SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant |X|
Filed by a Party other than the Registrant |_|
Check the appropriate box:
|_| Preliminary Proxy Statement |_| Confidential, For Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
|X| Definitive Proxy Statement
|_| Definitive Additional Materials
| | Soliciting Material Under Rule 14a-12
MIM CORPORATION
------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
|X| No fee required.
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
N/A
------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
N/A
------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
N/A
------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
N/A
------------------------------------------------------------------
(5) Total fee paid:
N/A
------------------------------------------------------------------
|_| Fee paid previously with preliminary materials:
------------------------------------------------------------------
|_| Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its filing.
(1) Amount previously paid:
N/A
------------------------------------------------------------------
(2) Form, Schedule or Registration Statement no.:
N/A
------------------------------------------------------------------
(3) Filing Party:
N/A
------------------------------------------------------------------
(4) Date Filed:
N/A
------------------------------------------------------------------
MIM CORPORATION
100 Clearbrook Road
Elmsford, New York 10523
(914) 460-1600
---------------------
NOTICE OF
ANNUAL MEETING OF STOCKHOLDERS
To be held on Thursday, June 5, 2003
---------------------
To the Stockholders of MIM Corporation:
The 2003 Annual Meeting of Stockholders of MIM Corporation, a Delaware
corporation (the "Company"), will be held at 10:00 a.m., local time, on
Thursday, June 5, 2003 at the Westchester Marriott Hotel, located at 670 White
Plains Road, Tarrytown, New York 10591, for the following purposes:
1. To elect nine (9) 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 2,000,000 shares, from 1,750,000 to 3,750,000 shares, and to
permit grants of Restricted Stock Units.
3. To ratify the appointment of Ernst & Young LLP as the Company's
independent auditors for the year ending December 31, 2003.
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
11, 2003 as the record date for determining stockholders of the Company entitled
to receive notice of and to vote at the Annual Meeting and any adjournments or
postponements thereof.
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, 2003 Executive Vice President, Secretary
and General Counsel
MIM CORPORATION
100 Clearbrook Road
Elmsford, New York 10523
(914) 460-1600
---------------------
PROXY STATEMENT
---------------------
This Proxy Statement ("Proxy Statement") is being 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
2003 Annual Meeting of Stockholders (the "Annual Meeting") of the Company to be
held on Thursday, June 5, 2003 at 10:00 a.m., local time, at the Westchester
Marriott Hotel, located at 670 White Plains Road, Tarrytown, New York 10591, 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 5, 2003.
Instead of submitting your proxy with the paper proxy card, you may
vote by telephone or electronically 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 27 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 nine (9) 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 thereunder by
2,000,000 shares, from 1,750,000 to 3,750,000 shares, and to permit
grants of Restricted Stock Units.
3. To ratify the appointment of Ernst & Young LLP as the Company's
independent auditors for the year ending December 31, 2003.
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 11, 2003 has been fixed by the
Board of Directors as the record date (the "Record Date") for determining
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, 22,174,934 shares
of Common Stock were issued and outstanding and were held of record by
approximately 92 holders (in addition to approximately 10,001 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 nine (9) 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 of Common Stock 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
such stockholder's 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
currently intend to seek an adjournment or postponement of the Annual Meeting,
but no assurance can be given that one will not be sought.
-2-
PROPOSAL 1.
ELECTION OF DIRECTORS
The By-Laws of the Company provide that the number of directors shall
be such number, currently nine (9), 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 or her successor is elected at the Company's next
annual meeting of stockholders and duly qualified, or until his or her 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.,
Charlotte W. Collins, Esq., Dr. Louis T. DiFazio, Harold Ford, Sr., Michael
Kooper, Dr. Louis A. Luzzi, Jack L. Salzman 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 nine (9) directors.
The following table sets forth, as of April 30, 2003, certain
information with respect to each nominee for director, including biographical
data for at least the last five (5) years:
Name Age Position
Richard H. Friedman 52 Director, Chairman
of the Board and Chief
Executive Officer
Richard A. Cirillo, Esq. 52 Director
Charlotte W. Collins, Esq. 50 Director
Louis T. DiFazio, Ph.D. 65 Director
Harold Ford, Sr. 58 Director
Michael Kooper 67 Director
Louis A. Luzzi, Ph.D. 70 Director
Jack L. Salzman 57 Director
Ronald K. Shelp 61 Director
-3-
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 its Chief Financial Officer and Chief
Operating Officer in May 1996. He served in those capacities until April 1998.
Mr. Friedman also served as the Company's Treasurer from April 1996 until
February 1998.
Richard A. Cirillo, Esq. has served as a director of the Company since
April 1998. Since June 21, 1999, Mr. Cirillo has been a partner of the law firm
of King & Spalding LLP. 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 LLP, that firm
has served as the Company's outside general counsel. Prior to that time,
Clifford Chance Rogers & Wells LLP had served in that capacity.
Charlotte W. Collins, Esq. was appointed as a director of the Company
in April 2003. Since January 2002 Ms. Collins has been Associate Research
Professor, Director of Minority Health Policy Program, at the George Washington
University School of Public Health and Health Services. Since 1996, Ms. Collins
has been associated with the law firm of Powell, Goldstein, Frazer & Murphy, LLP
in Washington, DC. During 1998, she held the position of Interim General Counsel
for the District of Columbia Health and Hospitals Public Benefit Corporation.
Louis T. 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 currently 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 from 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 has
held 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.
Jack L. Salzman has served as a director of the Company since July
2002. Since 1998 Mr. Salzman has been managing partner of Salzman Capital
Management which manages Kings Point Partners L.P., a hedge fund founded by Mr.
Salzman in 1997. Prior to 1997, Mr. Salzman was a partner and managing director
of Goldman Sachs and held various positions with Goldman Sachs, including
associate director of equity research.
Ronald K. Shelp has served as a director of the Company since July
2000. Mr. Shelp is Chairman of Kent Global Strategies, a consulting firm he
founded in 1996 specializing in communications, marketing for businesses and
not-for-profit organizations, and domestic and international business
transactions. From September 2001 to November 2002, Mr. Shelp was 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.
-4-
Information Concerning Meetings and Certain Committees
The Company has standing Executive, Audit, Nominating and Compensation
Committees of the Board of Directors.
The Executive Committee, established in November 2002, has all of the
powers and authority of the full Board in the management of the business and
affairs of the Company, subject to certain limitations. Messrs. Friedman,
Cirillo and Salzman currently serve on the Executive Committee. The Executive
Committee did not meet in 2002, but in February 2003 approved by unanimous
written consent a stock repurchase program pursuant to which the Company is
authorized to repurchase, in open market or private transactions, up to an
aggregate of $10,000,000 of its Common Stock.
The Audit Committee currently consists of Mr. Salzman, who is the
Chairman of the Audit Committee, and Drs. Luzzi and DiFazio. Each of the members
of the Audit Committee meets the independence requirements of the National
Association of Securities Dealers listing standards and Section 10A(m) of the
Securities Exchange Act of 1934 (the "Exchange Act"). The Audit Committee is
responsible, among its other duties, for engaging, overseeing, evaluating and
replacing the Company's independent auditors, pre-approving all audit and
non-audit services by the Company's independent auditors, reviewing the scope of
the audit plan and the results of each audit with management and the independent
accountants, reviewing the internal audit function, reviewing the adequacy of
the Company's system of internal accounting controls and disclosure controls and
procedures, and reviewing the financial statements and other financial
information included in the Company's annual and quarterly reports filed with
the Securities and Exchange Commission (the "Commission"). The Audit Committee's
duties are set forth in the Audit Committee's Charter, which was last amended by
the Board of Directors on April 22, 2003. A copy of the current Audit Committee
Charter is attached to this Proxy Statement as Appendix A.
The Compensation Committee, currently comprised of Dr. DiFazio, who is
the Chairman of the Compensation Committee, and Messrs. Kooper and Shelp,
administers the 2001 Plan, the 1996 Incentive Stock Plan (the "1996 Plan") and
the 1996 Non-Employee Directors Stock Incentive Plan (the "Directors Plan"),
makes recommendations to the Board of Directors concerning executive
compensation matters and performs such other duties as from time to time are
designated by the Board of Directors.
The Nominating Committee, currently comprised of Messrs. Shelp, who is
the Chairman of the Nominating Committee, and Ford and Dr. Luzzi, makes
recommendations from time to time on the selection of nominees for directors.
The Nominating Committee will consider nominees recommended from time to time by
stockholders who comply with the procedures set forth in the Company's By-Laws.
See "Stockholder Proposals" on page 26 of this Proxy Statement.
During 2002, the Board of Directors held eight (8) meetings and acted
one (1) time by unanimous written consent. The Audit Committee held five (5)
meetings and acted one (1) time by unanimous written consent. The Compensation
Committee and Nominating Committees each met one (1) time during 2002. 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 2002.
Report of the Audit Committee
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, 2002. Management of the Company is
responsible for the financial statements and the reporting process, including
the Company's system of internal controls. The independent auditors are
responsible for expressing an opinion on the conformity of those audited
financial statements with accounting principles generally accepted in the United
States.
The Audit Committee 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 Statement on Auditing
Standards No. 90. In addition, the Audit Committee has received and reviewed the
-5-
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, 2002, filed with the
Commission.
Members of the Audit Committee:
Jack L. Salzman, Chairman
Louis T. DiFazio, Ph.D.
Louis A. Luzzi, Ph.D.
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, each Outside
Director is automatically granted under the Directors Plan (i) a non-qualified
stock option to purchase 20,000 shares of Common Stock upon being elected to the
Board of Directors and (ii) a non-qualified stock option to purchase 5,000
shares of Common Stock 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. Directors who are also officers of the Company are not paid
any directors fees or granted any options under the Directors Plan; provided,
however, that such directors may receive options under the 1996 Plan and the
2001 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 500,000 shares of Common Stock for issuance under
the Directors Plan. Through April 30, 2003 (i) Messrs. Cirillo, Ford, Kooper and
Shelp and Drs. DiFazio and Luzzi have been granted options to purchase an
aggregate of 25,000 shares of Common Stock at exercise prices ranging from $2.13
to $13.00 per share and (ii) Mr. Salzman and Ms. Collins have each been granted
options to purchase 20,000 shares of Common Stock at exercise prices of $8.77
and $7.53 per share, respectively.
