Document:

exv4w9

 

EXHIBIT
4.9

POST-EGTRRA

AMENDMENT TO THE

AMPAC FINE CHEMICALS LLC BARGAINING UNIT 401(K) PLAN

 

 

POST
- EGTRRA - Employer

ARTICLE I

PREAMBLE

	 	1.1	 	Adoption and effective date of amendment. This amendment of the plan is adopted to
reflect certain provisions of the Economic Growth and Tax Relief Reconciliation Act of 2001
(“EGTRRA”), the Job Creation and Worker Assistance Act of 2002, and other IRS guidance. This
amendment is intended as good faith compliance with the requirements of EGTRRA and is to be
construed in accordance with EGTRRA and guidance issued thereunder. Except as otherwise
provided, this amendment shall be effective as of the first day of the first plan year
beginning after December 31, 2001.
	 
	 	1.2	 	Supersession of inconsistent provisions. This amendment shall supersede the
provisions of the plan to the extent those provisions are inconsistent with the provisions of
this amendment.

ARTICLE II

ADOPTION AGREEMENT ELECTIONS

The questions in this Article II only need to be completed in order to override the default
provisions set forth below. If all of the default provisions will apply, then these
questions should be skipped.

Unless the employer elects otherwise in this Article II, the following defaults apply:

	 	1.	 	If catch-up contributions are permitted, then the catch-up contributions are
treated like any other elective deferrals for purposes of determining matching
contributions under the plan.
	 
	 	2.	 	For plans subject to the qualified joint and survivor annuity rules, rollovers
are automatically excluded in determining whether the $5,000 threshold has been
exceeded for automatic cash-outs (if the plan provides for automatic cash-outs). This
is applied to all participants regardless of when the distributable event occurred.
	 
	 	3.	 	Amounts that are “deemed 125 compensation” are not included in the definition
of compensation.

	 	2.1	 	Exclusion of Rollovers in Application of Involuntary Cash-out Provisions. If the plan is
subject to the joint and survivor annuity rules and includes involuntary cash-out provisions,
then unless one of the options below is elected, effective for distributions made after
December 31, 2001, rollover contributions will be excluded in determining the value of a
participant’s nonforfeitable account balance for purposes of the plan’s involuntary cash-out
rules.

	 	a.	 	o           Rollover contributions will not be excluded.
	 
	 	b.	 	o           Rollover contributions will be excluded only with respect to
distributions made after                      (Enter a date no earlier than
December 31, 2001).

	 
	 	c.	 	o           Rollover contributions will only be excluded with respect to participants
who separated from service after                     . (Enter a date. The date
may be earlier than December 31,
2001.)

	 	2.2	 	Catch-up contributions (for 401(k) profit sharing plans only): The plan permits catch-up
contributions effective for calendar years beginning after December 31, 2001, (Article V)
unless otherwise elected below.

	 	a.	 	o          The plan does not permit catch-up contributions to be made.
	 
	 	b.	 	o           Catch-up contributions are permitted effective as of:                     
(enter a date no earlier than January 1, 2002).
	 
	 	 	 	And, catch-up contributions will be taken into account in applying any matching contribution
under the Plan unless otherwise elected below.
	 
	 	c.	 	o           Catch-up contributions will not be taken into account in applying any
matching contribution under the Plan.

	 	2.3	 	Deemed 125 Compensation. Article VI of this amendment shall not apply unless otherwise
elected below.

	 	 	 	o           Article VI of this amendment (Deemed 125 Compensation) shall apply
effective as of Plan Years and Limitation Years beginning on or after                     
(insert the later of January 1, 1998, or the first day of the first plan year
the Plan used this definition).

ARTICLE III

INVOLUNTARY CASH-OUTS

	 	3.1	 	Applicability and effective date. If the plan is subject to the qualified joint and
survivor annuity rules and provides for involuntary cash-outs of amounts less than $5,000,
then unless otherwise elected in Section 2.1 of this amendment, this Article shall apply for
distributions made after December 31, 2001, and shall apply to all participants.

© 2003 Franklin Templeton Investor services.
 

1

 

POST-EGTRRA
— Employer

	 	3.2	 	Rollovers disregarded in determining value of account balance for involuntary
distributions. For purposes of the Sections of the plan that provide for the involuntary
distribution of vested accrued benefits of $5,000 or less, the value of a participant’s
nonforfeitable account balance shall be determined without regard to that portion of the
account balance that is attributable to rollover contributions (and earnings allocable
thereto) within the meaning of Sections 402(c), 403(a)(4), 403(b)(8), 408(d)(3)(A)(ii), and
457(e)(16) of the Code. If the value of the participant’s nonforfeitable account balance as so
determined is $5,000 or less, then the plan shall immediately distribute the participant’s
entire nonforfeitable account balance.

ARTICLE IV

HARDSHIP DISTRIBUTIONS

Reduction of Section 402(g) of the Code following hardship distribution. If the plan
provides for hardship distributions upon satisfaction of the safe harbor (deemed) standards as set
forth in Treas. Reg. Section 1.401(k)-1(d)(2)(iv), then effective as of the date the elective
deferral suspension period is reduced from 12 months to 6 months pursuant to EGTRRA, there shall be
no reduction in the maximum amount of elective deferrals that a Participant may make pursuant to
Section 402(g) of the Code solely because of a hardship distribution made by this plan or any other
plan of the Employer.

ARTICLE V

CATCH-UP CONTRIBUTIONS

Catch-up Contributions. Unless otherwise elected in Section 2.2 of this amendment,
effective for calendar years beginning after December 31, 2001, all employees who are eligible to
make elective deferrals under this plan and who have attained age 50 before the close of the
calendar year shall be eligible to make catch-up contributions in accordance with, and subject to
the limitations of, Section 414(v) of the Code. Such catch-up contributions shall not be taken into
account for purposes of the provisions of the plan implementing the required limitations of
Sections 402(g) and 415 of the Code. The plan shall not be treated as failing to satisfy the
provisions of the plan implementing the requirements of Sections 401(k)(3), 401(k)(11), 401(k)(12),
410(b), or 416 of the Code, as applicable, by reason of the making of such catch-up contributions.

If elected in Section 2.2, catch-up contributions shall not be treated as elective deferrals for
purposes of applying any Employer matching contributions under the plan.

ARTICLE VI

DEEMED 125 COMPENSATION

If elected, this Article shall apply as of the effective date specified in Section 2.3 of this
amendment. For purposes of any definition of compensation under this Plan that includes a reference
to amounts under Section 125 of the Code, amounts under Section 125 of the Code include any amounts
not available to a Participant in cash in lieu of group health coverage because the Participant is
unable to certify that he or she has other health coverage. An amount will be treated as an amount
under Section 125 of the Code only if the Employer does not request or collect information
regarding the Participant’s other health coverage as part of the enrollment process for the health
plan.

This amendment has been executed this 1st day of December, 2005.

Name of Plan: Ampac Fine Chemicals LLC Bargaining Unit 401(k) Plan

Name of Employer: Ampac Fine Chemicals LLC     

By:                                                                                

                    EMPLOYER

© 2003 Franklin Templeton Investor services.

