-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, AYiaP65mf17LW5LK61y+ektTWwzJEAS1ajcmXFdQw38BUup0ihZuadvcMqPdulXk Sm3eRy4rx36zUVC2ZpjjCA== 0000927016-02-001766.txt : 20020415 0000927016-02-001766.hdr.sgml : 20020415 ACCESSION NUMBER: 0000927016-02-001766 CONFORMED SUBMISSION TYPE: 10-K405 PUBLIC DOCUMENT COUNT: 8 CONFORMED PERIOD OF REPORT: 20011229 FILED AS OF DATE: 20020329 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MOORE MEDICAL CORP CENTRAL INDEX KEY: 0000074691 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-MEDICAL, DENTAL & HOSPITAL EQUIPMENT & SUPPLIES [5047] IRS NUMBER: 221897821 STATE OF INCORPORATION: DE FISCAL YEAR END: 0102 FILING VALUES: FORM TYPE: 10-K405 SEC ACT: 1934 Act SEC FILE NUMBER: 001-08903 FILM NUMBER: 02593758 BUSINESS ADDRESS: STREET 1: PO BOX 1500 STREET 2: 389 JOHN DOWNEY DR CITY: NEW BRITAIN STATE: CT ZIP: 06050 BUSINESS PHONE: 2038263600 MAIL ADDRESS: STREET 1: 389 JOHN DOWNEY DRIVE STREET 2: 389 JOHN DOWNEY DRIVE CITY: NEW BRITAIN STATE: CT ZIP: 06050 FORMER COMPANY: FORMER CONFORMED NAME: OPTEL CORP DATE OF NAME CHANGE: 19850611 10-K405 1 d10k405.txt FORM 10-K405 ================================================================================ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ------------------ FORM 10 - K FOR ANNUAL AND TRANSITION REPORTS Pursuant to Sections 13 or 15 (d) of the Securities Exchange Act of 1934 [X] Annual Report Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934 For the fiscal year ended December 29, 2001 or |_| Transition Report Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934 MOORE MEDICAL CORP. (Exact name of registrant as specified in its charter) - -------------------------------------------------------------------------------- Delaware 1-8903 (State of incorporation) (Commission File Number) P.O. Box 1500, New Britain, CT 06050 22-1897821 (Address of principal executive offices) (I.R.S. Employer Identification Number) 860-826-3600 (Registrant's telephone number) Securities registered pursuant to Section 12(g) of the Act: Common Stock ($.01 Par Value) American Stock Exchange Rights to Purchase Series I Junior Preferred Stock American Stock Exchange (Title of Each Class) (Name of each exchange on which registered)
- -------------------------------------------------------------------------------- Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding twelve months, and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No |_| Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X] The aggregate market value of the voting stock held by non-affiliates (i.e. other than identified 5% holders, and holdings attributed to executive officers and directors) of the registrant as of March 11, 2002 was $16,381,610. Determination of affiliate status for such purpose is not a conclusive determination thereof for other purposes. Number of shares of Common Stock outstanding (exclusive of 92,096 treasury shares) as of March 11, 2002: 3,153,943. - -------------------------------------------------------------------------------- Documents Incorporated By Reference The portions of the registrant's proxy statement for its 2002 Annual Meeting of Shareholders referred to in Part III of this report are incorporated by reference. The exhibit index is located on pages 31-33. Total number of pages in the numbered original (including exhibits) is 154. This is page 1 of 35 pages. ================================================================================ Moore Medical Corp. & Subsidiary 2001 Annual Report on Form 10-K Table of Contents Part I - ----------------------------------------------------------------------------------------------------------------- Item 1. Business 3 Item 2. Properties 8 Item 3. Legal Proceedings 8 Item 4. Submission of Matters to a Vote of Security Holders 8 Part II - ----------------------------------------------------------------------------------------------------------------- Item 5. Market for Registrant's Common Equity and Related Stockholder Matters 8 Item 6. Selected Financial Data 9 Item 7. Management's Discussion and Analysis of Results of Operations and Financial Condition 10 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 13 Item 8. Financial Statements and Supplementary Data 13 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 29 Part III - ----------------------------------------------------------------------------------------------------------------- Item 10. Directors and Executive Officers of the Registrant 30 Item 11. Executive Compensation 30 Item 12. Security Ownership of Certain Beneficial Owners and Management 30 Item 13. Certain Relationships and Related Transactions 30 Part IV - ----------------------------------------------------------------------------------------------------------------- Item 14. Exhibits, Financial Statement Schedule and Reports on Form 8-K 31 Signatures 34
2 ITEM 1. Business Overview In 1997 Moore Medical Corp. generated 60% of its revenues from its wholesale drug distribution business to pharmacies and 40% of its revenues from the sale of medical and surgical supplies to health care practices in non-hospital settings. The Company exited the less profitable wholesale drug distribution business in October 1997 with accompanying non-recurring inventory markdowns and write-offs, costs and expenses of $6.0 million. Today, Moore Medical is an Internet-enabled multi-channel marketer and distributor of medical, surgical and pharmaceutical products to over 100,000 health care practices and facilities in non-hospital settings nationwide, including: physicians, emergency medical technicians, schools, correctional institutions, municipalities, occupational/industrial health doctors and nurses, and other specialty practice communities. Moore Medical also serves the medical/surgical supply needs of over 26 customer community affiliates. We market to and serve our customers through direct mail, industry-specialized telephone support staff, field sales representatives, and the Internet. Our direct marketing and distribution business has been in operation for over 50 years. Moore Medical's Mission & Key Initiatives Our mission is to empower health care professionals with the tools, and resources they need to improve the health of their patients and save lives. We strive to: Maintain a strong customer focus - -------------------------------- Our customers are the focal point of all that we do. We have established a Corporate Customer Council, health care specialty online advisory groups and ongoing surveys to help us learn more about customer needs and how to best serve them. Provide an enjoyable and efficient multi-channel customer experience - -------------------------------------------------------------------- We offer our customers a variety of ways to communicate with us and have streamlined the process of providing the quality goods and services that they have come to expect. Our second-generation web site, launched October 2001, houses a sophisticated e-commerce application that allows customers to make real-time selections and purchases online. We complement the total buying experience with an unparalleled gateway to industry associations and affiliate companies, while continuing to maintain a traditional direct mail communication campaign through our market-specific sales flyers and catalogs. Health Care Products Distribution Industry/Competition Industry: Current statistics from Hoover Online, an informational business - --------- network, report that the $1.2 trillion health care industry is the largest segment of the U.S. economy. About $35 billion is spent annually on medical/surgical supplies. There are three primary types of purchasers of medical supplies: hospitals, large Integrated Delivery Networks (IDNs) and Independent Physician Associations (IPAs). Moore distributes its products predominantly to IPAs, individual physicians' offices and clinics, as well as to emergency medical providers and health care professionals in institutional settings. The total market for sales by distributors to physicians for these products is approximately $3.3 billion, per current HIDA (Health Industry Distributors Association) statistics. Most manufacturers will not sell directly to health care practitioners in non-hospital settings. Likewise, most health care practitioners/practices prefer to purchase from a few distributors rather than from hundreds of manufacturers. Customers find it efficient and convenient to rely on these distributors for product availability, competitive prices, prompt delivery, and other services. Competition: The trend of health care product distributor consolidation - ------------ continues in an effort to realize economies of scale. Our competitors are large national distributors, regional distributors, and local distributors. Some primarily use direct mail and telemarketing, some rely on the Internet, and others make 3 sales and deliveries to their customers with a dedicated sales force and a fleet of distributor-operated delivery vehicles. Generally, we compete with other distributors on breadth of product line, brand recognition, delivery speed, price, order completion rates, and other value-added customer service factors, such as the convenience of ordering through the Internet. As more health care practices consolidate, we expect that a growing number of large customers will require their distributor to reliably service many delivery locations in different regions across the country. By providing a multi-channel distribution network, we expect that we will be able to meet the needs of our present and prospective customers. Marketing Marketing: Moore Medical conducts business-to-business marketing of its medical, - ---------- surgical, and pharmaceutical products to existing and prospective customers nationwide. The Company employs various marketing vehicles and channels to reach its target market: direct mail catalogs, flyers and letters; e-marketing initiatives (including e-mail campaigns and web site promotions); a toll-free customer support center which takes calls for orders, requests for catalogs, and provides product information; and market-specific sales representatives. The Company considers direct marketing to be one of its core competencies. An in-house creative department designs and produces all Company marketing collateral, examples of which include catalogs and flyers, web graphics and animations, Moore brand product packaging, trade show booth graphics, and affiliate-sponsored pieces. The Company contracts printing services through outside printers. Marketing materials are mailed throughout the year, utilizing a schedule based on historic results, customer-buying patterns, and forecasted segment penetration. Supply Chain During 2001, Moore Medical focused on analyzing the material movement process to identify ways to increase customer satisfaction while eliminating non-value added processes. The material movement analysis identified two significant opportunities to improve customer satisfaction and reduce internal costs. The first opportunity was the reengineering of our Demand Planning / Inventory Control process. In March 2001, we implemented a fully automated advanced forecasting and replenishment solution called E3TRIM(TM) by JDA(R) Software Group, Inc. The E3TRIM(TM) software automatically determines the appropriate inventory levels needed in our warehouses to meet our customers' expectations. The E3TRIM(TM) software has reduced manual labor, helped increase inventory turns and improved customer service levels for our Company as measured by complete, on time orders and line fill rates. The second significant opportunity was the consolidation of our distribution center network. After conducting a thorough analysis of our customers' expectations, we determined that we could improve our customer service levels and reduce costs by consolidating our distribution network to three strategically located distribution centers. We implemented our consolidation plan in September 2001 and eliminated our Illinois distribution center. Since we implemented the consolidation plan, we have realized record setting customer service levels as measured by complete, on time orders and line fill rates. Our core supply chain objective is to continuously identify new processes that improve customer satisfaction, eliminate non-value added processes and reduce costs. Distribution: We distribute our products throughout the United States and U.S. - ------------- territories from our three distribution centers in Connecticut, California, and Florida. The Distribution network has been designed with the objectives of delivering a completely satisfying purchasing experience to the customer, providing broader second-day delivery coverage, and minimizing inventory and transportation costs. We provide consistent, time-sensitive and high-quality order fulfillment services through sophisticated product allocation strategies, maintaining high standards of accuracy and fulfillment. 4 Customer orders enter the enterprise resource planning (ERP) system via our web site, and through entry by our market-specific sales representatives, customer support center representatives, or field representatives. Order fulfillment is completed the same day when the order is received by 4:00 p.m. eastern time. United Parcel Services (UPS) is our primary small package carrier, and we enjoy national account status. FedEx Ground provides small package service to our customers in the Midwest. Small package deliveries constitute over 90% of our package volume, with over 99% of orders filled to completion the same business day. With our national coverage, nearly 90% of our customers receive delivery within two business days. We are continually benchmarking our service and fulfillment performance against our system of Perfect Order Metrics, which is the percentage of orders shipped complete, on time, from the customer's assigned primary shipping warehouse (i.e., distribution center closest to customer's ship-to location) and received by the customer error-free. We have also implemented a process mapping method to identify every one of the individual steps involved in taking and fulfilling an order, with a goal towards streamlining and/or eliminating steps to make the process flow more smoothly. Product Line/Suppliers: Moore Medical's product line consists of over 10,000 of - ----------------------- the most popular medical/surgical supplies and pharmaceutical products, encompassing a broad and diversified selection. Over 7,500 stock keeping units (SKUs) are carried in stock. We are one of the few distributors of medical/surgical products to health care practitioners in non-hospital settings who also offer pharmaceuticals to those practices. Although many of our products are consumables and disposables, we also sell medical/surgical equipment and a variety of diagnostic instrumentation and accessories. We purchase products primarily from manufacturers and other distributors and do not manufacture or assemble any products, with the exception of medical and first aid kits. We maintain insurance coverage against potential losses due to product liability claims, and we believe such coverage is adequate. In 2001, our largest product suppliers were 3M, Allied Healthcare Products, Inc., Aventis Pasteur, Becton Dickinson, GlaxoSmithKline, Johnson & Johnson Healthcare Systems, Kendall Healthcare Products Co., Laerdal Medical Corp., Microflex Corporation (Microflex(R) is a registered trademark of the Microflex Corporation), and Welch Allyn. We have several competing sources for many medical/surgical supplies and pharmaceuticals. Sales of products from our largest supplier in 2001 (Microflex Corporation) accounted for 4.9% of total sales. In the pharmaceutical market, novel products are licensed which affects both product acquisition costs and obtainable margins that the Company can achieve. Our purchasing team also has ready access to several hundred industry manufacturers and suppliers and in 2001, we established a Vendor Council, which assists us in meeting customers' special requirements. We have long-term purchase arrangements (i.e., 2 years or longer) with several of our suppliers (American Diagnostic Corp., ASO, Graham Medical, and Microflex Corporation). We do not have any exclusive product rights, although we have preferred supplier status in a number of vertical markets and online health care communities for particular product offerings. Customers Our customers are the focal point of our marketing, sales and supply chain strategies, and we strive to provide value-added services to the health care specialties we serve. In order to better serve the podiatry community, for example, we published a podiatry-only specialty catalog in January 2002. Moore Medical also maintains a number of Internet alliances to help new customers find us more easily, encourage existing customers to choose us more frequently, and help Moore Medical understand customer community needs. Internet alliances include strategic partnerships, advertising sponsorships, preferred affiliates (collaborative joint marketing) and Internet affiliates. These alliances are designed to link sales from the affiliate's web site to www.mooremedical.com, -------------------- encourage direct sales through our web site and establish pre-conditioned sales through our Customer Support Center. We continue to benefit from our Corporate Customer Council, where customers share their views on Moore Medical's support, service, products, terms, pricing and delivery, and make suggestions on ways to improve their customer experience. We have recently expanded this concept to create individual Customer Advisory Groups for selected health care specialties. 5 Sales Staff Moore Medical's multi-channel capabilities allow customers and prospective customers to communicate and conduct business with us in the method or combination of methods they prefer. The majority of our business is conducted through industry-expert customer support representatives and market-specific sales representatives based in New Britain, Connecticut. Our customer support representatives are trained and organized by health care specialty and product knowledge to better serve our customers. Health care specialty key account and field representatives are located in Florida, Georgia, Texas, California, Indiana, Massachusetts, and Connecticut. Encouraged by our growing success in large and national account customer opportunities in the occupational health care, correctional and institutional markets, we are increasing our geographic field force in these specialty areas, as well as in multi-clinic primary care settings. Ten percent of our customers transacted through the Internet in 2001, using www.mooremedical.com to order, in addition to other means of communication. The - -------------------- launch of a greatly enhanced web site in mid-October 2001, contributed to the increased utilization. A small team of net agents, trained to facilitate live, online chats with customers, assists in the customer Internet purchase experience as requested by the customer. Our customer relations representatives are also conversant in web ordering so that a customer inquiry can be a one-stop ordering experience. Regulation The health care delivery industry in the United States continues to be under intensive scrutiny as a result of a wide variety of political, economic and regulatory influences. Because of uncertainty regarding the ultimate features of any future reform initiatives, the Company cannot predict the impact such proposals, should they be adopted, will have on its business. Moore Medical's business is subject to regulation under various federal, state and local laws governing the sale, marketing, packaging and distribution of prescription drugs, including controlled substances, regulated chemicals and medical devices, as well as licensing requirements. Each of our distribution centers is registered with the Drug Enforcement Agency (DEA) and, as a wholesale distributor of prescription drugs and devices, in each state that requires registration and/or licensure. In addition, we are registered with the Food and Drug Administration (FDA) as a Drug Establishment and as a Device Establishment. We are mandated by the Prescription Drug Marketing Act of 1987 and the Controlled Substance Act to validate our customers for purchases of regulated products. We require documentary evidence of our customers' regulatory authority to purchase regulated products and we are in material compliance with applicable federal and state statutes, which protect against the diversion of those products. We maintain extremely tight standards designed to ensure that every transaction constitutes a legal sale prior to shipping. In our capacity as a distributor of prescription pharmaceuticals, the Company is also subject to Medicare, Medicaid and state health care fraud, abuse and anti-kickback laws and regulations. In order to remain current with the regulatory environment, Moore Medical employs an in-house pharmacist who serves as Senior Manager of Regulatory Affairs as well as Immediate Past President of the Connecticut Pharmacists' Association. This individual is responsible for monitoring all pharmaceutical sales for compliance with federal and state regulations as well as with Company policy. He works closely with the U.S. Drug Enforcement Agency to help spot potential abuses, and serves as a source of information for our customers regarding regulations and recalls. 6 Information Technology Moore Medical will continue to invest in strategic technology initiatives as required to sustain competitiveness. Our business strategy and Information Technology (IT) planning are fused together to shorten time to market with new services, rapidly respond to IT-enabled opportunities and threats, and leverage IT-enabled value by re-purposing and connecting different parts of our enterprise. In 2001, Moore Medical IT focused on delivering best-in-class services to our customers for ordering medical supplies across all channels. This included an Ariba and Commerce One initiative allowing order processing through online marketplaces, which our customers had employed. We engaged Blue Barn Interactive (New York, New York) in the first quarter of 2001 to design the blueprint for our second-generation web site. On October 15, 2001, Moore Medical launched an enhanced e-commerce web site, with robust product and site navigation, an improved supply list, and an improved customer experience. To meet the needs of Moore Medical's growing customer database, we conducted three hardware upgrades. First, we upgraded to an AS/400 hardware platform, which approximately doubled system performance. Second, we upgraded 150 personal computers in the customer support center. And third, we upgraded the server farm that supports our data warehouse initiatives. All three upgrades resulted in significant improvements in order processing time, transaction throughput, and the ability to perform detailed analytics. We accomplished several key initiatives for Moore Medical's Supply Chain area, one of which was the implementation of the E3TRIM(TM) software package by JDA(R) Software Group, Inc. and its integration into JD Edwards, our enterprise resource planning (ERP) system. We also made significant upgrades to our network services. Employees We continue to recruit, hire, and retain individuals with the specific skills that complement our corporate growth strategy, and leverage current and future technological advances. Employees are encouraged to enhance their skills and professional development. As of December 29, 2001, the Company had 275 full time equivalent employees (including 13 part-time employees) in three locations, none of whom had collective bargaining agreements. Overall, the Company considers its employee relations to be good. 7 ITEM 2. Properties The Company owns no real property and it leases all its operating facilities. Its distribution centers are located in New Britain, Connecticut (92,000 square feet), Jacksonville, Florida (60,000 square feet), and Visalia, California (51,000 square feet). During the third quarter of 2001, the Company closed its Lemont, Illinois (58,000 square feet) distribution facility and the fulfillment activities of that location have been allocated to the remaining three facilities. The Company believes that its properties are generally in good condition. The Company's main offices are located in an industrial park in New Britain, Connecticut, where it occupies three buildings (41,000 square feet) adjacent to its main distribution center in a campus-like setting. In these offices, the business functions of order processing, telesales, marketing, purchasing, information services, finance, and administration are performed. Office space is adequate for the Company's present needs. ITEM 3. Legal Proceedings As of the date of this document there are no legal proceedings which are material to the financial position, results of operations or cashflow of the Company. ITEM 4. Submission of Matters to a Vote of Security Holders No matter was submitted to a vote of shareholders during the fiscal fourth quarter of 2001. PART II ITEM 5. Market for Registrant's Common Equity and Related Stockholder Matters The Company's common stock is listed on the American Stock Exchange (trading symbol "MMD"). The following sets forth, for each quarter since the beginning of 2000 the high and low sale prices of the common stock on the American Stock Exchange Composite Tape. 2001 2000 ------------------- ------------------- Quarters: High Low High Low ---- --- ---- --- First .......................... $ 9.950 $ 5.000 $13.063 $ 9.313 Second ......................... 9.400 8.000 11.625 6.000 Third .......................... 8.500 5.800 8.375 5.125 Fourth ......................... 9.000 6.250 7.625 3.875 The high and low sale prices of the common stock on March 11, 2002 were $9.57 and $9.25, respectively. The estimated number of holders (including estimated beneficial holders) of the Company's common stock as of March 11, 2002 was approximately 1,200. The Company has paid no cash dividends and has no plans to do so in the foreseeable future. Its loan agreement contains restrictions on dividend payments. 8 ITEM 6. Selected Financial Data
- -------------------------------------------------------------------------------------------------------- Amounts in thousands, except per share data 2001 2000 1999 1998 1997* - -------------------------------------------------------------------------------------------------------- SUMMARY OF OPERATIONS Net sales $132,833 $123,922 $118,536 $120,846 $288,513 Cost of products sold 97,564 92,042 86,390 87,590 255,252 -------- -------- -------- -------- -------- Gross profit 35,269 31,880 32,146 33,256 33,261 Selling, general and administrative expenses 37,546 38,076 29,730 28,879 36,056 -------- -------- -------- -------- -------- Operating (loss) income (2,277) (6,196) 2,416 4,377 (2,795) Interest expense (income), net 209 (228) (8) (82) 1,898 -------- -------- -------- -------- -------- (Loss) income before income taxes (2,486) (5,968) 2,424 4,459 (4,693) Income tax (benefit) provision (820) (1,432) 572 1,650 (1,772) -------- -------- -------- -------- -------- Net (loss) income $ (1,666) $ (4,536) $ 1,852 $ 2,809 $ (2,921) ======== ======== ======== ======== ======== Basic net (loss) income per share $ (0.53) $ (1.49) $ 0.63 $ 0.96 $ (1.00) Diluted net (loss) income per share $ (0.53) $ (1.49) $ 0.63 $ 0.95 $ (1.00) Basic weighted average shares outstanding 3,144 3,050 2,939 2,932 2,921 Diluted weighted average shares outstanding 3,144 3,050 2,943 2,949 2,921 BALANCE SHEET DATA Working capital $ 15,751 $ 19,781 $ 18,508 $ 18,521 $ 20,142 Total assets $ 41,128 $ 45,129 $ 41,966 $ 38,481 $ 39,203 Debt $ 5,326 $ 5,938 $ -- $ -- $ 1,512 Shareholders' equity $ 22,725 $ 24,358 $ 27,450 $ 25,553 $ 22,623
* 1997 Operating results include sales and related expenses of the Company's wholesale drug distribution business. During the fourth quarter of 1997, the Company notified customers of its intention of a planned withdrawal from the business. 9 ITEM 7. Management's Discussion and Analysis of Results of Operations and Financial Condition Reclassification Certain prior year amounts have been reclassified to conform with the current year presentation. Please refer to Notes to the Consolidated Financial Statements - Footnote 1. Results of Operations 2001 Compared with 2000 Net sales increased 7.2% to $132.8 million from $123.9 million in the prior year, which was primarily volume driven. The Company distributes its products to markets in non-hospital settings nationwide including: physicians, emergency medical technicians, schools, correctional institutions, municipalities, occupational/industrial health doctors and nurses, and other specialty practice communities. The sales increase was driven by multi-channel targeted marketing to health care specialties, through direct mail, national and field sales representatives and via the Internet. The sales growth that we realized in 2001 demonstrates continued strength in the physician and public sectors. Net sales to physician and public sectors grew 10.7% and 19.4%, respectively, while Internet based sales revenue increased 129.5% over prior year's results to represent 7.9% of our total net sales. Gross profit increased by 10.6% to $35.3 million compared to $31.9 million in the prior year. The gross profit margin percentage increased to 26.6% from 25.7% in 2000. The increased gross profit margin is attributable to both product and market mix combined with continued improvements in our supply chain operation. Selling, general and administrative (S,G&A) expenses decreased $0.5 million to $37.5 million compared to $38.0 million for the prior year. S,G&A expenses for the year ended December 30, 2000 contained a one-time charge in the amount of $2.5 million related to a matter the Company settled with the U.S. Government. As a percentage of net sales, S,G&A expenses decreased to 28.3% from 30.7%. Excluding the government settlement (see note 4) one-time charge, S,G&A expenditures increased $2.0 million due to expenses related to the transformation of the Company into a multi-channel direct marketer, including depreciation and amortization expenses related to prior investments in technology and the acquisitions of Podiatry Online and MERGInet.com. The increase in expenses was partially offset by the realization of efficiencies in the supply chain, including the closing of the Lemont distribution facility during the third quarter 2001. Continued leveraging of supply chain initiatives without adversely impacting customer service levels should continue to reduce fulfillment costs and overall operating costs. The Company believes the existing cost structure is adequate to support future growth. Net interest expense of $0.2 million in contrast to $0.2 million of net interest income was attributable to the interest on the government settlement note payable, which was executed on February 1, 2001. The effective income tax benefit rate of 33.0% was lower than the federal statutory rate due to tax implications relating to the closure of the Lemont distribution facility. Fiscal 2001 operations showed a net loss of ($1.7) million or ($0.53) per share in comparison with a net loss of ($4.5) million or ($1.49) per share including one-time charge ($2.5) million or ($0.79) per share in 2000. 2000 Compared with 1999 Revenue for fiscal 2000 was $123.9 million, compared to $118.5 million in fiscal 1999, representing growth of 4.6%, which was primarily volume driven. The Company's growth reflected strength in key communities, including a 28.5% increase in the reseller community, as well as an 8.2% increase in our public community, and a 5.5% increase in our EMS community. Results for fiscal 2000 were significantly affected by a one-time charge of $2.5 million, reflected in selling, general and administrative expenses or ($0.79) per share, related to a matter the Company settled with the U.S. Government in the fourth quarter. Earnings per share decreased to ($1.49) from $0.63 a year ago. Excluding the one-time charge as a 10 result of the government settlement, 2000 earnings per share would have been ($0.70) versus $0.63 a year ago. Gross profit margin was 25.7% for the year, which was lower than the 27.1% of the prior year primarily due to the increased volume in the reseller community, which typically reflects lower margins. Selling, general and administrative expenses increased to 30.7% of revenue as compared to 25.1% in the prior year. These expenses included incremental costs such as higher depreciation and amortization due to investments in technology, increased advertising and promotional costs associated with media initiatives, and outside consulting costs associated with the transformation to a "bricks and clicks" enterprise. Interest income was $0.2 million in 2000, an increase of over 100% from the prior year. The increase was due to the Company maintaining favorable cash investments for eleven months of the year. The effective income tax benefit rate of 24% was lower than the federal statutory tax rate due primarily to a net income tax provision from the settlement of the government contract. Liquidity and Capital Resources At its December 29, 2001 fiscal year end, the Company's cash and cash equivalents totaled $0.8 million, a $4.4 million decrease from December 30, 2000. The Company's operations used $2.4 million during the fiscal year 2001 compared to providing $1.4 million and $2.5 million in 2000 and 1999, respectively. In 2001, primary components of cash generated from operating activities were from depreciation offset by uses of cash from deferred income taxes (a net source of $2.2 million). This was offset by a use of cash of $2.9 million which resulted from a $2.8 million increase in trade receivables, a $1.3 million increase in inventory both of which are consistent with the Company's revenue growth, offset partially by an increase in accounts payable. In 2000, operating activities generated cash uses of $3.2 million which was offset by sources of $4.6 million in working capital. In 1999, operating activities generated cash sources of $5.8 million of which $3.9 million was from net non-cash elements in earnings, partially offset by a use of $2.9 million in working capital. Investing activities used $1.5 million during the year 2001 compared to $3.5 million and $5.3 million in 2000 and 1999, respectively. The primary use of cash for 2001 was continued investment in technology relating to the Internet in comparison to 2000 when the Company invested in strategic acquisitions in key communities. In 2000, the Company used $1.5 million to acquire a controlling interest in Podiatry Online, $0.4 million to acquire MERGInet Medical Resources and also purchased $1.6 million in equipment and software as a result of the Company's ongoing investment in multi-channel marketing and e-commerce initiatives. The $5.3 million in 1999 was used for capital expenditures, primarily in technology such as the remaining investment of the ERP system as well as e-commerce initiatives. Financing activities used cash of $0.6 million during 2001, compared with providing a source of cash in 2000 of $6.7 million and being neutral in 1999. The use of $0.6 million for 2001 is the result of payments made on the government settlement note payable. In 2000, $5.2 million was primarily attributed to an increase in long term notes payable relating to the government settlement note and the minimum purchase cost for the remaining minority interest in Podiatry Online. The Company also received $1.0 million in proceeds from the sale of treasury stock in 2000. As the business grows, the Company believes that the funding needs for our operating working capital and investments will continue to be met through cash flow from operations and financing under our line of credit. On January 26, 2001, the Company entered into a three-year bank financing agreement which will provide up to $15 million in a revolving credit line. The credit line provides the Company with the latitude it needs to implement strategic initiatives as they arise. Our business continues not to be materially impacted by seasonal factors. The Company believes it has adequate capital resources at its disposal to fund currently anticipated capital expenditures, business growth and expansion, and current and projected debt service requirements. 11 Forward-Looking Information This report contains statements about future events and expectations that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on management's beliefs, assumptions and expectations of the Company's future economic performance, taking into account the information that is currently available to management. These statements are not statements of historical fact. Forward-looking statements involve risks and uncertainties (including, but not limited to, economic, competitive, governmental and technological factors outside our control) that may cause the Company's actual results, performance or financial condition to differ materially from the expectations of future results, performance or financial condition we express or imply in any forward-looking statements. Factors that could contribute to these differences include, but are not limited to: Business Strategy Factors . The inability to generate adequate revenues and income from our strategy to transform the Company to a multi-channel e-commerce enabled business. . Our limited experience as an online marketer. . Changes in demand for the Company's products. . Pressures on revenues resulting from, for example, customer consolidations or changes in customer buying patterns. . Changes in the availability or salability of products manufactured by our suppliers. Operating Factors . Unforeseen web site hosting or other service disruptions, or online credit card fraud or security breaches in the Company's web site. . Failure to keep up with rapidly changing technologies or Internet developments. . Our internal systems are located in a single facility, the loss of which would significantly impact our continued business operations. . Disruptions in or cost increases for services or systems on which we are dependent, such as the trucking companies that deliver products from our suppliers, common carriers (such as United Parcel Service and Federal Express) which deliver products to our customers, telecommunication services, computer systems services, and printing services. Competitive Factors . Intense competition in health care product distribution from, distributor consolidations, new online entrants and pricing pressures from larger distributors able to benefit from economies of scale or other operating efficiencies. Governmental Factors . Changes in, or compliance with, laws regulating the distribution of drugs and medical devices. 12 . Changes in governmental support or insurance coverage of health care products or services, including, potential governmental reductions in health care funding affecting our customers' services or revenues. . New governmental regulation of the Internet. . New sales tax collection obligations. General Economic Factors . The effect of general economic conditions, inflation and interest rates. . Changes in currency exchange rates and political and economic conditions nationwide. Although we believe that the expectations reflected in such forward-looking statements are based on reasonable assumptions, we can give no assurance that the Company's expectations will be achieved. We qualify any forward-looking statements entirely by these cautionary factors, and readers are cautioned not to place undue reliance on forward-looking statements. The words "believe," "may," "will," "could," "should," "would," "anticipate," "estimate," "expect," "intend," "project," "objective," "seek," "strive," "might," "seeks," "likely result," "build," "grow," "plan," "goal", "expand," "position," or similar words, or the negatives of these words, or similar terminology, identify forward-looking statements. The forward-looking statements contained in this report only speak as of the date of this report. The Company disclaims any obligation or undertaking to provide any updates or revisions to any forward-looking statements to reflect any change in management's expectations or any change in events, conditions or circumstances on which the forward-looking statements are based. RECENT FINANCIAL ACCOUNTING STANDARDS Please refer to Notes to the Consolidated Financial Statements - Footnote 1. ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk We have no material market risk exposure associated with activities in derivative financial instruments, other financial instruments, or derivative commodity instruments. The Company does not expect changes in interest rates to have a material effect on income or cash flows in fiscal 2002, although there can be no assurances that interest rates will not significantly change. ITEM 8. Financial Statements and Supplementary Data The consolidated financial statements and supplementary data have been filed as part of this Annual Report as indicated in the index to consolidated Financial Statements and consolidated Financial Statement Schedule appearing on page 14. 13 MOORE MEDICAL CORP. & SUBSIDIARY INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE
Page No. Report of Independent Accountants 15 Consolidated Balance Sheets at the end of years 2001 and 2000 16 Consolidated Statements of Operations for the years 2001, 2000 and 1999 17 Consolidated Statements of Shareholders' Equity for the years 2001, 2000 and 1999 18 Consolidated Statements of Cash Flows for the years 2001, 2000 and 1999 19 Notes to Consolidated Financial Statements 20-29 Consolidated Financial Statement Schedule II - Valuation and Qualifying Accounts for the years ended 2001, 2000 and 1999 35
14 Report of Independent Accountants To the Board of Directors and Shareholders of Moore Medical Corp. In our opinion, the consolidated financial statements listed in the accompanying index present fairly, in all material respects, the consolidated financial position of Moore Medical Corp. and its subsidiary at December 29, 2001 and December 30, 2000, and the consolidated results of their operations and their cash flows for each of the three years in the period ended December 29, 2001, in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statement schedule listed in the accompanying index presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. These financial statements and financial statement schedule are the responsibility of the Company's management; our responsibility is to express an opinion on these financial statements and financial statement schedule based on our audits. We conducted our audits of these statements in accordance with auditing standards generally accepted in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above. /s/ PricewaterhouseCoopers LLP - ------------------------------ PricewaterhouseCoopers LLP Hartford, Connecticut February 18, 2002 15 MOORE MEDICAL CORP. & SUBSIDIARY Consolidated Balance Sheets at End of Years - -------------------------------------------------------------------------------- (Amounts in thousands, except par value) 2001 2000 - -------------------------------------------------------------------------------- ASSETS Current Assets Cash ................................................ $ 835 $ 5,233 Accounts receivable, less allowances of $933 and $664 ................................ 15,122 12,326 Inventories ......................................... 10,829 9,554 Prepaid expenses and other current assets ........... 1,875 2,152 Deferred income taxes ............................... 1,523 3,692 ------- ------- Total Current Assets ............................ 30,184 32,957 ------- ------- Noncurrent Assets Equipment and leasehold improvements, net ........... 8,271 9,672 Other assets ........................................ 2,673 2,500 ------- ------- Total Noncurrent Assets ......................... 10,944 12,172 ------- ------- $41,128 $45,129 ======= ======= LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities Accounts payable .................................... $11,204 $10,192 Accrued expenses .................................... 1,873 2,254 Current portion long term debt ...................... 1,356 730 ------- ------- Total Current Liabilities ....................... 14,433 13,176 ------- ------- Deferred Income Taxes .................................... -- 2,387 Long Term Notes Payable .................................. 3,970 5,208 Commitments and Contingencies (See Note 8) Shareholders' Equity Preferred stock, no shares outstanding .............. -- -- Common stock - $.01 par value; Shares authorized - 10,000 Shares issued - 3,246 ............................... 32 32 Capital in excess of par value ...................... 21,548 21,700 Note receivable ..................................... (298) -- Retained earnings ................................... 2,263 3,913 ------- ------- 23,545 25,645 Less treasury shares, at cost, 92 and 145 shares .... (820) (1,287) ------- ------- Total Shareholders' Equity ...................... 22,725 24,358 ------- ------- $41,128 $45,129 ======= ======= - -------------------------------------------------------------------------------- The accompanying notes are an integral part of the consolidated financial statements. 16 MOORE MEDICAL CORP. & SUBSIDIARY Consolidated Statements of Operations for the Years