Vote Required and Recommendation of the Board of Directors
If a quorum is present and voting, the nine (9) 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.
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 1,750,000 TO 3,750,000
AND AUTHORIZING THE GRANT OF RESTRICTED STOCK UNITS
In June 2001, the Company's stockholders approved and adopted the 2001
Plan. The primary purpose of the 2001 Plan is to (i) attract and retain key
employees, (ii) provide an incentive to key employees, and (iii) 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
-6-
the 2001 Plan as one of the benefits necessary to attract and retain highly
qualified and motivated employees. As of March 31, 2003, the Company had options
to purchase 1,699,000 shares of Common Stock outstanding under the 2001 Plan at
exercise prices ranging from $5.24 to $20.63 per share and had made restricted
stock grants for 50,000 shares of Common Stock under the 2001 Plan. Also as of
March 31, 2003, the Company had 1,000 shares, 90,521 shares and 330,000 shares
available for grant under the 2001 Plan, the 1996 Plan, and the Directors Plan,
respectively. Furthermore, as of March 31, 2003, there were 2,944,887
unexercised options outstanding with a weighted average term of 7.93 years and a
weighted average exercise price of $7.73. Finally, as of March 31, 2003, there
were 220,000 restricted shares outstanding whose restrictions on sale had not
yet lapsed.
In April 2003 the Company's Compensation Committee, which administers
the 2001 Plan as well as the 1996 Plan and the Directors Plan, with the
assistance of an outside compensation consultant, undertook a thorough review of
the Company's 2001 Plan and the 1996 Plan, including the number of shares of
Common Stock available for issuance under these plans, the various types of
grants that may be made under the plans, the average remaining term on options
outstanding under the plans and the number of full value shares of Common Stock
outstanding under the plans that still have restrictions on vesting. Based on
this review the Compensation Committee adopted, subject to stockholder approval,
amendments to the 2001 Plan increasing the aggregate number of shares reserved
for issuance by 2,000,000 to a total of 3,750,000 and authorizing the grant of
Restricted Stock Units. 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 and authorizing the grant of restricted
stock units so that the Company may continue to attract and retain the services
of qualified employees by providing employees an opportunity to acquire shares
of the Company's Common Stock through the 2001 Plan and to motivate them to
increase stockholder value.
Upon approval of the foregoing amendments to the 2001 Plan, the Company
will issue to Mr. Friedman an option to purchase 200,000 shares of Common Stock
previously authorized and committed to be granted on January 2, 2002 and an
option to purchase 200,000 shares of Common Stock previously authorized and
committed to be granted on January 2, 2003. These options will be granted as of,
and the exercise price will be equal to the fair market value of a share of
Common Stock on, January 2, 2002 and January 2, 2003, respectively. These option
grants were approved and committed to be issued in connection with a
compensation arrangement approved by the Company's Compensation Committee in
December of 2001. See "Employment Agreements" on page 22 of this Proxy Statement
for a discussion of this arrangement.
The following discussion summarizes the material terms of the 2001 Plan
as proposed to be amended and restated. 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 Appendix B.
Administration
The 2001 Plan is administered by the Compensation Committee. Each
director serving as a member of the Compensation Committee satisfies the
requirements for a "non-employee director" under Rule 16b-3 of 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 Compensation
Committee deems necessary or appropriate.
Coverage Eligibility and Grant Limits
The 2001 Plan provides for (i) the issuance to key employees of stock
options ("Options"), stock appreciation rights ("SAR") and performance units
("Performance Units"), (ii) the making of stock grants ("Stock Grants") to key
employees, and (iii) the granting of non-equity restricted stock units
("Restricted Stock Units") to key employees. A key employee will be any employee
of the Company or any subsidiary, parent or affiliate of the Company designated
by the Compensation Committee who, in the judgment of the Compensation
Committee, acting in its absolute discretion, is key directly or indirectly to
the success of the Company. No key employee in any calendar year may be granted
an Option to purchase more than 350,000 shares of Common Stock, more than
350,000 SARs with respect to Common Stock, Stock Grants for more than 350,000
shares of Common Stock, Restricted Stock Units based on the value of more than
350,000 shares of Common Stock or any combination of such awards covering, in
-7-
the aggregate, 500,000 shares of Common Stock. Furthermore, subsequent to the
adoption of this proposal, the Company may not grant Restricted Shares,
Restricted Stock Units, Stock Awards, Performance Shares or Performance Units
totaling more than 1,000,000 shares under the 2001 Plan.
Shares Reserved for Issuance Under 2001 Plan
There are currently 1,750,000 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 2,000,000 shares to
3,750,000. 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, any shares of Common Stock
subject to a SAR that remain unissued after the cancellation or expiration of
such SAR and any shares of Common Stock subject to issuance upon the vesting of
Restricted Stock Units which remain unissued after the cancellation or
forfeiture of such units 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 Compensation 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
Compensation 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 Compensation 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 Compensation
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 Compensation Committee may not as
part of an Option grant provide for an Option reload feature whereby a key
employee receives 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 Compensation 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
-8-
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.
Restricted Stock Units
Restricted Stock Units may be granted by the Compensation Committee to
key employees under the 2001 Plan. The value of each Restricted Stock Unit will
correspond to the fair market value of a share of Common Stock as determined on
the grant date. Each Restricted Stock Unit grant shall be evidenced by a
Restricted Stock Unit Certificate that shall set forth the number of Restricted
Stock Units granted to the key employee, the vesting schedule applicable to such
Restricted Stock Units and such other terms and conditions of grant as the
Compensation Committee, acting in its absolute discretion, deems consistent with
the terms of the 2001 Plan. Except for dividend equivalent adjustments made by
the Compensation Committee for stock dividends in accordance with the terms of
the 2001 Plan, there shall be no adjustment to Restricted Stock Units for
dividends paid by the Company. Upon the vesting of a Restricted Stock Unit the
key employee shall receive payment in shares of Common Stock, and the number of
shares of Common Stock to be issued to the key employee shall be equal to the
number of Restricted Stock Units that have so vested unless a Key Employee has
made a deferral election in accordance with the terms of the 2001 Plan. At the
time a Key Employee receives shares of Common Stock equal in number to the
vested Restricted Stock Units, such vested Restricted Stock Units shall
automatically be cancelled and the key employee shall have no further rights to
payment of any kind. The Compensation Committee, in its absolute discretion, may
permit a key employee to elect to defer receipt of the delivery of shares of
Stock that would otherwise be due to such key employee by virtue of the vesting
of a Restricted Stock Unit; provided such deferral election is made at least
twelve (12) months before the Restricted Stock Unit vests. Any deferral election
shall be subject to compliance with the rules and procedures for such payment
deferrals as established by the Compensation Committee; provided that the
Compensation Committee shall not be permitted to create any arrangement which
would constitute an employee pension benefit plan as defined in the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), unless the
arrangement provides benefits solely to one or more individuals who constitute
members of a select group of management or highly compensated employees (within
the meaning of ERISA). The Compensation Committee may, at the time a grant of
Restricted Stock Units is made, prescribe corporate, divisional, and/or
individual performance goals, applicable to all or any portion of the Restricted
Stock Units subject to the 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.
Stock Grants
A Stock Grant may be made by the Compensation 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 Compensation Committee, acting in its sole discretion. The Compensation
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 Compensation 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 Compensation
Committee acting in its sole discretion and shall be set forth in a written
agreement covering such Performance Units. The Compensation 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
-9-
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, Restricted Stock Unit or Performance Unit
will (absent the Compensation 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, Restricted Stock Unit or Performance Unit will (absent
the Compensation 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,
Restricted Stock Unit or Performance Unit previously granted without the consent
of the holder of such Option, Stock Grant, SAR, Restricted Stock Unit 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, Restricted Stock
Units 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 Compensation Committee in
an equitable manner to reflect any change in the capitalization of the Company.
Mergers
The Compensation Committee as part of any transaction described in Code
Section 424(a) shall have the right to adjust (in any manner which the
Compensation 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, Restricted Stock Unit 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 Compensation Committee in its
discretion deems consistent with Code Section 424(a)) Option, SAR and Restricted
Stock Unit grants and Stock Grants to effect the assumption of, or the
substitution for, option, stock appreciation right, restricted stock unit 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, any and all conditions to the
vesting of Restricted Stock Units and any and all vesting and forfeiture
conditions on any Stock Grants and Performance Units made under the 2001 Plan
shall be deemed satisfied in full and (ii) each then outstanding Option, Stock
Grant, Restricted Stock Unit, 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 Restricted Stock Unit, Stock Grants or cash
subject to any Performance Unit.
-10-
Loans
If approved by the Compensation 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
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
-11-
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.
Restricted Stock Units. A key employee generally will recognize
ordinary income for federal income tax purposes when the key employee receives
the shares of Common Stock underlying the Restricted Stock Unit. Such income
will equal the excess of the then fair market value of the Common Stock on the
date of receipt of the shares by the key employee over the purchase price, if
any, paid for such shares. 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 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 2001 Plan.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR"
THE AMENDMENT AND RESTATEMENT OF THE MIM CORPORATION
2001 INCENTIVE STOCK PLAN.
PROPOSAL 3.
RATIFICATION OF ERNST & YOUNG LLP AS THE COMPANY'S INDEPENDENT
AUDITORS FOR THE YEAR ENDING DECEMBER 31, 2003.
Ernst & Young LLP served as the Company's independent auditors for the
year ended December 31, 2002 and the Audit Committee has appointed Ernst & Young
LLP as the Company's independent auditors for the year ended December 31, 2003.
