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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 Tuesday, June 4, 2002
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To the Stockholders of MIM Corporation:
The 2002 Annual Meeting of Stockholders of MIM Corporation, a Delaware
corporation (the "Company"), will be held at 10:00 a.m., local time, on Tuesday,
June 4, 2002 at the Renaissance Westchester Hotel, located at 80 West Red Oak
Lane, White Plains, New York 10604, 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
shall have qualified.
2. To approve an amendment and restatement of the MIM Corporation
2001 Incentive Stock Plan to increase the number of authorized
shares of common stock available for issuance under the 2001
Incentive Stock Plan by 800,000 shares, from 950,000 to 1,750,000
shares.
3. To approve an amendment and restatement of the MIM Corporation
1996 Non-Employee Directors Stock Incentive Plan to, among other
things, (i) increase the number of authorized shares of common
stock available for issuance under the 1996 Non-Employee
Directors Stock Incentive Plan by 200,000 shares, from 300,000 to
500,000 shares; and (ii) provide for the automatic annual grant
to each non-employee director of the Company of options to
purchase 5,000 shares of common stock.
4. To transact such other business as may properly come before the
Annual Meeting or any adjournments or postponements thereof.
The Board of Directors has fixed the close of business on Friday, April
12, 2002 as the record date for determining the stockholders of the Company
entitled to receive notice of, and to vote at the Annual Meeting and any
adjournments or postponements thereof.
All stockholders of the Company are cordially invited to attend the
Annual Meeting in person. However, whether or not you plan to attend the Annual
Meeting in person, please mark, sign, date and mail the enclosed proxy card as
promptly as possible in the enclosed postage-prepaid envelope to ensure your
representation and the presence of a quorum at the Annual Meeting.
Alternatively, you may vote by toll-free telephone call or electronically via
the Internet. If you send in your proxy card, or vote by telephone or via the
Internet, and then decide to attend the Annual Meeting to vote your shares in
person, you may still do so. Your proxy is revocable in accordance with the
procedures set forth in the Proxy Statement.
By order of the Board of Directors,
/s/ Barry A. Posner
Elmsford, New York Barry A. Posner,
April 30, 2002 Executive Vice President, Secretary
and General Counsel
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 ("Proxy Statement") is furnished to the
stockholders of MIM Corporation, a Delaware corporation (the "Company"), in
connection with the solicitation by the Board of Directors of the Company (the
"Board of Directors") of proxies in the enclosed form for use in voting at the
2002 Annual Meeting of Stockholders (the "Annual Meeting") of the Company to be
held on Tuesday, June 4, 2002, at 10:00 a.m., local time, at the Renaissance
Westchester Hotel, located at 80 West Red Oak Lane, White Plains, New York
10604, and at any adjournments or postponements thereof. The shares of common
stock, par value $.0001 per share (the "Common Stock"), represented by the
proxies received, properly marked, dated, executed and not revoked will be voted
at the Annual Meeting. These proxy solicitation materials are being mailed to
stockholders on or about May 3, 2002.
Instead of submitting your proxy with the paper proxy card, you may
vote by telephone or via the Internet. If you vote by telephone or via the
Internet it is not necessary to return your proxy card. See "Voting By Telephone
or Via the Internet" on page 29 of this Proxy Statement for further details.
Please note that there are separate telephone and Internet voting arrangements
depending upon whether your shares of Common Stock are registered in your name
or in the name of a broker or bank.
Proposals; Record Date
At the Annual Meeting, the Company's stockholders will be asked:
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
shall have qualified.
2. To approve an amendment and restatement of the MIM Corporation
2001 Incentive Stock Plan (the "2001 Plan") to increase the
number of authorized shares of Common Stock available for
issuance under the 2001 Plan by 800,000 shares, from 950,000 to
1,750,000 shares.
3. To approve an amendment and restatement of the MIM Corporation
1996 Non-Employee Directors Stock Incentive Plan (the "Directors
Plan") to, among other things, (i) increase the number of
authorized shares of Common Stock available for issuance under
the Directors Plan by 200,000 shares, from 300,000 to 500,000
shares; and (ii) provide for the automatic annual grant to each
non-employee director of the Company of options to purchase 5,000
shares of Common Stock.
4. To transact such other business as may properly come before the
Annual Meeting or any adjournments or postponements thereof.
The close of business on Friday, April 12, 2002 has been fixed by the
Board of Directors as the record date (the "Record Date") for determining the
stockholders of the Company entitled to notice of, and to vote at the Annual
Meeting. The only outstanding voting securities of the Company are shares of
Common Stock. As of the close of business on the Record Date, 22,905,335 shares
of Common Stock were issued and outstanding and were held of record by
approximately 97 holders (in addition to approximately 8,400 stockholders whose
shares were held in nominee name).
Voting and Solicitation
Each stockholder entitled to vote at the Annual Meeting may cast one
(1) vote in person or by proxy for each share of Common Stock held by such
stockholder. The presence, in person or by proxy, of holders of a majority of
the shares of Common Stock issued and outstanding on the Record Date is
necessary to constitute a quorum at the Annual Meeting. Shares of Common Stock
represented at the Annual Meeting in person or by proxy but not voted will be
counted for purposes of determining a quorum. Accordingly, abstentions and
broker "non-votes" (shares as to which a broker or nominee has indicated that it
does not have discretionary authority to vote) on a particular matter, including
the election of directors, will be treated as shares that are present and
entitled to vote at the Annual Meeting for purposes of determining the presence
of a quorum. Certain matters submitted to a vote of stockholders are considered
to be "routine" items upon which brokerage firms may vote in their discretion on
behalf of their customers if such customers have not furnished voting
instructions within a specified period of time prior to the Annual Meeting. On
those matters determined to be "non-routine," brokerage firms that have not
received instructions from their customers would not have discretion to vote. In
the election of directors, the seven (7) nominees who receive the greatest
number of affirmative votes will be elected to the Board of Directors, without
giving effect to abstentions and broker non-votes. Each other matter to be voted
on by the stockholders at the Annual Meeting requires the affirmative vote of a
majority of the shares present in person or represented by proxy at the Annual
Meeting. On these matters, an abstention will have the same effect as a vote
cast against the applicable resolution, while broker non-votes will be
disregarded and have no effect on the applicable matter.
Proxies in the accompanying form that are properly executed, duly
returned to the Company and not revoked, or proxies which are submitted by
telephone or via the Internet and not revoked, will be voted in accordance with
the instructions contained therein. In the absence of specific instruction with
respect to any or all of the proposals to be acted upon, proxies will be voted
for the election of all of the nominees for director named in this Proxy
Statement and in favor of proposals 2 and 3. No matter currently is expected to
be considered at the Annual Meeting other than the proposals set forth in this
Proxy Statement and in the accompanying Notice of Annual Meeting. If any other
matters are properly brought before the Annual Meeting for action it is intended
that the persons named in the proxy and acting thereunder will vote in
accordance with their discretion on such matters.
The presence of a stockholder at the Annual Meeting will not revoke his
or her proxy. However, a proxy may be revoked at any time before it is voted by
delivering to the Secretary of the Company (at the principal offices of the
Company) a written notice of revocation, by executing and delivering a proxy
bearing a later date or by attending the Annual Meeting and voting in person.
Stockholders voting by telephone or via the Internet may also revoke their proxy
by attending the Annual Meeting and voting in person, by submitting the proxy in
accordance with the instructions thereon or by voting again, at a later time, by
telephone or via the Internet (a stockholder's latest telephone or Internet
vote, as applicable, will be counted and all earlier votes will be disregarded).
However, once voting on a particular matter is completed at the Annual Meeting,
a stockholder will not be able to revoke his or her proxy or change his or her
vote as to any matter or matters on which voting has been completed.
The solicitation of proxies will be conducted by mail, and the Company
will bear all attendant costs. These costs will include the expenses of
preparing and mailing proxy solicitation materials for the Annual Meeting and
reimbursements paid to brokerage firms and others for their expenses incurred in
forwarding such materials to beneficial owners of shares of Common Stock. The
Company may conduct further solicitations personally, telephonically or by
facsimile through its officers, directors and employees, none of whom will
receive additional compensation for assisting with any such solicitations.
Other Matters; Adjournments
Adjournments or postponements of the Annual Meeting may be made for the
purpose of, among other things, soliciting additional proxies. Any adjournment
or postponement may be made from time to time by approval of the holders of a
majority of the shares of Common Stock present in person or by proxy at the
Annual Meeting (whether or not a quorum exists) without further notice other
than by an announcement made at the Annual Meeting. The Company does not
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currently intend to seek an adjournment or postponement of the Annual Meeting,
but no assurance can be given that one will be sought.
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, based on the advice of its
Nominating Committee, has nominated and recommends the election of the following
persons to the Board of Directors of the Company, all of whom currently serve as
directors: Richard H. Friedman, Richard A. Cirillo, Esq., Dr. Louis B. DiFazio,
Harold Ford, Sr., Michael Kooper, Dr. Louis A. Luzzi and Ronald K. Shelp.
The Board of Directors has no reason to believe that any of its
nominees will be unable or unwilling to serve as a director if elected and, to
the knowledge of the Board of Directors, each of its nominees intends to serve
in such capacity for the entire term for which election is sought. However,
should any nominee become unwilling or unable to accept nomination or election
as a director of the Company, the proxies solicited by management 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 (7) directors.
The following table sets forth, as of April 30, 2002, certain
information with respect to each nominee for director, including biographical
data for at least the last five (5) years:
Name Age Position
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Richard H. Friedman 51 Chairman of the Board and Chief
Executive Officer
Richard A. Cirillo, Esq. 51 Director
Louis B. DiFazio, Ph.D. 64 Director
Harold Ford, Sr. 57 Director
Michael Kooper 66 Director
Louis A. Luzzi, Ph.D. 69 Director
Ronald K. Shelp 60 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 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 Clifford Chance 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, Clifford Chance
Rogers & Wells LLP had served in such capacity.
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Louis B. DiFazio, Ph.D. has served as a director of the Company since
May 1998. From March 1997 until his retirement in June 1998 Dr. DiFazio served
as Group Senior Vice President of the Pharmaceutical Group of Bristol-Myers
Squibb. 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.
Hon. Harold Ford has served as a director since June 2001. Mr. Ford
serves as President of The Harold Ford Group, a consulting and federal and state
lobbying firm specializing in advising business clients principally on
healthcare-related regulatory, legislative and general business matters. Prior
to founding The Harold Ford Group 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. Since December 1997, Mr. Kooper has served as the President of The
Kooper Group, a successor to Michael Kooper Enterprises, a benefits consulting
firm. From 1980 through December 1997, Mr. Kooper served as President of Michael
Kooper Enterprises.
Louis A. Luzzi, Ph.D. has served as a director of the Company since
July 1996. Dr. Luzzi is a retired Dean of Pharmacy and Provost for Health
Science Affairs of the University of Rhode Island College of Pharmacy. He holds
the Mario Distinguished Chair in Pharmaceutics at the University of Rhode Island
College of Pharmacy since 2001 and has been a Professor of Pharmacy at the
University of Rhode Island College of Pharmacy since 1980.
Ronald K. Shelp has served as a director of the Company since July
2000. Since September 2001, Mr. Shelp has been the Chairman of The Anne McBride
Company, the Company's investor relations firm. From June 1999 until June 2001,
Mr. Shelp held various positions with b2bstreet.com, a business-to-business
auction site for small businesses, including Chairman, 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 quarterly reviews of the auditors and other services
provided by the Company's independent auditors, 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 Luzzi, administers the 2001 Plan,
the Company's 1996 Incentive Stock Plan and 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 Drs.
