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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[X] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[_] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
MOORE MEDICAL CORP
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
[LOGO OF MOORE MEDICAL]
May __, 2000
Dear Fellow Shareholder:
You are cordially invited to attend the Annual Meeting of Shareholders of Moore
Medical Corp. on Wednesday, June 21, 2000, at the Algonquin Hotel, Gallery I, 59
West 44th Street, New York, NY, starting at 11:00 a.m. Your Board of Directors
and management look forward to personally greeting all shareholders who are able
to attend.
In addition to electing seven directors, at the Annual Meeting shareholders will
be asked to approve our 2000 Incentive Compensation Program and to amend our
Certificate of Incorporation to increase the authorization of Common Stock.
Our enclosed Form 10-K Report discusses our determination to transform the
Company into an Internet-based business-to-business enterprise. To further this
transformation and seize the opportunities available to us, we will need to
attract and retain high caliber information technology and marketing talent.
Equity-based compensation is crucial to our business strategy and closely aligns
management and shareholders objectives- to increase shareholder value.
The Board has voted to request shareholders to approve an increase in the number
of authorized Common Shares, which could be used to raise additional capital,
make acquisitions, and/or conduct transactions which could assist the Company in
implementing its transformation strategy. There are no specific plans for any
major transaction at this time, but the Board has set a clear course which it
believes to be in the best interest of the shareholders and it wishes to be in a
position to take advantage of opportunities as they arise.
Whether or not you plan to attend the Annual Meeting, it is important that your
shares be represented. Please complete, sign, date and mail the enclosed proxy
card in the postage-paid envelope provided or, if your proxy card or voting
instruction so indicates, vote electronically via the Internet or by telephone.
We appreciate your continued interest in and support of the Company.
Sincerely,
Linda M. Autore
President and
Chief Executive Officer
<PAGE>
[LOGO OF MOORE MEDICAL]
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NOTICE OF 2000 ANNUAL MEETING OF SHAREHOLDERS
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Dear Shareholder,
The Annual Meeting of the Shareholders of Moore Medical Corp. will be held
at the Algonquin Hotel, 59 West 44th Street, Gallery 1, New York, NY on
Wednesday, June 21, 2000 at 11.00 a.m. to:
(1) elect a Board of seven directors;
(2) act on a proposal to adopt a 2000 Incentive Compensation
Program;
(3) act on a proposal to amend the certificate of Incorporation,
including to increase the authorization of Common Stock; and
(4) act on such other matters as may properly come before the
meeting.
The Board of Directors has fixed the close of business on May 15, 2000 as
the record date for determining shareholders entitled to notice of and vote at
the meeting.
Joseph Greenberger,
Secretary
May __, 2000
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YOUR VOTE IS IMPORTANT
Whether or not you plan to attend the Annual Meeting, it is important that your
shares be represented. Please complete, sign, date and mail the enclosed proxy
card in the postage-paid envelope provided or, if your proxy card or voting
instructions so indicates, vote electronically via the Internet or by telephone.
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<PAGE>
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PROXY STATEMENT FOR
2000 ANNUAL MEETING OF SHAREHOLDERS
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<TABLE>
<CAPTION>
CONTENTS
--------
<S> <C>
GENERAL INFORMATION....................................................... 1
PRINCIPAL HOLDERS OF COMMON STOCK......................................... 2
ELECTION OF DIRECTORS..................................................... 3
ADOPTION OF 2000 INCENTIVE COMPENSATION PROGRAM........................... 4
ADOPTION OF AMENDMENT OF CERTIFICATE
OF INCORPORATION..................................................... 9
EXECUTIVE COMPENSATION.................................................... 11
PERFORMANCE GRAPH......................................................... 16
SHAREHOLDER PROPOSALS AND NOMINATIONS FOR 2001 ANNUAL MEETING............. 16
INDEPENDENT PUBLIC ACCOUNTANT............................................. 17
EXHIBIT A - 2000 INCENTIVE COMPENSATION PROGRAM........................... i
</TABLE>
<PAGE>
[LOGO OF MOORE MEDICAL]
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PROXY STATEMENT FOR
2000 ANNUAL MEETING OF SHAREHOLDERS
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General Information
Proxies in the form enclosed are being solicited on behalf of the Board of
Directors of Moore Medical Corp. (the "Company") for use at its 2000 Annual
Meeting of Shareholders to be held at 11:00 a.m. on Wednesday, June 21, 2000 at
the Algonquin Hotel, 59 West 44th Street, Gallery 1, New York, NY, or any
adjournments or postponements thereof (the "Meeting"). All properly executed
proxies received before the vote at the Meeting will be voted as instructed
thereon. If no instruction is indicated, it will be voted (1) FOR the election
of the seven directors nominated on behalf of the Board of Directors (Proposal
1), (2) FOR approval of the 2000 Incentive Compensation Program (Proposal 2),
and (3) FOR approval of an amendment to the Company's Certificate of
Incorporation (Proposal 3 ). The Company is not aware of any other matter
intended to be presented for consideration at the Meeting. If other matters
properly come before the Meeting, the persons named in the proxy will vote
thereon in their discretion.
Shares Entitled to Vote
Holders of record of the Company's Common Stock at the close of business on
May 15, 2000 (the "Record Date") are entitled to notice of and to vote at the
Meeting. On the Record Date, there were 3,045,176 shares of Common Stock
outstanding, each entitled to one vote. This Proxy Statement is being released
on or about May -- 2000 to all holders of Common Stock on the Record Date.
The stock ledger of the Company as of the Record Date will be available for
inspection at the office of Joseph Greenberger, Esq., 1370 Avenue of the
Americas, 27th Floor, New York, NY, by any shareholder of record at the Record
Date for any purpose germane to the Meeting during ordinary business hours from
June 9, 2000 until the Meeting date.
Proxies and Revocation of Proxies
Execution and delivery of a proxy will not affect a shareholder's right to
attend the Meeting and vote in person. A shareholder in whose name shares are
registered as of the Record Date and who has given a proxy may revoke it at any
time before it is voted by executing and delivering a written revocation to the
Secretary of the Company, by execution and delivery of a later dated proxy or by
attending the Meeting and voting by ballot (which has the effect of revoking the
prior proxy). Attendance at the Meeting, however, will not in and of itself
revoke a proxy.
A shareholder who is a beneficial owner but not registered as the record owner
as of the Record Date cannot vote his or her shares except by the shareholder's
broker, bank or nominee in whose name the shares are registered as of the Record
Date executing and delivering a proxy on his or her behalf or the shareholder
attending the Meeting with a proxy or other written authorization to vote from
the registered owner and voting.
Cost of Proxy Solicitation
Brokers, banks and other nominees will be reimbursed by the Company for their
out-of-pocket and other reasonable clerical expenses incurred in obtaining
instructions from beneficial owners of the Company's
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Common Stock. D.F. King & Co., Inc. will assist the Company in soliciting
proxies, for which it will be paid a fee of $4,000. Solicitations of proxies
may, in certain instances, also be made personally or by telephone by directors,
officers and a few employees of the Company.
PRINCIPAL HOLDERS OF COMMON STOCK
The following are believed by the Company to be holders of more than 5% of its
outstanding Common Stock and by all directors and executive officers as a group,
as of March 31, 2000:
<TABLE>
<CAPTION>
Number of Percent of
Name and Address: Shares Outstanding
- ----------------- ------ -----------
<S> <C> <C>
Heartland Advisors, Inc. ................................................. 437,200 (1) 14.4%
790 North Milwaukee Street
Milwaukee, WI 53202
Hollybank Investments, LP. ............................................... 319,200 (1) 12.9%
One Financial Center, Suite 1600
Boston, MA 02111
Thomas Charitable Foundation ............................................. 213,243 (1)(2) 7.0%
272 Undermountain Road
Salisbury, CT 06068
Dimensional Fund Advisors, Inc. .......................................... 194,300 (1) 6.4%
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401
Kennedy Capital Management, Inc .......................................... 186,800 (1) 6.1%
10829 Olive Boulevard
St. Louis, MO 63141
All Directors and Executive 487,163 (3) 16.0%
Officers as a Group
(10 persons)
</TABLE>
(1) Based on information supplied by the shareholder in its most recent
Schedule 13G, 13GA, and 13D received by the Company.
(2) Held by the named trust of which a director is a trustee and in which he
disclaims a beneficial interest.
(3) Includes 32,750 shares underlying stock options granted to executive
officers that are exercisable within 60 days. Also includes 213,243 shares
held by Thomas Charitable Foundation and 50,000 shares held by Vantage
Venture Partners, LP. For information regarding beneficial ownership of the
Company's Common Stock by each of its directors and executive officers, see
"Election of Directors - Certain Information Regarding Nominees" and
"Executive Officers," below.
PROPOSAL 1 - ELECTION OF DIRECTORS
Seven directors are proposed to be elected at the 2000 Annual Meeting of
Shareholders. Each director will hold Office until the election and
qualification of his or her successor or earlier removal or resignation. The
seven nominees receiving a plurality of votes, assuming that a quorum is present
at the Meeting, will be elected.
