<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ........ to ........
Commission file number is 0-4197
UNITED STATES LIME & MINERALS, INC.
(Exact name of registrant as specified in its charter)
TEXAS 75-0789226
------------------------------- -------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
12221 Merit Drive, Suite 500, Dallas, TX 75251
- ---------------------------------------- -------------------------
(Address of principal executive offices) (Zip Code)
(972) 991-8400
----------------------------------------------------
(Registrant's telephone number, including area code)
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 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes [ X ] No [ ]
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date: As of April 27, 1998,
3,969,425 shares of common stock, $.10 par value, were outstanding.
<PAGE> 2
PART I. FINANCIAL INFORMATION
ITEM 1: FINANCIAL STATEMENTS
UNITED STATES LIME & MINERALS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands of dollars)
(Unaudited)
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
ASSETS -------- --------
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 1,504 $ 2,787
Trade receivables, net 4,113 3,624
Inventories 3,327 3,001
Prepaid expenses and other assets 105 111
-------- --------
Total current assets 9,049 9,523
Property, plant and equipment at cost 57,481 52,302
Less: Accumulated depreciation and depletion (31,535) (30,896)
-------- --------
Property, plant and equipment, net 25,946 21,406
Deferred tax assets, net 2,505 2,537
Other assets, net 46 54
-------- --------
Total assets $ 37,546 $ 33,520
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current installments of long-term debt $ 1,607 $ 1,071
Accounts payable 2,608 4,437
Accrued expenses 1,340 1,594
-------- --------
Total current liabilities 5,555 7,102
Long-term debt, excluding current installments 7,536 2,167
Other liabilities 101 101
-------- --------
Total liabilities 13,192 9,370
Stockholders' Equity:
Common stock 529 529
Additional paid-in-capital 14,949 15,135
Retained earnings 22,933 22,729
-------- --------
38,411 38,393
Less treasury stock at cost; 1,324,640 and
1,342,212 shares of common stock, respectively (14,057) (14,243)
-------- --------
Total stockholders' equity 24,354 24,150
-------- --------
Total liabilities and stockholders' equity $ 37,546 $ 33,520
======== ========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
2
<PAGE> 3
UNITED STATES LIME & MINERALS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands of dollars, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
-------------------------------------
1998 1997
---------------- ----------------
<S> <C> <C> <C> <C>
Revenues $ 6,469 100.0% $ 7,808 100.0%
Cost of revenues:
Labor and other operating expenses 4,527 70.0% 6,233 79.8%
Depreciation, depletion & amortization 666 10.3% 980 12.6%
---------------- ----------------
5,193 80.3% 7,213 92.4%
---------------- ----------------
Gross profit 1,276 19.7% 595 7.6%
Selling, general &
administrative expenses 926 14.3% 1,116 14.3%
---------------- ----------------
Operating profit (loss) 350 5.4% (521) (6.7%)
Other deductions (income):
Interest expense 3 0.0% 133 1.7%
Other, net (74) (1.1%) (44) (0.6%)
---------------- ----------------
(71) (1.1%) 89 1.1%
---------------- ----------------
Net income (loss) before income taxes 421 6.5% (610) (7.8%)
---------------- ----------------
Federal and state income
tax expense (benefit) 118 1.8% (122) (1.5%)
---------------- ----------------
Net income (loss) $ 303 4.7% $ (488) (6.3%)
================ ================
Income (loss) per share of common stock:
Basic earnings (loss)/common share $ 0.08 $ (0.12)
========= =========
Diluted earnings (loss)/common share $ 0.08 $ (0.12)
========= =========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
3
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UNITED STATES LIME & MINERALS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands of dollars)
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
-----------------------
1998 1997
-------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 303 $ (488)
Adjustments to reconcile net income to net cash
used in operating activities:
Depreciation, depletion & amortization 686 1,023
Deferred income tax benefit 32 -
Amortization of financing costs - 25
Loss (gain) on sale of
property, plant & equipment 1 (5)
Current assets (net change) [1] (809) (188)
Other assets 8 (22)
Current liabilities (net change) [2] (2,083) (640)
Other liabilities - (1)
-------- --------
Net cash used in operating activities (1,862) (296)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property, plant & equipment (5,228) (1,681)
Proceeds from sale of property, plant & equipment 1 5
-------- --------
Net cash used in investing activities (5,227) (1,676)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payment of common stock dividends (99) (99)
Proceeds from borrowings on term loan 6,000 -
Principal payments on debt (95) (286)
Net cash provided by (used in) -------- --------
financing activities 5,806 (297)
-------- --------
Net decrease in cash (1,283) (1,137)
Cash at beginning of period 2,787 1,161
-------- --------
Cash at end of period $ 1,504 $ 24
======== ========
Supplemental cash flow information:
Interest paid $ 125 $ 109
======== ========
Income taxes paid $ - $ 219
======== ========
</TABLE>
[1] Exclusive of net change in cash
[2] Exclusive of net change in current portion of debt
See accompanying notes to condensed consolidated financial statements
4
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UNITED STATES LIME & MINERALS, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
1. Basis of Presentation
---------------------
The condensed consolidated financial statements included herein have been
prepared by the Company without independent audit. In the opinion of the
Company's management, all adjustments of a normal and recurring nature
necessary to present fairly the financial position, results of operations
and cash flows for the periods presented have been made. Certain
information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted. It is suggested that these
condensed consolidated financial statements be read in conjunction with
the consolidated financial statements and notes thereto included in the
Company's Annual Report on Form 10-K for the period ended December 31,
1997. The results of operations for the period ended March 31, 1998 are
not necessarily indicative of operating results for the full year.