DiFazio and Luzzi and Messrs. Kooper and Shelp, 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 By-Laws. See "Stockholder
Proposals" on page 29 of this Proxy Statement.
During 2001, the Board of Directors held six (6) meetings and acted by
unanimous written consent five (5) times. The Audit Committee held one (1)
meeting during 2001 and the Compensation and Nominating Committees each held two
(2) meetings during 2001. 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 2001.
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Report of the Audit Committee
The Board of Directors adopted a written Audit Committee charter on
June 6, 2000, a copy of which has been previously filed with the Securities and
Exchange Commission (the "Commission"). All members of the Audit Committee meet
the independence requirements of Rule 4200(a)(14) of the National Association of
Securities Dealers ("NASD") listing standards.
The Audit Committee has reviewed and discussed with the Company's
management and the Company's independent auditors the audited consolidated
financial statements of the Company contained in the Company's Annual Report on
Form 10-K for the year ended December 31, 2001. The Audit Committee has also
discussed with the Company's 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.
The Audit Committee has received and reviewed the written disclosures
and the letter from the Company's independent auditors required by Independent
Standards Board Standard No. 1, Independence Discussions with Audit Committees,
as amended, and has considered the compatibility of non-audit services with the
auditors' independence.
Based on the review and discussions referred to above, the Audit
Committee recommended to the Board of Directors that the audited consolidated
financial statements referred to above be included in the Company's Annual
Report on Form 10-K for the year ended December 31, 2001, filed with the SEC.
Members of the Audit Committee:
Richard A. Cirillo, Chairman
Louis B. DiFazio, Ph.D.
Ronald K. Shelp
Compensation of Directors
Each director who is not an officer or employee of the Company (an
"Outside Director") receives fees of $1,500 per month and $500 per meeting of
the Board of Directors and any committee thereof and is reimbursed for expenses
incurred in connection with attending such meetings. In addition, upon being
elected to the Board of Directors, each Outside Director is automatically
granted a non-qualified stock option to purchase 20,000 shares of Common Stock
under the Directors Plan. Directors who are also officers of the Company are not
paid any directors fees or granted any options under the Directors Plan;
provided, that such directors may receive options under the 1996 Incentive Stock
Plan and the 2001 Plan. See Proposal 3 for a description of the proposed
amendments to the Directors Plan.
The exercise price of options granted to a director under the Directors
Plan is equal to the fair market value of a share of Common Stock on the date of
grant. Options granted under the Directors Plan vest over three (3) years, in
three (3) 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 April 30, 2002, an option to purchase 20,000 shares
has been granted under the Directors Plan to each of (i) Mr. Ford, at an
exercise price of $5.925 per share, (ii) Dr. Luzzi, at an exercise price of $13
per share, (iii) Mr. Cirillo, at an exercise price of $4.35 per share, (iv) Mr.
Kooper and Dr. DiFazio, at an exercise price of $4.6875 per share and (v) 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 (7) nominees receiving the
highest number of votes duly cast at the Annual Meeting will be elected to the
Board of Directors.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
A VOTE "FOR" EACH OF THE ABOVE-NAMED NOMINEES.
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PROPOSAL 2.
APPROVAL OF AN AMENDMENT AND RESTATEMENT OF THE MIM CORPORATION 2001
INCENTIVE STOCK PLAN TO INCREASE THE NUMBER OF AUTHORIZED SHARES OF
COMMON STOCK AVAILABLE FOR ISSUANCE THEREUNDER FROM 950,000 TO 1,750,000
In June 2001, the Company's stockholders approved and adopted the 2001
Plan and 950,000 shares of Common Stock were reserved for issuance thereunder.
On April 17, 2002, the Board of Directors approved, subject to approval of the
Company's stockholders, an amendment and restatement of the 2001 Plan to
increase the number of authorized shares of Common Stock available for issuance
thereunder by 800,000 shares, from 950,000 to 1,750,000 shares. As of April 30,
2002, the Company has outstanding options to purchase 897,000 shares of Common
Stock under the 2001 Plan at exercise prices ranging from $5.24 to $19.00 per
share and has made stock grants for 50,000 shares of Common Stock under the 2001
Plan. In addition, options to purchase 160,000 shares of Common Stock have been
granted subject to approval of the foregoing amendment and restatement at
exercise prices ranging from $13.29 to $20.63 per share.
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 Board of Directors relies upon
the 2001 Plan as one of the benefits necessary to attract and retain highly
qualified and motivated employees. During 2001, the Company engaged the services
of an outside consultant to review, among other things, the Company's stock
option grant policies. Based on the advice of the consultant, the Company
determined to make annual stock option grants to its employees at the end of
each year based upon, among other factors, the employee's performance during the
year as compared to performance objectives established at the beginning of the
year and the financial performance of the Company. Based upon management's
estimates of the number of shares expected to be issued under the 2001 Plan, the
Board of Directors believes it is in the Company's best interests to amend and
restate the 2001 Plan to provide for the increase in shares available for
purchase thereunder so that the Company may continue to attract and retain the
services of qualified employees by providing employees an opportunity to
purchase shares of the Company's Common Stock through the 2001 Plan and to
motivate them to increase stockholder value.
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 A.
Administration
The 2001 Plan is administered by the Company's Compensation Committee
(the "Committee"). Each director serving as a member of the Committee satisfies
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 are evidenced by a certificate that
incorporates such terms and conditions as the Committee deems necessary or
appropriate.
Coverage Eligibility and Annual Grant Limits
The 2001 Plan provides 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 key directly or
indirectly to the success of the Company. The Company estimates that there
currently are approximately 37 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.
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Shares Reserved for Issuance Under 2001 Plan
There are currently 950,000 shares of Common Stock reserved for
issuance under the 2001 Plan. Upon approval of this proposal the 2001 Plan will
be amended and restated to increase the authorized number of shares of Common
Stock available for issuance under the 2001 Plan by 800,000 shares to 1,750,000.
These additional 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, 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 stock options ("Non-ISOs") may also be granted to 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 or in Common Stock which has been
held for at least six (6) months and is acceptable to the Committee or in any
combination of cash and such Common Stock. The exercise price may also 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% stockholder of the Company, the Option exercise price will be
no less than 110% of the fair market value of the Common Stock on the grant
date. No Option may be exercisable more than 10 years from the grant date, or,
if the Option is an ISO granted to a 10% stockholder of the Company, it may not
be exercisable more than five (5) 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 a 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 a SAR will be no less than the fair market value of a share of
Common Stock as determined on the grant date in accordance with the 2001 Plan.
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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 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.
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 of Directors to the extent
that it deems it 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 of Directors at any time. The Board of Directors
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.
-8-
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 is 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.
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
employee 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 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 lesser of (i) the excess of the fair market value of the
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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 the shares are
transferred pursuant to the exercise of the Non-ISO over the Option exercise
price. If, however, the key employee's sale of the shares within six months of
the transfer would subject him or her to suit under Section 16(b) of the
Exchange Act, the key employee will not recognize income on the date the shares
are transferred to him or her, but will recognize income at a later date. In
this case, income will be based on the difference between the Option exercise
price and the fair market value of the shares on the date that is the earlier of
(i) six months after the date of the transfer or (ii) the first date that the
shares can be sold by the key employee without liability under Section 16(b).
However, if the key employee timely elects under Section 83(b) of the Code, fair
market value of the shares will be determined on the date the shares are
transferred pursuant to the exercise without regard to the effect of Section
16(b). The Company will be entitled to a deduction from income in the same
amount when the key employee recognizes the ordinary income. Upon a subsequent
sale of the Common Stock by the key employee, such employee will recognize
short-term or long-term capital gain or loss (depending on the applicable
holding period) in an amount equal to the difference between the amount realized
on the disposition and the fair market value of the shares when ordinary income
was recognized.
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 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 amendment to the 2001 Plan.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR"
THE AMENDMENT AND RESTATEMENT OF THE MIM CORPORATION
2001 INCENTIVE STOCK PLAN.
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PROPOSAL 3.
APPROVAL OF AN AMENDMENT AND RESTATEMENT OF THE
MIM CORPORATION 1996 NON-EMPLOYEE DIRECTORS STOCK INCENTIVE PLAN
In May 1996, the Company's stockholders approved and adopted the
Directors Plan and 100,000 shares of Common Stock were reserved for issuance
thereunder. In August 1999, the Company's stockholders approved an amendment and
restatement of the Directors Plan to increase the number of shares of Common
Stock available for issuance thereunder from 100,000 to 300,000 and an
additional 200,000 shares were reserved for issuance thereunder. On April 17,
2002, the Board of Directors approved, subject to approval of the Company's
stockholders, an amendment and restatement of the Directors Plan to (i) increase
the number of authorized shares of Common Stock available for issuance under the
Directors Plan by 200,000 shares, from 300,000 to 500,000 shares; and (ii)
provide for the automatic annual grant to each Outside Director of the Company
of options to purchase 5,000 shares of Common Stock.
The primary purpose of the 2001 Plan is to attract and retain capable
Outside Directors and motivate them to promote the best interests of the
Company. Based on the advice of an outside compensation consultant, the Company
determined to make annual stock option grants to its Outside Directors in
addition to the initial grants described below. The Board of Directors believes
that the amendment and restatement of the Directors Plan to provide for the
annual grant to each Outside Director of options to purchase 5,000 shares and
the increase in the number of shares available for issuance under the Directors
Plan is necessary in order to continue to attract and retain capable Outside
Directors, and to motivate such persons with a view toward increasing
stockholder value and to more closely align the interests of such persons with
the interests of the Company's stockholders.
The following discussion summarizes the material terms of the Directors
Plan. This discussion does not comport to be complete and is qualified in its
entirety by reference to the Directors Plan, a copy of which is attached to this
Proxy Statement as Exhibit B.
Number of Shares
The aggregate maximum number of shares for which options may be granted
under the Directors Plan is 300,000. Upon approval of this proposal the
Directors Plan will be amended and restated to increase the authorized number of
shares of Common Stock available for issuance thereunder by 200,000 shares, to
500,000 shares. The shares of Common Stock issued under the Directors Plan may
be authorized but unissued shares or reacquired shares, and the Company may
purchase shares required for this purpose if it deems such purchase to be
advisable. If an option under the Directors Plan expires or otherwise terminates
for any reason whatsoever without having been exercised, the shares subject to
the unexercised portion of such option shall continue to be available for the
granting of options under the Directors Plan. Only options which are Non-ISOs
may be granted under the Directors Plan.
Administration
The Directors Plan is administered by the Committee. Each member of the
Committee who is an Outside Director shall be eligible for the grant of options
under the Directors Plan on the same basis as any other individual who is an
Outside Director, but a member of the Committee shall abstain from acting in his
or her capacity as a member of the Committee with respect to any Committee
decision affecting any option granted to him or her and over which the Committee
has discretion.
Eligibility and Granting
All those directors who are not, and who have not been during the
preceding 12 month period, employees of the Company or any related corporation
(as defined in the Directors Plan) and who are initially elected to the Board of
Directors on or after the date the Directors Plan was initially adopted by the
Board of Directors shall be automatically granted (without any further action by
the Committee) Non-ISOs to purchase 20,000 shares of Common Stock under the
Directors Plan upon their initial election to the Board of Directors or, if
applicable, upon expiration of such 12 month period (the "Initial Grant"). Upon
approval of this proposal, the Directors Plan will be amended and restated to
-11-
provide for the automatic annual grant, in addition to the Initial Grant, to
each Outside Director of Non-ISOs to purchase 5,000 shares of Common Stock. Such
options will automatically be granted (without any further action by the
Committee) each year at the annual meeting of the Board of Directors immediately
following the Company's annual meeting of stockholders; provided, that in order
to be eligible to receive the additional option grant an Outside Director shall
have been serving on the Board of Directors for at least six (6) consecutive
months.