The Board of Directors is asking that the stockholders ratify the selection of
Ernst & Young LLP as the Company's independent auditors. While the Company's
By-Laws do not require stockholder ratification, the Company is asking its
stockholders to ratify this appointment because it believes such a proposal is a
matter of good corporate practice. If the stockholders do not ratify the
appointment of Ernst & Young LLP, the Audit Committee will reconsider whether or
not to retain Ernst & Young LLP as the Company's independent auditors, but may
-12-
determine to do so. Even if the appointment of Ernst & Young LLP is ratified by
the stockholders, the Audit Committee may change the appointment at any time
during the year if it determines that a change would be in the best interests of
the Company and its stockholders.
A representative of Ernst & Young 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.
On May 24, 2002, the Audit Committee advised and recommended to the
Company's Board of Directors that the Company terminate Arthur Andersen LLP as
the Company's independent auditors and engage Ernst & Young LLP to serve as the
Company's independent auditors for the year ending December 31, 2002. On May 24,
2002, the Board of Directors, based on the advice and recommendation of the
Audit Committee, dismissed Arthur Andersen LLP as the Company's independent
auditors and engaged Ernst & Young LLP to serve as the Company's independent
auditors for the year ending December 31, 2002. The Company notified Arthur
Andersen LLP and Ernst & Young LLP of the Board's decision on May 24, 2002.
Arthur Andersen LLP's reports on the Company's consolidated financial
statements for the past two years did not contain an adverse opinion or
disclaimer of opinion, nor were they qualified or modified as to uncertainty,
audit scope or accounting principles. During the two years ended December 31,
2000 and 2001 and through May 24, 2002, there were no disagreements with Arthur
Andersen LLP on any matter of accounting principles or practices, financial
statement disclosure, or auditing scope or procedure which, if not resolved to
Arthur Andersen LLP's satisfaction, would have caused them to make reference to
the subject matter in connection with their report on the Company's consolidated
financial statements for such years; and there were no reportable events, as
listed in Item 304(a)(1)(v) of Regulation S-K promulgated under the Securities
Exchange Act of 1934, as amended.
The Company previously provided Arthur Andersen LLP with a copy of the
disclosures contained herein. At the Company's request, Arthur Andersen LLP
provided it with a letter addressed to the Commission, dated May 29, 2002,
stating its agreement with such statements. A copy of this letter was filed as
Exhibit 16 to the Company's Current Report on Form 8-K, which was filed with the
Commission on May 29, 2002.
During the two years ended December 31, 2000 and 2001 and through May
24, 2002, the date of Arthur Andersen LLP's dismissal, the Company did not
consult with Ernst & Young LLP on (i) either the application of accounting
principles to a specified transaction, either completed or proposed, or the type
of audit opinion that might be rendered on the Company's financial statements,
and neither a written report nor oral advice was provided to the Company that
Ernst & Young LLP concluded was an important factor considered by the Company in
reaching a decision as to the accounting, auditing or financial reporting issue;
or (ii) the subject of any disagreement, as defined in Item 304(a)(1)(iv) of
Regulation S-K and the related instructions, or reportable event.
Independent Auditors Fees
The following table shows the aggregate fees billed to the Company by
Ernst & Young, LLP for services rendered during the year ended December 31,
2002:
Description of Fees Amount Billed
Audit Fees (1).................................... $ 230,000
Audit Related Fees (2)............................ $ 31,850
Tax Fees (3)...................................... $ 129,700
(1) Includes fees for the audit of the Company's financial statements for the
year ended December 31, 2002 and reviews of quarterly financial statements.
(2) Includes fees for certain SEC reporting assistance and other accounting
consultations.
(3) Includes fees related to tax return preparation and other tax planning and
advisory services.
-13-
Effective May 2003, in accordance with rules of the Commission
implementing the Sarbanes-Oxley Act of 2002, the Audit Committee will
pre-approve all audit and allowable non-audit services to be performed by Ernst
& Young, LLP.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR"
THE RATIFICATION OF ERNST & YOUNG LLP AS THE COMPANY'S INDEPENDENT
AUDITORS FOR THE YEAR ENDING DECEMBER 31, 2003.
ADDITIONAL INFORMATION
Executive Officers
The following table sets forth, as of April 30, 2003, 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
---- --- --------
Alfred Carfora 52 President and Chief Operating Officer. Mr. Carfora joined
the Company in October 2002 and was appointed President and
Chief Operating Officer effective December 2002. From March
1993 to December 1998 Mr. Carfora held the position of
President and Chief Executive Officer of Duty Free
International Inc., an international specialty retailer and
New York Stock Exchange listed company. As a founding member
of the management team of Duty Free International, Mr.
Carfora held various senior management positions with Duty
Free International since 1973. Mr. Carfora continued to
remain involved in the management of Duty Free International
from the time of its sale in 1997 until 2000.
James S. Lusk 47 Executive Vice President and Chief Financial Officer. Mr.
Lusk joined the Company as Chief Financial Officer in
October 2002. From January 2002 until October 2002 Mr. Lusk
was the Chief Executive Officer of Sevmir Enterprises, a
financial services company which he founded. From 1996 to
2001, he held various senior leadership positions with
Lucent Technologies, including President - Business
Services, Acting Executive Vice President and Chief
Financial Officer, and Senior Vice President and Corporate
Controller. From 1982 to 1995 Mr. Lusk held various senior
management positions at AT&T. Mr. Lusk is a Certified Public
Accountant.
Barry A. Posner 39 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.
Russel J. Corvese 41 Vice President of Operations, Scrip Solutions, Inc. Prior to
holding this position, Mr. Corvese held the position of
Chief Information Officer of the Company. From November 27,
1997 to October 15, 2000 he served as Vice President of
Operations and Chief Information Officer of the Company's
subsidiary Scrip Solutions, Inc. From November 1996 through
-14-
November 1997, Mr. Corvese held the position of Executive
Director, Management Information Systems of Scrip Solutions,
Inc. From May 1994 to November 1996, Mr. Corvese held
various positions with Scrip Solutions, Inc.
Michael J. Sicilian 41 Executive Vice President of Sales, Scrip Solutions, Inc. Mr.
Sicilian joined the Company in July of 2001 as President of
the BioScrip infusion division of Scrip Solutions, Inc. and
served in that capacity until January 2002 at which time he
was appointed President of Operations for BioScrip. In
January 2003 Mr. Sicilian was appointed Executive Vice
President of Sales for Scrip Solutions, Inc. From October
2000 to July 2001 Mr. Sicilian 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.
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, 2003, 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:
-15-
Name and Address Number of Shares
of Beneficial Owner (1) Beneficially Owned(2) (3) Percent of Class (3)
---------------------------------------------------------------------------------------------------------------------
Richard H. Friedman 1,536,667 (4) 6.83%
Barry A. Posner 182,600 (5) *
James S. Lusk 2,000 (6) *
Russel J. Corvese 47,834 (7) *
Michael J. Sicilian 63,068 (8) *
Richard A. Cirillo 22,767 (9) *
Louis T. DiFazio 24,167 (10) *
Michael Kooper 21,667 (11) *
Louis A. Luzzi 23,967 (12) *
Ronald K. Shelp 20,000 (13) *
Harold Ford, Sr. 40,000 (14) *
Jack L. Salzman 132,000 (15) *
Charlotte W. Collins - (16) *
All Directors and Executive Officers as a group (14 persons) 2,116,137 (17) 9.27%
-----------------
* Less than 1%.
(1) 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.
(3) Shares deemed beneficially owned by virtue of the right of an individual to
acquire them within 60 days after April 30, 2003, 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 316,667 shares issuable upon exercise of the vested portion of
options held by Mr. Friedman. Excludes 133,333 shares subject to the
unvested portion of options held by Mr. Friedman. Includes 20,000 shares of
Common Stock owned by the Richard Friedman Family Limited Partnership, of
which Mr. Friedman is a general and limited partner. Mr. Friedman has
shared voting and dispositive power with respect to these shares of Common
Stock. Does not include options to purchase 200,000 shares of Common Stock
that should have been issued under the 2001 Plan to Mr. Friedman in 2002
and options to purchase 200,000 shares of Common Stock that should have
been issued under the 2001 Plan to Mr. Friedman in 2003 pursuant to the
terms of a compensation arrangement approved by the Company's Compensation
Committee in December of 2001. Upon stockholder approval of the proposed
amendments to the 2001 Plan, the Company will issue to Mr. Friedman the
option to purchase 200,000 shares of Common Stock previously authorized and
committed to be granted on January 2, 2002 and the option to purchase
200,000 shares of Common Stock previously authorized and committed to be
granted on January 2, 2003. See "Proposal 2" on page 6 of this Proxy
Statement for a discussion of the proposed amendments to the 2001 Plan.
-16-
These options will be granted as of, and the exercise price will be equal
to the fair market value of a share of Common Stock on, January 2, 2002 and
January 2, 2003, respectively. These option grants were approved and
committed to be issued in connection with a compensation arrangement
approved by the Company's Compensation Committee in December of 2001. See
"Employment Agreements" on page 22 of this Proxy Statement for a discussion
of this arrangement.
(5) Includes 119,000 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 46,666 shares subject to the unvested portion of
options held by Mr. Posner.
(6) Excludes 150,000 shares subject to the unvested portion of options held by
Mr. Lusk.
(7) Includes 45,334 shares issuable upon exercise of the vested portion of
options and excludes 6,666 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 41,668 shares issuable upon exercise of the vested portion of
options and 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 98,332 shares subject to the unvested portion of options
held by Mr. Sicilian.
(9) Includes 21,667 shares issuable upon exercise of the vested portion of
options held by Mr. Cirillo and 100 shares owned by Mr. Cirillo's son. Mr.
Cirillo disclaims beneficial ownership of these shares. Excludes 3,333
shares subject to the unvested portion of options held by Mr. Cirillo.
(10) Includes 21,667 shares issuable upon exercise of the vested portion of
options held by Dr. DiFazio and 2,500 shares owned directly by Dr. DiFazio.
Excludes 3,333 shares subject to the unvested portion of options held by
Dr. DiFazio.
(11) Includes 21,667 shares issuable upon exercise of the vested portion of
options held by Mr. Kooper. Excludes 3,333 shares subject to the unvested
portion of options held by Mr. Kooper.