- ----------------------------------------------------------------------------------- (Amounts in thousands, except per share data) 2001 2000 1999 - ----------------------------------------------------------------------------------- Net sales ...................................... $132,833 $123,922 $118,536 Cost of products sold .......................... 97,564 92,042 86,390 -------- -------- -------- Gross profit ................................... 35,269 31,880 32,146 Selling, general and administrative expenses ... 37,546 38,076 29,730 -------- -------- -------- Operating (loss) income ........................ (2,277) (6,196) 2,416 Interest expense (income), net ................. 209 (228) (8) -------- -------- -------- (Loss) income before income taxes .............. (2,486) (5,968) 2,424 Income tax (benefit) provision ................. (820) (1,432) 572 -------- -------- -------- Net (loss) income .............................. $ (1,666) $ (4,536) $ 1,852 ======== ======== ======== Basic net (loss) income per share .............. $ (0.53) $ (1.49) $ 0.63 Diluted net (loss) income per share ............ $ (0.53) $ (1.49) $ 0.63 - -----------------------------------------------------------------------------------
The accompanying notes are an integral part of the consolidated financial statements. 17 MOORE MEDICAL CORP. & SUBSIDIARY Consolidated Statements of Shareholders' Equity for the Years
- ------------------------------------------------------------------------------------------------------------------ Common Stock $.01 par value Capital -------------- in Excess Treasury Stock Shares Par of Par Retained -------------------- Note Amounts in thousands Issued Value Value Earnings Shares Cost Receivable - ------------------------------------------------------------------------------------------------------------------ 1999 - ---- Beginning balance 3,246 $ 33 $21,667 $ 6,597 (308) $(2,744) Net income 1,852 Stock options/stock compensation 8 3 37 ------- ------- ------- ------- ------- ------- ------- Ending balance 3,246 33 21,675 8,449 (305) (2,707) -- 2000 - ---- Net (loss) (4,536) Stock options/stock compensation (1) 25 160 1,420 ------- ------- ------- ------- ------- ------- ------- Ending balance 3,246 32 21,700 3,913 (145) (1,287) -- 2001 - ---- Net (loss) (1,666) Stock options/stock compensation (152) 16 53 467 $ (298) ------- ------- ------- ------- ------- ------- ------- Ending Balance 3,246 $ 32 $21,548 $ 2,263 (92) $ (820) $ (298) ======= ======= ======= ======= ======= ======= =======
The accompanying notes are an integral part of the consolidated financial statements. 18 MOORE MEDICAL CORP. & SUBSIDIARY Consolidated Statements of Cash Flows for the Years
- ------------------------------------------------------------------------------------------------------- (Amounts in thousands) 2001 2000 1999 - ------------------------------------------------------------------------------------------------------- Cash Flows From Operating Activities Net (loss) income ........................................... $(1,666) $(4,536) $ 1,852 Adjustments to reconcile net (loss) income to net cash flows (used in) provided by operating activities: Depreciation and amortization ......................... 3,005 2,641 1,733 Deferred income taxes ................................. (815) (1,343) 2,170 Other ................................................. -- 30 (307) Changes in operating assets and liabilities Accounts receivable ............................. (2,796) (838) (2,103) Inventories ..................................... (1,275) 4,688 (558) Other assets .................................... 563 (300) 140 Accounts payable ................................ 1,012 2,709 2,062 Other liabilities ............................... (381) (1,681) (2,474) ------- ------- ------- Net cash flows (used in) provided by operating activities ... (2,353) 1,370 2,515 ------- ------- ------- Cash Flows From Investing Activities Equipment and leasehold improvements acquired ............... (1,468) (1,599) (5,336) Acquisition of business ..................................... -- (1,934) -- ------- ------- ------- Net cashflows (used in) investing activities ................ (1,468) (3,533) (5,336) ------- ------- ------- Cash Flows From Financing Activities Sale of treasury stock ...................................... 35 1,444 45 Long term notes payable ..................................... (612) 5,208 -- ------- ------- ------- Net cash flows (used in) provided by financing activities .................................................. (577) 6,652 45 ------- ------- ------- (Decrease) increase in cash ................................. (4,398) 4,489 (2,776) Cash at the beginning of year ............................... 5,233 744 3,520 ------- ------- ------- Cash At End Of Year ......................................... $ 835 $ 5,233 $ 744 ======= ======= ======= - -------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of the consolidated financial statements. 19 MOORE MEDICAL CORP. & SUBSIDIARY Notes to Consolidated Financial Statements Note 1 - Summary of Significant Accounting Policies General - Moore Medical is an Internet-enabled multi-channel marketer and distributor of medical, surgical and pharmaceutical products to over 100,000 health care practices and facilities in non-hospital settings nationwide, including: physicians, emergency medical technicians, schools, correctional institutions, municipalities, occupational/industrial health doctors and nurses, and other specialty practice communities. Moore Medical also serves the medical/surgical supply needs of over 26 customer community affiliates. We market to and serve our customers through direct mail, industry-specialized telephone support staff, field sales representatives and the Internet. Our direct marketing and distribution business has been in operation for over 50 years. Principles of Consolidation - The consolidated financial statements include the accounts of the Company and its subsidiary using the fiscal year-ends discussed below. All intercompany accounts and transactions have been eliminated. The results of operations of companies acquired in purchase business transactions are included in the accompanying consolidated financial statements from the dates of acquisition. During the year ended December 30, 2000, the Company completed two acquisitions of premier on-line information sources, one serving the podiatry practice community and the other servicing the EMS practice community. Both of these acquisitions were accounted for under the purchase method of accounting. On June 15, 2000, the Company acquired 51% of the outstanding shares of capital stock of Podiatry Online, a Florida-based Internet magazine with circulation to more than 4,000 podiatrists for $500,000 and 29,826 shares of the Company's common stock valued at $254,000. In addition, the Company has committed to purchase the remaining 49% interest for a payment of not less than $500,000. The $1.5 million acquisition was recorded as a purchase, with $754,000 recorded as goodwill. Podiatry Online enables the Company access to a significant electronic sales channel to professionals in the podiatry market. On July 14, 2000, the Company acquired 100% of the assets of MERGInet Medical Resources, the premier Internet publication serving emergency medical services and emergency medical professionals for $300,000 in cash and 26,432 shares of the Company's common stock valued at $150,000. The acquisition was recorded as a purchase with tangible and intangible assets being depreciated/amortized over their respective useful lives. MERGInet is one of the most heavily visited resource channels for emergency medical service professionals and the only on-line publication in the market. The operating expenses of each of the acquisitions have been consolidated into the operating results for 2001 and for the period in 2000 during which the Company controlled each entity. The pro forma results of operations for the year ended December 30, 2000, assuming the acquisitions of MERGInet and Podiatry Online would have occurred on January 1, 2000, would not have been materially different than what was realized and reported in the results of operations for the year ended December 30, 2000. Fiscal Year - The Company's fiscal year ends on the Saturday closest to December 31. The fiscal years ended December 29, 2001, December 30, 2000 and January 1, 2000 were comprised of 52 weeks in 2001, 2000 and 1999. Inventories - Inventories, consisting of products purchased for resale, are stated at the lower of average cost or market value. Market values are based on estimated sales prices of products. 20 Equipment and Leasehold Improvements - Equipment is recorded at cost. Depreciation and amortization is provided on the straight-line method over the estimated useful lives of the assets as follows: - -------------------------------------------------------------------------------- Estimated Useful Lives - -------------------------------------------------------------------------------- Equipment 7 years Furniture & Fixtures 7 years Computer equipment and software 3 years Leasehold improvements Shorter of asset life or lease term Additionally, in 1999, the Company adopted AICPA Statement of Position 98-1 "Accounting for the Costs of Computer Software Developed or Obtained for Internal Use," which requires capitalization of certain costs incurred in the development of internal-use software. Expenditures for maintenance and repairs are charged to expense as incurred. Major improvements to equipment are capitalized. The cost of assets sold or retired and the related amounts of accumulated depreciation are removed from the accounts in the year of disposal, and any resulting gain or loss is included in income. Intangible Assets - Included within other current assets is goodwill, net of amortization, related to the acquisitions of MERGInet Medical Resources and Podiatry Online in the amounts of $1.0 million and $1.1 million for 2001 and 2000, respectively. Sales Recognition Policy and Customers - Sales are recorded upon shipment of products to customers. Accounts receivable have been reduced by estimated amounts for allowances related to future charges for uncollected accounts and product returns. Advertising - The cost of direct response catalog advertising is deferred and amortized over the period of expected revenues. Direct response catalog advertising consists primarily of catalog production expenses and related postage costs. Catalogs are effective for varying time periods but the largest catalogs are generally effective for less than a year. At December 29, 2001 and December 30, 2000, $283,000 and $639,000, respectively, of direct response catalog advertising expenses were deferred. Catalog advertising expense totaled $5,039,000, $4,527,000 and $2,485,000 in 2001, 2000 and 1999, respectively. Income Taxes - The liability method is used to calculate deferred income taxes. Under this method, deferred income tax assets and liabilities are recognized on temporary differences between the financial statement and tax bases of assets and liabilities, using applicable tax rates, and on tax carryforwards. Basic and Diluted Net Income (Loss) Per Share - Basic earnings per share computations are determined based on the weighted average number of shares outstanding during the period. The effect of the exercise and conversion of all diluted securities, including stock options are included in the diluted earnings per share calculation. Estimates - The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Subsequent actual outcomes could differ from those estimated and assumed. Reclassification - Certain prior year amounts have been reclassified to conform to the current year presentation. Recent Accounting Pronouncements In June 2001, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards ("SFAS") No. 141, "Business Combinations," and SFAS No. 142, "Goodwill and Other Intangible Assets". SFAS No. 141 requires that the purchase method of accounting be used for all business combinations initiated after June 30, 2001. The Company does not believe that the prospective adoption of this standard will have a material impact on its consolidated financial statements. 21 SFAS No. 142 changes the accounting for goodwill and certain other intangible assets from an "amortization" method to an "impairment only" approach. Due to the adoption of SFAS No. 142, the Company will not amortize goodwill beginning in fiscal 2002. The goodwill amortization expense during fiscal 2001 was $137,771. The Company does not anticipate the adoption of this standard will result in a material write down during fiscal 2002. During September 2000, the Emerging Issues Task Force ("EITF") issued EITF No. 00-10, Accounting for Shipping and Handling Fees and Costs ("EITF 00-10"), which addresses the income statement classification of amounts charged to customers for, as well as costs incurred related to, shipping and handling. The effective date of EITF 00-10 was the quarter ended December 30, 2000. EITF 00-10 requires that amounts billed to a customer in a sale transaction related to shipping and handling be classified as revenue. In addition, if costs incurred related to shipping and handling are significant and are not included in cost of sales, an entity should disclose both the amount of such costs and the income statement classification. Shipping and handling costs billed to customers are classified as revenues for all periods presented; previously, these revenues were offset against the related costs incurred, which were included in general and administrative expenses. Revenues from shipping and handling for each of the three years in the periods ended 2001, 2000, and 1999 were $640,000, $367,000, and $82,000, respectively. Costs related to shipping and handling are classified as cost of goods sold for all periods presented. Costs for shipping and handling were $5,835,000, $5,330,000, and $4,817,000, during each of the three years in the periods ended 2001, 2000, and 1999, respectively. The FASB recently issued SFAS No. 143, "Accounting for Asset Retirement Obligations". The statement, effective for fiscal years beginning after June 15, 2002, requires companies to record a liability for asset retirement obligations in the period in which they are incurred, which typically could be upon completion of construction or shortly thereafter. The Company does not believe that the prospective adoption of this standard will have a material impact on its consolidated financial statements. The FASB issued SFAS No. 144 "Accounting for the Impairment or Disposal of Long-Lived Assets". The statement is effective for fiscal years beginning after December 15, 2001. SFAS 144 will supersede SFAS 121 "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of". SFAS 144 changes the criteria for classifying an asset as held-for-sale. SFAS 144 will supersede APB Opinion 30 with regards to reporting the effects of a disposal of a segment of a business and will require expected future operating losses from discontinued operations to be displayed in discontinued operations in the period(s) in which the losses are incurred, rather than as of the measurement date as presently required by APB 30. The new pronouncement also expands the amount of dispositions that will qualify for discontinued operations treatment in the income statement. The Company does not believe that the prospective adoption of this standard will have a material impact on its consolidated financial statements. Note 2 - Income Taxes The income tax (benefit) provision consists of the following: - -------------------------------------------------------------------------------- Amounts in thousands 2001 2000 1999 - -------------------------------------------------------------------------------- Current Federal $ -- $ (94) $(1,554) State 20 5 (44) ----- ------- ------- Total current 20 (89) (1,598) ----- ------- ------- Deferred (840) (1,343) 2,170 ----- ------- ------- Total (benefit) provision $(820) $(1,432) $ 572 ===== ======= ======= A reconciliation of the statutory federal income tax rate to the effective income tax rate as a percentage of pretax income is as follows: 22 - -------------------------------------------------------------------------------- 2001 2000 1999 - -------------------------------------------------------------------------------- Statutory federal income tax rate 34.0% 34.0% 34.0% State income taxes, net of federal tax benefit 1.9 2.7 3.8 Valuation allowance (2.1) (1.5) 2.8 Other - net (0.8) (11.2) (17.0) ----- ----- ----- Effective income tax rate 33.0% 24.0% 23.6% ===== ===== ===== The effective income tax benefit rate of 33.0% was lower than the federal statutory tax rate due primarily to a net income tax charge of 2.1% due to the closure of the Lemont distribution facility. The effective income tax benefit rate of 24.0% in 2000 included an income tax provision of 12.5% relating to the government settlement (see note 4). The effective income tax provision of 23.6% in 1999 included an income tax benefit of $0.3 million or 12% recorded from a favorable settlement of a tax matter relating to 1998. Deferred income tax assets and liabilities at the end of each year consist of the tax effects of temporary differences related to the following: - -------------------------------------------------------------------------------- Amounts in thousands 2001 2000 - -------------------------------------------------------------------------------- Allowance for doubtful accounts $ 398 $ 249 Inventories 584 734 Accrued expenses 201 1,368 Federal & State Tax NOLs 3,298 1,789 Other 173 183 State tax valuation allowances (206) (155) ------- ------- Deferred Tax Assets 4,448 4,168 ------- ------- Accumulated depreciation/amortization (1,986) (2,513) Prepaid pension expense (342) (350) ------- ------- Deferred Tax Liabilities (2,328) (2,863) ------- ------- $ 2,120 $ 1,305 ======= ======= The Company had federal net operating loss carryforwards of $8,588,399 and state net operating loss carryforwards of $8,119,931 at December 29, 2001. A valuation allowance of $205,745 has been provided against the state net operating loss deferred tax asset of $377,608. The net operating loss carryforwards begin to expire in 2002 and continue through 2021. After application of the valuation allowance described above, the Company anticipates no limitations will apply with respect to utilization of the net deferred tax assets described above. Income tax payments totaled $0, $31,000 and $1,004,000 in 2001, 2000 and 1999, respectively. Note 3 - Equipment and Leasehold Improvements Equipment, leasehold improvements and accumulated depreciation are summarized as follows: - -------------------------------------------------------------------------------- Amounts in thousands 2001 2000 - -------------------------------------------------------------------------------- Equipment $ 4,285 $ 4,751 Furniture & Fixtures 1,290 1,297 Computer equipment and software 16,690 15,558 Leasehold improvements 3,231 3,214 -------- -------- 25,496 24,820 Less: accumulated depreciation (17,225) (15,148) -------- -------- $ 8,271 $ 9,672 ======== ======== 23 Note 4 - Debt and Long Term Contingencies On January 26, 2001, the Company entered into a collateralized bank financing agreement, which provides up to $15 million revolving line of credit through January 26, 2004. Interest is charged at the prime rate or, at the option of the Company, at the LIBOR rate plus a margin ranging from 0% to 2.75% depending on the financial leverage of the Company. In addition, the Company pays a commitment fee on the unused line of credit. In consideration for the revolving line of credit, the Company has collateralized all of the Company's assets (current and future existence) over the term of the credit facility. Pursuant to the revolving line of credit agreement, the Company covenants that as long as it has any obligations or commitments to the lender, that the Company will be subject to financial covenants involving Consolidated Tangible Net Worth and a Leverage Ratio calculation. These covenant targets fluctuate over the course of the term of the collateralized bank financing agreement. The Company previously had an unsecured bank financing agreement that provided a revolving line of credit of up to $10 million revolving line of credit that ended on March 31, 2000. - -------------------------------------------------------------------------------- Amounts in thousands 2001 2000 - -------------------------------------------------------------------------------- Borrowings Average $ 0 $ 10 Maximum $ 0 $361 Weighted daily average interest rate For the year 0.0% 1.6% At year end 0.0% 0.0% Cash payments for interest on revolving credit financing totaled $43,000 and $1,000 in 2001 and 2000, respectively. On February 1, 2001, the Company signed an agreement with the U.S. Government settling a pricing error by its former wholesale division under federal supply contracts entered into in 1991. In 1997, the Company voluntarily disclosed the error to the Government and established a $3.8 million reserve for 1996. In the fourth quarter of 2000, an additional $2.5 million reserve was recorded for the liability and associated legal costs. In settlement, the Company agreed to pay the government a total of $5.2 million ("government settlement note"), including $0.5 million on signing, and $4.7 million over five years. The settlement is interest bearing at rates ranging from 5.25% to 7.25%. The future principal and interest payments for the government settlement note are as follows: 2002 $888,803; 2003 $1,066,075; 2004 $1,591,763; 2005 $1,852,106. The principal and interest portion of the government settlement note is reflected in the Balance Sheets as follows: - -------------------------------------------------------------------------------- Amounts in thousands 2001 2000 - -------------------------------------------------------------------------------- Government settlement note: Current portion long term debt $ 635 $ 730 Long term notes payable 3,970 4,470 ------ ------ Total government settlement note $4,605 $5,200 ====== ====== Included in the liability section of the Balance Sheets is a note payable related to the acquisition of a controlling interest in Podiatry Online. The note payable is classified as follows: - -------------------------------------------------------------------------------- Amounts in thousands 2001 2000 - -------------------------------------------------------------------------------- Podiatry Online note: Current portion long term debt $721 $ -- Long term notes payable -- 738 ---- ---- Total Podiatry Online note $721 $738 ==== ==== 24 Note 5 - Employee Benefits All employees meeting eligibility requirements participate in the Company's defined benefit pension plan under which pension benefits are based on the employee's highest consecutive five-year average annual compensation. The Company's funding policy is to comply with the minimum funding requirements set by the Employee Retirement Income Security Act of 1974 (ERISA). Pension disclosure requirements of Financial Accounting Standard No. 132: - -------------------------------------------------------------------------------- Amounts in thousands 2001 2000 - -------------------------------------------------------------------------------- Change in Benefit Obligation Benefit obligation at beginning of year $ 3,977 $ 3,722 Service cost 358 342 Interest cost 345 279 Actuarial gain 593 191 Benefits paid (802) (557) ------- ------- Benefit obligation at end of year $ 4,471 $ 3,977 ======= ======= Change in plan assets Fair value of plan assets at beginning of year $ 4,825 $ 5,218 Actual return on plan assets (125) 15 Employer contribution 286 149 Benefits paid (802) (557) ------- ------- Fair value of plan assets at end of year $ 4,184 $ 4,825 ======= ======= Funded status $ (289) $ 847 Unrecognized net actuarial gain (loss) 1,139 34 Unrecognized prior service cost 27 32 ------- ------- Prepaid benefit cost $ 877 $ 913 ======= ======= Weighted-Average Assumptions as of Period Ending Discount rate 7.25% 7.50% Expected return on plan assets 9.00% 9.00% Rate of compensation increases 4.00% 4.00% - -------------------------------------------------------------------------------- Amounts in thousands 2001 2000 1999 - -------------------------------------------------------------------------------- Components of Net Periodic Benefit Cost Service cost $ 358 $ 342 $ 327 Interest cost 345 279 275 Expected return on plan assets (433) (470) (436) Amortization prior service cost 5 5 5 Amortization transition cost -- 12 12 Recognized net actuarial loss -- -- (65) ----- ----- ----- Net periodic benefit cost $ 275 $ 168 $ 118 ===== ===== ===== 25 The present value of the projected benefit obligation was determined using a discount rate of 7.5% in 2001, 2000 and 1999. The present value of the projected benefit obligation is based on actuarial assumptions and on estimates, including an assumed discount rate, which may change in the future and significantly affect the amount of this obligation. In addition to the pension plan, the Company has a 401(k) defined contribution retirement plan available to employees meeting eligibility requirements. This plan provides for Company non-discretionary matching contributions in an amount equal to 50% of employee pretax contributions subject to a maximum of 6% of employee's eligible compensation contributed to the plan. In 1999, the Company provided additional Company contributions to partially match employee contributions. The Company's expense in connection with this plan for the years 2001, 2000 and 1999 amounted to $139,000, $288,000 and $622,000, respectively. Note 6 - Shareholders' Equity The Company's Board of Directors, with shareholders' approval, adopted, as of June 22, 2000, an "Amendment of Certificate of Incorporation to increase authorized Common Stock". Authorized Shares of Common Stock were increased to 10 million shares and the authorization of Class A Preferred Stock and Class B Preferred Stock were deleted. At December 29, 2001, the Company had Class C Preferred Stock, $1.00 par value, 1,000,000 shares authorized of which 35,000 shares have been designated as a Series I Junior Participating Preferred Stock. The Shareholder Rights Plan, which the Company adopted in March 1989, expired on March 16, 1999. In November 1998, the Company adopted a successor Shareholder Rights Plan and declared a dividend distribution, effective March 17, 1999, of one Preferred Stock Purchase Right (the "Rights") for each outstanding share of common stock. The Rights will become exercisable, with certain exceptions, only if a party or group acquires 15% or more of the Company's common stock or announces an offer to acquire 15% or more. When exercisable, with some exceptions, each Right will entitle its holder (other than the party or group acquiring 15% or more or offering to acquire 15% or more of the common stock) to buy one one-hundredth of a share of a Series I Junior Participating Preferred Stock at a purchase price of $70.00. Upon the occurrence of certain events, Rights holders (other than such party or group) will be entitled to purchase either preferred stock of the Company or shares of the acquiring company at half of their market value. The Company will generally be entitled to redeem the Rights at $.01 per Right at any time prior to the earlier of the expiration of the Rights in March 2009 or ten days following the acquisition of or offer for 15% of the Company's common stock. On January 11, 2001, the Company's Board of Directors authorized to transfer 50,000 shares of common stock from its treasury shares to Linda M. Autore in consideration of Ms. Autore's promissory note secured by said shares in the principal amount of $281,250 pursuant to the terms and conditions set forth in an Executive Compensation Agreement, Recourse Promissory Note and Pledge Agreement dated January 11, 2001. On September 17, 2001, the Company adopted a stock repurchase program to purchase, at the Board of Director's discretion, up to $2 million of its common stock in the open market, through private transactions or otherwise. This stock repurchase program shall remain in effect until the $2 million is used by the Company to repurchase shares of its common stock, unless the Board of Directors or its Executive Committee terminates the program before then. As of December 29, 2001, no shares of common stock have been repurchased under this program. Note 7 - Stock Options In 2000, the Company's Board of Directors, with the shareholders' approval, adopted the "2000 Incentive Compensation Program" for directors, officers, employees, consultants, independent contractors and agents of the Company. Stock options awarded under the "program" shall be a "non-qualified stock option" exercisable in cumulative annual installments commencing one year from the date of the grant and expiring in either four or five years from the grant date. The new program may not exceed 505,000 shares, a total increase of 350,000 shares over the number of shares available for the grant of new 26 options under the present program, including 155,000 shares issued from prior plan which were available for grant. Effective from the date of said approval, no new options shall be granted under a "prior plan" (1992 incentive stock plan and 1998 non-qualified plans) of Moore Medical. The Company's Board of Directors adopted and approved the 1998 Stock Incentive Plan that authorized stock option grants for 100,000 shares to directors, officers and key employees. The Plan authorized and permitted the granting of non-qualified stock options of the Company's stock exercisable in four cumulative annual installments commencing one year from the date of the grant and expiring five years from the grant date. The 1992 Incentive Stock Option Plan authorized stock option grants for 200,000 shares. Under the plan, options were granted for ten years at prices not less than 100% of the fair market value of the common stock on the date of grant. The options were exercisable as determined by the Compensation Committee of the Board of Directors at the time of grant and were typically exercisable in four or five cumulative annual installments beginning one year after the date of grant and expiring five to ten years from the date of grant. Stock option transactions for all three plans summarized as follows:
- ------------------------------------------------------------------------------------------------------------------------ 2000 Incentive 1992 Incentive Stock Option Plan 1998 Stock Incentive Plan Compensation Program - ------------------------------------------------------------------------------------------------------------------------ Number of Weighted Average Number of Weighted Average Number of Weighted Average Options Exercise Price Options Exercise Price Options Exercise Price - ------------------------------------------------------------------------------------------------------------------------ Outstanding at end of 1999 27,900 $11.55 114,500 $11.54 -- $ 0.00 Granted 69,000 10.21 -- -- 98,000 7.83 Canceled (25,300) 10.80 (12,750) 11.35 -- -- Exercised (2,500) 10.63 (1,250) 10.88 -- -- ------- ------- ------- Outstanding at end of 2000 69,100 10.53 100,500 11.54 98,000 7.83 Granted -- -- -- -- 148,100 7.51 Canceled (23,100) 11.13 (27,000) 11.48 (90,400) 7.55 Exercised -- -- -- -- (2,500) 6.76 ------- ------- ------- Outstanding at end of 2001 46,000 $10.22 73,500 $11.58 153,200 $ 7.74 ======= ======= ======= Exercisable 2001 16,750 $10.62 46,375 $11.60 19,125 $ 9.12 Exercisable 2000 20,100 $11.56 40,750 $11.59 7,000 $11.00
The Company applies APB Opinion No. 25, "Accounting for Stock Issued to Employees". If the Company had elected to recognize compensation cost based on the fair value of the options granted at grant date as prescribed by SFAS No. 123, net income and earnings per share, basic and diluted, would have been reduced to pro forma amounts of ($2.2) million and ($0.71) per share, ($4.6) million and ($1.51) per share, and $1.8 million and $0.61 per share for 2001, 2000, and 1999, respectively. The fair value of each option grant is estimated on the date of the grant using the Black-Scholes option pricing model with the following assumptions used for grants issued during the year ended December 29, 2001: dividend yield of 0%; risk-free rates ranging from 4.6% to 5.8%, expected volatility factors ranging from 34% to 50%; and expected option terms ranging from four to five years. Note 8 - Commitments The Company leases its various facilities such as its distribution centers, office facilities and certain equipment. Certain lease commitments provide that the Company pay taxes, insurance, and 27 maintenance expenses relating to the leased assets. Rental expense approximated $1,334,000, $1,240,000, and $1,218,000 in 2001, 2000, and 1999, respectively. As of December 29, 2001, future minimum payments, for all leases are as follows: 2002, $1,240,000; 2003, $638,000; 2004, $419,000; 2005, $203,000; 2006, $92,000; thereafter, $0. Note 9 - Subsequent Events Subsequent to year-end 2001, on February 13, 2002, the Company utilized its collateralized revolving credit facility to pay off the government settlement note in full to take advantage of the current low interest rate environment. In addition, on February 15, 2002, the Company purchased a 30 month Interest Rate Cap in the amount of $3.0 million with a cap rate of 4.0% to hedge against an increase in interest rates. The fee of $56,000 will be recorded in accordance with FAS 133 as amended "Accounting for Derivatives and Hedging Activity". Under this standard, all derivative instruments are recorded at fair value on the balance sheet and all changes in fair value are recorded to earnings or to shareholders' equity through other comprehensive income. Based upon the "Job Creation and Worker Assistance Act" signed by President Bush on March 9, 2002, which allows companies to carry current year net operating losses back five years, the Company will be able to carry its current year net operating loss back five years. The Company estimates the carry back will result in a current refund of approximately $1.0 million. 28 Note 10 - Selected Quarterly Information (Unaudited)
- ---------------------------------------------------------------------------------------------------------- Amounts in thousands, Net Income Net Income except per share data Net Sales Gross Profit (Loss) (Loss) Per Share - ---------------------------------------------------------------------------------------------------------- 1999 - ---- First $ 29,055 $ 8,434 $ 477 $ 0.16 Second 29,377 8,163 428 0.15 Third 31,110 8,125 803 0.27 Fourth 28,994 7,424 144 0.05 -------- ------- ------- ------ Year $118,536 $32,146 $ 1,852 $ 0.63 ======== ======= ======= ====== 2000 - ---- First $ 29,594 $ 7,517 $ (255) $(0.09) Second 30,340 7,856 79 0.03 Third 33,146 8,580 (567) (0.18) Fourth 30,842 7,927 (3,793) (1.25) -------- ------- ------- ------ Year $123,922 $31,880 $(4,536) $(1.49) ======== ======= ======= ====== 2001 - ---- First $ 32,365 $ 8,419 $(1,097) $(0.35) Second 32,620 8,601 (760) (0.24) Third 34,685 9,087 (126) (0.04) Fourth 33,163 9,162 317 0.10 -------- ------- ------- ------ Year $132,833 $35,269 $(1,666) $(0.53) ======== ======= ======= ======
Net Sales and Gross Profit reflect reclassifications due to the impact of EITF 00-10 "Accounting for Shipping and Handling Fees and Costs". - -------------------------------------------------------------------------------- ITEM 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None. 29 PART III ITEM 10. Directors and Executive Officers of the Registrant Incorporated by reference to information under the caption "Certain Information Regarding Management's Nominees" and "Executive Officers" and "Section 16(a) Beneficial Ownership Reporting Compliance" in the Company's 2002 definitive proxy statement to be filed pursuant to Regulation 14A. ITEM 11. Executive Compensation Incorporated by reference to information under the caption "Executive Compensation", "Defined Benefit Plans", "Stock Options", "Compensation Committee Interlocks and Insider Participation", "Compensation Committee's Report", "Performance Graph", and "Fees Paid to Directors" in the Company's 2002 definitive proxy statement to be filed pursuant to Regulation 14A. ITEM 12. Security Ownership of Certain Beneficial Owners and Management Incorporated by reference to information under the caption "Principal Holders of Common Stock", "Certain Information Regarding Management's Nominees", and "Executive Officers" in the Company's 2002 definitive proxy statement to be filed pursuant to Regulation 14A. ITEM 13. Certain Relationships and Related Transactions Incorporated by reference to information under the captions "Fees Paid to Directors", "Executive Compensation", and "Defined Benefit Plans" in the Company's 2002 definitive proxy statement to be filed pursuant to Regulation 14A. 30 PART IV ITEM 14. Exhibits, Financial Statement Schedule, and Reports on Form 8-K (a) Documents filed as part of this Form 10-K. 1. Financial Statements. The financial statements filed as part of this Form 10-K are listed in the index on page 14. 2. Financial Statement Schedule. The financial statement schedule filed as part of this Form 10-K is listed in the index on page 14. Financial statement schedules not included in this Form 10-K Annual Report have been omitted because they are not applicable or the required information is shown in the financial statements or notes thereto.
Exhibits Filed Under Item 601 of Regulation Filed Herewith or Incorporated by S-K Reference To: 3. Articles of Incorporation and By-Laws .1 Certificate of Incorporation, as Exhibit 3.1 to Form 10-K for the fiscal year ended Amended. January 3, 1981, Exhibit 1 to Form 10-Q for the quarter ended June 29, 1985, Exhibit 3.1 to Form 10-K for the fiscal year ended January 2, 1988, Exhibit 3.1 to Form 10-K for the fiscal year ended January 2, 1999, Exhibit 3.4 to Form 10-Q for the quarter ended July 1, 2000. .2 Certificate of Designation under Exhibit 3 to Form 8-A filed December 30, 1998. Delaware General Corporation Law. .3 By-Law, as amended. Exhibit 3.3 to Form 10-K for the fiscal year ended January 3, 1981, Exhibit 3.3 to Form 10-K for the fiscal year ended December 30, 1989, and Exhibit 3.3 to Form 10-K for the fiscal year ended January 2, 1999. 4. Instruments Defining the Rights of Security Holders .1 Stock Repurchase Program, adopted September 17, 2001. Exhibit 3.4 to Form 10-Q for the period ended September 29, 2001. .2 Rights Agreement, between the Company and American Exhibit 4 to Form 8-K dated December 22, 1998. Stock Transfer & Trust Co., dated November 18, 1998 (includes as Exhibit B the forms of Rights Certificate and Election to Purchase, and as Exhibit C the form of Amended and Restated Certificate of Designations of Series I Junior Preferred Stock Certificate).
31 10. Material Contracts .3 Leases of property located in New Exhibit 10.3A to Form 10-K for the fiscal year Britain, Connecticut, as amended. ended December 28, 1985, Exhibit 10.3 to Form 10-K for the fiscal year ended December 30, 1989, and filed herewith. .4A Moore Medical Corp. Capital Accumulation Plan, Filed herewith. Fidelity - The Corporateplan for Retirement Service Agreement with Fidelity, effective November 1, 2001. .4B Summary Plan Description - Moore Medical Corp. Filed herewith. Capital Accumulation Plan, effective November 1, 2001. .4C Fidelity - The CORPORATEPlan For Retirement Adoption Filed herewith. Agreement, effective November 1, 2001. .5 Defined Benefit Pension Plan and Trust Exhibits 10.5A, 10.5B and 10.5C to Form 10-K for Agreement dated September 26, 1994, as the fiscal year ended December 31, 1994 and amended. Exhibit 10.5D to Form 10-K for the fiscal year ended January 1, 2000. .6 Incentive Stock Option Plan, as amended. Exhibit A to the 1982 Proxy Statement, Exhibit 10.2 to Form 10-K for the fiscal year ended January 1, 1983 and Exhibit 4(d) to a Registration statement on Form S-8 (commission file No. 33-20037) effective February 29, 1988 and Exhibit A to the 1992 Proxy Statement. .7 Non-qualified Stock Option Plan. Exhibit 10.7 to Form 10-K for the fiscal year ended January 2, 1999. .8 2001 - 2002 Change of Control and Position Payment Exhibit 10.8 to Form 10-K for the fiscal year Plan. ended December 30, 2000. .9 Employment Agreement between the Company Exhibit 10.9 to Form 10-K for the fiscal year and Jerry Flasz, effective January 15, 2001. ended December 30, 2000. .10 Employment Agreement between the Company Exhibit 10.10 to Form 10-K for the fiscal year and James R. Simpson, effective ended December 30, 2000. March 5, 2001. .11 Loan and Security Agreement between the Company and Exhibit 10.11 to Form 10-K for the fiscal year Fleet Capital Corporation dated January 26, ended December 30, 2000. 2001. .12 Appendix A to Security Agreement dated January 26, Exhibit 10.12 to Form 10-K for the fiscal year 2001, between the Company and Fleet Capital ended December 30, 2000. Corporation.
32 .13 Amended and Restated Employment Agreement between Exhibit 10.20 to Form 10-Q for period ended the Company and Linda M. Autore, effective March 1, April 1, 2000. 2001. .14 Subscription Agreement between the Company Exhibit 10.21 to Form 10-Q for period ended and Vantage Venture Partners, LP, dated April 1, 2000. February 28, 2000. .15 Executive Subscription Agreement between Exhibit 10.25 to Form 10-K for the fiscal year the Company and Linda M. Autore dated ended December 30, 2000. January 11, 2001. .16 Pledge Agreement between the Company and Linda M. Exhibit 10.26 to Form 10-K for the fiscal year Autore dated January 11, 2001. ended December 30, 2000. .17 Recourse Promissory Note between the Company and Exhibit 10.27 to Form 10-K for the fiscal year Linda M. Autore dated January 11, 2001. ended December 30, 2000. .18 Consulting Agreement between the Company and Peter Filed herewith. A. Derow effective October 8, 2001. .19 Employment Agreement between the Company Filed herewith. and Jon Garrity, effective October 1, 2001. .20 Promissory Note of the Company to the U.S. Exhibit 10.28 to Form 10-Q for period ended Government dated February 1, 2001. March 31, 2001. 21. Subsidiaries .1 Subsidiaries, identifiable pursuant to Item Exhibit 22 to Form 10-K for the fiscal year ended 601 (21) of Regulation S-K. December 28, 1991. 23. Consent of Expert .1 Consent of PricewaterhouseCoopers LLP. Filed herewith.