2. Inventories
-----------
Inventories consisted of the following at:
<TABLE>
<CAPTION>
(In thousands of dollars) March 31, December 31,
1998 1997
-------- --------
<S> <C> <C>
Lime and limestone inventories:
Raw materials $ 999 $ 624
Finished goods 800 844
-------- --------
1,799 1,468
Service parts 1,528 1,533
-------- --------
Total inventories $ 3,327 $ 3,001
======== ========
</TABLE>
3. Long-Term Debt
--------------
The Company has a financing agreement with a commercial bank. The
agreement, as amended and restated in December 1997, provides for a
$15,000,000 five-year secured term loan and a $4,000,000 unsecured
revolving credit facility which matures in December 1999. Both loans bear
interest at the bank's prime rate but may, at the option of the Company,
be converted into LIBOR-based loans that bear interest at LIBOR plus 1.65%
for the term loan and LIBOR plus 1.5% for the revolving credit facility.
The agreement also allows the Company to modify the interest
characteristics of all or a portion of the outstanding loans by
establishing a fixed rate with the bank or through the use of interest
rate protection agreements with the bank. In the first quarter of 1998,
the Company elected the LIBOR-based interest option for the debt
outstanding under the term loan.
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A summary of long-term debt is as follows:
<TABLE>
<CAPTION>
(In thousands of dollars) March 31, December 31,
1998 1997
-------- --------
<S> <C> <C>
Term loan $ 9,143 3,238
Revolving credit facility - -
-------- --------
Subtotal 9,143 3,238
Less current installments 1,607 1,071
-------- --------
Long-term debt, excluding
current installments $ 7,536 2,167
======== ========
</TABLE>
The additional amounts borrowed in the first quarter of 1998 were used to
partially fund the modernization and expansion project at the Texas
facility. Interest costs of $101,000 were capitalized as part of the
Texas project in the first quarter of 1998.
The carrying amount of the Company's long-term debt approximates its fair
value.
4. Subsequent Event
----------------
In April 1998, the Company entered into an interest rate protection
agreement with its bank (the "Swap Agreement") to modify the interest
characteristics of $9,000,000 of its then outstanding debt from a variable
rate to a fixed rate. The Swap Agreement involves the exchange of
interest obligations based on a fixed rate of 7.45% for interest
obligations based on variable 30 day LIBOR rates over the five-year life
of the Swap Agreement without an exchange of notional amounts upon which
such interest obligations are based. The interest rate differential to be
paid or received as rates change will be accrued and recognized as an
adjustment to interest expense. The related amount payable to or
receivable from the bank will be included as an adjustment to accrued
expenses. To the extent amounts are not material, the fair value of the
Swap Agreement and changes in the fair value as a result of changes in
market interest rates will not be recognized in the financial statements.
In the event of the early termination of the debt obligation, or an early
termination of the Swap Agreement, any realized gain or loss from the Swap
Agreement would be recognized as an adjustment to interest expense.
6
<PAGE> 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Liquidity and Capital Resources
- -------------------------------
Net cash used in operating activities was $1,862,000 for the three
months ended March 31, 1998, as compared to $296,000 used in operating
activities for the three months ended March 31, 1997. The increase in net
cash used in operating activities was primarily attributable to the payment of
certain invoices related to the modernization and expansion project at the
Texas facility that were included in accounts payable at December 31, 1997.
The Company made $5,228,000 in capital expenditures in the first three
months of 1998, compared to $1,681,000 for the same period last year. Of the
1998 capital expenditures, approximately $4,600,000 were related to the
modernization and expansion project at the Texas facility. The Texas project
includes the installation of a new stone crushing and handling system, the
addition of a preheater to one of the existing kilns, additional storage,
screening and shipping capacity and a new support building which will house a
laboratory, administrative offices and shop facilities.
