-----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, ORZEhGS8rjJHWuZUN6ojceWfPvkZ2CnaqGoZ2qvMRMHj38uCRAUkGyK3BRMJet9C LdNjD5G75l20mNTztQ5Yng== 0000950109-99-002916.txt : 19990816 0000950109-99-002916.hdr.sgml : 19990816 ACCESSION NUMBER: 0000950109-99-002916 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19990703 FILED AS OF DATE: 19990813 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-Q SEC ACT: SEC FILE NUMBER: 001-08903 FILM NUMBER: 99687123 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-Q 1 FORM 10-Q ================================================================================ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ______________ 1999 FORM 10 - Q For the Fiscal SECOND QUARTER Ended July 3, 1999 Quarterly 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(b) 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 _____ ----- 2,939,176 Number of shares of Common Stock outstanding as of July 29, 1999 Total number of pages in the numbered original (including exhibits) is 21 This is page 1 of 21 pages. ================================================================================ MOORE MEDICAL CORP. Index
Page No. -------- Part I. Financial Information Item 1. Financial Statements Balance Sheets at the end of the second quarter of 1999 and at the end of the year 1998.................................. 3 Statements of Operations for the second quarters of 1999 and 1998...................................................... 4 Statements of Operations for the first two quarters of 1999 and 1998...................................................... 5 Statements of Cash Flows for the first two quarters of 1999 and 1998...................................................... 6 Notes to Financial Statements.............................................. 7 Item 2. Management's Discussion and Analysis of Results of Operations and Financial Condition................................. 8-12 Part II. Other Information Item 4. Submission of Matters to a Vote of Security Holders ....................... 12 Item 6. Exhibits and Reports on Form 8-K........................................... 12-21 Signatures........................................................................... 13
2 MOORE MEDICAL CORP.
Balance Sheets at end of - --------------------------------------------------------------------------------------------------------------------- Amounts in thousands Second Quarter 1999 Year 1998 (Unaudited) - --------------------------------------------------------------------------------------------------------------------- ASSETS Current Assets Cash $ 148 $ 3,520 Accounts receivable, less allowances of $373 and $372............................................ 11,330 9,385 Inventories..................................................... 14,259 13,684 Prepaid expenses and other current assets....................... 2,420 1,992 Deferred income taxes........................................... 2,500 2,500 ---------- --------- Total Current Assets................................... 30,657 31,081 ---------- --------- Noncurrent Assets Equipment and leasehold improvements, net....................... 9,672 7,038 Other assets.................................................... 263 362 ---------- --------- Total Noncurrent Assets................................ 9,935 7,400 ---------- --------- $ 40,592 $ 38,481 ========== ========= LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities Accounts payable................................................ $ 7,599 $ 5,421 Accrued expenses................................................ 6,150 7,139 ---------- --------- Total Current Liabilities.............................. 13,749 12,560 ---------- --------- Deferred Income Taxes.................................................. 368 368 Shareholders' Equity Preferred stock - no shares outstanding......................... -- -- Common stock - $.01 par value; 5,000 shares authorized; 3,246 shares issued......................................... 33 33 Capital in excess of par value.................................. 21,672 21,667 Retained earnings............................................... 7,502 6,597 ---------- --------- 29,207 28,297 Less treasury shares, at cost, 307 and 308 shares...................................................... (2,732) (2,744) ---------- ---------- Total Shareholders' Equity............................. 26,475 25,553 ---------- ---------- $ 40,592 $ 38,481 ========== ========== - ---------------------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of the financial statements. 3 MOORE MEDICAL CORP.
Statements of Operations for the - -------------------------------------------------------------------------------------------------------------------- Amounts in thousands, except per share data Second Quarter ----------------------------------------- 1999 1998 (Unaudited) - -------------------------------------------------------------------------------------------------------------------- Net sales........................................................ $ 29,367 $ 30,042 Cost of products sold............................................ 20,152 20,685 -------- -------- Gross profit..................................................... 9,215 9,357 Selling, general & administrative expenses....................... 8,551 8,250 -------- -------- Operating income................................................. 664 1,107 Interest income, net............................................. 7 18 -------- -------- Income before income taxes....................................... 671 1,125 Income tax provision............................................. 243 416 -------- -------- Net income....................................................... $ 428 $ 709 ======== ======== Basic and diluted net income per share........................... $ .15 $ .24 ======== ======== - --------------------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of the financial statements. 4 MOORE MEDICAL CORP.
