<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
FILED BY THE REGISTRANT [X] FILED BY A PARTY OTHER THAN THE REGISTRANT [ ]
--------------------------------------------------------------------------------
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
POLYMEDICA CORPORATION
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement)
PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
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):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] 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:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
--------------------------------------------------------------------------------
<PAGE> 2
POLYMEDICA CORPORATION
11 STATE STREET
WOBURN, MASSACHUSETTS 01801
NOTICE OF 2000 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON SEPTEMBER 14, 2000
To the Stockholders:
The 2000 Annual Meeting of Stockholders (the "Annual Meeting") of
PolyMedica Corporation (the "Company"), a Massachusetts corporation, will be
held at the offices of Hale and Dorr LLP, 60 State Street, Boston, Massachusetts
02109, on Thursday, September 14, 2000, at 9:00 a.m., local time, to consider
and act upon the following matters:
1. To elect two (2) Class III Directors for the ensuing three years;
2. To approve an Amendment to the Articles of Organization increasing the
number of authorized shares of common stock and preferred stock;
3. To approve the adoption of the Company's 2000 Stock Incentive Plan (the
"2000 Plan"), authorizing the issuance of up to 1,200,000 shares of
common stock thereunder;
4. To ratify the selection by the Board of Directors of
PricewaterhouseCoopers LLP as the Company's independent accountants for
the fiscal year ending March 31, 2001; and
5. To transact such other business as may properly come before the meeting
or any adjournment thereof.
Stockholders of record at the close of business on July 24, 2000 are
entitled to notice of, and to vote at, the Annual Meeting, and any adjournment
thereof. The stock transfer books of the Company will remain open for the
purchase and sale of the Company's Common Stock.
All stockholders are cordially invited to attend the Annual Meeting.
By Order of the Board of Directors,
/s/ Eric G. Walters
ERIC G. WALTERS, Clerk
Woburn, Massachusetts
August 2, 2000
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE AND
SIGN THE ENCLOSED PROXY CARD AND PROMPTLY MAIL IT IN THE ENCLOSED ENVELOPE IN
ORDER TO ASSURE REPRESENTATION OF YOUR SHARES AT THE MEETING. NO POSTAGE NEED BE
AFFIXED IF THE PROXY CARD IS MAILED IN THE UNITED STATES.
<PAGE> 3
POLYMEDICA CORPORATION
11 STATE STREET
WOBURN, MASSACHUSETTS 01801
PROXY STATEMENT
FOR THE 2000 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON SEPTEMBER 14, 2000
GENERAL MATTERS
The enclosed proxy is solicited by the Board of Directors of PolyMedica
Corporation (the "Company" or "PolyMedica"), a Massachusetts corporation, for
use at the 2000 Annual Meeting of Stockholders (the "Annual Meeting") to be held
at the offices of Hale and Dorr LLP, 60 State Street, Boston, Massachusetts
02109, on Thursday, September 14, 2000, at 9:00 a.m., local time, and at any
adjournment or adjournments of that meeting.
All proxies will be voted in accordance with the instructions contained
therein, and if no choice is specified, the proxies will be voted in favor of
the matters set forth in the accompanying Notice of Meeting. Any proxy may be
revoked by a stockholder at any time before it is exercised by delivery of
written revocation to the Clerk of the Company, or by voting in person at the
Annual Meeting.
The Company's Annual Report for the fiscal year ended March 31, 2000 is
being mailed to stockholders with the mailing of this Notice and Proxy Statement
on or about August 7, 2000.
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED MARCH
31, 2000, AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, WITHOUT
EXHIBITS, WILL BE FURNISHED WITHOUT CHARGE TO ANY STOCKHOLDER UPON WRITTEN
REQUEST TO THE TREASURER, POLYMEDICA CORPORATION, 11 STATE STREET, WOBURN,
MASSACHUSETTS 01801.
QUORUM AND VOTE REQUIREMENT
On July 24, 2000, the record date for the determination of stockholders
entitled to notice of and to vote at the Annual Meeting, there were outstanding
and entitled to vote an aggregate of 13,184,232 shares of common stock of the
Company, $0.01 par value per share ("Common Stock"). Each share of Common Stock
is entitled to one vote.
The holders of a majority of the shares of Common Stock issued and
outstanding and entitled to vote at the Annual Meeting shall constitute a quorum
for the transaction of business at the Annual Meeting. Shares of Common Stock
present in person or represented by proxy (including shares which abstain or do
not vote with respect to one or more of the matters presented for stockholder
approval) will be counted for purposes of determining whether a quorum exists at
the Annual Meeting.
The affirmative vote of holders of a plurality of votes cast by the
stockholders entitled to vote at the Annual Meeting is required for the election
of directors. The affirmative vote of the holders of at least two-thirds
(66 2/3%) of the shares of Common Stock entitled to vote on the matter is
required to approve the proposal to amend the Articles of Organization. The
affirmative vote of the holders of a majority of the shares of Common Stock
present, or represented, and entitled to vote on the matter is required to
approve the proposal to adopt the 2000 Plan. The affirmative vote of the holders
of a majority of the shares of Common Stock present, or represented, and
entitled to vote on the matter is required for the approval of the ratification
of the selection of the Company's accountants.
Shares which abstain from voting as to a particular matter, and shares held
in "street name" by brokers or nominees who indicate on their proxies that they
do not have discretionary authority to vote such shares as to a particular
matter, will not be counted as votes in favor of such matter and will also not
be counted as votes cast or shares voting on such matter. Accordingly,
abstentions and "broker non-votes" will have no effect on the voting on a matter
that requires the affirmative vote of a certain percentage of the votes cast or
shares voting
<PAGE> 4
on a matter. However, abstentions are considered to be shares present, or
represented in determining whether a quorum exists.
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information, as of June 30, 2000,
with respect to the beneficial ownership of the Company's Common Stock by (i)
each person known by the Company to own beneficially more than 5% of the
outstanding shares of Common Stock; (ii) each director and nominee for director;
(iii) each current executive officer named in the Summary Compensation Table
under the heading "Compensation of Executive Officers" below and (iv) all
directors and executive officers of the Company as a group.
The number of shares beneficially owned by each 5% stockholder, director or
executive officer is determined under rules of the Securities and Exchange
Commission (the "SEC"), and the information is not necessarily indicative of
beneficial ownership for any other purpose. Under such rules, beneficial
ownership includes any shares as to which the individual or entity has sole or
shared voting power or investment power and also any shares which the individual
or entity has the right to acquire on or before June 30, 2000 through the
exercise of stock options, and any reference in the footnotes to this table to
shares subject to stock options refers only to stock options that are so
exercisable. For purposes of computing the percentage of outstanding shares of
common stock held by each person or entity, any shares which that person or
entity has the right to acquire on or before June 30, 2000, are deemed to be
outstanding but are not deemed to be outstanding for the purpose of computing
the percentage ownership of any other person. Unless otherwise indicated, each
person or entity has sole investment and voting power (or shares such power with
his or her spouse) with respect to the shares set forth in the following table.
The inclusion herein of any shares deemed beneficially owned does not constitute
an admission of beneficial ownership of those shares.
<TABLE>
<CAPTION>
NUMBER PERCENTAGE
OF SHARES OF SHARES
BENEFICIALLY BENEFICIALLY
NAME AND ADDRESS OF BENEFICIAL OWNER OWNED(1) OWNED
------------------------------------ ------------ ------------
<S> <C> <C>
Safeco Corporation(2)....................................... 1,515,500 11.5%
Safeco Plaza
Seattle, WA 98185
Steven J. Lee(3)............................................ 485,347 3.6%
Arthur A. Siciliano, Ph.D.(4)............................... 274,564 2.1%
Eric G. Walters(5).......................................... 172,992 1.3%
Thomas S. Soltys(6)......................................... 139,425 1.1%
W. Keith Trowbridge(7)...................................... 13,810 *
Daniel S. Bernstein, M.D.(8)................................ 41,659 *
Marcia J. Hooper(9)......................................... 41,288 *
Frank W. LoGerfo, M.D.(10).................................. 35,250 *
Peter K. Hoffman(11)........................................ 17,260 *
All directors and executive officers as a group (9
persons)(12).............................................. 1,221,595 8.9%
</TABLE>
---------------
* Represents holdings of less than one percent.
(1) The persons named in the table have sole voting and investment power with
respect to all shares shown as beneficially owned by them, subject to the
information contained in the footnotes to this table. Amounts shown include
shares issuable pursuant to the exercise of options exercisable within 60
days after June 30, 2000.
(2) Based upon a Schedule 13G filed by Safeco Corporation ("Safeco") filed on
February 11, 2000 pursuant to the Securities Exchange Act of 1934, as
amended (the "Exchange Act") and the rules promulgated thereunder. Safeco
disclaims any beneficial ownership of the shares reported. The reported
shares are owned beneficially by registered investment companies for which
a subsidiary of Safeco serves as advisor.
2
<PAGE> 5
(3) Includes 170,307 shares held by a family trust for which Mr. Lee, his
spouse and family are beneficiaries and 269,631 shares issuable upon
exercise of outstanding stock options held by Mr. Lee that are exercisable
within 60 days after June 30, 2000. See "Fiscal Year-End Option Table"
below.
(4) Includes 65,925 shares issuable upon exercise of outstanding stock options
held by Dr. Siciliano that are exercisable within 60 days after June 30,
2000. See "Fiscal Year-End Option Table" below.
(5) Includes 84,115 shares issuable upon exercise of outstanding stock options
held by Mr. Walters that are exercisable within 60 days after June 30,
2000. See "Fiscal Year-End Option Table" below.
(6) Includes 25,125 shares issuable upon exercise of outstanding stock options
held by Mr. Soltys that are exercisable within 60 days after June 30, 2000.