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401(a)(9) MODEL

AMENDMENT TO THE

AMPAC FINE CHEMICALS LLC BARGAINING UNIT 401(K) PLAN

 

 

401(a)(9)—Sponsor

MINIMUM DISTRIBUTION REQUIREMENTS AMENDMENT

ARTICLE I

GENERAL RULES

	 	1.1	 	Effective Date. Unless a later effective date is specified in Section 6.1 of this
Amendment, the provisions of this Amendment will apply for purposes of determining required
minimum distributions for calendar years beginning with the 2002 calendar year.

	 	1.2	 	Coordination with Minimum Distribution Requirements Previously in Effect. If the
effective date of this Amendment is earlier than calendar years beginning with the 2003
calendar year, required minimum distributions for 2002 under this Amendment will be determined
as follows. If the total amount of 2002 required minimum distributions under the Plan made to
the distributee prior to the effective date of this Amendment equals or exceeds the required
minimum distributions determined under this Amendment, then no additional distributions will
be required to be made for 2002 on or after such date to the distributee. If the total amount
of 2002 required minimum distributions under the Plan made to the distributee prior to the
effective date of this Amendment is less than the amount determined under this Amendment, then
required minimum distributions for 2002 on and after such date will be determined so that the
total amount of required minimum distributions for 2002 made to the distributee will be the
amount determined under this Amendment.

	 	1.3	 	Precedence. The requirements of this Amendment will take precedence over any
inconsistent provisions of the Plan.

	 	1.4	 	Requirements of Treasury Regulations Incorporated. All distributions required under
this Amendment will be determined and made in accordance with the Treasury regulations under
Section 401(a)(9) of the Internal Revenue Code.

	 	1.5	 	TEFRA Section 242(b)(2) Elections. Notwithstanding the other provisions of this
Amendment, distributions may be made under a designation made before January 1, 1984, in
accordance with Section 242(b)(2) of the Tax Equity and Fiscal Responsibility Act (TEFRA) and
the provisions of the Plan that relate to Section 242(b)(2) of TEFRA.

	 	1.6	 	Adoption by prototype sponsor. Except as otherwise provided herein, pursuant to
Section 5.01 of Revenue Procedure 2000-20, the sponsoring organization hereby adopts this
amendment on behalf of all adopting employers.

ARTICLE II

TIME AND MANNER OF DISTRIBUTION

	 	2.1	 	Required Beginning Date. The Participant’s entire interest will be distributed, or
begin to be distributed, to the Participant no later than the Participant’s required beginning
date.

	 	2.2	 	Death of Participant Before Distributions Begin. If the Participant dies before
distributions begin, the Participant’s entire interest will be distributed, or begin to be
distributed, no later than as follows:
	 
	 	(a)	 	If the Participant’s surviving spouse is the Participant’s sole designated beneficiary,
then, except as provided in Article VI, distributions to the surviving spouse will begin by
December 31 of the calendar year immediately following the calendar year in which the
Participant died, or by December 31 of the calendar year in which the Participant would have
attained age 70 1/2, if later.
	 
	 	(b)	 	If the Participant’s surviving spouse is not the Participant’s sole designated
beneficiary, then, except as provided in Article VI, distributions to the designated
beneficiary will begin by December 31 of the calendar year immediately following the
calendar year in which the Participant died.
	 
	 	(c)	 	If there is no designated beneficiary as of September 30 of the year following the year
of the Participant’s death, the Participant’s entire interest will be distributed by
December 31 of the calendar year containing the fifth anniversary of the Participant’s
death.
	 
	 	(d)	 	If the Participant’s surviving spouse is the Participant’s sole designated beneficiary
and the surviving spouse dies after the Participant but before distributions to the
surviving spouse begin, this Section 2.2, other than Section 2.2(a), will apply as if the
surviving spouse were the Participant.

© 2003 Franklin Templeton Investor services.

1

 

401(a)(9)—Sponsor

	 	 	 	For purposes of this Section 2.2 and Article IV, unless Section 2.2(d) applies,
distributions are considered to begin on the Participant’s required beginning date. If
Section 2.2(d) applies, distributions are considered to begin on the date distributions are
required to begin to the surviving spouse under Section 2.2(a). If distributions under an
annuity purchased from an insurance company irrevocably commence to the Participant before
the Participant’s required beginning date (or to the Participant’s surviving spouse before
the date distributions are required to begin to the surviving spouse under Section 2.2(a)),
the date distributions are considered to begin is the date distributions actually commence.

	 	2.3	 	Forms of Distribution. Unless the Participant’s interest is distributed in the form
of an annuity purchased from an insurance company or in a single sum on or before the required
beginning date, as of the first distribution calendar year distributions will be made in
accordance with Articles III and IV of this Amendment. If the Participant’s interest is
distributed in the form of an annuity purchased from an insurance company, distributions
thereunder will be made in accordance with the requirements of Section 401(a)(9) of the Code
and the Treasury regulations.

ARTICLE III

REQUIRED MINIMUM DISTRIBUTIONS DURING PARTICIPANT’S LIFETIME

	 	3.1	 	Amount of Required Minimum Distribution For Each Distribution Calendar Year. During
the Participant’s lifetime, the minimum amount that will be distributed for each distribution
calendar year is the lesser of:
	 
	 	(a)	 	the quotient obtained by dividing the Participant’s account balance by the distribution
period in the Uniform Lifetime Table set forth in Section 1.401(a)(9)-9 of the Treasury
regulations, using the Participant’s age as of the Participant’s birthday in the
distribution calendar year; or
	 
	 	(b)	 	if the Participant’s sole designated beneficiary for the distribution calendar year is
the Participant’s spouse, the quotient obtained by dividing the Participant’s account
balance by the number in the Joint and Last Survivor Table set forth in Section
1.401(a)(9)-9 of the Treasury regulations, using the Participant’s and spouse’s attained
ages as of the Participant’s and spouse’s birthdays in the distribution calendar year.

	 	3.2	 	Lifetime Required Minimum Distributions Continue Through Year of Participant’s Death.
Required minimum distributions will be determined under this Article 3 beginning with the
first distribution calendar year and up to and including the distribution calendar year that
includes the Participant’s date of death.

ARTICLE IV

REQUIRED MINIMUM DISTRIBUTIONS AFTER PARTICIPANT’S DEATH

	4.1	 	Death On or After Date Distributions Begin.

	 	(a)	 	Participant Survived by Designated Beneficiary. If the Participant dies on or
after the date distributions begin and there is a designated beneficiary, the minimum amount
that will be distributed for each distribution calendar year after the year of the
Participant’s death is the quotient obtained by dividing the Participant’s account balance
by the longer of the remaining life expectancy of the Participant or the remaining life
expectancy of the Participant’s designated beneficiary, determined as follows:

	 
	 	(1)	 	The Participant’s remaining life expectancy is calculated using the age of the
Participant in the year of death, reduced by one for each subsequent year.
	 
	 	(2)	 	If the Participant’s surviving spouse is the Participant’s sole designated
beneficiary, the remaining life expectancy of the surviving spouse is calculated for
each distribution calendar year after the year of the Participant’s death using the
surviving spouse’s age as of the spouse’s birthday in that year. For distribution
calendar years after the year of the surviving spouse’s death, the remaining life
expectancy of the surviving spouse is calculated using the age of the surviving
spouse as of the spouse’s birthday in the calendar year of the spouse’s death,
reduced by one for each subsequent calendar year.
	 
	 	(3)	 	If the Participant’s surviving spouse is not the Participant’s sole designated
beneficiary, the designated beneficiary’s remaining life expectancy is calculated
using the age of the beneficiary in the year following the year of the Participant’s
death, reduced by one for each subsequent year.