The Texas improvements should allow the Company to better serve its
customers by improving both quality and service. With the improvements, the
Company expects to be in a better position to compete for customers who
currently cannot use the Company's lime in their processes. The improvements
will also result in lower operating costs and in a more efficient utilization
of the work force. The cost of the Texas modernization and expansion project
is expected to be approximately $22,000,000. Although delays or changes in
the cost of the project could occur due to inclement weather, changes in the
design or cost overruns, none is anticipated at this time. This project is
being financed through a combination of internally generated funds from
operations, the proceeds from the sale of substantially all of the Corson Lime
Company assets and certain banking facilities.
The Texas project is being constructed in phases and significant
progress has been made. The new support building has been completed and the
stone crushing and handling system should be completed by the second quarter
of 1998. The storage, screening and load-out improvements as well as the
preheater should be completed by the fourth quarter of 1998. The Company has
secured all the necessary permits for construction.
A similar modernization and expansion project has also been approved for
the Arkansas facility. The Arkansas project will be constructed in two
phases. The first phase, scheduled for completion in 1999, includes the
addition of a new 1,200-ton per day rotary kiln, a new stone crushing and
handling system and new lime and ground calcium carbonate storage and load-out
facilities. The second phase of the project includes a new hydrator, a rock
transportation system and additional lime storage facilities. The second
phase of the project is currently scheduled for construction in 2002.
However, significant increases in product sales could result in an earlier
implementation of the second phase of the plan. Kiln system design and permit
applications are currently being finalized and bid proposals have been
requested for key components of the project. The preliminary cost estimates
for the project phases are approximately $27,000,000 and $5,000,000,
respectively. The project is contingent upon satisfactory permitting from the
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<PAGE> 8
various regulatory agencies. The Company expects to finance this project
through a combination of internally generated funds from operations and/or
alternative sources of financing.
The Arkansas improvements should allow the Company to better serve its
customers by improving both quality and service while increasing the
production capacity of quicklime and hydrated lime. With the improvements,
the Company expects to be in a better position to compete for customers who
currently cannot use the Company's lime in their processes due to insufficient
production capacity at the plant or quality constraints. The new rotary kiln
will have lower operating costs and a greater capacity than the six shaft
kilns currently in use. In addition to increasing capacity, this kiln will
also be able to consistently produce high-quality lime for use by certain
manufacturing customers who currently do not buy lime from the Arkansas
facility. The new stone crushing system will allow the Company to increase
quarry capacity and produce aggregate products with materials that are not
suitable for the production of lime. This system will be designed to produce
the appropriate size feed for the rotary kiln and will increase handling and
transport capacity while significantly reducing labor requirements. The new
hydrator will increase capacity and produce hydrated lime more efficiently
than the current systems. The storage, screening and load-out facilities will
also substantially reduce the amount of time required for the loading of bulk
quicklime trucks and railcars. The planned modernization and expansion
project will increase both production and shipping capacity, will lower
operating costs and will allow for a more efficient utilization of the work
force.
The Company is not contractually committed to any planned capital
expenditures until actual orders are placed for equipment. As of March 31,
1998, the Company's liability for open equipment and construction orders, all
of which were related to the Texas modernization and expansion project,
totaled approximately $2,600,000. This amount, as well as other future
billings related to the Texas and Arkansas modernization and expansion
projects, will be recorded as work is performed and billed to the Company.
As of March 31, 1998, the Company had approximately $9,143,000 in total
debt outstanding under the amended and restated term loan, up from the
$3,238,000 at December 31, 1997. The additional borrowings in 1998 have been
used to partially fund the modernization and expansion project at the Texas
facility.
8
<PAGE> 9
Results of Operations
- ---------------------
Revenues decreased from $7,808,000 in the first quarter of 1997 to
$6,469,000 in the first quarter of 1998, a decrease of $1,339,000, or 17.1%.
Excluding 1997 revenues from Corson, revenues for the three months ended March
31, 1998 increased by $560,000, or 9.5%, from 1997, resulting from a 9.9%
increase in sales volume, primarily at the Texas facility, which was partially
offset by 0.4% decrease in prices.
The Company's gross profit was $1,276,000 in the first quarter of 1998,
compared to $595,000 in the first quarter of 1997, a 114.5% increase. Gross
profit margin as a percentage of revenues for the first quarter of 1998
increased to 19.7% from 7.6% in 1997. The improved gross profit and gross
profit margins were attributable to eliminating the high production costs at
the Corson facility. The favorable impact resulting from the elimination of
the Corson operations was partially offset by higher fuel costs in 1998 at
both the Texas and Arkansas facilities.