(b) Reports on Form 8-K: The Company filed no Current Report on Form 8-K during the quarter ended December 29, 2001. 33 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. MOORE MEDICAL CORP. BY: /s/ Linda M. Autore BY: /s/ James R. Simpson - --------------------------------------- ------------------------------------ Linda M. Autore, President and Chief James R. Simpson, Executive Vice Executive Officer President and Chief Financial March 27, 2002 Officer March 27, 2002 BY: /s/ John M. Zinzarella ------------------------------------ John M. Zinzarella, Vice President and Controller March 27, 2002 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated. /s/ Linda M. Autore /s/ Robert H. Steele - --------------------------------------- -------------------------------------- Linda M. Autore, President and Chief Robert H. Steele, Chairman of the Executive Officer Board March 27, 2002 March 27, 2002 /s/ Christopher W. Brody /s/ Peter C. Sutro - --------------------------------------- -------------------------------------- Christopher W. Brody, Director Peter C. Sutro, Director March 27, 2002 March 27, 2002 /s/ Peter A. Derow /s/ Wilmer J. Thomas, Jr. - --------------------------------------- -------------------------------------- Peter A. Derow, Director Wilmer J. Thomas, Jr., Director March 27, 2002 March 27, 2002 /s/ Steven Kotler /s/ Dan K. Wassong - --------------------------------------- -------------------------------------- Steven Kotler, Director Dan K. Wassong, Director March 27, 2002 March 27, 2002 34 SCHEDULE II MOORE MEDICAL CORP. & SUBSIDIARY VALUATION AND QUALIFYING ACCOUNTS ALLOWANCES FOR RETURNS AND UNCOLLECTIBLES
Balance at Additions Balance at Beginning of Charged to End of Period Expenses Deductions Period ------------ ---------- ---------- ---------- Allowance for Returns and Uncollectibles Fiscal Year End December 29, 2001 $664 $367 $ (98) $933 Fiscal Year End December 30, 2000 $663 $ 89 $ (88) $664 Fiscal Year End January 1, 2000 $835 $ 16 $(188) $663
35 EX-10.3 3 dex103.txt LEASE Exhibit 10.3 EXTENSION OF LEASE ------------------ HYMAN L. MOORE, being the Landlord under a certain Indenture of Lease dated August 16, 1989, and SYLVIA A. MOORE, having acquired an undivided 1/2 fee interest in the premises demised under said Indenture of Lease by deed dated February 11, 2000, (hereinafter collectively "Landlord"), and MOORE MEDICAL CORPORATION, Tenant under said Indenture of Lease (hereinafter "Tenant"); said Lease having been extended by an Extension of Lease dated September 24, 1998, the extended term of which will expire on August 31, 2001, in consideration of the promises and covenants hereinafter set forth, hereby agree to further extend the term of said Indenture of Lease and to create options to renew said Indenture of Lease in accordance with the following terms and conditions: 1. The term of the Indenture of Lease shall be extended for an additional two (2) year period commencing June 1, 2001 and expiring May 31, 2003. Upon full execution of this Extension of Lease, the current extended term of the Indenture of Lease shall merge into this extended term. 2. The net annual rent during said extended term shall be Three Hundred Forty-five Thousand Seven Hundred Fifty Dollars ($345,750), payable in monthly installments of Twenty-eight Thousand Eight Hundred Twelve Dollars and 50/100 ($28,812.50) on the first day of each calendar month in advance. 3. Provided it is not then under default under the terms of the Indenture of Lease, Tenant shall have the following options to extend the terms of the Indenture of Lease: a. Tenant shall have the option to extend the term of the Indenture of Lease for an additional terms of one (1) year, commencing June 1, 2003 and terminating May 31, 2004, upon the same terms and conditions set forth in the original Indenture of Lease. The option is to be exercised in writing by the Tenant giving notice to the Landlord not later than ninety (90) days prior to the expiration of the renewal term. The net annual rental during said renewal term shall be Three Hundred Forty-five Thousand Seven Hundred Fifty Dollars ($345,750), payable in monthly installments of Twenty-eight Thousand Eight Hundred Twelve Dollars and 50/100 ($28,812.50) on the first day of each calendar month in advance. b. If Tenant shall have exercised its option set forth in subparagraph (a), Tenant shall have an additional option to extend the term of the Indenture of Lease for an additional term of one (1) year, commencing June 1, 2004 and terminating May 31, 2005, upon the same terms and conditions set forth in the original Indenture of Lease. The option is to be exercised in writing by the Tenant giving notice to the Landlord not later than ninety (90) days prior to the expiration of the first renewal term. The net annual rental during said second renewal term shall be Three Hundred Forty-five Thousand Seven Hundred Fifty Dollars ($345,750), payable in monthly installments of Twenty-eight Thousand Eight Hundred Twelve Dollars and 50/100 ($28,812.50) on the first day of each calendar month in advance. c. If Tenant shall have exercised its option set forth in subparagraph (b), Tenant shall have an additional option to extend the term of the Indenture of Lease for an additional term of one (1) year commencing June 1, 2005 and terminating May 31, 2006 upon the same terms and conditions set forth in the original Indenture of Lease, except that the rent shall be determined as set forth below. The option is to be exercised in writing by the Tenant giving notice to the Landlord not later than ninety (90) days prior to the expiration of the renewal term. (i) Promptly as practicable after January 1, 2005, Landlord shall compute the increase if any in the cost of living by using the Index as defined in Article III of the Indenture of Lease for the preceding twelve (12) month period. (ii) The average index number indicated for calendar year 2003 shall be the "base index number", and the corresponding index number for calendar year 2004 shall be the "current index number". (iii) The current index number shall be divided by the base index number. The quotient thereof shall be multiplied by the annual net rent in effect for the term ending May 31, 2005, and the - 2 - product thereof shall be the net annual rent for the additional one (1) year term commencing June 1, 2005; provided, however, that in no event shall the net annual rent for said term be less than the net annual rent for the term ending May 31, 2005. (iv) The Landlord shall, within reasonable time after obtaining the appropriate data necessary for computing such increase, give the Tenant notice of any increase so determined, and the Landlord's computation shall be conclusive and binding but shall not preclude any adjustment which may be required in the event of a published amendment of the Index figures upon which the computation was based unless the Tenant shall, within sixty (60) days after the giving of such notice, notify the Landlord of any claimed error therein. Any dispute between the parties as to such computation shall be determined by arbitration as provided in subparagraph (b) (iv) of Article III of the Indenture of Lease. d. If Tenant shall have exercised its option set forth in subparagraph (c), Tenant shall have an additional option to extend the term of the Indenture of Lease for an additional term of one (1) year commencing June 1, 2006 and terminating May 31, 2007 upon the same terms and conditions set forth in the original Indenture of Lease, except that the rent shall be determined as set forth below. The option is to be exercised in writing by the Tenant giving notice to the Landlord not later than ninety (90) days prior to the expiration of the renewal term. (i) Promptly as practicable after January 1, 2006, Landlord shall compute the increase if any in the cost of living by using the Index as defined in Article III of the Indenture of Lease for the preceding twelve (12) month period. (ii) The average index number indicated for calendar year 2004 shall be the "base index number", and the corresponding index number for calendar year 2005 shall be the "current index number". (iii) The current index number shall be divided by the base index number. The quotient thereof shall be multiplied by the annual net rent in effect for the term ending May 31, 2006, and the - 3 - product thereof shall be the net annual rent for the additional one (1) year term commencing June 1, 2006; provided, however, that in no event shall the net annual rent for said term be less than the net annual rent for the term ending May 31, 2006. (iv) The Landlord shall, within reasonable time after obtaining the appropriate data necessary for computing such increase, give the Tenant notice of any increase so determined, and the Landlord's computation shall be conclusive and binding but shall not preclude any adjustment which may be required in the event of a published amendment of the Index figures upon which the computation was based unless the Tenant shall, within sixty (60) days after the giving of such notice, notify the Landlord of any claimed error therein. Any dispute between the parties as to such computation shall be determined by arbitration as provided in subparagraph (b) (iv) of Article III of the Indenture of Lease. e. If publication of the Index shall be discontinued, the parties shall accept comparable statistics on the cost of living as they shall be computed and published by an agency of the United States or by a responsible financial periodical of recognized authority then to be selected by the parties, or if the parties cannot agree upon a selection, the selection shall be determined by arbitration as provided in subparagraph (b) (iv) of the Indenture of Lease. In the event of (i) use of comparable statistics in place of the Index, or (ii) publication of the Index figure at other than monthly intervals, there shall be made in the method of computation such revisions as the circumstances may require to carry out the intent of this paragraph, and any dispute between the parties as to the making of such adjustment shall be determined by arbitration as provided in subparagraph (b) (iv) of the Indenture of Lease. 4. It is the intention of the parties that Landlord shall receive any and all the net annual rent payable under this Extension of Lease free of all taxes, expenses, charges, damages, and deductions of any nature whatsoever, and the Tenant covenants and agrees to pay all sums which, except for this Lease, would have - 4 - been chargeable against the Premises and payable by the Landlord (other than non-building maintenance, casualty and condemnation restoration, and any other expense obligations of the Landlord as set forth in the Lease). The Tenant shall, however, be under no obligations to pay principal and/or interest on any mortgage on the fee of the leased property or any franchise or income tax payable by the Landlord or any gift, inheritance, transfer, estate or succession tax by reason of any present or future law which may be enacted during the term of this Lease. All such taxes, expenses, charges, damages, and deductions which the Tenant shall be required to pay shall be deemed additional rent and in the event of nonpayment of the same by the Tenant, the Landlord shall have all the rights and remedies with respect thereto as the Landlord has for the nonpayment of rent. 5. All notices to be given hereunder shall be effective upon delivery and shall be in writing and delivered by hand or by registered or certified mail, or by courier, addressed to the parties at their respective addresses as hereinafter set forth, or at such other address or addresses as a party shall from time to time designate by notice: As to Landlord: As to Tenant: -------------- ------------ Hyman L. Moore and Moore Medical Corporation Sylvia A. Moore 370 John Downey Drive 6 Hounds Chase New Britain, CT 06050 Avon, CT 06001 Attention: Vice President, Logistics Copy to: Copy to: Timothy J. Grace Susan M. Orr, Esq. 94 West Main Street Pepe & Hazard P.O. Box 1150 Goodwin Square New Britain, CT 06050 Hartford, CT 06103 6. Except as amended herein or otherwise required to give effect to this Extension of Lease, the terms and conditions of the Lease between the parties dated April 16, 1989, as extended, shall remain in full force and effect. - 5 - IN WITNESS WHEREOF, Landlord and Tenant have hereunto set their hands and seals this 15th date of June, 2001. /s/ Hyman L. Moore ----------------------------- Hyman L. Moore /s/ Sylvia A. Moore ----------------------------- Sylvia A. Moore Tenant MOORE MEDICAL CORPORATION /s/ James R. Simpson ----------------------------- James R. Simpson its EVP & CFO - 6 - EX-10.4A 4 dex104a.txt SERVICE AGREEMENT PLAN Exhibit 10.4(A) Moore Medical Corp. Capital Accumulation Plan The CORPORATEplan for Retirement/SM/ Service Agreement CPR Service Agreement 03/07/02 (C)1999 Fidelity Management & Research Company The CORPORATEplan for Retirement/SM/ SERVICE AGREEMENT This Agreement is between Fidelity Management Trust Company ("Fidelity") and Moore Medical Corp. (the "Employer"), who maintains the Plan designated below. - ------------------- Plan Name: Moore Medical Corp. Capital Accumulation Plan --------------------------------------------- Implementation Type: Conversion Plan or Start Up Plan with assets transferred from another plan --------------------------------------------- Plan Type: 401(k) and Profit Sharing Plan --------------------------------------------- Plan Document: Prototype --------------------------------------------- Effective Date (of CORPORATEplan for Retirement/SM/): 11/01/2001 --------------------------------------------- Implementation Date: 11/01/2001 --------------------------------------------- Number of Eligible Employees (as of Effective Date): 290 --------------------------------------------- Number of Participants (as of Effective Date): 409 --------------------------------------------- Plan Number:48263 CPR Service Agreement 03/07/02 2 (C)1999 Fidelity Management & Research Company - -------------------------------------------------------------------------------- ARTICLE I. BASIC SERVICES AND FEES - -------------------------------------------------------------------------------- A. Implementation Services Set Up Fee Fee Waived ---------- Fee Paid By: Includes: -------- . Original copy of all relevant administrative forms . Employee communication materials . Fidelity Retirement Services Workbench Software and reference manuals . Establishment of Plan Sponsor Webstation (PSW) . Dedicated project manager . Implementation conference call with consultation provided on the following: . Data transmission methods . Contribution process . Employee education process . Plan document provisions . Verification report for participant data received by Fidelity via electronic file . One Implementation Manual . One original Summary Plan Description . CORPORATEplan for Retirement/SM/ ('CPR') plan and trust documents (required) Conversion Fee Fee Waived ---------- Fee Paid By: Includes: -------- . Review of prior plan document and comparison to CPR document . Reconciliation of Participant records and Plan assets . Verification report for all records received by Fidelity via electronic file (e.g., Participant indicative, balances, hardship amounts, tax cost, loans) . implementation conference call or meeting with consultation provided on the following: . Conversion method . Data transmission methods . Asset transfer process . Coordination with prior trustee or custodian for transfer of assets B. Administrative Services Annual Administrative Services Fees Base fee per Plan Fee Waived ---------- Fee Paid By: Per Participant fee $25 --- (Contributions remitted 12 times annually or less) Fee Paid By: Employer The minimum annual Administrative Services fee $4,500 ------ Fee Paid By: Employer Includes: -------- Plan Number:48263 CPR Service Agreement 03/07/02 3 (C)1999 Fidelity Management & Research Company Participant Services: -------------------- . Maintenance of individual account records for each Participant . Telephone access to account balance and fund price information . Quarterly (non-calendar quarters) Statements . Internet access (via NetBenefits) to account balance and fund price information . Investment exchanges of existing Participant account balances . Investment direction of future contributions Plan Administrator Services: --------------------------- . Employer access to Plan Sponsor Webstation (PSW), includes up to 2 User Identification Numbers . Annual review of plan performance via Annual Service Review report . Annual review of compliance items affecting the Plan . Monthly Trial Balance Report . Contribution processing . Withdrawal and loan processing . Automated Periodic and Ad-Hoc Reporting Miscellaneous Administrative Services Fees ------------------------------------------ Additional annual fee per participant with an after-tax contribution account. $10 --- Fee Paid By: Employer Additional fee for up to 14 incremental contribution remittances annually. Per Plan $350 ---- Fee Paid By: Employer Refund of Participant 401(k) excess deferrals (if applicable), contributions, or annual additions (per Participant per distribution) $25 --- Fee Paid By: Employer C. Trustee Services Annual Fee $1,500 ------ Fee Paid By: Employer Includes: -------- . Annual plan year-end summary reporting package on a cash basis . Custody of plan assets held in trust at Fidelity . Distribution checks and annual IRS Form 1099-R tax reporting . Plan assets invested at the direction of Participants, or the Employer if Employer direction is elected . Annual Auditor's Package (for a Plan with more than 100 participants) . Annual SAS 70 Report Plan Number:48263 CPR Service Agreement 03/07/02 4 (C)1999 Fidelity Management & Research Company - -------------------------------------------------------------------------------- ARTICLE II. TERMS AND CONDITIONS - -------------------------------------------------------------------------------- This Agreement is subject to the following terms and conditions: 1. Services: Fidelity shall have the responsibility to perform only those -------- services set forth in this Agreement, including any Appendices to this Agreement. All other regulatory and administrative matters relating to the Plan shall be the responsibility of the Employer and the Plan Administrator. The Employer acknowledges that Fidelity does not provide legal or tax advice, and that the Employer must obtain its own legal and tax counsel for advice on the plan design appropriate for its specific situation and on legal and tax issues pertaining to the administration of the Plan. 2. Documents: The Employer must use the Fidelity CORPORATEplan for --------- Retirement/SM/ ('CPR') Prototype Basic Plan Document, corresponding Adoption Agreement, and Service Agreement. The Service Agreement includes any Appendices or Amendments. which are expressly made part of the Service Agreement. The Employer may not add, delete, or modify the documents in any way without the written consent of Fidelity. The Employer shall be responsible for completing and executing the Adoption Agreement, Standardized or Non-Standardized. Fidelity as the Prototype Plan Sponsor is responsible for updating and amending the Prototype plan document and may not provide legal advice to the Employer on the completion and execution of the documents. If the Non-Standardized Adoption Agreement is used. or if the Standardized Adoption Agreement is used and the Employer maintains, or has ever maintained, another plan, the Employer may not rely on the opinion letter issued by the National Office of the Internal Revenue Service as evidence that this Plan is qualified under section 401 of the Internal Revenue Code. In such case. the Employer is responsible for filing a request with the appropriate internal Revenue Service (IRS) office to obtain an individual determination letter for the Plan and for paying associated IRS user fees. 3. Related Employers: The Employer is responsible for determining if the ----------------- Employer is a member of a controlled group of businesses or an affiliated service group, as those terms are defined by the Internal Revenue Code, and for notifying Fidelity in writing of its determination. Fidelity is under no obligation to verify the Employer's determination. Only members of the Employer's controlled group or affiliated service group may participate in the Plan. if the Standardized Adoption Agreement is adopted by the Employer, all members of its controlled group or affiliated service group must be included in the plan. Failure to do so may result in disqualification of the Plan by the Internal Revenue Service. If the Non-standardized Adoption Agreement is adopted by the Employer, group members that participate in the Plan must be listed as Related Employers in the Adoption Agreement. All employees of group members must be considered for the coverage and contribution requirements of the Plan and of any plan. of a group member, If the Employer's controlled group or affiliated service group status changes after initial retention of Fidelity, the Employer must provide timely written notification to Fidelity and take other appropriate action to include, exclude, or remove group members or former group members from the Plan. 4. Conversion Method/Transition Period: An existing Employer plan converting ----------------------------------- to Fidelity shall be subject to a transition period to facilitate the movement of Participant records and Plan assets from the prior recordkeeper and/or trustee to Fidelity. The responsibilities of the parties, the procedures for the conversion, and the duration of the transition period are dependent upon the conversion method(s) selected by the Employer in the separate Conversion Strategy Agreement and are subject to the conditions and limitations contained therein. 5. Investments: Fidelity shall have no discretion or authority with respect ----------- to the investment of the Plan assets but shall act solely as a directed trustee of the contributed funds. All Plan assets must be invested in the Permissible Investments elected by the Employer and identified in Appendix A and are subject to the terms and conditions contained therein. The Employer may add, delete, or replace a Plan Number:48263 CPR Service Agreement 03/07/02 5 (C)1999 Fidelity Management & Research Company Permissible Investment with another by providing Fidelity with proper written direction at least thirty days prior to the effective date of the change. Fidelity may charge the Employer a reasonable additional fee to facilitate the addition, deletion, or replacement of the Permissible Investment. Forfeitures held by the Plan prior to application and contributions received by Fidelity as to which investment instructions have not been provided shall be invested in the Permissible Investment selected by the Employer for such purposes or, absent Employer selection, in the most conservative Permissible Investment designated in Appendix A, until investment instructions have been received by Fidelity. Delivery of prospectuses, amended prospectuses, and annual and semi-annual reports for Permissible Investments may only be made to the Named Fiduciary designated in Article II unless the Employer directs Fidelity in writing to deliver said information to Participants or a Participant requests said information in accordance with procedures communicated to Participants by Fidelity. 6. Employer Investment Direction: If Employer investment direction is elected ----------------------------- by the Employer, then all Participant accounts must be invested in Permissible Investments. A Participant shall not be allowed to make any exchanges of his/her account balance. Fidelity shall provide the Employer with procedures for exchanging Participant account balances between/among mutual Fund(s) offered under the Plan. Exchanges requested by an authorized Plan representative shall be executed within the time period specified in the procedures. Fidelity reserves the right to modify the procedures upon notice to the Employer. 7. Investment Directions by Participants: If Participant investment direction ------------------------------------- is elected by the Employer, each Participant in the Plan shall be permitted to direct the investment of his/her individual account balance and future contributions among Permissible Investments through Fidelity's telephone exchange system or internet exchange system, except as otherwise provided in the Plan and this Agreement, including any Appendices. The frequency of changes in investments shall be determined under the rules applicable to the Permissible Investments unless the Employer has adopted additional rules limiting the frequency of investment changes in accordance with Plan. Except as otherwise provided in this Agreement, including any Appendices, a proper exchange request received by Fidelity prior to the closing of the New York Stock Exchange shall be effective on that day. The Employer hereby directs Fidelity to act upon such directions without questioning the authenticity of the direction other than as provided in this section. A Participant shall be required to provide his/her Social Security Number and personal identification number. For security purposes, the Employer may direct that a Participant using the telephone exchange system be required to respond to additional questions (e.g., date of birth, date of hire) before being able to access his/her accounts. Only authorized Plan contacts and the Participant shall have access to a Participant's account. 8. Reliance and Indemnification: Fidelity may rely upon and act upon any ---------------------------- writing from any person authorized by the Employer to give instructions concerning the Plan and may conclusively rely upon and be protected in acting upon any written order from the Employer or upon any other notice, request, consent, certificate, or other instructions or paper reasonably believed by it to have been executed by a duly authorized person, so long as it acts in good faith in taking or omitting to take any such action. Fidelity need not inquire as to the basis in fact of any statement in writing received from the Employer. Fidelity shall be entitled to reasonably rely upon the information provided by the Employer in performance of its duties hereunder. Unless resulting from Fidelity's negligence or willful misconduct, the Employer shall indemnify and save harmless Fidelity from any and all liabilities and expenses, including without limitation, reasonable attorney's fees incurred or required to be paid by Fidelity in connection with the Plan. Plan Number:48263 CPR Service Agreement 03/07/02 6 (C)1999 Fidelity Management & Research Company Notwithstanding anything in this Agreement to the contrary and subject to the provisions of the attached Appendices to this Agreement, (i) any direction, notice or other communication provided to the Employer or Fidelity by another party required to be in writing by the Plan or this Service Agreement, (ii) any service provided under this Agreement requiring or utilizing written information, or (iii) any written communication or disclosure to Participants required by the Plan or this Service Agreement may be provided through any medium that is permitted under applicable law or regulation and, to the extent so allowed, will no longer require any writing to which reference is made in this Agreement. 9. Fees: As consideration for its services under this Agreement, Fidelity ---- shall be entitled to the fees in accordance with Article I, this Article II, and any Appendices or amendments to this Agreement. Fees shall be billed to the Employer or charged to Participant accounts as indicated. The Employer is responsible for determining whether any fees paid from Plan assets are reasonable expenses of administering the Plan as required by the Employee Retirement Income Security Act of 1974, as amended ("ERISA"). Fees charged to Participant accounts shall be charged as a flat dollar amount to all Participants unless otherwise indicated or directed by the Employer. A reasonable additional fee shall be charged if Fidelity has to reprocess any contribution data transmission due to excessive errors of the Employer or its payroll vendor. Fidelity shall be entitled to reasonable compensation for its extraordinary costs and expenses incurred in the event of termination of this Agreement. In addition, Fidelity reserves the right to charge a termination fee in an amount equal to a full year of Administrative and Trustee fees under this Agreement in the event the Employer terminates its relationship with Fidelity within one year after the Implementation Date. The Implementation Services fees in Article I shall be billed with the initial invoice generated by Fidelity. The Administrative Services fees in Article I shall become effective as of the date Participants have access to Participant account information at Fidelity. The Trustee Services fees in Article I shall become effective as of the Implementation Date. Except as otherwise indicated, all other fees under this Agreement, including any Appendices, shall become effective as of the Implementation Date. Unless otherwise indicated, all Fidelity fees under this Agreement, including any Appendices, shall be billed in arrears to the Employer or Participants, as applicable, on a quarterly basis during the twelve-month annual billing cycle. An Employee is treated as a Participant for purposes of the annual per-participant Administrative Services fee if he/she has an account balance on any day in the twelve-month annual billing cycle. If payment of the aforementioned fees is not received by Fidelity within sixty days of receipt of Fidelity's invoice, the fees shall be paid from available Plan forfeitures or shall be charged against the respective accounts of all Participants in such reasonable manner as the Trustee may determine. Fidelity may charge a separate Implementation Services Conversion Fee under Article I if the Employer acquires another Company and merges the acquired Company's plan with its Plan or receives additional assets for its Plan. The Conversion Fee shall be determined after the relevant information has been received by Fidelity, and it shall be communicated to the Employer prior to the conversion. 10. Duration and Amendment: This Agreement shall remain in effect for the ---------------------- remainder of the current calendar year and shall thereafter be automatically extended for successive one-year terms. Either party, however, by sixty days prior written notice to the other, may terminate this Agreement. The receiving party may agree to a shorter notice period. This Agreement may be amended or modified at any time and from time to time by an instrument executed by the parties. Notwithstanding the foregoing, Fidelity reserves the right to amend unilaterally the fee schedule upon sixty days prior written notice to the Employer. Plan Number:48263 CPR Service Agreement 03/07/02 7 (C)1999 Fidelity Management & Research Company 11. Service Providers: Fidelity Management Trust Company is the ----------------- non-discretionary Trustee of the Employer's Plan under the CORPORATEplan for Retirement/SM/. Fidelity may use its affiliates in providing the services described in this Agreement. 12. Construction and Interpretation: This agreement shall be construed in ------------------------------- accordance with the laws of the Commonwealth of Massachusetts except to the extent such laws are superseded by Section 514 of ERISA. Unless defined herein or a different meaning is clearly required by the context, capitalized terms shall have the meanings set forth in the Plan. Plan Number:48263 CPR Service Agreement 03/07/02 8 (C)1999 Fidelity Management & Research Company - -------------------------------------------------------------------------------- SPECIMEN SIGNATURES - -------------------------------------------------------------------------------- At least one person is required to be authorized to provide instructions to Fidelity Management Trust Company regarding the CORPORATEplan for Retirement/SM/ account. Only the following person(s) designated below is/are authorized to advise Fidelity on all plan administrative matters: NAME & TITLE SPECIMEN SIGNATURE - --------------------------- --------------------------- - --------------------------- --------------------------- - --------------------------- --------------------------- - --------------------------- --------------------------- - --------------------------- --------------------------- - --------------------------- --------------------------- - --------------------------- --------------------------- - --------------------------- --------------------------- PROCEDURE FOR CHANGING SPECIMEN SIGNATURES: The specimen signatures can be changed by the Employer at any time. To add a new authorized signer, the Employer must send a letter of instruction signed by an authorized individual to the designated Fidelity representative, with an original specimen signature of the new authorized signer. To delete a signer, the Employer should send a similar letter identifying the individual who is no longer an authorized signer. The Employer must provide any change at least ten business days prior to the date the change shall become effective. INVESTMENT LITERATURE CONTACT The Administrator designated in the Plan is the Named Fiduciary of the Plan. The individual designated below shall receive on behalf of the Named Fiduciary prospectuses and annual and semi-annual reports pertaining to the Permissible Investment options of the Plan. Mr. Daniel Gabriel - -------------------------------------------------------------------------------- (Name) - -------------------------------------------------------------------------------- (Title) 389 John Downey Drive - -------------------------------------------------------------------------------- (Address Line 1) - -------------------------------------------------------------------------------- (Address Line 2) (Address Line 3) New Britain CT 06050 - -------------------------------------------------------------------------------- (City) (State) (Zip) Plan Number:48263 CPR Service Agreement 03/07/02 9 (C)1999 Fidelity Management & Research Company - -------------------------------------------------------------------------------- EXECUTION PAGE (FIDELITY'S COPY) - -------------------------------------------------------------------------------- This Agreement shall be effective upon execution by both parties. By executing this Agreement, the parties agree to terms and conditions contained in the Agreement and the following attached Appendices:
Original Service Agreement Effective Date Revision Date(s) - ----------------- -------------- ---------------- Articles I and II 11/01/2001 -------------- ---------------- Appendix A - Investment Schedule and Services 11/01/2001 -------------- ---------------- Appendix B - Enrollment and Education Services 11/01/2001 -------------- ---------------- Appendix C - Contribution Processing Services 11/01/2001 -------------- ---------------- Appendix D - Loan and Withdrawal Services 11/01/2001 -------------- ---------------- Appendix E - Compliance Services 11/01/2001 -------------- ---------------- Appendix F - Miscellaneous Additional Services 11/01/2001 -------------- ----------------
In witness whereof, the parties hereto have caused this Agreement to be executed by their duly authorized officers. Employer: Employer: - --------------------------------- --------------------------------- (Signature) (Signature) - --------------------------------- --------------------------------- (Print Name) (Print Name) - --------------------------------- --------------------------------- (Title) (Title) - --------------------------------- --------------------------------- (Date) (Date) Note: Only one authorized signature is required to execute this Agreement unless the Employer's corporate policy mandates two authorized signatures. Fidelity Management Trust Company: - --------------------------------- (Signature) - --------------------------------- (Print Name) - --------------------------------- (Title) - --------------------------------- (Date) Plan Number:48263 CPR Service Agreement 03/07/02 10 (C)1999 Fidelity Management & Research Company - -------------------------------------------------------------------------------- EXECUTION PAGE (EMPLOYER'S COPY) - -------------------------------------------------------------------------------- This Agreement shall be effective upon execution by both parties. By executing this Agreement, the parties agree to terms and conditions contained in the Agreement and the following attached Appendices:
Original Service Agreement Effective Date Revision Date(s) - ----------------- -------------- ---------------- Articles I and II 11/01/2001 -------------- ---------------- Appendix A - Investment Schedule and Services 11/01/2001 -------------- ---------------- Appendix B - Enrollment and Education Services 11/01/2001 -------------- ---------------- Appendix C - Contribution Processing Services 11/01/2001 -------------- ---------------- Appendix D - Loan and Withdrawal Services 11/01/2001 -------------- ---------------- Appendix E - Compliance Services 11/01/2001 -------------- ---------------- Appendix F - Miscellaneous Additional Services 11/01/2001 -------------- ----------------
In witness whereof, the parties hereto have caused this Agreement to be executed by their duly authorized officers. Employer: Employer: - --------------------------------- --------------------------------- (Signature) (Signature) - --------------------------------- --------------------------------- (Print Name) (Print Name) - --------------------------------- --------------------------------- (Title) (Title) - --------------------------------- --------------------------------- (Date) (Date) Note: Only one authorized signature is required to execute this Agreement unless the Employer's corporate policy mandates two authorized signatures. Fidelity Management Trust Company: - --------------------------------- (Signature) - --------------------------------- (Print Name) - --------------------------------- (Title) - --------------------------------- (Date) Plan Number:48263 CPR Service Agreement 03/07/02 11 (C)1999 Fidelity Management & Research Company - -------------------------------------------------------------------------------- APPENDIX A - INVESTMENT SCHEDULE AND SERVICES - -------------------------------------------------------------------------------- Participant Accounts tinder the Trust shall be invested among the Permissible investment options listed below pursuant to Participant and/or Employer directions and pursuant to the conditions and limitations contained in this Appendix A. 1. Fidelity Funds -------------- Fund # Fidelity Fund Name ------ ------------------ 0631 Fidelity Retirement Government Money Market Portfolio 0651 Fidelity U.S. Bond Index Fund 0319 Fidelity Equity--Income II Fund 0650 Spartan(R)U.S. Equity index Fund 0022 Fidelity Contrafund 0316 Fidelity Low-Priced Stock Fund 0337 Fidelity Mid-Cap Stock Fund 0039 Fidelity Value Fund 0325 Fidelity Diversified International Fund 0369 Fidelity Freedom Income Fund/SM/ 0370 Fidelity Freedom 2000 Fund/SM/ 0371 Fidelity Freedom 2010 Fund/SM/ 0372 Fidelity Freedom 2020 Fund/SM/ 0373 Fidelity Freedom 2030 Fund/SM/ 0718 Fidelity Freedom 2040 Fund/SM/ 2. Non-Fidelity Funds ------------------ Annual Fee per plan Fee Waived ---------- Fee Paid By: Fund # Fund Name BPS* ------ --------- ---- OFYA Janus Adviser Worldwide Fund 0 *Basis-point-per-annum fee charged by Fidelity on amounts invested in the Non-Fidelity Fund paid by the. Fidelity shall provide recordkeeping services for Non-Fidelity Funds subject to and in accordance with the terms and conditions of this Section: a. For purposes of this Agreement, 'Non-Fidelity Fund' shall mean an investment company registered under the Investment Company Act of 1940, as amended, other than one advised by Fidelity Management & Research Company, and specified in an agreement between Fidelity and the transfer agent for such investment company ('Fund Vendor'). b. The basis-point-per-annum fee charged by Fidelity shall be computed and billed or charged in arrears quarterly based on the market value of Non-Fidelity Funds held in Participant Accounts on the last business day of the quarter. In addition to the fees specified above, Fidelity shall be Plan Number:48263 CPR Service Agreement 03/07/02 12 (C)1999 Fidelity Management & Research Company entitled to fees from the Fund Vendor as set forth in a separate agency agreement with the Fund Vendor. As of January, 1999, this fee ranges from zero to 35 basis points per annum on the plan assets invested in the Non-Fidelity Fund. c. The Fund Vendor shall prepare and provide descriptive information on the funds for use by Fidelity in its written participant communication materials. Fidelity shall utilize historical performance data obtained from third-party vendors in communications with plan participants. The Employer hereby consents to Fidelity's use of such materials and acknowledges that Fidelity is not responsible for the accuracy of such third-party information. 3. Annual Fee for Excess Permissible Investment Options ---------------------------------------------------- The fees stated in this Service Agreement, including any Appendices and amendments hereto, take into consideration the Permissible investment options selected by the Employer in this Appendix A and include up to 15 Permissible investment options with no additional annual fee. The annual fee for each Permissible Investment option in excess of 15 is $500 per option and such fee is in addition to any fees specified elsewhere in this Service Agreement, including any Appendices and amendments hereto. The annual fee for excess Permissible Investment options shall be billed or charged quarterly in arrears and paid by Employer. The Fidelity Freedom funds collectively count as one Permissible Investment option. Any change to the Permissible Investment options selected by the Employer after the effective date of this Service Agreement shall require an amendment to this Service Agreement and may result in amended or additional fees. Plan Number:48263 CPR Service Agreement 03/07/02 13 (C)1999 Fidelity Management & Research Company - -------------------------------------------------------------------------------- APPENDIX B - ENROLLMENT AND EDUCATION SERVICES - -------------------------------------------------------------------------------- Fidelity shall provide Enrollment and Education Services as outlined in this Appendix B. Consultation with a Fidelity Education Consultant is available to identify additional needs in the future. 1. Initial Enrollment & Education Services --------------------------------------- . Comprehensive consultation with a Fidelity Education Consultant . Employee Education Meetings* . 1 day at no charge: additional days at $750 per day for flight meetings or $300 for non flight meetings. * Additional days of meetings may be purchased at an additional fee. Flight meetings are required for meetings outside of a two hour driving radius from a Fidelity Education Consultant's office. Fidelity shall perform up to four employee education meetings per day. . Enrollment kits for eligible employees . Enrollment posters . Information inserts . Interactive worksheets . Customized employee education presentation Initial Enrollment and Education Services paid by: Employer 2. Ongoing Enrollment and Educational Services provided at no additional charge ---------------------------------------------------------------------------- . Enrollment Kits for newly eligible Participants . Ongoing Education Curriculum (one per year) . Retirement Benefits Line . Stages Magazines . Stages Program for Retirees, Pre-retirees and Job Changers . NetBenefits Internet Service . Unless the Employer specifically directs Fidelity otherwise in writing, Plan Participants will be provided educational and informational materials about integrated Fidelity investment opportunities through the Fidelity Employee Investment Services program. . Participant Statements: Fidelity will mail Participant statements directly to Participants' homes except for individual Participants who have indicated through Automated Channels (Fidelity Automated Retirement Benefits Line. NetBenefits/SM/ World Wide Web Internet service, or any other service subsequently employed by Fidelity to facilitate electronic plan administration) that they desire to receive statements only through. Automated channels. Notwithstanding any of the above, a Participant will always have the ability to request a written statement at least as frequently as legally required. 