	 	(b)	 	No Designated Beneficiary. If the Participant dies on or after the date
distributions begin and there is no designated beneficiary as of September 30 of the year
after the year of the Participant’s death, the minimum amount that will be distributed for
each distribution calendar year after the year of the Participant’s death is the quotient
obtained by dividing the Participant’s account balance by the Participant’s remaining life
expectancy calculated using the age of the Participant in the year of death, reduced by one
for each subsequent year.

© 2003 Franklin Templeton Investor services.

2

 

401(a) (9)—Sponsor

	    4.2	 	Death Before Date Distributions Begin.

	    	 
	 
	 	(a)	 	Participant Survived by Designated Beneficiary. Except as provided in Article
VI, if the Participant dies before the date distributions begin and there is a designated
beneficiary, the minimum amount that will be distributed for each distribution calendar year
after the year of the Participant’s death is the quotient obtained by dividing the
Participant’s account balance by the remaining life expectancy of the Participant’s
designated beneficiary, determined as provided in Section 4.1.
	 
	 	(b)	 	No Designated Beneficiary. If the Participant dies before the date distributions
begin and there is no designated beneficiary as of September 30 of the year following the
year of the Participant’s death, distribution of the Participant’s entire interest will be
completed by December 31 of the calendar year containing the fifth anniversary of the
Participant’s death.
	 
	 	(c)	 	Death of Surviving Spouse Before Distributions to Surviving Spouse Are Required to
Begin. If the Participant dies before the date distributions begin, the Participant’s
surviving spouse is the Participant’s sole designated beneficiary, and the surviving spouse
dies before distributions are required to begin to the surviving spouse under Section
2.2(a), this Section 4.2 will apply as if the surviving spouse were the Participant.

ARTICLE V

DEFINITIONS

	 	5.1	 	Designated beneficiary. The individual who is designated as the Beneficiary under the
Plan and is the designated beneficiary under Section 401(a)(9) of the Internal Revenue Code
and Section 1.401(a)(9)-1, Q&A-4, of the Treasury regulations.

	 	5.2	 	Distribution calendar year. A calendar year for which a minimum distribution is
required. For distributions beginning before the Participant’s death, the first distribution
calendar year is the calendar year immediately preceding the calendar year which contains the
Participant’s required beginning date. For distributions beginning after the Participant’s
death, the first distribution calendar year is the calendar year in which distributions are
required to begin under Section 2.2. The required minimum distribution for the Participant’s
first distribution calendar year will be made on or before the Participant’s required
beginning date. The required minimum distribution for other distribution calendar years,
including the required minimum distribution for the distribution calendar year in which the
Participant’s required beginning date occurs, will be made on or before December 31 of that
distribution calendar year.

	 	5.3	 	Life expectancy. Life expectancy as computed by use of the Single Life Table in
Section 1.401(a)(9)-9 of the Treasury regulations.

	 	5.4	 	Participant’s account balance. The account balance as of the last valuation date in
the calendar year immediately preceding the distribution calendar year (valuation calendar
year) increased by the amount of any contributions made and allocated or forfeitures allocated
to the account balance as of the dates in the valuation calendar year after the valuation date
and decreased by distributions made in the valuation calendar year after the valuation date.
The account balance for the valuation calendar year includes any amounts rolled over or
transferred to the Plan either in the valuation calendar year or in the distribution calendar
year if distributed or transferred in the valuation calendar year.

	 	5.5	 	Required beginning date. The date specified in the Plan when distributions under
Section 401(a)(9) of the Internal Revenue Code are required to begin.

ARTICLE VI

ADOPTION AGREEMENT ELECTIONS

The questions in this Article VI only need to be completed in order to override the default
provisions set forth below. If all of the default provisions will apply, then these questions
should be skipped.

Unless the employer elects otherwise in this Article VI, the following defaults apply:

	1)	 	The minimum distribution requirements are effective for distribution calendar years beginning
with the 2002 calendar year unless a later date is specified in Section 6.1 of this Amendment.

	2)	 	Participants or beneficiaries may elect on an individual basis whether the 5-year rule or the
life expectancy rule in the Plan applies to distributions after the death of a Participant who
has a designated beneficiary.

© 2003 Franklin Templeton Investor services.

3

 

401(a)(9)-Sponsor

	 	6.1	 	Effective Date of Plan Amendment for Section 401(a)(9) Final and Temporary Treasury
Regulations.

	 	o	 	 This Amendment applies for purposes of determining required minimum
distributions for distribution calendar years beginning with the 2003 calendar year, as
well as required minimum distributions for the 2002 distribution calendar year that are
made on or after   (leave blank if this Amendment does not apply to any
minimum distributions for the 2002 distribution calendar year).

	 	6.2	 	Election to not permit Participants or Beneficiaries to Elect 5-Year Rule.
	 
	 	 	 	Unless elected below, Participants or beneficiaries may elect on an individual basis whether
the 5-year rule or the life expectancy rule in Sections 2.2 and 4.2 of this Amendment
applies to distributions after the death of a Participant who has a designated beneficiary.
The election must be made no later than the earlier of September 30 of the calendar year in
which distribution would be required to begin under Section 2.2 of this Amendment, or by
September 30 of the calendar year which contains the fifth anniversary of the Participant’s
(or, if applicable, surviving spouse’s) death. If neither the Participant nor beneficiary
makes an election under this paragraph, distributions will be made in accordance with
Sections 2.2 and 4.2 of this Amendment and, if applicable, the elections in Section 6.3 of
this Amendment below.

	 	o	 	 The provision set forth above in this Section 6.2 shall not apply. Rather,
Sections 2.2 and 4.2 of this Amendment shall apply except as elected in Section 6.3 of
this Amendment below.

	6.3	 	Election to Apply 5-Year Rule to Distributions to Designated Beneficiaries.

	o	 	 	 If the Participant dies before distributions begin and there is a
designated beneficiary, distribution to the designated beneficiary is not required to
begin by the date specified in the Plan, but the Participant’s entire interest will be
distributed to the designated beneficiary by December 31 of the calendar year
containing the fifth anniversary of the Participant’s death. If the Participant’s
surviving spouse is the Participant’s sole designated beneficiary and the surviving
spouse dies after the Participant but before distributions to either the Participant or
the surviving spouse begin, this election will apply as if the surviving spouse were
the Participant.

	 	 	 	If the above is elected, then this election will apply to:

	 	 	 	o All distributions.
	 
	 	 	 	o The following
distributions:____.

	 	6.4	 	Election to Allow Designated Beneficiary Receiving Distributions Under 5-Year Rule to Elect
Life Expectancy Distributions.

	 	o	 	 A designated beneficiary who is receiving payments under the 5-year rule
may make a new election to receive payments under the life expectancy rule until
December 31, 2003, provided that all amounts that would have been required to be
distributed under the life expectancy rule for all distribution calendar years before
2004 are distributed by the earlier of December 31, 2003 or the end of the 5-year
period.

Except with respect to any election made by the employer in Article VI, this amendment is hereby
adopted by the prototype sponsoring organization on behalf of all adopting employers on:

[Sponsor’s signature and Adoption Date are on file with Sponsor]

NOTE: The employer only needs to execute this amendment if an election has been made in Article VI
of this amendment.