Selling, general and administrative expenses ("SG&A") decreased by
$190,000, or 17.0%, to $926,000 in the first quarter of 1998, as compared to
$1,116,000 in the first quarter of 1997. The SG&A decrease was primarily
attributable to the shut down of the Corson operations after the sale in June
1997. As a percent of sales, SG&A remained constant at 14.3%.
Interest expense in the first quarter of 1998 was $3,000 as compared to
$133,000 in 1997. This decrease was attributable to the capitalization of
substantially all interest costs as part of the Texas modernization and
expansion project. Interest costs of approximately $101,000 were capitalized
in the first quarter of 1998.
The Company reported net income of $303,000 ($0.08 per share) during the
first quarter of 1998, compared to a net loss of $488,000 ($0.12 per share)
during the first quarter of 1997. Net income for the quarter was favorably
impacted by the elimination of high production costs at Corson and increased
sales volume at the Texas facility.
9
<PAGE> 10
PART II. OTHER INFORMATION
ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K
--------------------------------
a. Exhibits:
10 International Swap Dealers Association Master
Agreement dated as of April 3, 1998 among CoreStates
Bank, N.A. and the Company.
11 Statement re computation of per share earnings (loss)
27 Financial Data Schedule
b. Reports on Form 8-K:
The Company filed no Reports on Form 8-K during the
quarter ended March 31, 1998.
10
<PAGE> 11
SIGNATURES
Pursuant to the requirements 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.
UNITED STATES LIME & MINERALS, INC.
April 27, 1998 By: \s\ Timothy W. Byrne
-------------------------
Timothy W. Byrne
President, Chief Executive Officer
and Chief Financial Officer
11
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UNITED STATES LIME & MINERALS, INC.
Quarterly Report on Form 10-Q
Quarter Ended
March 31, 1998
Index to Exhibits
Exhibit No. Exhibit
----------- ---------------------------------------------------
10 International Swap Dealers Association Master
Agreement dated as of April 3, 1998 among CoreStates
Bank, N.A. and the Company.
11 Statement re computation of per share earnings (loss)
27 Financial Data Schedule
E - 1
<PAGE> 1
(Local Currency-Single Jurisdiction)
ISDA(R)
International Swap Dealers Association, Inc.
MASTER AGREEMENT
dated as of April 3, 1998
CORESTATES BANK, N.A. and UNITED STATES LIME & MINERALS, INC.
- -------------------------------- ---------------------------------------
have entered and/or anticipate entering into one or more transactions (each a
"Transaction") that are or will be governed by this Master Agreement, which
includes the schedule (the "Schedule"), and the documents and other confirming
evidence (each a "Confirmation") exchanged between the parties confirming
those Transactions.
Accordingly, the parties agree as follows: -
1. Interpretation
(a) Definitions. The terms defined in Section 12 and in the Schedule will
have the meanings therein specified for the purpose of this Master Agreement.
(b) Inconsistency. In the event of any inconsistency between the provisions
of the Schedule and the other provisions of this Master Agreement, the
Schedule will prevail. In the event of any inconsistency between the
provisions of any Confirmation and this Master Agreement (including the
Schedule), such Confirmation will prevail for the purpose of the relevant
Transaction.
(c) Single Agreement. All Transactions are entered into in reliance on the
fact that this Master Agreement and all Confirmations form a single agreement
between the parties (collectively referred to as this "Agreement"), and the
parties would not otherwise enter into any Transactions.
2. Obligations
(a) General Conditions.
(i) Each party will make each payment or delivery specified in each
Confirmation to be made by it, subject to the other provisions of this
Agreement.
(ii) Payments under this Agreement will be made on the due date for
value on that date in the place of the account specified in the
relevant Confirmation or otherwise pursuant to this Agreement, in
freely transferable funds and in the manner customary for payments in
the required currency. Where settlement is by delivery (that is, other
than by payment), such delivery will be made for receipt on the due
date in the manner customary for the relevant obligation unless
otherwise specified in the relevant Confirmation or elsewhere in this
Agreement.
<PAGE> 2
(iii) Each obligation of each party under Section 2(a)(i) is subject
to (1) the condition precedent that no Event of Default or Potential
Event of Default with respect to the other party has occurred and is
continuing, (2) the condition precedent that no Early Termination Date
in respect of the relevant Transaction has occurred or been effectively
designated and (3) each other applicable condition precedent specified
in this Agreement.
(b) Change of Account. Either party may change its account for receiving a
payment or delivery by giving notice to the other party at least five Local
Business Days prior to the scheduled date for the payment or delivery to which
such change applies unless such other party gives timely notice of a
reasonable objection to such change.