3. Enrollment and Educational Services available for additional charge ------------------------------------------------------------------- . Additional Employee Education Meetings . Additional Enrollment Kits for existing Participants . Audio Cassettes/CD's on Asset Allocation . Savings Plan Enrollment Video Kit Plan Number:48263 CPR Service Agreement 03/07/02 14 (C)1999 Fidelity Management & Research Company . Train the Trainer . Automated Enrollments . Automated initial Enrollments One-time fee per Plan Fee Waived ---------- Fee Paid By: One-time fee per Participant Fee Waived ---------- Fee Paid By: . Ongoing Automated Enrollments and Deferral Changes Annual fee per Plan: Fee Waived ---------- Fee Paid By: Annual fee per Participant: Fee Waived ---------- Fee Paid By: Fidelity shall provide Automated Enrollments in accordance with and subject to the terms and conditions of this Section: a. The Employer shall provide Fidelity with the following Participant data in an acceptable format prior to the initial enrollment period concurrent with the conversion to Fidelity (if applicable) and/or prior to the date Employees become eligible to participate in the Plan: name, address, social security number, date of birth, date of hire, date of participation, date of termination, and employment status code. Failure to provide timely, complete. and accurate data shall delay Participants' ability to make investment elections and pretax and after-tax (if applicable) contribution elections. b. The Employer shall be responsible for mailing enrollment packets to Participants. including a worksheet for Automated Enrollment. c. Participants shall be eligible to communicate their initial investment elections and pre-tax and after-tax (if applicable) contribution elections by the Fidelity Automated Retirement Benefits Line or NetBenefitsSM (or any other service subsequently employed by Fidelity to facilitate electronic plan administration, hereafter NetBenefits) virtually 24 hours a day. Participants shall direct the investment of their conversion account balances (if applicable) and future contributions, investment elections shall not apply to employees making rollover contributions as they must complete a Rollover Contribution Form to indicate their investment elections. d. For Participants who fail to use Fidelity Automated Retirement Benefits Line or NetBenefits to establish their pre-tax and after-tax (if applicable) contribution election(s) within the required time period, the Employer shall discontinue pre-tax and after-tax (if applicable) contributions as of the effective date of conversion. Participants shall have the opportunity to change the investment direction of their conversion account balances (if applicable and future contributions, and their pre-tax and after tax (if applicable) contribution elections by contacting Fidelity after their accounts have been updated on the Fidelity Participant Recordkeeping System. Plan Number:48263 CPR Service Agreement 03/07/02 15 (C)1999 Fidelity Management & Research Company e. If the Plan is an existing Plan converted, to Fidelity the initial statement sent by Fidelity to [Participants shall reflect the Participant's conversion account balance as provided to Fidelity from the prior recordkeeper and the applicable earnings allocated to their account during the conversion process. Each statement shall contain the following message: Your conversion account balance and future contributions have been invested based on your investment election(s) provided to Fidelity through the Fidelity Automated Retirement Benefits Line or NetBenefits. If you failed to contact Fidelity during the enrollment period, then your conversion account balance was invested in the Plan's default investment option. f. Fidelity shall provide the Employer with a report identifying Participants who requested pre-tax and after-tax (if applicable) contribution election changes on a monthly or less frequent basis. g. Automated Enrollments are not available for Plans that allow Participants to make deferral elections based on specific dollar amount pre-tax and after-tax (if applicable) contributions, rather than based upon a percentage of Compensation. h. The fee for initial Enrollment services shall be billed or charged in full as of the invoice date following completion of the services. Annual fees for Ongoing Enrollment and Pretax and After-tax (if applicable) Contribution Percent Changes shall be computed and billed or charged quarterly in arrears. Fidelity does not warrant , guarantee or certify that the above described service in any way supplements. supercedes, or complies with any state law requirements surrounding the need to obtain permission to deduct or withhold amounts from an employee's paycheck. 4. Fees for Enrollment and Education Services ------------------------------------------ Except as otherwise provided in this Appendix B, fees for Enrollment and Education Services shall be billed or charged in full as of the invoice date following the date the services are provided. Plan Number:48263 CPR Service Agreement 03/07/02 16 (C)1999 Fidelity Management & Research Company - -------------------------------------------------------------------------------- APPENDIX C - CONTRIBUTION PROCESSING - -------------------------------------------------------------------------------- Fidelity shall provide contribution processing services as outlined in this Appendix C and subject to the terms and conditions contained herein. 1. The Employer shall be responsible for calculating and effecting Participant and Employer contributions to the Plan and transmitting such contributions and associated contribution data to Fidelity. 2. The Employer must consolidate all contribution data and loan repayment information for multiple payroll cycles and/or multiple sites into one transmission. Contribution data shall be received by Fidelity via Plan Sponsor Webstation (PSW), or other electronic medium permitted by Fidelity, in the manner specified. The Employer's computer system must meet certain minimum specifications to enable this service. 3. All contribution information shall be verified by a Fidelity representative before a wire transfer is requested. The Employer shall wire transfer to fund contributions according to wiring instructions provided by Fidelity. The Employer is responsible for funding contributions to the Trust within legal time limits. 4. Wire transfers received in good order upon request by a Fidelity representative shall be invested as of the next investment purchase opportunity. Unsolicited or improperly formatted wire transfers may not be invested until properly identified and reconciled. Plan Number:48263 CPR Service Agreement 03/07/02 17 (C)1999 Fidelity Management & Research Company - -------------------------------------------------------------------------------- APPENDIX D - LOAN AND WITHDRAWAL SERVICES - -------------------------------------------------------------------------------- Loans and withdrawals from the Plan shall be processed in accordance with the provisions of the Plan and this Appendix D. Fidelity shall provide loan and withdrawal processing services subject to the terms and conditions of this Appendix D. 1. Participant Loans Loan setup fee per loan: $75 --- Fee Paid By: Participants Annual loan maintenance fee per loan: $25 --- Fee Paid By: Participants Automated Loans --------------- This Section includes the Loan Policy adopted in accordance with the Plan. All other provisions governing Participant loans are included in the Plan. This Section is effective for loans made on or after the Effective Date of the CORPORATEplan for Retirement/SM/. Subject to paragraph f. below, other loans made under the Plan shall continue under their existing terms until they are repaid. a. Administration - The Employer shall act as Fidelity's agent in -------------- collecting and remitting all principal and interest payments to Fidelity, and keeping the proceeds of such loan repayments separate from the other assets of the Employer and clearly identifying such assets as Plan assets. If the Employer so directs Fidelity, all Participant loans shall be considered pro-approved by the Employer and there shall not be any advance notification to the Employer of any Participant loan. The Participant shall use Automated Channels (Fidelity Automated Retirement Benefits Line, NetBenefitsSM World Wide Web Internet service, or any other service subsequently employed by Fidelity to facilitate electronic plan administration) to apply for a loan. Participant loan requests that cannot be serviced via Automated Channels shall be referred to the Employer for assistance. The Employer must provide Fidelity with all applicable payroll frequencies for Participants by location, division, or region. Plans converting to The CORPORATEplan for Retirement must provide the highest outstanding loan balance(s) in the twelve months prior to the conversion date. If the Employer fails to provide this information, the Employer shall review and approve all loan requests via Plan Sponsor Webstation (or any other service subsequently employed by Fidelity to facilitate electronic plan sponsor administration, hereinafter PSW) for the first twelve months of the Plan's administration under The CORPORATEplan for Retirement/SM/. If the Employer directs Fidelity that Participant loans shall not be considered pre-approved. then the Employer shall review and approve all loan requests via PSW. b. Application Procedure - To originate a Participant loan. the --------------------- Participant shall direct Fidelity as to the term and amount of the loan to be made from his/her account. Such directions shall be made by use of the Automated Channels maintained for such purpose by Fidelity or its agent. The Automated Channels shall determine, based on the current value of the Participant's account on the date of the request and any guidelines provided by the Employer, the amount available for the loan. Based on the interest rate supplied by the Employer in accordance with the terms of the Plan, the Automated Channels shall advise the Participant of such interest rate, as well as the installment payment amounts. Fidelity shall distribute the Plan Number:48263 CPR Service Agreement 03/07/02 18 (C)1999 Fidelity Management & Research Company loan note with the proceeds check directly to the Participant. Fidelity shall also distribute the required Truth-in-Lending disclosures, if applicable, to the Participant. To facilitate recordkeeping, Fidelity may destroy the original of any promissory note made in connection with a loan to a Participant under the Plan. provided that Fidelity first creates a duplicate by a photographic optical scanning or other process. The duplicate shall yield a reasonable facsimile of the promissory note and the Participant's signature thereon. The duplicate may be reduced or enlarged in size from the actual size of the original promissory note. c. Conditions and Limitations -------------------------- i. Minimum Principal Amount. The minimum principal amount of any loan is $1,000. ii. Duration. The repayment period of any loan shall be no more than five years unless such loan is for the purchase of a Participant's primary residence, in which case the repayment period may not extend beyond 10 years from the date of the loan. A loan becomes immediately due and payable upon a Participant's termination of employment, death or disability. iii. Sources. The Administrator may provide that loans only be made from certain contribution sources within Participant Account(s) by notifying the Trustee in writing of the restricted source. iv. Purpose: A loan will be granted for any purpose. v. Repayment Method. A loan to an Employee shall be repaid at least quarterly by payroll. If repayment is not made by payroll deduction, a loan shall be repaid by the Employee to the Employer. Loan repayments are forwarded to Fidelity, by the Employer, in the same manner and frequency as contributions. vi. Outstanding Loans. A Participant may have up to two loans outstanding at a time. A Participant with two existing loans outstanding may not apply for another loan until one of the existing loans is paid in full. Also. a Participant may not (1) refinance an existing loan, (2) apply for an additional loan for the purpose of paying off an existing loan or (3) apply for more than one loan during each Plan Year. d. Interest Rate - The Employer shall determine and communicate ------------- to Fidelity a reasonable rate of interest based on the prevailing interest rates charged by persons in the business of lending money for loans which would be made under similar circumstances. The interest rate shall remain fixed throughout the duration of the loan. e. Default - The Employer shall notify Fidelity of any default. ------- If a distributable event has occurred, the Employer shall direct Fidelity to foreclose on the promissory note and offset the [Participant's vested Account by the outstanding balance of the loan. if a distributable event has not occurred. the Employer shall direct Fidelity to foreclose on the promissory note and offset the Participant's vested Account as soon as a distributable event occurs. f. Pre-existing Loans - Loans existing prior to the Effective ------------------ Date of the CORPORATEplan for Retirement/SM/ shall continue under their existing terms until repaid. However, Fidelity shall not accept any ire-existing loans that require Fidelity to hold as security for the loan property other than the Participant's vested account. Plan Number:48263 CPR Service Agreement 03/07/02 19 (C)1999 Fidelity Management & Research Company g. Fees - Loan Set-Up fees shall be billed or charged in full on ---- the first invoice date following origination of the loan. Annual loan maintenance fees shall be accrued and billed or charged quarterly in arrears. Notwithstanding any provision or designation herein to the contrary, the Employer shall be responsible for the payment of annual loan maintenance fees on preexisting loans unless the loan terms allow payment by Participants. 2. Participant Withdrawals Automated Withdrawals Participant withdrawals and distributions shall be processed in accordance with the provisions of the Plan and subject to the following terms and conditions: a. Except as authorized herein, if the Employer so directs Fidelity the Employer agrees that all Participant withdrawals shall be considered pre-approved by the Employer and there shall not be any advance notification to Fidelity of any Participant withdrawal. b. Participants shall use Automated Channels (Fidelity Automated Retirement Benefits Line, NetBenefitsSM World Wide Web Internet service, or any other service subsequently employed by Fidelity to facilitate electronic plan administration) to request withdrawals. Participant withdrawals that cannot be serviced via the Automated Channels shall be referred to the Employer for assistance. The Employer is responsible for updating the status code, termination date, and hire date for participants via The Fidelity Retirement Services Workbench Software, Plan Sponsor Webstation (PSW), or other agreed upon transmission. c. Participant withdrawals shall be processed any business day during any month except that no withdrawals shall be processed from December 15 through January 1. The Automated Channels shall determine the amount available for withdrawal based on the current value of the Participant's Account on the date of the request and any guidelines provided by the Employer. The vested percentage on Fidelity's Participant Recordkeeping System (FPRS) shall be used to process the distribution. Fidelity shall distribute withdrawals directly to Participants at the addresses of record. d. For the following distributions (or for all distributions, if the Employer so directs), the Employer shall review and approve the withdrawal request via PSW: i. withdrawals subject to spousal consent ii. hardship withdrawals iii. protected benefit forms only available to a specified class of participants e. The following distributions cannot be made through Automated Channels and must be made pursuant to separate procedures as currently established by Fidelity: i. Delayed distributions (Participants are not entitled to all or a portion of their accounts upon termination of employment). ii. Distributions as a results of the Plan's failure of any required Internal Revenue Code test. iii. minimum required Distributions. iv. Distributions to an alternate payee under a qualified domestic relations order prior to establishment of an Account for the alternate payee. v. Distributions to a beneficiary prior to establishment of an Account for the beneficiary. vi. Installment distributions. Plan Number:48263 CPR Service Agreement 03/07/02 20 (C)1999 Fidelity Management & Research Company Plan Number:48263 CPR Service Agreement 03/07/02 21 (C)1999 Fidelity Management & Research Company - -------------------------------------------------------------------------------- APPENDIX E - COMPLIANCE SERVICES - -------------------------------------------------------------------------------- 1. Nondiscrimination Testing ------------------------- 401(k) Only Plan or 401(k) and Profit Sharing Plan The Employer authorizes Fidelity to perform the nondiscrimination tests described below in accordance with the terms and conditions of this Section. a. The Employer understands that the non-discrimination tests' results are based upon the information provided to Fidelity by the Employer. Fidelity shall not be responsible for invalid test results that are based upon incorrect or incomplete information provided to Fidelity. Fidelity has no obligation to solicit data, nor does it have an obligation to ascertain. the accuracy or completeness of the data received. b. The Employer must complete a nondiscrimination testing questionnaire before any tests shall be performed. c. Fidelity shall perform 'Package Testing' services for the Plan. Package Testing includes the following tests: i. Semi-annual Actual Deferral Percentage tests required by Internal Revenue Code ('IRC') Section 401(k)(3) ('ADP test'); ii. Semi-annual Actual Contribution Percentage tests required by IRC Section 401(m) ('ACP test'), if applicable; iii. Semi-annual Annual Addition tests required by IRC Section 415(c)(1); iv. Semi-annual Deferral Contribution Limitation tests required by IRC Section 402(g); v. Annual Top Heavy test required by IRC Section 416(c)(2); vi. Annual Minimum Coverage test required by IRC Section 410(b)(1) (annual ratio percentage test only); vii. Annual Deferral Contribution Limitation, Annual Addition, Top Heavy and Minimum Coverage tests only for Plan Years that the Plan is operated as a plan that satisfies both the ADP and ACP Safe Harbor requirements under IRC Sections 401 (k)(12) and 401(m)(l1); and viii. Semi-annual ADP, Annual Additions and Deferral Contribution Limitations tests only for union plans. Please note the Annual Addition test shall be performed only for defined contribution plans that have the same plan and limitation years. The Deferral Contribution Limitation test shall be performed only for Plans whose Plan Year coincides with the calendar year. The initial test date for semi-annual testing shall be 07/01/2002. The annual fees for Package testing are listed below. Annual fees for Plans with more than 2000 eligible employees may be obtained from the designated Fidelity representative. - -------------------------------------------------------------------------------- SAFE HARBOR OR PLAN SIZE (BASED ON NON-SAFE HARBOR UNION EMPLOYEE NUMBER OF ELIGIBLE PLAN ONLY PLAN EMPLOYEES) PACKAGE TESTS PACKAGE TESTS ================================================================================ 1 - 100 $1,500 $1,000 - -------------------------------------------------------------------------------- Plan Number:48263 CPR Service Agreement 03/07/02 22 (C)1999 Fidelity Management & Research Company - -------------------------------------------------------------------------------- 101 - 500 $2,250 $1,500 - -------------------------------------------------------------------------------- 501 - 1,000 $3,300 $2,200 - -------------------------------------------------------------------------------- 1,001 - 2000 $4,350 $2,900 - -------------------------------------------------------------------------------- d. The data for the Non-discrimination Testing must be transmitted to Fidelity on magnetic tape, via the Fidelity Retirement Services Workbench Software, or in accordance with other written specifications provided by Fidelity. The Employer must notify Fidelity in writing 30 days prior to submitting the data for performance of the nondiscrimination testing if the Plan is operating as a Safe Harbor plan. Fidelity must receive complete and accurate data in the required format thirty days prior to the anticipated distribution date of Participant refunds due to the Plan's failure of the non-discrimination tests under IRC Section 401(k)(3) and/or 401 (m)(2). Fidelity must receive proper written authorization from the Employer before making any such distributions. e. All nondiscrimination fees identified in this Appendix E shall be paid by Employer. Except as otherwise specified herein, a pro-rata portion of the entire annual nondiscrimination testing services fees shall be billed or charged at the end of each quarter based on the services elected. Unless otherwise indicated in this Appendix E or any amendments hereto, the Plan shall be tested as a 'single employer plan' (i.e. adopting employers are all Related Employers). If the Plan is adopted by employers who are or who become non-Related Employers, an additional fee may apply. If testing is required for more than one plan of the Employer, a fee shall be charged for each plan based upon the number of Employees eligible to participate in that plan. If extraordinary consulting regarding the results of the nondiscrimination tests is provided by Fidelity personnel to the Employer, then such consulting shall be provided at the rate of $100 per hour. Also, any correction or manipulation of Plan data by Fidelity personnel at the request of the Employer shall be charged at the rate of $100 per hour. In addition, if a test must be re-run due to missing or incorrect data supplied by the Employer or another vendor on behalf of the Employer, an incremental fee of one half of the standard charge for a single test shall apply. The standard charge for a single test may be obtained from the designated Fidelity representative. f. Any IRC tests not included in this Appendix E or any amendments hereto shall be the responsibility of the Employer. 2. IRS Form 5500 Services ---------------------- The Employer authorizes Fidelity to provide IRS Form 5500 Services in accordance with the terms and conditions of this Section. a. The Employer must authorize Fidelity to provide IRS Form 5500 Services prior to the last day of the Plan Year for the which IRS Form 5500 Services are required. Fidelity shall not perform IRS 5500 Services for a Plan Year that ends prior to the date Fidelity becomes Trustee for the Plan. The Employer must also elect Package Testing nondiscrimination testing services in Section 1 of this Appendix E to utilize Fidelity's IRS Form 5500 Services. Fidelity must receive complete and accurate data in the required format for nondiscrimination testing within seven months after the end of the Plan Year or it may cancel IRS Form 5500 Services. Plan Number:48263 CPR Service Agreement 03/07/02 23 (C)1999 Fidelity Management & Research Company b. Fidelity shall provide the Employer with a plan questionnaire ('IRS Form 5500 Questionnaire') within 1 1/2 months after the end of the Plan Year. The Employer shall complete the IRS Form 5500 Questionnaire and return ft to Fidelity with a copy of the most recent 5500 and any previous years' returns requested by Fidelity. The Employer must also provide Fidelity with a copy of the independent auditor's report for the Plan if applicable. Fidelity shall have no responsibility for verifying the accuracy or authenticity of the data provided by the Employer. c. Fidelity shall prepare IRS Form 5500 and the Summary Annual Report for the Plan. However, if all required data is not received from the Employer within 3 1/2 months after the end of the Plan Year. Fidelity shall be authorized to file Form 5558 (Application for Extension of Time to File Certain Employee Plan Returns) on behalf of the Plan. If all required data is not received from the Employer at least 2 1/2 months prior to the extended filing date. Fidelity shall cancel IRS Form 5500 Services for that year and the Employer shall be responsible for completing and filing IRS Form 5500. d. The Employer shall review. execute, and file the IRS Form 5500 with the IRS and distribute the Summary Annual Report to Participants and beneficiaries as required by ERISA and applicable regulations. e. Fidelity shall respond to the Employer regarding any IRS inquiries received by the Employer pertaining to any IRS Form 5500 prepared by Fidelity. f. Fidelity shall not offer Fidelity IRS Form 5500 Services if the Employer terminates its relationship with Fidelity before the end of the Plan Year. If the Employer terminates a plan and assets remain at Fidelity, Fidelity's IRS Form 5500 Services shall only be offered for the Plan Year in which the resolution to terminate the plan was adopted and where Fidelity's Package nondiscrimination testing services were used. g. IRS Form 5500 Services shall be provided by Fidelity at no additional charge except that Fidelity shall charge a $350 fee if it does not receive the IRS Form 5500 Questionnaire from the Employer within 3 1/2 months after the end of the Plan Year. Any fees shall be paid by the Employer and shall be billed or charged upon completion of the IRS Form 5500. Fidelity also reserves the right to charge a reasonable fee for the preparation of an amended return that is requested by the Employer or required as a result of inaccurate or incomplete information provided by the Employer. Plan Number:48263 CPR Service Agreement 03/07/02 24 (C)1999 Fidelity Management & Research Company - -------------------------------------------------------------------------------- APPENDIX F - MISCELLANEOUS - -------------------------------------------------------------------------------- The provision(s) as identified in this Appendix F shall supercede the referenced provision(s) of this Agreement, subject to the terms and conditions contained herein. Title: Loan Limitation Description: Participants will be restricted from taking an additional loin after an existing loan has been paid off for a period of 60 days. Exception Fee: Fee Waived ---------- Plan Number:48263 CPR Service Agreement 03/07/02 25 (C)1999 Fidelity Management & Research Company EX-10.4B 5 dex104b.txt SERVICE PLAN DESCRIPTION PLAN Exhibit 10.4(B) SUMMARY PLAN DESCRIPTION Moore Medical Corp. Capital Accumulation Plan [GRAPHIC APPEARS HERE] Moore Medical Corp. Capital Accumulation Plan I. BASIC PLAN INFORMATION.....................................................2 A. ACCOUNT.................................................................2 B. BENEFICIARY.............................................................2 C. EMPLOYEE................................................................2 D. EMPLOYER................................................................2 E. ERISA...................................................................2 F. HIGHLY COMPENSATED EMPLOYEE.............................................2 G. NON HIGHLY COMPENSATED EMPLOYEE.........................................2 H. PARTICIPANT.............................................................2 I. PLAN TYPE...............................................................2 J. PLAN ADMINISTRATOR......................................................3 K. PLAN NUMBER.............................................................3 L. PLAN SPONSOR............................................................3 M. PLAN YEAR...............................................................3 N. SERVICE OF PROCESS......................................................3 O. TRUSTEE.................................................................3 II. PARTICIPATION.............................................................3 A. ELIGIBILITY REQUIREMENTS................................................3 III. CONTRIBUTIONS.............................................................4 A. COMPENSATION............................................................4 B. EMPLOYEE PRETAX CONTRIBUTIONS...........................................4 1. Regular Contributions...................................................4 C. EMPLOYER MATCHING CONTRIBUTIONS.........................................4 1. Non-discretionary Matching Contributions................................5 2. Qualified Matching Contributions........................................5 D. PROFIT SHARING CONTRIBUTIONS............................................5 1. Discretionary Profit Sharing Contributions..............................5 E. QUALIFIED NONELECTIVE CONTRIBUTIONS.....................................5 F. LIMIT ON CONTRIBUTIONS..................................................5 G. ROLLOVER CONTRIBUTIONS..................................................5 IV. INVESTMENTS...............................................................6 A. INVESTMENTS.............................................................6 B. STATEMENT OF ACCOUNT....................................................6 C. ELECTION................................................................6 V. VESTING...................................................................7 A. FORFEITURE AND RE-EMPLOYMENT............................................7 VI. PARTICIPANT LOANS.........................................................9 A. GENERAL LOAN RULES......................................................9 B. SPECIFIC LOAN PROCEDURES................................................9 VII. IN SERVICE WITHDRAWALS....................................................9 A. HARDSHIP WITHDRAWALS....................................................9 B. WITHDRAWALS AFTER AGE 59 1/2............................................9 C. WITHDRAWALS AFTER AGE 70 1/2...........................................10 D. WITHDRAWALS AFTER NORMAL RETIREMENT AGE................................10 E. WITHDRAWALS OF AFTER-TAX CONTRIBUTIONS.................................10 F. WITHDRAWALS OF QUALIFIED VOLUNTARY EMPLOYEE CONTRIBUTIONS..............10 G. WITHDRAWALS OF ROLLOVER CONTRIBUTIONS..................................10 H. OTHER WITHDRAWALS......................................................10 VIII. DISTRIBUTION OF BENEFITS...............................................10 A. ELIGIBILITY FOR BENEFITS...............................................10 B. DISTRIBUTABLE EVENTS...................................................11 1. Death..................................................................11 2. Disability.............................................................11 3. Retirement.............................................................11 4. Minimum Required Distributions.........................................11 5. Termination of Employment..............................................12 C. FORM OF PAYMENTS.......................................................12 1. Lump Sum Distributions.................................................12 a) Cash Distribution....................................................12 b) Direct Rollover Distribution.........................................12 c) Combination Cash Distribution and Direct Rollover Distributions........................................................13 2. Installment distributions..............................................13 3. Purchase of an annuity.................................................13 IX. MISCELLANEOUS INFORMATION................................................14 A. BENEFITS NOT INSURED...................................................14 B. ATTACHMENT OF YOUR ACCOUNT.............................................14 C. PLAN-TO-PLAN TRANSFER OF ASSETS........................................14 D. PLAN AMENDMENT.........................................................15 E. PLAN TERMINATION.......................................................15 F. INTERPRETATION OF PLAN.................................................15 G. ELECTRONIC DELIVERY....................................................15 X. INTERNAL REVENUE CODE TESTS..............................................15 A. NON-DISCRIMINATION TESTS...............................................15 B. TOP HEAVY TEST.........................................................16 XI. PARTICIPANT RIGHTS.......................................................16 A. CLAIMS.................................................................16 1. Claims Procedures......................................................16 2. Review Procedures......................................................16 B. STATEMENT OF ERISA RIGHTS..............................................16 XII. SERVICES AND FEES........................................................17 XIII. APPENDIX A: INVESTMENT OPTIONS..........................................1 XIV. APPENDIX B: LOAN PROCEDURES.............................................3 A. INITIATING LOANS........................................................3 1. Loan Application........................................................3 2. Loan Amount.............................................................3 3. Number of Loans.........................................................3 4. Interest Rate...........................................................3 5. Source of Loan Proceeds.................................................3 B. LOAN REPAYMENTS AND LOAN MATURITY.......................................3 C. DEFAULT OR TERMINATION OF EMPLOYMENT....................................3 XV. APPENDIX C. SPECIAL TAX NOTICE REGARDING PLAN PAYMENTS...................4 EXHIBIT 10.4(B) - -------------------------------------------------------------------------------- SUMMARY PLAN DESCRIPTION MOORE MEDICAL CORP. CAPITAL ACCUMULATION PLAN - -------------------------------------------------------------------------------- The Moore Medical Corp. Capital Accumulation Plan (the "Plan") of Moore Medical Corp. has been amended as of 11/01/2001 (the "Effective Date"). This Plan is intended to be a qualified retirement plan under the Internal Revenue Code. The purpose of the plan is to enable eligible Employees to save for retirement. As well as retirement benefits, the plan provides certain benefits in the event of death, disability, or other termination of employment. The Plan is for the exclusive benefit of eligible Employees and their Beneficiaries. This booklet is called a Summary Plan Description ("SPD") and it contains a summary in understandable language of your rights and benefits under the plan. If you have difficulty understanding any part of this SPD, you should contact the Plan Administrator identified in the Basic Plan Information section of this document during normal business hours for assistance. This SPD is a brief description of the principal features of the plan document and trust agreement and is not meant to interpret, extend or change these provisions in any way. A copy of the plan document is on file with the Plan Administrator and may be read by any employee at any reasonable time. The plan document and trust agreement shall govern if there is a discrepancy between this SPD and the actual provisions of the plan. - -------------------------------------------------------------------------------- Moore Medical Corp. Capital Accumulation Plan 1 - -------------------------------------------------------------------------------- I. Basic Plan Information - -------------------------------------------------------------------------------- The information in this section contains definitions to some of the terms that may be used in this Summary Plan Description. If the first letter of any of these definitions below is capitalized then it represents the indicated defined term. A. Account An Account shall be established by the Trustee to record contributions made on your behalf and any related income, expenses, gains or losses. It may also be referred to as an Account balance. B. Beneficiary This is the person or persons you designate, or are identified by the plan document if you fail to designate or improperly designate, who will receive your benefits in the event of your death. You may designate more than one Beneficiary. C. Employee An Employee is an individual who is employed by your Employer and is not terminated. D. Employer The name, address and business telephone number of your Employer is: Moore Medical Corp. 389 John Downey Drive New Britain, CT 06050 (860) 826-3600 Your Employer's federal tax identification number is: 22-1897821. E. ERISA ERISA (the Employee Retirement Income Security Act of 1974) identifies the rights of Participants and Beneficiaries covered by a qualified retirement plan. F. Highly Compensated Employee You are considered a highly compensated Employee if (i) at anytime during the current or prior year you own, or are considered to own, at least five percent of your Employer, or (ii) received compensation from your Employer during the prior year in excess of $85,000, as adjusted. G. Non Highly Compensated Employee An individual who is not a Highly Compensated Employee. H. Participant An Employee of the Employer who has satisfied the eligibility and entry date requirements to participate in the Plan or a formerly eligible Employee of such Employer who has an Account balance remaining in the Plan. I. Plan Type The Moore Medical Corp. Capital Accumulation Plan is a defined contribution plan. These types of plans are commonly described by the method by which contributions for participants are made to the plan. The - -------------------------------------------------------------------------------- Moore Medical Corp. Capital Accumulation Plan 2 Moore Medical Corp. Capital Accumulation Plan is a profit sharing plan with a 401(k) deferral feature. More information about the contributions made to the plan can be found in Section III, Contributions. J. Plan Administrator The Plan Administrator is responsible for the administration of the Plan and its duties are identified in the plan document. In general, the Plan Administrator is responsible for providing you and your Beneficiaries with information about your rights and benefits under the Plan. The name, address and business telephone number of the Plan Administrator is: Moore Medical Corp. 389 John Downey Drive New Britain, CT 06050 (860) 826-3600 K. Plan Number The three digit IRS number for the Plan is 003. L. Plan Sponsor Your Employer is the sponsor of the Plan. M. Plan Year The plan year is the twelve-month period ending on the last day of December. Your Employer may periodically change the plan year. N. Service of Process The plan's agent for service of legal process is the Plan Administrator. O. Trustee The trustee is responsible for trusteeing the Plan's assets. The trustee's duties are identified in the trust agreement and relate only to the assets in its possession. The name and address of the Plan's Trustee are: Fidelity Management Trust Company 82 Devonshire Street Boston, MA 02109 - -------------------------------------------------------------------------------- II. Participation - -------------------------------------------------------------------------------- A. Eligibility Requirements You are eligible to participate in the Plan if you are an Employee and you are not: . a citizen of Puerto Rico . Casual Employees You are also not eligible to participate if you are an individual who is a signatory to a contract, letter of agreement, or other document that acknowledges your status as an independent contractor not entitled to benefits under the Plan and you are not otherwise classified by the Employer as a common law employee and the Employer does not withhold income taxes, file Form W-2 (or any replacement form), or remit Social Security payments to the Federal government for you, even if you are later adjudicated to be a common law employee. - -------------------------------------------------------------------------------- Moore Medical Corp. Capital Accumulation Plan 3 The plan requires you to complete one month of service by the end of a twelve month period with your Employer. Upon satisfying these requirements you will become eligible to participate in the Plan on the first day of each month. Once you become a Participant, you are eligible to participate in the Plan until you terminate your employment with your Employer or become a member of a class of Employees excluded from the Plan. If you terminate your employment and are later re-employed by your Employer, you will again be eligible to participate in the Plan after you complete one hour of service. - -------------------------------------------------------------------------------- III. Contributions - -------------------------------------------------------------------------------- After you satisfy the participation requirements in Section Two of this Summary Plan Description, you will be eligible to make pretax contributions. In addition, your Employer may make matching and profit sharing contributions to your Account. The type(s) of contributions available under the Plan are described in this section. A. Compensation Compensation must be defined to compute contributions under the Plan. Eligible compensation for computing contributions under the Plan is the taxable compensation for a Plan Year reportable by your Employer on your IRS Form W-2, excluding reimbursements or other expenses allowances, fringe benefits, moving expenses, deferred compensation and welfare benefits and including salary reduction contributions you made to an Employer sponsored cafeteria, 401(k) or 403(b). In addition, compensation excludes: . the taxable value of a qualified or non-qualified stock option . severance pay Compensation for your first year of eligible Plan participation will be measured only for that portion of your initial Plan Year that you are eligible. Tax laws limit the amount of compensation that may be taken into account each Plan Year; the maximum amount for the 2001 Plan Year is $170,000.00. B. Employee Pretax Contributions 1. Regular Contributions You may elect to contribute a percentage of your eligible compensation into the Plan after you satisfy the Plan's eligibility requirements. The percentage of your eligible compensation you elect will be withheld from each payroll on a pretax basis and contributed to an Account in the Plan on your behalf. The percentage you defer is subject to an annual limit of the lesser of 12% of eligible compensation or $10,500 (in 2001 and thereafter as adjusted by the Secretary of the Treasury) in a calendar year. Your pretax contributions cannot be forfeited for any reason, however, there are special Internal Revenue Code rules that must be satisfied and may require that some of your contributions be returned to you. The Plan Administrator will notify you if any of your contributions will be returned. You may increase or decrease the amount you contribute as of the beginning of each payroll period. You may completely suspend your contributions with sufficient notice to the Plan Administrator. Thereafter, if you want to resume your Employee pretax contributions as of the first day of the next payroll period or as soon as administratively possible. Employer Matching Contributions All matching contributions will be computed by your Employer based on your eligible compensation contributed to the Plan each payroll period. You become eligible for matching contributions only if you - -------------------------------------------------------------------------------- Moore Medical Corp. Capital Accumulation Plan 4 make Employee pretax contributions. Employer matching contributions must be allocated to your Account in the Plan within prescribed legal time limits. 