Chief Compliance Officer Termination Of Employment Agreement - Eric G. Walters

EXHIBIT 10.64


This Agreement (the "Agreement") is entered into and is effective as of the 6th day of June, 2003, by and between Eric G. Walters ("Executive"), PolyMedica Corporation, a Massachusetts Corporation (the "Company"), and the Board of Directors of the Company (the "Board of Directors").


BACKGROUND


The Company, through its Board of Directors, has determined that a partial reorganization of operations is appropriate at this time to meet challenges and take advantage of opportunities presented by current market conditions. This reorganization includes, among other things, the elimination of the position of Executive Vice President now held by Executive. The Company has offered Executive the option to resign his employment with the Company on terms which reflect his long service and substantial contribution to the growth and success of the Company. Executive, after careful consideration of the Company's offer and his professional goals, believes that the most attractive opportunities for his personal professional development exist outside the Company, and has decided to resign his employment at the conclusion of an appropriate transitional period to facilitate the Company's reorganization plans. This important business decision is taking place at a time when the Company is the subject of government civil and criminal investigations and civil litigation, as noted in section 4.1 of this Agreement. It is of great importance to both the Board of Directors and the Executive that the resignation of the Executive not be interpreted by others as the product of a finding of impropriety as to the Executive. Such an interpretation would be inaccurate. The Company has neither resolved, nor is it determined to attempt to resolve some or all of the proceedings in which it is currently involved by offering to provide information to third parties concerning the Executive. The existence of the proceedings was not the basis for the decision by the Board to implement a partial reorganization which eliminates Executive's position or to accept the Executive's resignation.


RECITALS


WHEREAS Executive and the Company previously entered into an Executive Retention Agreement dated as of September 1, 2000 and an Amended Executive Employment Agreement dated April 1, 2001, as amended on June 8, 2001, September 25, 2001, May 13, 2002, and July 15, 2002 (collectively, all of the foregoing agreements shall be referred to as the "Previous Agreements");


WHEREAS Executive and the Company desire for this Agreement to supersede all Previous Agreements as of the effective date of Executive's resignation; and


WHEREAS Executive and the Company acknowledge that this Agreement is desirable and would not otherwise be entered into unless the Agreement supersedes the Previous Agreements as of the effective date of Executive's resignation;


WHEREAS Executive and the Company desire for this Agreement to resolve amicably and on mutually satisfactory terms any and all issues relating to the Executive's resignation from employment with the Company;


WHEREAS Executive desires to resign his position as Clerk, Disclosure Committee Member, and Chief Compliance Officer on the date hereof and as Executive Vice President on August 15, 2003 and the Company recognizes Executive's valuable service to the Company;


NOW THEREFORE, in consideration of the mutual promises and forbearances set forth in this Agreement, and other good and valuable consideration which Executive and the Company hereby acknowledge, Executive and the Company agree as follows:


TERMS AND CONDITIONS


1. BACKGROUND AND RECITALS. The foregoing Background and Recitals are incorporated into and made a part of the Terms and Conditions of the Agreement.


2. RESIGNATION OF EMPLOYMENT. Executive resigns his position with the Company as Clerk, Disclosure Committee Member, and Chief Compliance Officer effective as of the date of this Agreement. Executive shall, however, remain employed as Executive Vice President through August 15, 2003 or such sooner time as determined by Executive ("Date of Separation"), at which time Executive agrees to execute and deliver the Resignation Letter attached hereto as Exhibit A.


3. SEVERANCE BENEFITS.


3.1 OFFICER SEVERANCE PAY.


(a) As of the Date of Separation, the Company shall pay Executive salary continuation at his current base salary


for eighteen (18) months, less all state and federal taxes ("Severance"). The Severance shall be paid in accordance with the Company's normal payroll procedures, but in no event shall payment start earlier than the first regular payroll after the end of the Revocation Period for the Release of Claims executed by Executive.


(b) The Company shall, within five business days of the Date of Separation, pay to Executive any accrued unpaid salary. In addition, the Company shall pay Executive accrued unpaid bonus for FY2004 of $33,750 (less applicable tax withholdings).


(c) The Company shall within five business days of the Date of Separation pay to Executive the amount due to him (less applicable tax withholdings) for his 42.0 days of accrued, unused vacation.


3.2 HEALTH INSURANCE. For a period of 18 months after the Date of Separation, or until the Executive becomes employed, whichever occurs first, the Company shall offer Executive continued health and dental insurance as required under the Consolidated Omnibus Budget Reconciliation Act of 1985 ("COBRA"), or other law, and shall reimburse Executive for the full cost of that coverage.


3.3 EQUIPMENT. Executive shall be entitled to permanent ownership of the Brother fax machine he currently uses in his home office.


3.4 LIFE INSURANCE. For a period of 18 months after the Date of Separation or until Executive becomes employed, whichever occurs first, the Company shall continue in full force and effect, at its expense, life insurance on the life of the Executive with an Executive-directed beneficiary in the amount of $405,000.


3.5 NOTICE. Executive shall be obligated to provide the Company prompt notice of his subsequent employment.


3.6 401(K) PLANS.


(a) Executive is a participant in the Company's non-qualified 401(k) shadow plan/social security equalization plan/pension plan/deferred salary and bonus plan (the "SERP") and has a fully vested account balance in the SERP. Executive shall continue to participate in the SERP through the Date of Separation and the Company shall credit additional amounts to his SERP account based on his salary through the Date of Separation and accrued unpaid bonus for FY2004. As soon as practicable and in no event later than October 1, 2003, the Company shall cause: (1) the full amount in Executive's SERP account (less applicable tax withholdings) to be paid to him in a lump sum; and (2) to be delivered to Executive a schedule of all activity (e.g. contributions and investments) in his account from April 1, 2003 through the effective date of such payment.


(b) After the Date of Separation, Executive shall be entitled to roll-over any and all existing 401(k) retirement account(s), including discretionary amounts contributed by the Company, pursuant to the applicable benefit plan provisions.


3.7 OUTPLACEMENT. Executive shall be reimbursed for the cost of outplacement services provided by an outplacement consultant of Executive's choice up to a maximum of twenty-five thousand dollars.


4. INDEMNIFICATION AND NO ADVERSE ACTION.


4.1 The Company acknowledges Executive's rights as an Indemnitee under the Articles of Organization (the "Articles") of the Company. Without limitation of the foregoing, the Company acknowledges that it has received proper notice, in accordance with Section 3 of Article 6F of the Articles, of Executive's claim that he has a right to be indemnified with respect to the following matters:


- In re: PolyMedica Corp. Sec. Litig., Civ. A. No.
00-12426 REK, United States District Court, District
of Massachusetts


- In re: PolyMedica Corp. Shareholder Derivative
Litig., Civ. A. No. 01-3446, Superior Court of
Middlesex County, Commonwealth of Massachusetts


- The investigations currently being conducted by the
United States Attorney's for the Southern District of
Florida and the Southern District of Illinois


The Company further acknowledges that, pursuant to such Section 3, the Company has authorized Executive to employ Kirkpatrick & Lockhart LLP as his counsel with respect to the civil matters set forth above, and Robert C. Josefsberg with respect to the criminal matters set forth above. This acknowledgement shall not limit in any way the right of the Executive to employ his own counsel with respect to other indemnified claims, as provided in such S ...