Certain Information Regarding Nominees
The following table gives information as of March 31, 2000 concerning the
persons intended to be nominated on behalf of the Board of Directors for
election as directors. They are now members of the Board of Directors,
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constituting the entire Board, and their current term of office expires at the
election and qualification of their successors at the Meeting. The Company has
no reason to believe that any nominee will be unable to serve. If any nominee
should not be available, the persons named as proxies will vote for a substitute
nominee designated by the Nominating Committee of the Board of Directors.
<TABLE>
<CAPTION>
Director Number Percent of
Name Age Principal Occupation and Business Experience Since of Shares Outstanding
---- --- --------------------------------------------- ----- --------- -----------
<S> <C> <C> <C> <C> <C>
Linda M. Autore 49 President and Chief Executive Officer since August 17, 1999 4,000 (1) *
1999. Member of Office of the President (Chief
Executive Office) and Senior Vice President Sales and
Marketing, 1999, Senior Vice President, 1998. Senior
Vice President, Worldwide Marketing, Intellution, Inc.
(industrial automation software) from 1997-1998.
Prior thereto, business development and
marketing consultant.
Christopher W. Brody 55 Chairman of Vantage Partners, LLC (a private 2000 76,600 (2) 2.5%
investment firm) since January, 1999. Partner of
Warburg, Pincus and Co. from 1971-1998. Director of
Intuit, Inc. and several privately held Internet
companies. Former Chairman of the National Venture
Capital Association.
Steven Kotler 53 Chairman of Executive Committee and member of Audit, 1977 135,520 (3) 4.5%
Nominating and Stock Options Committees. Private
investor. Former Co-Chairman, President and Chief
Executive Officer of Schroder & Co., Inc. (investment
bankers). Director of Del Laboratories, Inc.
(cosmetics and drugs).
Robert H. Steele 61 Chairman of the Board and member of Executive 1981 32,250 (4) 1.1%
Committee. Vice Chairman of John Ryan Company
(financial marketing). Director of NLC Companies
(insurance), Accent Color Science, Inc. (printing
systems), Scan Optics, Inc. (data entry), Smart Serv
Online, Inc. (online information provider), and New
York Mercantile Exchange.
Peter C. Sutro 69 Retired. 1979 2,000 *
Wilmer J. Thomas, Jr. 73 Member of Executive, Audit, Nominating and Stock 1977 213,243 (5) 7.0%
Option Committees. Private investor and financial
consultant. Director and Vice Chairman of American
Country Holding Co. (insurance).
Daniel K. Wassong 68 Chairman, President and Chief Executive Officer of Del 1994 1,000 *
Laboratories, Inc. (cosmetics and drugs). Director of
Southern Union Company (gas utility).
</TABLE>
* Less than 1%.
(1) Includes 2,000 shares underlying options exercisable within 60 days.
(2) Includes 50,000 shares held by Vantage Venture Partners, LP of which Mr.
Brody is Chairman of its general partner, Vantage Partners, LLC and holds a
beneficial interest in Vantage Venture Partners, LP.
(3) Excludes 300 shares owned by Mr. Kotler's wife, in which he disclaims a
beneficial interest.
(4) Includes 16,250 shares underlying options exercisable within 60 days.
(5) Held by Thomas Charitable Foundation of which Mr. Thomas is a Trustee and
in which he disclaims a beneficiary interest.
Compliance with Section 16(a) of the Exchange Act
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
executive officers and directors and persons who own more than ten percent of
the Common Stock of the Company to file reports of ownership and changes in
ownership with the Securities and Exchange Commission ("SEC") and the exchange
on which the Common Stock is listed for trading. Executive officers, directors
and more than ten percent shareholders are required by regulations under the
Exchange Act to furnish the Company with copies of all Section 16(a) reports
filed. Based on the Company's review of such reports filed for its fiscal year
ended January 1, 2000, the Company believes that, except for a report of her
initial holdings filed by Linda M. Autore consequent to her election as an
executive officer on August 17, 1999 and a report of his initial holding filed
by Peter T. Hood
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consequent to his election as an executive officer on September 20, 1999, all
reporting requirements applicable to its executive officers, directors and more
than ten percent shareholders were timely complied with for the year ended
January 1, 2000.
Meetings of Board and Committees
The Board of Directors held four meetings during 1999. Each director other than
Mr. Wassong attended not less than 75% of the meetings. The Board has an
Executive Committee, an Audit Committee, a Nominating Committee and a Stock
Option Committee. The Executive Committee has all the authority which, under the
Delaware General Corporation Law, may be delegated to such a Committee; it has
also been delegated the functions of a Compensation Committee. The Executive
Committee held four meetings during 1999. The Audit Committee recommends the
firm of independent public accountants to be engaged as the Company's auditors
and participates in such accounting reviews as it deems appropriate. It held one
meeting during 1999. The Stock Option Committee is authorized to award stock
options. It held one meeting during 1999. The Nominating Committee recommends to
the Board management's nominees for election as directors and for officers. The
Nominating Committee held two meetings during 1999.
Compensation of Directors
A director who is not also a salaried officer is paid a fee of $8,000 per annum
plus $1,000 for each Board meeting attended. A member of the Executive Committee
who is not a salaried officer is paid an additional $1,000 per annum for
services in such capacity. A member of the Audit Committee who is not a salaried
officer is paid another $2,000 per annum for services in such capacity. In
addition, pursuant to Board action, Mr. Steele is paid a fee of $100,000 per
annum as the non-executive Chairman of the Board of Directors, and during 1999
he received a non-qualified stock option for 20,000 shares exercisable at
$13.3125 a share. Mr. Kotler is paid a fee of $50,000 per annum as Chairman of
the Executive Committee, and Mr. Thomas is paid a fee of $50,000 per annum under
a consulting arrangement with the Company pursuant to which he consults with its
executive officers with respect to financial and transactional matters.
PROPOSAL 2 - ADOPTION OF 2000 INCENTIVE COMPENSATION PROGRAM
On February 23, 2000, the Board of Directors adopted a 2000 Incentive
Compensation Program ("Program"), subject to approval by the Company's
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shareholders. The Board believes that the Company will need to expand its
Internet technology and marketing staff to exploit the opportunities offered by
the rapid growth of the Internet and the business-to-business website that the
Company plans to launch in 2000. The purpose of the Program is to increase
shareholder value by providing a variety of economic incentives designed to
attract, retain and motivate employees and other individuals providing services
to the Company and its subsidiaries, including new talent to carry out the
Board's determination to transform the Company to a website-based enterprise.
The complete text of the Program is included as Exhibit A to this Proxy
Statement. The following is a summary of the Program.
General
Incentives under the Program may consist of: (a) stock options; (b) restricted
stock; (c) stock awards; (d) performance shares; and (e) other incentives,
including cash. Incentives may be granted to any employee, director, consultant,
independent contractor or agent of the Company or a subsidiary or parent of the
Company ("eligible participants"), except that incentive stock options may be
granted only to employees, as selected from time to time by the Compensation
Committee of the Board of Directors.
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The Program will be administered by the Compensation Committee. It must consist
of two or more directors who qualify as disinterested persons under Rule 16b-3
of the Securities Exchange Act of 1934 ("Exchange Act") and as outside directors
under Section 162(m) of the Internal Revenue Code, as amended ("Code").
A total of 195,000 shares of Common Stock are issuable (or may become issuable
in installments) on exercise of options previously granted and presently
outstanding under the Company's 1992 Incentive Stock Option Plan and 1998
Non-Qualified Stock Option Plan, and a total of 155,000 shares of Common Stock
are presently available for the grant of new options under those Plans. The
total number of shares of Common Stock which may be issued under the proposed
new Program may not (subject to certain adjustments) exceed 505,000 shares, an
increase of 350,000 shares over the number of shares available for the grant of
new options under the present Plans. No additional options will be granted under
the present Plans if the shareholders approve the proposed new Program. The
closing market price of the Common Stock on February 23, 2000 was $10.50 a
share.
Stock Options
Under the Program, the Committee may authorize the grant of non-qualified and
incentive stock options to eligible participants to purchase shares of Common
Stock from the Company. The Program gives the Committee discretion to determine
the number and purchase price of the shares subject to each option, the dates
during its term when the option becomes exercisable, and the expiration date of
the option, subject to the following limitations: (a) no stock option may be
granted with a purchase price less than the fair market value on the date of
grant of the shares subject to the option; (b) the term of an option may not
exceed ten years from the date of grant; (c) no incentive stock option may be
granted to other than to an employee of the Company or a subsidiary or parent,
it may not be transferred by the optionee other than by will or the laws of
descent and distribution, and it may be exercised during the optionee's lifetime
only by the optionee; and (d) no person may receive, in any calendar year, stock
options for, in the total, more than 100,000 shares of Common Stock. Payment of
the option price may be made in such form and manner as the Committee may
approve.