Term of Plan and Options
No Option may be granted under the Directors Plan after May 22, 2006,
although then-outstanding Options may extend beyond that date. All options
terminate on the expiration of the term specified in the option agreement or
other granting instrument, which may not exceed ten (10) years from the date of
grant.
Exercise of Option
Options first become exercisable in annual increments over three (3)
years from the date of grant and, after such time, may be exercised at any time
prior to the expiration or termination of the option. If an Outside Director's
service as a director terminates prior to the date his or her option expires,
the Outside Director may exercise his or her option only to the extent of the
number of shares with respect to which the option is exercisable on the date he
or she terminates service as a director.
Exercise Price
The exercise price for options granted under the Directors Plan is
equal to the fair market value of a share of Common Stock on the date of grant.
Payment
An optionee may pay for shares covered by an option in cash or its
equivalent.
Option Document; Restrictions on Transferability
All options will be evidenced by a written option agreement containing
provisions consistent with the Directors Plan and such other provisions as the
Committee deems appropriate. No option granted under the Directors Plan may be
transferred other than by will or the laws of descent and distribution. If the
optionee is married at the time of exercise and so requests, the certificate(s)
representing shares of Common Stock issued will be registered in the name of the
optionee and his or her spouse, jointly, with right of survivorship.
Capital Adjustment
The number, kind or class (or any combination thereof) of shares which
may be issued under the Directors Plan or upon the exercise of an option, and
the number, kind or class (or any combination thereof) of shares issuable upon
the exercise of options granted to Outside Directors upon their initial election
to the Board of Directors or as an annual grant shall be adjusted to reflect any
stock dividend, stock split, share combination, or similar change in the
capitalization of the Company. In the event of certain corporate transactions
(as described in the Directors Plan) where a provision is not made for the
continuance and assumption of options under the Directors Plan, or for the
substitution for such options of new options to acquire securities or other
property to be delivered in connection with the transaction, the Committee
shall, upon written notice to the option holders, provide that all unexercised
options will terminate immediately prior to the consummation of such corporate
transaction unless exercised (to the extent then exercisable) by the option
holder within a specified number of days (which shall not be less than 7 days)
following the date of such notice.
-12-
Amendments to Options and to the Directors Plan; Discontinuance of the Directors
Plan
The Board of Directors may suspend, terminate or amend the Directors
Plan, and the Committee may amend any outstanding option, from time to time in
any respect whatsoever, provided that, no such amendment, suspension or
termination may materially impair the rights of the holder of any outstanding
option without such holder's consent, and further provided that, stockholder
approval (in the manner specified in the Directors Plan) is required for any
amendment which would (i) change the class of persons eligible to receive
options under the Directors Plan, or (ii) increase the benefits accruing under
the Directors Plan or the number of shares with respect to which options may be
granted under the Directors Plan (except as permitted under the Directors Plan
with respect to capital adjustments).
Summary of Federal Income Tax Aspects of the Directors Plan
Based on the advice of counsel, the Company believes that, under
present federal income tax law and regulations (including certain proposed
regulations), the federal income tax consequences to the Company and optionees
receiving options under the Directors Plan would be as follows:
The grant of a Non-ISO under the Directors Plan will not result in the
recognition of income for federal income tax purposes for an option holder, nor
will the grant entitle the Company to a federal income tax deduction. An option
holder who exercises a Non-ISO will generally recognize ordinary income in an
amount equal to the difference between the option price and the fair market
value of the shares determined generally on the date the shares are transferred
pursuant to the exercise. If, however, the director's sale of the shares within
six months of the transfer would subject him or her to suit under Section 16(b)
of the Exchange Act, the director will not recognize income on the date the
shares are transferred to him or her, but will recognize income at a later date.
In this case, income will be based on the difference between the option price
and the fair market value of the shares on the date that is the earlier of (1)
six months after the date of the transfer or (2) the first date that the shares
can be sold by the director without liability under Section 16(b). However, if
the director timely elects under Section 83(b) of the Code, fair market value of
the shares will be determined on the date the shares are transferred pursuant to
the exercise without regard to the effect of Section 16(b). The Company will be
entitled to a deduction from income in the same amount when the option holder
recognizes the ordinary income. The option holder's basis in the shares will be
the fair market value on the date the ordinary income is recognized, and capital
gain or loss will be recognized in the year of a subsequent sale or taxable
disposition in an amount equal to the difference between the amount realized on
the disposition and the fair market value of the shares when ordinary income was
recognized.
Various additional tax consequences may apply to the granting,
acceleration and exercise of options and to the disposition of shares acquired
thereunder, but such consequences are beyond the scope of this summary. The
foregoing does not purport to be a complete description of the effect of federal
income taxation upon holders of options or upon the Company, is not intended to
constitute tax advice, and does not cover possible state, local or foreign tax
consequences.
As of April 30, 2002, options to purchase 120,000 shares of Common
Stock were outstanding under the Directors Plan and no shares had been issued
upon the exercise of outstanding options. As of such date, an option to purchase
20,000 shares has been granted under the Directors Plan to each of (i) Mr. Ford,
at an exercise price of $5.925 per share, (ii) Dr. Luzzi, at an exercise price
of $13 per share, (iii) Mr. Cirillo, at an exercise price of $4.35 per share,
(iv) Mr. Kooper and Dr. DiFazio, at an exercise price of $4.6875 per share and
(v) Mr. Shelp at an exercise price of $2.13 per share.
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 approve the amendments to the Directors Plan.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE
APPROVAL OF THE AMENDMENT AND RESTATEMENT OF THE DIRECTORS PLAN.
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ADDITIONAL INFORMATION
Executive Officers
The following table sets forth, as of April 30, 2002, 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 those executive officers who are also directors.
Name Age Position
- ---- --- --------
Barry A. Posner 38 Executive Vice President, Secretary and General Counsel. Mr. Posner joined the Company in
March 1997 as General Counsel and was appointed Secretary of the Company at that time. On
April 16, 1998, Mr. Posner was appointed Vice President of the Company. In November 2001,
he was appointed to the position of Executive Vice President of the Company.
Recie B. Bomar 53 President of Scrip PBM. Mr. Bomar joined the Company in March 1999 as Vice President -
Sales and Marketing of the PBM division of the Company's wholly-owned subsidiary,
ScripSolutions, Inc. In February 2000 he was promoted to the position of President of the
PBM division of ScripSolutions, Inc. and currently serves as President of Scrip PBM. From
1997 through February 1999, Mr. Bomar was a Vice President of PharmaCare, a subsidiary of
CVS Corporation.
Russel J. Corvese 40 Chief Information Officer. 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 ScripSolutions, Inc. from November 27, 1997 to October 15, 2000. From November
1996 through November 1997, Mr. Corvese held the position of Executive Director,
Management Information Systems of ScripSolutions, Inc. From May 1994 to November 1996,
Mr. Corvese held various positions with ScripSolutions, Inc.
Donald A. Foscato 59 Chief Financial Officer. Mr. Foscato joined the Company in June 2001 as Chief Financial
Officer. Prior to joining the Company, from 2000 to June 2001, he was the Executive Vice
President and Chief Financial Officer of Health Resources and Technology, Inc., a company
providing medical consultation services to international health insurance and healthcare
organizations. From 1996 to 2000, Mr. Foscato was a Vice President in the Corporate
Finance Group of MetLife.
Donald Dindak 60 President, BioScrip Sales. Mr. Dindak joined the Company in July of 2001 as President of
the BioScrip injectable division of ScripSolutions, Inc. and currently serves as President
of Sales for BioScrip. Prior to joining the Company Mr. Dindak was an independent
consultant to a number of pharmacy benefit management companies for more than five years.
Michael J. Sicilian 40 President, BioScrip Operations. Mr. Sicilian joined the Company in July of 2001 as
President of the BioScrip infusion division of ScripSolutions, Inc. and currently serves
as President of Operations for BioScrip. From October 2000 to July 2001 he was a principal
of JAS Healthcare Consulting, Inc., concentrating in the area of home healthcare
services. From July 1998 to October 2000 Mr. Sicilian held various senior management
positions with Home Medical of America, Inc. From March 1994 to July 1998, he held
various senior management positions with National Medical Care Homecare, Inc.
-14-
William A. Jones 47 Executive Vice President - Operations, ScripSolutions, Inc. Mr. Jones joined the Company
in June 2001 as the Executive Vice President - Operations of ScripSolutions, Inc. From
1995 to June 2001, he was the President of Churchill Lee Consulting, a private consulting
company.
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
The following table sets forth certain information regarding the
beneficial ownership of the Company's Common Stock as of April 30, 2002, by (i)
each executive officer of the Company named in the Summary Compensation Table
set forth below; (ii) each of the Company's directors; (iii) each person who is
known by the Company to beneficially own more than five (5%) percent of the
Company's Common Stock; and (iv) all directors and executive officers of the
Company as a group. Except as indicated, each person listed below has sole
voting and investment power with respect to the shares set forth opposite such
person's name. The information set forth below is based upon information
provided by such persons to the Company and filings made with the Commission by
such persons:
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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Name and Address Number of Shares Percent of Class (3)
of Beneficial Owner (1) Beneficially Owned(2) (3)
---------------------------------------------------------------------------------------------------------------
Richard H. Friedman 1,366,666 (4) 5.9%
Barry A. Posner 218,266 (5) *
Recie B. Bomar 25,000 (6) *
Russel J. Corvese 44,500 (7) *
Michael J. Sicilian 19,000 (8) *
Donald Dindak 15,000 (9) *
Donald A. Foscato 20,000 (10) *
Richard A. Cirillo 20,000 (11) *
c/o King & Spalding
1185 Avenue of the Americas
New York, NY 10036
Louis B. DiFazio Ph.D. 22,500 (12) *
Unit 1102/LePark
4951 Gulfshore Boulevard North
Naples, FL 34103
Michael Kooper 20,000 (13) *
770 Lexington Avenue
New York, NY 10021
Louis A. Luzzi, Ph.D. 21,800 (14) *
University of Rhode Island
College of Pharmacy
Forgerty Hall
Kingston, RI 02881
Ronald K. Shelp 11,667 (15) *
5 East 16th Street, 8th Floor
New York, NY 10003
Harold Ford, Sr. 25,000 (16) *
100 S.E. 2nd Street, Suite 2600
Miami, FL 33131
All Directors and Executive Officers as a group 1,829,398 (17) 7.8% (18)
(13 persons)
- -----------------
* Less than 1%.
(1) Unless otherwise indicated, all addresses are c/o MIM Corporation, 100
Clearbrook Road, Elmsford, NY 10523.
(2) 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.
-16-
(3) Shares deemed beneficially owned by virtue of the right of an individual to
acquire them within 60 days after April 30, 2002, 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.
(4) Includes 166,666 shares issuable upon exercise of the vested portion of
options held by Mr. Friedman. Excludes 283,334 shares subject to the
unvested portion of options held by Mr. Friedman.
(5) Includes 95,666 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" for a
description of the terms and conditions relating to these restricted
shares. Mr. Posner shares voting and dispositive power over 2,600 shares
with his wife. Excludes 70,000 shares subject to the unvested portion of
options held by Mr. Posner.
(6) Includes 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" for a description of
the terms and conditions relating to these restricted shares. Excludes
50,000 shares subject to the unvested portion of options held by Mr. Bomar.