Statements of Operations for the - -------------------------------------------------------------------------------------------------------------------------- Amounts in thousands, except per share data First Two Quarters -------------------------------------- 1999 1998 (Unaudited) - -------------------------------------------------------------------------------------------------------------------------- Net sales........................................................ $ 58,422 $ 60,981 Cost of products sold............................................ 39,698 42,286 -------- -------- Gross profit..................................................... 18,724 18,695 Selling, general & administrative expenses....................... 17,354 16,951 -------- -------- Operating income................................................. 1,370 1,744 Interest income, net............................................. 52 24 -------- -------- Income before income taxes....................................... 1,422 1,768 Income tax provision............................................. 517 654 -------- -------- Net income....................................................... $ 905 $ 1,114 ======== ======== Basic and diluted net income per share........................... $ .31 $ .38 ======== ======== - --------------------------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of the financial statements. 5 MOORE MEDICAL CORP.
Statements of Cash Flows for the - ----------------------------------------------------------------------------------------------------------------------- Amounts in thousands First Two Quarters -------------------------------------- 1999 1998 (Unaudited) - ----------------------------------------------------------------------------------------------------------------------- Cash Flows From Operating Activities Net income............................................................ $ 905 $ 1,114 Adjustments to reconcile net income to net cash flows provided by operating activities: Depreciation and amortization..................................... 754 613 Changes in operating assets and liabilities Accounts receivable ......................................... (1,945) 4,187 Inventories.................................................. (575) (1,772) Other current assets......................................... (428) 372 Accounts payable............................................. 2,178 (2,702) Other current liabilities.................................... (886) 1,559 ------- --------- Net cash flows provided by operating activities........................................ 3 3,371 ------- --------- Cash Flows From Investing Activities Equipment and leasehold improvements.................................. (3,388) (1,539) ------- --------- Net cash flows used in investing activities....................... (3,388) (1,539) ------- --------- Cash Flows From Financing Activities Revolving credit financing decrease, net.............................. - (1,512) Other, net............................................................ 13 64 ------- --------- Net cash flows provided by (used in) financing activities............................................. 13 (1,448) ------- --------- (Decrease) increase in cash.................................................. (3,372) 384 Cash at beginning of period.................................................. 3,520 54 ------- --------- Cash At End Of Period........................................................ $ 148 $ 438 ======= ========= - -----------------------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of the financial statements. 6 MOORE MEDICAL CORP. NOTES TO FINANCIAL STATEMENTS Note 1 - Basis of Presentation of Financial Statements The accompanying financial statements should be read in conjunction with the Notes to Financial Statements and Management's Discussion and Analysis of Results of Operations and Financial Condition included in the Company's 1998 Annual Report filed on Form 10-K and in this Form 10-Q Report. In the opinion of management, all adjustments necessary for a fair presentation of the results for the interim periods have been made. The results of operations for the second quarter and first two quarters are not necessarily indicative of the results to be expected for the full year. The fiscal quarters ended July 3, 1999 and July 4, 1998. Note 2 - Contingencies Beginning in 1991, the Company entered into various supply contracts with the U.S. Department of Veterans Affairs and the Defense Department. In April 1997, the Company completed a review of its compliance with various pricing provisions of these contracts and, with the assistance of special legal counsel, concluded that adjustments may be due to the federal agencies for potential unasserted claims against the Company relating to pricing deficiencies under product supply contracts subject to General Services Administration and Department of Defense regulations. In the fourth quarter of 1996 the Company established a $3.8 million reserve for estimated pricing deficiency liabilities and associated legal costs. As of the end of 1998 and second quarter end of 1999, the reserve balance was $3.2 million. The final amount of the pricing deficiency adjustment is subject to the outcome of contract settlement discussions between the Company and the governmental agencies or to an adjudicated disposition. In management's opinion, the ultimate resolution of this matter will not have a material adverse effect on the Company's financial position. Although management believes that the reserve is sufficient, it is possible the final resolution could exceed such reserve and could have a material impact on the statement of operations and cash flow in such period. In 1997, the Company established a $4.5 million restructuring reserve relating to its exit from the wholesale drug distribution business. At the end of 1998, and the second quarter end of 1999, approximately $1.0 million and $0.8 million, respectively, remained. 7 MOORE MEDICAL CORP. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION OVERVIEW - -------- The following table sets forth items included in the Statements of Operations as a percentage of sales for the second quarters and first two quarters of 1999 and 1998, respectively. The table also shows, for each line item, the percentage change in the 1999 periods from the comparable 1998 periods.
