in excess of $1,000,000 in respect of
Performance Units for any given year.
-7-
Non-Transferability
No Option, Stock Grant, SAR or Performance Unit will (absent the
Committee's consent) be transferable by a key employee other than by will or the
laws of descent and distribution, and any Option, Stock Grant, SAR or
Performance Unit will (absent the Committee's consent) be exercisable during a
key employee's lifetime only by the key employee.
Amendments to the 2001 Plan
The 2001 Plan may be amended by the Board to the extent that it deems
necessary or appropriate (but any amendment relating to ISOs will be made
subject to the limitations of Code Section 422), and the 2001 Plan may be
terminated by the Board at any time. The Board may not unilaterally modify,
amend or cancel any Option, Stock Grant, SAR or Performance Unit previously
granted without the consent of the holder of such Option, Stock Grant, SAR or
Performance Unit, unless there is a dissolution or liquidation of the Company or
in connection with certain corporate transactions.
Adjustment of Shares
The number, kind, or class of shares of Common Stock reserved for
issuance under the 2001 Plan, the annual grant caps, the number, kind or class
of shares of Common Stock subject to Options, Stock Grants or SARs granted under
the 2001 Plan and the exercise price of Options and the SAR Value of SARs
granted shall be adjusted by the Committee in an equitable manner to reflect any
change in the capitalization of the Company.
Mergers
The Committee as part of any transaction described in Code Section
424(a) shall have the right to adjust (in any manner which the Committee in its
discretion deems consistent with Code Section 424(a)) the number, kind or class
of shares of Common Stock reserved for issuance under the 2001 Plan, the annual
grant caps, and the number, kind or class of shares of Common Stock subject to
Option and SAR grants and Stock Grants previously made under the 2001 Plan and
the related exercise price of the Options and the Value of the SARs and,
further, shall have the right to make (in any manner which the Committee in its
discretion deems consistent with Code Section 424(a)) Option and SAR grants and
Stock Grants to effect the assumption of, or the substitution for, option, stock
appreciation right and stock grants previously made by any other corporation to
the extent that such transaction calls for the substitution or assumption of
such grants.
Change in Control
If there is a change in control of the Company, (i) any conditions to
the exercise of outstanding Options and SARs and any condition applicable to
Stock Grants and Performance Units made under the 2001 Plan shall be deemed
satisfied in full and (ii) each then outstanding Option, Stock Grant, SAR grant
and Performance Unit grant may be canceled unilaterally by the Board of
Directors immediately before the date of the change in control of the Company if
the Board of Directors provides each key employee a reasonable period (not less
than 30 days) to exercise his or her Options and SARs and to take such other
action as necessary or appropriate to receive Common Stock subject to any Stock
Grants or cash subject to any Performance Unit.
Loans
If approved by the Committee, the Company may lend money to, or
guarantee loans by, a third party to any key employee to finance the exercise of
any Option granted under the 2001 Plan or the purchase of any Common Stock
subject to Stock Grants.
-8-
Federal Income Tax Consequences
The rules concerning the federal income tax consequences with respect
to grants made pursuant to the 2001 Plan are technical, and reasonable persons
may differ on the proper interpretation of such rules. Moreover, the applicable
statutory and regulatory provisions are subject to change, as are their
interpretations and applications, which may vary in individual circumstances.
Therefore, the following discussion is designed to provide only a brief, general
summary description of the federal income tax consequences associated with such
grants, based on a good faith interpretation of the current federal income tax
laws, regulations (including certain proposed regulations) and judicial and
administrative interpretations. The following discussion does not set forth (i)
any federal tax consequences other than income tax consequences or (ii) any
state, local or foreign tax consequences that may apply.
ISOs. In general, a key employee will not recognize taxable income upon
the grant or the exercise of an ISO. For purposes of the alternative minimum
tax, however, the key employee will be required to treat an amount equal to the
difference between the fair market value of the Common Stock on the date of
exercise over the option exercise price as an item of adjustment in computing
the key employee's alternative minimum taxable income. If the key employee does
not dispose of the Common Stock received pursuant to the exercise of the ISO
within either (i) two years after the date of the grant of the ISO or (ii) one
year after the date of the exercise of the ISO, a subsequent disposition of the
Common Stock generally will result in long-term capital gain or loss to such
individual with respect to the difference between the amount realized on the
disposition and exercise price. The Company will not be entitled to any federal
income tax deduction as a result of such disposition. In addition, the Company
normally will not be entitled to take a federal income tax deduction at either
the grant or the exercise of an ISO.
If the key employee disposes of the Common Stock acquired upon exercise
of the ISO within either of the above-mentioned time periods, then in the year
of such disposition, such individual generally will recognize ordinary income,
and the Company will be entitled to a federal income tax deduction (provided the
Company satisfies applicable federal income tax reporting requirements), in an
amount equal to the lesser of (i) the excess of the fair market value of the
Common Stock on the date of exercise over the option exercise price or (ii) the
amount realized upon disposition of the Common Stock over the exercise price.
Any gain in excess of such amount recognized by the key employee as ordinary
income would be taxed to such individual as short-term or long-term capital gain
(depending on the applicable holding period).
Non-ISOs. A key employee will not recognize any taxable income upon the
grant of a Non-ISO, and the Company will not be entitled to take an income tax
deduction at the time of such grant. Upon the exercise of a Non-ISO, the key
employee generally will recognize ordinary income and the Company will be
entitled to a federal income tax deduction (provided the Company satisfies
applicable federal income tax reporting requirements) in an amount equal to the
excess of the fair market value of the Common Stock on the date of exercise over
the option exercise price. Upon a subsequent sale of the Common Stock by the key
employee, such individual will recognize short-term or long-term capital gain or
loss (depending on the applicable holding period).
SARs. A key employee will recognize ordinary income for federal income
tax purposes upon the exercise of a SAR under the 2001 Plan for cash, Common
Stock or a combination of cash and Common Stock, and the amount of income that
the key employee will recognize will depend on the amount of cash, if any, and
the fair market value of the Common Stock, if any, that the key employee
receives as a result of such exercise. The Company generally will be entitled to
a federal income tax deduction in an amount equal to the ordinary income
recognized by the key employee in the same taxable year in which the key
employee recognizes such income, if the Company satisfies applicable federal
income tax reporting requirements.
Stock Grants. A key employee generally will recognize ordinary income
for federal income tax purposes when his interest in a Stock Grant is no longer
subject to a substantial risk of forfeiture. Such income will equal the excess
of the then fair market value of the Common Stock subject to such Stock Grant
over the purchase price, if any, paid for such stock. The Company generally will
be entitled to a federal income tax deduction in an amount equal to the ordinary
income recognized by the key employee in
-9-
the same taxable year in which the key employee recognizes such income, if the
Company satisfies the applicable federal income tax reporting requirements.
Performance Units. A key employee generally will not recognize income
for federal income tax purposes upon the grant of a Performance Unit. Upon
payment of cash with respect to such Performance Unit, the key employee
generally will recognize as ordinary income an amount equal to the amount of
cash received. The Company generally will be entitled to a federal income tax
deduction in an amount equal to the ordinary income recognized by the key
employee in the same taxable year in which the key employee recognizes such
income.
Vote Required and Recommendation at the Board of Directors
The affirmative vote of the holders of a majority of the votes cast, in
person or by Proxy, is required to approve the MIM Corporation 2001 Stock
Incentive Plan.
THE BOARD OF DIRECTORS RECOMMENDS THAT
STOCKHOLDERS VOTE "FOR" THE APPROVAL OF THE
MIM CORPORATION 2001 STOCK INCENTIVE PLAN.
PROPOSAL 3.
RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The firm of Arthur Andersen LLP served as the Company's independent
accountants for the year ended December 31, 2000. The Board of Directors has
appointed, subject to stockholder ratification, Arthur Andersen LLP to act in
that capacity for the year ending December 31, 2001. A representative of Arthur
Andersen LLP is expected to be present at the Meeting with the opportunity to
make a statement if he or she desires to do so and to be available to respond to
appropriate questions from Stockholders.
Audit Fees
Arthur Andersen LLP billed the Company $249,000 in the aggregate for
professional services rendered for the audit of the Company's annual financial
statements for 2000 and the reviews of the financial statements included in the
Company's Forms 10-Q for 2000.
Financial Information Systems Design and Implementation Fees
During 2000, Arthur Andersen LLP did not provide the Company with any
professional services relating to financial information systems design or
implementation.
All Other Fees
Arthur Andersen LLP billed the Company $103,800 in the aggregate for
services rendered by it, other than the audit related services discussed above,
for 2000.
The Audit Committee has considered whether the provision of the
services other than the audit and financial review services is compatible with
maintaining Arthur Andersen LLP's independence.
Vote Required and Recommendation of the Board of Directors
The affirmative vote of the holders of a majority of the votes cast, in
person or by Proxy, is required to ratify the appointment of Arthur Andersen LLP
as the Company's independent accountants.
-10-
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE
FOR THE RATIFICATION OF ARTHUR ANDERSEN LLP AS THE COMPANY'S INDEPENDENT
ACCOUNTANTS FOR THE YEAR ENDING DECEMBER 31, 2001.
OTHER MATTERS
The Board of Directors knows of no matters to be presented for action
at the Meeting other than those set forth in this Proxy Statement and the
attached Notice of Meeting. However, if any other matters should properly come
before the Meeting or any adjournments or postponements thereof, the Proxies
solicited hereby will be voted on such other matters, to the extent permitted by
the applicable rules of the Commission, in accordance with the judgment of the
persons voting such Proxies.
ADDITIONAL INFORMATION
Executive Officers
The following table sets forth, as of May 18, 2001, certain information with
respect to each current executive officer of the Company who is not also a
director of the Company. See Proposal 1 above for information regarding Mr.
Friedman, the Chairman and Chief Executive Officer, who is also a director.
Name Age Position
---- --- --------
Barry A. Posner 37 Vice President, Secretary and General Counsel. Mr. Posner
joined the Company in March 1997 as General Counsel and was
appointed as Secretary of the Company at that time. On April
16, 1998, Mr. Posner was appointed Vice President of the
Company. From September 1990 through March 1997, Mr. Posner
was associated with the Stamford, Connecticut law firm of
Finn Dixon & Herling LLP, where he practiced corporate law,
specializing in the areas of mergers and acquisitions and
securities law, and commercial real estate law.
Recie Bomar 53 President of Sales and Marketing of MIM Health Plans, Inc.
Mr. Bomar joined the Company in March 1999 as Vice President
of Sales and Marketing of MIM Health Plans, Inc. In February
2000, Mr. Bomar was promoted to President of Sales and
Marketing of MIM Health Plans, Inc. From 1997 through
February 1999, Mr. Bomar was a Vice President of PharmaCare,
a subsidiary of CVS Corporation. Mr. Bomar was a National
Director of Sales & Services for RX Connections from 1996 to
1997.
Bruce Blake 38 President of American Disease Management Associates, LLC, a
wholly owned subsidiary of the Company (`ADIMA"). Mr. Blake
has been affiliated with the Company since August 2000, when
the Company acquired ADIMA. Mr. Blake currently serves as
President of ADIMA, a position that he has held since
February 1996.