(7) Includes 13,748 shares issuable upon exercise of outstanding stock options
held by Mr. Trowbridge that are exercisable within 60 days after June 30,
2000. See "Fiscal Year-end Option Table" below.
(8) Includes 33,922 shares issuable upon exercise of outstanding stock options
that are exercisable within 60 days after June 30, 1999, and 4,620 shares
held by Dr. Bernstein in an IRA account.
(9) Includes 40,500 shares issuable upon exercise of outstanding stock options
held by Ms. Hooper that are exercisable within 60 days after June 30, 2000.
(10) Includes 15,000 shares issuable upon exercise of outstanding stock options
held by Dr. LoGerfo that are exercisable within 60 days after June 30,
2000.
(11) Includes 17,260 shares issuable upon exercise of outstanding stock options
held by Mr. Hoffman that are exercisable within 60 days after June 30,
2000.
(12) Includes 565,226 shares issuable upon exercise of outstanding stock options
that are exercisable within 60 days after June 30, 2000. See "Fiscal
Year-End Option Table" below.
3
<PAGE> 6
ITEM ONE
ELECTION OF DIRECTORS
The Company has a classified Board of Directors consisting of two Class I
Directors, two Class II Directors and two Class III Directors. The Class I,
Class II and Class III Directors will serve until the annual meetings of
stockholders to be held in 2001, 2002 and 2003 respectively, and until their
respective successors are elected and qualified. At each annual meeting of
stockholders, one class of directors is elected for a full term of three years
to succeed the class whose term is expiring.
The persons named in the enclosed proxy will vote to elect Daniel S.
Bernstein, M.D. and Peter K. Hoffman, the nominees named below, as Class III
Directors, unless the proxy is marked otherwise. Dr. Bernstein and Mr. Hoffman
are currently Class III Directors of the Company.
Dr. Bernstein and Mr. Hoffman will be elected to hold office until the 2003
Annual Meeting of Stockholders and until their successors are duly elected and
qualified. Dr. Bernstein and Mr. Hoffman have indicated their willingness to
serve, if elected; however, if Dr. Bernstein or Mr. Hoffman should be unable to
serve, the proxies may be voted for a substitute nominee designated by the Board
of Directors. It is not presently contemplated that either of the nominees will
be unavailable to serve.
The following table sets forth the name, age, length of service as a
director of each member of the Board of Directors, including the nominees for
Class III Directors, information given by each such person concerning all
positions he or she holds with the Company, his or her principal occupation and
business experience for the past five years and the names of other publicly-held
companies of which he or she serves as a director. Information with respect to
the number of shares of Common Stock of the Company beneficially owned by him or
her on June 30, 2000, and the percentage of all outstanding shares of Common
Stock owned by him or her on such date, appears above under "Security Ownership
and Certain Beneficial Owners and Management."
NOMINEES FOR TERM TO EXPIRE IN 2003
(CLASS III DIRECTORS)
DANIEL S. BERNSTEIN, M.D., age 73, has been a director since 1992. Dr.
Bernstein has been a physician at Brigham Medical Associates, Boston,
Massachusetts, since 1993; a lecturer at Harvard Medical School, Cambridge,
Massachusetts, since 1993; and Clinical Professor of Medicine Emeritus, Boston
University School of Medicine since 1973.
PETER K. HOFFMAN, age 51, has been a director since 1997. Mr. Hoffman has
served as President, Global Business Management, Gillette Grooming Products of
The Gillette Company since January 2000. He had served as President of
Commercial Operations for the Duracell North Atlantic Group from January 1998 to
January 2000. He served as Senior Vice President, Business Management, for the
North Atlantic Group from 1995 to 1998. Mr. Hoffman joined The Gillette Company
in 1972 and has held a variety of product management and general management
positions.
DIRECTORS WHOSE TERMS EXPIRE IN 2001
(CLASS I DIRECTORS)
FRANK W. LOGERFO, M.D., age 59, has been a director since 1994. Dr. LoGerfo
has been Surgeon-in-Chief, Chairman, Department of Surgery at Beth Israel
Deaconess Medical Center since April 2000. Dr. LoGerfo served as Attending
Surgeon, Associate Chairman for Research, Department of Surgery, and Chief,
Division of Vascular Surgery, Beth Israel Deaconess Medical Center from 1987 to
2000. Dr. LoGerfo has served as William V. McDermott Professor of Surgery at
Harvard Medical School since 1991.
MARCIA J. HOOPER, age 46, has been a director since 1991. Ms. Hooper served
as General Partner of three venture capital funds of Ampersand Ventures from
1985 to 1993 and is currently a limited partner of the general partner of three
venture capital funds of Ampersand Ventures. Ms. Hooper served as General
Partner of Viking Partners Capital Limited Partnership from 1994 to 1996. She
has been employed at Advent International Corporation since 1996 and is
currently Vice President and Partner of Advent International Corporation.
4
<PAGE> 7
DIRECTORS WHOSE TERMS EXPIRE IN 2002
(CLASS II DIRECTORS)
THOMAS S. SOLTYS, age 52, has been a director since 1996. Mr. Soltys has
served as President of Boston Special Risks Insurance Agency, Inc. since 1988
and has been its sole owner since 1994.
STEVEN J. LEE, age 53, has been a director since 1990. Mr. Lee has served
as Chairman of the Company since June 1996 and Chief Executive Officer and a
director of the Company since 1990. He served as President of the Company from
1990 through June 1996. Mr. Lee served as manager in the Mergers and
Acquisitions practice at Coopers & Lybrand L.L.P. from March 1990 to May 1990.
Previously, he was President and a director of Shawmut National Ventures from
November 1987 to March 1990, and served as President, Chief Executive Officer
and a director of RepliGen Corporation from 1984 to 1986. Currently he is a
director of Commonwealth BioVentures, Inc. and Fibersense Technology
Corporation.
BOARD AND COMMITTEE MEETINGS
The Company has a standing Audit Committee of the Board of Directors which
provides the opportunity for direct contact between the Company's independent
public accountants and the Board. The Audit Committee has responsibility for
recommending the appointment of the Company's independent public accountants,
reviewing the scope and results of audits and reviewing the Company's internal
accounting control policies and procedures. In the year ended March 31, 2000,
the Audit Committee included Marcia J. Hooper and Peter K. Hoffman and held two
meetings.
The Company also has a standing Compensation Committee of the Board of
Directors which provides recommendations to the Board regarding executive and
employee compensation programs of the Company. The Compensation Committee also
administers the Company's 1998 Stock Incentive Plan (the "1998 Plan") and, if
approved by the stockholders, will administer the 2000 Plan. In the year ended
March 31, 2000, the Compensation Committee included Ms. Hooper and Drs.
Bernstein and LoGerfo and held three meetings.
The Company also has a standing Executive Committee which provides
assistance to the Board of Directors. In the year ended March 31, 2000,
Executive Committee members included Mr. Lee, Dr. LoGerfo and Ms. Hooper. As the
full Board of Directors had frequent meetings, no meetings of the Executive
Committee were held in the year ended March 31, 2000.
The Board of Directors held six meetings during the year ended March 31,
2000. All directors attended at least 75% of the total number of meetings of the
Board of Directors and all committees on which they served during their service
as directors, except Mr. Hoffman, who attended 67% of such meetings.
There are no family relationships between or among any officers or
directors of the Company.
DIRECTORS' COMPENSATION
Non-employee directors receive $12,500 in annual cash compensation for
attending Board and Committee Meetings. Directors who are officers or employees
of the Company do not receive any additional compensation for their services as
directors.
Non-employee directors are entitled to participate in the 1998 Plan (and
will be entitled to participate in the 2000 Plan, if approved by the
stockholders), which, among other things, provide for discretionary grants of
non-statutory qualified stock options to members of the Company's Board of
Directors who are not employees of the Company.
Under the Company's 1998 Plan, Drs. Bernstein and LoGerfo, Ms. Hooper, and
Messrs. Hoffman and Soltys each were granted an option to purchase 7,500 shares
of Common Stock, at an exercise price of $26.9375 per share, on September 9,
1999.
5
<PAGE> 8
COMPENSATION OF EXECUTIVE OFFICERS
SUMMARY COMPENSATION TABLE. The following table sets forth certain
information with respect to the annual and long-term compensation for each of
the last three fiscal years of the Company's Chairman and Chief Executive
Officer and the Company's other most highly compensated executive officers who
were serving as executive officers on March 31, 2000:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
ANNUAL COMPENSATION -------------
-------------------- SECURITIES ALL OTHER
NAME AND PRINCIPAL SALARY BONUS UNDERLYING COMPENSATION
POSITION YEAR ($) ($)(1) OPTIONS(#)(2) ($)(3)(4)
------------------ ---- -------- -------- ------------- ------------
<S> <C> <C> <C> <C> <C>
Steven J. Lee..................... 2000 $327,187 $653,333 35,000 $9,215
Chairman and 1999 293,515 380,360 41,000 9,278
Chief Executive Officer 1998 261,492 144,167 40,000 4,529
Arthur A. Siciliano, Ph.D. ....... 2000 278,584 521,667 25,000 7,638
President 1999 249,914 295,640 32,500 9,465
1998 229,577 78,167 30,000 4,383
Eric G. Walters................... 2000 176,424 297,500 17,500 5,102
Chief Financial Officer 1999 160,583 191,500 19,000 8,828
and Clerk 1998 143,729 49,166 25,000 3,836
W. Keith Trowbridge............... 2000 218,367 425,000 5,000 --
President, 1999 -- -- -- --
Liberty Medical Supply, Inc. 1998 -- -- -- --
</TABLE>
---------------
(1) These amounts were either paid or accrued for the year shown.
(2) Represents options granted under the Company's 1990 Stock Option Plan and
the 1998 Stock Incentive Plan.