(12) Includes 21,667 shares issuable upon the exercise of the vested portion of
options. Excludes 3,333 shares subject to the unvested portion of options
held by Dr. Luzzi. Dr. Luzzi and his wife share voting and investment power
over 800 shares of Common Stock.
(13) Includes 15,000 shares issuable upon exercise of the vested portion of
options held by Mr. Shelp and excludes 10,000 shares subject to the
unvested portion of options held by Mr. Shelp.
(14) Includes 40,000 shares issuable upon exercise of the vested portion of
options. Excludes 10,000 shares subject to the unvested portion of options
held by Mr. Ford.
(15) Includes (i) 125,000 shares held by Kings Point Partners, L.P., a limited
partnership of which Mr. Salzman is the general partner; (ii) 2,000 shares
held by Salzman Capital Management Defined Benefit Plan, of which Mr.
Salzman is the trustee and (iii) 5,000 shares held in a trading account at
Salzman Capital Management over which Mr. Salzman has a power of attorney.
Mr. Salzman disclaims beneficial ownership of these shares. Excludes 20,000
shares subject to the unvested portion of options held by Mr. Salzman.
(16) Excludes 20,000 shares subject to the unvested portion of options held by
Ms. Collins.
(17) Includes 664,337 shares issuable upon exercise of the vested portion of
options and 75,000 shares of Common Stock subject to restrictions on
transfer and encumbrance. See footnotes 4 through 16 above.
-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, 2002, 2001 and 2000 by (i) the Company's chief
executive officer; and (ii) the four other most highly compensated executive
officers who were serving in such capacities as of December 31, 2002
(collectively, the "Named Executive Officers"):
Summary Compensation Table
Long-term
Annual Compensation Compensation
-------------------------------------------------------
Restricted Securities All Other
Stock Award(s) Underlying Compensation
Name and Principal Position Year Salary ($) Bonus ($) ($) Options (#) ($)(1)
----------------------------------------------------------------------------------------------------------------------------------
Richard H. Friedman (2) 2002 593,384 207,000 -- -- 3,525
Chief Executive Officer 2001 500,095 297,000 -- 200,000 3,600
2000 451,596 90,000 -- -- 3,600
Barry A. Posner 2002 273,615 40,000 -- -- 3,525
Executive Vice President, General Counsel 2001 265,084 162,000 -- 70,000 3,600
2000 241,553 48,800 -- -- 3,600
James S Lusk (3) 2002 53,852 15,000 -- 150,000 3,525
Chief Financial Officer 2001 -- -- -- -- --
2000 -- -- -- -- --
Michael J Sicilian 2002 242,634 45,000 -- 40,000 3,525
Executive Vice President, Sales 2001 103,062 45,000 92,025 100,000 1,800
2000 -- -- -- -- --
Russel J Corvese 2002 186,634 35,000 -- -- 3,525
Vice President, Operations 2001 173,235 50,000 -- 10,000 --
2000 171,192 5,000 -- -- --
------------------------------------------
(1) All other compensation for the named executive officers represents life
insurance premiums paid by them and reimbursed by the Company.
(2) Does not include options to purchase 200,000 shares of Common Stock that
should have been issued under the 2001 Plan to Mr. Friedman in 2002
pursuant to the terms of a compensation arrangement approved by the
Company's Compensation Committee in December of 2001. Upon stockholder
approval of the proposed amendments to the 2001 Plan, the Company will
issue to Mr. Friedman the option to purchase 200,000 shares of Common Stock
previously authorized and committed to be granted on January 2, 2002. See
"Proposal 2" on page 6 of this Proxy Statement for a discussion of the
proposed amendments to the 2001 Plan. These options will be granted as of,
and the exercise price will be equal to the fair market value of a share of
Common Stock on, January 2, 2002. These option grants were approved and
committed to be issued in connection with a compensation arrangement
approved by the Company's Compensation Committee in December of 2001. See
"Employment Agreements" on page 22 of this Proxy Statement for a discussion
of this arrangement.
(3) Mr. Lusk joined the Company in October 2002. His annualized base salary for
2002 was $300,000.
-18-
Equity Compensation Plan Information
The following table sets forth information relating to equity
securities authorized for issuance under the Company's equity compensation plans
as of December 31, 2002:
Equity Compensation Plan Information
------------------------------------------------------------------------------------------------------------------------------------
Number of securities
remaining available for
Number of securities to be future issuance under
issued upon exercise of Weighted-average exercise equity compensation plans
outstanding options, price of outstanding (excluding securities
warrants and rights options, warrants and rights reflected in column (a))
------------------------------------------------------------------------------------------------------------------------------------
Plan Category (a) (b) (c)
------------------------------------------------------------------------------------------------------------------------------------
Equity compensation plans
approved by security holders 2,811,719 $ 7.72 780,688
Equity compensation plans not
approved by security holders 25,000 $ 3.56 0
------------------------------------------------------------------------------------------------------------------------------------
Total 2,836,719 $ 7.68 780,688
------------------------------------------------------------------------------------------------------------------------------------
The table set forth above does not include options to purchase 200,000
shares of Common Stock that should have been issued under the 2001 Plan to Mr.
Friedman in 2002 pursuant to the terms of a compensation arrangement approved by
the Company's Compensation Committee in December of 2001. Upon stockholder
approval of the proposed amendments to the 2001 Plan, the Company will issue to
Mr. Friedman the option to purchase 200,000 shares of Common Stock previously
authorized and committed to be granted on January 2, 2002. See "Proposal 2" on
page 6 of this Proxy Statement for a discussion of the proposed amendments to
the 2001 Plan. This option will be granted as of, and the exercise price will be
equal to the fair market value of a share of Common Stock on, January 2, 2002.
This option grant was approved and committed to be issued in connection with a
compensation arrangement approved by the Company's Compensation Committee in
December of 2001. See "Employment Agreements" on page 22 of this Proxy Statement
for a discussion of this arrangement.
Option Grants
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, 2002. 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, 2002, the Company granted options to acquire up to an
aggregate of 633,000 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.
19
Option Grants in Last Fiscal Year
Individual Grants
--------------------------------------------------------------------------
% of Total
Options Potential Realizable Gain
Number of Securities Granted to Assuming Annual Rates of Stock
Underlying Options Employees in Exercise Price Expiration Price Appreciation ($)
Name Granted (#) 2002 (1) ($/share) Date 5% 10%
------------------------------------------------------------------------------------------------------------------------------------
James S. Lusk 150,000 23.70% $ 5.61 10/15/2012 $ 529,215 $ 1,341,134
Michael J. Sicilian 25,000 3.9% $ 10.20 6/4/2012 $ 160,368 $ 406,404
Michael J. Sicilian 15,000 2.4% $ 11.05 9/16/2012 $ 104,239 $ 264,163
The table set forth above does not include options to purchase 200,000
shares of Common Stock that should have been issued under the 2001 Plan to Mr.
Friedman in 2002 pursuant to the terms of a compensation arrangement approved by
the Company's Compensation Committee in December of 2001. Upon stockholder
approval of the proposed amendments to the 2001 Plan, the Company will issue to
Mr. Friedman the option to purchase 200,000 shares of Common Stock previously
authorized and committed to be granted on January 2, 2002. See "Proposal 2" on
page 6 of this Proxy Statement for a discussion of the proposed amendments to
the 2001 Plan. This option will be granted as of, and the exercise price will be
equal to the fair market value of a share of Common Stock on, January 2, 2002.
This option grant was approved and committed to be issued in connection with a
compensation arrangement approved by the Company's Compensation Committee in
December of 2001. See "Employment Agreements" on page 22 of this Proxy Statement
for a discussion of this arrangement.
Option Exercises and Fiscal Year-End Values
With respect to the Company's Named Executive Officers, the following
table sets forth information concerning option exercises in the year ended
December 31, 2002 and exercisable and unexercisable options held as of December
31, 2002. Also reported are the values for "in-the-money" options, which
represent the difference between the respective exercise prices of such stock
options and $5.80, the per share closing price of a share of Common Stock on
December 31, 2002, the last trading day of 2002:
Aggregated Option Exercises In Last Fiscal Year and Fiscal Year-End Option Values
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options at
Shares Options at Fiscal Year-End Fiscal Year-End
Acquired on Value -------------------------- ---------------
Name Exercise # Realized ($) Exercisable Unexercisable Exercisable Unexercisable
---- ---------- ------------ ----------- ------------- ----------- -------------
Richard H. Friedman -- $ -- 316,667 133,333 $ 901,139.26 $ --
Barry A. Posner 25,668 $ 351,504.55 119,000 46,666 $ 59,365.80 $ --
James S. Lusk -- $ -- -- 150,000 $ -- $ 28,500.00
Michael J. Sicilian -- $ -- 33,334 106,666 $ -- $ --
Russel J. Corvese 8,950 $ 134,190.04 45,334 6,666 $ 26,000.00 $ --
Compensation Committee Interlocks and Insider Participation
The Compensation Committee of the Company's Board of Directors
administers the 1996 Plan, the 2001 Plan and the Directors Plan and makes
recommendations to the Company's Board of Directors regarding management
compensation matters, including policies regarding the relationship of corporate
performance and other factors relating to compensation of management. At
December 31, 2002, Messrs. Kooper and Shelp and Dr. DiFazio, none of whom is or
20
ever has been an officer or employee of the Company, served as members of the
Compensation Committee.
Compensation Committee Report On Executive Compensation
The Compensation Committee is responsible for overseeing and approving
compensation levels for the Company's management, including the individuals
named in the Summary Compensation table. The Compensation Committee is also
involved in the development and administration of management 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, roles and responsibilities of the Company's senior
management. The Compensation Committee is comprised of three independent
directors.
The Company believes that a strong link should exist between management
compensation and management's success in maximizing stockholder value. In 2002
the Compensation Committee and the Chief Executive Officer retained a nationally
recognized compensation consulting firm to review the competitiveness and
effectiveness of the compensation program in order to ensure that the Company
was providing strong incentives for senior management to remain in the employ of
the Company, to deliver superior financial results and to provide significant
potential rewards to senior management if the Company achieves aggressive agreed
upon financial goals each fiscal year. The consulting firm worked closely with
the Compensation Committee and certain members of senior management.