Second Quarter First Two Quarters --------------------------------------- --------------------------------------- % of Sales % % of Sales % ------------------------- ---------- ------------------------ ---------- 1999 1998 Change 1999 1998 Change ----------- ---------- ---------- ---------- ---------- ---------- Net sales............................ 100.0% 100.0% (2)% 100.0% 100.0% (4)% Cost of products sold................ 68.6 68.9 (3) 68.0 69.3 (6) ------ ----- ------ ------ Gross profit......................... 31.4 31.1 (2) 32.0 30.7 - Selling, general & admin. exp........ 29.1 27.4 4 29.7 27.8 2 ------ ----- ------ ------ Operating income..................... 2.3 3.7 (40) 2.3 2.9 (21) Interest income, net............... - - (61) (0.1) - 117 ------ ----- ------ ------ Income before income taxes........... 2.3 3.7 (40) 2.4 2.9 (20) Income tax provision................. .8 1.3 (42) .9 1.1 (21) ------ ----- ------ ------ Net income........................... 1.5% 2.4% (40)% 1.5% 1.8% (19)% ====== ===== ===== ====== ====== =====
RESULTS OF OPERATIONS - --------------------- Second Quarter 1999 Compared with 1998 - ----------------------- Net sales of $29.4 million for the second quarter of 1999 decreased 2% from the same quarter of 1998 due primarily to the significant allocation of the Company's human and financial capital required to implement a new state-of-the- art Enterprise Resource Planning (ERP) system. The system was implemented to provide timely, consistent company wide management and customer information. For the 1999 second quarter, gross profit dollars decreased 2% to $ 9.2 million. The gross profit margin rate in the 1999 quarter increased to 31.4% of sales from 31.1% in the same quarter a year earlier. The improvement in margin rate is attributable to a favorable product mix in sales. 8 Selling, general and administrative expenses in the second quarter of 1999 increased 4% from the quarter a year ago. The increase is primarily attributable to expenses related to the implementation of the Company's ERP system for training and outside consulting services. Net income for the 1999 second quarter decreased 40%. The decrease was due primarily to lower sales volume and expenses related to the implementation of the Company's ERP system. First Two Quarters 1999 Compared with 1998 - ----------------------- Net sales for the first half of 1999 decreased 4% to $58.4 million from $61.0 million in the comparable 1998 period due to three major events: 1) the Company's transition out of the wholesale drug distribution business, 2) the liquidation of inventory related to this business in 1998 and 3) the investment in human and financial capital related to the Company's implementation of a new Enterprise Resource Planning (ERP) system. For the 1999 first half, gross profit dollars remained flat with 1998 at $18.7 million. The gross profit margin rate in the 1999 half increased to 32.0% of sales from 30.7% in the same period a year earlier. The improvement in rates is primarily due to a favorable product sales mix. Selling, general and administrative expenses during the first half of 1999 increased 2% compared with the first half of 1998. The increase is primarily due to expenses related to the implementation of the Company's ERP system for training and outside consulting services. Net income for the first half of 1999 decreased 19% as compared to the same 1998 period. The decrease was attributable to the expenses associated with the implementation of the Company's new ERP system. FINANCIAL CONDITION - ------------------- During the first half of 1999, the Company's operating activities were cash neutral and investing activities used $3.4 million in funds. Operating activities used $3.8 million in cash from a $1.9 million increase in accounts receivable, a $0.6 million increase in inventories and $1.3 million net change in other assets and liabilities. Operating activities generated $3.8 million in cash from a $2.2 million increase in accounts payable, $0.7 million in amortization and depreciation and $0.9 million in net income. Investing activities used $3.4 million for capital expenditures. The Company's bank financing agreement provides a $10 million revolving line of credit through December, 1999. Interest on loans is charged at the prime rate or, at the option of the Company, at the Eurodollar rate plus a rate in a range of 1% to 2% 9 depending on the financial leverage of the Company. In addition, the Company pays a 1/4% commitment fee on the unused line of credit. Management believes that the funding needs of the Company for operating working capital and capital expenditures will continue to be met through income from operations and financing available under its line of credit. YEAR 2000 ISSUES - ---------------- Year 2000 issues are the result of computer programs that were written using two digits rather than four to define the applicable year. If the Company's computer programs with date sensitive functions are not year 2000 compliant, they may recognize a date using "00" as the year 1900 rather than the year 2000. This could result in a system failure or miscalculations causing disruptions