(7) Includes 42,000 shares issuable upon exercise of the vested portion of
options and excludes 10,000 shares subject to the unvested portion of
options held by Mr. Corvese. Does not include 246,460 shares of Common
Stock owned by the Corvese Irrevocable Trust 1992, of which Mr. Corvese is
the trustee. Mr. Corvese disclaims beneficial ownership of these shares.
(8) Includes 15,000 shares of Common Stock subject to restrictions on transfer
and encumbrance through July 2, 2008, with respect to which Mr. Sicilian
possesses voting rights. See "Employment Agreements" for a description of
the terms and conditions relating to these restricted shares. Excludes
100,000 shares subject to the unvested portion of options held by Mr.
Sicilian.
(9) Includes 15,000 shares of Common Stock subject to restrictions on transfer
and encumbrance through July 2, 2008, with respect to which Mr. Dindak
possesses voting rights. See "Employment Agreements" for a description of
the terms and conditions relating to these restricted shares. Excludes
100,000 shares subject to the unvested portion of options held by Mr.
Dindak.
(10) Includes 20,000 shares of Common Stock subject to restrictions on transfer
and encumbrance through June 25, 2008, with respect to which Mr. Foscato
possesses voting rights. See "Employment Agreements" for a description of
the terms and conditions relating to these restricted shares. Excludes
120,000 shares subject to the unvested portion of options held by Mr.
Foscato.
(11) Consists of 20,000 shares issuable upon exercise of the vested portion of
options held by Mr. Cirillo.
(12) Consists of 20,000 shares issuable upon exercise of the vested portion of
options held by Dr. DiFazio and 2,500 shares owned directly by Dr. DiFazio.
(13) Consists of 20,000 shares issuable upon exercise of the vested portion of
options held by Mr. Kooper.
(14) 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.
(15) Includes 6,667 shares issuable upon exercise of the vested portion of
options held by Mr. Shelp and excludes 13,333 shares subject to the
unvested portion of options held by Mr. Shelp.
(16) Includes 25,000 shares issuable upon exercise of the vested portion of
options. Excludes 20,000 shares subject to the unvested portion of options
held by Mr. Ford.
(17) Includes 415,999 shares issuable upon exercise of the vested portion of
options and 135,000 shares of Common Stock subject to restrictions on
transfer and encumbrance. See footnotes 4 through 16 above.
(18) Assuming that all options held by the Company's directors and executive
officers were fully vested as of April 30, 2002, the Company's directors
and executive officers as a group would be deemed to beneficially own 10.8%
of the Company's outstanding Common Stock as of such date.
-17-
Executive Compensation
The following table sets forth certain information concerning
compensation for services rendered to the Company and its subsidiaries during
the years ended December 31, 2001, 2000 and 1999 by (i) the Company's chief
executive officer; (ii) the four other most highly compensated executive
officers who were serving in such capacities as of December 31, 2001; and (iii)
two individuals for whom disclosure would have been provided pursuant to (ii)
above but for the fact that the individuals were not serving as executive
officers as of December 31, 2001 (collectively, the "Named Executive Officers"):
Summary Compensation Table
Long-term
Annual Compensation Compensation
------------------------------------------------------------------------------
Securities
Restricted Underlying All Other
Name and Principal Position Year Salary ($) Bonus ($) Stock Award(s)($) Options (#) Compensation ($)
- -----------------------------------------------------------------------------------------------------------------------------------
Richard H. Friedman 2001 500,095 90,000 - 200,000 3,600 (5)
Chief Executive Officer 2000 451,596 - - - 3,600 (5)
1999 425,097 - - 250,000 5,710 (5) (6)
Barry A. Posner 2001 265,084 48,800 - 70,000 3,600 (5)
Executive Vice President, General Counsel 2000 241,553 - - - 3,600 (5)
1999 223,128 - 60,000 - 4,710 (5)
Donald A Foscato (1) 2001 93,846 - 105,000 120,000 1,800
Chief Financial Officer 2000 - - - - -
1999 - - - - -
Michael J Sicilian (2) 2001 103,062 - 90,000 100,000 1,800
President, BioScrip Operations 2000 - - - - -
1999 - - - - -
Donald Dindak (3) 2001 92,133 - 90,000 100,000 1,800
President, BioScrip Sales 2000 - - - - -
1999 - - - - -
Recie B. Bomar (4) 2001 217,173 25,000 - 50,000 3,600 (5)
President, Scrip PBM 2000 193,615 - - - 3,600 (5)
1999 150,198 - 25,000 75,000 50,000 (7) (8)
Russel J Corvese 2001 173,235 5,000 - 10,000 -
Chief Information Officer 2000 171,192 - - - -
1999 152,290 - - - -
- ----------------------------------
(1) Mr. Foscato joined the Company in June 2001. His annualized base salary for
2001 was $200,000.
(2) Mr. Sicilian joined the Company in July 2001. His annualized base salary
for 2001 was $225,000.
-18-
(3) Mr. Dindak joined the Company in July 2001. His annualized base salary for
2001 was $200,000.
(4) Mr. Bomar's annualized base salary for 2001 was $225,000.
(5) Represents life insurance premiums paid by them and reimbursed by the
Company.
(6) Represents tax return preparation expense paid by the Named Executive
Officer and reimbursed by the Company.
(7) Represents relocation expenses of $25,000 paid by Mr. Bomar and reimbursed
by the Company.
(8) Represents a signing bonus of $25,000 paid by the Company to Mr. Bomar.
The following table sets forth certain information with respect to
stock options granted to each of the Company's Named Executive Officers during
the year ended December 31, 2001. In accordance with the rules of the
Commission, also shown below is the potential realizable value over the term of
the option, the period from the grant date to the expiration date, based on
assumed rates of stock appreciation of 5% and 10%, compounded annually. These
rates are mandated by the Commission and do not represent the Company's estimate
of future stock price. Actual gains, if any, on stock option exercises will
depend on the future performance of the Company's Common Stock. In the fiscal
year ended December 31, 2001, the Company granted options to acquire up to an
aggregate of 1,027,000 shares of Common Stock to employees under its stock
option plans and all at an exercise price equal to the fair market value of the
Company's Common Stock on the date of grant.
Option Grants in Last Fiscal Year
Individual Grants
-----------------------------------------------------------
% of
Number of Total Potential Realizable Gain
Securities Options Assuming Annual Rates
Underlying Granted to of Stock Price
Options Employees in Exercise Price Expiration Appreciation ($)
Name Granted (#) 2001 ($/share) Date 5% 10%
- --------------------------------------------------------------------------------------------------------------------
Richard H. Friedman 200,000 19.47% 12.20 11/28/2011 1,534,503 3,888,732
Barry Posner 70,000 6.82% 12.20 11/28/2011 537,076 1,361,056
Donald A. Foscato 120,000 11.7% 5.24 6/25/2011 395,449 1,002,145
Michael J. Sicilian 100,000 9.7% 6.14 7/2/2011 385,827 977,761
Donald Dindak 100,000 9.7% 6.14 7/2/2011 385,827 977,761
Recie B. Bomar 50,000 4.87% 12.20 11/28/2011 383,626 972,183
Russel J. Corvese 10,000 0.97% 12.20 11/28/2011 76,725 194,437
With respect to the Company's Named Executive Officers, the following
table sets forth information concerning option exercises in the year ended
December 31, 2001 and exercisable and unexercisable options held as of December
31, 2001. Also reported are the values for "in-the-money" options, which
represent the difference between the respective exercise prices of such stock
options and $17.80, the per share closing price of a share of Common Stock on
December 31, 2001, the last trading day of 2001:
-19-
Aggregated Option Exercises In Last Fiscal Year and Fiscal Year-End Option Values
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options at
Options at Fiscal Year End (#) Fiscal Year End (#)
-------------------------------- ------------------------------
Shares Acquired
on
Name Exercise (#) Value Realized ($) Exercisable Unexercisable Exercisable Unexercisable
- ----------------------- -------------- ------------------- ------------------------------- -------------------------------
Richard H. Friedman - - 166,666 283,334 2,600,749 2,420,390
Barry A. Posner 78,666 611,266 121,334 70,000 1,510,997 392,000
Donald A. Foscato - - - 120,000 - 1,507,200
Michael J. Sicilian - - - 100,000 - 1,166,000
Donald Dindak - - - 100,000 - 1,166,000
Recie B. Bomar 20,000 148,574 30,000 75,000 456,300 660,250
Russel J. Corvese - - 30,950 10,000 407,850 56,000
The following table sets forth for each Named Executive Officer the
number of Performance Units and/or Stock Grants made by the Company during the
year ended December 31, 2001. 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
Number of or Period Estimated Future Payments Under
Shares, Units Until Maturation Non-Stock Price-Based Plans
Name or Rights or Payment Threshold Target Maximum
- -------------------------------------------------------------------------------------------------------------------------
Donald A. Foscato 5,000 (1) 12/31/2002 $ 50,000 $ 125,000 $ 200,000
20,000 12/31/2008 $ 105,000 $ 105,000 $ 105,000
Donald Dindak 5,000 (2) 12/31/2002 $ 50,000 $ 125,000 $ 200,000
15,000 12/31/2008 $ 90,000 $ 90,000 $ 90,000
Michael J. Sicilian 5,000 (2) 12/31/2002 $ 50,000 $ 125,000 $ 200,000
15,000 12/31/2008 $ 90,000 $ 90,000 $ 90,000
- ----------------
(1) Represents Performance Units granted to the indicated individual on
June 25, 2001. The Performance Units vest and become payable upon
the achievement by the Company of certain specified levels of
after-tax net income in fiscal 2002. 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 2002; (b) $25 per unit upon the
Company's achievement of a target level of after-tax net income in
fiscal 2002; and (c) $40 per unit upon the Company's achievement of
a maximum level of after-tax net income in fiscal 2002.
-20-
(2) Represents Performance Units granted to the indicated individual on
July 2, 2001. The Performance Units vest and become payable upon the
achievement by the Company of certain specified levels of after-tax
net income in fiscal 2002. 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 2002; (b) $25 per unit upon the
Company's achievement of a target level of after-tax net income in
fiscal 2002; and (c) $40 per unit upon the Company's achievement of
a maximum level of after-tax net income in fiscal 2002.
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 2001, Mr. Cirillo and Drs. Luzzi and
DiFazio, none of whom is or ever has been an officer or employee of the Company,
served as members of the Compensation Committee. During 2001, 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 stockholders' value. This
belief was adhered to in 2001 when the Company retained a nationally recognized
compensation consulting firm to review the continued effectiveness of the
short-term and long-term incentive executive compensation programs originally
adopted by the Company in 1998. The 1998 compensation program and the Company's
retention of the outside compensation consultant in 2001 were commissioned in
order to ensure that the Company was providing competitive compensation, strong
incentives for senior executives to remain in the employ of the Company, to
deliver superior financial results and to provide significant potential rewards
to senior executives if the Company achieves aggressive agreed upon financial
goals each fiscal year. 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 stockholder value, while taking into
consideration the activities, duties and responsibilities of the Company's
senior executives.
In 1998, the Board of Directors retained the services of an outside
consultant (the "1998 Consultant") to review its then existing compensation
programs and to assist the Company and the Compensation Committee in developing
the desired compensation program. The 1998 Consultant found that while executive
salaries were generally within a competitive range, the executive bonus
opportunities for senior executives were below the competitive range at
companies comparable to the Company and created a program providing a more
balanced combination of long-term incentive compensation consisting 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.