Compensation Philosophy and Elements
The Compensation Committee adheres to four principles in discharging
its responsibilities:
1. 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.
2. Over time, incentive compensation of the Company's management
should focus more heavily on long-term rather than short-term
accomplishments and results.
3. Equity-based compensation and equity ownership expectations
should be used to provide management with clear and distinct
links to stockholder interests.
4. 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 role and responsibilities of the individual.
The compensation program provides management and participating
employees with the opportunity to receive annual 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 performance goals and each individual's departmental and personal
objectives are achieved. Under the compensation program, no participant may
receive compensation payments in any year in excess of the $1 million limitation
set forth in Section 162(m) of the U.S. Internal Revenue Code of 1986. Any
amounts payable in excess of such $1 million limitation will be mandatorily
deferred to later years.
Compensation of the Chief Executive Officer
In determining an appropriate salary, bonus and long-term incentive
opportunity for its Chief Executive Officer, the Compensation Committee
considered, among other things, the compensation of chief executive officers of
other public companies within its industry, the Company's overall financial
performance, as well as the Chief Executive Officer's individual performance and
his unique role since becoming Chairman and Chief Executive Officer in 1997.
-21-
The Compensation Committee exercised its judgment and discretion in
determining the level of each element of compensation, individually and in
aggregate, for Mr. Friedman in 2002.
Mr. Friedman is paid an annual base salary of $594,000 through 2006.
Mr. Friedman's annual bonus, if any, is a multiple of his base salary. The
multiple is based on Company earnings versus budget and other qualitative
Company objectives. Based on individual and Company performance, Mr. Friedman
received a bonus of $207,000 for performance during 2002.
Deductibility of Compensation
Section 162(m) of the U.S. Internal Revenue Code of 1986 places a limit
on the tax deduction for compensation in excess of $1 million paid to certain
"covered employees" of a publicly held corporation (generally the company's
chief executive officer and its next four most highly compensated executives).
Under certain conditions, the statute allows the entity to preserve this tax
deduction for certain qualified performance-based compensation.
Any bonuses payable to the CEO are believed to qualify as
"performance-based" compensation with the meaning of section 162(m). The
Compensation Committee, composed entirely of independent 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 section 162(m), Mr. Friedman's amended employment agreement was structured
such that he will not receive cash compensation in excess of $1 million in any
one year.
The Compensation Committee intends to continue to pursue a strategy of
maximizing the deductibility of the compensation paid to the Company's
management. However, the Compensation Committee retains the flexibility to
provide compensation in an amount that may exceed the limit for tax
deductibility under section 162(m) and waive the mandatory deferral, as
appropriate, whenever the Compensation Committee believes that payment of such
compensation furthers the goals of the Company's executive compensation program,
or is otherwise in the best interests of the Company and its stockholders.
Members of the Compensation Committee:
Louis T. DiFazio, Ph.D., Chairman
Michael Kooper
Ronald K. Shelp
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. In December 2001, the
Compensation Committee approved (i) an increase in Mr. Friedman's base annual
salary to $594,000 and (ii) making an annual grant to Mr. Friedman of options to
purchase 200,000 shares of Common Stock at the beginning of each year commencing
January 1, 2002. The Company has failed to make the required grant of 200,000
options for each of 2002 and 2003. Upon stockholder approval of the proposed
amendments to the 2001 Plan, the Company will issue to Mr. Friedman the option
to purchase 200,000 shares of Common Stock previously authorized and committed
to be granted on January 2, 2002. This option will be granted as of, and the
exercise price will be equal to the fair market value of a share of Common Stock
on, January 2, 2002. This option grant was approved and
22
committed to be issued in connection with a compensation arrangement approved by
the Company's Compensation Committee in December of 2001. See "Proposal 2" on
page 6 of this Proxy Statement for a discussion of the proposed amendments to
the 2001 Plan. Mr. Friedman is also entitled to receive certain fringe benefits,
including an automobile allowance, and is also eligible to participate in the
Company's executive bonus program. See "Compensation Committee Report On
Executive Compensation" on page 21 of this Proxy Statement for a description of
the Company's bonus arrangement applicable to Mr. Friedman. 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.
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. Mr. Posner
currently serves as the Company's Executive Vice President, Secretary and
General Counsel. 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
23
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 result 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 October 2002, Mr. Lusk entered into an employment letter agreement
with the Company which provides for his employment as Executive Vice President
and Chief Financial Officer until terminated by the Company or Mr. Lusk. Under
the agreement Mr. Lusk is to be paid an initial base annual salary of $300,000
and 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. Lusk was granted options to purchase 150,000
shares of Common Stock at an exercise price of $5.61 (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. In the event that Mr. Lusk is terminated
without cause or if Mr. Lusk 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. Lusk 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, he is entitled to receive (i) an amount equal to one year of salary,
(ii) all outstanding unvested options held by Mr. Lusk shall become immediately
exercisable and (iii) subject to certain limitations, Mr. Lusk shall become
fully vested in any pension or other deferred compensation program in which he
is participating. Mr. Lusk 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 until terminated by the
Company or Mr. Sicilian. Mr. Sicilian currently serves as Executive Vice
President of Sales for Scrip Solutions, Inc. Under the agreement, Mr. Sicilian
is to be paid an initial base annual salary of $225,000 and 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
24
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. Corvese entered into an employment letter agreement
with the Company which provides for his employment until terminated by the
Company or Mr. Corvese. Mr. Corvese currently serves as Vice President of
Operations of Scrip Solutions, Inc. Under the agreement, Mr. Corvese is to be
paid an initial base annual salary of $175,000 and 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,
1997 through December 31, 2002, 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.
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN* AMONG MIM
CORPORATION, THE NASDAQ STOCK MARKET (U.S.) INDEX AND THE
NASDAQ HEALTH SERVICES INDEX
[GRAPHIC OMITTED]
The following table summarizes the data in the omitted line graph:
MIM CORP
Cumulative Total Return
--------------------------------------------------------------------------------------------------
12/97 3/98 6/98 9/98 12/98 3/99 6/99 9/99 12/99 3/00 6/00
----- ---- ---- ---- ----- ---- ---- ---- ----- ---- ----
MIM CORPORATION 100.00 84.21 100.00 65.79 71.05 48.68 51.32 44.74 51.33 90.80 55.26
NASDAQ STOCK MARKET (U.S.) 100.00 117.04 120.25 108.50 140.99 158.09 172.77 177.01 261.48 293.74 255.45
NASDAQ HEALTH SERVICES 100.00 109.71 99.62 74.83 84.77 75.89 93.76 69.26 68.19 70.92 72.36
(Table continued)
MIM CORP Cumulative Total Return
-------------------------------------------------------------------------------------------
9/00 12/00 3/01 6/01 9/01 12/01 3/02 6/02 9/02 12/02
---- ----- ---- ---- ---- ----- ---- ---- ---- -----
38.82 18.42 53.28 126.32 221.05 374.74 347.37 254.53 198.95 122.11
MIM CORPORATION 235.61 157.77 117.74 138.77 96.29 125.16 118.59 94.53 75.85 86.53
NASDAQ STOCK MARKET (U.S.) 80.33 93.60 85.93 103.26 98.69 101.20 105.65 101.40 89.22 87.20
NASDAQ HEALTH SERVICES
$100 invested on 12/31/97 in stock or index- including
reinvestment of dividends. Fiscal year ending December 31.
Certain Relationships and Related Transactions
In April 1999, the Company loaned to Mr. Friedman, its Chairman and
Chief Executive Officer, $1,700,000 evidenced by a promissory note secured by a
25
pledge of 1.5 million shares of the Company's Common Stock. The note required
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.
On January 31, 2002, 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"), repaid to the Company a loan in the
original principal amount of $299,000, together with accrued interest of
$2,224.44. The loan was made by the Company to Alchemie in 1994 and bore
interest at a rate of 10% per annum, payable monthly, and was secured by a lien
on Alchemie's rental income from the Company at one of its facilities.
During 2002, 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 2002, the Company paid $1,155,423.71 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.
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. The Harold Ford Group specializes in advising
business clients principally on healthcare-related regulatory, legislative and
general business matters. The initial consulting agreement between The Harold
Ford Group and the Company expired in October 2001 at which time the parties
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 Group $45,750 per month for its services under the consulting agreement.
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 2002 all Section
16(a) filing requirements applicable to its executive officers, directors and
ten percent stockholders were complied with, other than with respect Mr. Michael
Sicilian, who filed a Form 5 in January 2003 reporting the grant of a stock
option in September 2002 and Mr. Russel J. Corvese, who filed a Form 4 in May
2002 reporting the exercise of a stock option and subsequent sale of the
underlying shares of Common Stock in March 2002.
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
26
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
2004, any such notice must be received by the Company at its principal executive
offices between March 7, 2004 and April 6, 2004 to be considered timely for
purposes of the 2004 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 2004 Annual
Meeting must be received by the Company at its principal executive offices no
later than January 4, 2004, 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.
MISCELLANEOUS
A copy of the Company's 2002 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.
HOUSEHOLDING
If you and other residents with the same last name at your mailing
address own shares of Common Stock in street name, your broker or bank may have
sent you a notice that your household will receive only one annual report and
proxy statement for each company in which you hold stock through that broker or
bank. This practice of sending only one copy of proxy materials is known as
"householding." If you received a householding communication, your broker will
send one copy of the Proxy Statement and 2002 Annual Report to Stockholders to
your address unless contrary instructions were given by any stockholder at that
27
address. If you received more than one copy of the proxy materials this year and
you wish to reduce the number of reports you receive in the future and save the
Company the cost of printing and mailing these reports, your broker will
discontinue the mailing of reports on the accounts you select if you mark the
designated box on your proxy card, or follow the instructions provided when you
vote over the Internet.
You may revoke your consent to householding at any time by calling
800-542-1061. The revocation of your consent to householding will be effective
30 days following its receipt. In any event, if your household received a single
set of proxy materials for this year, but you would prefer to receive your own
copy, we will send a copy to you if you address your written request to MIM
Corporation, Investor Relations, 100 Clearbrook Road, Elmsford, NY 10523 or
contact MIM Corporation Investor Relations at 914-460-1600.