(c) Netting. If on any date amounts would otherwise be payable: -
(i) in the same currency; and
(ii) in respect of the same Transaction,
by each party to the other, then, on such date, each party's obligation to
make payment of any such amount will be automatically satisfied and discharged
and, if the aggregate amount that would otherwise have been payable by one
party exceeds the aggregate amount that would otherwise have been payable by
the other party, replaced by an obligation upon the party by whom the larger
aggregate amount would have been payable to pay to the other party the excess
of the larger aggregate amount over the smaller aggregate amount.
The parties may elect in respect of two or more Transactions that a net amount
will be determined in respect of all amounts payable on the same date in the
same currency in respect of such Transactions, regardless of whether such
amounts are payable in respect of the same Transaction. The election may be
made in the Schedule or a Confirmation by specifying that subparagraph (ii)
above will not apply to the Transactions identified as being subject to the
election, together with the starting date (in which case subparagraph (ii)
above will not, or will cease to, apply to such Transactions from such date).
This election may be made separately for different groups of Transactions and
will apply separately to each pairing of branches or offices through which the
parties make and receive payments or deliveries.
(d) Default Interest; Other Amounts. Prior to the occurrence or effective
designation of an Early Termination Date in respect of the relevant
Transaction, a party that defaults in the performance of any payment
obligation will, to the extent permitted by law and subject to Section 6(c),
be required to pay interest (before as well as after judgment) on the overdue
amount to the other party on demand in the same currency as such overdue
amount, for the period from (and including) the original due date for payment
to (but excluding) the date of actual payment, at the Default Rate. Such
interest will be calculated on the basis of daily compounding and the actual
number of days elapsed. If, prior to the occurrence or effective designation
of an Early Termination Date in respect of the relevant Transaction, a party
defaults in the performance of any obligation required to be settled by
delivery, it will compensate the other party on demand if and to the extent
provided for in the relevant Confirmation or elsewhere in this Agreement.
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<PAGE> 3
3. Representations
Each party represents to the other party (which representations will be deemed
to be repeated by each party on each date on which a Transaction is entered
into) that: -
(a) Basic Representations.
(i) Status. It is duly organized and validly existing under the laws
of the jurisdiction of its organization or incorporation and, if
relevant under such laws, in good standing;
(ii) Powers. It has the power to execute this Agreement and any other
documentation relating to this Agreement to which it is a party, to
deliver this Agreement and any other documentation relating to this
Agreement that it is required by this Agreement to deliver and to
perform its obligations under this Agreement and any obligations it has
under any Credit Support Document to which it is a party and has taken
all necessary action to authorize such execution, delivery and
performance;
(iii) No Violation or Conflict. Such execution, delivery and
performance do not violate or conflict with any law applicable to it,
any provision of its constitutional documents, any order or judgment of
any court or other agency of government applicable to it or any of its
assets or any contractual restriction binding on or affecting it or any
of its assets;
(iv) Consents. All governmental and other consents that are required
to have been obtained by it with respect to this Agreement or any
Credit Support Document to which it is a party have been obtained and
are in full force and effect and all conditions of any such consents
have been complied with; and
(v) Obligations Binding. Its obligations under this Agreement and any
Credit Support Document to which it is a party constitute its legal,
valid and binding obligations, enforceable in accordance with their
respective terms (subject to applicable bankruptcy, reorganization,
insolvency, moratorium or similar laws affecting creditors' rights
generally and subject, as to enforceability, to equitable principles of
general application (regardless of whether enforcement is sought in a
proceeding in equity or at law)).
(b) Absence of Certain Events. No Event of Default or Potential Event of
Default or, to its knowledge, Termination Event with respect to it has
occurred and is continuing and no such event or circumstance would occur as a
result of its entering into or performing its obligations under this Agreement
or any Credit Support Document to which it is a party.
(c) Absence of Litigation. There is not pending or, to its knowledge,
threatened against it or any of its Affiliates any action, suit or proceeding
at law or in equity or before any court, tribunal, governmental body, agency
or official or any arbitrator that is likely to affect the legality, validity
3
<PAGE> 4
or enforceability against it of this Agreement or any Credit Support Document
to which it is a party or its ability to perform its obligations under this
Agreement or such Credit Support Document.
(d) Accuracy of Specified Information. All applicable information that is
furnished in writing by or on behalf of it to the other party and is
identified for the purpose of this Section 3(d) in the Schedule is, as of the
date of the information, true, accurate and complete in every material
respect.
4. Agreements
Each party agrees with the other that, so long as either party has or may have
any obligation under this Agreement or under any Credit Support Document to
which it is a party: -
(a) Furnish Specified Information. It will deliver to the other party any
forms, documents or certificates specified in the Schedule or any Confirmation
by the date specified in the Schedule or such Confirmation or, if none is
specified, as soon as reasonably practicable.