Russel J. Corvese 39 Chief Information Officer; Senior Vice President of
MIMRx.com, Inc. On February 1, 2000, Mr. Corvese was
appointed to his current position . Mr. Corvese served as
Vice President of Operations and Chief Information Officer
of MIM Health Plans, Inc. from November 27, 1997 to February
1, 2000. From November 1996 through November 1997, Mr.
Corvese held the position of Executive Director, Management
Information Systems of MIM Health Plans, Inc.
-11-
From May 1994 to November 1996, Mr. Corvese held various
positions with MIM Health Plans, Inc.
Rita M. Marcoux 40 Senior Vice President-Pharmacy Operations of MIM Health
Plans, Inc. Ms. Marcoux has served the Company in various
capacities since 1994. On February 1, 2000, Ms. Marcoux was
promoted to her current position. Prior to that promotion,
Ms. Marcoux had served as Vice President of Clinical
Operations of MIM Health Plans, Inc. since 1997. From 1996
to 1997, she served as Executive Director of Business
Operations and, from 1994 to 1996, as Director of
Contracting, both with of MIM Health Plans, Inc.
Executive officers are appointed by, and serve at the pleasure of, the
Board of Directors, subject to the terms of their respective employment
agreements with the Company, which among other things, provide for each of them
to serve in the executive positions listed above. See "Employment Agreements"
below.
Common Stock Ownership by Certain Beneficial Owners and Management
Except as otherwise set forth below, the table on the facing page
lists, to the Company's knowledge, as of May 20, 2001, the beneficial ownership
of the Company's Common Stock by (1) each of the Company's Named Executive
Officers, including the former President and Chief Operating Officer (Mr.
Yablon) and former Chief Financial Officer (Mr. Sitar); (2) each of the
Company's directors; (3) each person or entity known to the Company to own
beneficially five percent (5%) or more of the Company's Common Stock; and (4)
all current directors and executive officers of the Company as a group. Such
information is based upon information provided by such persons to the Company
and filings made with the Commission by such persons:
-12-
Name of Beneficial Owner Address Number of Shares Beneficially Owned Percent of Class
- ------------------------------------------------------------------------------------------------------------------
Richard H. Friedman 100 Clearbrook Road 1,583,334 (3) 7.7%
Elmsford, NY 10523
Barry A. Posner 100 Clearbrook Road 229,266 (4) 1.1%
Elmsford, NY 10523
Recie Bomar 100 Clearbrook Road 75,000 (5) *
Elmsford, NY 10523
Russel J. Corvese 100 Clearbrook Road 23,617 (6) *
Elmsford, NY 10523
Richard A. Cirillo c/o King & Spalding 20,000 (7) *
1185 Avenue of the Americas
New York, NY 10036
Louis DiFazio, Ph.D. Unit 1102/Le Parc 22,500 (8) *
4951 Gulfshore Boulevard North
Naples, FL 34103
Michael Kooper 770 Lexington Avenue 20,000 (9) *
New York, NY 10021
Louis A. Luzzi, Ph.D. University of Rhode Island 21,800 (10) *
College of Pharmacy
Forgerty Hall
Kingston, RI 02881
Ronald K. Shelp 5 East 16th Street, 8th Floor 6,666 (11) *
New York, NY 10003
Scott R. Yablon 6 Palmer Place 1,000,000 (12) 4.7%
Armonk, NY 10504
Edward J. Sitar 7 Thunderhead Pl. 34,833 (13) *
Mahwah NJ 07430
Livingston Group LLC 16 East Willow Avenue 2,697,947 (14) 13.2%
Towson, MD 21286
John Chay 2200 Pine Hill Farms Lane 1,348,974 (15) 6.6%
Cockeysville, MD 21030
E. David Corvese 839 E. Ministerial Road 1,662,106 8.1%
Wakefield, RI 02879
All Directors and Executive Officers as a group 2,606,222 (16) 12.5%
(11 persons)
-13-
Notes to Beneficial Ownership Table
- ---------------------
* Less than 1%.
(1) The inclusion herein of any shares as beneficially owned does not
constitute an admission of beneficial ownership of those shares. Except as
otherwise indicated, each person has sole voting power and sole investment
power with respect to all shares beneficially owned by such person.
(2) Shares deemed beneficially owned by virtue of the right of an individual to
acquire them within 60 days after March 1, 2001, upon the exercise of an
option and shares with restrictions on transfer and encumbrance, with
respect to which the owner has voting power, are treated as outstanding for
purposes of determining beneficial ownership and the percentage
beneficially owned by such individual.
(3) Includes 83,334 shares issuable upon exercise of the vested portion of
options held by Mr. Friedman. Excludes 166,666 shares subject to the
unvested portion of options held by Mr. Friedman.
(4) Includes 166,666 shares issuable upon exercise of the vested portion of
options and 60,000 shares of Common Stock subject to restrictions on
transfer and encumbrance through December 31, 2006, with respect to which
Mr. Posner possesses voting rights. See "Employment Agreements" in Item 11
of this Annual Report for a description of terms and conditions relating to
these restricted shares. Excludes 33,334 shares subject to the unvested
portion of options held by Mr. Posner.
(5) Includes 50,000 shares issuable upon exercise of the vested portion of
options and 25,000 shares of Common Stock subject to restrictions on
transfer and encumbrance through December 31, 2006, with respect to which
Mr. Bomar possesses voting rights. See "Employment Agreements" in Item 11
of this Annual Report for a description of terms and conditions relating to
these restricted shares. Excludes 25,000 shares subject to the unvested
portion of options held by Mr. Bomar.
(6) Includes 23,617 shares issuable upon exercise of the vested portion of
options and excludes 7,333 shares subject to the unvested portion of
options held by Mr. Corvese.
(7) Consists of 20,000 shares issuable upon exercise of the vested portion of
options.
(8) Consists of 20,000 shares issuable upon exercise of the vested portion of
options and 2,500 shares owned directly by Dr. DiFazio.
(9) Consists of 20,000 shares issuable upon exercise of the vested portion of
options.
(10) Includes 20,000 shares issuable upon the exercise of the vested portion of
options. Dr. Luzzi and his wife share voting and investment power over
1,800 shares of Common Stock.
(11) Includes 6,666 shares issuable upon exercise of the vested portion of
options and excludes 13,334 shares subject to the unvested portion of
options held by Mr. Shelp.
(12) As of August 31, 2000, Mr. Yablon no longer served as an officer or
director of the Company, and is not included in the calculation of
beneficial ownership of the officers and directors of the company as a
group. Includes 1,000,000 shares issuable upon exercise of the vested
portion of options granted to Mr. Yablon while he was an officer that are
currently vested and held by Mr. Yablon.
(13) Effective as of April 20, 2001, Mr. Sitar resigned his position with the
Company, and as such he is not included in the calculation of beneficial
ownership of the officers and directors of the Company as a group. Includes
33,333 shares issuable upon exercise of the vested portion of options held
by Mr. Sitar.
(14) In connection with the acquisition by the Company of all of the interests
of American Disease Management Associates, LLC ("ADIMA"), the selling
members of ADIMA formed Livingston Group LLC as a holding company to hold
those shares of the Company that the former members of ADIMA received as
part of the consideration for the sale of ADIMA to the Company. According
to a Schedule 13D filed on May 16, 2001, by Livingston Group LLC and John
Chay, Livingston Group LLC, which is controlled by Mr. Chay, has sole
voting and dispositive power with respect to all of the 2,697,947 shares.
(15) According to a Schedule 13D filed on May 16, 2001 by Livingston Group LLC,
Mr. Chay, as the controlling of Livingston Group LLC, has sole voting and
dispositive power with respect to all of the 2,697,947 shares referenced in
footnote (14) above but has a pecuniary interest in 1,348,973.5 of such
shares.
(16) Includes 449,773 shares issuable upon exercise of the vested portion of
options and 110,000 shares of Common Stock subject to restrictions on
transfer and encumbrance. See footnotes 2 through 11 above.
-14-
Executive Compensation
The following table sets forth certain information concerning the annual,
long-term and other compensation of the Chief Executive Officer, the former
President and Chief Operating Officer and the four other most highly compensated
executive officers of the Company in 2000 (the "Named Executive Officers") for
services rendered in all capacities to the Company and its subsidiaries during
each of the years ended December 31, 2000, 1999 and 1998, respectively:
Summary Compensation Table
Long-term
Annual Compensation Compensation
------------------------------------------------------------------------------
Securities
Other Annual Underlying All Other
Name and Principal Position Year Salary (1) Bonus(2) Compensation (3) Options Compensation
- -----------------------------------------------------------------------------------------------------------------------------------
Richard H. Friedman 2000 $451,596 $90,000 $40,113 - $3,600 (4)
Chief Executive Officer 1999 $425,097 - $36,930 250,000 $5,710 (4) (5)
1998 $333,462 $212,500 $33,134 - (6) $5,217 (4)
Scott R. Yablon (7) 2000 $262,538 - $26,618 - $125,138 (8)
Former President & Chief Operating 1999 $354,828 - $28,494 - $4,710 (4)
Officer 1998 $207,500 $162,500 $6,678 1,000,000 (9) $4,605 (4)
Barry A. Posner 2000 $241,553 $48,800 $17,357 - $3,600 (4)
Vice President, General Counsel 1999 $223,128 - $13,619 - $4,710 (4)
& Secretary 1998 $191,346 $100,000 $10,828 100,000 (10) $5,890 (4)
Edward J. Sitar (11) 2000 $189,470 $38,200 $19,232 - $3,600 (4)
Former Chief Financial Officer 1999 $176,867 - $12,000 - $30,217 (4) (12)
& Treasurer 1998 $54,083 $15,000 $3,000 50,000 (9) -
Recie Bomar (13) 2000 $193,615 $25,000 $6,000 - $3,600 (4)
President of Sales & Marketing 1999 $150,198 $0 $5,000 75,000 (9) $50,000 (12) (14)
1998 - - - - -
Russel J. Corvese 2000 $171,192 $5,000 3,600 - -
Chief Information Officer & 1999 $152,290 - 3,600 - -
Senior Vice President, MIMRx.com 1998 $105,431 - 3,300 22,000 (10) -
(1) The annualized base salaries of the Named Executive Officers for 2000 were
as follows: Mr. Friedman ($450,000), Mr. Yablon ($375,000), Mr. Posner
($244,000), Mr. Sitar ($191,000), Mr. Bomar ($200,000) and Mr. Corvese
($175,000).
(2) The amounts listed below are cash bonuses. In addition, please refer to the
Long-Term Incentive Plan - Awards in the Last Fiscal Year Table below for
information on certain grants of Performance Units made during 2000 and the
corresponding table in this Proxy Statement for fiscal 1999 for similar
grants made in 1999.
(3) Represents automobile allowances, and for Messrs. Friedman, Yablon, Posner
and Sitar reimbursement for club membership dues and related fees and
expenses of $22,113, $10,118, $5,357 and $7,232, respectively in 2000.
(4) Represents life insurance premiums paid by them and reimbursed by the
Company.
(5) Represents tax return preparation expense paid by the Named Executive
Officer and reimbursed by the Company.