2. Non-discretionary Matching Contributions Each Plan Year your Employer will make non-discretionary matching contributions in an amount equal to 50% of your Employee pretax contributions. Non-discretionary matching contributions are subject to a maximum of 6.0% of your eligible compensation contributed to the Plan. 3. Qualified Matching Contributions Your Employer may designate all or a portion of any matching contributions for a Plan Year as "qualified matching contributions" and allocate them to Non Highly Compensated Employees to help the Plan pass one or more annually required Internal Revenue Code nondiscrimination test(s). Any such contributions will be allocated to those Participants eligible to receive the Employer matching contributions described above who made pretax contributions during the Plan Year. Participants are 100% vested in these contributions and may not request a hardship withdrawal of these contributions. C. Profit Sharing Contributions 1. Discretionary Profit Sharing Contributions Your Employer may make annual discretionary profit sharing contributions in an amount to be determined at Plan Year end by the Board of Directors. You must be employed as of the last day of the Plan Year to be eligible for any profit sharing contributions that may be made for that Plan Year. Profit sharing contributions, if any, made to the Plan by your Employer will be allocated to your Account in the ratio that your eligible compensation bears to the total eligible compensation paid to all eligible Participants. D. Qualified Nonelective Contributions Your Employer may designate all or a portion of any profit sharing contributions for a Plan Year as "qualified nonelective contributions" and allocate them to Non-Highly Compensated Employees to help the Plan pass one or more annually required Internal Revenue Code nondiscrimination test(s). You will be 100% vested in these contributions and may not request a hardship withdrawal of these contributions. E. Limit on Contributions Federal law requires that amounts contributed by you and on your behalf by your Employer for a given limitation year generally may not exceed the lesser of: . $35,000 (or such amount as may be prescribed by the Secretary of the Treasury); or . 25% of your annual compensation. The limitation year for purposes of applying the above limits is the twelve month period ending December 31. Contributions under this Plan, along with Employer contribution under any other Employer-sponsored defined contribution plans may not exceed the above limits. If this does occur, then excess contributions in your Account may be forfeited or refunded to you based on the provisions of the Plan document. You will be notified by the Plan Administrator if you have any excess contributions. Income tax consequences may apply on the amount of any refund you receive. F. Rollover Contributions You can roll over part or all of an eligible rollover distribution you received from a prior employer's qualified plan. The Plan Administrator must approve any rollover contribution and reserves the right to refuse to accept any such contribution. If your rollover contribution to the Plan is not a direct rollover (i.e. you received a cash distribution from your prior employer's plan or from your rollover IRA), then it must be received by the Trustee within 60 days of your receipt of the distribution. Rollover contributions shall only be made in the form of cash or allowable mutual fund shares. You may make a rollover contribution to the - -------------------------------------------------------------------------------- Moore Medical Corp. Capital Accumulation Plan 5 Plan before becoming a Participant. However, you will not become a Participant in the Plan and become entitled to make pretax contributions and share in Employer contributions until you have met the Plan's eligibility and entry date requirements. Your rollover contributions Account will be subject to the terms of this Plan and will always be fully vested and nonforfeitable. - -------------------------------------------------------------------------------- IV. Investments - -------------------------------------------------------------------------------- A. Investments The Employee Retirement Income Security Act of 1974 (ERISA) imposes certain duties on the parties who are responsible for the operation of the Plan. These parties, called fiduciaries, have a duty to invest Plan assets in a prudent manner. However, an exception exists for plans that comply with ERISA Section 404(c) and permit a Participant to exercise control over the assets in his/her Account and choose from a broad range of investment alternatives. This Plan is intended to be a Section 404(c) plan. You are responsible for investment decisions relating to the investment of assets in your Account under the Plan and the Plan fiduciaries are not responsible for any losses based on your investment instructions. In addition, you have the right to vote any mutual fund proxy based on the number of shares you own. Please see Appendix A for a list of the investments currently available under the Plan. If you want additional information about any investment alternative, you may request any of the following information by calling Fidelity at 1-800-835-5097: . A description of the annual operating expenses of each investment fund (e.g., investment management fees, administrative fees, transaction costs) which reduce the rate of return to you, and the aggregate amount of such expenses expressed as a percentage of average net assets of the designated investment alternative; . Prospectuses, financial statements and reports, plus any other material available to the Plan which relates to the available investment alternatives; . A list of the assets comprising the portfolio of each investment fund, the value of such assets (or the proportion of the investment fund which it comprises), and with respect to each such asset which is a fixed rate investment contract issued by a bank, savings and loan association or insurance company, the name of the issuer of the contract, the term of the contract and the rate of return on the contract; . Information concerning the value of shares or units of the investment funds available to Participants under the Plan, as well as the past investment performance of such funds, determined net of expenses, on a reasonable and consistent basis. B. Statement of Account The assets in the Plan are invested in available investment options and a separate Account is established for each Participant who receives and/or makes a contribution. The value of your Account is updated each business day to reflect any contributions, exchanges between investment options, investment earnings or losses for each investment option and withdrawals. A quarterly statement showing the value of your Account will be mailed to you within 15 business days after the following dates: January 31, April 30, July 31, October 31. You may also access the activity in your Account through the internet by using Fidelity's Netbenefits at 401k.com website. Please contact the Plan Administrator for further information. C. Election The Plan is intended to qualify as a Participant-directed plan under Section 404(c) of ERISA. This means that you are responsible for your investment decisions under the plan and any resulting investment activity. The plan fiduciaries, including, but not limited to, Fidelity Management Trust Company and Moore Medical Corp., are not responsible for any losses incurred as a result of your investment decisions. - -------------------------------------------------------------------------------- Moore Medical Corp. Capital Accumulation Plan 6 - -------------------------------------------------------------------------------- V. Vesting - -------------------------------------------------------------------------------- The term "vesting" refers to your nonforfeitable right to the money in your Account. You receive vesting credit for the number of years that you have worked for your Employer. If you terminate your employment with your Employer, you may be able to receive a portion or all of your Account based on your vested percentage. You are always 100% vested in your Rollover Contributions, After-Tax Contributions, Qualified Matching Contributions, Qualified Nonelective Contributions, Regular Contributions and any earnings thereon. Your Employer Matching Contributions and Employer Profit Sharing Contributions and any earnings thereon will be vested in accordance with the following schedule: Years of Service Vesting Percentage less than 1 0 1 33% 2 66% 3 100% Your years of service with will be counted to determine the number of years of service for vesting purposes. The Plan has changed the methodology used to determine your years of service. Previously you received vesting credit for a year of service under the `general method' if you worked more than 1,000 hours in a Plan Year. Vesting under the Plan is now based upon the elapsed time method. Hours of service are not counted and instead periods of service are computed. A period of service is determined by the time you work for your Employer. Only your whole years of service with your Employer will be counted to compute your years of service for vesting purposes. For example, if you work three years and ten months then for vesting purposes you will receive credit for three years of service. If you were a Participant in the Plan before November 1, 2001 then you will receive vesting credit for your years of service with your Employer based upon the following: - -------------------------------------------------------------------------------- Applicable Year(s) Method Measurement Period ------------------ ------ ------------------ - -------------------------------------------------------------------------------- 1. Year(s) before 2001 General Jan. 1 to Dec. 31 - -------------------------------------------------------------------------------- 2. 2001 General or Elapsed Time* Jan. 1 to Dec. 31 - -------------------------------------------------------------------------------- 3. Year(s) after 2001 Elapsed Time Jan. 1 to Dec. 31 - -------------------------------------------------------------------------------- * You will receive credit for this year based upon whichever method is more favorable to you. If you became a Participant on or after November 1, 2001 then you will receive vesting credit for your years of service with your Employer based only on the elapsed time method. In this case, your measurement period for determining your years of service will generally be based upon your date of employment with your Employer. A. Forfeiture and Re-employment If you terminate your employment with your Employer and are less than 100% vested in your Employer Account, you may forfeit the non-vested portion of your Employer Account. A forfeiture will occur in the Plan Year that you receive a distribution of your entire vested Account, or if you do not receive a - -------------------------------------------------------------------------------- Moore Medical Corp. Capital Accumulation Plan 7 distribution, after five consecutive one year breaks in service. Forfeitures are retained in the Plan and will first be used to pay administrative expenses. Any remaining amounts will be used to reduce future Employer contributions payable under the Plan. Example: (This example is for illustration purposes only.) Assuming your vesting schedule is as follows: Years of Service Vesting Percentage less than 1 0 1 33% 2 66% 3 100% You terminate your employment in 2001 with the following Account: Source Amount Vested Percentage Vested Amount Employee $2,000 100%+ $2,000 Employer $1,000 66% 660 ------ ------ Total $3,000 $2,660 You received a $2660 distribution in 2001 from the Plan. This represented a complete distribution of your Account. A $340 forfeiture will occur in 2001. + You are always 100% vested in your own employee pretax contributions and earnings in the Plan. A one-year break in service occurs when you work less than one hour in a twelve consecutive month period. A break in service starts with the date you stop working for your Employer. If you are absent from work due to maternity or paternity reasons, then the break period will not start until after the first anniversary year of your absence. If you were a Participant when you terminated your employment and are re-employed by your Employer, then you will again become a Participant on the date you complete one hour of service. Your period of employment before you were rehired is referred to as your pre-break service. Your period of employment after you were rehired is referred to as your post-break service. If you are re-employed after incurring five consecutive one-year breaks in service then your post-break service will not count in determining your vesting percentage in your pre-break Account balance. Your post-break service will count in determining your vesting percentage in your pre-break Account balance and any forfeited amounts will be restored to your Account if: (1) You are re-employed by your Employer before you incur five consecutive one-year breaks in service, and (2) If you received distribution of your vested Account and you repay the full amount of the distribution before the end of the five-year period that begins on the date you are re-employed. - -------------------------------------------------------------------------------- Moore Medical Corp. Capital Accumulation Plan 8 Example: Assume you terminate employment with your Employer in 2001 with an Account balance of $10,000, of which $6,000 is vested. You elect to receive a lump sum distribution of your vested Account balance. The remainder, or $4,000, is forfeited in 2001. If you are rehired on January 1, 2002 and repay the $6,000 distribution prior to January 1, 2007, the $4,000 previously forfeited will be restored to your Account. Additionally, your service after January 1, 2002 is counted toward vesting your pre-break Account balance of $10,000. - -------------------------------------------------------------------------------- VI. Participant Loans - -------------------------------------------------------------------------------- A. General Loan Rules Loans shall be made available to all qualifying Participants on a reasonably equivalent basis. However, loans may not be made to an eligible Employee who makes a rollover contribution and who has not satisfied the Plan's age, service and entry date requirements. Loans are not considered distributions and are not subject to Federal or state income taxes, provided they are repaid as required. While you do have to pay interest on your loan, both the principal and interest are deposited in your Account. B. Specific Loan Procedures Please see Appendix B, Loan Procedures, for specific information regarding receiving and repaying loans from the Plan. Additional information may be attained from the Plan Administrator. - -------------------------------------------------------------------------------- VII. In Service Withdrawals - -------------------------------------------------------------------------------- If you qualify and your request is approved by the Plan Administrator, you may obtain a withdrawal from the Plan while you are still an Employee. The following types of withdrawals are available under the Plan: A. Hardship Withdrawals If you are an Employee and request a hardship withdrawal and it is approved by the Plan Administrator, you may withdraw your Employee pretax contributions to satisfy any of the following immediate and heavy financial needs: (1) medical expenses for you, your spouse, children or dependents; (2) the purchase of your principal residence; (3) to prevent your eviction from, or foreclosure on, your principal residence; or (4) to pay for post-secondary education expenses (tuition, related educational fees, room and board) for you, your spouse, children or dependents for the next twelve months; or any other immediate and heavy financial need as determined based on Internal Revenue Service regulations. In accordance with Internal Revenue Service regulations, you must first exhaust all other assets reasonably available to you prior to obtaining a hardship withdrawal. This includes obtaining a withdrawal of any after-tax contribution in your Account and a loan from this Plan and any other qualified plan maintained by your Employer. Your pretax contributions to this Plan, and any other Employer-sponsored qualified or non-qualified plan, will be suspended for six months after your receipt of the hardship withdrawal. Your pretax contributions to the Plan for the following calendar six month period will be limited to the applicable limit less any pretax contributions made during the six month period of the hardship withdrawal The minimum hardship withdrawal is $500. Hardship withdrawals of amounts attributable to pre-tax employee deferral contributions will no longer be considered an "eligible rollover distribution" after December 31, 1998. Instead, these amounts will be subject to the 10% nonperiodic income tax withholding rate unless you elect out of withholding. You should refer to the "Distribution of Benefits" section of this SPD. B. Withdrawals After Age 59 1/2 If you have reached age 59 1/2, then you may elect to withdraw all or a portion of your entire Account while you are still employed by your Employer. - -------------------------------------------------------------------------------- Moore Medical Corp. Capital Accumulation Plan 9 C. Withdrawals After Age 70 1/2 Starting in the calendar year in which you reach age 70 1/2, you may elect to receive distributions calculated in the same manner as Minimum Required Distributions. For more information, please refer to the paragraph so entitled under the Distributable Events subsection of this SPD's section on Distribution of Benefits below. D. Withdrawals After Normal Retirement Age You may elect to withdraw your vested Account balance after you reach the Plan's normal retirement age, 65, or delay it until you retire. Notwithstanding, by law Employee Pretax, Qualified Matching, Safe Harbor Matching, Qualified Nonelective, and Safe Harbor Nonelective contributions cannot be withdrawn prior to age 59 1/2. E. Withdrawals of After-Tax Contributions If you have previously made after-tax contributions then you may elect to withdraw all or a portion of them. There is no limit on the number of withdrawals of this type. F. Withdrawals of Qualified Voluntary Employee Contributions Prior to 1987, the Plan allowed you to make qualified voluntary employee contributions. These were tax deductible Individual Retirement Account contributions that were contributed to the Plan. You may elect while you are employed by your Employer to withdraw all or a portion of your qualified voluntary employee contributions Account. G. Withdrawals of Rollover Contributions If you have a balance in your rollover contributions Account, you may elect to withdraw all or a portion of it. H. Other Withdrawals In service withdrawals from these specified Accounts shall be available to you if you satisfy the applicable requirements: Notwithstanding anything in the Plan, a Participant may withdrawal the vested portion of his or her Nonelective Contribution Account and Matching Contribution Account for hardship under Sections 1.18(a) and 10.05. The amount of any taxable withdrawal other than the return of your after-tax contributions that is not rolled over into an Individual Retirement Account or another qualified employer retirement plan will be subject to Federal and state, if applicable, income taxes. In general, the amount of any taxable withdrawal that is not rolled over into an Individual Retirement Account or another qualified employer retirement plan will be subject to 20% Federal Income Tax and any applicable State Income Tax. A 10% Internal Revenue Code early withdrawal penalty tax may apply to the amount of your withdrawal if you are under the age of 59 1/2 and do not meet one of the Internal Revenue Code exceptions. The Plan Administrator will notify you of the appropriate procedures to make a withdrawal from the Plan. The amount of any withdrawal will be withdrawn from available investment options in the order established by the Trustee. Consult your Plan Administrator for more information. - -------------------------------------------------------------------------------- VIII. Distribution of Benefits - -------------------------------------------------------------------------------- A. Eligibility For Benefits A distribution can be made to you if you request one due to your disability, retirement, or termination of employment from your Employer and any Related Employer. Your Beneficiary or Beneficiaries may request a distribution of your vested Account balance in the event of your death. - -------------------------------------------------------------------------------- Moore Medical Corp. Capital Accumulation Plan 10 You may defer receipt of your distribution until a later date. However, you cannot postpone it if your vested Account balance is $5,000 or less in which case the Plan Administrator will direct the Trustee to distribute it to you as a lump sum distribution without your consent. Your consent is required for any lump sum distribution from your Account after you have started to receive annuity or installment payments and, at the time those payments began, your vested Account balance exceeded $5,000 (or $3,500 if the date payments began was before March 22, 1999). If your vested Account balance exceeds $5,000, you may delay your distribution until you are required by law to receive minimum required distributions. You will have a continuing election to request a distribution if you elect to postpone your distribution unless you are re-employed by your Employer or any Related Employer. The value of your Account balance will continue to increase or decrease, as appropriate, based on the investment returns until it is distributed. Your written consent will be required for any distribution if your vested Account balance is greater than $5,000. You should consult with your tax advisor to determine the financial impact of your situation before you request a distribution. You may apply for a distribution by calling the Fidelity Retirement Benefits Line at 1-800-835-5097. All telephone calls will be recorded. Most distributions have been pre-approved by the Plan Administrator. B. Distributable Events You are eligible to request a distribution of your vested Account balance based on any of the following events: 1. Death If you are a Participant in the Plan and die, your vested Account balance, if any, will be paid to your designated Beneficiary or Beneficiaries. If you are an Employee of your Employer or a Related Employer at the time of your death, your Account balance will automatically become 100% vested. You may designate a Beneficiary or Beneficiaries on a designation form that must be properly signed and filed with the Plan Administrator. If you are married and want to designate someone other than your spouse as your primary Beneficiary, your spouse must consent to this designation by signing the form. His/her signature must be witnessed by a Plan representative or a notary public. You should contact the Plan Administrator to obtain a designation of beneficiary form. 2. Disability If you become disabled while you are employed by your Employer or a Related Employer, so that you satisfy the requirements for Social Security disability benefits, the full value of your Account balance may be distributed to you upon request. You will automatically become 100% vested in your Account balance when you become disabled. You may request a distribution of your Account balance only if you terminate your employment with your Employer or Related Employer. 3. Retirement You do not have to terminate your employment with your Employer just because you attain your early retirement age of 62 and complete 3 years of service or you attain your normal retirement age of 65. You will automatically become 100% vested in your Account balance upon meeting the retirement requirements. You may take an early retirement distribution at or after age 62 and after you complete 3 years of service, but you must first terminate your employment with your Employer or Related Employer. 4. Minimum Required Distributions You are required by law to receive a minimum required distribution from the Employer's Plan, unless you are a five percent owner of the Employer, no later than April 1 of the calendar year following the calendar year you turn 70 1/2 or terminate your employment, whichever is later. If you are a five percent owner of the Employer, you must start receiving your distribution no later than April 1 of the calendar year following the calendar year you turn 70 1/2. Once you start receiving your minimum required distribution, you should receive it at least annually and you should complete the appropriate - -------------------------------------------------------------------------------- Moore Medical Corp. Capital Accumulation Plan 11 documentation each year until all assets in your Account are distributed. If you have any questions about your minimum required distributions, please contact your Plan Administrator. 5. Termination of Employment If you terminate your employment with your Employer and any Related Employer, you may elect to receive a distribution of your vested Account balance from the Plan. C. Form of Payments The forms of payments that you may elect under the Plan are listed in this section below. 1. Lump Sum Distributions Your entire vested Account balance will be paid to you in a single cash distribution or other distribution that you elect. a) Cash Distribution Any distribution paid directly to you will be subject to mandatory Federal income tax withholding of 20% of the taxable distribution and the remaining amount will be paid to you. You cannot elect out of this tax withholding but you can avoid it by electing a direct rollover distribution as described below. This withholding is not a penalty but a prepayment of your Federal income taxes. You may rollover the taxable distribution you receive to an individual retirement account (IRA) or your new employer's qualified plan, if it accepts rollover contributions and you roll over this distribution within 60 days after receipt. You will not be taxed on any amounts timely rolled over into the IRA or your new employer's qualified Plan until those amounts are later distributed to you. Any amounts not rolled over may also be subject to certain early withdrawal penalties prescribed under the Internal Revenue Code. b) Direct Rollover Distribution As an alternative to a cash distribution, you may request that your entire distribution be rolled directly into a Fidelity IRA, a non-Fidelity IRA or to your new employer's qualified plan if it accepts rollover contributions. Federal income taxes will not be withheld on any direct rollover distribution. When you call the Fidelity Retirement Benefits Line to take a withdrawal, you will be asked whether you will be rolling over any part of your distribution. If you wish to have any part of your distribution rolled over to an IRA or another qualified plan, you will need to speak to a Fidelity representative. - -------------------------------------------------------------------------------- Moore Medical Corp. Capital Accumulation Plan 12 1. Rollover to Fidelity IRA - You will be asked whether you have ------------------------ received a Fidelity Service for Exiting Employees (`SEE') Rollover IRA Kit. If you haven't received a SEE Kit, the Fidelity representative will send out one. Then, your rollover request will be entered on the system and will pend (for up to 90 days) until the Rollover IRA account is set up. You must return the signed Rollover IRA application to Fidelity's Retail Customer Service Department (in Dallas, TX) in order to set up the Rollover IRA account. Once the Rollover IRA account has been set up, your vested Account balance will be transferred to the Fidelity Rollover IRA. 2. Rollover to Non-Fidelity IRA - A check will be issued by the ---------------------------- Trustee payable to the IRA custodian or trustee for your benefit. The check will contain the notation `Direct Rollover' and it will be mailed directly to you. You will be responsible for forwarding it on to the custodian or trustee. You must provide the Plan Administrator with complete information to facilitate your direct rollover distribution. 3. Rollover to your New Employer's Qualified Plan - You should ---------------------------------------------- check with your new employer to determine if its plan will accept rollover contributions. If allowed, then a check will be issued by the Trustee payable to the trustee of your new employer's qualified plan. The check will contain the notation `Direct Rollover' and it will be mailed directly to you. You will be responsible for forwarding it on to the new trustee. You must provide the plan Administrator with complete information to facilitate your direct rollover distribution c) Combination Cash Distribution and Direct Rollover Distributions You may request that part of your distribution be paid directly to you and the balance rolled into an IRA, your new employer's retirement plan, or a 403(a) annuity. Any cash distribution will be subject to the Federal income tax withholding rules referred to in subsection 1a above and any direct rollover distribution will be made in accordance with section 1b above. Your direct rollover distribution must be at least $500. You will pay income tax on the amount of any taxable distribution you receive from the Plan unless it is rolled into an IRA or your new employer's qualified Plan. A 10% IRS premature distribution penalty tax may also apply to your taxable distribution unless it is rolled into an IRA or another qualified plan. The 20% Federal income tax withheld under this section may not cover your entire income tax liability. Consult with your tax advisor for further details. 2. Installment distributions Your vested Account balance will be paid to you in substantially equal amounts over a period of time. You may elect annual or more frequent installments. You may elect to receive a lump sum distribution after you start to receive installment distributions, by completing the appropriate documentation. The direct rollover distribution rules referred to in the lump sum distribution section also apply to installment distributions. 3. Purchase of an annuity The normal form of payment under the Plan is a lump sum distribution. The Plan does allow you, if you are single, to elect a life annuity in which case your vested Account balance will be paid to you in the form of a single life annuity. If you are married and you elect a life annuity, your vested Account balance will be paid to you in the form of a joint and survivor annuity. Your vested Account balance, as of your annuity starting date, will be used by the Trustee to purchase a life annuity contract from an insurance company if you are single, or a joint and survivor annuity if you are married. (The annuity starting date is the first day of the first period for which an amount is payable as an annuity.) The insurance company will make monthly payments to you for your life based - -------------------------------------------------------------------------------- Moore Medical Corp. Capital Accumulation Plan 13 upon the type of annuity purchased. If you are single, you will receive a lifetime income under a single life annuity. The payments will cease upon your death and will not pay any death benefits to other Beneficiaries. If you are married as of the annuity starting date, the joint and survivor annuity will pay you a level monthly payment for your life and, if your spouse survives you, he/she will receive for his/her life at least 50 % of the level monthly payment payable to you during your life. The joint and survivor annuity will not pay any death benefits to other Beneficiaries. In the case of a joint and survivor annuity, the Plan Administrator shall not less than 30 days and not more than 90 days prior to the annuity starting date provide you with a written explanation of: (i) the terms and conditions of a qualified joint and survivor annuity; (ii) your right to make and the effect of an election to waive the joint and survivor annuity form of benefit; (iii) the rights of your spouse; and (iv) the right to make, and the effect of, a revocation of a previous election to waive the qualified joint and survivor annuity. The annuity starting date for a distribution in a form other than a joint and survivor annuity may be less than 30 days after receipt of the written explanation described in the preceding paragraph provided: (a) you have been provided with information that clearly indicates that you have at least 30 days to consider whether to waive the joint and survivor annuity and elect (with spousal consent which must be in writing and witnessed by a notary public or a Plan representative) a form of distribution other than a qualified joint and survivor annuity: (b) you are permitted to revoke any affirmative distribution election at least until the annuity starting date or, if later, at any time prior to the expiration of the 7-day period that begins the day after the explanation of the joint and survivor annuity is provided to you; and (c) the annuity starting date is a date after the date that the written explanation was provided to you. - -------------------------------------------------------------------------------- IX. Miscellaneous Information - -------------------------------------------------------------------------------- A. Benefits Not Insured Benefits provided by the Plan are not insured or guaranteed by the Pension Benefit Guaranty Corporation under Title IV of the Employee Retirement Income Security Act of 1974 because the insurance provisions under ERISA are not applicable to this particular Plan. You will only be entitled to the vested benefits in your Account based upon the provisions of the Plan and the value of your Account will be subject to investment gains and losses. B. Attachment of Your Account Your Account may not be attached, garnished, assigned or used as collateral for a loan outside of this Plan except to the extent required by law. Your creditors may not attach, garnish or otherwise interfere with your Account balance except in the case of a proper Internal Revenue Service tax levy or a Qualified Domestic Relations Order (QDRO). A QDRO is a special order issued by the court in a divorce, child support or similar proceeding. In this situation, your spouse, or former spouse, or someone other than you or your Beneficiary, may be entitled to a portion or all of your Account balance based on the court order. Participants and Beneficiaries can obtain, without a charge, a copy of QDRO procedures from the Plan Administrator. C. Plan-to-Plan Transfer Of Assets Your Employer may direct the Trustee to transfer all or a portion of the assets in the Account of designated Participants to another plan or plans maintained by your Employer or other employers subject to certain restrictions. The plan receiving the Trust Funds must contain a provision allowing the transfer and preserve any benefits required to be protected under existing laws and regulations. In addition, a Participant's vested Account balance may not be decreased as a result of the transfer to another plan. - -------------------------------------------------------------------------------- Moore Medical Corp. Capital Accumulation Plan 14 D. Plan Amendment Your Employer reserves the authority to amend certain provisions of the Plan by taking the appropriate action. However, any amendment may not eliminate certain forms of benefits under the Plan or reduce the existing vested percentage of your Account balance derived from Employer contributions. If you have three or more years of service with your Employer and a Related Employer and the vesting schedule is amended, then you will be given a choice to have the vested percentage of future Employer contributions made to your Account computed under the new or the old vesting schedule. The Plan Administrator will provide you with the appropriate information to make an informed decision if the Plan's vesting schedule is amended. E. Plan Termination Your Employer has no legal or contractual obligation to make annual contributions to or to continue the Plan. Your Employer reserves the right to terminate the Plan at any time by taking appropriate action as circumstances may dictate, with the approval of the Board of Directors. In the event the Plan should terminate, each Participant affected by such termination shall have a vested interest in his Account of 100 percent. The Plan Administrator will facilitate the distribution of Account balances in single lump sum payments to each Participant in accordance with Plan provisions until all assets have been distributed by the Trustee. Each Participant in the Plan upon Plan termination will automatically become 100% vested in his/her Account balance. F. Interpretation of Plan The Plan Administrator has the power and discretionary authority to construe the terms of the Plan based on the Plan document, existing laws and regulations and to determine all questions that arise under it. Such power and authority include, for example, the administrative discretion necessary to resolve issues with respect to an Employee's eligibility for benefits, credited services, disability, and retirement, or to interpret any other term contained in Plan documents. The Plan Administrator's interpretations and determinations are binding on all Participants, Employees, former Employees, and their Beneficiaries. G. Electronic Delivery This Summary Plan Description and other important Plan information may be delivered to you through electronic means. This Summary Plan Description contains important information concerning the rights and benefits of your Plan. If you receive this Summary Plan Description (or any other Plan information) through electronic means you are entitled to request a paper copy of this document, free of charge, from the Plan Administrator. The electronic version of this document contains substantially the same style, format and content as the paper version. - -------------------------------------------------------------------------------- X. Internal Revenue Code Tests - -------------------------------------------------------------------------------- A. Non-Discrimination Tests The Plan must pass Internal Revenue Code non-discrimination tests as of the last day of each Plan Year to maintain a qualified Plan. These tests are intended to ensure that the amount of contributions under the Plan do not discriminate in favor of Highly Compensated Employees. In order to meet the tests, your Employer encourages participation from all eligible Employees. Depending upon the results of the tests, the Plan Administrator may have to refund pretax contributions contributed to the Plan and vested matching contributions to certain Highly Compensated Employees, as determined under Internal Revenue Service regulations. Pretax or matching contributions will be refunded to you from applicable investment options. You will be notified by the Plan Administrator if any of your contributions will be refunded to you. - -------------------------------------------------------------------------------- Moore Medical Corp. Capital Accumulation Plan 15 B. Top Heavy Test The Plan is subject to the Internal Revenue Code "top-heavy" test. Each Plan Year, the Plan Administrator tests this Plan, together with any other Employer-sponsored qualified plans that cover one or more key employees, to ensure that no more than 60% of the benefits are for key employees. If this Plan is top-heavy, then your Employer may be required to make a minimum annual contribution on your behalf to this, or another Employer sponsored plan, if you are employed as of Plan Year-end. In addition, the following vesting schedule will be used instead of the one previously listed in the vesting section of this Summary Plan Description. Years of Service Vesting Percentage less than 1 0 1 33% 2 66% 3 100% - -------------------------------------------------------------------------------- XI. Participant Rights - -------------------------------------------------------------------------------- A. Claims 1. Claims Procedures You or your Beneficiary has the right to make a claim for benefits you are entitled to under the Plan. You must submit any claim to the Plan Administrator on the required form and it will be considered and subject to a full and fair review. The Plan Administrator will provide you with written notice of the disposition of your claim within 90 days after it has been filed, or, in certain circumstances, within 180 days if special circumstances require an extension of time to process the claim. In the event the claim is denied, the Plan Administrator will disclose in writing to you the specific reasons for the denial, the pertinent reference to the provisions of the Plan, a description of additional material or information required and why it is required, and information about the steps that must be taken to submit a request for review. 