of operations, including, an inability to process transactions, send invoices or engage in other normal business activities. The Company has identified its Year 2000 risks in three categories: internal business software, internal non-information technology software, and external vendor compliance. Internal Information Technology - ------------------------------- During 1998, as part of a modernization program intended to improve productivity and increase profitability by upgrading data processing, integrating systems and enhancing internal reporting, the Company purchased an integrated enterprise system which includes software which the vendor has represented to be Year 2000 compliant. The total estimated hardware, software, installation and training cost of the integrated enterprise system, of which Year 2000 compliance is a by-product, is $6.7 million, of which $6.2 million has been incurred through the second quarter, funded through operating cash flow. The Company substantially completed the implementation of the system during the second quarter of 1999. With this implementation, the Company believes its internal information technology systems to be in substantial compliance. However, if experience should demonstrate that the implementation is not substantially complete, Year 2000 issues could have a material adverse impact on the Company's operations. Contingency plans are being developed for areas where management considers there may be some risk to modify certain of the major existing internal information technology systems to be Year 2000 compliant. Internal Non-Information Technology - ----------------------------------- The Company has assessed the Year 2000 compliance of its internal non-information software and of the technology embedded in such systems as security, telecommunications and building systems by contacting the providers of such systems. Written assurance of Year 2000 compliance has been received from substantially all providers. 10 External Vendor Compliance - -------------------------- The Company has identified and contacted its major suppliers, service providers and contractors ("vendors") to determine the extent of their Year 2000 compliance. The process is substantially complete. To the extent that responses were unsatisfactory, the Company intends to consider changing the vendors to those who have represented Year 2000 readiness, but cannot be assured that it will be successful in finding alternative vendors. In the event that a major vendor's written assurance of Year 2000 compliant becomes questionable and the Company does not replace it with a new vendor, its business could be materially adversely affected. The Company is formulating a contingency plan for major vendors' Year 2000 non-compliance. FORWARD-LOOKING INFORMATION - --------------------------- From time to time, the Company or its representatives may have made or may make forward-looking statements, orally or in writing. Such forward-looking statements may be included in, but, not limited to, press releases, oral statements made by or with the approval of an authorized executive officer, or in this report or other filings made by the Company with the Securities and Exchange Commission. The words or phrases "trend," "expect," "grow," "will," "could," "likely result," "planned," "intends," "continued," "anticipated," "estimated," "projected" or similar expressions are intended to identify "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. The Company wishes to ensure that such statements are accompanied by meaningful cautionary statements, so as to maximize to the fullest extent possible the protections of the safe harbor established in the said Act. Accordingly, such statements are qualified in their entirety by reference to and are accompanied by the following discussion of certain important factors that could cause actual results to differ materially from such forward-looking statements. Investors should also be aware of factors that could have an impact on the Company's business or financial position or performance. These include possible: pressures on revenues resulting, for example, from customer consolidations or changes in customer buying patterns; intensified competition resulting, for example, from distributor consolidations or pricing pressures from distributors able to benefit from economies of scale or other operating efficiencies; disruptions in services on which the Company is dependent, such as by truckers in deliveries from its suppliers, by UPS or other common carriers in deliveries to its customers, by its catalog printers or in telecommunication services, or relating to its computer systems; unfavorable outcomes of litigation to which the Company may become a party; and other factors detailed from time to time in the Company's Securities and Exchange Commission filings or other readily available or generally disseminated writings. The risks identified here are not all inclusive. Reference is also made to other parts of this report that include additional information concerning factors that could adversely impact the Company's business or financial position or performance. Moreover, the