This
amendment has been executed this 30th day of November, 2005

Name of Plan: Ampac Fine Chemicals LLC Bargaining Unit 401(k) Plan

Name of Employer: Ampac Fine Chemicals LLC

By: /s/ John R. Gibson                                                            

                    EMPLOYER

© 2003 Franklin Templeton Investor services.

4exv10w1

 

Exhibit 10.1

EMPLOYMENT AGREEMENT

     THIS EMPLOYMENT AGREEMENT entered into as of the 13th day of February, 2006 (the
“Effective Date”), by and between PolyMedica Corporation (the “Company”), a Massachusetts
corporation, and Devin J. Anderson, (the “Executive”) (hereinafter collectively referred to as the
“parties”).

     WHEREAS, the Executive is currently employed by the Company as its General Counsel and
Secretary and during his employment has gained experience in all phases of the Company’s business;

     WHEREAS, the Company recognizes the Executive’s extraordinary experience and relationships in
the Company’s business and industry, and the Company desires to retain the services and employment
of the Executive;

     WHEREAS,
the Executive and the Company are parties to an Employment Agreement
dated May 10, 2004, as amended August 31, 2004, and a
Retention Agreement dated June 1, 2005; and

     WHEREAS, the Company and the Executive desire to enter into this Agreement which will replace
and supersede the Prior Agreements and will provide for the continued employment of the Executive
by the Company upon the terms and subject to the conditions set forth herein.

     NOW, THEREFORE, in consideration of the foregoing and the mutual promises contained herein,
the parties agree as follows:

     1.      Term. The initial term of employment under this Agreement will be for the period
commencing on the Effective Date and continuing in effect until February 12, 2009. The term of
this Agreement shall be extended for successive one (1) year terms at the end of the initial term
and on each anniversary thereafter unless the Company has provided written notice to the Executive
at least six (6) months before the end of a term that the Agreement shall not be extended (the
initial term and any extensions thereof, the “Term”). Notwithstanding the foregoing, the
Executive’s employment may be terminated during a Term as provided in Section 7 below.

     2.      Employment.

              (a)      The Executive will be employed as the General Counsel and Secretary of the Company or in
such other position(s) as may be mutually agreed upon by the parties. The Executive will perform
the duties, undertake the responsibilities and exercise the authority customarily performed,
undertaken and exercised by persons employed in a similar executive capacity or as directed by
PolyMedica’s Chief Executive Officer or Board of Directors of the Company (the “Board”). The
Executive shall report directly to the Chief Executive Officer of PolyMedica.

              (b)      The Executive will devote his full working time, attention and skill to the

1

 

performance of
his duties and responsibilities as an executive employee of the Company in a trustworthy and
professional manner, and will use his best efforts to promote the interests of the Company. The
Executive will not, without prior written approval of the Board, engage in any other activities
that would interfere with the performance of his duties as an employee of the Company, are in
violation of written policies of the Company, are in violation of applicable law, or would create
an actual or perceived conflict of interest with respect to the Executive’s obligations as an
employee of the Company. The Executive may (1) with advance notice to and consent of the Board,
serve on corporate, civil or charitable boards or committees; (2) deliver lectures and teach at
educational institutions; (3) serve as a personal representative or trustee; (4) manage his
personal, financial and legal affairs; and (5) invest personally in any business where no conflict
of interest exists between such investment and the business of the Company, provided those
activities do not require a material time commitment by the Executive or are otherwise contrary to
any provision of this Agreement.

     3.      Compensation. For so long as the Executive is employed by the Company under this
Agreement, the Executive shall be paid the following compensation:

               (a)      Base Salary. The Executive’s initial base salary will be $250,000 per annum (such
base salary, as may be adjusted from time to time in accordance with this Section, the “Base
Salary”), from which shall be deducted all required or authorized payroll deductions, including
state and federal withholdings. The Base Salary will be payable in accordance with the Company’s
customary payroll practices applicable to its executives. The Base Salary will be reviewed, and
may be adjusted, at least annually in a manner designated by the Board.

               
(b)      Bonus. The Executive will be eligible for an annual bonus for each fiscal year of
his employment. Such bonus shall be based on a target equal to a percentage of Executive’s Base
Salary as set forth in the PolyMedica Executive Bonus Plan, or similar plan, as in effect from time
to time. The Board, or the Compensation Committee of the Board (the “Compensation Committee”), in
its sole discretion, shall establish the eligibility criteria for such annual bonus, which may
include Company financial projections and management goals specific to the Executive. Each bonus
earned by the Executive will be paid to the Executive on or before 2 1/2 months following the end
of (i) the Company’s fiscal year in which the applicable bonus was earned; or (ii) the calendar
year in which the applicable bonus was earned, as applicable.

               
(c)      Stock Based Compensation. The Executive will be eligible to participate in
PolyMedica’s Employee Stock Purchase Plan and to be considered by the Compensation Committee for
grants or awards of stock options or other stock-based compensation under PolyMedica’s 2000 Stock
Incentive Plan or similar plans as in effect from time to time. All such grants or awards shall be
governed by the relevant plan documents and requirements and shall be evidenced by PolyMedica’s
then-standard form of stock option, restricted stock or other applicable agreement.

     4.      Employee Benefits. The Executive will be entitled to participate in all employee
benefit plans, practices and programs maintained by the Company and made available to employees
generally including, without limitation, all pension, retirement, profit sharing, savings, health,
hospitalization, disability, dental, life or travel accident insurance benefit plans, vacation and
sick leave in accordance with the terms of such plans, practices and
programs as in effect from
time to time.

2

 

     5.      Executive Benefits. The Executive will be entitled to participate in all executive
benefit or incentive compensation plans now maintained or hereafter established by the Company for
the purpose of providing compensation and/or benefits to executives of the Company. Unless
otherwise provided herein or as otherwise determined by the Compensation Committee of the Board,
the Executive’s participation in such plans will be on the same basis and terms as other similarly
situated executives of the Company. No additional compensation provided under any of such plans
will be deemed to modify or otherwise affect the terms of this Agreement or any of the Executive’s
entitlements hereunder.

     6.      Reimbursements and Other Benefits.

          
     (a)      Expenses. The Company will pay all reasonable and properly documented expenses
incurred by the Executive in furtherance of the Company’s business in accordance with applicable
Company policies and procedures (“Expenses”), including, without limitation, traveling and
entertainment expenses, and will reimburse the Executive for all such reasonable expenses advanced
by him and not reimbursed prior to the date of this Agreement.

          
     (b)      Life Insurance. The Company will provide term life insurance on the life of the
Executive, for which the Executive shall designate the beneficiaries, with a death benefit equal to
150% of the Executive’s Base Salary.

          
     (c)      Vacation. The Executive may take four (4) weeks of paid vacation during each year
at such times as shall be consistent with PolyMedica’s vacation policies and, in PolyMedica’s
judgment, with PolyMedica’s vacation schedule for executives and other employees.

     7.      Termination and Compensation Upon Termination. The Executive’s employment
hereunder may be terminated under the following circumstances:

          
     (a)      Definitions.