28
APPENDIX A
AUDIT COMMITTEE CHARTER
OF MIM CORPORATION
Organization
1. Appointment. The Board of Directors will appoint an Audit Committee,
which will be composed of at least three directors. The Board of Directors also
will appoint a chairman of the Audit Committee.
2. Qualifications. Each member of the Audit Committee must satisfy the
independence requirements of Rule 4200(a)(14) of the National Association of
Securities Dealers listing standards and Section 10A(m) of the Securities
Exchange Act of 1934. In addition, all Audit Committee members shall be
financially literate, or shall become financially literate within a reasonable
period of time after appointment to the Audit Committee, and at least one member
shall have accounting or related financial management expertise.
Statement of Purpose
1. Oversight Responsibility. The purpose of the Audit Committee is to
assist the Board of Directors in fulfilling its oversight responsibility to the
stockholders, potential stockholders, the investment community, and others
relating to (1) the integrity of the Company's financial statements and
financial reporting process and the Company's systems of internal accounting and
financial controls, (2) the performance of the internal audit function, (3) the
annual audit of the Company's financial statements by the independent auditors,
the engagement of the independent auditors and the evaluation of the
qualifications, independence and performance of the independent auditors, (4)
the Company's compliance with ethics policies and legal and regulatory
requirements, including the Company's disclosure controls and procedures, and
(5) the fulfillment of the other responsibilities set forth in this charter. The
Audit Committee also will prepare the report of the Audit Committee required by
the rules of the Securities and Exchange Commission to be included in the
Company's annual proxy statement.
2. Other Matters. It is not the role of the Audit Committee to plan or
conduct audits or to determine that the financial statements are complete and
accurate and are in accordance with generally accepted accounting principles.
Management is responsible for the preparation, presentation, and integrity of
the Company's financial statements and for the appropriateness of the accounting
principles and reporting policies that are used by the Company. The independent
auditors are responsible for auditing the Company's financial statements and for
reviewing the Company's unaudited interim financial statements.
Operation
1. Open Communication. The Audit Committee will maintain regular and
open communication among the directors, the independent auditors, the internal
auditors and management.
2. Reports to the Board of Directors. The Audit Committee will report
committee actions to the Board of Directors and may make appropriate
recommendations for action by the Board of Directors.
3. Meetings. The Audit Committee will establish a schedule of meetings
to be held each year and may schedule additional meetings as required. In
planning the annual schedule of meetings, the Audit Committee will ensure that
sufficient opportunities exist for its members to meet separately with the
independent auditors and the head of internal audit (or internal audit service
providers), without management present; to meet separately with management,
without the independent auditors and the head of internal audit (or internal
audit service providers) present; and to meet with only the Audit Committee
members present.
4. Procedures. The Audit Committee may adopt such procedures relating
to the conduct of its proceedings, as it deems appropriate.
5. Access to Records, Advisors and Others. The Audit Committee will
have full authority (1) to investigate any matter brought to its attention with
full access to all books, records, facilities and personnel of the Company, (2)
to retain outside legal, accounting or other advisors to advise the Audit
Committee and (3) to request any officer or employee of the Company, the
Company's external counsel, the internal auditors or the independent auditors to
attend meetings of the Audit Committee or to meet with any members of, or
advisors to, the Audit Committee. The Audit Committee may retain advisors
without seeking approval of such retention by the Board of Directors. The
Company will provide appropriate funding, as determined by the Audit Committee,
for payment of the compensation of any advisors retained by the Audit Committee.
6. Delegation. The Audit Committee may delegate any of its
responsibilities to a subcommittee composed of one or more members of the Audit
Committee to the extent permitted by applicable law and listing standards. The
decisions of any Audit Committee member to whom responsibility is delegated must
be presented to the full Audit Committee at the next scheduled meeting after any
such decisions are made.
7. Performance Evaluation. The Audit Committee will establish criteria
for evaluating its performance and will conduct such an evaluation on an annual
basis.
Responsibilities.
1. Engagement of Independent Auditors. The Audit Committee will engage
the independent auditors and oversee, evaluate and, where appropriate, replace
the independent auditors. Any engagement of the independent auditors by the
Audit Committee may be subject to stockholder approval or ratification, as
determined by the Board of Directors.
2. Pre-Approval of Audit and Non-Audit Services. The Audit Committee
will approve in advance (1) all audit, review and attest services and all
non-audit services provided to the Company by the independent auditors and (2)
all fees payable by the Company to the independent auditors for such services,
all as required by applicable law or listing standards. The Audit Committee
shall not engage the independent auditors to perform the specific non-audit
services proscribed by law or regulation.
3. Independence of Independent Auditors. The Audit Committee will
consider matters relating to the independence of the independent auditors. The
Audit Committee will ensure that the independent auditors submit, on a periodic
basis, to the Audit Committee formal written statements delineating all
relationships between the independent auditors and the Company, as required by
the Independence Standards Board (or any successor body), will discuss with the
independent auditors any such disclosed relationships and their impact on the
independent auditors' independence and will take appropriate action in response
to the independent auditors' statements to satisfy itself of the independent
auditors' independence.
4. Performance of Independent Auditors. The Audit Committee will review
the performance of the independent auditors annually. In connection with this
evaluation, the Audit Committee will consult with management and will obtain and
review a report by the independent auditors describing their internal control
procedures, any issues raised by their most recent internal quality control
review or peer review (if applicable) or by any inquiry or investigation by
governmental or professional authorities for the preceding five years, and the
response of the independent auditors to any such review, inquiry or
investigation. The Audit Committee will consider whether it is appropriate to
adopt a policy of rotating independent auditors on a periodic basis.
5. Performance of Internal Auditors. The Audit Committee will annually
review the experience and qualifications of the senior members of the internal
auditors and the quality control procedures of the internal auditors. If the
internal audit services are outsourced, the Audit Committee will be responsible
for the engagement, evaluation and termination of the internal audit service
providers, and will approve fees paid to the internal audit service providers.
As part of its responsibility to evaluate any internal audit service providers,
the Audit Committee will review the quality control procedures applicable to the
service providers. The Audit Committee also will obtain and review not less
frequently than annually a report of the service providers addressing such
service providers' internal control procedures, issues raised by their most
recent internal quality control review or by any inquiry or investigation by
governmental or professional authorities for the preceding five years, and the
response of such service providers to any such review, inquiry or investigation.
2
6. Audits. The Audit Committee will discuss with the internal auditors
or internal audit service providers and the independent auditors the overall
scope and plans for their respective audits, including the adequacy of staffing
and other factors that may affect the effectiveness and timeliness of such
audits. In this connection, the Audit Committee will discuss with management,
the internal auditors or internal audit service providers and the independent
auditors the Company's major risk exposures (whether financial, operating or
otherwise), the adequacy and effectiveness of the accounting and financial
controls, and the steps management has taken to monitor and control such
exposures and manage legal compliance programs, among other considerations that
may be relevant to their respective audits. The Audit Committee will review with
management and the independent auditors management's annual internal control
report, including any attestation of such internal control report by the
independent auditors. The Audit Committee will obtain and review periodic
reviews from management and the internal auditors or internal audit service
providers regarding any significant deficiencies in the design or operation of
the Company's internal controls, material weaknesses in internal controls and
any fraud (regardless of materiality) involving persons having a significant
role in the internals controls, as well as any significant changes in internal
controls implemented by management during the most recent reporting period of
the Company.
7. Review of Disclosure Controls and Procedures. The Audit Committee
will review with the chief executive officer and the chief financial officer the
Company's disclosure controls and procedures and will review periodically, but
no less frequently than quarterly, management's conclusions about the efficacy
of such disclosure controls and procedures, including any significant
deficiencies in, or material non-compliance with, such controls and procedures.
8. Consultation with Independent Auditors. The Audit Committee will
review with the independent auditors any problems or difficulties the auditors
may have encountered in connection with the annual audit or otherwise and any
management letter provided by the auditors and the Company's response to that
letter. This review will address any difficulties encountered by the independent
auditors in the course of the audit work, including any restrictions on the
scope of activities or access to required information, any disagreements with
management regarding generally accepted accounting principles and other matters,
and any material adjustments to the financial statements recommended by the
independent auditors, regardless of materiality.
9. Review of Regulatory and Accounting Initiatives. The Audit Committee
will review with management and the independent auditors the effect of new or
proposed regulatory and accounting initiatives on the Company's financial
statements and other public disclosures.
10. Review of Annual SEC Filings. The Audit Committee will review and
discuss with management and the independent auditors the audited financial
statements and the other financial information (including disclosures under
Management's Discussion and Analysis of Financial Condition and Results of
Operations) to be included in the Company's Annual Report on Form 10-K filed
with the Securities and Exchange Commission, including their judgment about the
quality, no just the acceptability, of accounting principles, the reasonableness
of significant judgments, and the clarity of the disclosures in the financial
statements. The Audit Committee also will discuss the results of the annual
audit and any other matters required to be communicated to the Audit Committee
by the independent auditors under generally accepted auditing standards,
applicable law or listing standards, including matters required to be discussed
by Statement on Auditing Standards No. 61, as amended by Statement on Auditing
Standards No. 90. Based on such review and discussion, the Audit Committee will
make a determination whether to recommend to the Board of Directors that the
audited financial statements be included in the Company's Annual Report on Form
10-K.
11. Review of Quarterly SEC Filings and Other Communications. The Audit
Committee will review and discuss with management and the independent auditors
the quarterly financial information to be included in the Company's Quarterly
Reports on Form 10-Q filed with the Securities and Exchange Commission. In
connection with this review, the Audit Committee will discuss the results of the
independent auditors' review of the Company's quarterly financial information
conducted in accordance with Statement on Auditing Standards No. 71. The Audit
Committee also will discuss any other matters required to be communicated to the
Audit Committee by the independent auditors under generally accepted auditing
standards, applicable law or listing standards. The Audit Committee will review
the Company's earnings press releases to the extent required by applicable law
or listing standards as well as financial information and earnings guidance
provided to analysts and rating agencies.