Restricted Stock
Restricted stock are shares of Common Stock issued by the Company to an eligible
participant which are subject to restrictions on sale or other transfer or to
risk of forfeiture, on such terms and conditions as may be determined by the
Committee. The price, if any, at which restricted stock will be issued will be
determined by the Committee, and it may vary from time to time and among
eligible participants and may require no payment or be less than the fair market
value of the shares at the date of issuance. A participant receiving restricted
stock will have the rights of a shareholder (including voting and dividend
rights) as to the stock only to the extent the Committee designates. No person
may receive, in any calendar year, more than 100,000 shares of Common Stock as
restricted stock. The Committee, in its discretion, may substitute cash for
shares of Common Stock otherwise required to be released from restriction.
Stock Awards
Stock awards are shares of Common Stock issued by the Company to an eligible
participant without payment, as additional compensation for his or her services
to the Company or a subsidiary of the Company. No person may receive stock
awards aggregating more than 5,000 shares of Common Stock in any calendar year.
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Performance Shares
Performance shares represent contingent rights granted to an eligible
participant to be issued shares of Common Stock of the Company, to the extent
performance goals established by the Committee are achieved. No person may
receive more than 100,000 shares of Common Stock as performance shares in any
calendar year.
Other Incentives; Stock Appreciation Rights
Other incentives may consist of stock appreciation rights entitling the
participants to receive the appreciation in the fair market value of shares of
common stock, payments in cash or transfers of other value by the Company to
eligible participants as additional compensation for his or her services to the
Company or a subsidiary of the Company. The form, amount and the terms and
conditions of such rights and other incentives will be determined by the
Committee.
Performance Goals
Section 162(m) of the Code prevents a publicly-traded corporation from taking a
tax deduction for certain compensation in excess of $1 million per year which it
or any subsidiary pays to its chief executive officer or any of its four next
most highly compensated executive officers ("covered employees"). Certain
compensation, including compensation based on the attainment of performance
goals, is excluded from the deduction limit and deductible even if it exceeds $1
million per year. To qualify for this performance-based exemption, the material
terms pursuant to which the compensation is to be paid, including the
performance goals and the maximum amount payable to the covered employees, must
be approved by the shareholders before payments are made. The maximum
compensation amounts will be limited by the calendar year maximums set forth in
the Program and described above. Stock price, market share, sales and earnings
per share (including as met by a subsidiary, division or joint venture of the
Company) are performance goals under the Program; the specific goals and goal
amounts applicable to each award subject to a performance goal will be
established by the Committee. If the Committee determines that compensation
attributable to an incentive under the Program to a covered employee is intended
to be excepted from the $1 million per year limit, it may make the grant of such
incentive subject to the attainment of performance goals. In addition, other
incentives to covered employees, and incentives granted to eligible participants
who are not covered employees, may also be made subject to performance goals.
Non-transferability of Most Incentives
No restricted stock, performance share or non-qualified stock option granted
under the Program will be transferable by its holder, except, in the event of
the holder's death, by will or pursuant to the laws of descent and distribution
or, to the extent provided for in the grant, to the participant's immediate
family or to trusts for his, her or their benefit. No incentive stock option may
be transferred except, in the event of the optionee's death, by will or pursuant
to the laws of the descent and distribution.
Amendment of the Program
The Board of Directors may amend or discontinue the Program at any time.
However, no amendment or discontinuance may (a) alter or impair, without the
consent of the recipient, an incentive previously granted, or (b) result in a
change which would disqualify awards made under the Program from the exemption
provided by Rule 16b-3 of the Exchange Act. In addition, the Board of Directors
may not amend the Program without approval of the Company's shareholders to the
extent such approval is required by law, or by any exchange or automated trading
system on which the Common Stock is traded.
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<PAGE>
Acceleration of Incentives
The Committee may, when it authorizes an award of restricted stock, stock option
exercisable in installments, or an incentive subject to performance goals,
provide that, on a change of control (as such may be defined by the Committee),
the restrictions will lapse, the unexercised installments will become
exercisable, and the performance goals will be deemed to have been met.
Federal Income Tax Consequences
Under existing federal income tax provisions, an eligible participant who
receives a stock option, or performance shares or shares of restricted stock
(unless a Section 83 Election, discussed below, is made), under the Program will
not generally realize any income, nor will the Company generally receive any
deduction for federal income tax purposes, in the year such incentive is
granted. A participant who receives a stock award under the Program consisting
of shares of Common Stock will realize ordinary income in the year of the award
in an amount equal to the fair market value of the shares covered by the award
on the date it is made, and the Company will be entitled to a deduction equal to
the amount the employee is required to treat as ordinary income. A participant
who receives a cash award will realize ordinary income at the time the award is
paid equal to the amount received, and the amount will be deductible by the
Company.
When a non-qualified stock option granted pursuant to the Program is exercised,
the optionee will realize ordinary income measured by the difference between the
aggregate purchase price of the shares as to which the option is exercised and
the aggregate fair market value of shares on the exercise date, and the Company
will be entitled to a deduction in the year the option is exercised equal to the
amount the optionee is required to treat as ordinary income.
Options which qualify as incentive stock options are entitled to special tax
treatment. If shares purchased pursuant to the exercise of an incentive stock
option are not disposed of by the optionee within a holding period of two years
from the date of the option grant or within one year after the transfer of the
shares to the optionee, whichever is longer, then:
. the optionee recognizes no income upon the exercise of the option;
. any gain or loss will be recognized by the optionee only upon ultimate
disposition of the shares and, assuming the shares constitute capital
assets in the optionee's hands, will be treated as a long-term capital
gain or loss;
. the optionee's basis in the shares purchased will equal the amount of
cash paid for such shares; and
. the Company will not be entitled to a federal income tax deduction in
connection with the exercise of the option.
The difference between the option price and the fair market value of the shares
acquired upon exercise of an incentive stock option will be treated as an "item
of tax preference" for purposes of the alternative minimum tax. In addition,
incentive stock options exercised more than three months after retirement are
treated as non-qualified options. If the optionee disposes of the shares
acquired by exercise of an incentive stock option before
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<PAGE>
expiration of the holding period described above, the optionee must treat as
ordinary income in the year of the disposition an amount equal to the difference
between the optionee's basis in the shares and the lesser of the fair market
value of the shares on the date of exercise or the selling price.
The Company will be entitled to a deduction equal to the amount the optionee is
required to treat as ordinary income. If the exercise price of an option is paid
by surrender of previously owned shares, the basis of the shares received in
replacement of the previously owned shares is carried over. If the option is a
non-qualified option, the gain recognized on exercise is added to the basis. If
the option is an incentive stock option, the optionee will recognize gain if the
shares surrendered were acquired through the exercise of an incentive stock
option or through an employee stock purchase plan and have not been held for the
applicable holding period. This gain will be added to the basis of the shares
received in replacement of the previously owned shares.
An eligible participant who receives restricted stock or performance shares will
generally realize taxable income on the date the shares become transferable or
no longer subject to a substantial risk of forfeiture or on the date of their
earlier disposition. The amount of such taxable income will equal the amount by
which the fair market value of the shares of Common Stock on the date such
restrictions lapse or the applicable performance goals are attained (or any
earlier date on which the shares are disposed of) exceeds their purchase price,
if any. A participant may be entitled to elect (a "Section 83 Election"),
however, to include in income in the year of receipt the excess of the fair
market value of the shares of Common Stock (without regard to any restrictions
or goals) on the date of receipt over its purchase price. The Company will be
entitled to a deduction for compensation paid in the same year and in the same
amount as income is realized by the employees. Upon exercise of a stock
appreciation right, the participant will recognize ordinary income, and the
Company will be entitled to a deduction, measured by the fair market of the
shares plus any cash received.
The vote FOR of the majority of the shares of Common Stock present in person or
represented by proxy at the Meeting, assuming that a quorum is present at the
Meeting, is needed to adopt the Program.
The Board of Directors recommends a vote FOR adoption of the 2000 Incentive
Compensation Program.
8
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PROPOSAL 3. APPROVAL OF AMENDMENT OF CERTIFICATE OF
INCORPORATION TO INCREASE AUTHORIZED COMMON STOCK
General
The Company's Certificate of Incorporation currently authorized the issuance of
up to five million shares of Common Stock, 200,000 shares of Class A Preferred
Stock, 70,002 shares of Class B Preferred Stock, and one million shares of Class
C Preferred Stock. The Class A Preferred Stock and Class B Preferred Stock were
designed for specific transactions in 1969 and 1971 and none are outstanding. A
series of Class C Preferred Stock was designated by the Board of Directors as
Series I Junior Preferred Stock in 1998 and 35,000 shares of such Stock are
reserved for issuance in connection with the Company's 1998 Shareholder Rights
Plan.