In 2001, the Compensation Committee and the Chief Executive Officer
retained a nationally recognized compensation consulting firm in order to review
the competitiveness and effectiveness of the compensation program adopted in
1998. That new compensation firm worked closely with the Compensation Committee
and certain members of senior management. The new consulting firm determined
that, as a continuing program, the 1998 program did not appropriately
incentivize senior management since the pre-established thresholds established
in 1998 to be obtained by the Company and its management were practically
unachievable, even at mimimum performance hurdles, and therefore did not provide
senior management with the motivation that these programs would typically
provide.
Based on the recommendations of the new compensation consultant, the
Compensation Committee approved and adopted a program providing for cash bonuses
and annual grants of stock options based on Company performance and a senior
executive's attainment of personal accomplishments relative to that executive's
goals and objectives for a given year and approved by his direct supervisor and
the Chief Executive Officer, and, in the case of the Chief Executive Officer,
the Compensation Committee.
-21-
Compensation Philosophy and Elements
The Compensation Committee adheres to four (4) principles in
discharging its responsibilities, which have been applied through the adoption
of the 1998 and 2001 compensation programs. First, annual bonuses and long-term
compensation for senior management and key employees should be at risk, with
actual compensation levels corresponding to the Company's actual financial
performance and each participating executive's personal goals and
accomplishments. 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 2001 compensation 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 financial profit
plan and each individual's departmental and personal objectives are achieved. No
participant will receive compensation payments under the 2001 compensation
program in any year in excess of the $1,000,000 limitation set forth in Code
Section 162(m). Any amounts payable in excess of such $1,000,000 limitation will
be deferred to later years. The $1,000,000 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.
Compensation of the Chief Executive Officer
In considering the appropriate salary, bonus and long-term incentive
opportunity for the current Chief Executive Officer, the Compensation Committee
considered, among other things, his unique role since becoming Chairman and
Chief Executive Officer in 1997 and his expected role in the future. The
Compensation Committee determined that in a very real sense, the Company would
have faced extreme difficulties 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. It also determined that Mr.
Friedman was largely responsible for increasing stockholder value throughout
2001. The Compensation Committee's negotiation of a performance-driven,
five-year agreement entered into in December 1998 and the extension of that
agreement in 2001 through 2006 was based on the recognition of his key role in
maximizing future stockholder value.
Code Section 162(m)
The Chief Executive Officer participates in the 1998 and 2001
compensation programs and any bonuses payable to the Chief Executive Officer are
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 Company's compensation programs and the entire Board of Directors
approved Mr. Friedman's employment 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.
Members of the Audit Committee:
Richard A. Cirillo
Louis DiFazio, Ph.D.
Louis A. Luzzi, Ph.D.
-22-
Employment Agreements
In December 1998, Mr. Friedman entered into 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 stockholder 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 and was further amended during
2001 (as amended, the "Amended Agreement"). The Amended Agreement provides for
Mr. Friedman's employment as the Chairman and Chief Executive Officer of the
Company for a term of employment through November 30, 2006 (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 Company's executive compensation
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 200,000 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.
-23-
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) and (ii) 60,000 restricted shares of 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 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 dividends 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 he 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 into an employment letter agreement
with the Company which provided for his employment as the Vice President - Sales
and Marketing of the PBM division of the Company's wholly-owned subsidiary,
ScripSolutions, Inc. until terminated by the Company or Mr. Bomar. In October
2001, the Company and Mr. Bomar entered into a letter agreement amending certain
provisions of the 1999 employment letter agreement. Under the agreement, as
amended, Mr. Bomar is employed as President - Sales and Marketing of the PBM
division of ScripSolutions, Inc. at an initial base annual salary of $225,000.
Mr. Bomar currently serves as President of Scrip PBM. 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. In addition, 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) and (ii) 25,000 restricted shares of 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 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. In
addition, if, within three months following certain changes of control, Mr.
Bomar is terminated by the Company or a successor entity or Mr. Bomar elects to
terminate his employment after the Company or such successor assigns duties
materially inconsistent with his position prior to such change of control or if
Mr. Bomar is terminated at any time without cause or he terminates his
employment for good reason, he is entitled to receive (i) an amount equal to six
months salary and other benefits earned and accrued prior to termination, (ii)
all outstanding unvested options held by Mr. Bomar shall become immediately
exercisable and (iii) subject to certain limitations, Mr. Bomar shall become
fully vested in any pension or other deferred compensation program in which he
is participating. Mr. Bomar is subject to the same restrictions on competition
and non-interference as described above with respect to Mr. Friedman.
In June 2001, Mr. Foscato entered into an employment letter agreement
with the Company which provides for his employment as Chief Financial Officer
until terminated by the Company or Mr. Foscato at an initial base annual salary
of $200,000. Under the agreement, Mr. Foscato is entitled to receive certain
-24-
fringe benefits, including an automobile allowance, and is also eligible to
participate in the Company's executive bonus program. Under the agreement, Mr.
Foscato was granted options to purchase 120,000 shares of Common Stock at an
exercise price of $5.24 (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. Foscato was also granted (i) an aggregate of 5,000 Performance Units
and (ii) 20,000 restricted shares of Common Stock in June 2001. Mr. Foscato's
restricted shares have the same terms with respect to vesting, forfeiture and
acceleration as Mr. Posner's restricted shares, as described above. In the event
that Mr. Foscato is terminated without cause or terminates his employment at any
time, he is entitled to receive an amount equal to six months salary. If Mr.
Foscato is terminated by the Company or a successor entity within one year
following a change of control of the Company or, within such one year period,
Mr. Foscato elects to terminate his employment after the Company or such
successor materially alters his authority, duties and responsibilities or
assigns duties materially inconsistent with his position prior to such change of
control, (i) all Performance Units granted to Mr. Foscato shall become vested
and immediately payable at the then applicable maximum rate and (ii) all
restricted shares issued to Mr. Foscato shall vest and become immediately
payable. In addition he is entitled to receive (i) an amount equal to six months
salary, (ii) all outstanding unvested options held by Mr. Foscato shall become
immediately exercisable and (iii) subject to certain limitations, Mr. Foscato
shall become fully vested in any pension or other deferred compensation program
in which he is participating. Mr. Foscato is subject to the same restrictions on
competition and non-interference as described above with respect to Mr.
Friedman.
In June 2001, Mr. Sicilian entered into an employment letter agreement
with the Company which provides for his employment as President of the BioScrip
infusion division of ScripSolutions, Inc. until terminated by the Company or Mr.
Sicilian at an initial base annual salary of $225,000. Mr. Sicilian currently
serves as President of Operations for BioScrip. Under the agreement, Mr.
Sicilian 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. Sicilian was granted options to purchase
100,000 shares of Common Stock at an exercise price of $6.135 (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. Sicilian was also granted (i) an
aggregate of 5,000 Performance Units and (ii) 15,000 restricted shares of Common
Stock in June 2001. Mr. Sicilian's restricted shares have the same terms with
respect to vesting, forfeiture and acceleration as Mr. Posner's restricted
shares, as described above. In the event that Mr. Sicilian is terminated without
cause he is entitled to receive an amount equal to six months salary. If Mr.
Sicilian is terminated by the Company or a successor entity within one year
following a change of control of the Company or his salary is reduced after a
change of control from the level immediately prior to the change of control, or,
within such one year period Mr. Sicilian elects to terminate his employment
after the Company or such successor materially alters his authority, duties and
responsibilities or assigns duties materially inconsistent with his position
prior to such change of control, (i) all Performance Units granted to Mr.
Sicilian shall become vested and immediately payable at the then applicable
maximum rate and (ii) all restricted shares issued to Mr. Sicilian shall vest
and become immediately payable. In addition he is entitled to receive (i) an
amount equal to six months salary, (ii) all outstanding unvested options held by
Mr. Sicilian shall become immediately exercisable and (iii) subject to certain
limitations, Mr. Sicilian shall become fully vested in any pension or other
deferred compensation program in which he is participating. Mr. Sicilian is
subject to the same restrictions on competition and non-interference as
described above with respect to Mr. Friedman.
In June 2001, Mr. Dindak entered into an employment letter agreement
with the Company which provides for his employment as President of the BioScrip
injectable division of ScripSolutions, Inc. until terminated by the Company or
Mr. Dindak at an initial base annual salary of $200,000. Mr. Dindak currently
serves as President of Sales for BioScrip. Under the agreement, Mr. Dindak 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. Dindak was granted options to purchase 100,000 shares
of Common Stock at an exercise price of $6.135 (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. Dindak was also granted (i) an aggregate
of 5,000 Performance Units and (ii) 15,000 restricted shares of Common Stock in
June 2001. Mr. Dindak's restricted shares have the same terms with respect to
vesting, forfeiture and acceleration as Mr. Posner's restricted shares, as
described above. In the event that Mr. Dindak is terminated without cause he is
entitled to receive an amount equal to six months salary. If Mr. Dindak is
-25-
terminated by the Company or a successor entity within one year following a
change of control of the Company or, within such one year period Mr. Dindak
elects to terminate his employment after the Company or such successor
materially alters his authority, duties and responsibilities or assigns duties
materially inconsistent with his position prior to such change of control or
requires him to relocate his residence in order to perform his duties, (i) all
Performance Units granted to Mr. Dindak shall become vested and immediately
payable at the then applicable maximum rate and (ii) all restricted shares
issued to Mr. Dindak shall vest and become immediately payable. In addition he
is entitled to receive (i) an amount equal to six months salary, (ii) all
outstanding unvested options held by Mr. Dindak shall become immediately
exercisable and (iii) subject to certain limitations, Mr. Dindak shall become
fully vested in any pension or other deferred compensation program in which he
is participating. Mr. Dindak is subject to the same restrictions on competition
and non-interference as described above with respect to Mr. Friedman.
In June 2001, Mr. Corvese entered into an employment letter agreement
with the Company which provides for his employment as Chief Information Officer
until terminated by the Company or Mr. Corvese at an initial base annual salary
of $175,000. Under the agreement, Mr. Corvese is entitled to receive certain
fringe benefits, including an automobile allowance, and is also eligible to
participate in the Company's executive bonus program. In the event that Mr.
Corvese is terminated without cause or terminates his employment at any time, he
is entitled to receive an amount equal to six months salary. If Mr. Corvese is
terminated by the Company or a successor entity within one year following a
change of control of the Company or within such one year period Mr. Corvese
elects to terminate his employment after the Company or such successor
materially alters his authority, duties and responsibilities or assigns duties
materially inconsistent with his position prior to such change of control or
requires him to relocate his residence in order to perform his duties (i) all
outstanding unvested options held by Mr. Corvese shall become immediately
exercisable and (ii) subject to certain limitations, Mr. Corvese shall become
fully vested in any pension or other deferred compensation program in which he
is participating. Mr. Corvese is subject to the same restrictions on competition
and non-interference as described above with respect to Mr. Friedman.
Stockholder Return Performance Graph
The Company's Common Stock first commenced trading on the Nasdaq Stock
Market on August 15, 1996, in connection with the Company's initial public
offering. The graph set forth below compares, for the period of December 31,
1996 through December 31, 2001, 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 and the Nasdaq Stock Market Health Services Index.
[OBJECT OMITTED]
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
AMONG MIM CORPORATION, THE NASDAQ STOCK MARKET (U.S.) INDEX
AND THE NASDAQ HEALTH SERVICES INDEX
[LINE GRAPH REPRESENTING THE FOLLOWING HAS BEEN OMITTED]
12/96 3/97 6/97 9/97 12/97 3/98 6/98 9/98 12/98 3/99 6/99
MIM CORPORATION 100 128 288 196 95 80 95 63 68 46 49
NASDAQ STOCK MARKET (U.S.) 100 95 112 131 122 143 147 133 173 194 212
NASDAQ HEALTH SERVICES 100 93 105 114 103 113 102 77 87 78 96
9/99 12/99 3/00 6/00 9/00 12/00 3/01 6/01 9/01 12/01
MIM CORPORATION 43 49 86 53 37 18 52 120 210 356
NASDAQ STOCK MARKET (U.S.) 217 321 360 313 288 193 144 170 118 153
NASDAQ HEALTH SERVICES 71 70 73 74 82 96 88 106 101 104
*$100 invested on December 31, 1996 in MIM Corporation Common Stock, the Nasdaq
Stock Market (US) Index and the Nasdaq Health Services Index, including
reinvestment of dividends, if any.