3
12. Proxy Statement Report. The Audit Committee will prepare the report
required by the rules of the Securities and Exchange Commission to be included
in the Company's annual proxy statement.
13. Related Party Transactions. The Audit Committee will review
periodically, but no less frequently than annually, a summary of the Company's
transactions with directors and officers of the Company and with entities that
employ directors, as well as any other material related party transactions.
14. Hiring Guidelines. The Audit Committee will approve guidelines for
the Company's hiring of former employees of the independent auditors, which will
meet the requirements of applicable law and listing standards.
15. Establishment of Whistleblowing Procedures. The Audit Committee
will establish procedures for the receipt, retention and treatment of complaints
received by the Company regarding accounting, internal accounting controls or
auditing matters and the confidential, anonymous submission by employees of the
Company of concerns regarding questionable accounting or auditing matters.
16. Review of Legal and Regulatory Compliance. The Audit Committee will
periodically review with management, including the general counsel, and the
independent auditors any correspondence with, or other action by, regulators or
governmental agencies and any employee complaints or published reports that
raise concerns regarding the Company's financial statements, accounting or
auditing matters or compliance with the Company's code of conduct and ethics.
The Compensation Committee also will meet periodically and separately with the
Company's general counsel to review material legal affairs of the Company and
the Company's compliance with applicable law and listing standards.
17. Other Responsibilities. The Audit Committee also will carry out
such other duties that may be delegated to it by the Board of Directors from
time to time.
Charter
1. Annual Review. The Audit Committee will review and reassess the
adequacy of this charter on an annual basis.
2. Inclusion in Proxy Statement. The Audit Committee will cause a copy
of the charter to be included in the Company's annual proxy statement filed with
the Securities and Exchange Commission as required by applicable law or
regulation.
4
APPENDIX B
MIM CORPORATION
2001 INCENTIVE STOCK PLAN
AS AMENDED AND RESTATED
EFFECTIVE JUNE 5, 2003
TABLE OF CONTENTS
Page
ss.1. BACKGROUND AND PURPOSE1
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 Ending Value.........................................2
2.7 Fair Market Value....................................2
2.8 ISO..................................................2
2.9 Key Employee.........................................2
2.10 1933 Act.............................................2
2.11 1934 Act.............................................2
2.12 MIM..................................................2
2.13 Non-ISO..............................................2
2.14 Option...............................................3
2.15 Option Certificate...................................3
2.16 Option Price.........................................3
2.17 Parent...............................................3
2.18 Performance Goal.....................................3
2.19 Performance Period...................................3
2.20 Performance Unit.....................................3
2.21 Plan.................................................3
2.22 Restricted Stock Unit................................3
2.23 Restricted Stock Unit Certificate....................3
2.24 Rule 16b-3...........................................3
2.25 SAR Value............................................3
2.26 Stock................................................3
2.27 Stock Appreciation Right.............................3
2.28 Stock Appreciation Right Certificate.................3
2.29 Stock Grant..........................................3
2.30 Stock Grant Certificate..............................4
2.31 Subsidiary...........................................4
2.32 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 Prohibited......................7
ss.8. STOCK APPRECIATION RIGHTS..........................................................8
8.1 Committee Action.....................................8
8.2 Terms and Conditions.................................8
8.3 Exercise.............................................9
ss.9. RESTRICTED STOCK UNITS.............................................................9
9.1 Committee Action.....................................9
9.2 No Adjustment for Cash Dividends....................10
9.3 Payment for Restricted Stock Units..................10
9.4 Deferrals...........................................10
9.5 Performance Goals...................................11
ss.10. STOCK GRANTS.....................................................................11
10.1 Committee Action....................................11
10.2 Conditions..........................................11
10.3 Dividends and Voting Rights.........................12
10.4 Satisfaction of Forfeiture Conditions...............13
10.5 Performance Goals...................................13
ss.11. PERFORMANCE UNITS................................................................13
11.1 Committee Action....................................13
11.2 Conditions..........................................13
11.3 Performance Goals...................................13
11.4 Performance Period..................................14
11.5 Payment for Performance Unit........................14
ss.12. NON-TRANSFERABILITY..............................................................14
ss.13. SECURITIES REGISTRATION..........................................................15
ss.14. LIFE OF PLAN.....................................................................15
ss.15. ADJUSTMENT.......................................................................16
15.1 Capital Structure...................................16
15.2 Mergers.............................................16
15.3 Fractional Shares...................................17
ss.16. CHANGE IN CONTROL................................................................17
ss.17. AMENDMENT OR TERMINATION.........................................................18
ss.18. MISCELLANEOUS....................................................................18
18.1 Shareholder Rights..................................18
18.2 No Contract of Employment...........................18
18.3 Withholding.........................................19
18.4 Construction........................................19
18.5 Other Conditions....................................19
18.6 Rule 16b-3..........................................20
18.7 Loans...............................................20
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 underss.414(c) of the Code if
"50 percent" were substituted for "80 percent" in the income tax regulations
underss.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 50% 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)
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" underss. 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 withss. 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 ofss. 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
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 ofss. 424(e) of the Code) of MIM.
2.18 Performance Goal -- means a performance goal described inss. 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 Restricted Stock Unit -- means an award granted under Section 9.
2.23 Restricted Stock Unit Certificate -- means the written certificate
which sets forth the terms and conditions of a Restricted Stock Unit.
2.24 Rule 16b-3 -- means the exemption under Rule 16b-3 to Section
16(b) of the 1934 Act or any successor to such rule.
2.25 SAR Value -- means the value assigned by the Committee to a share
of Stock in connection with the grant of a Stock Appreciation Right underss.8.
2.26 Stock -- means the common stock, $.0001 par value per share, of
MIM.
2.27 Stock Appreciation Right -- means a right to receive the
appreciation in a share of Stock which is granted underss.8.
2.28 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.
2.29 Stock Grant -- means Stock granted underss. 10.
3
2.30 Stock Grant Certificate -- means the written certificate which
sets forth the terms and conditions of a Stock Grant.
2.31 Subsidiary -- means a corporation which is a subsidiary
corporation (within the meaning ofss. 424(f) of the Code) of MIM.
2.32 Ten Percent Shareholder -- means a person who owns (after taking
into account the attribution rules ofss. 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. 15) be 3,750,000 shares of Stock reserved
for issuance under this Plan (which number shall include the 950,000 shares of
Stock originally reserved for issuance as well as the additional 800,000 shares
reserved for issuance upon stockholder approval at the Company's Annual Meeting
of Stockholders on June 4, 2002 under this Plan prior to this amendment and
restatement of this Plan), and no more than such number of shares shall (subject
to ss. 15) 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; 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; and any shares of
Stock subject to issuance upon the vesting of Restricted Stock Units which
remain unissued after the cancellation or forfeiture of such units thereafter
shall again become available for issuance under this Plan. Any shares of Stock
used to satisfy a withholding obligation shall be treated as issued under this
Plan and not again become available for grants under this Plan.
4
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 toss. 16 andss. 17 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 (i) Options to purchase (subject to ss. 15) more than 350,000
shares of Stock, (ii) more than 350,000 Stock Appreciation Rights based on the
appreciation with respect to Stock (subject to ss. 15) (iii) Stock, Stock Grants
for (subject to ss. 15) more than 350,000 shares of Stock; or (iv) Restricted
Stock Units based on the Fair Market Value of (subject to ss.15) more than
350,000 shares of Stock; or any combination of such awards covering in the
aggregate 500,000 shares of Stock. In addition, subsequent to the effective date
of this amendment and restatement of the Plan, the Company will not make Stock
Grants or grants of Restricted Stock Units or Performance Units totaling more
than 1,000,000 shares under the Plan.
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 $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 six (6) months and which is
acceptable to the Committee or in any combination of cash, check and such Stock.
The Option Price in addition may be paid through any cashless exercise procedure
which is acceptable to the Committee or its delegate and which is facilitated
through a sale of Stock. Any payment made in Stock shall be treated as equal to
the Fair Market Value of such Stock on the date the certificate for such Stock
(or proper evidence of such certificate) is presented to the Committee or its
delegate in such form as acceptable to the Committee.
6
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 Prohibited. The Committee may not, as part of
the grant of an Option, provide in the related Option Certificate for "reload"
Option grants (i.e., the automatic grant of an additional Option to pay all or a
part of the Option Price or using Stock to satisfy all or a part of any related
tax withholding requirement.
7
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, 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.
8
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
absolute discretion shall have the right to determine the form and time of any
payment under this ss. 8.3.
ss. 9.
RESTRICTED STOCK UNITS
9.1 Committee Action. The Committee acting in its absolute discretion
shall have the right from time to time to grant to Key Employees under this Plan
non-equity Restricted Stock Units, the value of each of which corresponds to the
Fair Market Value of a share of Stock. Each Restricted Stock Unit grant shall be
evidenced by a Restricted Stock Unit Certificate that shall set forth the number
of Restricted Stock Units granted to the Key Employee, the vesting schedule
applicable to such Restricted Stock Units and such other terms and conditions of
such grant as the Committee acting in its absolute discretion deems consistent
with the terms of this Plan.
9
9.2 No Adjustment for Cash Dividends. Except for dividend equivalent
adjustments made by the Committee for stock dividends in accordance with ss.
15.1, there shall be no adjustment to Restricted Stock Units for dividends paid
by MIM.
9.3 Payment for Restricted Stock Units. Unless a Key Employee has made
a deferral election in accordance with ss. 9.5, a Key Employee shall receive
upon the vesting of a Restricted Stock Unit payment from MIM in Stock issued
under this Plan, and the number of shares of Stock issued to the Key Employee
shall be equal to the number of Restricted Stock Units that have at such time
become vested. At the time a Key Employee receives shares of stock equal in
number to such Key Employee's vested Restricted Stock Units, such vested
Restricted Stock Units shall automatically be cancelled and shall give the Key
Employee no further rights to payment of any kind.