Of the five million authorized shares of Common Stock, at the Record Date a
total of 3,745,176 were issued and outstanding or reserved for issuance, as
follows:
<TABLE>
<S> <C>
Issued and outstanding.......................................................... 3,045,176
Reserved for issuance under stock-based compensation plans (assuming 2000
Incentive Compensation Program is approved by the shareholders):
Covered by currently outstanding awards............................................. 195,000
Available for future awards......................................................... 505,000
---------
Total............................................................................... 3,745,176
</TABLE>
In our recent Form 10-K Report, we described our strategy to transform the
Company to an electronic commerce-based enterprise by migrating existing
customers and attracting new customers to the comprehensive Internet platform we
plan to launch. The Report noted that our "Board recognizes the level of
investment required to accomplish our Internet strategy." The Board of
Directors believes that the presently remaining availability for issuance of
1,254,824 shares of Common Stock is inadequate for the Company's long-term
needs, and it has voted to request shareholders to approve an increase in the
number of authorized Common Stock to 10 million shares. The additional shares
could be used to raise capital, make acquisitions, and/or conduct other
transactions which could assist the Company in implementing its transformation
strategy. There are no specific plans for any major transaction at this time,
but the Board believes it to be in the best interest of the shareholders that
the Company be in position to take advantage of opportunities as they arise.
The Board also believes that no shares of Class A Preferred Stock or Class B
Preferred Stock are likely to be reissued in the future because the terms of
such securities were uniquely designed for specific transactions.
Accordingly, the Board of Directors has approved and recommends to the
shareholders approval of a proposed amendment to the Company's Certificate of
Incorporation to amend Article "FOURTH" of the Certificate to increase the
number of authorized shares of Common Stock to 10 million shares and to delete
the authorization of Class A Preferred Stock and Class B Preferred Stock.
<PAGE>
Purpose and Effect of the Proposed Amendment
The purpose of the proposed increase in the number of authorized shares of
Common Stock is to ensure that additional shares of Common Stock will be
available, if and when needed, for issuance from time to time for any proper
purpose approved by the Board of Directors (including, without limitations,
issuances to raise capital or effect acquisitions, and for other corporate
purposes). Although there are no present arrangements, agreements or
understandings for the issuance of additional shares of Common Stock (other than
the shares previously reserved for issuance as described above), the Board of
Directors believes that the availability of the additional authorized shares of
Common Stock for issuance upon approval of the Board of Directors for a proper
purpose, without the necessity for, or the delay inherent in, a meeting of the
shareholders (except as may be required by applicable law, by regulatory
authorities, or by the policies, rules or regulations of the American Stock
Exchange or such other stock exchange or automated quotation system on which the
Company's securities may then be listed or traded), will be beneficial to the
Company and its shareholders by providing the Company with the flexibility
required to promptly consider and respond to future business opportunities and
needs as they arise.
If the proposed amendment is approved by the shareholders, the Board of
Directors does not presently intend to seek further shareholder approval with
respect to any particular issuance of shares, unless required by applicable law,
by regulatory authorities, or by the policies, rules or regulations of the
American Stock Exchange or such other stock exchange or automated quotation
system on which the Company's securities may then be listed or traded. The
rules of the American Stock Exchange, on which the Company presently has shares
of Common Stock listed, require shareholder approval of a transaction involving
the sales or issuance by a company of common stock (or securities convertible
into common stock) at a price less than the greater of book or market value
which, together with sales by officers, directors or principal shareholders,
equals 20% or more of the outstanding common stock.
Shareholders do not have any preemptive or similar rights to subscribe for or
purchase any additional shares of Common Stock that may be issued in the future
and, therefore, future issuances of Common Stock, depending upon the
circumstances, may have a dilutive effect on the earnings per share, book value
per share, voting power and other interests of the existing shareholders.
The proposed increase in the authorized number of shares of Common Stock could
have an anti-takeover effect, although that is not its purpose. For example, if
the Company were the subject of a hostile takeover attempt, it could try to
impede the takeover by issuing shares of Common Stock, thereby diluting the
voting power of the other outstanding shares and increasing the potential cost
of the takeover. The availability of this defensive strategy to the Company
could discourage unsolicited takeover attempts, thereby limiting the opportunity
for the Company's shareholders to realize a higher price for their shares than
might otherwise be available in the public markets. The Board of Directors is
not aware of any attempt, or contemplated attempt, to acquire control of the
Company, and this proposal is not being presented for the purpose of creating an
anti-takeover device.
The affirmative vote of the holders of a majority of the outstanding shares of
Common Stock entitled to vote at the Meeting is necessary for approval of the
proposal.
The Board of Directors recommends a vote "FOR" the adoption of the proposed
amendment to the Company's Certificate of Incorporation.
<PAGE>
EXECUTIVE COMPENSATION
Executive Officers
The Company has three executive officers other than its Chief Executive Officer.
Their ages, business experience over the last five years and the number of
shares of the Company's Common Stock beneficially owned by each of them as of
March 31, 2000, are set forth below:
<TABLE>
<CAPTION>
Business Number Percent of
Name Age Experience of Shares Outstanding
---- --- ---------- --------- -----------
<S> <C> <C> <C> <C>
Peter T. Hood 54 Senior Vice President of Information Systems 1,050 *
since September 20, 1999; Vice President Systems
and Networks, Gartner Group, 1999;
Director of Enterprise Architecture and Planning,
Oxford Health, 1995-1998.
Kenneth S. Kollmeyer 50 Executive Vice President of Operations since 1999; 20,500 (1) *
Member Office of the President (Chief
Executive Office), 1999; Senior Vice President
Operations 1992-1999.
Joseph P. Savidge 43 Senior Vice President of Finance - Chief Financial 1,000 *
Officer since October 19, 1999; Vice President
Finance and Measurement, Advo, Inc., (direct mail
marketer), 1996-1999.
</TABLE>
*Less than 1%.
(1) Includes 14,500 shares underlying stock options that are exercisable within
60 days.
11
<PAGE>
Executive Compensation
The following table summarizes for the Company's fiscal year ended January 1,
2000 and for the two prior fiscal years compensation earned by the Chief
Executive Officer of the Company and its following other Named Executive
Officers who served in such capacity on January 1, 2000 and whose total annual
compensation exceeded $100,000 in said fiscal year.
<TABLE>
<CAPTION>
Summary Compensation Table
Long-Term
Compensation
Annual Compensation Awards
------------------- ------
Securities
Name and Underlying All Other
Principal Position Year Salary ($) Bonus ($) Options (#) Compensation ($)
- ------------------ ---- ---------- --------- ----------- ----------------
<S> <C> <C> <C> <C> <C>
Linda M. Autore, 1999 179,293 11,225 15,000 --
President and Chief Executive Officer since 1998 24,404 -- 8,000 --
August 17, 1999, Member Office of the
President (Chief Executive Office)
June 15, 1999-August 17, 1999, Senior Vice
President Sales and Marketing since 1998
Richard A. Bucchi, 1999 249,490 71,145 -- 103,777 (1)
Member, Office of the President (Chief 1998 174,155 -- 16,000 9,800 (2)
Executive Office) and Executive Vice President 1997 165,532 -- -- 9,600 (2)
of Sales and Marketing until
June 11, 1999
Kenneth S. Kollmeyer, 1999 256,778 71,658 -- 9,800 (2)
Executive Vice President of Operations since 1998 184,820 -- 16,000 9,800 (2)
1999, Member, Office of the President
(Chief Executive Office), 1999, Senior Vice 1997 182,437 -- -- 9,600 (2)
President Operations, 1992-1999
David V. Harper, 1999 211,824 29,854 -- 65,095 (3)
Member, Office of the President 1998 56,461 -- 16,000 --
(Chief Executive Office) and Executive Vice
President of Finance - Chief Financial Officer
until August 17, 1999
</TABLE>
(1) Included in Mr. Bucchi's other annual compensation for 1999 is $94,220 paid
under a Severance, Consulting and Non- Competition Agreement, dated June
11, 1999, and a contribution of $9,557 to his retirement account under the
Company's defined contribution plan.
(2) Consists of the Company's contribution to the named officer's retirement
account under its defined contribution plan.
(3) Included in Mr. Harper's other annual compensation for 1999 is $60,652 paid
under a Severance, Consulting and Non-Competition Agreement, dated August
17, 1999, and a contribution of $4,443 to his retirement account under the
Company's defined contribution plan.
12
<PAGE>
Employment Related Agreements
Linda M. Autore has an employment agreement as of March 1, 2000 to serve as the
Company's Chief Executive Officer for a term starting March 1, 2000 and ending
December 31, 2001. Under the agreement, Ms. Autore's 2000 annual base salary
rate is $275,000 from March 1, 2000. Ms. Autore and Mr. Kollmeyer are
participants under a plan entitling each to a payment equal to one year's salary
in the event of a change of control (as defined in the plan) followed within
twelve months by a change of position (as defined therein). Messrs. Hood and
Savidge are participants under a plan entitling each to a payment equal to 75%
of one year's salary in the event of a change of control. The plans are through
December 31, 2000, except for Ms. Autore's which is through December 31, 2001.