2. Review Procedures You or your Beneficiary may appeal the denial of your claim within 60 days after the date which you receive a denied claim. If you wish further consideration of your claim, you must file a written request for review with the Plan Administrator and include any pertinent documentation. The Plan Administrator shall make a decision on your claim and will notify you in writing within 60 days after receipt or within 120 days if there are special circumstances that may require an extension of time to process the request. If a decision on review is not made then the claim will be considered denied. B. Statement of ERISA Rights As a Participant in the Plan, you are entitled to certain rights and protections under ERISA. ERISA provides that all Plan Participants shall be entitled to: . Examine, without charge, at the Plan Administrator's office and at other specified locations such as worksites and union halls, all documents governing the Plan, including insurance contracts and collective bargaining agreements, and a copy of the latest annual report (Form 5500 Series) filed by the Plan with the U.S. Department of Labor. - -------------------------------------------------------------------------------- Moore Medical Corp. Capital Accumulation Plan 16 . Obtain, upon written request to the Plan Administrator, copies of documents governing the operation of the plan, including insurance contracts and collective bargaining agreements, and copies of the latest annual report (Form 5500 Series) and updated Summary Plan Description. The Plan Administrator may make a reasonable charge for the copies. . Receive a summary of the Plan's annual financial report. The Plan Administrator is required by law to furnish each Participant with a copy of this Summary Annual Report each year. In addition to creating rights for Plan Participants, ERISA imposes duties upon the people who are responsible for the operation of the employee benefit plan. The people who operate your Plan, called "fiduciaries" of the Plan, have a duty to do so prudently and in the interest of you, other Plan Participants and Beneficiaries. No one, including your Employer, your union, or any other person, may fire you or otherwise discriminate against you in any way to prevent you from obtaining a pension benefit or exercising your rights under ERISA. If your claim for a pension benefit under the Plan is denied, in whole or in part, you must receive a written explanation of the reason for the denial. You have the right to have the Plan review and reconsider your claim. Under ERISA, there are steps you can take to enforce the above rights. For instance, if you request materials from the Plan and do not receive them within 30 days, you may file suit in a Federal court. In such a case, the court may require the Plan Administrator to provide the materials and pay you up to $110 a day until you receive the materials, unless the materials were not sent because of reasons beyond the control of the Plan Administrator. If you have a claim for benefits that is denied or ignored, in whole or in part, you may file suit in a state or Federal court. In addition, if you disagree with the Plan's decision or lack thereof concerning the qualified status of a domestic relations order, you may file suit in Federal court. If it should happen that Plan fiduciaries misuse the Plan's money, or if you are discriminated against for asserting your rights, you may seek assistance from the U.S. Department of Labor, or you may file suit in a Federal court. The court will decide who should pay court costs and legal fees. If you are successful, the court may order the person you have sued to pay these costs and fees. If you lose, the court may order you to pay these costs and fees; for example, if it finds your claim frivolous. If you have any questions about your Plan, you should contact the Plan Administrator. If you have any questions about your rights under ERISA, you should contact the nearest office of the Pension and Welfare Benefits Administration, U.S. Department of Labor, listed in your telephone directory or the Division of Technical Assistance and Inquiries, Pension and Welfare Benefits Administration, U.S. Department of Labor, 200 Constitution Avenue N.W., Washington, D.C. 20210. - -------------------------------------------------------------------------------- XII. Services and Fees - -------------------------------------------------------------------------------- Fees and expenses charged under your Account will impact your retirement savings, and fall into three basic categories. Investment fees are generally assessed as a percentage of assets invested, and are deducted directly from your investment returns. Investment fees can be in the form of sales charges, loads, commissions, 12b-1 fees, or management fees. You can obtain more information about such fees from the documents (e.g., a prospectus) that describe the investments available under your Plan and from Appendix A: Investment Options. Plan administration fees cover the day-to-day expenses of your Plan for recordkeeping, accounting, legal and trustee services, as well as additional services that may be available under your Plan, such as daily valuation, telephone response systems, internet access to plan information, retirement planning tools, and educational materials. In some cases, these costs are covered by investment fees that are deducted directly from investment returns. In other cases, these administrative fees are either paid directly by your Employer, or are passed through to the participants in the Plan, in which case a recordkeeping fee will be deducted from your Account. Transaction-based fees are associated with optional services offered under your Plan, and are charged directly to your Account if you take advantage of a particular plan feature that may be available, such as a Plan loan. For more information on fees associated with your Account, refer to your quarterly Account statement or speak with your Plan Administrator. - -------------------------------------------------------------------------------- Moore Medical Corp. Capital Accumulation Plan 17 - -------------------------------------------------------------------------------- XIII. Appendix A: Investment Options - -------------------------------------------------------------------------------- You have the opportunity to direct the investments of your Account among the following investment funds: - -------------------------------------------------------------------------------- Fund Name Fund Code Fund Objective - -------------------------------------------------------------------------------- FIDELITY RET GOVT MM 0631 Seeks a high current income, preservation of capital, and liquidity from money market instruments issued by the U.S. Government or its agencies. FIDELITY US BD INDEX 0651 To provide investment results that correspond to the aggregate price and interest performance of the debt securities in the Lehman Brothers Aggregate Bond Index** (the Aggregate Bond Index). FIDELITY EQ INC II 0319 Seeks income by investing primarily in income-producing equity securities, considering the potential for capital appreciation. Seeks yield exceeding the S&P 500. SPARTAN US EQ INDEX 0650 Seeks investment results that correspond to the total return performance of the Standard and Poor's 500 Index by duplicating the investment composition. FIDELITY CONTRAFUND 0022 Seeks high capital appreciation. FIDELITY LOW PR STK 0316 Capital appreciation; invests mainly in a portfolio of low-priced stocks that may be undervalued, overlooked or out-of-favor. FIDELITY MID-CAP STK 0337 To increase the value of your investment over the long term through capital growth. FIDELITY VALUE 0039 Capital appreciation; invests in companies with valuable fixed assets or in companies believed to be under-valued based on company assets, earnings, or growth potential. FIDELITY DIVERS INTL 0325 Seeks capital growth by investing mainly in countries which are included in the Morgan Stanley EAFE Index;focuses on companies with market capitalizations of $100,000,000 or more;seeks a rate of return which exceeds that of the GDP-Weighted EAFE Index. JANUS ADV WORLDWIDE OFYA The fund is a growth mutual fund that invests globally. It tries to increase the value of your investment over the long term through capital growth by investing primarily in common stocks of foreign and domestic companies. The Fund has the flexibility to invest on a worldwide basis, in companies and organizations of any size. The Fund normally invests in issuers from at least five different countries, including the U.S.; however, the Fund may at times invest in fewer than five countries or 03/25/2002 even a single country. Share price and return will vary. Retirement Shares are available through the plan. Managed by Janus. FID FREEDOM INCOME 0369 To seek high current income and, as a secondary objective, some capital appreciation for those already in retirement. FID FREEDOM 2000 0370 To seek high total returns for those planning to retire in approximately 1 - 10 years. FID FREEDOM 2010 0371 To seek high total returns for those planning to retire in approximately 10 - 20 years. FID FREEDOM 2020 0372 To seek high total returns for those planning to retire in approximately 20 - 30 years. FID FREEDOM 2030 0373 To seek high total returns for those planning to retire in approximately 30 - 40 years. FID FREEDOM 2040 0718 Seeks high total returns for those planning to retire around 2040. If a contribution is received for your Account and you have not supplied investment instructions to the Trustee, this contribution will be invested based on Employer direction, or absent such direction, in the most conservative investment option in the Plan. You may redirect the investment of your future contributions or exchange your existing Account balance among available investment options by calling 1-800-835-5097 on any business day between 8:30 AM (ET) and 8:00 PM (ET). This is an automated telephone service and you should follow the telephonic instructions or you can press the appropriate number if you want to talk to a Fidelity telephone representative. All representative-assisted calls will be recorded for your protection. You may call the telephone number virtually 24 hours a day, seven days a week to check Account balances, prices, yields or obtain investment information. You may also use the internet to redirect the investment or your future contributions or exchange your existing Account balance by using Fidelity's NetBenefits internet account access website (at 401k.com). Please contact the Plan Administrator for further information. Exchanges received and confirmed before the close of the market (usually 4:00 PM (ET)) will be posted on that business day based upon the closing price of the affected investment(s). Exchanges received and confirmed after the market close will be processed on the next business day based upon the closing price of the affected investment(s) on that next business day. The minimum exchange is the lesser of $250 or 100% of your Account balance in the investment option. If your exchange is less than $250 then it may only be exchanged into one investment option. A written confirmation of your change in the investment of your future contributions or your exchange of an existing fund will be mailed to you within five business days. Fidelity reserves the right to change, restrict, or terminate exchange procedures to protect mutual fund shareholders. Your Employer has agreed to pay certain investment fees associated with having each investment in excess of the 15 investment options allowed for the Plan at no additional fee. If your Employer fails to pay any of those fees, then Participants may have those fees deducted from their Accounts. 03/25/2002 - -------------------------------------------------------------------------------- XIV. Appendix B: Loan Procedures - -------------------------------------------------------------------------------- A. Initiating Loans 1. Loan Application If you have met the Plan's eligibility and entry date requirements, you may apply for a loan by calling the Fidelity Retirement Benefits Line, 1-800-835-5097. All telephone calls will be recorded. You may apply for only one loan each Plan Year. All loans have been pre-approved by the Plan Administrator based on the criteria outlined in the Plan. Loans will be allowed for any purpose. A loan set up fee of $75 will be deducted from your Account for each new loan processed. 2. Loan Amount The minimum loan is $1,000 and the maximum amount is the lesser of one-half of your vested Account balance or $50,000 reduced by the highest outstanding loan balance in your Account during the prior twelve month period. All of your loans from plans maintained by your Employer or a Related Employer will be considered for purposes of determining the maximum amount of your loan. Up to 50% of your vested Account balance may be used as collateral for any loan. 3. Number of Loans You may only have 2 loans outstanding at any given time. You may not refinance an existing loan or obtain a second loan for the purpose of paying off the existing loan. 4. Interest Rate All loans shall bear a reasonable rate of interest as determined by the Plan Administrator based on the prevailing interest rates charged by persons in the business of lending money for loans which would be made under similar circumstances. The interest rate shall remain fixed throughout the duration of the loan. 5. Source of Loan Proceeds Loan proceeds will be withdrawn from available contribution sources and investment options in the order established by the Trustee. Please contact the Plan Administrator for more information. B. Loan Repayments and Loan Maturity All loans must be repaid in level payments through after-tax payroll deductions on at least a quarterly basis over a five year period unless it is for the purchase of your principal residence in which case the loan repayment period may not extend beyond 10 years from the date of the loan. If repayment is not made by payroll deduction, a loan shall be repaid to the Plan by payment to the Employer. You will be assessed an annual fee of $25 for each outstanding loan. The level repayment requirement may be waived for a period of one year or less if you are on a leave of absence, however, your loan must still be repaid in full on the maturity date. If a loan is not repaid within its stated period, it will be treated as a taxable distribution to you. C. Default or Termination of Employment The Plan Administrator will consider a loan in default if any scheduled repayment remains unpaid at the end of the calendar quarter following the calendar quarter in which a scheduled repayment was due or if there is an outstanding principal balance existing on a loan after the last scheduled repayment date. In the event of a default, death, disability or termination of employment, the entire outstanding principal and accrued interest shall be immediately due and payable. In addition, you will be deemed to have received a taxable distribution from the Plan. 03/25/2002 - -------------------------------------------------------------------------------- XV. Appendix C. Special Tax Notice Regarding Plan Payments - -------------------------------------------------------------------------------- This notice contains important information you will need before you decide how to receive your benefits from the Moore Medical Corp. Capital Accumulation Plan (the "Plan"). Important Note: If you receive this Special Tax Notice Regarding Plan Payments (also known as a "section 402(f) notice") through electronic means, you are entitled to request a paper copy of this document, free of charge, from the Plan Administrator. Summary There are two ways you may be able to receive a Plan payment that is eligible for rollover: (1) Certain payments can be made directly to a traditional IRA or, if you choose, another qualified employer plan that will accept it ("DIRECT ROLLOVER"); or (2) The payment can be PAID TO YOU. You have the right to wait at least 30 days from your receipt of this notice to make your distribution decision. You waive the 30 day period by initiating either a direct rollover or a payment to you before the end of the 30 day period. If you choose a DIRECT ROLLOVER: . Your payment will not be taxed in the current year and no income tax will be withheld. . Your payment will be made directly to your traditional IRA or, if you choose, to another employer plan that accepts your rollover. Your Plan payment cannot be rolled over to a Roth IRA, a SIMPLE IRA, or an education IRA because these are not traditional IRAs. . Your payment will be taxed later when you take it out of the traditional IRA or the qualified employer plan. If you choose to have your Plan payment that is eligible for rollover PAID TO YOU: . You will receive only 80% of the payment because the Plan administrator, or his/her agent, is required to withhold 20% of the payment and send it to the IRS as income tax withholding to be credited against your taxes. . Your payment will be taxed in the current year unless you roll it over. Under limited circumstances, you may be able to use special tax rules that could reduce the tax you owe. However, if you receive the payment before age 59 1/2, you also may have to pay an additional 10% tax. 03/25/2002 . You can roll over the payment by paying it to your traditional IRA or to another qualified employer plan that accepts your rollover within 60 days after you receive the payment. The amount rolled over will not be taxed until you take it out of the traditional IRA or the qualified employer plan. . If you want to roll over 100% of the payment to a traditional IRA or another qualified employer plan, you must find other money to replace the 20% that was withheld. If you roll over only the 80% that you received, you will be taxed on the 20% that was withheld and that is not rolled over. MORE INFORMATION I. PAYMENTS THAT CAN & CANNOT BE ROLLED OVER II. DIRECT ROLLOVER III. PAYMENT PAID TO YOU IV. SURVIVING SPOUSES, ALTERNATE PAYEES AND OTHER BENEFICIARIES I. Payments That Can and Cannot Be Rolled Over Payments from the Plan may be "eligible rollover distributions." This means that they can be rolled over to an IRA or to another employer plan that accepts rollovers. Payments from the Plan cannot be rolled over to Roth IRA, a SIMPLE IRA, or an education IRA. The following types of payments cannot be rolled over: Non-taxable Payment. In general, only the "taxable portion" of your payment can be rolled over. If you have made "after-tax" employee contributions to the Plan, these contributions will be non-taxable when they are paid to you, and they cannot be rolled over. (After-tax employee contributions generally are contributions you made from your own pay that were already taxed.) Your Plan administrator should be able to tell you how much of your payment is the taxable portion and how much is the after-tax employee contribution portion. Payments Spread Over Long Periods. You cannot roll over a payment if it is part of a series of equal (or almost equal) payments that are made at least once a year and that will last for: . your lifetime (or your life expectancy); or . your lifetime and your beneficiary's lifetime (or life expectancies); or . a period of ten years or more. Required Minimum Payments. Beginning in the year in which you reach age 70 1/2 or retire, whichever is later, a certain portion of your payment cannot be rolled over because it is a " minimum required distribution" (MRD) that must be paid to you. Special rules apply if you own 5% or more of your employer. Hardship Distributions. A hardship distribution for your employer's 401(k) Plan may not be eligible for rollover. Those amounts that are attributable to your pre-tax contributions that are distributed as the result of a financial hardship are not eligible to be rolled over. The Plan administrator will be able to tell you which portion, if any, of your hardship distribution is eligible to be rolled over. 03/25/2002 II. Direct Rollover A DIRECT ROLLOVER is a direct payment of your Plan benefits to a traditional IRA or to another qualified employer plan that will accept it. You can choose a DIRECT ROLLOVER of all or a portion of your payment that is an eligible rollover distribution, as described in Part I above. You are not taxed on any portion of your payment for which you choose a DIRECT ROLLOVER until you later take it out of the traditional IRA or the qualified employer plan. In addition, no income tax withholding is required for any portion of your Plan benefits for which you choose a DIRECT ROLLOVER. Direct Rollover to a Traditional IRA. You can open a traditional IRA to receive the direct rollover. If you choose to have your payment made directly to a traditional IRA, contact an IRA sponsor (usually a financial institution) to find out how to have your payment made in a direct rollover to a traditional IRA at that institution. If you are unsure of how to invest your money, you can temporarily establish a traditional IRA to receive the payment. However, in choosing a traditional IRA, you may wish to consider whether the traditional IRA you choose will allow you to move all or a part of your payment to another traditional IRA at a later date, without penalties or other limitations. See IRS Publication 590, Individual Retirement Arrangements, for more information on traditional IRAs (including limits on how often you can roll over between IRAs). Direct Rollover to a Plan. If you are employed by a new employer that has a qualified employer plan, and you want a direct rollover to that plan, ask the plan administrator of that plan whether it will accept your rollover. A qualified employer plan is not legally required to accept a rollover. If your new employer's plan does not accept a rollover, you can choose a DIRECT ROLLOVER to a traditional IRA. Direct Rollover of a Series of Payments. If you receive a payment that can be rolled over to a traditional IRA or to another qualified employer plan that will accept it, and it is paid in a series for less than ten years, your choice to make or not make a DIRECT ROLLOVER for a payment will apply to all later payments in the series until you change your election. You are free to change your election for any later payments in the series of payments. III. Payment Paid To You If your payment can be rolled over under Part I and the payment is made to you in cash, it is subject to 20% federal income tax withholding. The payment is taxed in the year you receive it unless, within 60 days, you roll it over to a traditional IRA or another qualified employer plan that accepts rollovers. If you do not roll it over, special tax rules may apply. Income Tax Withholding Mandatory Withholding. If any portion of your payment can be rolled over under Part I and you do not elect a DIRECT ROLLOVER, the Plan is required by law to withhold 20% of that amount. This amount is sent to the IRS as income tax withholding. For example, if you can roll over a payment of $10,000, only $8,000 will be paid to you because the Plan must withhold $2,000 as income tax. However, when you prepare your income tax return for the year, you must report the full $10,000 as a payment from the Plan. You must report the $2,000 as tax withheld, and it will be credited against any income tax you owe for the year. 03/25/2002 Voluntary Withholding. If any portion of your payment is taxable but cannot be rolled over under Part I, the mandatory withholding rules described above do not apply. In this case, you may elect not to have withholding apply to that portion. To elect out of withholding, ask the Plan administrator for the election form and related information. Sixty-Day Rollover Option. If you receive a payment that can be rolled over under Part I, you can still decide to roll over all or part of it to a traditional IRA or to another qualified employer plan that accepts rollovers. If you decide to roll over, you must contribute the amount of the payment you ------------------------------------------------- received to a traditional IRA or another qualified plan within 60 days after you - -------------------------------------------------------------------------------- receive the payment. The portion of your payment that is rolled over will not be - ------------------- taxed until you take it out of the traditional IRA or the qualified employer plan. You can roll over up to 100% of your payment that can be rolled over under Part I, including an amount equal to the 20% that was withheld. If you choose to roll over 100%, you must find other money within the 60-day period to contribute to the traditional IRA or the qualified employer plan to replace the 20% that was withheld. On the other hand, if you roll over only the 80% that you received, you will be taxed on the 20% that was withheld. Example: The portion of your payment that can be rolled over under Part I is $10,000, and you choose to have it paid to you. You will receive $8,000 and $2,000 will be sent to the IRS as income tax withholding. Within 60 days after receiving the $8,000, you may roll over the entire $10,000 to a traditional IRA or qualified employer plan. To do this, you roll over the $8,000 you received from the Plan, and you will have to find $2,000 from other sources (your savings, a loan, etc.). In this case, the entire $10,000 is not taxed until you take it out of the traditional IRA or the qualified employer plan. If you roll over the entire $10,000, you may get a refund of the $2,000 withheld when you file your income tax return. If, on the other hand, you roll over only $8,000, the $2,000 you did not roll over is taxed in the year it was withheld. When you file your income tax return, you may get a refund of the $2,000 withheld. (However, any refund is likely to be larger if you roll over the entire $10,000.) Additional 10% Tax if You Are Under Age 59 1/2. If you receive a payment before you reach age 59 1/2 and you do not roll it over, then, in addition to the regular income tax, you may have to pay an extra tax equal to 10% of the taxable portion of the payment. The additional 10% tax does not generally apply to (1) payments that are paid after you separate from service with your employer during or after the year you reach age 55, (2) payments that are paid because you retire due to disability, (3) payments that are paid as equal (or almost equal) payments over your life or life expectancy (or your and your beneficiary's lives or life expectancies), (4) dividends paid with respect to stock by an employee stock ownership plan (ESOP) as described in Code section 404(k), (5) payments that are paid directly to the government to satisfy a federal tax levy, (6) payments that are paid to an alternate payee under a qualified domestic relations order, or (7) payments that do not exceed the amount of your deductible medical expenses. See IRS Form 5329 for more information on the additional 10% tax. Special Tax Treatment if you were born before January 1, 1936. If you receive a payment that can be rolled over under Part I and you do not roll it over to a traditional IRA or to another qualified employer plan that accepts it, the payment will be taxed in the year you receive it. However, if it qualifies as a "lump sum distribution," it may be eligible for special tax treatment (see also "Employer Stock or Securities" below). A lump sum distribution is a payment, within one year, of your entire balance under --- 03/25/2002 the Plan (and certain other similar plans of the employer) that is payable to you after you have reached age 59 1/2 or because you have separated from service with your employer (or, in the case of a self-employed individual, after you have reached age 59 1/2 or have become disabled). For a payment to qualify as a lump sum distribution, you must have been a participant in the Plan for at least five years before the year in which you received the distribution. The special tax treatment for lump sum distributions that may be available to you is described below. Ten-Year Averaging. If you receive a lump sum distribution and you were born before January 1, 1936, you can make a one-time election to figure the tax on the payment by using "10-year averaging" (using 1986 tax rates). Ten-year averaging often reduces the tax you owe. Capital Gain Treatment. If you receive a lump sum distribution and you were born before January 1, 1936 and if you were a participant in the Plan before 1974, you may elect to have the part of your payment that is attributable to your pre-1974 participation in the Plan, taxed as long-term capital gain at a rate of 20%. There are other limits on the special tax treatment for lump sum distributions. For example, you can generally elect this special tax treatment only once in your lifetime, and the election applies to all lump sum distributions that you receive in that same year. If you have previously rolled over a distribution from the Plan (or certain other similar plans of the employer), you cannot use this special averaging treatment for later payments from the Plan. If you roll over your payment to a traditional IRA, you will not be able to use this special tax treatment for later payments from the traditional IRA. Also, if you roll over only a portion of your payment to a traditional IRA, this special tax treatment is not available for the rest of the payment. See IRS Form 4972, which has more information on lump sum distributions and how you elect the special tax treatment. Employer Stock or Securities. There is a special rule for a payment from the Plan that includes employer stock (or other employer securities). To use this special rule, (1) the payment must qualify as a lump sum distribution, as described above, except that you do not yet have five years of Plan participation, or (2) the employer stock included in the payment must be attributable to "after-tax" employee contributions, if any. Under this special rule, you may have the option of not paying tax on the "net unrealized appreciation" of the stock until you sell the stock. Net unrealized appreciation generally is the increase in the value of the employer stock while it was held by the Plan. For example, if employer stock was contributed to your Plan account when the stock was worth $1,000 but the stock was worth $1,200 when you received it, you would not have to pay tax on the $200 increase in value until you later sold the stock. You may instead elect not to have the special rule apply to the net unrealized appreciation. In this case, your net unrealized appreciation will be taxed in the year you receive the stock, unless you roll over the stock. The stock (including any net unrealized appreciation) can be rolled over to a traditional IRA or another qualified employer plan in either a direct rollover or a rollover that you make yourself. If you receive only employer stock in a payment that can be rolled over, no amount will be withheld from the payment. If you receive cash or property other than employer stock, as well as employer stock, in a payment that can be rolled over, the 20% withholding amount will be based upon the entire amount paid to you (including the employer stock but excluding the net unrealized appreciation). However, the amount withheld will be limited to cash or property (excluding employer stock) paid to you. 03/25/2002 If you receive employer stock in a payment that qualifies as a lump sum distribution, the special tax treatment for lump sum distributions described above (such as 10-year averaging) also may apply. See IRS Form 4972 for additional information on these rules. Repayment of Plan Loans. If you end your employment and have an outstanding loan from your Plan, your employer may reduce (or "offset") your balance in the Plan by the amount of your loan you have not repaid. The amount of your loan offset is treated as a distribution to you at the time of the offset and will be taxed to you unless you roll over an amount equal to the amount of your loan offset to another qualified employer plan or a traditional IRA within 60 days of the date of the offset. If the amount of your loan offset is the only amount you receive or are treated as having received, no amount will be withheld from the offset. If you receive other payments of cash or property from the Plan, the 20% withholding amount will be based on the entire amount paid to you, including the amount of the loan repayment. The amount withheld will be limited to the amount of other cash or property paid to you (other than employer securities). IV. Surviving Spouses, Alternate Payees and Other Beneficiaries In general, the rules summarized above that apply to payments to employees also apply to payments to surviving spouses of employees and to spouses or former spouses who are "alternate payees." You are an alternate payee if your interest in the Plan results from a "qualified domestic relations order," which is an order issued by a court, usually in connection with a divorce or legal separation. Some of the rules summarized above also apply to a deceased employee's beneficiary who is not a spouse. However, there are some exceptions for payments to surviving spouses, alternate payees, and other beneficiaries that should be mentioned. If you are a surviving spouse, you may choose to have a payment that can be rolled over, as described in Part I, paid in a DIRECT ROLLOVER to a traditional IRA or paid to you. If you have the payment paid to you, you can keep it or roll it over yourself to a traditional IRA but you cannot roll it over to a qualified employer plan. If you are an alternate payee, you have the same choices as the employee. Thus, you can have the payment paid as a DIRECT ROLLOVER or paid to you. If you have it paid to you, you can keep it or roll it over yourself to a traditional IRA or to another qualified employer plan that accept rollovers. If you are a beneficiary other than the surviving spouse, you cannot choose a direct rollover, and you cannot roll over the payment yourself. If you are a surviving spouse, an alternate payee, or another beneficiary, your payment is generally not subject to the additional 10% tax described in Section III, even if you are younger than age 59 1/2. If you are a surviving spouse, an alternate payee, or another beneficiary, you may be able to use the special tax treatment for lump sum distributions and the special rule for payments that include employer stock, as described in Section III. If you receive a payment because of the employee's death, you may be able to treat the payment as a lump sum distribution if the employee met the appropriate age requirements, whether or not the employee had five years of participation in the Plan. V. How to Obtain Additional Information 03/25/2002 This notice summarizes only the federal (not state or local) tax rules that might apply to your payment. The rules described above are complex and contain many conditions and exceptions that are not included in this notice. Therefore, you may want to consult with a professional tax adviser before you take a payment of your benefits from the Plan. Also, you can find more specific information on the tax treatment of payments from qualified retirement plans in IRS Publication 575, Pension and Annuity Income, IRS Publication 590, Individual Retirement Arrangements. These publications are available from your local IRS office, on the IRS Web site at www.irs.gov or by calling 1-800-TAX-FORMS. (Melo:Fidelity:SPD plan#48263 401K) 03/25/2002 EX-10.4C 6 dex104c.txt RETIREMENT ADOPTION AGREEMENT EXHIBIT 10.4(C) THE CORPORATEPLAN FOR RETIREMENT/SM/ (PROFIT SHARING/401(K) PLAN) A FIDELITY PROTOTYPE PLAN Non-Standardized Adoption Agreement No. 001 For use With Fidelity Basic Plan Document No. 07 The CORPORATEplan for RETIREMENT/SM/, Basic Plan Document No. 07, and related Adoption Agreements has not yet received approval from the Internal Revenue Service for use as a prototype plan. The CORPORATEplan for RETIREMENT/SM/ was submitted in April of 1998 to the Internal Revenue Service as a minor modifier to Fidelity Basic Plan Document No. 14. The document is considered an individually-designed plan until it is approved by the Internal Revenue Service. Revisions to the Basic Plan Document and/or Adoption Agreement may be required by the Internal Revenue Service as part of the approval process. If revisions are required, the approved document will be distributed to adopting employers and must be re-executed by them within a specified time period. Plan Number:48263 Non-Std PS Plan The CORPORATEplan for RETIREMENT/SM/ 02/01/99 (C) 1999 Fidelity Management & Research Company ADOPTION AGREEMENT ARTICLE 1 NON-STANDARDIZED PROFIT SHARING/401(K) PLAN 1.01 PLAN INFORMATION ---------------- (a) Name of Plan: This is the Moore Medical Corn. Capital Accumulation Plan (the --------------------------------------------- "Plan") (b) Type of Plan: (1) |_| 401(k) Only (2) [X] 401(k) and Profit Sharing (3) |_| Profit Sharing Only (c) Administrator Name (i not the Employer): -------------------------------------------------------------------- Address: ---------------------------------------------- ---------------------------------------------- Telephone Number: ---------------------------------------------- The Administrator is the agent for service of legal process for the Plan. (d) Plan Year End (month/day): 12/31 ----- (e) Three Digit Plan Number: 003 --- Plan Number:48263 Non-Std PS Plan The CORPORATEplan for RETIREMENT/SM/ 02/01/99 (C) 1999 Fidelity Management & Research Company 1 (f) Limitation Year (check one): (1) |_| Calendar Year (2) [X] Plan Year (3) |_| Other: _______________________ (g) Plan Status (check appropriate box(es)): (1) |_| New Plan Effective Date: _________________ (2) [X] Amendment Effective Date: 11/1/2001 --------- This is (check one): (A) |_| an amendment of The CORPORATEplan for RETIREMENT/SM/ Basic Plan Document No. 07 Adoption Agreement previously executed by the Employer; or (B) [X] a conversion to The CORPORATEplan for RETIREMENT/SM/ Basic Plan Document No. 07. The original effective date of the Plan: 2/28/1966 --------- The substantive provisions of the Plan shall apply prior to the Amendment Effective Date to the extent required by the Internal Revenue Code, as specifically provided in the Basic Plan Document. (3) |_| Special Effective Dates - Certain provisions of the Plan shall be effective as of a date other than the date specified above. Please complete the Special Effective Dates Addendum to the Adoption Agreement indicating the affected provisions and their effective dates. (4) |_| Plan Merger Effective Dates. Please complete the Special Effective Dates Addendum to the Adoption Agreement indicating the plan(s) that have merged into the Plan and the effective date(s) of such merger(s). Plan Number:48263 Non-Std PS Plan The CORPORATEplan for RETIREMENT/SM/ 02/01/99 (C) 1999 Fidelity Management & Research Company 2 1.02 EMPLOYER -------- (a) Employer Name: Moore Medical Corp. ------------------------------------------------- Address: 389 John Downey Drive ------------------------------------------------- New Britain, CT 06050 ------------------------------------------------- Contact's Name: Ms. Cindy Melo ------------------------------------------------- Telephone Number: (860) 826-3615 ------------------------------------------------- (1) Employer's Tax Identification Number: 22-1897821 ----------------------- (2) Employer's fiscal year end: The closest Saturday to 12/31 ----------------------------- (3) Date business commenced: 1/1/1948 -------- (b) The term "Employer" includes the following Related Employer(s) (as defined in Subsection 2.01(rr)) (list each participating Related Employer and its Employer Tax Identification Number): -------------------------------------------------------------------- -------------------------------------------------------------------- -------------------------------------------------------------------- 1.03 TRUSTEE (a) Trustee Name: Fidelity Management Trust Company Address: 82 Devonshire Street Boston, MA 02109 Plan Number:48263 Non-Std PS Plan The CORPORATEplan for RETIREMENT/SM/ 02/01/99 (C) 1999 Fidelity Management & Research Company 3 1.04 COVERAGE All Employees who meet the conditions specified below shall be eligible to participate in the Plan: (a) Age Requirement (check one): (1) [X] no age requirement. (2) |_| must have attained age: _____ (not to exceed 21). (b) Eligibility Service Requirement (1) Eligibility to Participate in Plan (check one): (A) |_| no Eligibility Service requirement. (B) [X] 1 (not to exceed 11) months of Eligibility Service - requirement (no minimum number Hours of Service can be required). (C) |_| one year of Eligibility Service requirement (at least 1,000 Hours of Service are required during the Eligibility Computation Period). (D) |_| two years of Eligibility Service requirement (at least 1,000 Hours of Service are required during each Eligibility Computation Period) (Do not select if Option 1.01 (b) (1), 401(k) Only, is checked, unless a different Eligibility Service requirement applies to Deferral Contributions under Option 1.04(b) (2)). Note: If the Employer selects the two year Eligibility Service requirement, then contributions subject to such Eligibility Service requirement must be 100% vested when made. (2) |_| Special Eligibility Service requirement for Deferral Contributions and/or Matching Employer Contributions: (A) The special Eligibility Service requirement applies to (check the appropriate box(es)): (i) |_| Deferral Contributions. (ii) |_| Matching Employer Contributions. Plan Number:48263 Non-Std PS Plan The CORPORATEplan for RETIREMENT/SM/ 02/01/99 (C) 1999 Fidelity Management & Research Company 4 (B) The special Eligibility Service requirement is: _______ (Fill in (A), (B), or (C) from Subsection 1.04(b)( 1) above). (c) Eligible Class of Employees (check one): Note: The Plan may not cover employees who are citizens of Puerto Rico. These employees are automatically excluded from the eligible class, regardless of the Employer's selection under this Subsection 1.04(c). (1) |_| includes all Employees of the Employer. (2) [X] includes all Employees of the Employer except for (check the appropriate box(es)): (A) |_| employees covered by a collective bargaining agreement. (B) |_| Highly Compensated Employees as defined in Code Section 414(q). (C) |_| Leased Employees as defined in Subsection 2.0l(cc). (D) |_| nonresident aliens who do not receive any earned income from the Employer which constitutes United States source income. (E) [X] other: Casual Employees Note: No exclusion in this Subsection 1.04(c) may create a discriminatory class of employees. An Employer's Plan must still pass the Internal Revenue Code coverage requirements if one or more of the above groups of Employees have been excluded from the Plan. (d) The Entry Dates shall be (check one): (1) |_| immediate upon meeting the eligibility requirements specified in Subsections 1.04(a), (b), and (c). Plan Number:48263 Non-Std PS Plan The CORPORATEplan for RETIREMENT/SM/ 02/01/99 (C) 1999 Fidelity Management & Research Company 5 (2) |_| the first day of each Plan Year and the first day of the seventh month of each Plan Year. (3) |_| the first day of each Plan Year and the first day of the fourth, seventh, and tenth months of each Plan Year. (4) [X] the first day of each month. (5) |_| the first day of each Plan Year (do not select if there is an Eligibility Service requirement of more than six months in Subsection 1.04(b) or if there is an age requirement of more than 20 1/2 in Subsection 1.04(a)). (e) |_| Special Entry Date(s) - In addition to the Entry Dates specified in Subsection 1.04(d) above, the following special Entry Date(s) apply for Nonelective and/or Matching Employer Contributions. (Special Entry Dates may only be selected if Option 1.04(b)(2), special Eligibility Service requirement, is checked. The same Entry Dates must be selected for contributions that are subject to the same Eligibility Service requirements.) (1) |_| The special Entry Date(s) shall apply to (check the appropriate box(es)): (A) |_| Nonelective Employer Contributions (B) |_| Matching Employer Contributions (2) The special Entry Date(s) shall be: ______ (Fill in (2), (3), (4), or (5) from Subsection 1.04(d) above). (f) Date of Initial Participation - An Employee shall become a Participant unless excluded by Subsection 1.04(c) above on the Entry Date immediately following the date the Employee completes the service and age requirement(s) in Subsections 1.04(a) and (b), if any, except (check one): (1) [X] no exceptions. (2) |_| Employees employed on the Effective Date in Subsection 1.01(g) shall become Participants on that date. Plan Number:48263 Non-Std PS Plan The CORPORATEplan for RETIREMENT/SM/ 02/01/99 (C) 1999 Fidelity Management & Research Company 6 (3) |_| Employees who meet the age and service requirement(s) of Subsections 1.04(a) and (b) on the Effective Date in Subsection 1.01(g) shall become Participants on that date. 1.05 COMPENSATION ------------ Compensation for purposes of determining contributions shall be as defined in Subsection 2.01W, modified as provided below. (a) Compensation Exclusions: Compensation shall exclude the item(s) listed below for purposes of determining Deferral Contributions, Employee Contributions, if any, and Qualified Nonelective Employer Contributions, or if Subsection 1.01(b)(3), Profit Sharing Only, is selected, Nonelective Employer Contributions. Unless otherwise indicated in Subsection 1.05(b), these exclusions shall also apply in determining all other Employer-provided contributions. (Check the appropriate box(es); Options (2), (3), (4), (5), and (6) may not be elected with respect to Deferral Contributions if Option 1.l0(a)(3), Safe Harbor Matching Employer Contributions is checked): (1) |_| No exclusions. (2) |_| Overtime Pay. (3) |_| Bonuses. (4) |_| Commissions. (5) [X] The value of a qualified or a non-qualified stock option granted to an Employee by the Employer to the extent such value is includable in the Employee's taxable income. (6) [X] Severance Pay. (b) Special Compensation Exclusions for Determining Employer-Provided Contributions in Article 5 (either (1) or (2) may be selected, but not both): (1) |_| Compensation for purposes of determining Matching, Qualified Matching, and Nonelective Employer Contributions shall exclude: _______________ (Fill in number(s) for item(s) from Subsection 1.05(a) above that apply.) Plan Number:48263 Non-Std PS Plan The CORPORATEplan for RETIREMENT/SM/ 02/01/99 (C) 1999 Fidelity Management & Research Company 7 (2) |_| Compensation for purposes of determining Nonelective Employer Contributions only shall exclude: __________________ (Fill in number(s) for item(s) from Subsection 1.05(a) above that apply.) Note:If the Employer selects Option (2), (3), (4), (5), or (6) with respect to Nonelective Employer Contributions, Compensation must be tested to show that it meets the requirements of Code Section 414(s) or 401 (a)(4). These exclusions shall not apply for purposes of the "Top Heavy" requirements in Section 15.03, or for allocating safe harbor Matching Employer Contributions if Subsection 1.10(a)(3) is selected, for allocating safe harbor Nonelective Employer Contributions if Subsection 1.11 (a)(3) is selected, or for allocating non-safe harbor Nonelective Employer Contributions if the Integrated Formula is elected in Subsection 1.11 (b)(2). (c) Compensation for the First Year of Participation - Contributions for the Plan Year in which an Employee first becomes a Participant shall be determined based on the Employee's Compensation (check one): (1) |_| for the entire Plan Year. (2) [X] for the portion of the Plan Year in which the Employee is eligible to participate in the Plan. Note:If the initial Plan Year of a new Plan consists of fewer than 12 months from the Effective Date in Subsection 1.01 (g)( 1) through the end of the initial Plan Year, Compensation for purposes of determining the amount of contributions, other than non-safe harbor Nonelective Employer Contributions, under the Plan shall be the period from such Effective Date through the end of the initial year. However, for purposes of determining the amount of non-safe harbor Nonelective Employer Contributions and for other Plan purposes, where appropriate, the full 12-consecutive-month period ending on the last day of the initial Plan Year shall be used. 1.06 TESTING RULES ------------- (a) ADP/ACP Present Testing Method - The testing method for purposes of applying the "ADP" and "ACP" tests described in Sections 6.03 and 6.06 of the Plan shall be the (check one): (1) |X| Current Year Testing Method - The ADP or ACP of Highly Compensated Employees for the Plan Year shall be compared to the ADP or ACP of Non-Highly Compensated Employees for the same Plan Year. (Must choose if Option 1.10(a)(3), Safe Harbor Matching Employer Contributions, or Option 1.11(a)(3), Safe Harbor Formula, with respect to Non elective Employer Contributions is checked.) Plan Number:48263 Non-Std PS Plan The CORPORATEplan for RETIREMENT/SM/ 02/01/99 (C) 1999 Fidelity Management & Research Company 8 (2) |_| Prior Year Testing Method - The ADP or ACP of Highly Compensated Employees for the Plan Year shall be compared to the ADP or ACP of Non-Highly Compensated Employees for the immediately preceding Plan Year. (Do not choose if Option 1.10(a) (3), Safe Harbor Matching Employer Contributions, or Option 1.11(a)(3), Safe Harbor Formula, with respect to Nonelective Employer Contributions is checked.) (3) |_| Not applicable. (Only if Option 1.01(b)(3), Profit Sharing Only, is checked.) (b) |_| ADP/ACP Testing Methods Used in Prior Years - For Plan Years prior to the effective date of this amendment, the "ADP" and "ACP" tests were applied using a different testing method as shown in the ADP/ACP Testing Methods History Addendum to the Adoption Agreement. (Choose if there has been a change in the testing method used under the Plan.) (c) |_| Initial Year Testing Method - For the initial Plan Year of a new Plan, other than a successor plan, the ADP and ACP tests shall be applied (check one): (1) |_| assuming a 3% ADP and ACP for Non-Highly Compensated Employees. (2) |_| using the actual ADP and ACP of Non-Highly Compensated Employees for the initial Plan Year. (d) HCE Determinations: Look Back Year - The look back year for purposes of determining which Employees are Highly Compensated Employees shall be the 12-consecutive-month period preceding the Plan Year, unless otherwise provided below. (1) |_| Calendar Year Determination - The look back year shall be the calendar year beginning within the preceding Plan Year. (Do not choose if the Plan Year is the calendar year.) (2) |_| Prior Plan Years - For Plan Years prior to the effective date of this amendment, the Plan was operated in accordance with a different look back year election as shown in the Special Effective Dates Addendum to the Adoption Agreement. (Choose if there has been a change in the look back year used under the Plan.) Plan Number:48263 Non-Std PS Plan The CORPORATEplan for RETIREMENT/SM/ 02/01/99 (C) 1999 Fidelity Management & Research Company 9 (e) HCE Determinations: Top Paid Group - Employees with Compensation exceeding $80,000 (as indexed) shall be considered Highly Compensated Employees only if they are in the top paid group (the top 20% of Employees ranked by Compensation), unless otherwise provided below. (1) [X] No Top Paid Group Election Current Plan Year - All Employees with Compensation exceeding $80,000 (as indexed) shall be considered Highly Compensated Employees. (2) |_| Prior Plan Years - For Plan Years prior to the effective date of this amendment, the Plan was operated in accordance with a different top paid group election as shown in the Special Effective Dates Addendum to the Adoption Agreement. (Choose if the Plan has used the top paid group election in some prior Plan Years, but not in others.) Note: Effective for determination years beginning on or after January 1, 1998, if the Employer elects Option 1.06(d)(1) and/or applies the top paid group election described in Subsection 1.06(e), such election must apply consistently to all retirement plans of the Employer for determination years that begin with or within the same calendar year (except that Option 1.06(d)(1), Calendar Year Determination, shall not apply to calendar year plans). Effective for determination years beginning on or after January 1, 2000, any such election must apply consistently to all plans of the Employer, including non-retirement plans. 