9.4 Deferrals. The Committee, in its absolute discretion, may permit a
Key Employee to elect to defer such Key Employee's receipt of the delivery of
shares of Stock that would otherwise be due to such Key Employee by virtue of
the vesting of a Restricted Stock Unit; provided such deferral election is made
at least 12 months before the Restricted Stock Unit vests. If any such deferral
election is permitted by the Committee, the Committee shall, in its absolute
discretion, establish additional rules and procedures for such payment
deferrals. However, notwithstanding the preceding provisions of this ss. 9.3 and
notwithstanding any other provision of this Plan to the contrary, the Committee
shall not, (1) in establishing the terms and provisions of any grant of
Restricted Stock Units, or (2) in exercising its powers under this ss. 9.3,
create any arrangement which would constitute an employee pension benefit plan
as defined in ss. 3(2) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), unless the arrangement provides benefits solely to one or
more individuals who constitute members of a select group of management or
highly compensated employees (within the meaning of ERISA ss.ss. 201(2),
301(a)(3), 401(a)(1) and 4021(b)(6)).
10
9.5 Performance Goals. The Committee may, at the time a Restricted
Stock Unit is granted, prescribe corporate, divisional, and/or individual
performance goals, applicable to all or any the Restricted Stock Units subject
to the 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.
STOCK GRANTS
10.1 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.
10.2 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, under ss. 10.2(b) for
the related Stock Grant.
11
(b) Forfeiture Conditions. The Committee acting in its
absolute discretion may make Stock issued in the name
of a Key Employee subject to one, or more than one,
objective employment, performance or other forfeiture
condition that the Committee acting in its absolute
discretion deems appropriate under the circumstances
for Key Employees generally or for a Key Employee in
particular, and the related Stock Grant Certificate
shall set forth each such forfeiture condition, if any,
and the deadline, if any, for satisfying each such
forfeiture condition. A Key Employee's non-forfeitable
interest in the shares of Stock underlying a Stock
Grant shall depend on the extent to which he or she
timely satisfies each such condition. Each share of
Stock underlying a Stock Grant shall be unavailable
underss. 3 after such grant is effective unless such
share thereafter is forfeited as a result of a failure
to timely satisfy a forfeiture condition, in which
event such share of Stock shall again become available
underss. 3 as of the date of such forfeiture.
10.3 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.
12
10.4 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. 10.5 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. 11.
PERFORMANCE UNITS
11.1 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.
11.2 Conditions. The written agreement covering Performance Units shall
specify Performance Goals (as defined in ss. 11.3), a Performance Period (as
defined in ss. 11.4)) 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.
11.3 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.
13
11.4 Performance Period. The Committee (acting in its sole discretion)
shall determine the Performance Period, which shall be the period of time during
which the Performance Goals must be satisfied in order for the Key Employee to
be entitled to payment of Performance Units granted to such Key Employee.
Different Performance Periods may be established for different Performance
Units. Performance Periods may run consecutively or concurrently. 11.5 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. 12.
NON-TRANSFERABILITY
No Option, Stock Grant, Restricted Stock Unit, 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, Restricted
Stock Unit, 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.
14
ss. 13.
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 toward 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 federal
or state securities law or he or she shall have furnished to MIM an opinion in
form and substance satisfactory to MIM or its legal counsel satisfactory to MIM
that such registration is not required. Certificates representing the Stock
transferred upon the exercise of an Option, Stock Appreciation Right or
Restricted Stock Unit 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. 14.
LIFE OF PLAN
No Option, Stock Appreciation Right, Restricted Stock Unit 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 underss. 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, all Restricted Stock Units have vested
and all Performance Periods have ended, or
15
(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 the
satisfaction of the forfeiture conditions, if any, on
Stock Grants, or the payment of shares upon the vesting
of Restricted Stock Units) been issued or no longer is
available for use under this Plan, in which event this
Plan also shall terminate on such date.
ss. 15.
ADJUSTMENT
15.1 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, Restricted Stock Units or Stock Appreciation
Rights granted under this Plan, the Option Price of such Options, 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.
15.2 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
16
and forfeiture conditions, and the number, kind or class (or any combination
thereof) of shares subject to Option, Restricted Stock Unit and Stock
Appreciation Right grants previously made under this Plan and the related Option
Price and SAR Value for each such Option 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 Stock
Appreciation Right and Restricted Stock Unit grants to effect the assumption of,
or the substitution for, stock grants and option, restricted stock unit 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, restricted stock unit and stock
appreciation right grants.
15.3 Fractional Shares. If any adjustment under this ss. 15 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, Restricted
Stock Unit 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. 15 by the Committee shall be conclusive and binding on all
affected persons.
ss. 16.
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, any and all conditions to the vesting of all outstanding
Restricted Stock Units, 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, Restricted Stock Units, 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
17
appropriate to receive the Stock subject to any Restricted Stock Units or Stock
Grants or the cash subject to any Performance Units. ss. 17. 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. 16 on or after any date described in ss. 16 which might adversely
affect any rights which otherwise vest on such date. The Board also may suspend
granting Options, Stock Appreciation Rights, Restricted Stock Units or
Performance Units or making Stock Grants under this Plan at any time and may
terminate this Plan at any time; provided, however, the Board shall not have the
right unilaterally to modify, amend or cancel any Option, Restricted Stock Unit,
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. 15 or ss. 16.
ss. 18.
MISCELLANEOUS
18.1 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 Restricted Stock
Unit or Stock Appreciation Right pending the actual delivery of the Stock
subject to such Option, Restricted Stock Unit or Stock Appreciation Right to
such Key Employee. Subject to ss. 10.3, 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.
18.2 No Contract of Employment. The grant of an Option, Restricted
Stock Unit, 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, Restricted Stock Unit Certificate, Stock
Appreciation Right Certificate, Stock Grant Certificate, or Performance Unit
agreement.
18
18.3 Withholding. Each Option, Stock Appreciation Right, Restricted
Stock Unit, 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 payment of shares upon the vesting
of such Restricted Stock Unit, 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, Restricted Stock Unit Certificate, Stock Grant Certificate, or
Performance Unit agreement that a Key Employee may elect to satisfy such minimum
statutory federal and state tax withholding requirements through a reduction in
the cash or the number of shares of Stock actually transferred to him or to her
under this Plan. No withholding shall be effected under this Plan which exceeds
the minimum statutory federal and state withholding requirements.
18.4 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.
18.5 Other Conditions. Each Option Certificate, Restricted Stock Unit
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, the payment of shares upon the vesting of a Restricted
Stock Unit 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, Restricted Stock Unit or a Stock
Appreciation Right or a Stock Grant or provides for the repurchase of such Stock
by MIM.
19
18.6 Rule 16b-3. The Committee shall have the right to amend any
Option, Stock Grant, Restricted Stock Unit 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.
18.7 Loans. If approved by the Committee, MIM may lend money to, or
guarantee loans made by a third party to, any Key Employee to finance all or a
part of the exercise of any Option granted under this Plan or the purchase of
any Stock subject to a Stock Grant under this Plan, and the exercise of an
Option or the purchase of any such Stock with the proceeds of any such loan
shall be treated as an exercise or purchase for cash under this Plan.
IN WITNESS WHEREOF, MIM Corporation has caused its duly authorized
officer to execute this Plan to evidence its adoption of this Plan.
MIM CORPORATION
By: ___________________________
Date: ___________________________
20
ANNUAL MEETING OF STOCKHOLDERS OF
MIM CORPORATION
To be held on
June 5, 2003
PROXY VOTING INSTRUCTIONS
MAIL - Date, sign and mail your proxy card in the envelope provided as soon as
possible.
- OR -
TELEPHONE - Call toll-free 1-800-PROXIES from any touch-tone telephone and
follow the instructions. Have your control number and proxy card available when
you call.
- OR -
INTERNET - Access "www.voteproxy.com" and follow the on-screen instructions.
Have your control number available when you access the web page.
COMPANY NUMBER
ACCOUNT NUMBER
CONTROL NUMBER
Please detach and mail in the envelope provided
IF you are not voting via telephone or the Internet.
--------------------------------------------------------------------------------
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR
VOTE IN BLUE OR BLACK INK AS SHOWN HERE [x]
-------------------------------------------------------------------------------
PROPOSAL 1. Election of Directors:
NOMINEES:
[ ] FOR ALL NOMINEES
O Richard A. Cirillo
[ ] WITHHOLD AUTHORITY O Charlotte W. Collins
FOR ALL NOMINEES O Dr. Louis T. DiFazio
O Harold Ford, Sr.
[ ] FOR ALL EXCEPT O Richard H. Friedman
(See instructions below) O Michael Kooper
O Dr. Louis A. Luzzi
O Jack L. Salzman
O Ronald K. Shelp
INSTRUCTION:
To withhold authority to vote for any individual nominee(s), mark "FOR ALL
EXCEPT" and fill in the circle next to each nominee you wish to withhold, as
shown here: (X)
_______________________________________________________________________________
To change the address on your account, please check the box at
right and indicate your new address in the address space above. [ ]
Please note that changes to the registered name(s) on the account
may not be submitted via this method.
PROPOSAL 2. Proposal to amend and restate the MIM Corporation 2001 Incentive
Stock Plan.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
PROPOSAL 3. Proposal to ratify the appointment of Ernst & Young LLP as the
Company's independent auditors
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
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.
Signature of Stockholder_________________________ Date: __________
Signature of Stockholder_________________________ Date: __________
Note: Please sign exactly as your name or names appear on this Proxy. When
shares are held jointly, each holder should sign. When signing as
executor, administrator, attorney, trustee or guardian, please give full
title as such. If the signer is a corporation, please sign full corporate
name by duly authorized officer, giving full title as such. If signer is
a partnership, please sign in partnership name by authorized person.
PROXY CARD
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
MIM CORPORATION
2003 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 5, 2003
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 30, 2003, 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 2003 Annual Meeting of Stockholders of the
Company (the "Annual Meeting") to be held on June 5, 2003, at 10:00 a.m., local
time, at the Westchester Marriott Hotel, 670 White Plains Road, Tarrytown, New
York 10591, 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)