Defined Benefit Plans
The Company has a noncontributory, defined benefit pension plan (the "Plan").
Under the Plan, retirement benefits are based on the number of years of service
(up to a maximum of 25 years) multiplied by the sum of (i) 1.25% of the
employee's average base compensation during the highest consecutive five years,
and (ii) 0.6% of such compensation in excess of earnings for Social Security
benefits as promulgated in an Internal Revenue Service "Covered Compensation
Table Number l." The Plan is a "Qualified Plan" within the meaning of the
Internal Revenue Code. Under Internal Revenue Code guidelines for a qualified
plan, no more than $160,000 (as such may change from time to time) of cash
compensation may be considered in calculating benefits payable under the Plan.
Normal retirement is at age 65 and the Plan has a lump sum payment option.
The following table shows the estimated annual benefits payable under the Plan
upon retirement at age 65 to persons in specified remuneration and
years-of-service classifications:
Average Highest
Consecutive Years of Service
5 Years' --------------------------------------------------------
Compensation 10 Years 15 Years 20 Years 25 Years
------------ -------- -------- -------- --------
$130,000 $ 19,694 $ 29,541 $ 39,388 $ 49,235
$160,000 $ 27,094 $ 40,641 $ 54,188 $ 67,735
Ms. Autore will have 17 years of service, Mr. Hood will have 12 years of
service, Mr. Kollmeyer will have 26 years of service and Mr. Savidge will have
22 years of service, assuming retirement from the Company at age 65.
13
<PAGE>
Stock Options
The following table sets forth information concerning the number of options
granted and the potential realized value of the stock options granted to each of
the Company's Named Executive Officer during its fiscal year ended January 1,
2000:
<TABLE>
<CAPTION>
Option Grants in Last Fiscal Year
Individual Grant
----------------
Number of Percent of Potential
Securities Total Realizable Value at
Underlying Options Exercise Assumed Annual
Unexercised Granted to of Rates of Stock Price
Options at Employees Base Appreciation for
Fiscal Year- in Fiscal Price Expiration Option Terms
------------
Name End (#) Year ($/Sh) Date 5% ($) 10% ($)
---- ------- ---- ------ ---- --------------
<S> <C> <C> <C> <C> <C> <C>
Linda M. Autore 15,000 37% $9.125 8/17/04 37,816 83,564
</TABLE>
The following table sets forth information concerning options exercised during
the fiscal year ended January 1, 2000 and the number of unexercised options and
the imputed value thereof held by the Named Executive Officers at the end of
such fiscal year:
<TABLE>
<CAPTION>
Aggregated Option Exercises in Last Fiscal Year
and Fiscal Year-End Option Values
Number of Securities
Underlying Unexercised In-the-Money
Shares Options at Options at
Acquired Fiscal Year-End (#) Fiscal Year-End($)
------------------- ------------------
on Value
Name Exercise(#) Realized ($) Exercisable Unexercisable Exercisable Unexercisable
---- ----------- ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Linda M. Autore -- -- 2,000 31,000 -- $9,375
President and Chief
Executive Officer
Peter T. Hood -- -- -- 3,000 -- $ 750
Senior Vice President of
Information Systems
Kenneth S. Kollmeyer -- -- 8,500 15,500 -- --
Executive Vice President
of Operations
Joseph P. Savidge -- -- -- 3,000 -- $ 750
Senior Vice President -
Finance and Chief
Financial Officer
</TABLE>
Compensation Committee Interlocks and Insider Participation
The members of the Board's Executive Committee, which in 1999 performed the
functions of a compensation committee, are Steven Kotler (Chairman), Robert H.
Steele and Wilmer J. Thomas, Jr. Directors' compensation decisions were by the
action of the entire Board, with no director participating in an action
affecting himself. See "Compensation of Directors".
14
<PAGE>
Executive Committee's Compensation Report
The objectives of the Company's executive officer compensation program are to
attract and retain the best possible executive talent, to motivate the
executives to achieve the goals of the Company's business strategy and to align
executive and shareholder interests, by means of a compensation package that
recognizes individual contributions as well as overall business results. The
package for 1999 consisted of a base salary, annual bonuses under the Company's
bonus plans, and stock options under its stock option plans. The performance of
the chief executive officer is separately evaluated by the Committee, based on
business development, formulation and delivery of major corporate goals and the
Company's performance. The chief executive officer and, the Chairman of the
Board made other compensation recommendations, which were based on an assessment
of the nature of the position and the contributions, experience and tenure of
the other executive officer. The Committee reviewed and approved the components
of the packages.
Base Salaries. Base salaries for executive officers reflect the achievements,
responsibilities and experience of the individual. Annual salary adjustments are
determined by evaluating the performance of the Company and of each executive
officer, and also take into account new responsibilities.
Annual Bonuses. For 1999, the Committee approved bonus plans under which
executive officers were entitled to an annual bonus of up to $20,000 on the
achievement of certain individually set goals and an additional bonus ranging
between 12.5% and 50% of annual salary if the Company's pre-tax earnings (as
defined in the plans and as subject to certain possible adjustments thereunder)
exceeded specified amounts. The additional bonuses were designed to align the
interests of the executives with those of the shareholders.
Stock Options. Stock options are designed to further align the interests of
executives with those of the shareholders. They are granted with an exercise
price equal to the market price of the Common Stock on the date of grant and, to
encourage the creation of shareholder value by having appreciation occur over a
number of years, generally become exercisable in four equal annual cumulative
installments, starting one year after the date of the grant.
Executive Committee:
Steven Kotler
Robert H. Steele
Wilmer J. Thomas, Jr.
15
<PAGE>
pPAGE>
PERFORMANCE GRAPH
The graph below compares the cumulative total shareholders' return of the Common
Stock of the Company for the last five years with the American Stock Exchange
Composite Index and the Standard & Poor's Wholesale - Medical, Dental & Hospital
Equipment & Supply Index. The graph plots the value of a $100 investment on
December 31, 1994, assuming that all dividends were reinvested.
Performance graph
Return to Shareholders
Moore Medical Corp.
INDEXED RETURNS
<TABLE>
<CAPTION>
Base
Period
Dec. 94 Dec. 95 Dec. 96 Dec. 97 Dec. 98 Dec. 99
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Moore Medical Corp. 100 81.9 78.1 82.86 102.86 74.29
American Stock Exchange Index 100 126.42 134.5 157.86 158.87 202.22
Peer Group 100 147.87 124.46 168.58 186.28 103.84
</TABLE>
SHAREHOLDER PROPOSALS AND NOMINATIONS FOR 2001 ANNUAL MEETING
Shareholder Proposals
Shareholders may present proposals for inclusion in the Company's 2001 Proxy
Statement provided they are submitted to Chief Financial Officer, Moore Medical
Corp., P.O. Box 1500, New Britain, CT 06050, no later than January __, 2001,
and are in compliance with applicable Securities and Exchange Commission
regulations. A shareholder may present a proposal not included in said Proxy
Statement at the Company's 2001 Annual Meeting of Shareholders only if the
Company has notice of it at least 45 days before it mails the Proxy Statement.
Nominating Procedures
The Company's by-laws provide that any shareholder entitled to vote for the
election of directors may nominate persons for election as directors only if
such shareholder has given written notice of such shareholder's intent to make
such nominations, either by personal delivery or by United States mail, postage
prepaid, to the Secretary
16
<PAGE>
of the Company, care of Chief Financial Officer, Moore
Medical Corp., P.O. Box 1500, New Britain, CT 06050, not later than 60 days
before the date of an annual meeting and not less than seven days after the date
on which notice of a special meeting is first given to shareholders. Each such
notice shall set forth:
(a) The name and address of the shareholder who intends to make the
nominations and of the person or persons to be nominated;
(b) A representation that the shareholder is a holder of record of stock
of the Company entitled to vote at such meeting and intends to appear
in person or by proxy at the meeting to nominate the person or persons
specified in the notice;
(c) A description of all arrangements or understandings between the
shareholder and each nominee and any other person or persons (naming
such person or persons) pursuant to which nominations are to be made
by the shareholder;
(d) Such other information regarding each nominee proposed by such
shareholder as would be required to be included in a proxy statement
filed pursuant to the proxy rules of the Securities and Exchange
Commission; and
(e) The consent of each nominee to serve as a director of the Company if
so elected.
The presiding officer of the meeting may refuse to acknowledge the nomination of
any person not made in compliance with the foregoing procedure. The Company has
not received notice of nominations other than those proposed by management.
THE COMPANY'S INDEPENDENT PUBLIC ACCOUNTANT
PriceWaterhouseCoopers LLP is the independent public accountant for the Company.
A representative of PriceWaterhouseCoopers LLP is expected to be present at the
2000 Annual Meeting of Shareholders and will be available to answer appropriate
questions.