(b) Maintain Authorizations. It will use all reasonable efforts to maintain
in full force and effect all consents of any governmental or other authority
that are required to be obtained by it with respect to this Agreement or any
Credit Support Document to which it is a party and will use all reasonable
efforts to obtain any that may become necessary in the future.
(c) Comply with Laws. It will comply in all material respects with all
applicable laws and orders to which it may be subject if failure so to comply
would materially impair its ability to perform its obligations under this
Agreement or any Credit Support Document to which it is a party.
5. Events of Default and Termination Events
(a) Events of Default. The occurrence at any time with respect to a party or,
if applicable, any Credit Support Provider of such party or any Specified
Entity of such party of any of the following events constitutes an event of
default (an "Event of Default") with respect to such party: -
(i) Failure to Pay or Deliver. Failure by the party to make, when
due, any payment under this Agreement or delivery under Section 2(a)(i)
or 2(d) required to be made by it if such failure is not remedied on or
before the third Local Business Day after notice of such failure is
given to the party;
(ii) Breach of Agreement. Failure by the party to comply with or
perform any agreement or obligation (other than an obligation to make
any payment under this Agreement or delivery under Section 2(a)(i) or
2(d) or to give notice of a Termination Event) to be complied with or
performed by the party in accordance with this Agreement if such
failure is not remedied on or before the thirtieth day after notice of
such failure is given to the party;
4
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(iii) Credit Support Default.
(1) Failure by the party or any Credit Support Provider of such
party to comply with or perform any agreement or obligation to be
complied with or performed by it in accordance with any Credit
Support Document if such failure is continuing after any applicable
grace period has elapsed;
(2) the expiration or termination of such Credit Support Document
or the failing or ceasing of such Credit Support Document to be in
full force and effect for the purpose of this Agreement (in either
case other than in accordance with its terms) prior to the
satisfaction of all obligations of such party under each Transaction
to which such Credit Support Document relates without the written
consent of the other party; or
(3) the party or such Credit Support Provider disaffirms,
disclaims, repudiates or rejects, in whole or in part, or challenges
the validity of, such Credit Support Document;
(iv) Misrepresentation. A representation made or repeated or deemed to
have been made or repeated by the party or any Credit Support Provider
of such party in this Agreement or any Credit Support Document proves to
have been incorrect or misleading in any material respect when made or
repeated or deemed to have been made or repeated;
(v) Default under Specified Transaction. The party, any Credit Support
Provider of such party or any applicable Specified Entity of such party
(1) defaults under a Specified Transaction and, after giving effect to
any applicable notice requirement or grace period, there occurs a
liquidation of, an acceleration of obligations under, or an early
termination of, that Specified Transaction, (2) defaults, after giving
effect to any applicable notice requirement or grace period, in making
any payment or delivery due on the last payment, delivery or exchange
date of, or any payment on early termination of, a Specified Transaction
(or such default continues for at least three Local Business Days if
there is no applicable notice requirement or grace period) or (3)
disaffirms, disclaims, repudiates or rejects, in whole or in part, a
Specified Transaction (or such action is taken by any person or entity
appointed or empowered to operate it or act on its behalf);
(vi) Cross Default. If "Cross Default" is specified in the Schedule as
applying to the party, the occurrence or existence of (1) a default,
event of default or other similar condition or event (however described)
in respect of such party, any Credit Support Provider of such party or
any applicable Specified Entity of such party under one or more
agreements or instruments relating to Specified Indebtedness of any of
them (individually or collectively) in an aggregate amount of not less
than the applicable Threshold Amount (as specified in the Schedule)
which has resulted in such Specified Indebtedness becoming, or becoming
capable at such time of being declared, due and payable under such
agreements or instruments, before it would otherwise have been due and
payable or (2) a default by such party, such Credit Support Provider or
such Specified Entity (individually or collectively) in making one or
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more payments on the due date thereof in an aggregate amount of not less
than the applicable Threshold Amount under such agreements or
instruments (after giving effect to any applicable notice requirement or
grace period);
(vii) Bankruptcy. The party, any Credit Support Provider of such party
or any applicable Specified Entity of such party: -
(1) is dissolved (other than pursuant to a consolidation,
amalgamation or merger); (2) becomes insolvent or is unable to pay
its debts or fails or admits in writing its inability generally to