               
          (i)      Cause. For purposes of this Agreement, “Cause” means:

                    
               (A)      a good faith finding by the Board that the Executive failed to substantially perform his
duties and obligations to the Company (other than a failure resulting from the Executive’s
incapacity because of a Disability, as defined in Section 7(a)(ii)), including but not limited to
one or more acts of gross negligence;

                    
               (B)      a good faith finding by the Board of a material breach of the Company’s Code of Conduct or
other policies and procedures; provided that, if such material breach is determined by the Board,
in its sole discretion, to be curable, the material breach is not cured within 10 days after a
written demand for cure is received by the Executive from the Board which specifically identifies
the manner in which the Board believes the Executive has materially breached a provision of the
Company’s Code of Conduct or other written policies of the Company;

3

 

                    
     (C)      indictment or conviction (including the entry of a plea of guilty or nolo contendere by
the Executive) to any felony or any misdemeanor or other criminal offense involving fraud,
dishonesty, theft, breach of trust or moral turpitude or that requires mandatory exclusion in any
Federal health care program pursuant to 42 U.S.C. § 1320a-7(a) during the Executive’s employment;

                    
     (D)      a good faith finding by the Board that the Executive willfully engaged in conduct which is
demonstrably and materially injurious to the Company, monetarily or otherwise;

                    
     (E)      a good faith finding by the Board that the Executive materially breached this Agreement or
the Confidentiality, Non-Competition/Non-Solicitation and Work Product Agreement incorporated by
Section 8;

                    
     (F)      the Executive’s exclusion, debarment or suspension from participation in any Federal
health care programs or in Federal procurement or nonprocurement programs; or

                    
     (G)      the Executive’s violation of the Securities Act of 1933 or the Securities Exchange Act of
1934.

               (ii)      Disability.

                    
     (A)      Except as set forth in Section 7(a)(ii)(B) below, for purposes of this Agreement,
“Disability” means a physical or mental illness, impairment or infirmity which renders the
Executive unable to perform the essential functions of his position, including his duties under
this Agreement, with reasonable accommodation, as determined by a physician selected by the Company
and acceptable to the Executive or the Executive’s legal representative, for at least one hundred
eighty (180) days during any 365-consecutive-day period.

                    
     (B)      Notwithstanding the foregoing, to the extent that any payment under this Agreement that is
subject to Code Section 409A may be triggered due to a Disability, “Disability” shall mean
Executive (A) is unable to engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment which can be expected to result in death or can be
expected to last for a continuous period of not less than twelve (12) months, or (B) is, by reason
of any medically determinable physical or mental impairment which can be expected to result in
death or can be expected to last for a continuous period of not less than twelve (12) months,
receiving income replacement benefits for a period of not less than three (3) months under a
Company-sponsored group disability plan.

     The Executive shall be entitled to the compensation and benefits provided for under this
Agreement for any period during the Term of this Agreement and prior to the establishment of the
Executive’s Disability during which the Executive is unable to work due to a physical or mental
illness, impairment or infirmity. Notwithstanding anything contained in this Agreement to the
contrary, the Executive will be entitled to return to his position with the Company as set forth in
this Agreement in which event no Disability of the Executive will be deemed to have occurred, until
the Termination Date specified in a Notice of Termination (as each term is hereinafter defined)
relating to the Executive’s Disability.

4

 

               (iii)      Change in Control. For purposes of this Agreement, “Change in Control” means
the occurrence of any of the following events:

                    
     (A)      the acquisition by an individual, entity or group (within the meaning of Section 13(d)(3)
or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) (a “Person”)
of beneficial ownership of any capital stock of the Company if, after such acquisition, such Person
beneficially owns (within the meaning of Rule 13d-3 promulgated under the Exchange Act) in excess
of 50% of either the then-outstanding shares of common stock of the Company (the “Outstanding
Company Common Stock”) or the combined voting power of the then-outstanding securities of the
Company entitled to vote generally in the election of directors (the “Outstanding Company Voting
Securities”); provided, however, that for purposes of this subsection (A), the following
acquisitions shall not constitute a Change in Control: (1) any acquisition of more than 50% of the
Outstanding Company Common Stock directly from the Company (excluding an acquisition pursuant to
the exercise, conversion or exchange of any security exercisable for, convertible into or
exchangeable for common stock or voting securities of the Company, unless the Person exercising,
converting or exchanging such security acquired such security directly from the Company or an
underwriter or agent of the Company); (2) any acquisition of more than 50% of the Outstanding
Company Common Stock by the Company; (3) any acquisition of more than 50% of the Outstanding
Company Common Stock by any employee benefit plan (or related trust) sponsored or maintained by the
Company or any corporation controlled by the Company; or (4) any acquisition by any Person who,
prior to such acquisition, already owned more than 50% of the Outstanding Company Common Stock or
Outstanding Company Voting Securities; or

                    
     (B)      such time as the majority of the members of the Board (or, if applicable, the board of
directors of a successor corporation to the Company) is replaced during any 12-month period
(commencing no earlier than the date of this Agreement) by directors whose appointment or election
is not endorsed by a majority of the members of the Board prior to the date of the appointment or
election; or

                    
     (C)      the consummation of a merger, consolidation, reorganization, recapitalization or statutory
share exchange involving the Company or a sale or other disposition of all or substantially all of
the assets of the Company in one or a series of transactions (a “Business Combination”), unless,
immediately following such Business Combination, all or substantially all of the individuals and
entities who were the beneficial owners of the Outstanding Company Common Stock and Outstanding
Company Voting Securities immediately prior to such Business Combination beneficially own, directly
or indirectly, more than 50% of the then-outstanding shares of common stock and the combined voting
power of the then-outstanding securities entitled to vote generally in the election of directors,
respectively, of the resulting or acquiring corporation in such Business Combination (which shall
include, without limitation, a corporation which as a result of such transaction owns the Company
or substantially all of the Company’s assets either directly or through one or more subsidiaries)
in substantially the same proportions as their ownership, immediately prior to such Business
Combination, of the Outstanding Company Common Stock and Outstanding Company Voting Securities,
respectively; or

5

 

                    
     (D)      approval by the stockholders of the Company of a complete liquidation or dissolution of
the Company, other than in a bankruptcy proceeding, provided that the liquidation or dissolution
otherwise meets the requirements of one of the events described in Sections 7(a)(iii)(A), (B) or
(C) above.

     In all respects, the definition of “Change in Control” shall be interpreted to comply with
Code Section 409A, and the provisions of Treasury Notice 2005-1, and any successor statute,
regulation and guidance thereto.

               (iv)      Change in Control Date. For purposes of this Agreement, “Change in Control Date”
means (A) the first date during the Term on which a Change in Control occurs; or (B) the date
immediately prior to the date on which the Executive is terminated before a Change in Control if a
Change in Control occurs and it is reasonably demonstrated by the Executive that such termination
of employment (1) was at the request of a third party who has taken steps reasonably calculated to
effect a Change in Control; or (2) otherwise arose in connection with or in anticipation of a
Change in Control.