Dated: May __, 2000
A SHAREHOLDER MAY OBTAIN A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR
ITS FISCAL YEAR ENDED JANUARY 1, 2000 WITHOUT CHARGE BY WRITING TO: CHIEF
FINANCIAL OFFICER, MOORE MEDICAL CORP., P.O. BOX 1500, NEW BRITAIN, CONNECTICUT
06050.
17
<PAGE>
Exhibit A
MOORE MEDICAL CORP.
2000 INCENTIVE COMPENSATION PROGRAM
1. Purpose.
The purpose of this Moore Medical Corp. 2000 Incentive Compensation Program
("Program") is to increase stockholder value and advance the interests of Moore
-------
Medical Corp., a Delaware corporation ("Moore Medical"), and its subsidiaries
-------------
(collectively, the "Company") by providing a variety of Incentives (hereinafter
-------
defined) designed to attract, retain and motivate directors, officers,
employees, consultants, independent contractors and agents.
2. Administration.
2.1 Administration by Committee. The Program shall be administered by the
---------------------------
Compensation Committee ("Committee") of the Board of Directors ("Board") of
--------- -----
Moore Medical. The Committee shall, except as otherwise determined by the Board,
consist of two or more directors all of whom shall be non-employee directors
(within the meaning of Rule 16b-3 of the Securities Exchange Act of 1934, as
amended ("Exchange Act")), who are also outside directors within the meaning of
------------
Section 162(m) of the Internal Revenue Code of 1986 (as amended or as provided
in successor provisions, the "Code").
----
2.2 Authority. Subject to the provisions of the Program, the Committee
---------
shall have the authority to:
(a) interpret the provisions of the Program, and prescribe, amend and
rescind rules and procedures relating to the Program;
(b) award such Stock Options (hereinafter defined), Stock Awards
(hereinafter defined), Restricted Stock (hereinafter defined),
Performance Shares (hereinafter defined) and Other Incentives
(hereinafter defined) (collectively, "Incentives"), in such amounts
----------
as it deems appropriate (including, without limitations Incentives
made in combination with or in tandem with other Incentives, whether
or not contemporaneously granted), and subject to such terms and
conditions as it deems appropriate as set forth in the instrument
evidencing the Incentive ("Award");
-----
(c) modify the terms of, cancel and reissue, (subject to Section
5.1(d) hereof, with respect to Incentive Stock Options (therein
defined)), or repurchase outstanding Incentives, subject to Section
11.9 hereof;
(d) prescribe the form and content of any Award;
(e) correct any defect or omission and reconcile any inconsistency in
the Program or in any Incentive or Award; and
(f) make all other determinations, and take all other actions as it
deems necessary or desirable, for the administration of the Program.
i
<PAGE>
The determination of the Committee on matters within its authority shall be
conclusive and binding on the Company and all other persons.
3. Participation.
Subject to the terms and conditions of the Program, the Committee shall
(subject to Section 5.1(d) hereof, with respect to Incentive Stock Options)
determine and designate, from time to time, the directors (including
non-employee directors), officers, employees, consultants, independent
contractors and agents of the Company (and persons expected to become directors,
officers, employees, consultants, independent contractors and agents of the
Company) who shall receive Incentives under the Program ("Participants").
------------
4. Shares Subject to the Program.
4.1 Number of Shares Reserved. Shares of Common Stock, $.0l par value, of
-------------------------
Moore Medical ("Common Stock") shall be available for Incentives under the
------------
Program. To the extent provided by resolution of the Board, such shares may be
uncertificated. Subject to adjustment in accordance with Sections 4.3, 4.4 and
4.5 hereof, the aggregate number of shares of Common Stock available for
Incentives under the Program shall be 505,000 shares (the "Reserved Shares").
---------------
4.2 Type of Common Stock. Common Stock issuable pursuant to Incentives
--------------------
under the Program may be authorized and unissued shares or issued shares held as
treasury shares, provided, however, that authorized and unissued shares may be
-----------------
issued under the Program only to the extent that the Committee determines that
past services of the Participant constitute adequate lawful consideration for at
least the par value thereof or a consideration in cash of at least the par value
thereof is paid therefore prior to issuance.
4.3 Reusage of Shares.
-----------------
(a) In the event of the exercise or termination (by reason of
forfeiture, expiration, cancellation, surrender or otherwise) of
any Incentive under the Program, the number of shares of Common
Stock that was subject to the Incentive but not delivered shall
again be available for Incentives under the Program.
(b) In the event that shares of Common Stock are delivered under the
Program as Restricted Stock or pursuant to a Stock Award and are
thereafter forfeited or reacquired by the Company pursuant to
restrictions applicable thereto, such forfeited or reacquired
shares shall again be available for Incentives under the
Program.
(c) Notwithstanding the provisions of paragraphs (a) or (b), above,
the following shares of Common Stock shall not be available for
Incentives under the Program:
(i) shares withheld from any Incentive, paid under the Program
to satisfy tax withholding obligations, or surrendered to
fulfill tax obligations (as described in Section 11.5(e)
hereof); and
(ii) shares surrendered in payment of the Option Price
(hereinafter defined) upon the exercise of a Stock Option.
ii
<PAGE>
4.4 Cessation of Grants Under Prior Plans; Reissuance under Program with
--------------------------------------------------------------------
Additional Reserved Shares on Cancellation of Outstanding Options under Prior
- -----------------------------------------------------------------------------
Plans. As of the date of the approval by the shareholders of Moore Medical of
- -----
this Program, there are a total of 195,000 shares of Common Stock underlying
(i.e., shares which are or may become) subject to issuance on exercise of
options outstanding as of said date under the 1992 Incentive Stock Plan and 1998
Non-Qualified Plans (the "Prior Plans") of Moore Medical.
-----------
Effective from the date of said approval, no option shall be granted under a
Prior Plan. In the event options outstanding under a Prior Plan are cancelled by
the Committee with the consent of the optionees prior to their expiration date
and replaced by options under this Program for the same number of underlying
shares of Common Stock as the cancelled options, the number of Reserved Shares
under the Program shall be deemed to be increased by the aggregate number of
such underlying shares of Common Stock.
4.5 Adjustments to Shares Reserved and Exercise Price. In the event of any
-------------------------------------------------
merger, consolidation, reorganization, recapitalization, spin-off, stock
dividend, stock split, reverse stock split, exchange, or (except as otherwise
provided pursuant to Section 7.4 hereof) other similar change in the corporate
structure or capitalization affecting the Common Stock, the type and number of
shares of stock which are or may be subject to Incentives under the Program, the
terms of any outstanding Incentives (including the price at which shares of
stock may be issued pursuant to outstanding Incentives), and the limitations set
forth in Sections 5.1(c), 6(d), 7.1, and 8.1 hereof, shall be equitably adjusted
by the Committee, in its sole discretion, to preserve the value of Incentives
awarded or to be awarded under the Program and the value of the consideration to
be received by Moore Medical in connection therewith.
5. Stock Options.
5.1 Awards. Subject to the terms and conditions of the Program, the
------
Committee shall designate the Participants to whom options to purchase shares of
Common Stock ("Stock Options") are to be awarded under the Program and shall
-------------
determine the number, type and terms and conditions of the Stock Options to be
awarded to each. Stock Option awards are subject to the following specific
limitations:
(a) each Stock Option shall expire on the earlier of the date
provided by the Option's terms and conditions or the date which
is 10 years after the date of grant;
(b) the Option exercise price per share ("Option Price") for any
------------
Stock Option awarded shall not be less than the greater of par
value or the Fair Market Value (hereinafter defined) of a share
of Common Stock on the date the Stock Option is awarded;
(c) no person shall receive, in any calendar year, Stock Options
which, in the aggregate, represent more than 100,000 shares of
Common Stock, subject to adjustment as set forth in Section 4.5
hereof; and
(d) each Stock Option awarded under the Program shall be a "non-
----
qualified stock option" for tax purposes unless it satisfies all
----------------------
of the requirements of Section 422 of the Code, the Committee
designates such Option as an "Incentive Stock Option", and the
----------------------
Award evidencing such Option identifies it as an Incentive Stock
Option. An Incentive Stock Option may be granted only to a
person who at the time of the grant is an employee of Moore
Medical or its parent corporation, if any, or a subsidiary
corporation, if any, of Moore Medical.
iii
<PAGE>
5.2 Manner of Exercise. A Stock Option may be exercised to the extent
------------------
provided for in the Award, in whole or in part, by delivering written notice to
the chief financial officer of Moore Medical prior to the date on which the
Stock Option expires; provided, however, that a Stock Option may be exercised
-----------------
only with respect to whole shares of Common Stock. Such notice shall specify the
number of shares of Common Stock to be purchased and shall be accompanied by
payment of the Option Price for such shares in such form and manner as the
Committee may from time to time approve. If the Committee approves the use of
shares of Moore Medical for payment of part or all of the Option Price, it may
establish procedures to be used in lieu of the actual delivery of shares for
such payment.