1.07 DEFERRAL CONTRIBUTIONS ---------------------- (a) [X] Deferral Contributions - Participants may elect to have a portion of their Compensation contributed to the Plan on a before-tax basis pursuant to Code Section 401(k). (1) Regular Contributions - The Employer shall make a Deferral Contribution in accordance with Section 5.03 on behalf of each Participant who has an executed salary reduction agreement in effect with the Employer for the payroll period in question, not to exceed l2% (not to exceed 25%) of Compensation for that period. Note: The percentage elected above must be less than 25% in order to satisfy the limitation on annual additions under Code Section 415 if other types of contributions are provided under the Plan. Plan Number:48263 Non-Std PS Plan The CORPORATEplan for RETIREMENT/SM/ 02/01/99 (C) 1999 Fidelity Management & Research Company 10 (A) |_| Instead of specifying a percentage of Compensation, a Participant's salary reduction agreement may specify a dollar amount to be contributed each payroll period, provided such dollar amount does not exceed the maximum percentage of Compensation specified in Subsection 1.07(a)(1) above. (B) A Participant may increase or decrease, on a prospective basis, his salary reduction agreement percentage (check one): (i) [X] as of the beginning of each payroll period. (ii) |_| as of the first day of each month. (iii) |_| as of the next Entry Date. (Do not select if Option 1.04(d)(1), immediate entry, is checked.) (iv) |_| other. (Specify, but must be at least once per Plan Year) Note: Notwithstanding the Employer's election hereunder, if Option 1.10(a)(3), Safe Harbor Matching Employer Contributions, or 1.11(a)(3), Safe Harbor Formula, with respect to Nonelective Employer Contributions is checked, the Plan provides that an Active Participant may change his salary reduction agreement percentage for the Plan Year within a reasonable period (not fewer than 30 days) of receiving the notice described in Section 6.10. (C) A Participant may revoke, on a prospective basis, a salary reduction agreement at any time upon proper notice to the Administrator but in such case may not file a new salary reduction agreement until (check one): (i) |_| the first day of the next Plan Year. (ii) |_| any subsequent Entry Date. (Do not select if Option 1.04(d) (1), immediate entry, is checked.) (iii) [X] other. (Specify, but must be at least once per Plan Year) As of the first day of the next payroll --------------------------------------- period or as soon as administratively possible. ----------------------------------------------- Plan Number:48263 Non-Std PS Plan The CORPORATEplan for RETIREMENT/SM/ 02/01/99 (C) 1999 Fidelity Management & Research Company 11 (2) |_| Catch-Up Contributions - The Employer may allow Participants upon proper notice and approval to enter into a special salary reduction agreement to make additional Deferral Contributions in an amount up to 100% of their Compensation for the payroll period(s) designated by the Employer. (3) |_| Bonus Contributions - The Employer may allow Participants upon proper notice and approval to enter into a special salary reduction agreement to make Deferral Contributions in an amount up to 100% of any Employer paid cash bonuses designated by the Employer on a uniform and non- discriminatory basis that are made for such Participants during the Plan Year. The Compensation definition elected by the Employer in Subsection 1.05(a) must include bonuses if bonus contributions are permitted. Note: A Participant's contributions under Subsection 1.07(a)(2) and/or (3) may not cause the Participant to exceed the percentage limit specified by the Employer in Subsection 1.07(a)(1) for the full Plan Year. The Employer has the right to restrict a Participant's right to make Deferral Contributions if they will adversely affect the Plan's ability to pass the "ADP" and/or the "ACP" test. 1.08 EMPLOYEE CONTRIBUTIONS ---------------------- (a) [X] Employee Contributions - Participants either currently are or previously were permitted to contribute amounts to the Plan on an after-tax basis. (check one): (1) |_| Future Employee Contributions - Participants may make voluntary, non-deductible, after-tax Employee Contributions pursuant to Section 5.08 of the Plan. A Participant's Employee Contributions for the Plan Year may not exceed 10% of his Compensation for the Plan Year. (Only if Option 1.07(a), Deferral Contributions, is checked.) (2) [X] Frozen Employee Contributions - Participants may not currently make after-tax Employee Contributions to the Plan, but the Employer does maintain frozen Employee Contributions Accounts. Plan Number:48263 Non-Std PS Plan The CORPORATEplan for RETIREMENT/SM/ 02/01/99 (C) 1999 Fidelity Management & Research Company 12 1.09 QUALIFIED NONELECTIVE CONTRIBUTIONS ----------------------------------- (a) Qualified Nonelective Employer Contributions - If Option 1.07(a), Deferral Contributions, is checked, the Employer may contribute an amount which it designates as a Qualified Nonelective Employer Contribution to be included in the "ADP" or "ACP" test. Qualified Nonelective Employer Contributions shall be allocated to Participants who were eligible to participate in the Plan at any time during the Plan Year and are Non-Highly Compensated Employees (check one): (1) [X] either (A) in the ratio which each Participant's "testing compensation", as defined in Subsection 6.01(t), for the Plan Year bears to the total of all Participants' "testing compensation" for the Plan Year or (B) as a flat dollar amount. (2) |_| as a percentage of the lowest paid Participant's "testing compensation", as defined in Subsection 6.01(t), for the Plan Year up to the lower of (A) the maximum amount contributable under the Plan or (B) the amount necessary to satisfy the "ADP" or "ACP" test. If any Qualified Nonelective Employer Contribution remains, allocation shall continue in the same manner to the next lowest paid Participants until the Qualified Nonelective Employer Contribution is exhausted. (3) |_| not applicable. (Only if Option 1.01(b)(3), Profit Sharing Only, is checked.) 1.10 MATCHING EMPLOYER CONTRIBUTIONS (Only if Option 1.07(a), Deferral ------------------------------- Contributions is checked) (a) [X] Basic Matching Employer Contributions (check one): (1) [X] Non-Discretionary Matching Employer Contributions - The Employer shall make a basic Matching Employer Contribution on behalf of each Participant in an amount equal to the following percentage of a Participant's Deferral Contributions during the Contribution Period (check (A) or (B) and, if applicable, (C)): Note: Effective for Plan Years beginning on or after January 1, 1999, if the Employer elected Option 1.11(a)(3), Safe Harbor Formula, with respect to Nonelective Employer Contributions and meets the requirements for deemed satisfaction of the "ADP" test in Subsection 6.10 for a Plan Year, the Plan will also be deemed to satisfy the "ACP" test for such Plan Year with respect to Matching Employer Contributions if Matching Employer Contributions hereunder meet the requirements in Section 6.11. Plan Number:48263 Non-Std PS Plan The CORPORATEplan for RETIREMENT/SM/ 02/01/99 (C) 1999 Fidelity Management & Research Company 13 (A) [X] Single Percentage Match: 50% (B) |_| Tiered Match: ________% of the first ________% of the Active Participant's Compensation contributed to the Plan, ________% of the next ________% of the Active Participant's Compensation contributed to the Plan ________% of the next ________% of the Active Participant's Compensation contributed to the Plan. Note: The percentages specified above for basic Matching Employer Contributions may not increase as the percentage of Compensation contributed increases. (C) [X] Limit on Non-Discretionary Matching Employer Contributions (check the appropriate box(es)): (i) [X] Deferral Contributions in excess of 6% of the Participant's Compensation for the period in question shall not be considered for non-discretionary Matching Employer Contributions. Note: If the Employer elected a percentage limit in (i) above and requested the Trustee to account separately for matched and unmatched Deferral Contributions, the non-discretionary Matching Employer Contributions allocated to each Participant must be computed, and the percentage limit applied, based upon each payroll period. (ii) |_| Matching Employer Contributions for each Participant for each Plan Year shall be limited to $_____ (2) |_| Discretionary Matching Employer Contributions - The Employer may make a basic Matching Employer Contribution on behalf of each Participant in an amount equal to the percentage declared for the Contribution Period, if any, by a Board of Directors' Resolution (or by a Letter of Intent for a sole proprietor or partnership) of the Deferral Contributions made by each Participant during the Contribution Period. The Board of Directors' Resolution (or Letter of Intent, if applicable) may limit the Deferral Contributions matched to a specified percentage of Compensation or limit the amount of the match to a specified dollar amount. Plan Number:48263 Non-Std PS Plan The CORPORATEplan for RETIREMENT/SM/ 02/01/99 (C) 1999 Fidelity Management & Research Company 14 (A) |_| 4% Limitation on Discretionary Matching Employer Contributions for Deemed Satisfaction of "ACP" Test - Effective only for Plan Years beginning on or after January 1, 2000, in no event may the dollar amount of the discretionary Matching Employer Contribution made on a Participant's behalf for the Plan Year exceed 4% of the Participant's Compensation for the Plan Year. (Only if Option 1.11(a) (3), Safe Harbor Formula, with respect to Non elective Employer Contributions is checked.) (3) |_| Safe Harbor Matching Employer Contributions - Effective only for Plan Years beginning on or after January 1, 1999, if the Employer elects one of the safe harbor formula Options provided in the Safe Harbor Matching Employer Contribution Addendum to the Adoption Agreement and provides written notice each Plan Year to all Active Participants of their rights and obligations under the Plan, the Plan shall be deemed to satisfy the "ADP" test and, in certain circumstances, the "ACP" test. (b) |_| Additional Matching Employer Contributions - The Employer may at Plan Year end make an additional Matching Employer Contribution equal to a percentage declared by the Employer, through a Board of Directors' Resolution (or by a Letter of Intent for a sole proprietor or partnership), of the Deferral Contributions made by each Participant during the Plan Year. (Only if Option 1.10(a) (1) or (3) is checked.) The Board of Directors' Resolution (or Letter of Intent, if applicable) may limit the Deferral Contributions matched to a specified percentage of Compensation or limit the amount of the match to a specified dollar amount. (1) |_| 4% Limitation on Discretionary Matching Employer Contributions for Deemed Satisfaction of "ACP" Test - Effective only for Plan Years beginning on or after January 1, 2000, in no event may the dollar amount of the additional Matching Employer Contribution made on a Participant's behalf for the Plan Year exceed 4% of the Participant's Compensation for the Plan Year. (Only if Option 1.10(a) (3), Safe Harbor Matching Employer Contributions, or Option 1.11(a) (3), Safe Harbor Formula, with respect to Nonelective Employer Contributions is checked.) Plan Number:48263 Non-Std PS Plan The CORPORATEplan for RETIREMENT/SM/ 02/01/99 (C) 1999 Fidelity Management & Research Company 15 Note: If the Employer elected Option 1.10(a)(3), Safe Harbor Matching Employer Contributions, above and wants to be deemed to have satisfied the "ADP" test for Plan Years beginning on or after January 1, 1999, the additional Matching Employer Contribution must meet the requirements of Section 6.10. In addition to the foregoing requirements, if the Employer elected either Option 1 .l0(a)(3), Safe Harbor Matching Employer Contributions, or Option 1.11(a)(3), Safe Harbor Formula, with respect to Nonelective Employer Contributions, and wants to be deemed to have satisfied the "ACP" test with respect to Matching Employer Contributions for the Plan Year, the Deferral Contributions matched may not exceed the limitations in Section 6.11. (c) Contribution Period for Matching Employer Contributions - The Contribution Period for purposes of calculating the amount of basic Matching Employer Contributions described in Subsection 1.1 0(a)(l) or (2) is: (1) |_| each calendar month. (2) |_| each Plan Year quarter. (3) |_| each Plan Year. (4) [X] each payroll period. The Contribution Period for safe harbor Matching Employer Contributions described in Subsection 1.1 0(a)(3) and additional Matching Employer Contributions described in Subsection 1.10(b) is the Plan Year. (d) Continuing Eligibility Requirement(s) - A Participant who makes Deferral Contributions during a Contribution Period shall only be entitled to receive Matching Employer Contributions under Section 1.10 for that Contribution Period if the Participant satisfies the following requirement(s) (Check the appropriate box(es). Options (3) and (4) may not be elected together; Option (5) may not be elected with Option (2), (3), or (4); Options (2), (3), (4), (5) and (7) may not be elected with respect to basic Matching Employer Contributions if Option 1. 10(a)(3), Safe Harbor Matching Employer Contributions, is checked): (1) |X| No requirements. (2) |_| Is employed by the Employer or a Related Employer on the last day of the Contribution Period. Plan Number:48263 Non-Std PS Plan The CORPORATEplan for RETIREMENT/SM/ 02/01/99 (C) 1999 Fidelity Management & Research Company 16 (3) |_| Earns at least 501 Hours of Service during the Plan Year. (Only if the Contribution Period is the Plan Year.) (4) |_| Earns at least 1,000 Hours of Service during the Plan Year. (Only if the Contribution Period is the Plan Year.) (5) |_| Either earns at least 501 Hours of Service during the Plan Year or is employed by the Employer or a Related Employer on the last day of the Plan Year. (Only if the Contribution Period is the Plan Year.) (6) |_| Is not a Highly Compensated Employee for the Plan Year. (7) |_| Is not a partner or a member of the Employer, if the Employer is a partnership or an entity taxed as a partnership. (8) |_| Special continuing eligibility requirement(s) for additional Matching Employer Contributions. (Only if Options 1.10(b), Additional Matching Employer Contributions, is checked.) (A) The continuing eligibility requirement(s) for additional Matching Employer Contributions is/are: _____ (Fill in number of applicable eligibility requirement(s) from above.) Note: If Option (2), (3), (4), or (5) above is selected, then Matching Employer Contributions can only be funded by the Employer after the Contribution Period or Plan Year ends. Matching Employer Contributions funded during the Contribution Period or Plan Year shall not be subject to the eligibility requirements of Option (2), (3), (4), or (5). If Option (2), (3), (4), or (5) is adopted during a Contribution Period or Plan Year, as applicable, such Option shall not become effective until the first day of the next Contribution Period or Plan Year. (e) [X] Qualified Matching Employer Contributions - Prior to making any Matching Employer Contribution hereunder (other than a safe harbor Matching Employer Contribution), the Employer may designate all or a portion of such Matching Employer Contribution as a Qualified Matching Employer Contribution that may be used to satisfy the "ADP" test on Deferral Contributions and excluded in applying the "ACP" test on Employee and Matching Employer Contributions. Note: Qualified Matching Contributions may not be excluded in applying the "ACP" test for a Plan Year if the Employer elected Option 1.1 0(a)(3), Safe Harbor Matching Contributions, or Option 1.11 (a)(3), Safe Harbor Formula, with respect to Nonelective Employer Contributions, and the "ADP" test is deemed satisfied under Section 6.10 for such Plan Year. Plan Number:48263 Non-Std PS Plan The CORPORATEplan for RETIREMENT/SM/ 02/01/99 (C) 1999 Fidelity Management & Research Company 17 (1) Qualified Matching Employer Contributions shall be allocated to Participants who meet the continuing eligibility requirement(s) described in Subsection 1.10(d) above for the type of Matching Employer Contribution being characterized as a Qualified Matching Employer Contribution and who (check one): (A) [X] are Non-Highly Compensated Employees for the Plan Year. (B) |_| are either Non-Highly Compensated or Highly Compensated Employees for the Plan Year. 1.11 NONELECTIVE EMPLOYER CONTRIBUTIONS ---------------------------------- Note: An Employer may elect both a fixed formula and a discretionary formula. If both are selected, the discretionary formula shall be treated as an additional Nonelective Employer Contribution and allocated separately in accordance with the allocation formula selected by the Employer. (a) |_| Fixed Formula (check one): (1) |_| Fixed Percentage Employer Contribution - For each Plan Year, the Employer shall contribute for each eligible Active Participant an amount equal to _______% (not to exceed 15%) of such Active Participant's Compensation. (2) |_| Fixed Flat Dollar Employer Contribution - The Employer shall contribute for each eligible Active Participant an amount equal to $_____ The contribution amount is based on an Active Participant's service for the following period: (A) |_| Each paid hour. (B) |_| Each payroll period. (C) |_| Each Plan Year. (D) |_| Other: Plan Number:48263 Non-Std PS Plan The CORPORATEplan for RETIREMENT/SM/ 02/01/99 (C) 1999 Fidelity Management & Research Company 18 (3) |_| Safe Harbor Formula - Effective only with respect to Plan Years that begin on or after January 1, 1999, the Nonelective Employer Contribution is intended to satisfy the safe harbor contribution requirements under the Code such that the "ADP" test is deemed satisfied. Please complete the Safe Harbor Nonelective Employer Contribution Addendum to the Adoption Agreement. (Choose only if Option 1.07(a), Deferral Contributions, is checked.) (b) [X] Discretionary Formula - The Employer may decide each Plan Year whether to make a discretionary Nonelective Employer Contribution on behalf of eligible Active Participants in accordance with Section 5.10. Such contributions shall be allocated to eligible Active Participants based upon the following (check (1) or (2)): (1) [X] Non-integrated Allocation Formula - In the ratio that each eligible Active Participant's Compensation bears to the total Compensation paid to all eligible Active Participants for the Plan Year. (2) |_| Integrated Allocation Formula - As (A) a percentage of each eligible Active Participant's Compensation plus (B) a percentage of each eligible Active Participant's Compensation in excess of the "integration level" as defined below. The percentage of Compensation in excess of the "integration level" shall be equal to the lesser of the percentage of the Active Participant's Compensation allocated under (A) above or the "permitted disparity limit" as defined below. Note: An Employer that has elected the Safe Harbor formula in Subsection 1.11 (a)(3) above may not take Nonelective Employer Contributions made to satisfy the safe harbor into account in applying the integrated allocation formula described above. "Integration level" means the Social Security taxable wage base for the Plan Year, unless the Employer elects a lesser amount in (A) or (B) below. (A) _____% (not to exceed 100%) of the Social Security taxable wage base for the Plan Year, or (B) $_____ (not to exceed the Social Security taxable wage base). "Permitted disparity limit" means the percentage provided by the following table: Plan Number:48263 Non-Std PS Plan The CORPORATEplan for RETIREMENT/SM/ 02/01/99 (C) 1999 Fidelity Management & Research Company 19 ================================================================================ If the "Integration Level" is at But Less Than The "Permitted least ___% of the Taxable of the Disparity Wage Base Taxable Wage Base Limit" is - -------------------------------------------------------------------------------- 0% 20% 5.7% - -------------------------------------------------------------------------------- 20% 80% 4.3% - -------------------------------------------------------------------------------- 80% 100% 5.4% - -------------------------------------------------------------------------------- 100% N/A 5.7% - -------------------------------------------------------------------------------- Note: An Employer who maintains any other plan that provides for Social Security Integration (permitted disparity) may not elect 1.11 (b)(2). (c) Continuing Eligibility Requirement(s) - A Participant shall only be entitled to receive Nonelective Employer Contributions for a Plan Year under this Section 1.11 if the Participant satisfies the following requirement(s) (Check the appropriate box(es) - Options (3) and (4) may not be elected together; Option (5) may not be elected with Option (2), (3), or (4); Options (2), (3), (4), (5) and (7) may not be elected with respect to Nonelective Employer Contributions under the fixed formula if Option 1.11 (a)(3), Safe Harbor Formula, is checked): (1) |_| No requirements. (2) [X] Is employed by the Employer or a Related Employer on the last day of the Plan Year. (3) |_| Earns at least 501 Hours of Service during the Plan Year. (4) |_| Earns at least 1,000 Hours of Service during the Plan Year. (5) |_| Either earns at least 501 Hours of Service during the Plan Year or is employed by the Employer or a Related Employer on the last day of the Plan Year. (6) |_| Is not a Highly Compensated Employee for the Plan Year. (7) |_| Is not a partner or a member of the Employer, if the Employer is a partnership or an entity taxed as a partnership. (8) |_| Special continuing eligibility requirement(s) for discretionary Nonelective Employer Contributions. (Only if both Options 1.11(a) and (b) are checked.) Plan Number:48263 Non-Std PS Plan The CORPORATEplan for RETIREMENT/SM/ 02/01/99 (C) 1999 Fidelity Management & Research Company 20 (A) The continuing eligibility requirement(s) for additional discretionary Nonelective Employer Contributions is/are: _____ (Fill in number of applicable eligibility requirement(s) from above.) Note: If Option (2), (3), (4), or (5) above is selected then Nonelective Employer Contributions can only be funded by the Employer after the Plan Year ends. Nonelective Employer Contributions funded during the Plan Year shall not be subject to the eligibility requirements of Option (2), (3), (4), or (5). If Option (2), (3), (4), or (5) is adopted during a Plan Year, such Option shall not become effective until the first day of the next Plan Year. 1.12 EXCEPTIONS TO CONTINUING ELIGIBILITY REQUIREMENTS ------------------------------------------------- [X] Death, Disability, and Retirement Exception to Eligibility Requirements - Active Participants who do not meet any last day or Hours of Service requirement under Subsection 1.10(d) or 1.11(c) because they become disabled, as defined in Section 1.14, retire, as provided in Subsection 1.13(a), (b), or (c), or die shall nevertheless receive an allocation of Nonelective Employer and/or Matching Employer Contributions. No Compensation shall be imputed to Active Participants who become disabled for the period following their disability. 1.13 RETIREMENT ---------- (a) The Normal Retirement Age under the Plan is (check one); (1) [X] age 65. (2) |_| age _____ (specify between 55 and 64). (3) |_| later of age (not to exceed 65) or the fifth anniversary of the Participant's Employment Commencement Date. (b) [X] The Early Retirement Age is the first day of the month after the Participant attains age 62.0 and completes 3.0 years of Vesting Service. Note: If this Option is elected, Participants who are employed by the Employer or a Related Employer on the date they reach Early Retirement Age shall be 100% vested in their Accounts under the Plan. Plan Number:48263 Non-Std PS Plan The CORPORATEplan for RETIREMENT/SM/ 02/01/99 (C) 1999 Fidelity Management & Research Company 21 (c) [X] A Participant who becomes disabled, as defined in Section 1.14, is eligible for disability retirement Note: If this Option is elected, Participants who are employed by the Employer or a Related Employer on the date they become disabled shall be 100% vested in their Accounts under the Plan. 1.14 DEFINITION OF DISABLED ---------------------- A Participant is disabled if he/she (check the appropriate box(es)): (a) |_| satisfies the requirements for benefits under the Employer's Long-Term Disability Plan. (b) [X] satisfies the requirements for Social Security disability benefits. (c) |_| is determined to be disabled by a physician approved by the Employer. 1.15 VESTING ------- A Participant's vested interest in Matching Employer Contributions and/or Nonelective Employer Contributions, other than Safe Harbor Matching Employer and/or Nonelective Employer Contributions elected in Subsection 1.10(a) (3) or 1.11(a) (3) , shall be based upon his years of Vesting Service and the schedule(s) selected below, except as provided in Subsection 1.21(d) or in the Grandfathered Vesting Schedule Addendum to the Adoption Agreement (a) |_| Years of Vesting Service shall exclude: (1) |_| for new plans, service prior to the Effective Date as defined in Subsection 1.0l(g)(l). (2) |_| for existing plans converting from another plan document, service prior to the original Effective Date as defined in Subsection 1.01(g)(2). Plan Number:48263 Non-Std PS Plan The CORPORATEplan for RETIREMENT/SM/ 02/01/99 (C) 1999 Fidelity Management & Research Company 22 (b) Vesting Schedule(s) (1) Nonelective Employer Contributions (check one): (A) |_| N/A - No Nonelective Employer Contributions (B) |_| 100% Vesting immediately (C) |_| 3 year cliff (see C below) (D) |_| 5 year cliff (see D below) (E) |_| 6 year graduated (see E below) (F) |_| 7 year graduated (see F below) (G) [X] Other vesting (complete G1 below) (2) Matching Employer Contributions (check one): (A) |_| N/A - No Nonelective Employer Contributions (B) |_| 100% Vesting immediately (C) |_| 3 year cliff (see C below) (D) |_| 5 year cliff (see D below) (E) |_| 6 year graduated (see E below) (F) |_| 7 year graduated (see F below) (G) [X] Other vesting (complete G2 below) Years of Vesting Service Applicable Vesting Schedule(s) ================================================================================ C D E F G1 G2 ================================================================================ 0 0% 0% 0% 0% 0.00% 0.00% - -------------------------------------------------------------------------------- 1 0% 0% 0% 0% 33.33% 33.33% - -------------------------------------------------------------------------------- 2 0% 0% 20% 0% 66.66% 66.66% - -------------------------------------------------------------------------------- 3 100% 0% 40% 20% 100.00% 100.00% - -------------------------------------------------------------------------------- 4 100% 0% 60% 40% 100.00% 100.00% - -------------------------------------------------------------------------------- 5 100% 100% 80% 60% 100.00% 100.00% - -------------------------------------------------------------------------------- 6 100% 100% 100% 80% 100.00% 100.00% - -------------------------------------------------------------------------------- 7 or more 100% 100% 100% 100% 100.00% 100.00% ================================================================================ Note: A schedule elected under Gl or G2 above must be at least as favorable as one of the schedules in C, D, E or F above. Plan Number:48263 Non-Std PS Plan The CORPORATEplan for RETIREMENT/SM/ 02/01/99 (C) 1999 Fidelity Management & Research Company 23 Note: If the Plan is being amended to provide a more restrictive vesting schedule, the more favorable vesting schedule shall continue to apply to Participants who are Active Participants immediately prior to the later of (1) the effective date of the amendment or (2) the date the amendment is adopted. Grandfathered vesting schedules are reflected in the Grandfathered Vesting Schedule Addendum to the Adoption Agreement. (c) |_| A vesting schedule different from the vesting schedule(s) selected above applies to certain persons employed prior to the effective date of this amendment. Please complete the Grandfathered Vesting Schedule Addendum to the Adoption Agreement. (d) [X] Application of Forfeitures - If a participant forfeits any portion of his non-vested Account balance as provided in Section 6.04, 6.07, or 11.08, such forfeitures shall be used to reduce administrative expenses under the Plan, if any. Any forfeitures remaining after administrative expenses have been paid shall be (check one): (1) |_| N/A - Either (A) there are no Matching Employer Contributions under the Plan and all other Employer Contributions are 100% vested when made or (B) there are no Employer Contributions under the Plan. (2) [X] applied to reduce Employer contributions. (3) |_| allocated among the Accounts of eligible Participants in the manner provided in Section 1.11. (Only if Option 1.11(a) or (b) is checked.) 1.16 PREDECESSOR EMPLOYER SERVICE ---------------------------- |_| Service for purposes of eligibility in Subsection 1.04(b) and vesting in Subsection 1.15(b) of this Plan shall include service with the following predecessor employer(s): Plan Number:48263 Non-Std PS Plan The CORPORATEplan for RETIREMENT/SM/ 02/01/99 (C) 1999 Fidelity Management & Research Company 24 1.17 PARTICIPANT LOANS ----------------- Participant loans (check one): (a) [X] are allowed in accordance with Article 9 and loan procedures outlined in the Service Agreement (b) |_| are not allowed. 1.18 IN-SERVICE WITHDRAWALS ---------------------- Participants may make withdrawals prior to termination of employment under the following circumstances (check the appropriate box(es)): (a) [X] Hardship Withdrawals - Hardship withdrawals from a Participant's Deferral Contributions Account shall be allowed in accordance with Section 10.05, subject to a $500 minimum amount. (b) [X] Age 59 1/2 - Participants shall be entitled to receive a distribution of all or any portion of the following Accounts upon attainment of age 59 1/2 (check one): (1) |_| Deferral Contributions Account (2) [X] All Accounts (c) Withdrawal of Employee Contributions and Rollover Contributions - The Plan provides for in-service withdrawals of Rollover Contributions at any time. Employee Contributions may be withdrawn in accordance with Section 10.02 subject to the following (check if applicable): (1) |_| Employees may not make such withdrawals more frequently than: Note: If Option 1.18(c)(l) is not selected, withdrawals of Employee Contributions shall be permitted at any time. (d) [X] Protected In-Service Withdrawal Provisions - Check if the Plan was converted by plan amendment or received transfer contributions from another defined contribution plan, and benefits under the other defined contribution plan were payable as (check the appropriate box(es)): Plan Number:48263 Non-Std PS Plan The CORPORATEplan for RETIREMENT/SM/ 02/01/99 (C) 1999 Fidelity Management & Research Company 25 (1) |_| an in-service withdrawal of vested employer contributions maintained in a Participant's Account (check (A) and/or (B)): (A) |_| for at least _____ (24 or more) months. (i) |_| Special restrictions applied to such in-service withdrawals under the prior plan that the Employer wishes to continue under the Plan as restated hereunder. Please complete the Protected In-Service Withdrawals Addendum to the Adoption Agreement identifying the restrictions. (B) |_| after the Participant has at least 60 months of participation. (i) |_| Special restrictions applied to such in-service withdrawals under the prior plan that the Employer wishes to continue under the Plan as restated hereunder. Please complete the Protected In-Service Withdrawals Addendum to the Adoption Agreement identifying the restrictions. (2) |X| another in-service withdrawal option that is a "protected benefit" under Code Section 41l(d)(6). Please complete the Protected In-Service Withdrawals Addendum to the Adoption Agreement identifying the in-service withdrawal option(s). 1.19 FORM OF DISTRIBUTIONS --------------------- Subject to Article 14, distributions under the Plan shall be paid as (check the appropriate box(es) with respect to optional forms): (a) Lump Sum Payments - Lump sum payments are always available under the Plan. If a Participant's account balance is less than or equal to the "cashout limit", distribution shall be made to the Participant as soon as reasonably practicable following his termination of employment in a lump sum payment. Effective the first day of the first Plan Year beginning on or after August 5, 1997 (or the date the Plan is first operated in compliance with the increase, if later, but not later than the effective date specified in Subsection 1.0l(g)(l) or (2)), the "cashout limit" is $5,000 (increased from $3,500). Plan Number:48263 Non-Std PS Plan The CORPORATEplan for RETIREMENT/SM/ 02/01/99 (C) 1999 Fidelity Management & Research Company 26 (b) [X] Installments Payments - In lieu of a lump sum, Participants may elect distribution under a systematic withdrawal plan (installments). (c) [X] Protected Benefit Forms - Check if the Plan was converted by plan amendment or received transfer contributions from another defined contribution plan, and benefits under the other defined contribution plan were payable in any other form (check the appropriate box(es)): (1) [X] The protected benefit forms apply to the Accounts of all Participants (check the appropriate box(es)): (A) [X] The prior plan provided a life annuity form of payment. (i) The normal annuity form for unmarried Participants is a single life annuity. ------------------- The normal annuity form for married Participants is a 50% (must be at least 50%, but not more than 100%) "qualified joint and survivor annuity". (ii) The normal form of distribution under the Plan is: (I) [X] A lump sum payment. (II) |_| A "qualified joint and survivor annuity". (iii) The qualified preretirement survivor annuity provided to a Participant's spouse is purchased with 50% (must be at least 50%) of the Participant's Account. (B) |_| The prior plan provided other optional annuity forms. The other optional annuity forms available under the Plan are: -------------------------------------------------- -------------------------------------------------- -------------------------------------------------- -------------------------------------------------- Plan Number:48263 Non-Std PS Plan The CORPORATEplan for RETIREMENT/SM/ 02/01/99 (C) 1999 Fidelity Management & Research Company 27 (C) |_| The prior plan provided other forms of distribution that are protected benefits. The other forms of distribution available under the Plan are: (2) |_| The protected benefit forms apply only to the Accounts of a specified class of Participants. Please complete the Protected Benefit Forms Addendum describing each protected benefit and the class of Participants whose Accounts are subject to distribution in the protected benefit form. 1.20 TIMING OF DISTRIBUTIONS ----------------------- Except as provided in Subsection 1.20(b) and the Postponed Distribution Addendum to the Adoption Agreement, distribution shall be made to an eligible Participant from his vested interest in his Account as soon as reasonably practicable following the date the Participant's application for distribution is received by the Administrator, but in no event later than his Required Beginning Date, as defined in Subsection 2.01 (ss). (a) Required Beginning Date - The Required Beginning Date of a Participant who is not a five percent owner shall be determined under Code Section 401 (a)(9) as amended by the Small Business Job Protection Act. (1) |_| If a Participant attained age 70 1/2 before January 1, 1999 (or such later date as may be specified below), he may elect to have his Required Beginning Date determined under Code Section 401 (a)(9) as in effect prior to the amendment. (Choose only if the Plan was originally effective before January 1, 1997.) (A) |_| A later effective date applies for grandfathering the prior Code Section 401 (a)(9) rules. Please complete Section (d) of the Special Effective Dates Addendum to the Adoption Agreement indicating the late effective date. Plan Number:48263 Non-Std PS Plan The CORPORATEplan for RETIREMENT/SM/ 02/01/99 (C) 1999 Fidelity Management & Research Company 28 (b) |_| Postponed Distributions - Check if the Plan was converted by plan amendment from another defined contribution plan that provided for the postponement of certain distributions from the Plan to eligible Participants and the Employer wants to continue to administer the Plan using the postponed distribution provisions. Please complete the Postponed Distribution Addendum to the Adoption Agreement indicating the types of distributions that are subject to postponement and the period of postponement. Note: An Employer may not provide for postponement of distribution to a Participant beyond the 60th day following the close of the Plan Year in which (1) the Participant attains Normal Retirement Age under the Plan, (2) the Participant's 10th anniversary of participation in the Plan occurs, or (3) the Participant's employment terminates, whichever is latest. 