-15-
(6) The annual report for fiscal 1998 reflected a grant of 800,000 options to
Mr. Friedman. Such grant was subject to stockholder approval, which was not
obtained at the Company's 1999 Annual Meeting of Stockholders. As such, the
grant of 800,000 options was cancelled.
(7) Mr. Yablon's employment with the Company ended on August 31, 2000.
(8) Represents severance payments made by the Company after Mr. Yablon's
departure on August 31, 2000 and life insurance premiums of $3,600 paid by
him and reimbursed by the Company.
(9) Represents options to purchase shares of Common Stock at market price on
the date of grant.
(10) Represents options with respect to which the exercise price was repriced to
$6.50 per share on July 6, 1998.
(11) Mr. Sitar joined the Company as Vice President - Finance in June 1998 and
left the Company on April 20, 2001.
(12) Represents relocation reimbursement expense received by Messrs. Sitar and
Bomar of $25,000 each.
(13) Mr. Bomar joined the Company as Director of Sales and Marketing in March
1999.
(14) Represents signing bonus received by Mr. Bomar for $25,000.
--------------------------------------------
There were no stock option grants made during fiscal 2000 to any of the
Named Executive Officers.
The following table sets forth for each Named Executive Officer the number
of shares of Common Stock covered by both exercisable and unexercisable stock
options held as of December 31, 2000. Also reported are the values for
"in-the-money" options, which represent the difference between the respective
exercise prices of such stock options and $0.875, the per share closing price of
the Common Stock on December 29, 2000, the last trading day of 2000:
Aggregated Option Exercises In Last Fiscal Year and Fiscal Year-End Option Values
Number of Securities(1) Value of Unexercised
Underlying Unexercised In the Money Options at
Options at Fiscal Year-End Fiscal Year-End(2)
-----------------------------------------------------------------------------
Name Shares
Acquired on Value
Exercise # Realized ($) Exercisable Unexercisable Exercisable Unexercisable
- -------------------------------------------------------------------------------------------------------------------------------
Richard H. Friedman - - 83,334 166,666 - -
Scott R. Yablon - - 1,000,000 - - -
Barry A. Posner - - 133,332 66,668 - -
Edward J. Sitar - - 66,667 33,334 - -
Recie Bomar - - 25,000 50,000 - -
Russel J. Corvese - - 23,617 7,333 $ 7,771.03 -
(1) Indicated options are to purchase shares of Common Stock from the Company.
(2) Except as indicated, none of the options were "in the money".
--------------------------------------------
-16-
The following table sets forth for each Named Executive Officer the number
of performance units and/or restricted shares of Common Stock granted by the
Company during the year ended December 31, 2000. In addition, for each award,
the table also sets forth the related maturation period and future payments
expected to be made under varying circumstances:
Long-Term Incentive Plan -- Awards In Last Fiscal Year
Performance Estimated Future Payments Under
Number of or Period Non-Stock Price-Based Plans
Shares, Units Until Maturation ----------------------------------------
Name or Rights or Payment Threshold Target Maximum
- ------------------------------------------------------------------------------------------------
Barry A. Posner 10,000 (1) 12/31/01 $ 100,000 $ 250,000 $ 400,000
Edward J. Sitar 2,500 (1) 12/31/01 $ 25,000 $ 62,500 $ 100,000
Recie Bomar 5,000 (2) 12/31/01 $ 50,000 $ 125,000 $ 200,000
- -----------------------------
(1) Represents performance units granted to the indicated individual on
March 1, 2000. The performance units vest and become payable upon the
achievement by the Company of certain specified levels of after-tax
net income in fiscal 2001. Upon vesting, the performance units are
payable in two equal installments after the earlier of (I) the
individual's Date of Termination and (II) a Change of Control (each
as defined in his Performance Units Agreement) as follows: (a) $10
per unit upon the Company's achievement of a threshold level of
after-tax net income in fiscal 2001; (b) $25 per unit upon the
Company's achievement of a target level of after-tax net income in
fiscal 2001; and (c) $40 per unit upon the Company's achievement of a
maximum level of after-tax net income in fiscal 2001.
(2) Represents performance units granted to the indicated individual on
June 1, 2000. The performance units vest and become payable upon the
achievement by the Company of certain specified levels of after-tax
net income in fiscal 2001. Upon vesting, the performance units are
payable in two equal installments after the earlier of (I) the
individual's Date of Termination and (II) a Change of Control (each
as defined in his Performance Units Agreement) as follows: (a) $10
per unit upon the Company's achievement of a threshold level of
after-tax net income in fiscal 2001; (b) $25 per unit upon the
Company's achievement of a target level of after-tax net income in
fiscal 2001; and (c) $40 per unit upon the Company's achievement of a
maximum level of after-tax net income in fiscal 2001.
Compensation Committee Interlocks and Insider Participation
The Compensation Committee of the Company's Board of Directors
administers the Company's stock incentive plans and makes recommendations to the
Company's Board regarding executive officer compensation matters, including
policies regarding the relationship of corporate performance and other factors
relating to executive compensation. During 2000, the following persons served as
members of the Committee: Messrs. Cirillo, Luzzi and DiFazio, none of whom is or
ever has been an officer or employee of the Company. During 2000, Mr. Cirillo
was a partner with the law firm of King & Spalding, the Company's outside
counsel, which received fees from the Company for the provision of legal
services.
Compensation Committee Report On Executive Compensation
The Company believes that a strong link should exist between executive
compensation and management's success in maximizing shareholder value. This
belief was adhered to in 2000 by continuing the short-term and long-term
incentive executive compensation programs originally implemented in 1999 in
order to provide competitive compensation, strong incentives for the executives
to stay with the Company and deliver superior financial results, and significant
potential rewards if the Company achieves
-17-
aggressive financial goals. The Compensation Committee's role and
responsibilities involve the development and administration of executive
compensation policies and programs that are consistent with, linked to, and
supportive of the basic strategic objective of maximizing shareholder value,
while taking into consideration the activities, duties and responsibilities of
the Company's management.
In 1998, the Board of Directors engaged the professional services of an
outside consultant to review the existing compensation programs and to assist
the Company and the Compensation Committee in developing the desired program.
The consultant found that while some of the executive salaries were within a
competitive range, the executive bonus opportunities were below the level that
would be considered appropriate for executives at companies comparable to the
Company. The consultant further reported that the long-term incentive
compensation portion of the program should have been a more balanced combination
of performance units, performance shares and stock options instead of relying
solely on stock options for long-term incentive as the Company had done in the
past.
At that time, the Board of Directors directed its Compensation Committee
to work with that executive compensation consultant to develop and adopt a total
compensation program focused on maximizing shareholder value. In December 1998,
the Compensation Committee adopted the 1998 Total Compensation Program for Key
Employees for senior management (the "Program"). These actions were based on the
recommendation of the outside consultant and an internal review of the Chief
Executive Officer's recommendations regarding participation and appropriate
grants of performance units, performance shares and stock options. Grants
affecting the Chief Executive Officer's recommendations, as adopted by the
Compensation Committee continued to be awarded in 2000 in the form of
performance units.
Compensation Philosophy and Elements
The Compensation Committee adheres to four principles in discharging its
responsibilities, which have been applied through its adoption in December 1998
of the Program. First, the majority of annual bonuses and long-term compensation
for management and key employees should be in large part at risk, with actual
compensation levels corresponding to the Company's actual financial performance.
Second, over time, incentive compensation of the Company's executives should
focus more heavily on long-term rather than short-term accomplishments and
results. Third, equity-based compensation and equity ownership expectations
should be used on an increasing basis to provide management with clear and
distinct links to stockholder interests. Fourth, the overall compensation
programs should be structured to ensure the Company's ability to attract,
retain, motivate and reward those individuals who are best suited to achieving
the desired performance results, both long-term and short-term, while taking
into account the duties and responsibilities of the individual.
The Program provides the Compensation Committee with the discretion to pay
cash bonuses and grant (i) performance units payable in cash upon achievement of
certain performance criteria established by the Compensation Committee, (ii)
performance shares which are subject to restrictions on transfer and encumbrance
for a specified period of time, but which transfer restrictions may lapse early
upon achievement of certain performance criteria established by the Compensation
Committee and (iii) both non-qualified and incentive stock options.
The Program provides management and participating employees with the
opportunity to receive cash bonuses and long-term rewards if corporate,
department and/or individual objectives are achieved. Specifically, participants
may receive significant bonuses if the Company's aggressive annual financial
profit plan and each individual's departmental and personal objectives are
achieved. The maximum amount payable in any given year to any one individual
under the cash bonus and performance unit portions of the Program is $1 million.
Any amounts in excess of such threshold will be deferred to later years. The $1
million limitation is set pursuant to regulations concerning "performance-based"
compensation plans in Code Section 162(m) to enable the Compensation Committee
"negative discretion" in determining the actual bonus or performance unit
awards.
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Compensation of the Chief Executive Officer
While it was considering the appropriate salary, bonus opportunity and
long-term incentive for the current Chief Executive Officer back in 1998, the
Compensation Committee considered, among other things, his unique role during
1998 and his expected role over the next four years. The Compensation Committee
determined that in a very real sense, the Company would have faced extreme
difficulty in 1998 and 1999, were it not for the fact that Mr. Friedman accepted
the challenge to replace both the former Vice-Chairman and the former Chairman
and Chief Executive Officer and give the investment community and the Company's
stockholders reassurance that the Company would overcome the problems faced in
its primary market. The Board of Directors further determined that Mr.
Friedman's demonstrated commitment to the Company as evidenced by the purchase
of a large block of stock and his active and effective involvement in
restructuring the business, were assets that should be protected by the Company.
The Compensation Committee's negotiation of a performance-driven, five-year
agreement entered into in December 1998 was based on this recognition of his key
role in maximizing future shareholder value.
Code Section 162(m)
The Chief Executive Officer's total compensation package under his new
employment agreement is believed to qualify as "performance-based" compensation
with the meaning of Code Section 162(m). A Compensation Committee composed
entirely of outside directors adopted the Total Compensation Program and the
entire Board of Directors approved Mr. Friedman's agreement. In order to qualify
for favorable treatment under Code Section 162(m), Mr. Friedman's amended
Employment Agreement was structured such that he will not receive cash
compensation in excess of $1,000,000 in any one year under the cash bonus
portion of the Program. The performance units, performance shares and stock
options for all persons were granted from shares authorized under the 1996 Plan,
but the form of the awards required certain amendments to the 1996 Plan and
authorization of additional shares, which were approved by the Stockholders at
the Company's 1999 Annual Meeting of Stockholders.
MIM CORPORATION COMPENSATION COMMITTEE
Richard A. Cirillo
Louis DiFazio, Ph.D.
Louis A. Luzzi, Ph.D.
Employment Agreements
In December 1998, Mr. Friedman entered in to an employment agreement
with the Company (the "1998 Agreement"). Under the 1998 Agreement, Mr. Friedman
was granted options to purchase 800,000 shares of Common Stock at an exercise
price of $4.50 per share (the market price on December 2, 1998, the date of
grant), 200,000 performance units and 300,000 restricted shares. Such grants
were canceled after the proposal seeking shareholder approval for such grants at
the 1999 Annual Meeting of Stockholders was withdrawn prior to a vote of the
Stockholders. Based upon the recommendations of the Compensation Committee, the
1998 Agreement was amended on October 11, 1999 (as amended, the "Amended
Agreement"). The Amended Agreement provides for Mr. Friedman's employment as the
Chairman and Chief Executive Officer for a term of employment through November
30, 2003 (unless earlier terminated) at an initial base annual salary of
$425,000. Mr. Friedman is entitled to receive certain fringe benefits, including
an automobile allowance, and is also eligible to participate in the Program.