6. Stock Awards.
Subject to the terms and conditions of the Program, the Committee
shall designate the Participants who shall be awarded shares of Common Stock
without restriction ("Stock Awards") under the Program, and shall determine the
------------
number of shares and terms and conditions of Stock Awards. Stock Awards are
subject to the following limitations:
(a) no person subject to Section 16(a) of the Exchange Act may
receive a Stock Award; and
(b) no person eligible to receive a Stock Award may receive a Stock
Award representing more than 5,000 shares of Common Stock in any
calendar year, subject to adjustment as set forth in Section 4.5
hereof.
7. Restricted Stock.
7.1 Awards. Subject to the terms and conditions of the Program, the
------
Committee shall designate the Participants to whom shares of Common Stock which
are subject to restrictions and reservations of rights ("Restricted Stock")
----------------
shall be awarded under the Program and determine the number of shares and the
terms and conditions (including restrictions pursuant to Section 7.2 hereof) of
each such award. Each Restricted Stock award shall entitle the Participant to
receive shares of Common Stock upon the terms and conditions specified by the
Committee, provided, however, that no Participant shall be awarded more than
-----------------
100,000 shares in any calendar year, subject to adjustment as set forth in
Section 4.5 hereof.
7.2 Restrictions. All shares of Restricted Stock awarded pursuant to the
------------
Program shall be subject to such restrictions as the Committee may determine,
including, without limitation, any or all of the following:
(a) required period of employment with the Company, as determined by
the Committee, prior to the vesting of the shares of Restricted
Stock;
(b) a prohibition against the sale, assignment, transfer, pledge,
hypothecation or other encumbrance of the shares of Restricted
Stock for a specified period, as determined by the Committee;
(c) a requirement that the holder of shares of Restricted Stock
forfeit (or in the case of shares sold to a Participant, resell
to the Company at his or her cost) all or a part of such shares
in the event of termination of his or her employment during any
period in which such shares are subject to restrictions or in the
event a Performance Goal (hereinafter defined) applicable to such
Stock is not attained; and
(d) prohibition against employment of the holder of such Restricted
Stock by any competitor of Company or against such holder's
dissemination or use of any secret or confidential information
belonging to the Company.
iv
<PAGE>
All restrictions on shares of Restricted Stock awarded pursuant to the Program
shall expire at such time or times as the Committee shall specify in the Award
evidencing such Stock.
7.3 Registration of Shares. Shares of Restricted Stock awarded pursuant to
----------------------
the Program shall be registered in the name of the Participant and, if such
shares are certificated, in the discretion of the Committee, may be required to
be deposited in a bank designated by the Committee or with Moore Medical. The
Committee may also require the deposit with such bank or Moore Medical of a
stock power endorsed in blank by the Participant with respect to shares of
Restricted Stock, whether or not certificated.
7.4 Stockholder Rights. Subject to the terms and conditions of the
------------------
Program, during any period in which shares of Restricted Stock are subject to
forfeiture or restrictions on transfer, each Participant who has been awarded
shares of Restricted Stock shall have only such rights of a stockholder with
respect to such shares as the Committee may determine at the time of the award,
including (if so determine) the right to vote such shares and the right to
receive dividends and distributions with respect to such shares. Unless
otherwise determined by the Committee, dividends and distributions with respect
to Restricted Stock shall be restricted to the same extent and subject to the
same terms and conditions as the Restricted Stock to which they are
attributable, and may be required by the Committee to be deposited as provided
for with respect to shares of Restricted Stock in Section 7.3 hereof.
7.5 Lapse of Restrictions. Subject to the terms and conditions of the
---------------------
Program, at the end of any time period during which the shares of Restricted
Stock are subject to forfeiture or restrictions, such shares will be delivered
free of all restrictions to the Participant.
7.6 Substitution of Cash. The Committee may, in its sole discretion,
--------------------
substitute cash equal to the Fair Market Value of shares of Common Stock
otherwise required to be delivered to a Participant in accordance with this
Section 7.5 hereof.
8. Performance Shares.
8.1 Awards. Subject to the terms and conditions of the Program, the
------
Committee shall designate the Participants to whom shares of Common Stock
("Performance Shares") are to be awarded in accordance with this Section 8, the
------------------
number of shares subject to such awards, and the Performance Goals and other
terms and conditions of such awards. No Participant shall in any calendar year
be awarded Performance Shares for more than 100,000 shares of Common Stock,
subject to adjustment as set forth in Section 4.5 hereof. Each Performance
Shares awarded pursuant to this Section 8 shall entitle the Participant to be
issued one share of Common Stock by the Company upon the attainment of such
Performance Goal, subject to such terms and conditions as may be set forth in
the Award evidencing such Share.
8.2 No Adjustment. Except as otherwise determined by the Committee
-------------
pursuant to Section 4.5 hereof, no adjustment shall be made in Performance
Shares awarded on account of dividends or distributions or other rights which
may be provided to the holders of Common Stock prior to the attainment of any
applicable Performance Goals.
8.3 Substitution of Cash. The Committee may, in its sole discretion,
--------------------
substitute cash equal to the Fair Market Value of shares of Common Stock
otherwise required to be issued to a Participant in accordance with this Section
8.
v
<PAGE>
9. Other Incentives; Stock Appreciation Rights.
In addition to the Incentives described in Section 5 through 8, above,
and subject to the terms and conditions of the Program, the Committee may grant
other Incentives, including the right to receive the appreciation in the fair
market value of shares of Common Stock (either granted singly or in combination
with or in tandem with a Stock Option) ("Other Incentives"), payable in cash or
----------------
shares of Common Stock, under the Program as it determines to be in the best
interest of the Company.
10. Performance Goals and Application of Tax Deduction Limitations.
The Committee shall have the authority to determine that compensation
attributable to Incentives awarded to a person subject to Section 16(a) of the
Exchange Act is intended to satisfy the requirements of the exception to
"applicable employee compensation" for performance-based compensation referred
to in Section 162(m)(4) of the Code. Such awards shall be made subject to the
attainment of performance goals relating to stock price, market share, sales,
net income, and/or earnings per share, including as met by a subsidiary,
division or joint venture of the Company as determined by the Committee, and set
forth in the Awards evidencing the Incentives ("Performance Goals").
-----------------
11. General.
11.1 Effective Date. The Program will become effective upon its approval by
--------------
the affirmative vote of the holders of a majority of the outstanding shares of
voting stock of Moore Medical present in person or represented by proxy and
entitled to vote thereon at a meeting of stockholders of Moore Medical at which
a quorum is present. Unless approved within one year after the date of the
Program's adoption by the Board, the Program shall not be effective for any
purpose. Prior to the approval of the Program by Moore Medical's stockholders,
the Committee may award Incentives, but if such approval is not received within
such one year such awards shall be of no effect.
11.2 Duration. The Program shall remain in effect until all Reserved Shares
--------
have been issued and all restrictions imposed on shares of Common Stock issued
under the Program have lapsed. No Incentive may be granted under the Program
after February 22, 2010, the day prior to the tenth anniversary of the date the
Program was approved by the Board of Moore Medical.
11.3 Non-transferability of Incentives. No Restricted Stock, Performance
---------------------------------
Share or Non-Qualified Stock Option or any interest therein may be transferred,
pledged or assigned (consensually, by operation of law, or otherwise) by the
Participant, except, (a) in the event of the holder's death, by will or the laws
of descent and distribution, or (b) to the limited extent provided by the terms
of such Incentive, to the Participant's immediate family or trusts for the
benefit of the Participant or members of his or her immediate family. Except in
such event or to such extent, the Company shall not be required to recognize any
attempted transfer, pledge or assignment of such Incentive by any Participant.
No Incentive Stock Option shall be transferable by the optionee otherwise than
by will or the laws of descent and distribution, and it shall be exercisable,
during his or her lifetime, only by the optionee.
vi
<PAGE>
11.4 Effect of Termination of Employment or Death. If the employment by the
--------------------------------------------
Company of a Participant ceases for any reason, including death, any Incentive
awarded to such Participant then outstanding shall expire, except as otherwise
authorized by the Committee and provided for in the Award evidencing the
Incentive, provided, however, that an Incentive Stock Option shall expire no
-----------------
later than as provided in Section 422(a)(2) and 421(c)(1) of the Code.
11.5 Compliance with Applicable Law and Withholding.
----------------------------------------------
(a) Notwithstanding any other provisions of the Program, Moore Medical shall
have no obligation to issue any shares of Common Stock under the Program if
such issuance would violate any applicable law, rule or regulation.
(b) Prior to the issuance of any shares of Common Stock under the Program,
Moore Medical may require a written representation of the recipient that he
or she is acquiring the shares as restricted securities (within the meaning
of Rule 144(a)(3) of the Securities Act of 1933 ("Securities Act")), for
--------------
investment and not for the purpose or with the intention of distributing
the shares and that the recipient will not dispose of them in violation of
the registration requirements of the Securities Act, and a legend may be
placed on the certificates representing the shares to the effect that the
securities represented thereby may not be transferred or otherwise disposed
of except pursuant to an effective registration statement or an exemption
from the registration requirements of the Securities Act.