Company operates in a changing and very competitive business environment. New risks may emerge from time to time, and 11 it is not possible for management to predict all risk factors, nor can it necessarily identify or assess the impact of all such factors on the Company or the extent to which any factor or combination of factors may cause actual results to differ materially from those contained in any forward-looking statements. Accordingly, forward-looking statements should not be relied upon as a prediction of actual results. PART II. OTHER INFORMATION ----------------- Item 4. Submission of Matters to a Vote of Security Holders --------------------------------------------------- (a) The 1999 Annual Meeting of Shareholders of the Company was held May 12, 1999. (b) At the Annual Meeting, the following persons were elected directors, with the following number of shares voted for and withheld: For Withheld --------------- ------------- Steven Kotler 2,259,359 11,606 Robert H. Steele 2,259,359 11,606 Peter C. Sutro 2,259,359 11,606 Wilmer J. Thomas, Jr. 2,259,359 11,606 Dan K. Wassong 2,259,359 11,606 Item 6. Exhibits and Reports on Form 8-K -------------------------------- (a) Exhibits -------- Fifth Amendment to Revolving Credit Exhibit 10.18 Agreement by the Company and BankBoston, N.A., dated April 30, 1999 Financial Data Schedule Exhibit 27 (b) Reports on Form 8-K ------------------- No report on Form 8-K was filed during the quarter. 12 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. (REGISTRANT) By: /s/ David V. Harper By: /s/ Susan G. D'Amato ------------------------- ------------------------------- David V. Harper, Executive Susan G. D'Amato, Vice Vice President - Finance and President and Controller Chief Financial Officer August 10, 1999 August 10, 1999 13 EX-10.18 2 AMENDMENT NO.5 TO REVOLVING CREDIT AGREEMENT EXHIBIT 10.18 FIFTH AMENDMENT AGREEMENT ------------------------- FIFTH AMENDMENT AGREEMENT (this "Amendment Agreement") dated as of April 30, 1999- by and among Moore Medical Corp. (the "Borrower"), BankBoston, N.A. (as successor by merger to Bank of Boston Connecticut) and certain other lending institutions (collectively, the "Banks"), and BankBoston, N.A. (as successor by merger to Bank of Boston Connecticut), as agent for the Banks (in such capacity, the "Agent"), amending a certain Revolving Credit Agreement dated as of January 9, 1996, as amended by the First Amendment Agreement dated as of March 1, 1996, the Second Amendment Agreement dated as of December 27, 1996, the Third Amendment and Waiver Agreement dated as of April 14, 1997 and the Fourth Amendment and Waiver Agreement dated as of March 30, 1998 (as amended, the "Credit Agreement"). WITNESSETH ----------- WHEREAS, the Borrower has requested that the Banks amend certain terms and conditions of the Credit Agreement; and WHEREAS, the Banks and the Agent are willing to amend such terms and conditions on the terms and conditions set forth herein. NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: (S)1. Definitions. Capitalized terms used herein without definition that ----------- are defined in the Credit Agreement shall have the same meanings herein as therein. (S)2. Ratification of Existing Agreements. All of the Borrower's ----------------------------------- obligations and liabilities to the Agent and the Banks, and all the Agent's and Banks' obligations and liabilities to the Borrower, as evidenced by or otherwise arising under the Credit Agreement, the Notes and the other Loan Documents, except as otherwise expressly modified in this Amendment Agreement upon the terms set forth herein, are, by the Borrower's, the Agent's and Banks', execution of this Amendment Agreement ratified and confirmed in all respects. In addition, by the Borrower's execution of this Amendment Agreement, the Borrower represents and warrants that, subject to the provided and provided, however, clauses of Section 5.4 of the Credit Agreement, no counterclaim, right of set-off or defense of any kind exists or is outstanding with respect to such obligations and liabilities. (S)3. Representations and Warranties. All of the representations and ------------------------------ warranties made by the Borrower in the Credit Agreement, the Notes and the other Loan Documents are true and correct on the date hereof as if made on and as of the date hereof, except to the extent that any of such representations and warranties relate by their terms to a prior date and except to the extent of changes resulting from transactions contemplated or permitted by the Credit Agreement and 14 changes occurring in the ordinary course of business that singly or in the aggregate do not have a Material Adverse Effect. (S)4. Conditions Precedent. The effectiveness of the amendments -------------------- contemplated hereby shall be subject to the satisfaction on or before the date hereof of each of the following conditions precedent: (a) Representations and Warranties. All of the representations and ------------------------------ warranties made by the Borrower herein, whether directly or incorporated by reference, shall be true and correct on the date