-26-
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 March 23, 2002, Mr. Friedman
repaid in full the outstanding principal amount of the loan, together with
accrued interest of $402,411.49.
At December 31, 2001, Alchemie Properties, LLC, a Rhode Island limited
liability company of which Mr. E. David Corvese, the brother of Russel J.
Corvese and a stockholder and former officer and director of the Company, is the
manager and principal owner ("Alchemie"), was indebted to the Company in the
amount of $267,149.61 representing a loan made by the Company to Alchemie in
1994 in the original principal amount of $299,000. The loan bears interest at a
rate of 10% per annum, payable monthly, and is secured by a lien on Alchemie's
rental income from the Company at one of its facilities. The principal amount of
the loan is payable in full on or before December 1, 2004. The outstanding
principal amount of the loan, together with accrued interest of $2,224.44, was
repaid in full on January 31, 2002.
During 2001, the Company paid $55,500 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.
During 2001, the Company paid $77,646 in fees and expenses to The Anne
McBride Company, the Company's public relations firm. Ronald K. Shelp, a
director of the Company, is Chairman of The Anne McBride Company.
During 2001, the Company paid $793,000 in fees and expenses to the law
firm of King & Spalding, the Company's outside general counsel. Richard A.
Cirillo, a director of the Company, is a partner of King & Spalding.
In 1995 the Company made a loan in the amount of $456,000 to MIM
Holdings, a company controlled by Mr. E. David Corvese. The loan, together with
accrued interest of $87,351.31, was repaid in full in November 2001.
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, a former officer and director of the Company,
and Mr. Michael J. Ryan, a former officer, in connection with federal and
Tennessee state investigations that ended during 2001 by their entering guilty
pleas to certain charges and agreeing to pay the federal and Tennessee state
governments $2.4 million. As it was obligated to do under Section 145 and the
By-Laws, the Company advanced defense costs to Messrs. Corvese and Ryan
aggregating $3.4 million through 2001, upon receipt of their respective
undertakings to repay the advances if it is ultimately determined that they are
not entitled to indemnification of all or part of the advanced amounts. The
Company is not now in a position to assess the likelihood that Mr. Corvese or
Mr. Ryan will be entitled to indemnification of any of these amounts or able to
repay the advances if not.
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
The Harold Ford Group, a consulting and federal and state lobbying firm founded
and controlled by Harold Ford, a member of the Board of Directors and a nominee
for re-election as director which specializes in advising business clients
principally on healthcare-related regulatory, legislative and general business
-27-
matters. The initial consulting agreement between The Harold Ford Group and the
Company expired in October 2001 at which time The Harold Ford Group and the
Company entered in to a new consulting agreement substantially on the same terms
as the original agreement. The initial term of the consulting agreement is for
three (3) years and expires on October 1, 2004. Thereafter the agreement may be
extended for additional one (1) year periods, subject to either party's right to
terminate the agreement on 30 days written notice. The Company pays The Harold
Ford Company $45,750 per month for its services under the consulting agreement,
which consist of lobbying and healthcare related services.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's executive officers and directors and
persons who own more than ten percent of a registered class of the Company's
equity securities to file with the Commission an initial report of ownership on
Form 3 and changes in ownership on Form 4 and Form 5. Such officers, directors
and ten percent stockholders are required by the rules of the Commission to
furnish the Company with copies of all Section 16(a) forms they file. Based
solely on its review of the copies of such forms received by it, or written
representations from certain reporting persons that no Forms 5 were required to
be filed for such person, the Company believes that during 2001 all Section
16(a) filing requirements applicable to its executive officers, directors and
ten percent stockholders were complied with, other than with respect to Mr.
Friedman, who filed a Form 4 in July 2001 reporting stock option grants in
October 1999, and Mr. Michael Sicilian, who filed a Form 4 in March 2002
reporting the acquisition of shares of Common Stock in November 2001.
INDEPENDENT ACCOUNTANTS
Arthur Andersen LLP served as the Company's independent accountants for
the year ended December 31, 2001. A representative of Arthur Andersen LLP is
expected to be present at the Annual Meeting and will have an opportunity to
make a statement, if he or she desires to do so, and to be available to respond
to appropriate questions from stockholders.
No principal accountant has been selected or is being recommended for
election, approval or ratification at the Annual Meeting because the Board of
Directors has not yet selected an independent certified public accountant for
the year ending December 31, 2002. Management and the Audit Committee are
currently reviewing the qualifications of major national accounting firms to
serve as the Company's independent public accountants for the year ending
December 31, 2002.
Audit Fees
Arthur Andersen LLP billed the Company an aggregate of $255,000 for
professional services rendered for the audit of the Company's annual financial
statements for 2001 and the reviews of the financial statements included in the
Company's Forms 10-Q for 2001.
Financial Information Systems Design and Implementation Fees
During 2001, Arthur Andersen LLP did not provide the Company with any
professional services relating to financial information systems design or
implementation, the operation of the Company's information system or the
management of its local area network, as defined in Paragraph (c)(4)(ii) of Rule
2-01 of Regulation S-X.
All Other Fees
Arthur Andersen LLP billed the Company an aggregate of $329,500 for
professional services rendered during 2001, excluding fees for the audit
services discussed above. This included $155,000 in audit-related fees and
$174,000 in other fees. Audit-related fees include due diligence services
primarily related to the Company's acquisition of Vitality Home Infusion
Services, Inc. and fees primarily related to tax services.
-28-
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.
STOCKHOLDER PROPOSALS
In accordance with the amended By-Laws 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
2003, any such notice must be received by the Company at its principal executive
offices between March 6, 2003 and April 5, 2003 to be considered timely for
purposes of the 2003 annual meeting. Any person interested in making such a
nomination or proposal should request a copy of the relevant By-Law 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 2003 Annual
Meeting must be received by the Company at its principal executive offices no
later than January 3, 2003, 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 BY TELEPHONE OR VIA THE INTERNET
Please note that there are separate telephone and Internet 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.
-29-
MISCELLANEOUS
A copy of the Company's 2001 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.
-30-
EXHIBIT A
MIM CORPORATION
2001 INCENTIVE STOCK PLAN
AS AMENDED AND RESTATED
EFFECTIVE APRIL 17, 2002
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...........................................3
2.20 SAR Value............................................3
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.............................................4
ss.4. EFFECTIVE DATE.........................................................5
ss.5. COMMITTEE..............................................................5
ss.6. ELIGIBILITY AND ANNUAL GRANT CAPS......................................5
ss.7. OPTIONS................................................................6
7.1 Committee Action.....................................6
7.2 $100,000 Limit.......................................6
7.3 Option Price.........................................6
7.4 Payment..............................................6
7.5 Exercise Period......................................7
7.6 Reload Option Grants.................................7
ss.8. STOCK APPRECIATION RIGHTS..............................................8
8.1 Committee Action.....................................8
8.2 Terms and Conditions.................................8
8.3 Exercise.............................................9
ss.9. STOCK GRANTS..........................................................10
9.1 Committee Action....................................10
9.2 Conditions..........................................10
9.3 Dividends and Voting Rights.........................11
9.4 Satisfaction of Forfeiture Conditions...............11
9.5 Section 162(m)......................................12
ss.10. NON-TRANSFERABILITY..................................................13
ss.11. SECURITIES REGISTRATION..............................................13
ss.12. LIFE OF PLAN.........................................................14
ss.13. ADJUSTMENT...........................................................15
13.1 Capital Structure...................................15
13.2 Mergers.............................................15
13.3 Fractional Shares...................................16
ss.14. SALE, MERGER OR CHANGE IN CONTROL....................................16
ss.15. AMENDMENT OR TERMINATION.............................................16
ss.16. MISCELLANEOUS........................................................17
16.1 Shareholder Rights..................................17
16.2 No Contract of Employment...........................17
16.3 Withholding.........................................17
16.4 Construction........................................18
16.5 Other Conditions....................................18
16.6 Rule 16b-3..........................................18
16.7 Loans...............................................18
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 merged), unless such
merger, consolidation or similar transaction is with a Subsidiary or with
-2-
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 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 ofss. 422 of the
Code.
2.14 Option -- means an ISO or a Non-ISO which is granted underss.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.
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.
-3-
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. ss. 3.
SHARES RESERVED UNDER PLAN
There shall (subject to ss. 14) be 1,750,000 shares of Stock reserved
for issuance under this Plan (which number shall include the 950,000 shares of
Stock originally reserved for issuance under this Plan prior to this amendment
and restatement of 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
-4-
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 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.
-5-
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 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.
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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 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,
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(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 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,
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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 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
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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 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
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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.
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.
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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 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.
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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 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
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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 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.
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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 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.
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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.
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,
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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.
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
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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 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.
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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:
--------------------------------
Date:
-----------------------------
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EXHIBIT B
MIM CORPORATION
1996 NON-EMPLOYEE DIRECTORS
STOCK INCENTIVE PLAN
As Amended and Restated
Effective April 17, 2002
TABLE OF CONTENTS
Page
SECTION 1 Purpose.......................................................... 1
SECTION 2 Administration................................................... 1
SECTION 3 Eligibility.......................................................2
SECTION 4 Stock.............................................................2
SECTION 5 Granting of Options...............................................3
SECTION 6 Terms and Conditions of Options...................................3
SECTION 7 Option Agreements - Other Provisions..............................6
SECTION 8 Capital Adjustments...............................................6
SECTION 9 Amendment or Discontinuance of the Plan...........................7
SECTION 10 Termination of Plan...............................................8
SECTION 11 Shareholder Approval..............................................8
SECTION 12 Miscellaneous 8
MIM CORPORATION
1996 NON-EMPLOYEE DIRECTORS
STOCK INCENTIVE PLAN
SECTION 1
Purpose
This amended and restated MIM CORPORATION 1996 NON-EMPLOYEE DIRECTORS
STOCK INCENTIVE PLAN ("Plan") is intended to provide a means whereby MIM
Corporation, a Delaware corporation (the "Company"), may, through the grant of
non-qualified stock options ("Options") to purchase common stock of the Company
("Common Stock") to Non-Employee Directors (as defined in Section 3), attract
and retain capable independent directors and motivate such independent directors
to promote the best interests of the Company and of any Related Corporation.
For purposes of the Plan, a Related Corporation of the Company shall
mean either a corporate subsidiary of the Company, as defined in section 424(f)
of the Internal Revenue Code of 1986, as amended ("Code"), or the corporate
parent of the Company, as defined in section 424(e) of the Code. Further, as
used in the Plan, the term "non-qualified stock option" shall mean an option
which, at the time such option is granted, does not qualify as an incentive
stock option within the meaning of section 422 of the Code.
SECTION 2
Administration
The Plan shall be administered by the Company's Compensation Committee
("Committee"), which shall consist of not less than two (2) directors of the
Company who shall be appointed by, and shall serve at the pleasure of, the
Company's Board of Directors ("Board"). Each member of such Committee, while
serving as such, shall be deemed to be acting in his or her capacity as a
director of the Company. Each member of the Committee who is a "Non-Employee
Director" shall be eligible for the grant of Options under the Plan on the same
basis as any other individual who is a Non-Employee Director, but a member of
the Committee shall abstain from acting in his capacity as a member of the
Committee with respect to any Committee decision affecting any Option which had
been granted to such member over which the Plan gives the Committee any
discretion.