pay its debts as they become due; (3) makes a general assignment,
arrangement or composition with or for the benefit of its creditors;
(4) institutes or has instituted against it a proceeding seeking a
judgment of insolvency or bankruptcy or any other relief under any
bankruptcy or insolvency law or other similar law affecting
creditors' rights, or a petition is presented for its winding-up or
liquidation, and, in the case of any such proceeding or petition
instituted or presented against it, such proceeding or petition (A)
results in a judgment of insolvency or bankruptcy or the entry of an
order for relief or the making of an order for its winding-up or
liquidation or (B) is not dismissed, discharged, stayed or
restrained in each case within 30 days of the institution or
presentation thereof; (5) has a resolution passed for its winding-
up, official management or liquidation (other than pursuant to a
consolidation, amalgamation or merger); (6) seeks or becomes subject
to the appointment of an administrator, provisional liquidator,
conservator, receiver, trustee, custodian or other similar official
for it or for all or substantially all its assets; (7) has a secured
party take possession of all or substantially all its assets or has
a distress, execution, attachment, sequestration or other legal
process levied, enforced or sued on or against all or substantially
all its assets and such secured party maintains possession, or any
such process is not dismissed, discharged, stayed or restrained, in
each case within 30 days thereafter; (8) causes or is subject to any
event with respect to it which, under the applicable laws of any
jurisdiction, has an analogous effect to any of the events specified
in clauses (1) to (7) (inclusive); or (9) takes any action in
furtherance of, or indicating its consent to, approval of, or
acquiescence in, any of the foregoing acts; or
(viii) Merger Without Assumption. The party or any Credit Support
Provider of such party consolidates or amalgamates with, or merges with
or into, or transfers all or substantially all its assets to, another
entity and, at the time of such consolidation, amalgamation, merger or
transfer: -
(1) the resulting, surviving or transferee entity fails to assume
all the obligations of such party or such Credit Support Provider
under this Agreement or any Credit Support Document to which it or
its predecessor was a party by operation of law or pursuant to an
agreement reasonably satisfactory to the other party to this
Agreement; or
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(2) the benefits of any Credit Support Document fail to extend
(without the consent of the other party) to the performance by such
resulting, surviving or transferee entity of its obligations under
this Agreement.
(b) Termination Events. The occurrence at any time with respect to a party
or, if applicable, any Credit Support Provider of such party or any Specified
Entity of such party of any event specified below constitutes an Illegality if
the event is specified in (i) below, and, if specified to be applicable, a
Credit Event Upon Merger if the event is specified pursuant to (ii) below or
an Additional Termination Event if the event is specified pursuant to (iii)
below: -
(i) Illegality. Due to the adoption of, or any change ii), any
applicable law after the date on which a Transaction is entered into,
or due to the promulgation of, or any change in, the interpretation by
any court, tribunal or regulatory authority with competent jurisdiction
of any applicable law after such date, it becomes unlawful (other than
as a result of a breach by the party of Section 4(b)) for such party
(which will be the Affected Party): -
(1) to perform any absolute or contingent obligation to make a
payment or delivery or to receive a payment or delivery in respect
of such Transaction or to comply with any other material provision
of this Agreement relating to such Transaction; or
(2) to perform, or for any Credit Support Provider of such party to
perform, any contingent or other obligation which the party (or such
Credit Support Provider) has under any Credit Support Document
relating to such Transaction;
(ii) Credit Event Upon Merger. If "Credit Event Upon Merger" is
specified in the Schedule as applying to the party, such party ("X"),
any Credit Support Provider of X or any applicable Specified Entity of
X consolidates or amalgamates with, or merges with or into, or
transfers all or substantially all its assets to, another entity and
such action does not constitute an event described in Section
5(a)(viii) but the creditworthiness of the resulting, surviving or
transferee entity is materially weaker than that of X, such Credit
Support Provider or such Specified Entity, as the case may be,
immediately prior to such action (and, in such event, X or its
successor or transferee, as appropriate, will be the Affected Party);
or
(iii) Additional Termination Event. If any "Additional Termination
Event" is specified in the Schedule or any Confirmation as applying,
the occurrence of such event (and, in such event, the Affected Party or
Affected Parties shall be as specified for such Additional Termination
Event in the Schedule or such Confirmation).
(c) Event of Default and Illegality. If an event or circumstance which would
otherwise constitute or give rise to an Event of Default also constitutes an
Illegality, it will be treated as an Illegality and will not constitute an
Event of Default.