(3) Other compensation in the form of perquisites and other personal benefits
has been omitted in those instances where such perquisites and other
personal benefits constituted less than the lesser of $50,000 or 10% of the
total salary and bonus for each named executive officer for such year.
(4) Represents the Company's matching cash contribution paid and/or accrued
under the Company's 401(k) Plan and the taxable portion of group term life
insurance paid by the Company. Mr. Lee received $7,348, $7,082 and $2,634 in
401k matching contributions in 2000, 1999 and 1998, respectively, and
$1,867, $2,196 and $1,895 in taxable group term life benefits in 2000, 1999,
and 1998, respectively. Dr. Siciliano received $5,084, $7,638 and $2,715 in
401k matching contributions in 2000, 1999 and 1998, respectively, and
$2,554, $1,827 and $1,668 in taxable group term life benefits in 2000, 1999
and 1998, respectively. Mr. Walters received $5,012, $8,181 and $3,281 in
401k matching contributions in 2000, 1999 and 1998, respectively, and $90,
$647 and $555 in taxable group term life benefits in 2000, 1999 and 1998,
respectively.
6
<PAGE> 9
OPTION GRANT TABLE. The following table sets forth certain information
regarding options granted during the year ended March 31, 2000 by the Company to
the executive officers in the Summary Compensation Table:
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE
PERCENT OF AT ASSUMED ANNUAL RATES
TOTAL OF STOCK PRICE
NUMBER OF OPTIONS EXERCISE APPRECIATION FOR
SECURITIES GRANTED TO OR OPTION TERM(5)
UNDERLYING EMPLOYEES IN BASE PRICE EXPIRATION --------------------------
NAME OPTIONS(#) YEAR 2000 ($/SH)(3) DATE(4) 5% 10%
---- ---------- ------------ ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Steven J. Lee................ 21,500(1) 10.12% $21.1250 10/29/09 $285,628 $723,858
13,500(2) 6.35% 21.1250 10/29/09 179,348 454,515
Arthur A. Siciliano,
Ph.D. ..................... 11,500(1) 5.41% 21.1250 10/29/09 152,778 387,180
13,500(2) 6.35% 21.1250 10/29/09 179,348 454,515
Eric G. Walters.............. 4,000(1) 1.88% 21.1250 10/29/09 53,140 134,671
13,500(2) 6.35% 21.1250 10/29/09 179,348 454,515
W. Keith Trowbridge.......... 5,000(1) 2.35% 21.1250 10/29/09 66,425 168,339
</TABLE>
---------------
(1) This grant vests over twelve equal quarterly installments, commencing with
the date of grant.
(2) This grant vests one third on the date of grant, one third on 1/2/2000 and
the remaining third on 1/2/2001.
(3) The exercise price is equal to the fair market value of the Company's Common
Stock on the date of grant.
(4) Options expire at the end of the option term, which is ten years from the
date of grant.
(5) Amounts represent hypothetical gains that could be achieved for options if
exercised at the end of the option term. These grants are based on assumed
rates of stock price appreciation of 5% and 10% compounded annually from the
date options are granted.
FISCAL YEAR-END OPTION TABLE. The following table sets forth certain
information regarding stock options exercised during the year ended March 31,
2000 and stock options held as of March 31, 2000 by the executive officers named
in the Summary Compensation Table:
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES
FROM APRIL 1, 1999 TO MARCH 31, 2000
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT FISCAL YEAR END AT FISCAL YEAR END(2)
SHARES ACQUIRED --------------------------- ---------------------------
NAME ON EXERCISE(1) VALUE REALIZED(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- --------------- ----------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Steven J. Lee........ 357,164 $5,791,906 278,113 48,334 $14,442,286 $2,154,188
Arthur A. Siciliano,
Ph.D. ............. 311,203 7,703,130 78,427 34,501 3,810,234 1,563,062
Eric G. Walters...... 161,361 3,901,589 89,115 20,251 4,438,594 920,532
W. Keith Trowbridge.. -- -- 11,250 18,750 553,481 887,769
</TABLE>
---------------
(1) For Mr. Lee, includes 200,612 shares exercised and not sold with a value
realized of $2,295,389; for Dr. Siciliano, includes 169,632 shares exercised
and not sold, with a value realized of $4,166,758; for Mr. Walters, includes
85,241 shares exercised and not sold with a value realized of $2,088,405.
(2) Total value of "in-the-money" unexercised options is based on the difference
between the last sales price of the Company's Common Stock on the Nasdaq
Stock Market on March 31, 2000 ($58.750 per share) and the exercise price of
"in-the-money" options, multiplied by the number of shares subject to such
options.
7
<PAGE> 10
EMPLOYMENT AGREEMENTS
The Company entered into employment agreements in 1990 with Mr. Lee and Dr.
Siciliano, and in 1991 with Mr. Walters, pursuant to which each individual
agreed to serve as an officer of the Company. Pursuant to the terms of the
employment agreements, the officer receives a base salary which is reviewed
annually by the Board of Directors. Each officer is entitled to receive an
annual bonus payment in an amount, if any, to be determined by the Compensation
Committee of the Board of Directors. The employment agreements, as amended to
date, extend to November 30, 2001 for Mr. Lee, and to May 31, 2001 for Dr.
Siciliano and Mr. Walters.
The term of the employment agreements will also be deemed to continue on a
month-to-month basis if not expressly extended while each officer remains
employed by the Company. Both the officer and the Company have the right to
terminate an employment agreement at any time with or without cause upon 30
days' prior written notice. In the event that the Company terminates an
employment agreement without cause or an officer terminates his employment for
good reason (as defined in the agreement) following a change of control (as
defined in the agreement), such officer will be entitled to receive his base
salary at termination for the longer of one year or the remainder of his
employment period up to a maximum of eighteen months. In the event of a change
in control, following which an executive's employment is terminated other than
for cause including, without limitation, the failure to renew an employment
contract within two years following such change in control (as defined in the
agreement), such executive will receive an amount equal to 2.99 times his annual
compensation. Each officer has also agreed not to compete with the Company for
one year following termination of his employment.
Pursuant to these agreements, each of Mr. Lee, Dr. Siciliano and Mr.
Walters currently receives a base salary of $400,000, $330,000 and $210,000,
respectively.
DEFERRED COMPENSATION PLAN
The Company maintains an un-funded, non-qualified deferred compensation
plan for the benefit of Messrs. Lee and Walters and Dr. Siciliano. Under the
terms of the plan, the executives participating in the plan may defer up to 50%
of their annual compensation. Amounts deferred by an executive are credited to a
bookkeeping account for his benefit. The Company provides additional credits to
the executive's accounts. First, each executive receives a credit for each
calendar year equal to 6.2% of the excess of (i) his compensation for such
calendar year before any deferral over (b) the Social Security Wage Base for
such calendar year ($72,600 for 1999 and $76,200 for 2000). Second, each
executive receives a credit equal to 50% of any compensation deferred in a
calendar year, but this credit cannot exceed 3% of the amount by which the
executive's pre-deferral compensation for such calendar year exceeds the
compensation limit imposed by the Company's 401(k) plan ($160,000 for 1999 and
$170,000 for 2000). In addition to these credits, the Company may make
discretionary credits to the accounts of the executives.
The account of each executive is credited with earnings as though the
accounts were invested in the investment choices available under the Company's
401(k) plan as selected by each executive. The amounts credited to an
executive's account are paid to the executive upon termination of employment in
a lump sum or in installments over 15 or fewer years. In addition, an executive
may receive a distribution while employed. If the distribution is other than for
the alleviation of an unforeseeable financial emergency, the executive's account
will be charged with a withdrawal penalty of 10% of the amount withdrawn.
Finally, an executive may elect in advance to receive the entire balance to his
credit upon the occurrence of a change in control of the Company. An executive
may not assign or pledge his rights to payment under the plan.
Payment of benefits under the plan are made from the Company's general
assets. The Company has set funds aside in a grantor trust for the purpose of
satisfying its obligations under the plan. The assets of this trust are subject
to the claims of the Company's creditors. No executive has any rights under the
plan greater than the rights of an unsecured general creditor of the Company.
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COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Company's executive compensation program is administered by a standing
Compensation Committee composed of three non-employee directors. All decisions
by the Compensation Committee relating to the compensation of the Company's
executive officers are reviewed by the full Board of Directors. The Company's
executive compensation program is designed to retain and reward senior
executives who will lead the Company and achieve business objectives within the
markets in which the Company competes.
The objectives of the Company's compensation programs are to align business
objectives with a combination of base pay, bonuses and stock options tailored
toward individual performance. In a competitive environment, it is important
that the Company be able to attract, retain and reward executive officers who
contribute to the long-term success of the Company. The Company's executive
compensation philosophy is based upon the following principles:
I. Competitive and Fair Compensation
With respect to fiscal 2000 compensation, the Company based
compensation decisions in part on a 1999 study performed for the Company
which reviewed the compensation structure for the Company's executive
officers and made recommendations to the Compensation Committee with
respect to base salary. Base salary, performance-based bonuses and
stock-based compensation are based on the intention to ensure that the
Company's executive officers were compensated in the highest quartile of
comparable entities.
The Company seeks to have the compensation paid to a particular
individual reflect the contribution made by that individual in the
achievement of the Company's objectives.
II. Business Plan and Goals
The Company holds strategic planning sessions to review its strategic
and business plan goals. This review includes the analysis of such factors
as achievement of operating budgets, licensing, development of alliances
with third parties, introduction of new processes and products,
manufacturing efficiencies, raising of capital, potential acquisitions and
overall performance relative to its competitors. The performance of each
officer is evaluated by the Board with respect to how the executive has
contributed to achieving the business plan and goals.
III. Executive Compensation Program
Annual compensation for executive officers consists of the following
three fundamental elements:
- A base salary within an established competitive salary range that is
determined by individual contributions and sustained performance.
- An annual bonus structure tied to the achievement of corporate
financial performance measures as well as the achievement of
individual business-related objectives.