The Committee shall have full authority, subject to the terms of the
Plan, to interpret the Plan, but shall have no discretion with respect to the
selection of Non-Employee Directors to receive Options, the number of shares of
Common Stock subject to the Plan, setting the purchase price for shares of
Common Stock subject to an Option at other than fair market value, the method or
methods for determining the amount of Options to be granted to each Non-Employee
Director, the timing of grants hereunder or with respect to any other matter
which would cause this Plan to fail to comply with Rule 16b-3(c)(2)(ii) under
-1-
the Securities Exchange Act of 1934. Subject to the foregoing, the Committee may
correct any defect, supply any omission and reconcile any inconsistency in this
Plan and in any Option granted hereunder in the manner and to the extent it
shall deem desirable. The Committee also shall have the authority to establish
such rules and regulations, not inconsistent with the provisions of the Plan,
for the proper administration of the Plan, and to amend, modify or rescind any
such rules and regulations, and to make such determinations and interpretations
under, or in connection with, the Plan, as it deems necessary or advisable. All
such rules, regulations, determinations and interpretations shall be binding and
conclusive upon the Company, its shareholders and all Non-Employee Directors
(including former Non-Employee Directors), and upon their respective legal
representatives, beneficiaries, successors and assigns and upon all other
persons claiming under or through any of them.
No member of the Board or the Committee shall be liable for any action
or determination made in good faith with respect to the Plan or any Option
granted under it.
SECTION 3
Eligibility
The persons who shall be eligible to receive Options under the Plan
shall be those directors of the Company (the "Non-Employee Directors") who:
(a) are not employees of the Company or any Related Corporation,
(b have not been employees of the Company or any Related Corporation
during the immediately preceding 12-month period, and
(c) are initially elected to the Board of Directors on or after the
date of the Plan's initial adoption by the Board of Directors (the "Effective
Date").
SECTION 4
Stock
Options may be granted under the Plan to purchase up to a maximum of
five hundred thousand (500,000) shares of Common Stock, par value $ 0.0001 per
share, (which number of shares shall include the three hundred thousand
(300,000) shares of Common Stock reserved for issuance under the Plan prior to
this amendment and restatement of the Plan) subject to adjustment as hereinafter
provided. Shares issuable under the Plan may be authorized but unissued shares
or reacquired shares, and the Company may purchase shares required for this
purpose, from time to time, if it deems such purchase to be advisable.
If any Option granted under the Plan expires or otherwise terminates,
in whole or in part, for any reason whatever (including, without limitation, the
-2-
Non-Employee Director's surrender thereof) without having been exercised, the
shares subject to the unexercised portion of such Option shall continue to be
available for the granting of Options under the Plan as fully as if such shares
had never been subject to an Option.
SECTION 5
Granting of Options
(a) Grant Upon Becoming a Non-Employee Director. An Option to purchase
20,000 shares of Common Stock (as adjusted pursuant to Section 8) automatically
shall be granted (without any further action on the part of the Committee) to
any person on the date he or she first becomes a Non-Employee Director, whether
by reason of his or her election by stockholders or appointment by the Board to
be a director, or, if applicable, the expiration of the 12-month period
specified in Section 3(b) with respect to a present or future director who had
previously been an employee of the Company or any Related Corporation; provided,
that if a Non-Employee Director who previously received a grant of an Option
under this Section 5 terminates service as a director and is subsequently
elected or appointed to the Board again, such director shall not be eligible to
receive a second grant of Options under this Section 5(a) of the Plan.
(b) Annual Grant. An Option to purchase 5,000 shares of Common Stock
(as adjusted pursuant to Section 8) automatically shall be granted (without any
further action on the part of the Committee) to any person who is serving as a
Non-Employee Director on the date of the first annual Board meeting following
the Company's annual shareholders meeting at which this Plan is adopted and who
has served as such for at least six consecutive months as of such date.
Thereafter, on the date of the first annual Board meeting that follows the
Company's annual shareholder meeting during a calendar year, each Non-Employee
Director who is serving as such on such date and who has served as such for more
than six consecutive months automatically shall be granted (without any further
action on the part of the Committee) an Option under the Plan as of such date to
purchase 5,000 shares of Common Stock (as adjusted pursuant to Section 8).
(c) No Other Grants. A Non-Employee Director shall not be eligible to
receive an Option under the Plan except as provided in this Section 5.
SECTION 6
Terms and Conditions of Options
Options granted pursuant to the Plan shall include expressly or by
reference the following terms and conditions:
(a) Number of Shares. A statement of the number of shares to which the
Option pertains.
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(b) Price. A statement of the Option price which shall be determined as
follows:
(1) with respect to any Option granted on or prior to the
effective date of the Company's initial public offering, if any, the
exercise price shall be the initial public offering price set forth on
the cover page of the prospectus included within the registration
statement for such Offering as of the date it is declared effective
with the Securities and Exchange Commission provided that such
offering is declared effective within ninety days after the grant date
of such Option; otherwise, the exercise price shall be the fair market
value of the optioned shares of Common Stock as determined as of the
date of grant in accordance with Section 6(b)(2)(iv) hereinbelow; and
(2) with respect to any Option granted after the effective date
of the Company's initial public offering, if any, the exercise price
shall be the fair market value of the optioned shares of Common Stock,
which shall be:
(i) the mean between the highest and lowest quoted
selling price, if there is a market for the Common Stock on
a registered securities exchange or in an over the counter
market, on the date of grant;
(ii) the weighted average of the means between the
highest and lowest sales on the nearest date before and the
nearest date after the date of grant, if there are no sales
on the date of grant but there are sales on dates within a
reasonable period both before and after the date of grant;
(iii) the mean between the bid and asked prices, as
reported by the National Quotation Bureau on the date of
grant, if actual sales are not available during a reasonable
period beginning before and ending after the date of grant;
or
(iv) if Sections 6(b)(2)(i) through (iii) are
inapplicable, such other method of determining fair market
value as shall be authorized by the Code, or the rules or
regulations thereunder, and adopted by the Committee.
Where the fair market value of the optioned shares of Common Stock is
determined under Section 6(b)(2)(ii) above, the average of the means
between the highest and lowest sales on the nearest date before and
the nearest date after the date of grant is to be weighted inversely
by the respective numbers of trading days between the selling dates
and the date of grant (i.e., the valuation ---- date), in accordance
with Treas. Reg.ss.20.2031-2(b)(1).
-4-
(c) Term. Subject to earlier termination as provided in Section 8
hereof, the term of each Option shall be ten (10) years from the date of grant.
(d) Exercise. Each Option granted under Section 5(a) shall become
initially exercisable in the following amounts and upon the following dates
provided that the Non-Employee Director has served continuously as a director of
the Company from the date of grant to and including each such initial exercise
date: (i) as to 6,667 shares, on the first anniversary date of the date of
grant; (ii) as to an additional 6,667 shares, on the later of (A) the first
anniversary date of the grantee's first election to the Board subsequent to the
date of grant or (B) the second anniversary date of the date of grant; and (iii)
as to the remaining 6,666 shares, on the later of (A) the first anniversary date
of the grantee's second election to the Board subsequent to the date of grant or
(B) the third anniversary date of the date of grant. Each Option granted under
Section 5(b) shall become initially exercisable in the following amounts and
upon the following dates provided that the Non-Employee Director has served
continuously as a director of the Company from the date of grant to and
including each such initial exercise date: (i) as to 1,667 shares, on the first
anniversary date of the date of grant; (ii) as to an additional 1,667 shares, on
the second anniversary date of the date of grant; (iii) as to the remaining
1,666 shares, on the third anniversary date of the date of grant. Any Option
shares, the right to the purchase of which has accrued, may be purchased at any
time up to the expiration or termination of the Option. Exercisable Options may
be exercised, in whole or in part, from time to time by giving written notice of
exercise to the Company at its principal office, specifying the number of shares
to be purchased and accompanied by payment in full of the aggregate price for
such shares. Only full shares shall be issued under the Plan, and any fractional
share which might otherwise be issuable upon exercise of an Option granted
hereunder shall be forfeited.
The Option price shall be payable in cash or its equivalent.
(e) Expiration of Term or Removal of Non-Employee Director as Director.
If a Non-Employee Director's service as a director with the Company terminates
prior to the expiration date of his or her Option for any reason (such as,
without limitation, failure to be re-elected by the stockholders), such Option
may be exercised by the Non-Employee Director, only to the extent of the number
of shares with respect to which the Non-Employee Director could have exercised
it on the date of such termination of service as a director, at any time prior
to the expiration or other termination of the Option as set forth in Section
6(c) hereof.
(f) Non-Transferability. No Option shall be assignable or transferable
by the Non-Employee Director otherwise than by will or by the laws of descent
and distribution, and during the lifetime of the Non-Employee Director, the
Option shall be exercisable only by him or her or, in the case of his or her
legal disability, by his or her guardian or legal representative. If the
Non-Employee Director is married at the time of exercise and if the Non-Employee
-5-
Director so requests at the time of exercise, the certificate or certificates
shall be registered in the name of the Non-Employee Director and the
Non-Employee Director's spouse, jointly, with right of survivorship. In the
event of the Non-Employee Director's death, the Option may be exercised by the
Non-Employee Director's estate, personal representative or beneficiary if, when
and to the extent that the Non-Employee Director would have been so entitled
hereunder but for such death after giving effect to all the provisions hereof
including Section 6(e) hereinabove.
(g) Rights as a Shareholder. A Non-Employee Director shall have no
rights as a shareholder with respect to any shares covered by his or her Option
until the issuance of a stock certificate to him or her for such shares.
(h) Listing and Registration of Shares. Each Option shall be subject to
the requirement that, if at any time the Committee shall determine, in its
discretion, that the listing, registration or qualification of the shares
covered thereby upon any securities exchange or under any state or federal law,
or the consent or approval of any governmental regulatory body, is necessary or
desirable as a condition of, or in connection with, the granting of such Option
or the purchase of shares thereunder, or that action by the Company or by the
Non-Employee Director should be taken in order to obtain an exemption from any
such requirement, no such Option may be exercised, in whole or in part, unless
and until such listing, registration, qualification, consent, approval, or
action shall have been effected, obtained, or taken under conditions acceptable
to the Committee. Without limiting the generality of the foregoing, each
Non-Employee Director or his or her legal representative or beneficiary may also
be required to give satisfactory assurance that shares purchased upon exercise
of an Option are being purchased for investment and not with a view to
distribution, and certificates representing such shares may be legended
accordingly.
SECTION 7
Option Agreements - Other Provisions
Options granted under the Plan shall be evidenced by written documents
("Option Agreements") in such form as the Committee shall, from time to time,
approve, which Option Agreements shall contain such provisions, not inconsistent
with the provisions of the Plan as the Committee shall deem advisable. Each
Non-Employee Director shall enter into, and be bound by, such Option Agreements.
SECTION 8
Capital Adjustments
The number, kind or class (or any combination thereof) of shares which
may be issued under the Plan, as stated in Section 4 hereof, the number, kind or
-6-
class (or any combination thereof) of shares granted under Section 5, and the
number, kind or class (or any combination thereof) of shares issuable upon
exercise of outstanding Options under the Plan (as well as the Option price per
share under such outstanding Options), shall, subject to the provisions of
section 424(a) of the Code, be adjusted proportionately to reflect any stock
dividend, stock split, share combination, or similar change in the
capitalization of the Company.