1.21 TOP HEAVY STATUS ---------------- (a) The Plan shall be subject to the Top-Heavy Plan requirements of Article 15 (check one): (1) |_| for each Plan Year, whether or not the Plan is a "top-heavy plan" as defined in Subsection 15.01(f). (2) [X] for each Plan Year, if any, for which the Plan is a "top-heavy plan" as defined in Subsection 15.01(f). (3) |_| Not applicable. (Choose only if Plan covers only employees subject to a collective bargaining agreement.) (b) In determining whether the Plan is a "top-heavy plan "for an Employer with at least one defined benefit plan, the following assumptions shall apply: (1) [X] Interest rate: 9% per annum. - (2) [X] Mortality table: 1986 Unisex Annuity Table. -------------------------- (3) |_| Not applicable. (Choose only if either (A) Plan covers only employees subject to a collective bargaining agreement or (B) Employer does not maintain and has never maintained any defined benefit plans.) Plan Number:48263 Non-Std PS Plan The CORPORATEplan for RETIREMENT/SM/ 02/01/99 (C) 1999 Fidelity Management & Research Company 29 (c) If the Plan is or is treated as a "top-heavy plan" for a Plan Year, each non-key Employee shall receive an Employer Contribution of at least 3.0 (3, 4, 5, or 71/2) % of Compensation for the Plan Year in accordance with Section 15.03. The minimum Employer Contribution provided in this Subsection 1.21(c) shall be made under this Plan only if the Participant is not entitled to such contribution under another qualified plan of the Employer, unless the Employer elects otherwise in (1) or (2) below: (1) |_| The minimum Employer Contribution shall be paid under this Plan in any event. (2) |_| Not applicable. (Choose only if Plan covers only employees subject to a collective bargaining agreement.) Note: The minimum Employer contribution may be less than the percentage indicated in Subsection 1.21(c) above to the extent provided in Section 15.03. (d) If the Plan is or is treated as a "top-heavy plan "for a Plan Year, the following vesting schedule shall apply instead of the schedule(s) elected in Subsection 1.15(b) for such Plan Year and each Plan Year thereafter (check one): (1) |_| Not applicable. (Choose only if either (A) the schedule(s) elected in Subsection 1.15(b) is/are more favorable in all cases than the schedules available below or (B) Plan covers only employees subject to a collective bargaining agreement.) (2) |_| 100% vested after _____ (not in excess of 3) years of Vesting Service. Plan Number:48263 Non-Std PS Plan The CORPORATEplan for RETIREMENT/SM/ 02/01/99 (C) 1999 Fidelity Management & Research Company 30 (3) [X] Graded vesting: ================================================================================ Years of Vesting Vesting Must be Service Percentage at Least - -------------------------------------------------------------------------------- 0 0.00% 0% - -------------------------------------------------------------------------------- 1 33.33% 0% - -------------------------------------------------------------------------------- 2 66.66% 20% - -------------------------------------------------------------------------------- 3 100.00% 40% - -------------------------------------------------------------------------------- 4 100.00% 60% - -------------------------------------------------------------------------------- 5 100.00% 80% - -------------------------------------------------------------------------------- 6 100.00% 100% ================================================================================ Note: If the schedule(s) elected in Subsection 1.15(b) is/are more favorable in all cases than the schedule elected in Subsection 1.21(d) above, then the schedule(s) in Subsection 1.15(b) shall continue to apply even in Plan Years in which the Plan is a "top-heavy plan". 1.22 CORRECTION TO MEET 415 REQUIREMENTS UNDER MULTIPLE DEFINED CONTRIBUTION ----------------------------------------------------------------------- PLANS ----- If the Employer maintains other defined contribution plans, annual additions to a Participant's Account shall be limited as provided in Section 6.12 of the Plan to meet the requirements of Code Section 415, unless the Employer elects otherwise below and completes the 415 Correction Addendum describing the order in which annual additions shall be limited among the plans. (a) |_| Other Order for Limiting Annual Additions Plan Number:48263 Non-Std PS Plan The CORPORATEplan for RETIREMENT/SM/ 02/01/99 (C) 1999 Fidelity Management & Research Company 31 1.23 INVESTMENT DIRECTION -------------------- (a) Investment Directions - Participant Accounts shall be invested (check one): (1) |_| in accordance with investment directions provided to the Trustee by the Employer for allocating all Participant -------- Accounts among the Options listed in the Service Agreement. (2) [X] in accordance with investment directions provided to the Trustee by each Participant for allocating his entire ----------- Account among the Options listed in the Service Agreement. (3) |_| in accordance with investment directions provided to the Trustee by each Participant for all contribution sources in a Participant's Account except the following sources shall be invested as directed by the Employer (check (A) and/or (B)): (A) |_| Nonelective Employer Contributions (B) |_| Matching Employer Contributions The Employer must direct the applicable sources among the same investment options made available for Participant directed sources listed in the Service Agreement. (b) [X] 404(c) Election (only if Option 1 .23(a)(2) or 1 .23(a)(3) is checked) - The Administrator intends to treat this Plan as being subject to ERISA Section 404(c). 1.24 RELIANCE ON OPINION LETTER -------------------------- An adopting Employer may not rely on the opinion letter issued by the National Office of the Internal Revenue Service as evidence that this Plan is qualified under Code Section 401. If the Employer wishes to obtain reliance that its Plan is qualified, application for a determination letter should be made to the appropriate Key District Director of the Internal Revenue Service. Failure to fill out the Adoption Agreement properly may result in disqualification of the Plan. This Adoption Agreement may be used only in conjunction with Fidelity Basic Plan Document No. 07. The Prototype Sponsor shall inform the adopting Employer of any amendments made to the Plan or of the discontinuance or abandonment of the prototype plan document. Plan Number:48263 Non-Std PS Plan The CORPORATEplan for RETIREMENT/SM/ 02/01/99 (C) 1999 Fidelity Management & Research Company 32 1.25 PROTOTYPE INFORMATION: --------------------- Name of Prototype Sponsor: Fidelity Management & Research Company Address of Prototype Sponsor: 82 Devonshire Street Boston, MA 02109 Questions regarding this prototype document may be directed to the following telephone number: 1-800-684-5254. Plan Number:48263 Non-Std PS Plan The CORPORATEplan for RETIREMENT/SM/ 02/01/99 (C) 1999 Fidelity Management & Research Company 33 EXECUTION PAGE (Prototype Sponsor's Copy) IN WITNESS WHEREOF, the Employer has caused this Adoption Agreement to be executed this __________ day of _________________, _______. Employer: ________________________________________ By: ______________________________________________ Title: ___________________________________________ Employer: ________________________________________ By: ______________________________________________ Title: ___________________________________________ Accepted by: Fidelity Management Trust Company, as Trustee By: ______________________________ Date: _____________ Title: ___________________________ Plan Number:48263 Non-Std PS Plan The CORPORATEplan for RETIREMENT/SM/ 02/01/99 (C) 1999 Fidelity Management & Research Company 34 EXECUTION PAGE (Employer's Copy) IN WITNESS WHEREOF, the Employer has caused this Adoption Agreement to be executed this __________ day of _________________, _______. Employer: ________________________________________ By: ______________________________________________ Title: ___________________________________________ Employer: ________________________________________ By: ______________________________________________ Title: ___________________________________________ Accepted by: Fidelity Management Trust Company, as Trustee By: ______________________________ Date: _____________ Title: ___________________________ Plan Number:48263 Non-Std PS Plan The CORPORATEplan for RETIREMENT/SM/ 02/01/99 (C) 1999 Fidelity Management & Research Company 35 ADDENDUM Re: SPECIAL EFFECTIVE DATES for Plan Name: Moore Medical Corn. Capital Accumulation Plan --------------------------------------------- (a) |_| Special Effective Dates for Other Provisions - The following provisions (e.g., new eligibility requirements, new contribution formula, etc.) shall be effective as of the dates specified herein: -------------------------------------------------------------------- -------------------------------------------------------------------- -------------------------------------------------------------------- -------------------------------------------------------------------- -------------------------------------------------------------------- -------------------------------------------------------------------- (b) |_| Plan Merger Effective Dates - The following plan(s) were merged into the Plan after the Effective Date indicated in Subsection 1.0l(g)(l) or (2), as applicable. The provisions of the Plan are effective with respect to the merged plan(s) as of the date(s) indicated below: (1) Name of merged plan: ----------------------------------------------- -------------------------------------------------------------------- -------------------------------------------------------------------- Effective date: ---------------------------------------------------- Plan Number:48263 Non-Std PS Plan The CORPORATEplan for RETIREMENT/SM/ 02/01/99 (C) 1999 Fidelity Management & Research Company 36 (2) Name of merged plan: ----------------------------------------------- -------------------------------------------------------------------- -------------------------------------------------------------------- Effective date: ---------------------------------------------------- (3) Name of merged plan: ----------------------------------------------- -------------------------------------------------------------------- -------------------------------------------------------------------- Effective date: ---------------------------------------------------- (4) Name of merged plan: ----------------------------------------------- -------------------------------------------------------------------- -------------------------------------------------------------------- Effective date: ---------------------------------------------------- (5) Name of merged plan: ----------------------------------------------- -------------------------------------------------------------------- -------------------------------------------------------------------- Effective date: ---------------------------------------------------- (c) HCE Determination - HCE determinations for prior Plan Years shall be made applying the following rules: (1) |_| HCE Determination: Look Back Year Elections - For Plan Years prior to the effective date of this amendment, the Plan was administered in accordance with the following look back year election(s): Plan Number:48263 Non-Std PS Plan The CORPORATEplan for RETIREMENT/SM/ 02/01/99 (C) 1999 Fidelity Management & Research Company 37 (A) |_| No calendar year election - For the following Plan Years, the look back year was the 12- consecutive-month period immediately preceding the Plan Year: -------------------------------------------------------------- -------------------------------------------------------------- -------------------------------------------------------------- (B) |_| Calendar year election - For the following Plan Years, the look back year was the calendar year beginning within the preceding Plan Year: -------------------------------------------------------------- -------------------------------------------------------------- -------------------------------------------------------------- (2) |_| HCE Determination: Top Paid Group Elections - For Plan Years prior to the effective date of this amendment, the Plan was administered in accordance with the following top paid group election(s): (A) |_| For the following Plan Years, Highly Compensated Employees included only the top 20% of Employees ranked by Compensation: -------------------------------------------------------------- -------------------------------------------------------------- -------------------------------------------------------------- Plan Number:48263 Non-Std PS Plan The CORPORATEplan for RETIREMENT/SM/ 02/01/99 (C) 1999 Fidelity Management & Research Company 38 (B) |_| For the following Plan Years, Highly Compensated Employees included all Employees with Compensation exceeding $80,000 (as indexed): -------------------------------------------------------------- -------------------------------------------------------------- -------------------------------------------------------------- (d) |_| Late Effective Date for Grandfathering Prior Required Beginning Date Rules Effective date: January 1, _____________ (Must be first day of the calendar year beginning after the date the Plan was first amended to comply with the new Required Beginning Date rules, but not later than the first day of the calendar year beginning after the end of the Employer's remedial amendment period for making changes to comply with the Small Business Job Protection Act.) Plan Number:48263 Non-Std PS Plan The CORPORATEplan for RETIREMENT/SM/ 02/01/99 (C) 1999 Fidelity Management & Research Company 39 ADDENDUM Re: ADP/ACP TESTING METHODS HISTORY for Plan Name: Moore Medical Corp. Capital Accumulation Plan --------------------------------------------- (a) For Plan Years prior to the date of this amendment, the Plan applied the following testing methods: (1) |_| Current Year Testing Method - The ADP/ACP tests for the following Plan Years were applied using the current year testing method described in Subsection l.06(a)(l): -------------------------------------------------------------------- -------------------------------------------------------------------- -------------------------------------------------------------------- (2) |_| Prior Year Testing Method - The ADP/ACP tests for the following Plan Years were applied using the prior year testing method described in Subsection 1 .06(a)(2): -------------------------------------------------------------------- -------------------------------------------------------------------- -------------------------------------------------------------------- Plan Number:48263 Non-Std PS Plan The CORPORATEplan for RETIREMENT/SM/ 02/01/99 (C) 1999 Fidelity Management & Research Company 40 ADDENDUM Re: SAFE HARBOR MATCHING EMPLOYER CONTRIBUTION for Plan Name: Moore Medical Corp. Capital Accumulation Plan --------------------------------------------- (a) Safe Harbor Matching Employer Contribution Formula Note: Matching Employer Contributions made under this Option must be 100% vested when made and may only be distributed because of death, disability, separation from service, age 59 1/2, or termination of the Plan without the establishment of a successor plan. In addition, each Plan Year, the Employer must provide written notice to all Active Participants of their rights and obligations under the Plan. (1) |_| 100% of the first 3% of the Active Participant's Compensation contributed to the Plan and 50% of the next 2% of the Active Participant's Compensation contributed to the Plan. (A) |_| Safe harbor Matching Employer Contributions shall not be made on behalf of Highly Compensated Employees. Note: If the Employer selects this formula and does g~ elect Option 1.10(b), Additional Matching Employer Contributions, Matching Employer Contributions will automatically meet the safe harbor contribution requirements for deemed satisfaction of the "ACP" test. (Employee Contributions must still be tested.) (2) |_| Other Tiered Match: ______% of the first ______% of the Active Participant's Compensation contributed to the plan. ______% of the next ______% of the Active Participant's Compensation contributed to the plan, ______% of the next to the plan. ______% of the Active Participant's Compensation contributed Note: To satisfy the safe harbor contribution requirement for the "ADP" test, the percentages specified above for Matching Employer Contributions may not increase as the percentage of Compensation contributed increases, and the aggregate amount of Matching Employer Contributions at such rates must at least equal the aggregate amount of Matching Employer Contributions which would be made under the percentages described in (aXl) of this Addendum. Plan Number:48263 Non-Std PS Plan The CORPORATEplan for RETIREMENT/SM/ 02/01/99 (C) 1999 Fidelity Management & Research Company 41 (A) |_| Safe harbor Matching Employer Contributions shall not be made on behalf of Highly Compensated Employees. (B) |_| The formula specified above is also intended to satisfy the safe harbor contribution requirement for deemed satisfaction of the "ACP" test with respect to Matching Employer Contributions. (Employee Contributions must still be tested.) Note: To satisfy the safe harbor contribution requirement for the "ACP" test, the Deferral Contributions and/or Employee Contributions matched cannot exceed 6% of a Participant's Compensation. Plan Number:48263 Non-Std PS Plan The CORPORATEplan for RETIREMENT/SM/ 02/01/99 (C) 1999 Fidelity Management & Research Company 42 ADDENDUM Re: SAFE HARBOR NONELECTIVE EMPLOYER CONTRIBUTION for Plan Name: Moore Medical Corp. Capital Accumulation Plan --------------------------------------------- (a) For each Plan Year, the Employer shall contribute for each eligible Active Participant an amount equal to ______% (not less than 3% nor more than 15%) of such Active Participant's Compensation. Note: Contributions that are intended to satisfy the safe harbor contribution requirement must be 100% vested when made and may only be distributed because of death, disability, separation from service, age 59 1/2, or termination of the Plan without the establishment of a successor plan. In addition, each Plan Year, the Employer must provide written notice to all Active Participants of their rights and obligations under the Plan. (1) |_| Safe harbor Nonelective Employer Contributions shall not be made on behalf of Highly Compensated Employees. (2) |_| In conjunction with its election of the safe harbor described above, the Employer has elected to make Matching Employer Contributions under Subsection 1.10 that are intended to meet the requirements for deemed satisfaction of the "ACP" test with respect to Matching Employer Contributions (i.e. (1) the percentage of Deferral Contributions matched does not increase as the percentage of Compensation contributed increases; (2) Highly Compensated Employees are not provided a greater percentage match than Non-Highly Compensated Employees; (3) Deferral Contributions matched do not exceed 6% of a Participant's Compensation; and (4) for Plan Years beginning on or after January 1, 2000, the dollar amount of any discretionary Matching Employer Contributions made on a Participant's behalf for the Plan Year shall not exceed 4% of the Participant's Compensation for the Plan Year). Plan Number:48263 Non-Std PS Plan The CORPORATEplan for RETIREMENT/SM/ 02/01/99 (C) 1999 Fidelity Management & Research Company 43 ADDENDUM Re: PROTECTED IN-SERVICE WITHDRAWALS for Plan Name: Moore Medical Corn. Capital Accumulation Plan --------------------------------------------- (a) |_| Restrictions on In-Service Withdrawals of Amounts Held for Specified Period - The following restrictions apply to in-service withdrawals made in accordance with Subsection 1.1 8(d)( l)(A) (cannot include any mandatory suspension of contributions restriction): -------------------------------------------------------------------------- -------------------------------------------------------------------------- -------------------------------------------------------------------------- -------------------------------------------------------------------------- -------------------------------------------------------------------------- (b) |_| Restrictions on In-Service Withdrawals Because of Participation in Plan for 60 or More Months - The following restrictions apply to in-service withdrawals made in accordance with Subsection 1.18(d)(l)(B) (cannot include any mandatory suspension of contributions restriction): -------------------------------------------------------------------------- -------------------------------------------------------------------------- -------------------------------------------------------------------------- -------------------------------------------------------------------------- -------------------------------------------------------------------------- (c) Other In-Service Withdrawal Provisions - In-service withdrawals from a Participant's Accounts specified below shall be available to Participants who satisfy the requirements also specified below: Plan Number:48263 Non-Std PS Plan The CORPORATEplan for RETIREMENT/SM/ 02/01/99 (C) 1999 Fidelity Management & Research Company 44 Notwithstanding anything in the Plan, a Participant may withdrawal the vested portion of his or her Nonelective Contribution Account and Matching Contribution Account for hardship under Sections 1.18(a) and 10.05. -------------------------------------------------------------------------- -------------------------------------------------------------------------- -------------------------------------------------------------------------- -------------------------------------------------------------------------- -------------------------------------------------------------------------- (1) |_| The following restrictions apply to a Participant's Account following an in-service withdrawal made pursuant to (c) above (cannot include any mandatory suspension of contributions restriction): -------------------------------------------------------------------- -------------------------------------------------------------------- -------------------------------------------------------------------- -------------------------------------------------------------------- -------------------------------------------------------------------- Plan Number:48263 Non-Std PS Plan The CORPORATEplan for RETIREMENT/SM/ 02/01/99 (C) 1999 Fidelity Management & Research Company 45 ADDENDUM Re: PROTECTED BENEFIT FORMS for Plan Name: Moore Medical Corp. Capital Accumulation Plan --------------------------------------------- (a) |_| Prior Plan Provided Life Annuity Form - The normal annuity form for unmarried Participants is a _____________________________________. The normal annuity form for married Participants is a _____% (must be at least 50%, but no more than 100%) "qualified joint and survivor annuity". (1) Class of Participants whose Accounts are subject to distribution in the normal annuity form: -------------------------------------------------------------------- -------------------------------------------------------------------- -------------------------------------------------------------------- (2) The normal form of distribution under the Plan is: (A) |_| A lump sum payment. (B) |_| A "qualified joint and survivor annuity". (3) The qualified preretirement survivor annuity provided to a Participant's spouse is purchased with ______% (must be at least 50%) of the Participant's Account. Plan Number:48263 Non-Std PS Plan The CORPORATEplan for RETIREMENT/SM/ 02/01/99 (C) 1999 Fidelity Management & Research Company 46 (b) |_| Prior Plan Provided Other Optional Annuity Form(s) - The other optional annuity forms available under the Plan are: -------------------------------------------------------------------- -------------------------------------------------------------------- -------------------------------------------------------------------- (1) Class of Participants whose Accounts are subject to distribution in the optional annuity forms: -------------------------------------------------------------------- -------------------------------------------------------------------- -------------------------------------------------------------------- (c) |_| Prior Plan Provided Other Protected Form(s) - The other forms of distribution available under the Plan are: -------------------------------------------------------------------- -------------------------------------------------------------------- -------------------------------------------------------------------- (1) Class of Participants whose Accounts are subject to distribution in the other forms: -------------------------------------------------------------------- -------------------------------------------------------------------- -------------------------------------------------------------------- Plan Number:48263 Non-Std PS Plan The CORPORATEplan for RETIREMENT/SM/ 02/01/99 (C) 1999 Fidelity Management & Research Company 47 ADDENDUM Re: GRANDFATHERED VESTING SCHEDULES for Plan Name: Moore Medical Corp. Capital Accumulation Plan --------------------------------------------- (a) Grandfather of More Favorable Vesting Schedule (1) Prior vesting schedule: -------------------------------------------------------------------- -------------------------------------------------------------------- -------------------------------------------------------------------- -------------------------------------------------------------------- -------------------------------------------------------------------- (2) Prior vesting schedule applies to Participants initially hired prior to: -------------------------------------------------------------------- (b) |_| Additional Grandfather of More Favorable Vesting Schedule (1) Prior vesting schedule: -------------------------------------------------------------------- -------------------------------------------------------------------- -------------------------------------------------------------------- -------------------------------------------------------------------- -------------------------------------------------------------------- Plan Number:48263 Non-Std PS Plan The CORPORATEplan for RETIREMENT/SM/ 02/01/99 (C) 1999 Fidelity Management & Research Company 48 (2) Prior vesting schedule applies to Participants initially hired prior to: -------------------------------------------------------------------- (c) |_| Additional Grandfather of More Favorable Vesting Schedule (1) Prior vesting schedule: -------------------------------------------------------------------- -------------------------------------------------------------------- -------------------------------------------------------------------- -------------------------------------------------------------------- -------------------------------------------------------------------- (2) Prior vesting schedule applies to Participants initially hired prior to: -------------------------------------------------------------------- Plan Number:48263 Non-Std PS Plan The CORPORATEplan for RETIREMENT/SM/ 02/01/99 (C) 1999 Fidelity Management & Research Company 49 ADDENDUM Re: POSTPONED DISTRIBUTIONS for Plan Name: Moore Medical Corn. Capital Accumulation Plan --------------------------------------------- Postponement of Certain Distributions to Eligible Participants - The types of distributions specified below to eligible Participants of their vested interests in their Accounts shall be postponed for the period also specified below: - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Notwithstanding the foregoing, if the Employer selected an Early Retirement Age in Subsection 1.14(b) that is later of an attained age or completion of a specified number of years of Vesting Service, any Participant who terminates employment on or after completing the required number of years of Vesting Service, but before attaining the required age shall be eligible to commence distribution of his vested interest in his Account upon attaining the required age. Plan Number:48263 Non-Std PS Plan The CORPORATEplan for RETIREMENT/SM/ 02/01/99 (C) 1999 Fidelity Management & Research Company 50 ADDENDUM Re: 415 CORRECTION for Plan Name: Moore Medical Corp. Capital Accumulation Plan --------------------------------------------- (a) Other Formula for Limiting Annual Additions to Meet 415 - If the Employer, or any employer required to be aggregated with the Employer under Code Section 415, maintain any other qualified defined contribution plans or any "welfare benefit fund", "individual medical account", or "simplified medical account", annual additions to such plans shall be limited as follows to meet the requirements of Code Section 415: - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Plan Number:48263 Non-Std PS Plan The CORPORATEplan for RETIREMENT/SM/ 02/01/99 (C) 1999 Fidelity Management & Research Company 51 EX-10.18 7 dex1018.txt CONSULTING AGREEMENT Exhibit 10.18 October 8, 2001 Mr. Peter A. Derow 320 So. Bedford Road Mt. Kisco, NY 10549 Re: Consulting Agreement ------------------------ Dear Mr. Derow: I am pleased to advise you that the Compensation Committee of our Board of Directors today approved your engagement as a consultant and, as consideration for your services and in anticipation of your election as a director at our Board's November meeting, the grant to you of a non-qualified option for 12,000 shares. A copy of the Committee's Action approving the consulting agreement and option is enclosed. The terms of your consulting agreement are as follows: . You will, until February 8, 2003, provide six (6) consulting days of service to us, at our executive offices, on mutually convenient dates, reporting to the President/CEO. [You may also be available on other dates for short follow-up telephone consultations and conferences.] . As compensation for the consulting services described above, we will issue to you the option approved by our Compensation Committee. . The option is enclosed. Pursuant to our Compensation Committee's Action, it is subject to and conditional upon your execution of this agreement, your providing the consulting services required thereby, and your election and serving as a director. Moreover, pursuant to our form of option, it becomes exercisable in installments (as provided for therein) at $ 7.09 per share (today's closing market price), and it expires in five years or, if earlier, 90 days after you are no longer a consultant or director. . We will also reimburse you for your reasonable out-of-pocket expenses incurred as our consultant. . We may ask you to provide consulting services, in addition to the services provided for above. Subject to your availability due to prior commitments, you will provide such services. We will compensate you for such services at the rate of $1,500 per day. If the above sets forth all the terms relating to your consulting services and our compensation for the services, please sign and return a copy of this letter. The terms may not be changed other than by a signed writing. Sincerely, Accepted: /s/ Peter A. Derow --------------------------------- Linda M. Autore Peter A. Derow Date: President & Chief Executive Officer Moore Medical Corp. cc: Robert H. Steele, Chairman of the Board EX-10.19 8 dex1019.txt EMPLOYMENT AGREEMENT Exhibit 10.19 EMPLOYMENT AGREEMENT, agreed to be entered into on and effective as of October 1, 2001 (the "Effective Date"), by and between MOORE MEDICAL CORP., a -------------- Delaware corporation with an office in New Britain, Connecticut (the "Employer"), and JON GARRITY of 133 Cutlers Farm Road, Monroe, CT 06468 (the -------- "Employee"). -------- The Employer and Employee hereby agree as follows: 1. Term; Duties. For the period from October 1, 2001 through December 31, ------------ 2002 (or earlier, pursuant to paragraphs 6, 7, 15 or 16) (the "Term"), the ---- Employer will employ the Employee, and the Employee will serve the Employer, as its Senior Vice President of Supply Chain, reporting to its President and subject at all times to the direction of its Board of Directors and Executive Committee. During the Term the Employee's office will be at such office of the Employer in Connecticut as the Employer may designate. The Employee agrees that during the Term he will devote his entire working time and give his best efforts and attention to the business of the Employer. The Employee shall not be required to perform duties inconsistent with those normally assigned by the Employer to its executive level employees. 2. Salary. As compensation for his services during the Term, the Employer ------ will pay the Employee, in installments on the Employer's regular payroll payment dates and subject to statutory withholding amounts, a salary at the annual rate of $172,000. The Compensation Committee of the Employer's Board of Directors may, in its absolute discretion, approve an inflation-adjustment in the annual rate of the Employee's salary for 2002. 3. Bonus Compensation. As additional compensation for his services during ------------------ the Term, the Employer will pay the Employee such bonus compensation as may become due to senior executive officers of the Employer under the 2001 Executive Officers' Bonus Plan of the Employer. The Employee has received a copy of said Plan. The Employee will, during the Term, be entitled to participate as a senior executive officer of the Employer under such Executive Officers' Bonus Plan as the Employer's Board of Directors may adopt for 2002. 4. Vacation; Benefits. The Employee will be entitled to three weeks ------------------ vacation during each calendar year during the Term. The Employee has received a list of the Employer's current benefit plans and policies regarding severance, sick leave and the like, available or applicable to the Employer's executives, including the Employee. The Employee acknowledges that said list does not set forth all material terms and conditions of these plans and policies, and that they are subject to modification or elimination by the Employer. If a new benefit plan is made available to officers of the Employer generally, the Employee will be a participant thereunder. 5. Non-Competition. The Employee covenants and agrees that during the --------------- Term, and until six months thereafter, he will not, directly or indirectly, engage or own any interest in any distributor of medical or surgical supplies or pharmaceutical, whether as principal, agent, partner, director, officer, stockholder, investor, lender, consultant, employee, or in any other capacity. The Employer will not unreasonably withhold its consent in writing to the Employee's employment after the Term by a company not principally engaged in the distribution of medical, surgical or pharmaceutical products which has a subsidiary, division or other separate business unit engaged in such business if the company in writing requests such consent from the Employer and gives the Employer its written agreement, in form and substance satisfactory to the Employer, which (i) provides that the Employee's services for said company will not, directly or indirectly, relate to the business or affairs of said subsidiary, division or unit or to the development of such a distribution business, (ii) sets forth the practical steps that said company will take to assure compliance with clause (i) hereof, and (iii) grants the Employer the right and practical ability to have its independent accountants determine compliance or non-compliance with said clause. The Employee agrees that a remedy at law for any breach or threatened breach of the foregoing covenant will be inadequate, and that Employer will be entitled to temporary and permanent injunctive relief in respect thereof without the necessity of posting a bond or proving actual damage to Employer. 6. Death. The death of the Employee will terminate the Term. ----- 7. Incapacity. If during the Term the Employee is unable, on account of ---------- illness or other incapacity, to perform his duties for a total of more than 45 consecutive, or an aggregate of 75 days during any twelve month period, the 1 Employer has the right (subject to compliance with applicable law) to terminate the Term on ten days' written notice to the Employee, and the Employee will thereafter be entitled to receive only one-half of his salary installments otherwise payable until the earlier of the last day of (i) the month-end after the delivery of said notice, or (ii) the Term (determined without giving effect to such termination). 8. Employer Information. All information and materials disclosed by the -------------------- Employer to the Employee or acquired at the Employer's expense by the Employee or acquired or developed by the Employee in connection with his services under this Agreement, all trade secrets of the Employer and all Work-Product (hereinafter defined) (herein collectively "Employer Information") shall be and -------------------- remain the sole property of the Employer. The Employee shall protect all Employer Information which may be in his possession or custody and shall deliver all such Information (and all copies thereof, in any media) to the Employer at its request. Notwithstanding the foregoing, Employment Information shall not include information that the Employee can demonstrate (i) was known to him prior to the disclosure to him by the Employer, or (ii) was publicly known at the time of the disclosure or which thereafter became publicly known without fault of the Employee. 9. Work-Product. All right, title and interest in and to any work-product ------------ which the Employee acquires, compiles, authors, invents, makes or otherwise generates, in whole or in part, including all works authored and all inventions made, for use in connection with or arising out of or in relation to his services under this Agreement, whether or not copyrightable or patentable (herein collectively "Work-Product"), shall belong exclusively to the Employer. ------------ During and after the Term of this Agreement, the Employee shall execute, acknowledge, and deliver all documents, including, without limitation, all instruments of assignment, and perform all acts, which the Employer may reasonably request to secure its rights hereunder. 10. Confidentiality; Non-use. During and after the Term, the Employee ------------------------ shall not, without first obtaining the written consent of the Employer, divulge or disclose to anyone outside the Employer, whether by private or public communication or publication or otherwise, or use except pursuant to this Agreement, any Employer Information; however, an incidental non-derogatory disclosure by the Employee of Employer Information (other than trade secret or Work Product information) after 18 months following the end of the Term will not breach this provision. 11. Conflicts of Interest; Conflicting Obligations. The Employee agrees ---------------------------------------------- that it is his responsibility to recognize and avoid, and disclose to the President of the Employer in writing, any situation which might, either directly or indirectly, adversely affect his judgment in serving the Employer or which might otherwise involve a conflict between his personal interests and the interests of the Employer. The Employee represents and warrants to the Employer that at the date hereof no such situation exists or is contemplated or anticipated. The Employee agrees not to disclose or use in the course of his services for the Employer any trade secret, confidential or proprietary information, or work-product of any party other than the Employer. The Employee represents and warrants to the Employer that his entry into and performance of this Agreement do not and will not conflict with any obligation by which he is or may become bound or any right of a third party to which he is or may become subject. The Employee will not serve as a Board member of another company unless he seeks and obtains the Employer's approval prior to making a commitment to do so. 12. Non-Solicitation. The Employee agrees that, until one year after the ---------------- Term, he will not solicit, induce, attempt to hire, or hire any employee of the Employer, or assist in such hiring by any other party, or encourage any such employee to terminate his or her employment with the Employer. 13. Standard Intellectual Property Agreement. The Employee agrees to ---------------------------------------- execute the Employer's standard employee agreement relating to intellectual property and employment information. To the extent any of the provisions of this Agreement are in conflict with any of the provisions of such standard agreement, the provisions of this Agreement will control. 14. Stock Option as an Inducement. As an inducement to the Employee to ----------------------------- enter into this Agreement, the Compensation Committee of the Employer's Board of Directors has authorized the grant to him, subject to his execution of this Agreement, of a non-qualified stock option pursuant to the Employer's 2000 Incentive Compensation Program to purchase 10,000 shares of the common stock of the Employer at an exercise price equal to the closing market price of said stock on the date of approval by the Compensation Committee. Said option is to become exercisable in four equal cumulative annual installments commencing November 2002 and is to expire no later than October 2006. Employee 2 has received a copy of said Program and of the form of option used by the Employer. Although the option will have the tax treatment of a non-qualified, non-incentive option, it will be subject to terms and conditions required for an incentive stock option, and to the condition that the Employee not be in material breach of this Agreement. It will be subject to acceleration of exercisability of 50% of all otherwise non-exercisable installments in the event the Employee becomes entitled to a severance payment under paragraph 15. 15. Effect of "Change of Control"; Termination; Severance. The Employer or ----------------------------------------------------- Employee may terminate the Term on written notice to the other within 30 days after a "Change of Control" (as defined in Section 3(b) of the Employer's Change of Control and Change of Position Payment Plan). The Employee has received a copy of said Plan. The Employee may also terminate the Term on written notice to the Employer within 30 days after "Change of Position" (as defined in Section 3(c)(ii) of the Plan)) occurring within twelve months after a Change of Control. A termination will be effective 30 days after the delivery of the notice. In the event of a termination by the Employer, the Employee will be entitled to a severance payment, under Section 4 of the Plan and subject thereto, in the amount of 100% of the "Base Amount" (as defined in Section 4 of the Plan). In the event of a termination by the Employee after a Change of Position within twelve months of a Change of Control, the Employee will be entitled to a severance payment, under Section 4 of the Plan and subject thereto, in the amount of 75% of said Base Amount. The provisions of this paragraph 14 supersede any prior agreement between the Employer and the Employee relating to any severance, termination or change of control arrangement or payment. 16. Termination. The Employer will have the right to terminate the Term ----------- for cause. However, in the event the Employee's employment is terminated by the Employer without cause, the Employee will be entitled to receive his salary payments through the end of the Term, less the compensation earned and consideration received by the Employee from any subsequent employment or for otherwise providing services. However, the Employee will not have an affirmative duty to seek employment not consistent with his experience (including prior levels of responsibility) and expertise. "Cause" shall include material breach ----- of this Agreement not cured within 10 days, breach of fiduciary duty, gross insubordination, willful neglect of duties, habitual unreliability, personal conduct in material violation of the Employer's policies or universally accepted good business practices, and other matters of comparable severity to any of the above. 17. Governing Law; Etc. This Agreement is governed by the laws of ------------------ Connecticut. It represents the entire agreement of the parties and it can not be changed except by a writing signed by the President of the Employer and the Employee. All notices by the Employee to the Employer under this Agreement shall be delivered to the President of the Employer. IN WITNESS WHEREOF, the parties have signed and delivered this Employment Agreement, effective as of the Effective Date. MOORE MEDICAL CORP. /s/ Jon Garrity by /s/ Linda M. Autore ------------------------ -------------------------- JON GARRITY Linda M. Autore, President State of Connecticut County of Middlesex I certify that I know or have sufficient evidence that Jon Garrity is the person who appeared before me, and that said person acknowledged that he signed this instrument and acknowledged it to be his free and voluntary act. Dated: November 13, 2001 /s/ Bonzena Samsel -------------------------------------- Notary Public for the State of Connecticut My commission expires May 31, 2003 3 EX-23.1 9 dex231.txt CONSENT OF PRICEWATERHOUSECOOPERS Exhibit 23.1 CONSENT OF INDEPENDENT ACCOUNTANTS ---------------------------------- We hereby consent to the incorporation by reference in the Prospectuses (including in the Prospectuses on Form S-3 included therein) constituting part of the Registration Statements on Form S-8 (Nos. 33-20037, 33-68128, 333-75445 and 333-56448) and on Form S-3 (No. 333-59688) of Moore Medical Corp. of our report dated February 18, 2002, appearing on page 15 of this Form 10-K. We also consent to the reference to us under the heading "Experts" in such Prospectuses. /s/ PricewaterhouseCoopers LLP - ------------------------------ PricewaterhouseCoopers LLP Hartford, Connecticut March 27, 2002 -----END PRIVACY-ENHANCED MESSAGE-----