- A long-term incentive program afforded by stock options.
Prior to determining base salary, cash bonuses and stock options for
fiscal 2000, the Compensation Committee reviewed the extent to which each
executive officer had achieved certain business objectives and analyzed its
recommendations in light of companies at comparable stages of development
and similar capitalization. Each of these three elements of compensation is
discussed below.
Base Salary. The Compensation Committee has reviewed salary amounts
since the 1999 study and has adjusted salaries based on its assessment of
each executive's individual performance and increases in salaries paid by
competitors.
Bonuses. The Company's fiscal 2000 executive incentive compensation
program (the "Incentive Program") provided for a cash pool to be paid out
on the basis of achievement of specified individual, financial and
strategic targets and objectives of the Company, including Company
profitability and
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<PAGE> 12
revenue targets. Bonuses could be earned through the achievement of a
combination of these targets and objectives.
Long-Term Incentive Compensation. The Company's long-term incentive
compensation program is implemented through the periodic grant of stock
options. The Company's stock option program promotes a long-term congruity
of interest between the Company's employees and its stockholders and
assists in the retention of executives. The number of shares to be granted
to each participant generally reflects the position of the executive within
the Company and his or her contributions to the Company's achievement of
the business plan and goals. Stock options are granted at the current
market price and generally vest over a three-year period to encourage key
employees to continue in the employ of the Company.
Benefits. The Company's executive officers are entitled to receive
medical benefits and life insurance benefits. They participate in the
Company's 401(k) plan, to which the Company will make matching cash
contributions and the 1992 Employee Stock Purchase Plan, which allows
participants to purchase shares at a discount of approximately 15% from the
fair market value at the beginning or end of the applicable purchase
period. The above benefits are also available to all of the Company's
employees. In addition, certain executives participate in a deferred
compensation plan previously described.
Summary of Compensation of Chief Executive Officer. In fiscal 2000,
the Company's Chairman and Chief Executive Officer, Steven J. Lee, received
salary and bonus compensation of $980,520, including base salary at the
annual rate of $333,960 and bonus compensation of $653,333, which was based
in part on the Incentive Program and in part on discretionary amounts
determined by the Compensation Committee. The Compensation Committee has
set Mr. Lee's total annual compensation including compensation derived from
the Incentive Plan and the grant of stock options under the 1998 Plan at a
level it believes to be competitive. Mr. Lee's bonus compensation for
fiscal 2000 reflected the achievement of a combination of the Company's
financial and strategic goals, as well as the principles set forth in the
Incentive Program described above.
Certain Tax Considerations
Section 162(m) of the Internal Revenue Code generally disallows a tax
deduction to public companies for compensation in excess of $1 million paid
to the chief executive officer and the four other most highly compensated
executive officers. Qualifying performance-based compensation will not be
subject to the deduction limit if certain requirements are met. In this
regard, PolyMedica has, among other things, limited the number of shares
subject to stock options which may be granted to Company employees in a
manner that complies with the performance-based requirements of Section
162(m). While the Compensation Committee does not currently intend to
qualify its other compensatory awards as performance-based compensation, it
will continue to monitor the impact of Section 162(m) on us. In any event,
there can be no assurance that compensation attributable to stock options
granted under PolyMedica's stock option plans will be exempt from Section
162(m) as performance-based compensation.
Compensation Committee
Daniel S. Bernstein, M.D.
Frank W. LoGerfo, M.D.
Marcia J. Hooper
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COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The current members of the Compensation Committee are Ms. Hooper and Drs.
Bernstein and LoGerfo. No member of the Compensation Committee was at any time
during fiscal 2000, or formerly, an officer or employee of the Company or any
subsidiary of the Company, nor has any member of the Compensation Committee had
any relationship with the Company requiring disclosure under Item 404 of
Regulation S-K under the Securities Act of 1933, as amended.
COMPARATIVE STOCK PERFORMANCE
The comparative stock performance graph below compares the cumulative
stockholder return on the Common Stock of the Company for the period from March
31, 1995, and through the years ended March 31, 1996, 1997, 1998, 1999 and 2000
with the cumulative total return on, (i) the Total Return Index for the Nasdaq
Stock Market, (U.S. Companies) (the "Nasdaq Composite Index") and (ii) a peer
group (the "Peer Group") determined by the Company. The graph assumes the
investment of $100 in the Company's Common Stock, the Nasdaq Composite Index,
and the Peer Group on March 31, 1995, and reinvestment of all dividends.
Measurement points are on March 31, 1995, 1996, 1997, 1998, 1999 and 2000.
The Peer Group consists of Chronimed, Inc., Curative Health Services, Inc.,
Del Laboratories, Inc., IVC Industries, Inc., KV Pharmaceutical Company, Matria
Healthcare, Inc., Moore Medical Corporation, Nutraceutical International
Corporation and Transworld Healthcare, Inc.
STOCK PERFORMANCE GRAPH
<TABLE>
<CAPTION>
POLYMEDICA CORPORATION NASDAQ COMPOSITE INDEX PEER GROUP
---------------------- ---------------------- ----------
<S> <C> <C> <C>
3/31/1995 100.00 100.00 100.00
3/29/1996 124.00 135.80 156.50
3/31/1997 101.40 151.00 122.30
3/31/1998 249.80 228.90 185.50
3/31/1999 152.10 309.20 89.50
3/31/2000 1191.80 574.70 114.40
</TABLE>
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's directors,
executive officers and persons who own more than ten percent of the registered
class of the Company's equity securities, to file with the SEC initial reports
of ownership and reports of changes in beneficial ownership of Common Stock and
other equity securities of the Company.
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Officers, directors and greater than ten percent shareholders are required
by SEC regulations to furnish the Company with copies of all Section 16(a)
reports they file.
Based on a review of its records, the Company believes that all directors,
executive officers and ten percent stockholders filed timely reports under
Section 16(a) of the Exchange Act in fiscal 2000.
CERTAIN TRANSACTIONS
In December 1994 and January 1997, certain officers of the Company
purchased in the aggregate 100,000 and 100,000 shares, respectively, of the
Company's Common Stock on the open market, which purchases were valued at an
aggregate of $415,000 and $607,000, respectively.
These purchases were funded by interest-free notes issued by the Company to
each officer on the respective date. These loans were paid off during fiscal
2000. The terms of the notes provide for each executive to repay the Company
within five years from the date of the note with Company shares having a market
value equal to the original principal of the note. As required by the Internal
Revenue Code, an annual amount equal to the market rate of interest at the time
each note was issued and imputed to each officer. As of March 31, 2000 there are
no amounts loaned and outstanding to Mr. Lee, Dr. Siciliano and Mr. Walters.
Boston Special Risks Insurance Agency, Inc, of which Mr. Soltys, a Director
of the Company, is President and Owner, is the Company's agent for corporate
insurance. In the fiscal year ended March 31, 2000, the Company paid
approximately $556,725 in premiums in connection with these insurance policies.
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<PAGE> 15
ITEM TWO
AUTHORIZATION TO INCREASE THE AUTHORIZED
COMMON AND PREFERRED STOCK
The Board of Directors proposes to amend the Articles of Organization to
increase the authorized number of shares of Common Stock by an additional
40,000,000 shares of Common Stock to 60,000,000 shares of Common Stock and to
increase the authorized number of shares of preferred stock, par value $0.01
("Preferred Stock"), by an additional 4,500,000 shares of Preferred Stock to
6,500,000 shares of Preferred Stock. The Board of Directors believes approval of
this amendment is in the best interest of the Company and its stockholders.
Common Stock. The authorization of additional shares of Common Stock will
enable the Company to meet its obligations under the various employee benefit
plans, employment arrangements and outstanding options and to issue options,
awards and warrants in the future. The increase in authorized shares of Common
Stock could also be used for cash, securities or other property, allowing the
Company to take advantage of favorable market conditions by allowing for
flexibility and to attract or retain personnel or business opportunities. In
addition, the proposed amendment will give the Board of Directors flexibility to
authorize the issuance of shares of Common Stock and Preferred Stock in the
future for financing the Company's business, for acquiring other businesses, for
forming strategic partnerships and alliances and for stock dividends and stock
splits.
The holders of Common Stock of the Company are entitled to one vote for
each share held of record on all matters to be voted on by the stockholders of
the Company. There is no cumulative voting with respect to the election of
directors, with the result that the holders of more than 50% of the shares of
Common Stock of the Company voted in an election of directors can elect the
directors of the Company. The holders of Common Stock are entitled to receive
dividends when, as and if declared by the Board of Directors out of funds
legally available therefor. The Company never has paid cash dividends on its
shares of Common Stock. In the event of liquidation, dissolution or winding up
of the Company, the holders of the shares of Common Stock are entitled to share
ratably in all assets remaining available for distribution to them after payment
of liabilities and after provision has been made for each class of stock, if
any, having preference over the Common Stock. Holders of shares of Common Stock
have no conversion, preemptive or other subscription rights, and there are no
redemption provisions applicable to the Common Stock.
Preferred Stock. The proposed amendment would also vest in the Board of
Directors the authority to designate 4,500,000 additional shares of Preferred
Stock in one or more series of Preferred Stock. Such provisions are often
referred to as "blank check" provisions, as they give the Board of Directors the
flexibility, at any time or from time to time, without further shareholder
approval, to create one or more series of Preferred Stock and to determine the
designations, preferences and limitations of each such series, including, but
not limited to, (i) the number of shares, (ii) dividend rights, (iii) voting
rights, (iv) conversion privileges, (v) redemption provisions, (vi) sinking fund
provisions, (vii) rights upon liquidation, dissolution or winding up of the
Company and (viii) other relative rights, preferences and limitations of such
series. If the proposed amendment is approved by the shareholders, it will
become effective upon filing and recording a certificate of amendment to the
Articles of Organization.