hereof, except as provided in (S)3 hereof. (b) Performance: No Event of Default. The Borrower shall have -------------------------------- performed and complied in all material respects with all terms and conditions herein required to be performed or complied with by it prior to or at the time hereof, and there shall exist no Default or Event of Default. (c) Corporate Action. All requisite corporate action necessary for ---------------- the valid execution, delivery and performance by the Borrower of this Amendment Agreement and all other instruments and documents delivered by the Borrower in connection therewith shall have been duly and effectively taken. (d) Delivery. The parties hereto shall have executed and delivered -------- this Amendment Agreement. In addition, the Borrower shall have executed and delivered such further instruments, and take such further action as the Agent and the Banks may have reasonably requested, in each case further to effect the purposes of this Amendment Agreement, the Credit Agreement and the other Loan Documents. (e) Fees and Expenses. The Borrower shall have paid to the Agent ----------------- and the Banks all fees and expenses incurred by the Agent in connection with this Amendment Agreement, the Credit Agreement or the other Loan Documents on or prior to the date hereof. (S)5. Amendments to Credit Agreement. ------------------------------ (S)5.1. Amendment to (S) 2.1. Section 2.1 of the Credit Agreement -------------------- is hereby amended by deleting the entire thirteenth line of such section and substituting the phrase "time exceed the Total Commitment." therefor. (S)5.2. Amendment to (S) 2.10. Section 2.10 of the Credit --------------------- Agreement is hereby deleted in its entirety. (S)5.3. Amendment to (S) 3.2. Section 3.2 of the Credit Agreement -------------------- is hereby amended by deleting the phrase "lesser of (a) the Total Commitment and (b) the Borrowing Base." in the fourth line thereof and substituting the phrase "the Total Commitment," therefor. 15 (S)5.4. Amendment to (S) 4.1. Section 4.1(a) of the Credit -------------------- Agreement is hereby amended by deleting the phrase "lessor of (1) the Total Commitment and (2) the Borrowing Base." in the second to last and last line thereof and substituting the phrase "Total Commitment." therefor. (S)5.5. Amendment to (S) 6. Section 6 of the Credit Agreement is ------------------ hereby amended in its entirety to read as follows: "(S)6. Intentionally Omitted." (S)5.6. Amendment to (S) 7.14. Section 7.14 of the Credit --------------------- Agreement is hereby amended in its entirety to read as follows: "(S)7.14. Intentionally Omitted." (S)5.7. Amendment to (S) 8.4. Section 8.4(e) of the Credit ------------------- Agreement is hereby amended in its entirety to read as follows: "(e) intentionally omitted;" (S)5.8. Amendment to (S)8.5. Clause "(ii)" of Section 8.5(b) of ------------------- the Credit Agreement is hereby amended in its entirety to read as follows: "(ii) upon becoming aware thereof, of any inquiry, proceeding, investigation, or other action, including a notice from any agency of potential environmental liability, or any federal, state or local environmental agency or board, that has the potential to materially affect the assets, liabilities, financial conditions or operations of the Borrower or any of its Subsidiaries." (S)5.9. Amendment to (S)8.5. Section 8.5(c) of the Credit ------------------- Agreement is hereby amended in its entirety to read as follows: "(c) Notification of Claim Against Assets. The Borrower will, immediately upon becoming aware thereof, notify the Agent and each of the Banks in writing of any setoff, claims (including, with respect to the Real Estate, environmental claims), withholdings or other defenses to which any of the assets of the Borrower, or the Agent's rights with respect thereto, are subject." (S)5.10. Amendment to (S)8.7. Section 8.7 of the Credit Agreement ------------------- is hereby amended in its entirety to read as follows: "(S)8.7. Insurance The Borrower will, and will cause each of its --------- Subsidiaries to, maintain with financially sound and reputable insurers insurance with respect to its properties and business against such casualties and contingencies as shall be in accordance with the general practices of businesses engaged in similar activities in similar geographic areas and in amounts, containing such terms, in such forms and for such periods as may be reasonable and prudent." 