In the event of a corporate transaction (as that term is described in
section 424(a) of the Code and the Treasury Regulations issued thereunder as,
for example, a merger, consolidation, acquisition of property or stock,
separation, reorganization, or liquidation), and, provision is not made for the
continuance and assumption of Options under the Plan, or the substitution for
such Options of new Options to acquire securities or other property to be
delivered in connection with the transaction, the Committee shall, upon written
notice to the holders of Options, provide that all unexercised Options will
terminate immediately prior to the consummation of such merger, consolidation,
acquisition, reorganization, liquidation, sale or transfer unless exercised (to
the extent then exercisable) by the holder within a specified number of days
(which shall not be less than seven (7) days) following the date of such notice.
SECTION 9
Amendment or Discontinuance of the Plan
(a) General. The Board from time to time may suspend or discontinue
the Plan or amend it in any respect whatsoever, provided, however, that an
amendment to the Plan shall require shareholder approval (given in the
manner set forth in Section 9(b) below) if such amendment would materially:
(1) increase the benefits accruing to Non-Employee Directors
under the Plan;
(2) increase the number of shares of Common Stock which may be
issued to Non-Employee Directors under the Plan; or
(3) modify the requirements as to eligibility to participate in
the Plan.
The foregoing notwithstanding, no such suspension, discontinuance or
amendment shall materially impair the rights of any holder of an
outstanding Option without the consent of such holder. Further, the
provisions of this Plan establishing the directors eligible to receive
Options under this Plan, the timing of the grants of such Options, the
purchase price for shares subject to Options, the number of Shares covered
by each Option, the method or methods for determining the amount of Options
to be granted to each Non-Employee Director, and any other provision of the
Plan which, if amended more than once every six months, would cause the
-7-
Plan to fail to comply with Rule 16b-3(c)(2)(ii)(B) under the Securities
Exchange Act of 1934, shall not be amended more than once every six months.
(b) Shareholder Approval Requirements. Shareholder approval must be by
either:
(1) the written consent of the holders of a majority of the
outstanding shares of Common Stock complying with the requirements of
the certificate of incorporation and bylaws of the Company and of the
applicable provisions of the Delaware General Corporation Law; or
(2) a majority of the outstanding shares of Common Stock present,
or represented, and entitled to vote at a meeting duly held in
accordance with the requirements of the certificate of incorporation
and bylaws of the Company and of the applicable provisions of the
Delaware General Corporation Law.
SECTION 10
Termination of Plan
Unless earlier terminated as provided in the Plan, the Plan and all
authority granted hereunder shall terminate absolutely at 12:00 midnight on day
immediately prior to the tenth anniversary of the date of the Plan's adoption by
the Board, and no Options hereunder shall be granted thereafter. Nothing
contained in this Section 10, however, shall terminate or affect the continued
existence of rights created under Options issued hereunder and outstanding on
said Plan termination date, which by their terms extend beyond such date.
SECTION 11
Shareholder Approval
The Effective Date of this Plan shall be the date of the Plan's
adoption by the Board; provided, however, that if the Plan is not approved by
the shareholders in the manner described in Section 9(b), within twelve (12)
months after said date, the Plan and all Options granted hereunder shall be null
and void.
SECTION 12
Miscellaneous
(a) Governing Law. The operation of, and the rights of Non-Employee
Directors under, the Plan, the Option Agreements and any Options granted
hereunder shall be governed by applicable Federal law, and otherwise by the
laws of the State of Delaware.
-8-
(b) Rights. Neither the adoption of the Plan nor any action of the
Board or the Committee shall be deemed to give any individual any right to
be granted an Option, or any other right hereunder, unless and until the
Committee shall have granted such individual an Option, and then his or her
rights shall be only such as are provided by the Option Agreement.
Any Option under the Plan shall not entitle the holder thereof to any
rights as a shareholder of the Company prior to the exercise of such Option
and the issuance of the shares pursuant thereto. Further, any provisions of
the Plan or the Option Agreement with a Non-Employee Director
notwithstanding, the granting of an Option to a Non-Employee Director shall
not entitle that Non-Employee Director to continue to serve as a director
of the Company or a Related Corporation or affect the terms and conditions
of such service.
(c) Indemnification of Board and Committee. Without limiting any other
rights of indemnification which they may have from the Company and any
Related Corporation, the members of the Board and the members of the
Committee shall be indemnified by the Company against all costs and
expenses reasonably incurred by them in connection with any claim, action,
suit, or proceeding to which they or any of them may be a party by reason
of any action taken or failure to act under, or in connection with, the
Plan, or any Option granted thereunder, and against all amounts paid by
them in settlement thereof (provided such settlement is approved by legal
counsel selected by the Company) or paid by them in satisfaction of a
judgment in any such action, suit, or proceeding, except a judgment based
upon a finding of willful misconduct or recklessness on their part. Upon
the making or institution of any such claim, action, suit, or proceeding,
the Board or Committee member shall notify the Company in writing, giving
the Company an opportunity, at its own expense, to handle and defend the
same before such Board or Committee member undertakes to handle it on his
or her own behalf.
(d) Application of Funds. The proceeds received by the Company from
the sale of Common Stock pursuant to Options granted under the Plan shall
be used for general corporate purposes. Any cash received in payment for
shares upon exercise of an Option to purchase Common Stock shall be added
to the general funds of the Company and shall be used for its corporate
purposes.
(e) No Obligation to Exercise Option. The granting of an Option shall
impose no obligation upon a Non-Employee Director to exercise such Option.
* * *
-9-
Please date, sign and mail your
proxy card back as soon as possible!
Annual Meeting of Stockholders of
MIM CORPORATION
To be held on
June 4, 2002
Please Detach and Mail in the Envelope Provided
A [X] PLEASE MARK YOUR
VOTES AS IN THIS
EXAMPLE
PROPOSAL 1. For Withheld Nominees:
Election of Richard A. Cirillo
Directors: [ ] [ ] Dr. Louis B. DiFazio
Harold Ford, Sr.
Richard H. Friedman
For all nominees except as noted below. Michael Kooper
Dr. Louis A. Luzzi
[ ] _____________________________________ Ronald K. Shelp
PROPOSAL 2. Proposal to amend and FOR AGAINST ABSTAIN
restate the MIM Corporation 2001 [ ] [ ] [ ]
Incentive Stock Plan.
PROPOSAL 3. Proposal to amend and [ ] [ ] [ ]
restate the MIM Corporation 1996
Non-Employee Directors Stock
Incentive Plan.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS
DIRECTED OR IF NO CONTRARY DIRECTION IS INDICATED WILL
BE VOTED FOR PROPOSALS 1-3 ABOVE AND IN THE DISCRETION
OF THE PROXIES UPON SUCH OTHER MATTERS WHICH MAY
PROPERLY COME BEFORE THE MEETING AND ANY
ADJOURNMENTS OR POSTPONEMENTS THEREOF.
Mark here for [ ]
address change
and note
Signature:_____________________ Date: _____ Signature:____________Date: _______
NOTE: (This proxy should be marked, dated and signed by the stockholder(s)
exactly as such stockholder's name appears hereon and returned promptly in the
enclosed envelope. If shares are held by joint tenants or as community property,
both should sign exactly as their names appear hereon. When signing as attorney,
executor, administrator, trustee or guardian, please give title as such. If a
corporation, please sign in full corporate name by president or other authorized
officer. If a partnership or limited liability company, please sign in name of
partnership or limited liability company by authorized person.)
PROXY CARD
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
MIM CORPORATION
2002 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 4, 2002
The undersigned stockholder of MIM CORPORATION, a Delaware corporation
(the "Company"), hereby acknowledges receipt of the Notice of Annual Meeting of
Stockholders and Proxy Statement dated April 23, 2002, and hereby revokes all
prior proxies and appoints Richard H. Friedman and Barry A. Posner, or either
one of them, proxies and attorneys-in-fact, with full power to each of
substitution and resubstitution, on behalf and in the name of the undersigned,
to represent the undersigned at the 2002 Annual Meeting of Stockholders of the
Company (the "Annual Meeting") to be held on June 4, 2002, at 10:00 a.m., local
time, at the Renaissance Westchester Hotel, 80 West Red Oak Lane, White Plains,
New York 10604, and at any adjournment or postponement thereof, and to vote all
shares of Common Stock of the Company which the undersigned would be entitled to
vote if then and there personally present, on the matters set forth on the
reverse side and upon such other matters as may properly come before the Annual
Meeting or any adjournments or postponements thereof, hereby revoking any
proxies heretofore given.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED OR IF NO
CONTRARY DIRECTION IS INDICTED WILL BE VOTED FOR PROPOSALS 1-3 ON THE REVERSE
SIDE HEREOF IN FAVOR OF MANAGEMENT'S RECOMMENDATIONS AND FOR SUCH OTHER MATTERS
AS MAY PROPERLY COME BEFORE THE MEETING AS SAID PROXIES DEEM ADVISABLE AND IN
THE BEST INTEREST OF THE COMPANY.
(IMPORTANT - TO BE MARKED, SIGNED AND DATED ON REVERSE SIDE)
ANNUAL MEETING OF STOCKHOLDERS OF
MIM CORPORATION
To be held on
June 4, 2002
Co. # __________________ Acct. # _____________________________________
PROXY VOTING INSTRUCTIONS
TO VOTE BY MAIL
Please date, sign and mail your proxy card in the envelope provided as soon as
possible.
TO VOTE BY TELEPHONE (TOUCH-TONE PHONE ONLY)
Please call toll-free 1-800-PROXIES and follow the instructions. Have your
control number and the proxy card available when you call.
TO VOTE BY INTERNET
Please access the web page at "www.voteproxy.com" and follow the on-screen
instructions. Have your control number available when you access the web page.
YOUR CONTROL NUMBER IS -------> [ ]
A [X] PLEASE MARK YOUR
VOTES AS IN THIS
EXAMPLE
PROPOSAL 1. For Withheld Nominees:
Election of Richard A. Cirillo
Directors: [ ] [ ] Dr. Louis B. DiFazio
Harold Ford, Sr.
Richard H. Friedman
For all nominees except as noted below. Michael Kooper
Dr. Louis A. Luzzi
[ ] _____________________________________ Ronald K. Shelp
PROPOSAL 2. Proposal to amend and FOR AGAINST ABSTAIN
restate the MIM Corporation 2001 [ ] [ ] [ ]
Incentive Stock Plan.
PROPOSAL 3. Proposal to amend and [ ] [ ] [ ]
restate the MIM Corporation 1996
Non-Employee Directors Stock
Incentive Plan.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS
DIRECTED OR IF NO CONTRARY DIRECTION IS INDICATED WILL
BE VOTED FOR PROPOSALS 1-3 ABOVE AND IN THE DISCRETION
OF THE PROXIES UPON SUCH OTHER MATTERS WHICH MAY
PROPERLY COME BEFORE THE MEETING AND ANY
ADJOURNMENTS OR POSTPONEMENTS THEREOF.
Mark here for [ ]
address change
and note
Signature:_____________________ Date: _____ Signature:____________Date: _______
NOTE: (This proxy should be marked, dated and signed by the stockholder(s)
exactly as such stockholder's name appears hereon and returned promptly in the
enclosed envelope. If shares are held by joint tenants or as community property,
both should sign exactly as their names appear hereon. When signing as attorney,
executor, administrator, trustee or guardian, please give title as such. If a
corporation, please sign in full corporate name by president or other authorized
officer. If a partnership or limited liability company, please sign in name of
partnership or limited liability company by authorized person.)