The proposed increase in Preferred Stock is being sought because the Board
of Directors believes that it is advisable and in the best interest of the
Company to have 4,500,000 additional shares of preferred stock available to
provide the Company with greater flexibility in financing the continued
operations of the Company, and in undertaking acquisitions or joint ventures.
The Company believes that the additional Preferred Stock will provide the
Company with a capital structure better suited to meet the Company's short and
long term capital needs. The additional shares of Preferred Stock permit the
Company to negotiate the precise terms of an equity instrument by simply
creating a new series of preferred stock without incurring the cost and delay in
obtaining shareholder approval. This allows the Company to more effectively
negotiate with, and satisfy the precise financial criteria, of any investor in a
timely manner.
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If any series of Preferred Stock authorized by the Board provides for
dividends, such dividends, when and as declared by the Board of Directors out of
any funds legally available therefor, may be cumulative and may have a
preference over the Common Stock as to the payment of such dividends. In
addition, if any series of Preferred Stock authorized by the Board so provides,
in the event of any dissolution, liquidation or winding up of the Company,
whether voluntary or involuntary, the holders of each such series of the then
outstanding Preferred Stock may be entitled to receive, prior to the
distribution of any assets or funds to the holders of Common Stock, a
liquidation preference established by the Board of Directors, together with all
accumulated and unpaid dividends. Depending upon the consideration paid for
Preferred Stock, the liquidation preference of Preferred Stock and other
matters, the issuance of Preferred Stock could therefore result in a reduction
in the assets available for distribution to the holders of Common Stock in the
event of liquidation of the Company. Holders of Common Stock do not have any
preemptive rights to acquire Preferred Stock or any other securities of the
Company.
Anti-takeover Effects. While the proposed amendment is not designed to
deter or prevent a change in control, the overall effect of an issuance of
additional shares of Common Stock and Preferred Stock, as well as the potential
use of the Preferred Stock to create voting impediments or to otherwise
frustrate persons seeking to effect a takeover or otherwise gain control of the
Company, may render more difficult the accomplishment of any attempted merger,
takeover or other change in control affecting the Company and may thereby
protect the continuity of the Company's incumbent Board of Directors and
management. However, the Board of Directors does not view the increase in
authorized common and preferred stock as an anti-takeover measure. The Proposed
Amendment is being sought to augment liquidity and to enhance corporate
flexibility generally.
Approval of the proposal will permit the Board of Directors to issue
additional shares of Common Stock and Preferred Stock without further approval
of the stockholders of the Company; and the Board of Directors does not intend
to seek stockholder approval prior to any issuance of the authorized capital
stock unless stockholder approval is required by applicable law or stock market
or exchange requirements. Although the Company from time to time reviews various
transactions that could result in the issuance of Common Stock or Preferred
Stock, the Company is not a party to any agreement to issue additional shares of
its capital stock, except as may be required in connection with the exercise of
existing outstanding options and warrants or upon a proposed financing that will
require the Company to issue shares of Common Stock on conversion of certain
notes and on exercise of certain warrants, or in connection with options and
other stock based awards which may be issued under the Company's 2000 Plan or
under any other plan or arrangement the Board of Directors may hereafter
approve.
The issuance of additional shares of Common Stock and Preferred Stock may
have a dilutive effect on earnings per share and on the equity and voting power
of existing security holders of the Company's capital stock. It may also
adversely affect the market price of the Common Stock. However, if additional
shares are issued in transactions whereby favorable business opportunities are
provided and allow the Company to pursue its business plans, the market price
may increase.
The affirmative vote of two-thirds (66 2/3%) of the outstanding Common
Shares is required to approve the amendment to the Articles of Organization.
If the proposal to amend the Articles of Organization is approved, the
fourth article of the Articles of Organization will be amended promptly after
the meeting to increase the number of shares of Common Stock the Company is
authorized to issue to 60,000,000 and increase the number of shares of Preferred
Stock the Company is authorized to issue to 6,500,000.
BOARD RECOMMENDATION
ACCORDINGLY, THE BOARD OF DIRECTORS BELIEVES APPROVAL OF THE PROPOSAL TO
AMEND THE COMPANY'S ARTICLES OF ORGANIZATION TO INCREASE THE AUTHORIZED COMMON
AND PREFERRED STOCK IS IN THE BEST INTERESTS OF THE COMPANY AND ITS STOCKHOLDERS
AND RECOMMENDS A VOTE FOR THIS PROPOSAL.
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ITEM THREE
APPROVAL OF 2000 STOCK INCENTIVE PLAN
On April 6, 2000, the Board of Directors of the Company adopted, subject to
stockholder approval, the 2000 Stock Incentive Plan (the "2000 Plan"). Up to
1,200,000 shares of Common Stock (subject to adjustment in the event of stock
splits and other similar events) may be issued pursuant to awards granted under
the 2000 Plan. The Board of Directors believes that the future success of the
Company depends, in large part, upon the ability of the Company to maintain a
competitive position in attracting, retaining and motivating key personnel.
SUMMARY OF THE 2000 PLAN
The following is a brief summary of the material terms of the 2000 Plan.
Description of Awards
The 2000 Plan provides for the grant of incentive stock options intended to
qualify under Section 422 of the Code, nonstatutory stock options, and
restricted stock awards (collectively "Awards").
Incentive Stock Options and Nonstatutory Stock Options. Optionees receive
the right to purchase a specified number of shares of Common Stock at a
specified option price and subject to such other terms and conditions as are
specified in connection with the option grant. All stock options granted under
the plan must be granted at an exercise price equal to or greater than the fair
market value of the Company's Common Stock on the date of the grant. Under
present law, incentive stock options and options intended to qualify as
performance based compensation under Section 162(m) of the Code may not be
granted at an exercise price less than the fair market value of the Common Stock
on the date of grant (or less than 110% of the fair market value in the cash of
incentive stock options granted to optionees holding more than 10% of the total
combined voting power of the Company or its Subsidiaries). The 2000 Plan permits
the Board to determine the manner of payment of the exercise price of options,
including payment by cash, check or in connection with a "cashless exercise"
through a broker, by surrender to the Company of shares of Common Stock, by
delivery to the Company of a promissory note, or by any other lawful means. No
option issued under the 2000 Plan may be repriced, replaced or regranted through
cancellation or by lowering the option exercise price of a previously granted
Award, without the prior approval of the stockholders of the Company.
Restricted Stock Awards. Restricted stock awards entitle recipients to
acquire shares of Common Stock, subject to the right of the Company to
repurchase all or part of such shares from the recipient in the event that the
conditions specified in the applicable Award are not satisfied prior to the end
of the applicable restriction period established for such Award.
Eligibility to Receive Awards
Officers, employees, directors, consultants and advisors of the Company and
its subsidiaries are eligible to be granted Awards under the 2000 Plan. Under
present law, however, incentive stock options may only be granted to employees.
The maximum number of shares with respect to which Awards may be granted to any
participant under the 2000 Plan may not exceed 150,000 shares per calendar year.
As of March 31, 2000, approximately 799 persons would have been eligible to
receive Awards under the 2000 Plan, including the Company's four executive
officers and five non-employee directors. The granting of Awards under the 2000
Plan is discretionary, and the Company cannot now determine the number or type
of Awards to be granted in the future to any particular person or group.
On July 21, 2000, the last reported sale price of the Company's Common
Stock on the Nasdaq National Market was $47.125 per share.
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<PAGE> 18
Administration
The 2000 Plan is administered by the Board of Directors. The Board has the
authority to adopt, amend and repeal the administrative rules, guidelines and
practices relating to the 2000 Plan and to interpret the provisions of the 2000
Plan. Pursuant to the terms of the 2000 Plan, the Board of Directors may
delegate authority under the 2000 Plan to one or more committees of the Board.
The Board has authorized the Compensation Committee to administer certain
aspects of the 2000 Plan, including the granting of options to executive
officers. Subject to any applicable limitations contained in the 2000 Plan, the
Board of Directors, the Compensation Committee, or any other committee or
executive officer to whom the Board delegates authority, as the case may be,
selects the recipients of Awards and determines (i) the number of shares of
Common Stock covered by options and the dates upon which such options become
exercisable, (ii) the exercise price of options, (iii) the duration of options,
and (iv) the number of shares of Common Stock subject to any restricted stock
and the terms and conditions of such Awards, including conditions for
repurchase, issue price and repurchase price.
The Board of Directors is required to make appropriate adjustments in
connection with the 2000 Plan and any outstanding Awards to reflect stock
dividends, stock splits and certain other events. In the event of a merger,
liquidation or other Acquisition Event (as defined in the 2000 Plan), the Board
of Directors is required to provide for outstanding options or other stock-based
Awards to be assumed or substituted for by the surviving or acquiring
corporation, to accelerate the Awards to make them fully exercisable prior to
consummation of the Acquisition Event or to provide for a cash out of the value
of any outstanding options. If any Award expires or is terminated, surrendered,
canceled or forfeited, the unused shares of Common Stock covered by such Award
will again be available for grant under the 2000 Plan, subject, however, in the
case of incentive stock options to any limitations under the code.
Amendment or Termination
No Award may be made under the 2000 Plan after April 5, 2010, but Awards
previously granted may extend beyond that date. The Board of Directors may at
any time amend, suspend or terminate the 2000 Plan, except that no Award
designated as subject to Section 162(m) of the Code by the Board of Directors
after the date of such amendment shall become exercisable, realizable or vested
(to the extent such amendment was required to grant such Award) unless and until
such amendment shall have been approved by the Company's stockholders.
FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of the United States federal income tax
consequences that generally will arise with respect to Awards granted under the
2000 Plan and with respect to the sale of Common Stock acquired under the 2000
Plan.