Under the Amended Agreement, Mr. Friedman was granted incentive stock options to
purchase 42,194 shares of Common Stock at an exercise price of $2.37 per share
and non-qualified stock options to purchase 207,806 shares of Common Stock at an
exercise price of $2.16 (the market price on October 8, 1999, the date of grant)
and
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200,000 performance units. See "Long Term Incentive Plan - Awards in Last Fiscal
Year" above for a description of the terms and conditions applicable to the
performance units.
If Mr. Friedman's employment is terminated early due to his death or
disability, (i) all vested options may be exercised by his estate for one year
following termination, (ii) all performance units shall vest and become
immediately payable at the accrued value measured at the end of the fiscal year
following his termination; provided, however, that should Mr. Friedman remain
disabled for six months following his termination for disability, he shall also
be entitled to receive for a period of two years following termination, his
annual salary at the time of termination and continuing coverage under all
benefit plans and programs to which he was previously entitled. If Mr.
Friedman's employment is terminated early by the Company without cause, (i) Mr.
Friedman shall be entitled to receive, for the longer of two years following
termination or the period remaining in his term of employment under the
agreement, his annual salary at the time of termination (less the net proceeds
of any long term disability or workers' compensation benefits) and continuing
coverage under all benefit plans and programs to which he was previously
entitled, (ii) all unvested options shall become vested in any other pension or
deferred compensation plans, and (iii) any performance units to which he would
have been entitled at the time of his termination shall become vested and
immediately payable at the then applicable target rate. If the Company
terminates Mr. Friedman for cause, he shall be entitled to receive only salary,
bonus and other benefits earned and accrued through the date of termination. If
Mr. Friedman terminates his employment for good reason, (i) Mr. Friedman shall
be entitled to receive, for a period of two years following termination, his
annual salary at the time of termination and continuing coverage under all
benefit plans and programs to which he was previously entitled, (ii) all
unvested options shall become vested and immediately exercisable in accordance
with the terms of the options and Mr. Friedman shall become vested in any other
pension or deferred compensation plans, and (iii) all performance units granted
to Mr. Friedman shall become vested and immediately payable at the then
applicable maximum rate. Upon the company undergoing certain specified changes
of control which result in his termination by the Company or a material
reduction in his duties, (i) Mr. Friedman shall be entitled to receive, for the
longer of three years following termination or the period remaining in his term
of employment under the agreement, his annual salary at the time of termination
and continuing coverage under all benefits plans and programs to which he was
previously entitled, (ii) all unvested options shall become vested and
immediately exercisable in accordance with the terms of the options and Mr.
Friedman shall become vested in any other pension or deferred compensation
plans, and (iii) all performance units granted to Mr. Friedman shall become
vested and immediately payable at the then applicable maximum rate; provided
that if the change of control is approved by two-thirds of the Board of
Directors, the performance units shall become vested and payable at the accrued
value measured at the prior fiscal year end.
During the term of employment and for one year following the later of
his termination or his receipt of severance payments, Mr. Friedman may not
directly or indirectly (other than with the Company) participate in the United
States in any pharmacy benefit management business or other business which is at
any time a material part of the Company's overall business. Similarly, for a
period of two years following termination, Mr. Friedman may not solicit or
otherwise interfere with the Company's relationship with any present or former
employee or customer of the Company.
In March 1999, Mr. Posner entered into an employment agreement with the
Company which provides for his employment as the Company's Vice President and
General Counsel for a term of employment through February 28, 2004 (unless
earlier terminated) at an initial base annual salary of $230,000. Under the
agreement, Mr. Posner is entitled to receive certain fringe benefits, including
an automobile allowance, and is also eligible to participate in the Company's
executive bonus program. Under the agreement, Mr. Posner was granted options to
purchase 100,000 shares of Common Stock at an exercise price of $4.50 (the
market price on December 2, 1998, the date of grant). The options vest in three
equal installments on the first three anniversaries of the date of grant. Mr.
Posner was also granted (i) an aggregate of 20,000 Performance Units (10,000
Units in both 1999 and 2000) (See "Long Term Incentive Plan - Awards in Last
Fiscal Year" above for a description of the grant of the performance units to
Mr. Posner in March 2000 and a summary of the terms and conditions applicable to
the performance units) and (ii) 60,000 restricted shares of Company Common Stock
in March 1999. The restricted shares are subject to restrictions on transfer and
encumbrance through December 31, 2006 and are automatically forfeited to the
Company upon termination
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of Mr. Posner's employment with the Company prior to December 31, 2006. The
restrictions to which the restricted shares are subject may lapse prior to
December 31, 2006 in the event that the Company achieves certain specified
levels of earnings per share in fiscal 2001 or 2002. Mr. Posner possesses voting
rights with respect to the restricted shares, but is not entitled to receive
dividend or other distributions, if any, paid with respect to the restricted
shares. In addition, Mr. Posner's restricted shares shall vest and become
immediately transferable without restriction upon the occurrence of the
following termination events: (i) Mr. Posner is terminated early by the Company
without cause, (ii) Mr. Posner terminates his employment for good reason, or
(iii) after certain changes of control of the Company which results in Mr.
Posner's termination by the Company or a material reduction of his duties with
the Company. In addition, in the event that Mr. Posner is terminated without
cause or terminates his employment for good reason following a change of control
of the Company, (i) all performance units granted to Mr. Posner shall become
vested and immediately payable at the then applicable maximum rate and (ii) all
restricted shares issued to Mr. Posner shall vest and become immediately
payable. Upon termination, Mr. Posner is entitled to substantially the same
entitlements as described above as Mr. Friedman. In addition, Mr. Posner is
subject to the same restrictions on competition and non-interference as
described above with respect to Mr. Friedman.
In February 1999, Mr. Bomar entered in to an employment letter agreement
with the Company which provides for his employment as Vice President - Sales and
Marketing until terminated by the Company or Mr. Bomar at an initial base annual
salary of $180,000. Under the agreement, Mr. Bomar is entitled to receive
certain fringe benefits, including automobile and life insurance allowances and
is also eligible to participate in the Company's executive bonus program. Under
the agreement, Mr. Bomar was granted options to purchase 75,000 shares of Common
Stock in 1999 at an exercise price of $2.59 per share (the market price on the
date of grant). The options vest in three equal installments on the first three
anniversaries of the date of grant. Mr. Bomar was also granted (i) an aggregate
of 10,000 Performance Units (5,000 Units in both 1999 and 2000) (See "Long Term
Incentive Plan - Awards in Last Fiscal Year" above for a description of the
grant of the performance units to Mr. Bomar in June 2000 and a summary of the
terms and conditions applicable to the performance units) and (ii) 25,000
restricted shares of Company Common Stock in June 1999. Mr. Bomar's restricted
shares have the same terms with respect to vesting, forfeiture and acceleration
as Mr. Posner's restricted shares, as described above. In addition, in the event
that Mr. Bomar is terminated without cause or terminates his employment for good
reason following a change of control of the Company, (i) all performance units
granted to Mr. Bomar shall become vested and immediately payable at the then
applicable maximum rate and (ii) all restricted shares issued to Mr. Bomar shall
vest and become immediately payable. Under the agreement, if, within three
months following certain changes of control, Mr. Bomar is terminated by the
Company or Mr. Bomar elects to terminate his employment due to a material
reduction in his duties with the Company, he is entitled to receive an amount
equal to six months salary and all outstanding unvested options held by Mr.
Bomar shall become immediately exercisable. In addition, Mr. Bomar is subject to
the same restrictions on competition and non-interference as described above
with respect to Mr. Friedman.
On April 20, 2001, Edward J. Sitar resigned as Chief Financial Officer
and Treasurer of the Company. Mr. Sitar's employment agreement terminated on
such date, with the exception of certain restrictive covenants against
competition. Mr. Sitar forfeited 5,000 performance units, 15,000 restricted
shares of Common Stock and options to purchase Common Stock.
-21-
Stockholder Return Performance Graph
The Common Stock first commenced trading on the Nasdaq on August 15, 1996,
in connection with the Company's Offering. The graph set forth below compares,
for the period of August 15, 1996 through December 31, 2000, the total
cumulative return to holders of the Company's Common Stock with the cumulative
total return of the Nasdaq Stock Market (U.S.) Index.
COMPARISON OF 56 MONTH CUMULATIVE TOTAL RETURN*
AMONG MIM CORPORATION, THE NASDAQ STOCK MARKET (U.S.) INDEX
AND THE NASDAQ HEALTH SERVICES INDEX
LINE CHART GRAPHIC OMITTED
The Data represented by the Line Chart is as follows:
MIM CORP
Cumulative Total Return*
-------------------------------------------------------------------------------------------------------
8/15/1996 12/96 12/97 12/98 12/99 12/00 3/01 5/17/2001
MIM CORPORATION 100.00 38.46 36.54 25.96 18.75 6.73 31.85
NASDAQ STOCK MARKET (U.S.) 100.00 113.52 139.03 196.04 364.31 219.01 163.68
NASDAQ HEALTH SERVICES 100.00 92.27 94.68 80.26 64.56 88.63 81.42
* $100 INVESTED ON 8/15/96 IN STOCK OR INDEX -
INCLUDING REINVESTMENT OF DIVIDENDS.
FISCAL YEAR ENDING DECEMBER 31.
-22-
Certain Relationships and Related Transactions
In April 1999, the Company loaned to Mr. Friedman, its Chairman and
Chief Executive Officer, $1.7 million evidenced by a promissory note secured by
a pledge of 1.5 million shares of the Company's Common Stock. The note requires
repayment of principal and interest by March 31, 2004. Interest accrues monthly
at the "Prime Rate" (as defined in the note) then in effect. The loan was
approved by the Company's Board of Directors in order to provide funds with
which such executive officer could pay the Federal and state tax liability
associated with the exercise of stock options representing 1.5 million shares of
the Company's Common Stock in January 1998. On December 31, 2000, the
outstanding amount of the loan was $1,963,151, including accrued interest.
At December 31, 2000, Alchemie Properties, LLC, a Rhode Island limited
liability company of which Mr. E. David Corvese, the brother of Russel J.
Corvese, is the manager and principal owner ("Alchemie"), was indebted to the
Company in the amount of $269,419 represented a loan received from the Company
in 1994 in the original principal amount of $299,000. The loan bears interest at
a 10% per annum, with interest payable monthly and principal payable in full on
or before December 1, 2004, and secured by a lien on Alchemie's rental income
from the Company at one of its facilities.
During 2000, the Company paid $50,875 in rent to Alchemie pursuant to a
ten-year lease entered into in December 1994 for approximately 7,200 square feet
of office space in Peace Dale, Rhode Island.