16 (S)5.11. Amendment to (S) 8.13. Section 8.13 of the Credit Agreement --------------------- is hereby deleted. (S)5.12. Amendment to (S) 9.1. Section 9.1 of the Credit Agreement -------------------- is hereby amended by deleting "." from the end of subsection "(h)" and substituting "; and" therefore and by adding a new subsection "(i)" to such section to read as follows: "(i) Indebtedness in the aggregate principal amount not in excess of $10,000,000 at any time as long as such Indebtedness is either (x) unsecured or (y) incurred in connection with the acquisition of Acquired Assets or Capitalized Leases and is secured only by such Acquired Assets or such Capitalized Leases with no other recourse of any kind whatsoever to the Borrower," (S)5.13. Amendment to (S) 9.2. Section 9.2(e)(viii) of the Credit -------------------- Agreement is hereby amended by adding the phrase "Acquired Assets or" after the phrase "mortgages on" in the second line of such section and adding the phrase "or (S)9.1(i)(y)" after "(S)9.1(f)" in the fifth line of such section. (S)5.14. Amendment to (S) 9.3. Section 9.3 of the Credit Agreement --------------------- is hereby amended by deleting "." from the end of subsection "(i)" and substituting "; and" therefore and by adding a new subsection "(j)" to such section to read as follows: "(j) the Permitted Acquisitions." (S)5.15. Amendment to (S) 9.5. Section 9.5(a) of the Credit Agreement -------------------- is hereby amended by inserting the phrase "the Permitted Acquisitions or" after the phrase "other than" in the fourth line of such section. (S)5.16. Amendment to (S) 10.5. Section 10.5 of the Credit Agreement --------------------- is amended by adding the phrase "(other than for Capital Assets acquired in connection with Permitted Acquisitions)" after the phrase "Capital Expenditures" in the second line of such section. (S)5.17. Amendment to (S) 11. Section 11.5 of the Credit Agreement ------------------- is hereby amended in its entirety to read as follows: "(S)11.5 Intentionally Omitted." (S)5.18. Amendment to (S) 12.3. Section 12.3 of the Credit Agreement -------------------- is hereby amended in its entirety to read as follows: "(S)12.3. Intentionally omitted." (S)5.19. Amendment to (S) 13.1. Section 13.1(m) of the Credit --------------------- Agreement is hereby amended in its entirety to read as follows: 17 "(m) there shall occur any material damage to, or loss, theft or destruction of, any assets of the Borrower, or any strike, lockout, labor dispute, embargo, condemnation, act of God or public enemy, or other casualty, which in any such case causes, for more than fifteen (15) consecutive days, the cessation or substantial curtailment of revenue producing activities at any facility of the Borrower or any of its Subsidiaries if such event or circumstance is not covered by business interruption insurance and would have a Materially Adverse Effect." (S)5.20. Amendment to (S) 13.1. Section 13.1(o) of the Credit -------------------- Agreement is hereby amended in its entirety to read as follows: "(o) the Borrower or any of its Subsidiaries shall be indicted for a federal crime, a punishment for which could include the forfeiture of any assets of the Borrower or such Subsidiary having a fair market value in excess of $1,000,000;" (S)5.21. Amendment to (S) 13.4. The first paragraph of Section 13.4 --------------------- of the Credit Agreement is hereby amended in its entirety to read as follows: "(S)13.4 Distribution of Proceeds. In the event that following the ------------------------ occurrence or during the continuance of any Default or Event of Default, the Agent or any Bank, as the case may be, receives any monies in connection with the enforcement of any the Loan Documents, or otherwise with respect to the realization upon any of the assets of the Borrower, such monies shall be distributed for application as follows:" (S)5.22. Amendment to (S) 13.4. Section 13.4(a) of the Credit --------------------- Agreement is hereby amended by deleting the word "Collateral" in the seventh line thereof and substituting the phrase "assets of the Borrower" therefor. (S)5.23. Amendment to (S) 14. Section 14 of the Credit Agreement is ------------------- hereby amended by deleting the word "Collateral," in the first line thereof and substituting the phrase "collateral security, if any," therefor. (S)5.24. Amendment to (S)15.11. Section 15.11 of the Credit --------------------- Agreement is hereby amended in its entirety to read as follows: "(S)15.11. Duties in the Case of Enforcement. In case one of more --------------------------------- Events of Default have occurred and shall be continuing, and whether or not acceleration of the Obligations shall have occurred, the Agent shall, if (a) so requested by the Majority Banks and (b) the Banks have provided to the Agent such additional indemnities and assurances against expenses and liabilities as the Agent may reasonably request, proceed to enforce the provisions of the Loan Documents authorizing the sale or other disposition of all or any part of the assets of the Borrower and exercise all or any such other legal and equitable and other rights or remedies as it may have in respect of such assets. The Majority Banks may direct the Agent in writing as to the method and the extent of any such sale or other disposition, the Banks hereby agreeing to indemnify and hold the Agent, harmless 18 from all liabilities incurred in respect of all actions taken or omitted in accordance with such directions, provided that the Agent -------- need not comply with any such direction to the extent that the Agent reasonably believes the Agent's compliance with such direction to be unlawful or commercially unreasonable in any applicable jurisdiction." (S)5.25. Amendment to (S) 16. Section 16 of the Credit