Incentive Stock Options. In general, a participant will not recognize
taxable income upon the grant or exercise of an incentive stock option. Instead,
a participant will recognize taxable income with respect to an incentive stock
option only upon the sale of Common Stock acquired through the exercise of the
option ("ISO Stock"). The exercise of an incentive stock option, however, may
subject the participant to the alternative minimum tax.
Generally, the tax consequences of selling ISO Stock will vary with the
length of time that the participant has owned the ISO Stock at the time it is
sold. If the participant sells ISO Stock after having owned it for at least two
years from the date the option was granted (the "Grant Date") and one year from
the date the option was exercised (the "Exercise Date"), then the participant
will recognize long-term capital gain in an amount equal to the excess of the
sale price of the ISO Stock over the exercise price.
If the participant sells ISO Stock for more than the exercise price prior
to having owned it for at least two years from the Grant Date and one year from
the Exercise Date (a "Disqualifying Disposition"), then all or a portion of the
gain recognized by the participant will be ordinary compensation income and the
remaining
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<PAGE> 19
gain, if any, will be a capital gain. This capital gain will be a long-term
capital gain if the participant has held the ISO Stock for more than one year
prior to the date of sale.
If a participant sells ISO Stock for less than the exercise price, then the
participant will recognize capital loss in an amount equal to the excess of the
exercise price over the sale price of the ISO Stock. This capital loss will be a
long-term capital loss if the participant has held the ISO Stock for more than
one year prior to the date of sale.
Nonstatutory Stock Options. As in the case of an incentive stock option, a
participant will not recognize taxable income upon the grant of a nonstatutory
stock option. Unlike the case of an incentive stock option, however, a
participant who exercises a nonstatutory stock option generally will recognize
ordinary compensation income in an amount equal to the excess of the fair market
value of the Common Stock acquired through the exercise of the option ("NSO
Stock") on the Exercise Date over the exercise price.
With respect to any NSO Stock, a participant will have a tax basis equal to
the exercise price plus any income recognized upon the exercise of the option.
Upon selling NSO Stock, a participant generally will recognize capital gain or
loss in an amount equal to the difference between the sale price of the NSO
Stock and the participant's tax basis in the NSO Stock. This capital gain or
loss will be a long-term gain or loss if the participant has held the NSO Stock
for more than one year prior to the date of the sale.
Restricted Stock Awards. A participant will not recognize taxable income
upon the grant of a restricted stock award, unless the participant makes an
election under Section 83(b) of the Code (a "Section 83(b) Election"). If the
participant makes a Section 83(b) Election within 30 days of the date of the
grant, then the participant will recognize ordinary compensation income, for the
year in which the Award is granted, in an amount equal to the difference between
the fair market value of the Common Stock at the time the Award is granted and
the purchase price paid for the Common Stock. If a Section 83(b) Election is not
made, then the participant will recognize ordinary compensation income, at the
time that the forfeiture provisions or restrictions on transfer lapse, in an
amount equal to the difference between the fair market value of the Common Stock
at the time of such lapse and the original purchase price paid for the Common
Stock. The participant will have a basis in the Common Stock acquired equal to
the sum of the price paid and the amount of ordinary compensation income
recognized.
Upon the disposition of the Common Stock acquired pursuant to a restricted
stock award, the participant will recognize a capital gain or loss in an amount
equal to the difference between the sale price of the Common Stock and the
participant's basis in the Common Stock. This capital gain or loss will be a
long-term capital gain or loss if the shares are held for more than one year.
Tax Consequences to the Company
The grant of an Award under the 2000 Plan will have no tax consequences to
the Company. Moreover in general, neither the exercise of an incentive stock
option nor the sale of any Common Stock acquired under the 2000 Plan will have
any tax consequences to the Company. The Company generally will be entitled
business-expense deduction, however, with respect to any ordinary compensation
income recognized by a participant under the 2000 Plan, including in connection
with a restricted stock award or as a result of the exercise of a nonstatutory
stock option or a Disqualifying Disposition. Any such deduction will be subject
to the limitations of Section 162(m) of the Code.
BOARD RECOMMENDATION
ACCORDINGLY, THE BOARD OF DIRECTORS BELIEVES ADOPTION OF THE 2000 PLAN IS
IN THE BEST INTERESTS OF THE COMPANY AND ITS STOCKHOLDERS AND RECOMMENDS A VOTE
FOR THIS PROPOSAL.
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ITEM FOUR
RATIFICATION OF SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS
Subject to ratification by the stockholders, the Board of Directors, on the
recommendation of its Audit Committee, has selected the firm of
PricewaterhouseCoopers LLP ("PwC") as the Company's independent public
accountants for the current year. PwC (or one of its predecessors, Coopers &
Lybrand LLP) has served as the Company's independent public accountants since
1990.
Representatives of PwC are expected to be present at the Annual Meeting.
They will have the opportunity to make a statement if they desire to do so and
will also be available to respond to appropriate questions from stockholders.
If the stockholders do not ratify the selection of PwC as the Company's
independent public accountants, the selection of such accountants will be
reconsidered by the Board of Directors.
BOARD RECOMMENDATION
ACCORDINGLY, THE BOARD OF DIRECTORS BELIEVES RATIFICATION OF THE SELECTION
OF PWC AS THE COMPANY'S INDEPENDENT PUBLIC ACCOUNTANTS FOR THE CURRENT YEAR IS
IN THE BEST INTERESTS OF THE COMPANY AND ITS STOCKHOLDERS AND RECOMMENDS A VOTE
FOR THIS PROPOSAL.
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OTHER MATTERS
The Board of Directors does not know of any other matters which may come
before the meeting. However, if any other matters are properly presented to the
meeting, it is the intention of the persons named in the accompanying proxy to
vote, or otherwise act, in accordance with their judgment on such matters.
All costs of solicitation of proxies will be borne by the Company. In
addition to solicitations by mail, the Company's directors, officers and regular
employees, without additional remuneration, may solicit proxies by telephone,
telegraph and personal interviews and the Company reserves the right to retain
outside agencies for the purpose of soliciting proxies. Brokers, custodians and
fiduciaries will be requested to forward proxy soliciting material to the owners
of stock held in their names, and the Company will reimburse them for their
reasonable out-of-pocket expenses incurred in connection with the distribution
of proxy materials.
DEADLINE FOR SUBMISSION OF STOCKHOLDER PROPOSALS FOR THE 2001 ANNUAL MEETING
Proposals of stockholders intended to be presented at the 2001 Annual
Meeting of Stockholders must be received by the Company at its principal office
in Woburn, Massachusetts not later than April 8, 2001, for inclusion in the
proxy statement for that meeting.
By Order of the Board of Directors,
/s/ Eric G. Walters
ERIC G. WALTERS, Clerk
August 2, 2000
THE BOARD OF DIRECTORS ENCOURAGES STOCKHOLDERS TO ATTEND THE MEETING.
WHETHER OR NOT YOU PLAN TO ATTEND, YOU ARE URGED TO COMPLETE, DATE, SIGN AND
RETURN THE ENCLOSED PROXY IN THE ACCOMPANYING ENVELOPE. A PROMPT RESPONSE WILL
GREATLY FACILITATE ARRANGEMENTS FOR THE MEETING AND YOUR COOPERATION WILL BE
APPRECIATED. STOCKHOLDERS WHO ATTEND THIS MEETING MAY VOTE THEIR STOCK
PERSONALLY EVEN THOUGH THEY HAVE SENT IN THEIR PROXIES.
19
<PAGE> 22
EXHIBIT 2
POLYMEDICA CORPORATION
2000 STOCK INCENTIVE PLAN
1. PURPOSE
The purpose of this 2000 Stock Incentive Plan (the "Plan") of PolyMedica
Corporation, a Massachusetts corporation ("PolyMedica" or the "Company"), is to
advance the interests of the Company's stockholders by enhancing the Company's
ability to attract, retain and motivate persons who make (or are expected to
make) important contributions to the Company by providing such persons with
equity ownership opportunities and performance-based incentives and thereby
better aligning the interests of such persons with those of the Company's
stockholders. Except where the context otherwise requires, the term "Company"
shall include any of the Company's present or future subsidiary corporations as
defined in Section 424(f) of the Internal Revenue Code of 1986, as amended, and
any regulations promulgated thereunder (the "Code") and any other business
venture (including, without limitation, joint venture or limited liability
company) in which the Company has a significant interest, as determined by the
Board of Directors of the Company (the "Board").
2. ELIGIBILITY
All of the Company's employees, officers, directors, consultants and
advisors (and any individuals who have accepted an offer for employment) are
eligible to be granted options and restricted stock awards (each, an "Award")
under the Plan. Each person who has been granted an Award under the Plan shall
be deemed a "Participant".
3. ADMINISTRATION, DELEGATION
(a) ADMINISTRATION BY BOARD OF DIRECTORS. The Plan will be administered by
the Board. The Board shall have authority to grant Awards and to adopt, amend
and repeal such administrative rules, guidelines and practices relating to the
Plan as it shall deem advisable. The Board may correct any defect, supply any
omission or reconcile any inconsistency in the Plan or any Award in the manner
and to the extent it shall deem expedient to carry the Plan into effect and it
shall be the sole and final judge of such expediency. All decisions by the Board
shall be made in the Board's sole discretion and shall be final and binding on
all persons having or claiming any interest in the Plan or in any Award. No
director or person acting pursuant to the authority delegated by the Board shall
be liable for any action or determination relating to or under the Plan made in
good faith.
(b) APPOINTMENT OF COMMITTEES. To the extent permitted by applicable law,
the Board may delegate any or all of its powers under the Plan to one or more
committees or subcommittees of the Board (a "Committee"). All references in the
Plan to the "Board" shall mean the Board or a Committee of the Board to the
extent that the Board's powers or authority under the Plan have been delegated
to such Committee.