In 1995, MIM Holdings, a company controlled by Mr. E. David Corvese,
was indebted to the Company under two promissory notes in the amount of $456,000
and $622,000, respectively. The $456,000 promissory note, which is guaranteed by
Mr. Corvese, became due and payable as of March 31, 2001 in the amount of
$512,966.56, including principal and interest. As of May 22, 2001, the loan has
not been repaid by MIM Holdings or Mr. Corvese. The Company intends to utilize
all of its rights and remedies available under the $456,000 Note in order to
collect the entire amount outstanding. The $622,000 promissory note will not be
repaid and was recorded as a stockholder distribution during the first half of
1996.
As discussed above, under Section 145 of the Delaware General
Corporation Law and the Company's By-Laws, under certain circumstances the
Company may be obligated to indemnify Mr. E. David Corvese as well as Michael J.
Ryan, a former officer of one of the Company's subsidiaries, in connection with
their respective involvement in a Federal and State of Tennessee investigation
against them. In January 2001, the proceedings against Messrs. Corvese and Ryan
ended in a settlement of claims against them. The settlement with the Federal
and Tennessee State governments is subject to, among other things, execution of
a definitive settlement agreement and the approval of the U.S. District Court
for the Western District of Tennessee. A hearing to approve this settlement and
sentencing originally scheduled for April 6, 200 was rescheduled for June 29,
2001. Regardless of the settlement, until the Board determines as to whether or
not either or both Messrs. Corvese and Ryan are so entitled to indemnification,
the Company is obligated under Section 145 and its By-Laws to advance the costs
of defense to such persons; however, if the Board determines that either or both
of these former officers are not entitled to indemnification, the Company would
seek reimbursement from such individuals of all amounts advanced to them. During
2000, the Company advanced $3.1 million for Messrs. Corvese and Ryan's and legal
costs, in connection with the matter. The Company is not presently in a position
to assess the likelihood that either or both of these former officers would be
entitled to such indemnification and advancement of defense costs. No assurance
can be given, however, that the Company will recover the costs of defense
advanced to these former officers whether or not it believes it is entitled to
such reimbursement.
On February 16, 2001, the Company repurchased 1,298,183 shares of its
Common Stock at a price of $2.00 per share in private transactions not reported
on NASDAQ, including all 1,135,699 shares of Common Stock beneficially owned by
Michael E. Erlenbach, an owner of greater than 5% of the Company's Common Stock
prior to such transaction. The closing sales price per share for the Common
Stock on February 16, 2001, was $2.00 per share.
Since October 1998, the Company has engaged the consulting services of
Harold Ford & Company, LLC, founded and controlled by Harold Ford, a nominee for
director. The consulting agreement, which is
-23-
scheduled to expire on October 13, 2001, has an initial three (3) year term,
Harold Ford & Company provides lobbying and health care related services. During
the term of the consulting agreement, the Company pays Harold Ford & Company
$45,750 per month for such services.
Stockholder Proposals
In accordance with the amended Bylaws of the Company, a Stockholder who
at any annual meeting of stockholders of the Company intends to nominate a
person for election as a director or present a proposal must so notify the
Secretary of the Company, in writing, describing such nominee(s) or proposal and
providing information concerning such stockholder and the reasons for, and
interest of, such stockholder in any such nomination or proposal. Generally, to
be timely, such notice must be received by the Secretary not less than 60 days
nor more than 90 days in advance of the first anniversary of the preceding
year's annual meeting, provided that in the event that no annual meeting was
held the previous year or the date of the annual meeting has been changed by
more than 30 days from the date of the previous year's meeting, or in the event
of a special meeting of stockholders called to elect directors, not later than
the close of business on the tenth day following the day on which notice of the
date of the meeting was mailed or public disclosure of the date of the meeting
was made, whichever occurs first. For the Company's annual meeting to be held in
2002, any such notice must be received by the Company at its principal executive
offices between March 23, 2002 and April 22, 2002 to be considered timely for
purposes of the 2002 Annual Meeting. Any person interested in making such a
nomination or proposal should request a copy of the relevant Bylaw provisions
from the Secretary of the Company. These time periods also apply in determining
whether notice is timely for purposes of rules adopted by the Commission
relating to the exercise of discretionary voting authority, and are separate
from and in addition to the Commission's requirements (described below) that a
Stockholder must meet to have a proposal included in the Company's Proxy
Statement.
Stockholder proposals intended to be presented at the 2002 Annual
Meeting must be received by the Company at its principal executive offices no
later than January 25, 2002, in order to be eligible for inclusion in the
Company's Proxy Statement and proxy card relating to that meeting. Upon receipt
of any proposal, the Company will determine whether to include such proposal in
accordance with regulations governing the solicitation of Proxies.
Voting Via the Internet or by Telephone
Please note that there are separate Internet and telephone voting
arrangements depending upon whether your Shares are registered in your name or
in the name of a bank or broker. Stockholders voting via the Internet should
understand that there may be costs associated with electronic access, such as
usage charges from Internet access providers and telephone companies, that must
be borne by such Stockholder utilizing such services.
Shares Registered Directly in the Name of the Stockholder
Stockholders with Shares registered directly with the Company's
transfer agent, American Stock Transfer & Trust Company ("AmStock"), may vote
telephonically by calling 1-800-PROXIES (1-800-776-9437) on a touch-tone
telephone, or via the Internet at AmStock's voting site on the World Wide Web
(www.voteproxy.com). A Control Number located on the proxy card will be utilized
to verify your identity, allow you to vote your Shares, and confirm that your
voting instructions have been properly recorded.
Shares Registered in the Name of a Brokerage Firm or Bank
A number of brokerage firms and banks are participating in a program
that also offers telephone and Internet voting options. This program is likely
different from the program provided by AmStock for Shares registered in the name
of the Stockholder. If your shares are held in an account at a brokerage firm or
bank which participates in an electronic voting program, you may vote those
Shares telephonically or via the Internet by following the instructions included
on your proxy card.
-24-
Solicitation of Proxies
The Company will bear the cost of the solicitation of Proxies for the
Meeting. Brokerage houses, banks, custodians, nominees and fiduciaries are being
requested to forward the proxy material to beneficial owners and their
reasonable expenses therefore will be reimbursed by the Company. Solicitation
will be made by mail and also may be made personally or by telephone, facsimile
or other means by the Company's officers, directors and employees, without
special compensation for such activities. We have also hired Morrow & Co.
("Morrow") to assist in the solicitation of proxies. Morrow will receive a fee
for such services of approximately $25,000, plus reasonable out-of-pocket
expenses, which will be paid by the Company.
Miscellaneous
A copy of the Company's 2000 Annual Report to Stockholders, including
the financial statements and financial statement schedules, as filed with the
Commission, is enclosed but is not to be regarded as proxy solicitation
materials.
-25-
Exhibit A
MIM CORPORATION
CHARTER OF THE AUDIT COMMITTEE OF
THE BOARD OF DIRECTORS
ADOPTED JUNE 6, 2000
PURPOSE
The Audit Committee shall provide assistance to the Board of Directors in
fulfilling their responsibility to the shareholders, potential shareholders, and
investment community relating to the accounting and reporting practices of MIM
Corporation (the "Corporation") and the quality and integrity of the financial
information provided by the Corporation. The Audit Committee will fulfill these
responsibilities and duties primarily by carrying out the activities enumerated
in this Charter.
COMPOSITION
The Audit Committee shall be comprised of three or more directors as determined
by the Board of Directors of the Corporation, each of whom shall be independent
directors in accordance with the National Association of Securities Dealers
listing standards, and, free from any relationship that, in the opinion of the
Board of Directors, would interfere with the exercise of his or her independent
judgment as a member of the Audit Committee. All members of the Audit Committee
shall be financially literate as interpreted by the Board of Directors, or
become financially literate within a reasonable period of time after his or her
appointment to the Audit Committee. One member of the Audit Committee shall have
accounting or related financial management expertise, as the Board of Directors
interprets such qualifications in its business judgment.
MEETINGS
The Audit Committee shall meet at stated times without notice, or on notice to
all by the Chairman or Vice Chairman of the Board of Directors, the President,
the Chief Financial Officer, or by one of the members of the Audit Committee, or
more frequently as circumstances dictate. As part of its responsibilities to
foster open communication, the Audit Committee should meet at least annually
with management and the independent accountants separately to discuss any
matters that the Audit Committee or each of these groups believe should be
discussed privately.
RESPONSIBILITIES AND DUTIES
Review and reassess, at least annually, the adequacy of this Charter. Make
recommendations to the Board of Directors, as conditions dictate, to update this
Charter.
Review with management and the independent accountants the Corporation's audited
financial statements, including a discussion with the independent accountants of
the matters required to be discussed by Statement of Auditing Standards No. 61
"Communications with Audit Committees" (SAS No. 61).
Recommend to the Board of Directors that, based on the Audit Committee's review
and discussions with management and the independent accountants, the audited
financial statements be included in the annual report of filing with the
Securities and Exchange Commission.
Review the performance of the independent accountants and make recommendations
to the Board of Directors regarding the appointment or termination of the
independent accountants. The independent accountants are ultimately accountable
to the Board of Directors and the Audit Committee. The Audit Committee and the
Board of Directors have the ultimate authority and responsibility to select,
evaluate, and where appropriate, replace the independent accountants.
Oversee independence of the accountants by:
Receiving from the independent accountants, on a periodic basis, a
formal written
A-1
Statement delineating all relationships between the
independent accountants and the Corporation consistent with
Independence Standard No. 1 "Independence
Discussions with Audit Committees";
Discussing with the independent accountants any disclosed
relationships or services between the independent accountants and
the Corporation that may impact the objectivity and independence of
the accountants; and
Recommending, if necessary, that the Board of Directors take
appropriate action to satisfy itself of the accountants;
independence based on the report provided.
Review in consultation with the independent accountants the audit
scope and plan of the independent accountants.
Review with the independent accountants and management the
adequacy and effectiveness of internal controls of the
Corporation.
Report through the Audit Committee's Chairperson to the Board of
Directors following meetings of the Audit Committee.
Maintain minutes or other records of meetings and activities of
the Audit Committee.
Perform any other activities consistent with this Charter and the
Corporation's By-Laws as the Audit Committee or the Board of
Directors deems necessary or appropriate.