               (v)      Good Reason. For purposes of this Agreement, “Good Reason” means:

                    
     (A)      a change in the Executive’s title or duties resulting in a material diminution of the
Executive’s status, authority or responsibilities;

                    
     (B)      a reduction in the Executive’s Base Salary;

                    
     (C)      the failure by the Company to (1) continue in effect any material compensation or benefit
plan or program (including without limitation any life insurance, medical, health and accident or
disability plan and any vacation or automobile program or policy) (a “Benefit Plan”) in which the
Executive participates or which is applicable to the Executive, unless an equitable arrangement
(embodied in an ongoing substitute or alternative plan) has been made with respect to such plan or
program; (2) continue the Executive’s participation in a Benefit Plan (or in such substitute or
alternative plan) on a basis not materially less favorable, both in terms of the amount of benefits
provided and the level of the Executive’s participation relative to other participants; or (3)
award cash bonuses to the Executive in amounts and in a manner substantially consistent with past
practice in light of the Company’s financial performance;

                    
     (D)      a change by the Company in the location at which the Executive performs his principal
duties for the Company to a new location that is both (1) outside a radius of 35 miles from the
Executive’s principal residence; and (2) more than 20 miles from the location at which the
Executive performed his principal duties for the Company as of the date this Agreement is executed
by the Executive;

                    
     (E)      a requirement by the Company that the Executive travel on Company business to a
substantially greater extent than as of the date this Agreement is executed by the Executive;

6

 

                    
          (F)      the failure of the Company to obtain the agreement from any successor to the Company to
assume and agree to perform this Agreement, as required by Section 11(a);

                    
          (G)      a purported termination of the Executive’s employment which is not effected pursuant to a
Notice of Termination satisfying the requirements of Section 7(c); or

                    
          (H)      any failure of the Company to pay or provide to the Executive any portion of the
Executive’s compensation or benefits due under any Benefit Plan within ten (10) days of the date
such compensation or benefits are due, or any material breach by the Company of this Agreement.

     The Executive’s right to terminate his employment for Good Reason shall not be affected by his
incapacity due to physical or mental illness.

     Notwithstanding the occurrence of any such event or circumstance, such occurrence shall not be
deemed to constitute Good Reason if (1) prior to the Date of Termination specified in the Notice of
Termination (each as defined in Sections 7(c) and 7(d)) given by the Executive in respect thereof,
such event or circumstance has been fully corrected and the Executive has been reasonably
compensated for any losses or damages resulting therefrom (provided that such right of correction
by the Company shall only apply to the first Notice of Termination for Good Reason given by the
Executive); or (2) the Company has given the Executive Notice of Termination prior to the date the
Executive provides the Company with a Notice of Termination for Good Reason.

          (b)      Termination and Compensation Upon Termination.

               
     (i)      Termination for Cause. The Company may terminate the Executive’s employment for
Cause.

                    
          (A)      If the Executive’s employment is terminated by the Company for Cause, then the Company
will pay the Executive all amounts earned or accrued hereunder through the Termination Date but not
paid as of the Termination Date, including (1) Base Salary; (2) Expenses incurred by the Executive
on behalf of the Company for the period ending on the Termination Date; (3) vacation pay (i.e. the
Base Salary divided by 260 and then multiplied by the number of accrued and unused vacation days as
of the Termination Date); and (4) any bonus or incentive compensation with respect to the fiscal
year ended prior to the fiscal year in which the Termination Date occurs that was earned and
unpaid, (collectively, “Accrued Compensation”).

                    
          (B)      In the event that the Company terminates the Executive’s employment without Cause as set
forth in Section 7(b)(ii), but the Board determines subsequently that the Company had the right to
terminate the Executive’s employment for Cause pursuant to this Section 7(b)(i), the Company may
terminate the payment of all amounts to the Executive pursuant to Section 7(b)(ii) and the
Executive shall return all previous payments made to him pursuant to Section 7(b)(ii) other than
the Accrued Compensation.

7

 

               (ii)      Termination by the Company Without Cause or by the Executive for Good Reason.
The Company may terminate the Executive’s employment without Cause and the Executive may terminate
his employment for Good Reason. If the Executive’s employment with the Company is terminated by
the Company without Cause (excluding any termination due to the Executive’s death or Disability) or
by the Executive for Good Reason (other than within 24 months of the Change in Control Date, in
which event Section 7(b)(v) shall apply), then the Company will pay the Executive:

                    
     (A)      all Accrued Compensation;

                    
     (B)      any deferred compensation;

                    
     (C)      a severance payment equal to two times the sum of (x) the Executive’s highest Base Salary
during the three-year period immediately preceding the Termination Date (or during the period the
Executive was employed by the Company, if shorter than three years) and (y) the average of the
annual bonuses awarded to the Executive pursuant to Section 3(b) above during the three-year period
immediately preceding the Termination Date (or during the period the Executive was employed by the
Company, if shorter than three years). The severance pay provided for in this section shall be paid
to the Executive in twenty-four (24) equal monthly installments on the first business day of each
month following the Termination Date except that the first payment shall not be sooner than the
eighth day following the date on which the Executive delivers to the Company the release referred
to in Section 7(b)(ii)(F) below.

                    
     (D)      directly, or by reimbursing the Executive for, the monthly premium for continuation
coverage under the Company’s health and dental insurance plans, to the same extent that such
insurance is provided to persons currently employed by the Company, provided that the Executive
makes a timely election for such continuation coverage under the Consolidate Omnibus Budget
Reconciliation Act of 1985 (“COBRA”). The “qualifying event” under COBRA shall be deemed to have
occurred on the Termination Date. The Company’s obligation under this paragraph shall end 18
months after the Termination Date or at such earlier date as the Executive becomes eligible for
comparable coverage under another employer’s group coverage. The Executive agrees to notify the
Company promptly and in writing of any new employment and to make full disclosure to the Company of
the health and dental insurance coverage available to him through such new employment.

                    
     (E)      directly, or by reimbursing the Executive for, the monthly premium to continue the life
insurance provided for in Section 6(b) for 18 months following the Termination Date.

                    
     (F)      The Company shall not be obligated to make the payments otherwise provided for in Sections
7(b)(ii)(B), (C), (D) and (E) unless the Executive provides to the Company, and does not revoke, a
general release of claims in a form satisfactory to the Company.

                    
     (G)      The Company shall not be obligated to make the payments otherwise provided for in Sections
7(b)(ii)(B), (C), (D) and (E) upon a good faith finding by the Board of a material breach of the
Confidentiality, Non-Competition/Non-Solicitation and Work

8

 

Product Agreement incorporated by
Section 8 and the Executive shall return all previous payments made to him pursuant to Sections
7(b)(ii)(B), (C), (D) and (E) after the date on which the Executive materially breached the
Confidentiality, Non-Competition/Non-Solicitation and Work Product Agreement incorporated by
Section 8.

                    
     (H)      Notwithstanding any other provision with respect to the timing of payments under Sections
7(b)(ii)(B), (C), (D) and (E), to the extent that the Executive is deemed to be a “key employee”
within the meaning of Code Section 416(i), any payments to which the Executive may become entitled
under Sections 7(b)(ii) (B), (C), (D) and (E) will not commence until the first business day of the
seventh month following the Termination Date, at which time the Executive shall be paid an
aggregate amount equal to seven monthly payments otherwise due to the Executive under the terms of
Sections 7(b)(ii)(B), (C), (D) and (E). Commencing on the first business day of the eighth month
following the Termination Date and continuing each month thereafter, the Executive shall be paid
the regular monthly payment otherwise due to the Executive in accordance with the terms of Sections
7(b)(ii) (B), (C), (D) and (E).