Agreement is ------------------- hereby amended by deleting the word "Collateral;" in the fourth to last line thereof and substituting the phrase "collateral security;" therefor. (S)5.26. Amendment to (S) 17. Section 17 of the Credit Agreement is hereby amended by deleting the word "Collateral," in the fourteenth line thereof and substituting the phrase "assets of the Borrower," therefor. (S)5.27. Amendments to Schedule 2. Schedule 2 is hereby amended by ------------------------ deleting the definitions of "Borrowing Base," "Borrowing Base Report," "Collateral," "Perfection Certificates" and "Security Agreement" set forth therein. (S)5.28. Amendments to Schedule 2. ------------------------ (a) The definition of "Loan Documents" appearing in Schedule 2 to the Credit Agreement is hereby amended by deleting the phrase "Security Agreement" from the second line thereof. (b) The following definitions of "Permitted Acquisitions" and "Acquired Assets" are hereby added to Schedule 2 to the Credit Agreement in the proper alphabetical order to read as follows: "Permitted Acquisitions. Shall mean any acquisition of all ----------------------- or substantially all the assets of, or shares or other equity interest in, a Person or division or line of business ("Acquired Assets") of a Person if immediately after giving effect thereto: (a) no Default or Event of Default shall have occurred and be continuing or would result therefrom, (b) all transactions related thereto shall be consummated in accordance in all material respects with applicable laws, (c) the Bank shall have received evidence that the board of directors (or Persons performing similar functions) of such Person shall have approved such acquisition, such evidence of approval to be in form and substance reasonably satisfactory to the Bank in all respects, (d) such acquisition is in the same or similar line of business of the Borrower, (e) the payment of the total consideration for such acquisition, separately and when considered with all acquisitions of Acquired Assets since the Closing Date, shall not be in excess of $10,000,000, (f) one hundred percent (100%) of the capital stock or other equity interest of any acquired or newly formed corporation, partnership, limited liability, association or other business entity is owned directly by the Borrower or a Subsidiary of the Borrower and (g)(x) the Borrower and its Subsidiaries shall be in compliance, on a pro forma basis after giving effect to such acquisition or formation, with the covenants contained in (S)10 recomputed as at the last day of each relevant period for testing such compliance, and the Borrower shall have 19 delivered to the Bank an officer's certificate to such effect, together with all relevant financial information for such subsidiary or assets, and (y) any acquired or newly formed subsidiary shall not be liable for any Indebtedness (except for Indebtedness permitted by (S)9.1 hereof). (S)6. Release of Collateral. Subject to the satisfaction of the --------------------- conditions set forth herein and in accordance with the terms hereof, the Banks and the Agent hereby release the security interest in and lien on the Collateral and agree to execute and file termination statements in all filing offices of each jurisdiction in which a financing statement with respect to any of the Collateral was filed, all at the cost and expense of the Borrower. (S)7. Expenses. The Borrower agrees to pay to the Agent upon demand -------- an amount equal to any and all out-of-pocket costs or expenses (including reasonable legal fees and disbursements and appraisal expenses) incurred or sustained by the Agent in connection with the preparation of this Amendment Agreement and any related matters. (S)8. Miscellaneous. ------------- (c) This Amendment Agreement shall be governed by and construed in accordance with the laws of the State of Connecticut. (d) Except as otherwise expressly provided by this Amendment Agreement, all of the respective terms, conditions and provisions of the Credit Agreement shall remain the same and in full force and effect. It is declared and agreed by each of the parties hereto that this Amendment Agreement and the Credit Agreement be read and construed as one instrument, and all referenced in the Loan Documents to the Credit Agreement shall hereafter refer to the Credit Agreement, as amended by this Amendment Agreement. IN WITNESS WHEREOF, each of the parties hereto have caused this Amendment Agreement to be executed in its name and behalf by its duly authorized officer as of the date first written above. MOORE MEDICAL CORP. By: /s/ David V. Harper ------------------- Executive Vice President - Finance and Chief Financial Officer BANKBOSTON, N.A. (as successor by merger to Bank of Boston Connecticut) Individually and as Agent By: /s/ Donald W. Peters -------------------- Vice President 20 EX-27 3 FINANCIAL DATA SCHEDULE
5 1,000 6-MOS JAN-01-2000 JAN-03-1999 JUL-03-1999 148 0 11,703 373 14,259 30,657 21,273 (11,601) 40,592 13,749 0 0 0 33 26,442 40,592 58,422 58,422 39,698 39,698 17,354 0 (52) 1,422 517 905 0 0 0 905 0.31 0.31
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