* * * *
A-2
EXHIBIT B
MIM CORPORATION
2001 INCENTIVE STOCK PLAN
TABLE OF CONTENTS
Page
ss.1. BACKGROUND AND PURPOSE..................................................1
ss.2. DEFINITIONS.............................................................1
2.1 Affiliate.............................................1
2.2 Board.................................................1
2.3 Change in Control.....................................1
2.4 Code..................................................2
2.5 Committee.............................................2
2.6 Director..............................................2
2.7 Fair Market Value.....................................2
2.8 ISO...................................................3
2.9 Key Employee..........................................3
2.10 1933 Act..............................................3
2.11 1934 Act..............................................3
2.12 MIM...................................................3
2.13 Non-ISO...............................................3
2.14 Option................................................3
2.15 Option Certificate....................................3
2.16 Option Price..........................................3
2.17 Parent................................................3
2.18 Plan..................................................3
2.19 Rule 16b-3............................................4
2.20 SAR Value.............................................4
2.21 Stock.................................................4
2.22 Stock Grant...........................................4
2.23 Stock Grant Certificate...............................4
2.24 Stock Appreciation Right..............................4
2.25 Stock Appreciation Right Certificate...................
2.26 Subsidiary............................................4
2.27 Ten Percent Shareholder...............................4
ss.3. SHARES RESERVED UNDER PLAN..............................................5
ss.4. EFFECTIVE DATE..........................................................5
ss.5. COMMITTEE...............................................................5
ss.6. ELIGIBILITY AND ANNUAL GRANT CAPS.......................................6
ss.7. OPTIONS.................................................................6
7.1 Committee Action......................................6
7.2 $100,000 Limit........................................6
7.3 Option Price..........................................7
7.4 Payment...............................................7
7.5 Exercise Period.......................................7
7.6 Reload Option Grants..................................8
ss.8. STOCK APPRECIATION RIGHTS...............................................8
8.1 Committee Action......................................8
8.2 Terms and Conditions..................................9
8.3 Exercise.............................................10
ss.9. STOCK GRANTS...........................................................10
9.1 Committee Action.....................................10
9.2 Conditions...........................................10
9.3 Dividends and Voting Rights..........................12
9.4 Satisfaction of Forfeiture Conditions................12
9.5 Section 162(m).......................................12
ss.10. NON-TRANSFERABILITY...................................................14
ss.11. SECURITIES REGISTRATION...............................................14
ss.12. LIFE OF PLAN..........................................................15
ss.13. ADJUSTMENT............................................................15
13.1 Capital Structure....................................15
13.2 Mergers..............................................16
13.3 Fractional Shares....................................16
ss.14. SALE, MERGER OR CHANGE IN CONTROL.....................................17
ss.15. AMENDMENT OR TERMINATION..............................................17
ss.16. MISCELLANEOUS.........................................................18
16.1 Shareholder Rights...................................18
16.2 No Contract of Employment............................18
16.3 Withholding..........................................18
16.4 Construction.........................................18
16.5 Other Conditions.....................................19
16.6 Rule 16b-3...........................................19
16.7 Loans................................................19
ii
ss. 1.
BACKGROUND AND PURPOSE
The purpose of this Plan is to promote the interest of MIM by
authorizing the Committee to grant Options, Stock Appreciation Rights and
Performance Units and to make Stock Grants to Key Employees in order (1) to
attract and retain Key Employees, (2) to provide an additional incentive to each
Key Employee to work to increase the value of Stock and (3) to provide each Key
Employee with a stake in the future of MIM which corresponds to the stake of
each of MIM's stockholders.
ss. 2.
DEFINITIONS
2.1 Affiliate -- means any organization (other than a Subsidiary) that
would be treated as under common control with MIM under ss. 414(c) of the Code
if "50 percent" were substituted for "80 percent" in the income tax regulations
under ss. 414(c) of the Code.
2.2 Board -- means the Board of Directors of MIM.
2.3 Change in Control -- means (i) a "person" or "group" within the
meaning of sections 13(d) and 14(d) of the 1934 Act becomes the "beneficial
owner" (within the meaning of Rule 13d-3 under the 1934 Act) of securities of
MIM (including options, warrants, rights and convertible and exchangeable
securities) representing 30% or more of the combined voting power of MIM's then
outstanding securities in any one or more transactions unless approved by at
least two-thirds of the Board then serving at that time; provided, however, that
purchases by employee benefit plans of MIM and by MIM or its Subsidiaries and
Affiliates shall be disregarded; or (ii) any sale, lease, exchange or other
transfer (in one transaction or a series of related transactions) of all, or
substantially all, of the operating assets of MIM; or (iii) a merger or
consolidation, or a transaction having a similar effect, where (A) MIM is not
the surviving corporation, (B) the majority of the common stock of MIM is no
longer held by the stockholders of MIM immediately prior to the transaction, or
(C) MIM's common stock is converted into cash, securities or other property
(other than the common stock of a company into which MIM is
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merged), unless such merger, consolidation or similar transaction is with a
Subsidiary or with another company, a majority of whose outstanding capital
stock is owned by the same persons or entities who own a majority of MIM's
common stock at such time; or (iv) at any annual or special meeting of
stockholders of MIM at which a quorum is present (or any adjournments or
postponements thereof), or by written consent in lieu thereof, directors (each a
"New Director" and collectively the "New Directors") then constituting a
majority of the Board shall be duly elected to serve as New Directors and such
New Directors shall have been elected by stockholders of MIM who shall be an (I)
"Adverse Person(s)"; (II) "Acquiring Person(s)"; or (III) "40% Person(s)" (as
each of the terms set forth in (I), (II), and (III) hereof are defined in that
certain Amended and Rights Agreement, dated May 20, 1999, between MIM and
American Stock Transfer & Trust Company, as Rights Agent).
2.4 Code -- means the Internal Revenue Code of 1986, as amended.
2.5 Committee -- means a committee of the Board which shall have at
least 2 members, each of whom shall be appointed by and shall serve at the
pleasure of the Board and shall come within the definition of a "non-employee
director" under Rule 16b-3 and an "outside director" under ss. 162(m) of the
Code.
2.6 Ending Value -- means, a value for each Performance Unit or a
formula for determining the value of each Performance Unit at the time of
payment.
2.7 Fair Market Value -- means (1) the closing price on any date for a
share of Stock as reported by The Wall Street Journal or, if The Wall Street
Journal no longer reports such closing price, such closing price as reported by
a newspaper or trade journal selected by the Committee or, if no such closing
price is available on such date, (2) such closing price as so reported in
accordance with ss. 2.7 (1) for the immediately preceding business day, or, if
no newspaper or trade journal reports such closing price or if no such price
quotation is available, (3) the price which the Committee acting in good faith
determines through any reasonable valuation method that a share of Stock might
change hands between a
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willing buyer and a willing seller, neither being under any compulsion to buy or
to sell and both having reasonable knowledge of the relevant facts.
2.8 ISO -- means an option granted under this Plan to purchase Stock
which is intended to satisfy the requirements of ss. 422 of the Code.
2.9 Key Employee -- means an employee of MIM or any Subsidiary or
Parent or Affiliate designated by the Committee who, in the judgment of the
Committee acting in its absolute discretion, is key directly or indirectly to
the success of MIM.
2.10 1933 Act -- means the Securities Act of 1933, as amended.
2.11 1934 Act -- means the Securities Exchange Act of 1934, as amended.
2.12 MIM -- means MIM Corporation and any successor to MIM Corporation.
2.13 Non-ISO -- means an option granted under this Plan to purchase
Stock which is intended to fail to satisfy the requirements of ss. 422 of the
Code.
2.14 Option -- means an ISO or a Non-ISO which is granted under ss. 7.
2.15 Option Certificate -- means the written certificate which sets
forth the terms and conditions of an Option granted under this Plan.
2.16 Option Price -- means the price which shall be paid to purchase
one share of Stock upon the exercise of an Option granted under this Plan.
2.17 Parent -- means any corporation which is a parent corporation
(within the meaning of ss. 424(e) of the Code) of MIM.
2.18 Performance Goal -- means a performance goal described in ss.
10.3.
2.19 Performance Period -- means a performance period as described
inss. 10.4.
2.20 Performance Unit -- means an award granted underss.10.
2.21 Plan -- means this MIM Corporation 2001 Incentive Stock Plan as
effective as of the date adopted by the Board in 2001 and as amended from time
to time thereafter.
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2.22 Rule 16b-3 -- means the exemption under Rule 16b-3 to Section
16(b) of the 1934 Act or any successor to such rule.
2.23 SAR Value -- means the value assigned by the Committee to a share
of Stock in connection with the grant of a Stock Appreciation Right under ss. 8.
2.24 Stock -- means the common stock, $.0001 par value per share, of
MIM.
2.25 Stock Appreciation Right -- means a right to receive the
appreciation in a share of Stock which is granted underss.8.
2.26 Stock Appreciation Right Certificate -- means the written
certificate which sets forth the terms and conditions of a Stock Appreciation
Right which is not granted to a Key Employee as part of an Option.
2.27 Stock Grant -- means Stock granted under ss. 9.
2.28 Stock Grant Certificate -- means the written certificate which
sets forth the terms and conditions of a Stock Grant.
2.29 Subsidiary -- means a corporation which is a subsidiary
corporation (within the meaning of ss. 424(f) of the Code) of MIM.
2.30 Ten Percent Shareholder -- means a person who owns (after taking
into account the attribution rules of ss. 424(d) of the Code) more than ten
percent of the total combined voting power of all classes of stock of either
MIM, a Subsidiary or Parent.
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ss. 3.
SHARES RESERVED UNDER PLAN
There shall (subject to ss. 14) be 950,000 shares of Stock reserved for
issuance under this Plan, and no more than such number of shares shall (subject
to ss. 14) be issued in connection with the exercise of ISOs. Such shares of
Stock shall be reserved to the extent that MIM deems appropriate from authorized
but unissued shares of Stock and from shares of Stock which have been reacquired
by MIM. Any shares of Stock subject to an Option or Stock Grant which remain
unissued after the cancellation, expiration or exchange of such Option or Stock
Grant or which are forfeited after issuance and any shares of Stock subject to
issuance under a Stock Appreciation Right which remain unissued after the
cancellation or expiration of such Stock Appreciation Right thereafter shall
again become available for issuance under this Plan. Any shares of Stock used to
satisfy a withholding obligation shall be treated as issued under this Plan and
not again become available for grants under this Plan.
ss. 4.
EFFECTIVE DATE
The effective date of this Plan shall be the date of its adoption by
the Board, provided the shareholders of MIM (acting at a duly called meeting of
such shareholders) approve such adoption within twelve (12) months of such
effective date. Any Option or Stock Appreciation Right granted or Stock Grant
made before such shareholder approval automatically shall be granted subject to
such approval.
ss. 5.
COMMITTEE
This Plan shall be administered by the Committee. The Committee acting
in its absolute discretion shall exercise such powers and take such action as
expressly called for under this Plan and, further, the Committee shall have the
power to interpret this Plan and (subject to ss. 15 and ss. 16 and Rule 16b-3)
to take such other action in the administration and operation of this Plan as
the Committee deems equitable under the circumstances, which action shall be
binding on MIM, on each affected
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Key Employee and on each other person directly or indirectly affected by such
action.
ss. 6.
ELIGIBILITY AND ANNUAL GRANT CAPS
Only Key Employees who are employed by MIM or a Subsidiary or Parent
shall be eligible for the grant of ISOs under this Plan. All Key Employees shall
be eligible for the grant of Non-ISOs and Stock Appreciation Rights and for
Stock Grants under this Plan. However, no Key Employee in any calendar year
shall be granted an Option to purchase (subject to ss. 14) more than 350,000
shares of Stock, a Stock Appreciation Right based on the appreciation with
respect to (subject to ss. 14) more than 350,000 shares of stock, Stock Grants
(subject to ss. 14) for more than 150,000 shares of Stock, or any combination of
such awards covering in the aggregate 500,000 shares of Stock.
ss. 7.