               (iii)      Disability. The Company may terminate the Executive’s employment upon the
Executive’s Disability. If the Executive’s employment with the Company is terminated because of
his Disability, then the Company will pay the Executive (A) all Accrued Compensation; and (B) an
amount equal to the Executive’s target bonus for the fiscal year in which the Executive’s
employment is terminated due to his Disability, multiplied by a fraction, the numerator of which
shall be the number of days from the beginning of such fiscal year through the Termination Date and
the denominator of which shall be three hundred and sixty-five (365). If the Executive’s
Disability meets the definition set forth in Section 7(a)(ii)(B), the Company will also pay the
Executive any deferred compensation. In addition, effective upon the Executive’s Disability, each
outstanding option to purchase shares of Common Stock of the Company held by the Executive shall
become immediately exercisable in full and will no longer be subject to a right of repurchase by
the Company, and each outstanding restricted stock award shall be deemed to be fully vested and
will no longer be subject to a right of repurchase by the Company.

               (iv)      Death. The Executive’s employment shall terminate because of the Executive’s
death. If the Executive’s employment with the Company terminates because of the Executive’s death,
then the Company will pay the Executive’s beneficiaries or heirs (A) all Accrued Compensation; (B)
an amount equal to the Executive’s target bonus for the fiscal year in which the Executive’s
employment is terminated due to his death, multiplied by a fraction, the numerator of which shall
be the number of days from the beginning of such fiscal year through the Termination Date and the
denominator of which shall be three hundred and sixty-five (365); and (C) any deferred
compensation. In addition, effective upon the death of the Executive, each outstanding option to
purchase shares of Common Stock of the Company held by the Executive shall become immediately
exercisable in full and will no longer be subject to a right of repurchase by the Company, and each
outstanding restricted stock award shall be deemed to be fully vested and will no longer be subject
to a right of repurchase by the Company.

               (v)      Termination by the Company Without Cause or by the Executive for Good Reason Within 24
Months of Change in Control Date. If the Executive’s employment

9

 

with the Company is terminated
by the Company without Cause (excluding any termination due to the Executive’s death or Disability)
or by the Executive for Good Reason and in either case the Termination Date occurs within
twenty-four (24) months of the Change in Control Date, then the Company will pay or reimburse the
Executive:

                    (A)      all Accrued Compensation;

                    (B)      any deferred compensation;

                    (C)      a severance payment equal to two times the sum of (x) the Executive’s highest Base Salary
during the three-year period immediately preceding the Change in Control Date (or during the period
the Executive was employed by the Company, if less than three years prior to the Change in Control
Date) and (y) the average of the annual bonuses awarded to the Executive pursuant to Section 3(b)
above during the three-year period immediately preceding the Change in Control Date (or during the
period the Executive was employed by the Company, if shorter than three years). The severance pay
provided for in this section shall be paid to the Executive in twenty-four (24) equal monthly
installments on the first business day of each month following the Termination Date except that the
first payment shall not be sooner than the eighth day following the date on which the Executive
delivers to the Company the release referred to in Section 7(b)(v)(F) below.

                    (D)      directly, or by reimbursing the Executive for, the monthly premium for continuation
coverage under the Company’s health and dental insurance plans, to the same extent that such
insurance is provided to persons currently employed by the Company, provided that the Executive
makes a timely election for such continuation coverage under COBRA. The “qualifying event” under
COBRA shall be deemed to have occurred on the Termination Date. The Company’s obligation under
this paragraph shall end 18 months after the Termination Date or at such earlier date as the
Executive becomes eligible for comparable coverage under another employer’s group coverage. The
Executive agrees to notify the Company promptly and in writing of any new employment and to make
full disclosure to the Company of the health and dental insurance coverage available to him through
such new employment.

                    (E)      directly, or by reimbursing the Executive for, the monthly premium to continue the life
insurance provided for in Section 6(b) for 18 months following the Termination Date.

                    (F)      The Company shall not be obligated to make the payments otherwise provided for in Sections
7(b)(v)(B), (C), (D) and (E) unless the Executive provides to the Company, and does not revoke, a
general release of claims in a form satisfactory to the Company.

                    (G)      The Company shall not be obligated to make the payments otherwise provided for in Sections
7(b)(v)(B), (C), (D) and (E) upon a good faith finding by the Board of a material breach of the
Confidentiality, Non-Competition/Non-Solicitation and Work Product Agreement incorporated by
Section 8 and the Executive shall return all previous payments made to him pursuant to Sections
7(b)(v)(B), (C), (D) and (E) after the date on which

10

 

the Executive materially breached the
Confidentiality, Non-Competition/Non-Solicitation and Work Product Agreement incorporated by
Section 8.

                    
               (H)      Notwithstanding any other provision with respect to the timing of payments under Sections
7(b)(v)(B), (C), (D) and (E), to the extent that the Executive is deemed to be a “key employee”
within the meaning of Code Section 416(i), any payments to which the Executive may become entitled
under Sections 7(b)(v)(B), (C), (D) and (E) will not commence until the first business day of the
seventh month following the Termination Date, at which time the Executive shall be paid an
aggregate amount equal to seven monthly payments otherwise due to the Executive under the terms of
Sections 7(b)(v)(B), (C), (D) and (E). Commencing on the first business day of the eighth month
following the Termination Date and continuing each month thereafter, the Executive shall be paid
the regular monthly payment otherwise due to the Executive in accordance with the terms of Sections
7(b)(v)(B), (C), (D) and (E).

          
          (vi)      Resignation. The Executive may terminate this Agreement without Good Reason upon
thirty (30) days’ prior written notice to the Board. If the Executive’s employment with the
Company is terminated by the Executive without Good Reason, then the Company will pay the Executive
all Accrued Compensation earned through the Termination Date specified in the Notice of
Termination.

          (c)      Notice of Termination. Any purported termination by the Company or by the
Executive will be communicated by a written Notice of Termination to the other. For purposes of
this Agreement, a “Notice of Termination” means a notice which indicates the specific termination
provision in this Agreement relied upon and sets forth the Termination Date (as defined below).
For purposes of this Agreement, no purported termination of employment will be effective without a
Notice of Termination.

          (d)      Termination Date. “Termination Date” will mean (i) in the case of the Executive’s
Death, the Executive’s date of Death; (ii) if the Executive’s employment is terminated for
Disability, the date of the Executive’s Disability; (iii) if the Executive terminates his
employment, on the effective date of termination specified in the Notice of Termination; and (iv)
if the Executive’s employment is terminated for any other reason, the date specified in the Notice
of Termination, which will not be longer than seven (7) days after the Notice of Termination.

          (e)      Timing of Payment. The Accrued Compensation payable to the Executive as provided
in Sections 7(b)(i) — (vi) will be paid pursuant to applicable state law or within ten (10)
business days after the Executive’s Termination Date, whichever period is shorter. Any deferred
compensation will be paid to the Executive or his beneficiaries, as applicable, 60 days after the
Executive’s termination date. Any other compensation provided for in Section 7(b) will be paid as
set forth above.

          (f)      Mitigation. The Executive will not be required to mitigate the amount of any
payment provided for in this Agreement by seeking other employment or otherwise and no such payment
will be offset or reduced by the amount of any compensation or benefits provided to the Executive
in any subsequent employment other than as provided under Sections 7(b)(ii)(D) and 7(b)(v)(D).

11

 

          
     (g)      Other. The Executive’s entitlement to any other compensation or benefits upon
termination of Executive’s employment. will be determined in accordance with the Company’s employee
benefit plans and other applicable programs and practices then in effect.