(c) With respect to any person who is subject to Section 16(a) of the Exchange
Act, the Committee may, at any time, add such conditions and limitations to
any Incentive or payment under the Program, or implement procedures for the
administration of the Program which it deems necessary or desirable to
comply with the requirements of Rule 16b-3 of the Exchange Act.
(d) If, at any time, Moore Medical, in its sole discretion, determines that the
listing, registration, or qualification (or any updating of any such
document) of any type of Incentive, or the shares of Common Stock issuable
pursuant thereto, is necessary on any securities exchange or under any
federal or state securities or blue sky law, or that the consent or
approval of any governmental regulatory body is necessary or desirable as a
condition of, or in connection with, any Incentive, the issuance of shares
of Common Stock pursuant to any Incentive, or the removal of any
restrictions imposed on shares subject to an Incentive, such Incentive
shall not be granted and the shares of Common Stock shall not be issued or
such restrictions shall not be removed, as the case may be, in whole or in
part, unless such listing, registration, qualification, consent, or
approval shall have been effected or obtained free of any conditions not
acceptable to Moore Medical.
(e) All Incentives and payments under the Program are subject to withholding of
all applicable taxes, and the Company shall have the right to withhold from
any award under the Program or to collect as a condition of any issuance or
payment under the Program, as applicable, any taxes required by law to be
withheld. To the extent provided by the Committee, a Participant may elect
to have any distribution, or a portion thereof, otherwise required to be
made under the Program to be withheld or to surrender to the Company
previously owned shares of Common Stock to fulfill any tax withholding
obligation.
11.6 No Continued Employment. Neither this Program nor any Award evidencing
-----------------------
an Incentive thereunder (except to the extent expressly provided therein)
constitutes a contract of employment or continued service, and participation in
the Program will not give any employee or Participant the right to be retained
in the employ of the Company or any right or claim to any benefit under the
Program unless such right or claim has specifically accrued in the Award
evidencing an Incentive.
vii
<PAGE>
11.7 Treatment as a Stockholder. No Incentive shall create any rights in
--------------------------
such Participant as a stockholder of Moore Medical until (subject to Section 7.4
hereof) shares of Common Stock required to be issued to the Participant by the
Incentive are registered in his or her name.
11.8 Deferral Permitted. Payment of cash to a Participant or distribution
------------------
of any shares of Common Stock to which a Participant is entitled under any
Incentive shall be made as provided by the terms and conditions of the Award
evidencing the Incentive. Payment may be deferred at the request of the
Participant, to the extent provided in the Award evidencing the Incentive or
authorized by the Committee.
11.9 Amendment of the Program. The Board may, at any time and in any
------------------------
manner, amend, suspend or terminate the Program or any Incentive outstanding
under the Program, provided, however, that no such amendment, suspension or
-----------------
termination shall:
(a) be made without stockholder approval to the extent such approval
is required by law, agreement or the rules of any exchange or
automated quotation system upon which the Common Stock is listed
or quoted;
(b) alter or impair the rights of Participants with respect to
Incentives previously made under the Program, without the consent
of the Participant; or
(c) make any change that would, with respect to any Incentive not
subject to Section 16(a) of the Exchange Act because of an
exemption provided by Rule 16b-3 of the Exchange Act, disqualify
such exemption.
11.10 Acceleration of Incentives.
--------------------------
(a) Notwithstanding any provision in this Program to the contrary, if
authorized by the Committee and expressly so provided in one or
more Awards evidencing Restricted Stock, Stock Options,
Performance Shares or other Incentives:
(i) the restrictions on such Restricted Stock and other
Incentives shall lapse immediately;
(ii) such Stock Options shall become exercisable
immediately; and
(iii) all Performance Goals, if any, relating to such
Restricted Stock, Performance Shares and other
Incentives shall be deemed to be met immediately;
upon the occurrence of a Change in Control (hereinafter
defined).
(b) Notwithstanding any provision in this Program or in an Award to
the contrary, the Committee shall have the authority to require
that, upon such occurrence, any or all Stock Options shall be
surrendered to the Company by the optionee for cancellation, in
which event the optionee shall receive a cash payment from the
Company in an amount equal to the number of shares of Common
Stock then subject to such surrendered Stock Options, multiplied
by the excess, if any, of either (as may be determined by the
Committee) of (i) the highest per share price offered to
stockholders of Moore Medical in any transaction whereby the
Change in Control takes place or (ii) the Fair Market Value of a
share of Common Stock on the date of occurrence of the Change in
Control, over the purchase price per share of Common Stock
subject to such surrendered Stock Options.
viii
<PAGE>
11.11 Certain Definitions. (a) As used in this Program, the term "Fair
------------------- ----
Market Value" of a share of Common Stock as of any date means the fair market
- ------------
value of a share of Common Stock on said date as determined by any reasonable
valuation method selected by the Committee or, if no method is selected, the
closing sale price of a share of Common Stock as reported for the date prior to
said date on The National Association of Securities Dealers' American Stock
Exchange Composite Reporting Tape (or if the Common Stock is not traded on the
American Stock Exchange, the closing sale price on the exchange on which it is
traded or, if it is not traded on an exchange, as reported by an applicable
automated quotation system) ("Composite Tape") or, if no sale of Common Stock is
--------------
reported for said prior date, the closing sale price of a share of Common Stock
for the date of the Common Stock was last reported on the Composite Tape (or
such other exchange or automated quotation system, if applicable).
(b) As used in this Program, the term "subsidiary" means any business or entity,
----------
whether or not incorporated, in which Moore Medical has a direct or indirect
ownership interest, except that for purposes of Incentive Stock Options as
referred to in Section 5.1(d) hereof the terms "parent" and "subsidiary" mean
------ ----------
any corporation which is, respectively, a "parent corporation" or a "subsidiary
corporation" (within the meaning of Sections 425(e) and 425(f), respectively, of
the Code) of Moore Medical.
(c) As used in this Program (other than in Section 5.1(d) hereof), the terms
"employment" and "employee" refer to service as director, officer, employee,
---------- --------
consultant, independent contractor or agent of the Company. As used in Section
5.1(d) thereof, such terms have the same meaning as in Section 422 of the Code.
(d) As used in this Program, the term "Change of Control" shall have such
-----------------
meaning as may set forth in Award evidencing the Restricted Stock, Stock Option
or Performance Shares or other Incentive to which it is applicable.
ix
<PAGE>
[X] Please mark your votes as in this example.
The Board of Directors recommends a vote FOR Proposals 1, 2 and 3.
<TABLE>
<S> <C> <C> <C>
FOR WITHHOLD Nominees: Steven Kotler, Robert H. Steele,
all nominees authority to vote Peter C. Sutro, Wilmer J. Thomas, Jr.,
(see instruction) for all nominees Daniel K. Wassong., Christopher W. Brody
1. ELECTION OF [_] [_] Linda M. Autore
DIRECTORS
Instruction: To withhold authority to vote for any nominee(s), print the name(s) on the line below.
____________________________________________________________________________________________________
</TABLE>
The shares represented by this proxy will be voted as directed. If no contrary
instruction is given, the shares will be voted FOR the Election of Directors and
FOR Proposals Numbers 2 and 3.
SIGNATURE(S) _________________________________________________________________
DATE ___________________________________
FOR AGAINST ABSTAIN
2. Approval of the [_] [_] [_]
2000 Incentive
Compensation
Program.
3. Approval of the FOR AGAINST ABSTAIN
Amendment of [_] [_] [_]
Certificate of
Incorporation
IN THEIR DISCRETION THE PROXIES
ARE AUTHORIZED TO VOTE UPON
SUCH OTHER BUSINESS AS MAY
PROPERLY COME BEFORE THE
MEETING.
NOTE REGARDING SIGNATURE: Please sign and date as name appears hereon and return
promptly. Joint owners should each sign. When signing as Corporate Officer,
Partner, Executor, Administrator, Trustee or Guardian, please give full title.
Please note any change in your address alongside the address as it appears
hereon.
<PAGE>
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
MOORE MEDICAL CORP.-ANNUAL MEETING OF SHAREHOLDERS
Wednesday, June 21, 2000
The undersigned hereby appoints JOSEPH P. SAVIDGE and JOSEPH GREENBERGER,
and each of them, with the full power of substitution, and as proxies to
represent the undersigned at the Annual Meeting of Shareholders to be held at
the Algonquin Hotel, 59 West 44th Street, New York, New York on June 21, 2000,
at 11:00 A.M., and at any adjournment or postponement thereof, and to vote all
the shares of stock the undersigned would be entitled to vote if personally
present at the meeting as indicated on the reverse side.
(To be signed on reverse side)