<PAGE> 23
4. STOCK AVAILABLE FOR AWARDS
(a) NUMBER OF SHARES. Subject to adjustment under Section 7, Awards may be
made under the Plan for up to 1,200,000 shares of common stock, $.01 par value
per share, of the Company (the "Common Stock"). If any Award expires or is
terminated, surrendered or canceled without having been fully exercised or is
forfeited in whole or in part (including as the result of shares of Common Stock
subject to such Award being repurchased by the Company at the original issuance
price pursuant to a contractual repurchase right) or results in any Common Stock
not being issued, the unused Common Stock covered by such Award shall again be
available for the grant of Awards under the Plan, subject, however, in the case
of Incentive Stock Options (as hereinafter defined), to any limitations required
under the Code. Shares issued under the Plan may consist in whole or in part of
authorized but unissued shares or treasury shares.
(b) PER-PARTICIPANT LIMIT. Subject to adjustment under Section 7, the
maximum number of shares of Common Stock with respect to which Awards may be
granted to any Participant under the Plan shall be 150,000 per calendar year.
The per-Participant limit described in this Section 4(b) shall be construed and
applied consistently with Section 162(m) of the Code ("Section 162(m)").
5. STOCK OPTIONS
(a) GENERAL. The Board may grant options to purchase Common Stock (each,
an "Option") and determine the number of shares of Common Stock to be covered by
each Option, the exercise price of each Option and the conditions and
limitations applicable to the exercise of each Option, including conditions
relating to applicable federal or state securities laws, as it considers
necessary or advisable. An Option which is not intended to be an Incentive Stock
Option (as hereinafter defined) shall be designated a "Nonstatutory Stock
Option". Notwithstanding anything contained herein to the contrary, without the
prior approval of the Company's shareholders, no option issued hereunder shall
be repriced, replaced or regranted through cancellation, or by lowering the
option exercise price of a previously granted award.
(b) INCENTIVE STOCK OPTIONS. An Option that the Board intends to be an
"incentive stock option" as defined in Section 422 of the Code (an "Incentive
Stock Option") shall only be granted to employees of Polymedica or any of its
present or future subsidiaries as defined in section 424(f) of the code, and
shall be subject to and shall be construed consistently with the requirements of
Section 422 of the Code. The Company shall have no liability to a Participant,
or any other party, if an Option (or any part thereof) which is intended to be
an Incentive Stock Option is not an Incentive Stock Option.
(c) EXERCISE PRICE. The Board shall establish the exercise price at the
time each Option is granted at not less than 100% of the fair market value of
the shares of Common Stock, as determined by the Board, at such time, and shall
specify that exercise price in the applicable option agreement.
(d) DURATION OF OPTIONS. Each Option shall be exercisable at such times
and subject to such terms and conditions as the Board may specify in the
applicable option agreement, provided, however, that no Option will be granted
for a term in excess of 10 years.
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<PAGE> 24
(e) EXERCISE OF OPTION. Options may be exercised by delivery to the
Company of a written notice of exercise signed by the proper person or by any
other form of notice (including electronic notice) approved by the Board
together with payment in full as specified in Section 5(f) for the number of
shares for which the Option is exercised.
(f) PAYMENT UPON EXERCISE. Common Stock purchased upon the exercise of an
Option granted under the Plan shall be paid for as follows:
(1) in cash or by check, payable to the order of the Company;
(2) except as the Board may, in its sole discretion, otherwise
provide in an option agreement, by (i) delivery of an irrevocable and
unconditional undertaking by a creditworthy broker to deliver promptly to the
Company sufficient funds to pay the exercise price and any required tax
withholding or (ii) delivery by the Participant to the Company of a copy of
irrevocable and unconditional instructions to a creditworthy broker to deliver
promptly to the Company cash or a check sufficient to pay the exercise price
and any required tax withholding;
(3) by delivery of shares of Common Stock owned by the Participant
valued at their fair market value as determined by (or in a manner approved by)
the Board in good faith ("Fair Market Value"), provided (i) such method of
payment is then permitted under applicable law and (ii) such Common Stock, if
acquired directly from the Company was owned by the Participant at least six
months prior to such delivery;
(4) to the extent permitted by the Board, in its sole discretion by
(i) delivery of a promissory note of the Participant to the Company on terms
determined by the Board, or (ii) payment of such other lawful consideration as
the Board may determine; or
(5) by any combination of the above permitted forms of payment.
(g) SUBSTITUTE OPTIONS. In connection with a merger or consolidation of an
entity with the Company or the acquisition by the Company of property or stock
of an entity, the Board may grant Options in substitution for any options or
other stock or stock-based awards granted by such entity or an affiliate
thereof. Substitute Options may be granted on such terms as the Board deems
appropriate in the circumstances, notwithstanding any limitations on Options
contained in the other sections of this Section 5 or in Section 2.
6. RESTRICTED STOCK
(a) GRANTS. The Board may grant Awards entitling recipients to acquire
shares of Common Stock, subject to the right of the Company to repurchase all or
part of such shares at their issue price or other stated or formula price (or to
require forfeiture of such shares if issued at no cost) from the recipient in
the event that conditions specified by the Board in the applicable Award are not
satisfied prior to the end of the applicable restriction period or periods
established by the Board for such Award (each, a "Restricted Stock Award").
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<PAGE> 25
(b) TERMS AND CONDITIONS. The Board shall determine the terms and
conditions of any such Restricted Stock Award, including the conditions for
repurchase (or forfeiture) and the issue price, if any. Any stock certificates
issued in respect of a Restricted Stock Award shall be registered in the name of
the Participant and, unless otherwise determined by the Board, deposited by the
Participant, together with a stock power endorsed in blank, with the Company (or
its designee). At the expiration of the applicable restriction periods, the
Company (or such designee) shall deliver the certificates no longer subject to
such restrictions to the Participant or if the Participant has died, to the
beneficiary designated, in a manner determined by the Board, by a Participant to
receive amounts due or exercise rights of the Participant in the event of the
Participant's death (the "Designated Beneficiary"). In the absence of an
effective designation by a Participant, Designated Beneficiary shall mean the
Participant's estate.
7. ADJUSTMENTS FOR CHANGES IN COMMON STOCK AND CERTAIN OTHER EVENTS
(a) CHANGES IN CAPITALIZATION. In the event of any stock split, reverse
stock split, stock dividend, recapitalization, combination of shares,
reclassification of shares, spin-off or other similar change in capitalization
or event, or any distribution to holders of Common Stock other than a normal
cash dividend, (i) the number and class of securities available under this Plan,
(ii) the per-Participant limit set forth in Section 4(b), (iii) the number and
class of securities and exercise price per share subject to each outstanding
Option, (iv) the repurchase price per share subject to each outstanding
Restricted Stock Award, and (v) the terms of each other outstanding Award shall
be appropriately adjusted by the Company (or substituted Awards may be made, if
applicable) to the extent the Board shall determine, in good faith, that such an
adjustment (or substitution) is necessary and appropriate. If this Section 7(a)
applies and Section 7(c) also applies to any event, Section 7(c) shall be
applicable to such event, and this Section 7(a) shall not be applicable.
(b) LIQUIDATION OR DISSOLUTION. In the event of a proposed liquidation or
dissolution of the Company, the Board shall upon written notice to the
Participants provide that all then unexercised Options will (i) become
exercisable in full as of a specified time at least 10 business days prior to
the effective date of such liquidation or dissolution and (ii) terminate
effective upon such liquidation or dissolution, except to the extent exercised
before such effective date. The Board may specify the effect of a liquidation or
dissolution on any Restricted Stock Award or other Award granted under the Plan
at the time of the grant of such Award.
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<PAGE> 26
(c) ACQUISITION EVENTS
(1) DEFINITION. An "Acquisition Event" shall mean: (a) any merger or
consolidation of the Company with or into another entity as a result of which
the Common Stock is converted into or exchanged for the right to receive cash,
securities or other property or (b) any exchange of shares of the Company for
cash, securities or other property pursuant to a share exchange
transaction.
(2) CONSEQUENCES OF AN ACQUISITION EVENT ON OPTIONS. Upon the
occurrence of an Acquisition Event, or the execution by the Company of any
agreement with respect to an Acquisition Event, the Board shall provide that all
outstanding Options shall be assumed, or equivalent options shall be
substituted, by the acquiring or succeeding corporation (or an affiliate
thereof). For purposes hereof, an Option shall be considered to be assumed if,
following consummation of the Acquisition Event, the Option confers the right to
purchase, for each share of Common Stock subject to the Option immediately prior
to the consummation of the Acquisition Event, the consideration (whether cash,
securities or other property) received as a result of the Acquisition Event by
holders of Common Stock for each share of Common Stock held immediately prior to
the consummation of the Acquisition Event (and if holders were offered a choice
of consideration, the type of consideration chosen by the holders of a majority
of the outstanding shares of Common Stock); provided, however, that if the
consideration received as a result of the Acquisition Event is not solely common
stock of the acquiring or succeeding corporation (or an affiliate thereof), the
Company may, with the consent of the acquiring or succeeding corporation,
provide for the consideration to be received upon the exercise of Options to
consist solely of common stock of the acquiring or succeeding corporation (or an
affiliate thereof) equivalent in fair market value to the per share
consideration received by holders of outstanding shares of Common Stock as a
result of the Acquisition Event.
Notwithstanding the foregoing, if the acquiring or succeeding corporation
(or an affiliate thereof) does not agree to assume, or substitute for, such
Options, then the Board shall, upon written notice to the Participants, provide
that all Options will become exercisable in full as of a specified time prior to
the Acquisition Event and will terminate immediately prior to the consummation
of such Acquisition Event, except to the extent exercised by the Participants
before the consummation of such Acquisition Event; provided, however, that in
the event of an Acquisition Event under the terms of which holders of Common
Stock will receive upon consummation thereof a cash payment for each share of
Common Stock surrendered pursuant to such Acquisition Event (the "Acquisition
Price"), then the Board may instead provide that all outstanding Options shall
terminate upon consummation of such Acquisition Event and that each Participant
shall receive, in exchange therefor, a cash payment equal to the amount (if any)
by which (A) the Acquisition Price multiplied by the number of shares of Common
Stock subject to such outstanding Options (whether or not then exercisable),
exceeds (B) the aggregate exercise price of such Options.