OPTIONS
7.1 Committee Action. The Committee acting in its absolute discretion
shall have the right to grant Options to Key Employees under this Plan from time
to time to purchase shares of Stock. Each grant of an Option to a Key Employee
shall be evidenced by an Option Certificate, and each Option Certificate shall
set forth whether the Option is an ISO or a Non-ISO and shall set forth such
other terms and conditions of such grant as the Committee acting in its absolute
discretion deems consistent with the terms of this Plan; however, if the
Committee grants an ISO and a Non-ISO to a Key Employee on the same date, the
right of the Key Employee to exercise the ISO shall not be conditioned on his or
her failure to exercise the Non-ISO. Options, once issued, may not be repriced
without first obtaining the approval of the shareholders of MIM.
7.2 $100,000 Limit. No Option shall be treated as an ISO to the extent
that the aggregate Fair Market Value of the Stock subject to the Option which
would first become exercisable in any calendar year exceeds $100,000. Any such
excess shall instead automatically be treated as a Non-ISO. The Committee shall
interpret and administer the ISO limitation set forth in this ss. 7.2 in
accordance
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with ss. 422(d) of the Code, and the Committee shall treat this ss. 7.2 as in
effect only for those periods for which ss. 422(d) of the Code is in effect.
7.3 Option Price. The Option Price for each share of Stock subject to
an Option shall be no less than the Fair Market Value of a share of Stock on the
date the Option is granted; provided, however, if the Option is an ISO granted
to a Key Employee who is a Ten Percent Shareholder, the Option Price for each
share of Stock subject to such ISO shall be no less than 110% of the Fair Market
Value of a share of Stock on the date such ISO is granted.
7.4 Payment. The Option Price shall be payable in full upon the
exercise of any Option, and at the discretion of the Committee an Option
Certificate can provide for the payment of the Option Price either in cash, by
check or in Stock which has been held for at least 6 months and which is
acceptable to the Committee or in any combination of cash, check and such Stock.
The Option Price in addition may be paid through any cashless exercise procedure
which is acceptable to the Committee or its delegate and which is facilitated
through a sale of Stock. Any payment made in Stock shall be treated as equal to
the Fair Market Value of such Stock on the date the certificate for such Stock
(or proper evidence of such certificate) is presented to the Committee or its
delegate in such form as acceptable to the Committee.
7.5 Exercise Period. Each Option granted under this Plan shall be
exercisable in whole or in part at such time or times as set forth in the
related Option Certificate, but no Option Certificate shall make an Option
exercisable on or after the earlier of
(1) the date which is the fifth anniversary of the date the Option is
granted, if the Option is an ISO and the Key Employee is a Ten
Percent Shareholder on the date the Option is granted, or
(2) the date which is the tenth anniversary of the date the Option is
granted, if the Option is (a) a Non-ISO or (b) an ISO which is
granted to a Key
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Employee who is not a Ten Percent Shareholder on the date the
Option is granted.
An Option Certificate may provide for the exercise of an Option after the
employment of a Key Employee has terminated for any reason whatsoever, including
death or disability.
7.6 Reload Option Grants. The Committee as part of the grant of an
Option may provide in the related Option Certificate for the automatic grant of
an additional Option as of each date that a Key Employee exercises the original
Option if the Key Employee in connection with such exercise uses (in accordance
with ss. 7.4) Stock to pay all or a part of the Option Price or uses Stock to
satisfy all or a part of any related tax withholding requirement. As for each
such additional Option,
(1) the number of shares of Stock subject to the additional Option
shall be no more than the number of shares of Stock used to pay
the related Option Price or to satisfy the related withholding
requirement,
(2) the Option Price shall be no less than the Fair Market Value of a
share of Stock on the date of the related exercise of the
original Option,
(3) the additional Option shall expire no later than the expiration
date for the original Option,
(4) the additional Option shall be subject to such other terms and
conditions as the Committee deems appropriate under the
circumstances, and
(5) the additional Option shall be evidenced by a Stock Option
Certificate.
ss. 8.
STOCK APPRECIATION RIGHTS
8.1 Committee Action. The Committee acting in its absolute discretion
shall have the right to grant Stock Appreciation Rights to Key Employees under
this Plan from time to time, and each Stock Appreciation Right grant shall be
evidenced by a Stock Appreciation Right Certificate or, if
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such Stock Appreciation Right is granted as part of an Option, shall be
evidenced by the Option Certificate for the related Option.
8.2 Terms and Conditions.
(a) Stock Appreciation Right Certificate. If a Stock Appreciation
Right is evidenced by a Stock Appreciation Right Certificate,
such certificate shall set forth the number of shares of Stock on
which the Key Employee's right to appreciation shall be based and
the SAR Value of each share of Stock. Such SAR Value shall be no
less than the Fair Market Value of a share of Stock on the date
that the Stock Appreciation Right is granted. The Stock
Appreciation Right Certificate shall set forth such other terms
and conditions for the exercise of the Stock Appreciation Right
as the Committee deems appropriate under the circumstances, but
no Stock Appreciation Right Certificate shall make a Stock
Appreciation Right exercisable on or after the date which is the
tenth anniversary of the date such Stock Appreciation Right is
granted.
(b) Option Certificate. If a Stock Appreciation Right is evidenced by
an Option Certificate, the number of shares of Stock on which the
Key Employee's right to appreciation shall be based shall be the
same as the number of shares of Stock subject to the related
Option and the SAR Value for each such share of Stock shall be no
less than the Option Price under the related Option. Each such
Option Certificate shall provide that the exercise of the Stock
Appreciation Right with respect to any share of Stock shall
cancel the Key Employee's right to exercise his or her Option
with respect to such share and, conversely, that the exercise of
the Option with respect to any share of Stock shall cancel the
Key Employee's right
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to exercise his or her Stock Appreciation Right with respect to
such share. A Stock Appreciation Right which is granted as part
of an Option shall be exercisable only while the related Option
is exercisable. The Option Certificate shall set forth such other
terms and conditions for the exercise of the Stock Appreciation
Right as the Committee deems appropriate under the circumstances.
8.3 Exercise. A Stock Appreciation Right shall be exercisable only when
the Fair Market Value of a share of Stock on which the right to appreciation is
based exceeds the SAR Value for such share, and the payment due on exercise
shall be based on such excess with respect to the number of shares of Stock to
which the exercise relates. A Key Employee upon the exercise of his or her Stock
Appreciation Right shall receive a payment from MIM in cash or in Stock issued
under this Plan, or in a combination of cash and Stock, and the number of shares
of Stock issued shall be based on the Fair Market Value of a share of Stock on
the date the Stock Appreciation Right is exercised. The Committee acting in its
absolute discretion shall have the right to determine the form and time of any
payment under this ss. 8.3.
ss. 9.
STOCK GRANTS
9.1 Committee Action. The Committee acting in its absolute discretion
shall have the right to make Stock Grants to Key Employees. Each Stock Grant
shall be evidenced by a Stock Grant Certificate, and each Stock Grant
Certificate shall set forth the conditions, if any, under which Stock will be
issued under the Stock Grant and the conditions under which the Key Employee's
interest in any Stock which has been issued will become non-forfeitable.
9.2 Conditions.
(a) Conditions to Issuance of Stock. The Committee acting in its
absolute discretion may make the issuance of Stock under a Stock
Grant subject to
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the satisfaction of one, or more than one, condition which the
Committee deems appropriate under the circumstances for Key
Employees generally or for a Key Employee in particular, and the
related Stock Grant Certificate shall set forth each such
condition and the deadline for satisfying each such condition.
Stock subject to a Stock Grant shall be issued in the name of a
Key Employee only after each such condition, if any, has been
timely satisfied, and any Stock which is so issued shall be held
by MIM pending the satisfaction of the forfeiture conditions, if
any, underss.9.2(b) for the related Stock Grant.
(b) Forfeiture Conditions. The Committee acting in its absolute
discretion may make Stock issued in the name of a Key Employee
subject to one, or more than one, objective employment,
performance or other forfeiture condition that the Committee
acting in its absolute discretion deems appropriate under the
circumstances for Key Employees generally or for a Key Employee
in particular, and the related Stock Grant Certificate shall set
forth each such forfeiture condition, if any, and the deadline,
if any, for satisfying each such forfeiture condition. A Key
Employee's non-forfeitable interest in the shares of Stock
underlying a Stock Grant shall depend on the extent to which he
or she timely satisfies each such condition. Each share of Stock
underlying a Stock Grant shall be unavailable underss. 3 after
such grant is effective unless such share thereafter is forfeited
as a result of a failure to timely satisfy a forfeiture
condition, in which event such share of Stock shall again become
available underss. 3 as of the date of such forfeiture.
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9.3 Dividends and Voting Rights. If a cash dividend is paid on a share
of Stock after such Stock has been issued under a Stock Grant but before the
first date that a Key Employee's interest in such Stock (1) is forfeited
completely or (2) becomes completely non-forfeitable, MIM shall pay such cash
dividend directly to such Key Employee. If a Stock dividend is paid on such a
share of Stock during such period, such Stock dividend shall be treated as part
of the related Stock Grant, and a Key Employee's interest in such Stock dividend
shall be forfeited or shall become non-forfeitable at the same time as the Stock
with respect to which the Stock dividend was paid is forfeited or becomes
non-forfeitable. The disposition of each other form of dividend which is
declared on such a share of Stock during such period shall be made in accordance
with such rules as the Committee shall adopt with respect to each such dividend.
A Key Employee also shall have the right to vote the Stock issued under his or
her Stock Grant during such period.
9.4 Satisfaction of Forfeiture Conditions. A share of Stock shall cease
to be subject to a Stock Grant at such time as a Key Employee's interest in such
Stock becomes non-forfeitable under this Plan, and the certificate representing
such share shall be transferred to the Key Employee as soon as practicable
thereafter.
9.5 Performance Goals. The Committee may, at the time a Stock Grant is
made, prescribe corporate, divisional, and/or individual performance goals,
applicable to all or any portion of the shares subject to the Stock Grant.
Performance goals may be based on achieving a certain level of total revenue,
earnings, earnings per share or return on equity of MIM and its and its
Subsidiaries and Affiliates, or on the extent of changes in such criteria.
ss. 10.
PERFORMANCE UNITS
10.1 Committee Action. The Committee (acting in its sole discretion)
may from time to time grant Performance Units to Key Employees under the Plan
representing the right to receive in
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cash an amount determined by reference to certain performance measurements,
subject to such restrictions, conditions and other terms as the Committee may
determine.
10.2 Conditions. The written agreement covering Performance Units shall
specify Performance Goals (as defined in ss. 10.3), a Performance Period (as
defined in ss. 10.4)) and an Ending Value. Performance Units granted to a Key
Employee shall be credited to a bookkeeping account established and maintained
for such Key Employee.
10.3 Performance Goals. With respect to each award of Performance
Units, the Committee (acting in its sole discretion) shall specify as
Performance Goals the corporate, division, and/or individual performance goals
which must be satisfied in order for the Key Employee to be entitled to payment
to such Performance Units. Performance Goals may be based on achieving a certain
level of total revenue, earnings, earnings per share or return on equity of MIM
and its Subsidiaries and Affiliates, or on the extent of changes in such
criteria. Different Performance Goals may be established for different awards of
Performance Units, and a Key Employee may be granted more than one award of
Performance Units at the same time.