     8.      Executive Covenants. As a condition of his continued employment with the Company
and in exchange for the consideration set forth in this Agreement and the consideration provided by
the Executive’s Restricted Stock Agreement, the Executive acknowledges and reaffirms his
obligations under his Confidentiality, Non-Competition/Non-Solicitation and Work Product Agreement
dated May 27, 2005 and as amended from time to time (the “Non-Competition Agreement”), which shall
survive the termination of his employment.

     9.      Accelerated Vesting Upon a Change in Control. If a Change in Control occurs during
the Term, then, effective upon the Change in Control:

          
     (a)      each outstanding option to purchase shares of Common Stock of the Company held by the
Executive shall become immediately exercisable in full and will no longer be subject to a right of
repurchase by the Company; and

          
     (b)      each outstanding restricted stock award shall be deemed to be fully vested and will no
longer be subject to a right of repurchase by the Company.

     10.      Treatment of Section 280G. If it is determined that the amounts payable to the
Executive under the Agreement, when considered together with any amounts payable to the Executive
in connection with a Change in Control, cause such payments to be treated as “excess parachute
payments” as defined under Code Section 280G (“Excess Parachute Payments”), and such payments equal
an amount that is at least equal to the product of (a) 3.3, multiplied by (b) the “base amount” as
defined under Code Section 280G (“Base Amount”), then the Company will make an additional “gross
up” payment to the Executive, which shall be in an amount sufficient to pay for any additional tax
imposed on the Executive pursuant to Code Section 4999 and any additional interest or penalties
imposed on the Executive with respect to such tax, plus the federal, state and local taxes
applicable to such additional “gross up” payment. Notwithstanding the foregoing, if it is
determined that the amounts payable to the Executive under the Agreement, when considered together
with any amounts payable to the Executive in connection with a Change in Control, will cause such
payments to be treated as Excess Parachute Payments, but such payments will equal an amount which
is less than the product of (x) 3.3, multiplied by (y) the Base Amount, then the payments to the
Executive under this Agreement will be reduced to the extent necessary so that no additional tax
will be imposed on the Executive pursuant to Code Section 4999.

     11.      Successors and Assigns.

          
     (a)      Successor to Company. The Company shall require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the
business or assets of the Company expressly to assume and agree to perform this Agreement to the
same extent that the Company would be required to perform it if no such succession had taken place.
Failure of the Company to obtain an assumption of this

12

 

Agreement at or prior to the effectiveness
of any succession shall be a breach of this Agreement and shall constitute Good Reason if the
Executive elects to terminate employment, except that for purposes of implementing the foregoing,
the date on which any such succession becomes effective shall be deemed the Date of Termination.

          
     (b)      Successor to the Executive. Neither this Agreement nor any right or interest
hereunder will be assignable or transferable by the Executive, his beneficiaries or legal
representatives, except by will or by the laws of descent and distribution. This Agreement will
inure to the benefit of and be enforceable by the Executive’s legal personal representative.

     12.      Arbitration. The Company and the Executive agree that they prefer to arbitrate
any dispute they may have instead of litigating in court before a judge or jury. Therefore, any
and all disputes, claims and controversies between the Company or any of its Affiliates and the
Executive arising out of or relating to this Agreement, or the breach thereof, or otherwise arising
out of or relating to the Executive’s employment or the termination thereof will be resolved by
binding arbitration in accordance with the National Rules for the Resolution of Employment Disputes
of the American Arbitration Association (or any comparable rules then in existence). The
arbitration will take place in the Boston, Massachusetts metropolitan area. The arbitrator will
have no authority to award punitive damages. The award of the arbitrator will be final and
judgment thereon may be entered in any court having jurisdiction. The parties will share the costs
of the arbitration equally, unless otherwise ordered by the arbitrator. Each party will bear its
own attorneys’ fees and costs. Judgment upon the arbitration award may be entered in any federal
or state court having jurisdiction. The parties understand and agree that EACH PARTY TO THIS
AGREEMENT WAIVES ANY RIGHT TO A JURY TRIAL.

     13.      Notice. For the purposes of this Agreement, notices and all other communications
provided for in the Agreement (including the Notice of Termination) will be in writing and will be
deemed to have been duly given when personally delivered or sent by certified mail, return receipt
requested, postage prepaid, addressed to the respective addresses last given by each party to the
other, provided that all notices to the Company will be directed to the attention of the Board with
a copy to the Secretary of the Company. All notices and communications will be deemed to have been
received on the date of delivery thereof or on the third business day after the mailing thereof,
except that notice of change of address will be effective only upon receipt.

     14.      Non-exclusivity of Rights. Nothing in this Agreement will prevent or limit the
Executive’s continuing or future participation in any benefit, bonus, incentive or other plan or
program provided by the Company or any of its subsidiaries and for which the Executive may qualify,
nor will anything herein limit or reduce such rights as the Executive may have under any other
agreements with the Company or any of its subsidiaries. Amounts which are vested benefits or which
the Executive is otherwise entitled to receive under any plan or program of the Company or any of
its subsidiaries will be payable in accordance with such plan or program, except as explicitly
modified by this Agreement.

     15.      Miscellaneous. No provision of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is agreed to in writing and signed by the
Executive and the Company. The Company and the Executive agree that they will negotiate in good
faith and jointly execute an amendment to modify this Agreement to the extent necessary

13

 

to comply
with the requirements of Code Section 409A, or any successor statute, regulation and guidance
thereto; provided that no such amendment shall increase the total financial obligation of the
Company under this Agreement. No waiver by either party hereto at any time of any breach by the
other party hereto of, or compliance with, any condition or provision of this Agreement to be
performed by such other party will be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time. No agreement or representations, oral
or otherwise, express or implied, with respect to the subject matter hereof have been made by
either party which are not expressly set forth in this Agreement.

     16.    Governing Law. This Agreement will be governed by and construed and enforced in
accordance with the laws of the Commonwealth of Massachusetts without giving effect to the conflict
of law principles thereof. The Executive hereby irrevocably submits and acknowledges and
recognizes the jurisdiction of the courts of the Commonwealth of Massachusetts, or if appropriate,
a federal court located in Massachusetts (which courts, for purposes of this Agreement, are the
only courts of competent jurisdiction), over any suit, action or other proceeding arising out of,
under or in connection with this Agreement or the subject matter hereof.

     17.    Severability. The provisions of this Agreement will be deemed severable and the
invalidity or unenforceability of any provision will not affect the validity or enforceability of
the other provisions hereof.

     18.    Entire Agreement. This Agreement, and the Non-Competition Agreement, the 2000
Stock Incentive Plan, the Restricted Stock Grant, the PolyMedica Corporation Executive Savings Plan
and the PolyMedica Corporation Employee Stock Purchase Plan constitute the entire agreement between
the parties hereto and supersede all prior agreements, understandings and arrangements, oral or
written, between the parties hereto with respect to the subject matter hereof, including, but not
limited to, the Prior Agreements.

     19.    Tax Consequences. The Company does not guarantee the tax treatment or tax
consequences associated with any payment or benefit arising under this Agreement.

14

 

     IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its duly
authorized officer and the Executive has executed this Agreement as of the day and year first above
written.

	 	 	 	 	 
	 	PolyMedica Corporation

 	 
	 	/s/ Patrick T. Ryan
 	 
	 	Name:  	Patrick T. Ryan 	 
	 	Title:  	President and Chief Executive Officer 	 
	 
	 	Executive

 	 
	 	/s/ Devin J. Anderson
 	 
	 	Devin J. Anderson 	 
	 	 	 
	 

 

15

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