(3) CONSEQUENCES OF AN ACQUISITION EVENT ON RESTRICTED STOCK AWARDS.
Upon the occurrence of an Acquisition Event, the repurchase and other rights of
the Company under each outstanding Restricted Stock Award shall inure to the
benefit of the Company's successor and shall apply to the cash, securities or
other property which the Common Stock was converted
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<PAGE> 27
into or exchanged for pursuant to such Acquisition Event in the same manner and
to the same extent as they applied to the Common Stock subject to such
Restricted Stock Award.
8. GENERAL PROVISIONS APPLICABLE TO AWARDS
(a) TRANSFERABILITY OF AWARDS. Except as the Board may otherwise determine
or provide in an Award, Awards shall not be sold, assigned, transferred, pledged
or otherwise encumbered by the person to whom they are granted, either
voluntarily or by operation of law, except by will or the laws of descent and
distribution, and, during the life of the Participant, shall be exercisable only
by the Participant. References to a Participant, to the extent relevant in the
context, shall include references to authorized transferees.
(b) DOCUMENTATION. Each Award shall be evidenced by a written instrument
in such form as the Board shall determine. Each Award may contain terms and
conditions in addition to those set forth in the Plan.
(c) BOARD DISCRETION. Except as otherwise provided by the Plan, each Award
may be made alone or in addition or in relation to any other Award. The terms of
each Award need not be identical, and the Board need not treat Participants
uniformly.
(d) TERMINATION OF STATUS. The Board shall determine the effect on an
Award of the disability, death, retirement, authorized leave of absence or other
change in the employment or other status of a Participant and the extent to
which, and the period during which, the Participant, the Participant's legal
representative, conservator, guardian or Designated Beneficiary may exercise
rights under the Award.
(e) WITHHOLDING. Each Participant shall pay to the Company, or make
provision satisfactory to the Board for payment of, any taxes required by law to
be withheld in connection with Awards to such Participant no later than the date
of the event creating the tax liability. Except as the Board may otherwise
provide in an Award, when the Common Stock is registered under the Exchange Act,
Participants may, to the extent then permitted under applicable law, satisfy
such tax obligations in whole or in part by delivery of shares of Common Stock,
including shares retained from the Award creating the tax obligation, valued at
their Fair Market Value; provided, however, that the total tax withholding where
stock is being used to satisfy such tax obligation cannot exceed the Company's
minimum statutory withholding obligations (based on minimum statutory
withholding rates for federal and state taxes including payroll taxes that
are applicable to such supplemental taxable income). The Company may, to the
extent permitted by law, deduct any such tax obligations from any payment of any
kind otherwise due to a Participant.
(f) AMENDMENT OF AWARD. Subject to the provisions of the last sentence of
Section 5(a) hereof, the Board may amend, modify or terminate any outstanding
Award, including but not limited to, substituting therefor another Award of the
same or a different type, changing the date of exercise or realization, and
converting an Incentive Stock Option to a Nonstatutory Stock Option, provided
that the Participant's consent to such action shall be required unless the Board
determines that the action, taking into account any related action, would not
materially and adversely affect the Participant.
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<PAGE> 28
(g) CONDITIONS ON DELIVERY OF STOCK. The Company will not be obligated to
deliver any shares of Common Stock pursuant to the Plan or to remove
restrictions from shares previously delivered under the Plan until (i) all
conditions of the Award have been met or removed to the satisfaction of the
Company, (ii) in the opinion of the Company's counsel, all other legal matters
in connection with the issuance and delivery of such shares have been satisfied,
including any applicable securities laws and any applicable stock exchange or
stock market rules and regulations, and (iii) the Participant has executed and
delivered to the Company such representations or agreements as the Company may
consider appropriate to satisfy the requirements of any applicable laws, rules
or regulations.
(h) ACCELERATION. The Board may at any time provide that any Options shall
become immediately exercisable in full or in part, or that any Restricted Stock
Awards shall be free of restrictions in full or in part.
9. MISCELLANEOUS
(a) NO RIGHT TO EMPLOYMENT OR OTHER STATUS. No person shall have any claim
or right to be granted an Award, and the grant of an Award shall not be
construed as giving a Participant the right to continued employment or any other
relationship with the Company. The Company expressly reserves the right at any
time to dismiss or otherwise terminate its relationship with a Participant free
from any liability or claim under the Plan, except as expressly provided in the
applicable Award.
(b) NO RIGHTS AS STOCKHOLDER. Subject to the provisions of the applicable
Award, no Participant or Designated Beneficiary shall have any rights as a
stockholder with respect to any shares of Common Stock to be distributed with
respect to an Award until becoming the record holder of such shares.
Notwithstanding the foregoing, in the event the Company effects a split of the
Common Stock by means of a stock dividend and the exercise price of and the
number of shares subject to such Option are adjusted as of the date of the
distribution of the dividend (rather than as of the record date for such
dividend), then an optionee who exercises an Option between the record date and
the distribution date for such stock dividend shall be entitled to receive, on
the distribution date, the stock dividend with respect to the shares of Common
Stock acquired upon such Option exercise, notwithstanding the fact that such
shares were not outstanding as of the close of business on the record date for
such stock dividend.
(c) EFFECTIVE DATE AND TERM OF PLAN. The Plan shall become effective on
the date on which it is adopted by the Board, but no Award granted to a
Participant that is intended to comply with Section 162(m) shall become
exercisable, vested or realizable, as applicable to such Award, unless and until
the Plan has been approved by the Company's stockholders to the extent
stockholder approval is required by Section 162(m) in the manner required under
Section 162(m) (including the vote required under Section 162(m)). No Awards
shall be granted under the Plan after the completion of ten years from the
earlier of (i) the date on which the Plan was adopted by the Board or (ii) the
date the Plan was approved by the Company's stockholders, but Awards previously
granted may extend beyond that date.
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<PAGE> 29
(d) AMENDMENT OF PLAN. The Board may amend, suspend or terminate the Plan
or any portion thereof at any time, provided that to the extent required by
Section 162(m), no Award granted to a Participant that is intended to comply
with Section 162(m) after the date of such amendment shall become exercisable,
realizable or vested, as applicable to such Award, unless and until such
amendment shall have been approved by the Company's stockholders as required by
Section 162(m) (including the vote required under Section 162(m)).
(e) GOVERNING LAW. The provisions of the Plan and all Awards made
hereunder shall be governed by and interpreted in accordance with the laws of
the State of Massachusetts, without regard to any applicable conflicts of law.
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<PAGE> 30
APPENDIX 1
POLYMEDICA CORPORATION
ANNUAL MEETING OF STOCKHOLDERS - SEPTEMBER 14, 2000
The undersigned, having received notice of the meeting and management's
Proxy Statement therefor, and revoking all prior proxies, hereby appoint(s)
Steven J. Lee, Arthur A. Siciliano and John K.P. Stone, III, and each of them
(with full power of substitution), as proxies of the undersigned to attend the
Annual Meeting of Stockholders of PolyMedica Corporation (the "Company") to be
held on Thursday, September 14, 2000 and any adjourned sessions thereof, and
there to vote and act upon the following matters in respect of all shares of
Common Stock of the Company which the undersigned would be entitled to vote or
act upon, with all powers the undersigned would possess if personally present.
Attendance of the undersigned at the meeting or at any adjourned
session thereof will not be deemed to revoke this proxy unless the undersigned
shall affirmatively indicate thereat the intention of the undersigned to vote
said shares in person. If the undersigned hold(s) any of the shares of the
Company in a fiduciary, custodial or joint capacity or capacities, this proxy is
signed by the undersigned in every such capacity as well as individually.
IN THEIR DISCRETION, THE NAMED PROXIES ARE AUTHORIZED TO VOTE UPON SUCH
OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING, OR ANY ADJOURNMENT
THEREOF.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED BY THE
UNDERSIGNED. IF NO DIRECTION IS GIVEN WITH RESPECT TO ANY ELECTION TO OFFICE OR
ANY PROPOSAL SPECIFIED BELOW, THIS PROXY WILL BE VOTED FOR SUCH ELECTION TO
OFFICE OR PROPOSAL.
1. To elect the following two individuals as Class III Directors of
the Company to serve for a three-year term ending at the 2003
Annual Meeting of Stockholders: Daniel S. Bernstein, M.D. and
Peter K. Hoffman.
FOR ( ) WITHHOLD AUTHORITY ( )
------------------------
To Withhold authority with respect to a
particular nominee, write his or her
name in the space provided above.
2. To approve an Amendment to the Articles of Organization increasing
the number of authorized shares of common stock and preferred
stock.
FOR ( ) AGAINST ( ) ABSTAIN ( )
3. To approve the adoption of the Company's 2000 Stock Incentive
Plan, authorizing the issuance of up to 1,200,000 shares of common
stock thereunder.
FOR ( ) AGAINST ( ) ABSTAIN ( )
<PAGE> 31
4. To ratify the selection by the Board of Directors of
PricewaterhouseCoopers LLP as the Company's independent
accountants for the fiscal year ending March 31, 2001.
FOR ( ) AGAINST ( ) ABSTAIN ( )
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE
COMPANY.
Please sign name(s) exactly as appearing hereon. When signing as
attorney, executor, administrator or other fiduciary, please give your full
title as such. Joint owners should each sign personally. If a corporation, sign
in full corporate name, by authorized officer. If a partnership, please sign in
partnership name, by authorized person.
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Signature(s)
Dated: -----------------------