10.4 Performance Period. The Committee (acting in its sole discretion)
shall determine the Performance Period, which shall be the period of time during
which the Performance Goals must be satisfied in order for the Key Employee to
be entitled to payment of Performance Units granted to such Key Employee.
Different Performance Periods may be established for different Performance
Units. Performance Periods may run consecutively or concurrently.
10.5 Payment for Performance Units. As soon as practicable following
the end of a Performance Period, the Committee shall determine whether the
Performance Goals for the Performance Period have been achieved. As soon as
reasonably practicable after such determination, or at such later date or in
such installments as the Committee shall determine at the time of grant, MIM
shall pay to the Key Employee an amount in cash equal to the Ending Value of
each Performance Unit as to which the
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Performance Goals have been satisfied; provided, however, that in no event shall
a Key Employee receive an amount in excess of $1,000,000 in respect of
Performance Units for any given year.
ss. 11.
NON-TRANSFERABILITY
No Option, Stock Grant, Stock Appreciation Right, or Performance Unit
shall (absent the Committee's consent) be transferable by a Key Employee other
than by will or by the laws of descent and distribution, and any Option or Stock
Appreciation Right shall (absent the Committee's consent) be exercisable during
a Key Employee's lifetime only by the Key Employee. The person or persons to
whom an Option, Stock Grant, Stock Appreciation Right or Performance Unit is
transferred by will or by the laws of descent and distribution (or with the
Committee's consent) thereafter shall be treated as the Key Employee.
ss. 12.
SECURITIES REGISTRATION
As a condition to the receipt of shares of Stock under this Plan, the
Key Employee shall, if so requested by MIM, agree to hold such shares of Stock
for investment and not with a view of resale or distribution to the public and,
if so requested by MIM, shall deliver to MIM a written statement satisfactory to
MIM to that effect. Furthermore, if so requested by MIM, the Key Employee shall
make a written representation to MIM that he or she will not sell or offer for
sale any of such Stock unless a registration statement shall be in effect with
respect to such Stock under the 1933 Act and any applicable state securities law
or he or she shall have furnished to MIM an opinion in form and substance
satisfactory to MIM of legal counsel satisfactory to MIM that such registration
is not required. Certificates representing the Stock transferred upon the
exercise of an Option or Stock Appreciation Right or upon the lapse of the
forfeiture conditions, if any, on any Stock Grant may at the discretion of MIM
bear a legend to the effect that such Stock has not been registered under the
1933 Act or any applicable state securities law and that such Stock cannot be
sold or offered for sale in the absence of an effective
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registration statement as to such Stock under the 1933 Act and any applicable
state securities law or an opinion in form and substance satisfactory to MIM of
legal counsel satisfactory to MIM that such registration is not required.
ss. 13.
LIFE OF PLAN
No Option, Stock Appreciation Right or Performance Unit shall be
granted or Stock Grant made under this Plan on or after the earlier of
(1) the tenth anniversary of the effective date of this Plan (as
determined under ss. 4), in which event this Plan otherwise
thereafter shall continue in effect until all outstanding Options
and Stock Appreciation Rights have been exercised in full or no
longer are exercisable, all Stock issued under any Stock Grants
under this Plan have been forfeited or have become
non-forfeitable, and all Performance Periods have ended, or
(2) the date on which all of the Stock reserved underss. 3 has (as a
result of the exercise of Options or Stock Appreciation Rights
granted under this Plan or the satisfaction of the forfeiture
conditions, if any, on Stock Grants) been issued or no longer is
available for use under this Plan, in which event this Plan also
shall terminate on such date.
ss. 14.
ADJUSTMENT
14.1 Capital Structure. The number, kind or class (or any combination
thereof) of shares of Stock reserved under ss. 3, the annual grant caps
described in ss. 6, the number, kind or class (or any combination thereof) of
shares of Stock subject to Options or Stock Appreciation Rights granted under
this Plan and the Option Price of such Options and the SAR Value of such Stock
Appreciation Rights as well as the number, kind or class (or any combination
thereof) of shares of Stock subject to
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Stock Grants granted under this Plan shall be adjusted by the Committee in an
equitable manner to reflect any change in the capitalization of MIM, including,
but not limited to, such changes as stock dividends or stock splits.
14.2 Mergers. The Committee as part of any corporate transaction
described in ss. 424(a) of the Code shall have the right to adjust (in any
manner which the Committee in its discretion deems consistent with ss. 424(a) of
the Code) the number, kind or class (or any combination thereof) of shares of
Stock reserved under ss. 3 and the annual grant caps described in ss. 6.
Furthermore, the Committee as part of any corporate transaction described in ss.
424(a) of the Code shall have the right to adjust (in any manner which the
Committee in its discretion deems consistent with ss. 424(a) of the Code) the
number, kind or class (or any combination thereof) of shares of Stock subject to
any outstanding Stock Grants under this Plan and any related grant conditions
and forfeiture conditions, and the number, kind or class (or any combination
thereof) of shares subject to Option and Stock Appreciation Right grants
previously made under this Plan and the related Option Price and SAR Value for
each such Option and Stock Appreciation Right, and, further, shall have the
right (in any manner which the Committee in its discretion deems consistent with
ss. 424(a) of the Code and without regard to the annual grant caps described in
ss. 6 of this Plan) to make any Stock Grants and Option and Stock Appreciation
Right grants to effect the assumption of, or the substitution for, stock grants
and option and stock appreciation right grants previously made by any other
corporation to the extent that such corporate transaction calls for such
substitution or assumption of such stock grants and stock option and stock
appreciation right grants.
14.3 Fractional Shares. If any adjustment under this ss. 14 would
create a fractional share of Stock or a right to acquire a fractional share of
Stock, such fractional share shall be disregarded and the number of shares of
Stock reserved under this Plan and the number subject to any Options or Stock
Appreciation Right grants and Stock Grants shall be the next lower number of
shares of Stock, rounding all fractions downward. An adjustment made under this
ss. 14 by the Committee shall be conclusive and binding on all affected persons.
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ss. 15.
CHANGE IN CONTROL
If there is a Change in Control of MIM on any date, then any and all
conditions to the exercise of all outstanding Options and Stock Appreciation
Rights on such date and any and all outstanding issuance and forfeiture
conditions on any Stock Grants and Performance Units on such date automatically
shall be deemed satisfied in full on such date, and the Board shall have the
right (to the extent expressly required as part of such transaction) to cancel
such Options, Stock Appreciation Rights, Stock Grants and Performance Units
after providing each Key Employee a reasonable period (which period shall not be
less than 30 days) to exercise his or her Options and Stock Appreciation Rights
and to take such other action as necessary or appropriate to receive the Stock
subject to any Stock Grants or the cash subject to any Performance Units.
ss. 16.
AMENDMENT OR TERMINATION
This Plan may be amended by the Board from time to time to the extent
that the Board deems necessary or appropriate; provided, however, (1) no
amendment shall be made absent the approval of the shareholders of MIM to the
extent such approval is required under applicable law and (2) no amendment shall
be made to ss. 15 on or after any date described in ss. 15 which might adversely
affect any rights which otherwise vest on such date. The Board also may suspend
granting Options, Stock Appreciation Rights or Performance Units or making Stock
Grants under this Plan at any time and may terminate this Plan at any time;
provided, however, the Board shall not have the right unilaterally to modify,
amend or cancel any Option, Stock Appreciation Right or Performance Unit granted
or Stock Grant made before such suspension or termination unless (x) the Key
Employee consents in writing to such modification, amendment or cancellation or
(y) there is a dissolution or liquidation of MIM or a transaction described in
ss. 14 or ss. 15.
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ss. 17.
MISCELLANEOUS
17.1 Shareholder Rights. No Key Employee shall have any rights as a
shareholder of MIM as a result of the grant of an Option or a Stock Appreciation
Right pending the actual delivery of the Stock subject to such Option or Stock
Appreciation Right to such Key Employee. Subject to ss. 9.3, a Key Employee's
rights as a shareholder in the shares of Stock underlying a Stock Grant which is
effective shall be set forth in the related Stock Grant Certificate.
17.2 No Contract of Employment. The grant of an Option, a Stock
Appreciation Right or a Performance Unit or a Stock Grant to a Key Employee
under this Plan shall not constitute a contract of employment and shall not
confer on a Key Employee any rights upon his or her termination of employment in
addition to those rights, if any, expressly set forth in the related Option
Certificate, Stock Appreciation Right Certificate, Stock Grant Certificate, or
Performance Unit agreement.
17.3 Withholding. Each Option, Stock Appreciation Right, Performance
Unit and Stock Grant, shall be made subject to the condition that the Key
Employee consents to whatever action the Committee directs to satisfy the
minimum statutory federal and state tax withholding requirements, if any, which
MIM determines are applicable to the exercise of such Option or Stock
Appreciation Right, the satisfaction of any forfeiture conditions with respect
to Stock subject to a Stock Grant issued in the name of the Key Employee, or to
the payment for the Performance Units. The Committee also shall have the right
to provide in an Option Certificate, Stock Appreciation Right Certificate, Stock
Grant Certificate, or Performance Unit agreement that a Key Employee may elect
to satisfy such minimum statutory federal and state tax withholding requirements
through a reduction in the cash or the number of shares of Stock actually
transferred to him or to her under this Plan. No withholding shall be effected
under this Plan which exceeds the minimum statutory federal and state
withholding requirements.
17.4 Construction. All references to sections (ss.) are to sections
(ss.) of this Plan unless otherwise indicated. This Plan shall be construed
under the laws of the State of Delaware. Finally, each
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term set forth in ss. 2 shall have the meaning set forth opposite such term for
purposes of this Plan and, for purposes of such definitions, the singular shall
include the plural and the plural shall include the singular.
17.5 Other Conditions. Each Option Certificate, Stock Appreciation
Right Certificate or Stock Grant Certificate may require that a Key Employee (as
a condition to the exercise of an Option or a Stock Appreciation Right or the
issuance of Stock subject to a Stock Grant) enter into any agreement or make
such representations prepared by MIM, including (without limitation) any
agreement which restricts the transfer of Stock acquired pursuant to the
exercise of an Option or a Stock Appreciation Right or a Stock Grant or provides
for the repurchase of such Stock by MIM.
17.6 Rule 16b-3. The Committee shall have the right to amend any
Option, Stock Grant or Stock Appreciation Right to withhold or otherwise
restrict the transfer of any Stock or cash under this Plan to a Key Employee as
the Committee deems appropriate in order to satisfy any condition or requirement
under Rule 16b-3 to the extent Rule 16 of the 1934 Act might be applicable to
such grant or transfer.
17.7 Loans. If approved by the Committee, MIM may lend money to, or
guarantee loans made by a third party to, any Key Employee to finance all or a
part of the exercise of any Option granted under this Plan or the purchase of
any Stock subject to a Stock Grant under this Plan, and the exercise of an
Option or the purchase of any such Stock with the proceeds of any such loan
shall be treated as an exercise or purchase for cash under this Plan.
IN WITNESS WHEREOF, MIM Corporation has caused its duly authorized
officer to execute this Plan to evidence its adoption of this Plan.
MIM CORPORATION
By: /s/ Richard H. Friedman
Date: 5/25/01
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