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6. Early Termination
(a) Right to Terminate Following Event of Default. If at any time an Event of
Default with respect to a party (the "Defaulting Party") has occurred and is
then continuing, the other party (the "Non-defaulting Party") may, by not more
than 20 days notice to the Defaulting Party specifying the relevant Event of
Default, designate a day not earlier than the day such notice is effective as
an Early Termination Date in respect of all outstanding Transactions. If,
however, "Automatic Early Termination" is specified in the Schedule as
applying to a party, then an Early Termination Date in respect of all
outstanding Transactions will occur immediately upon the occurrence with
respect to such party of an Event of Default specified in Section
5(a)(vii)(1), (3), (5), (6) or, to the extent analogous thereto, (8), and as
of the time immediately preceding the institution of the relevant proceeding
or the presentation of the relevant petition upon the occurrence with respect
to such party of an Event of Default specified in Section 5(a)(vii)(4) or, to
the extent analogous thereto, (8).
(b) Right to Terminate Following Termination Event.
(i) Notice. If a Termination Event occurs, an Affected Party will,
promptly upon becoming aware of it, notify the other party, specifying
the nature of that Termination Event and each Affected Transaction and
will also give such other information about that Termination Event as
the other party may reasonably require.
(ii) Two Affected Parties. If an Illegality under Section 5(b)(i)(1)
occurs and there are two Affected Parties, each party will use all
reasonable efforts to reach agreement within 30 days after notice
thereof is given under Section 6(b)(i) on action to avoid that
Termination Event.
(iii) Right to Terminate. If: -
(1) an agreement under Section 6(b)(ii) has not been effected with
respect to all Affected Transactions within 30 days after an
Affected Party gives notice under Section 6(b)(i); or
(2) an Illegality other than that referred to in Section 6(b)(ii),
a Credit Event Upon Merger or an Additional Termination Event
occurs,
either party in the case of an Illegality, any Affected Party in the
case of an Additional Termination Event if there is more than one
Affected Party, or the party which is not the Affected Party in the
case of a Credit Event Upon Merger or an Additional Termination Event
if there is only one Affected Party may, by not more than 20 days
notice to the other party and provided that the relevant Termination
Event is then continuing, designate a day not earlier than the day such
notice is effective as an Early Termination Date in respect of all
Affected Transactions.
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(c) Effect of Designation.
(i) If notice designating an Early Termination Date is given under
Section 6(a) or (b), the Early Termination Date will occur on the date
so designated, whether or not the relevant Event of Default or
Termination Event is then continuing.
(ii) Upon the occurrence or effective designation of an Early
Termination Date, no further payments or deliveries under Section
2(a)(i) or 2(d) in respect of the Terminated Transactions will be
required to be made, but without prejudice to the other provisions of
this Agreement. The amount, if any, payable in respect of an Early
Termination Date shall be determined pursuant to Section 6(e).
(d) Calculations.
(i) Statement. On or as soon as reasonably practicable following the
occurrence of an Early Termination Date, each party will make the
calculations on its part, if any, contemplated by Section 6(e) and will
provide to the other party a statement (1) showing, in reasonable
detail, such calculations (including all relevant quotations and
specifying any amount payable under Section 6(e)) and (2) giving
details of the relevant account to which any amount payable to it is to
be paid. In the absence of written confirmation from the source of a
quotation obtained in determining a Market Quotation, the records of
the party obtaining such quotation will be conclusive evidence of the
existence and accuracy of such quotation.
(ii) Payment Date. An amount calculated as being due in respect of any
Early Termination Date under Section 6(e) will be payable on the day
that notice of the amount payable is effective (in the case of an Early
Termination Date which is designated or occurs as a result of an Event
of Default) and on the day which is two Local Business Days after the
day on which notice of the amount payable is effective (in the case of
an Early Termination Date which is designated as a result of a
Termination Event). Such amount will be paid together with (to the
extent permitted under applicable law) interest thereon (before as well
as after judgment), from (and including) the relevant Early Termination
Date to (but excluding) the date such amount is paid, at the Applicable
Rate. Such interest will be calculated on the basis of daily
compounding and the actual number of days elapsed.
(e) Payments on Early Termination. If an Early Termination Date occurs, the
following provisions shall apply based on the parties' election in the
Schedule of a payment measure, either "Market Quotation" or "Loss", and a
payment method, either the "First Method" or the "Second Method". If the
parties fail to designate a payment measure or payment method in the Schedule,
it will be deemed that "Market Quotation" or the "Second Method", as the case
may be, shall apply. The amount, if any, payable in respect of an Early
Termination Date and determined pursuant to this Section will be subject to
any Set-off.
(i) Events of Default. If the Early Termination Date results from an
Event of Default: -
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(1) First Method and Market Quotation. If the First Method and
Market Quotation apply, the Defaulting Party will pay to the Non-
defaulting Party the excess, if a positive number, of (A) the sum of
the Settlement Amount (determined by the Non-defaulting Party) in
respect of the Terminated Transactions and the Unpaid Amounts owing
to the Non-defaulting Party over (B) the Unpaid Amounts owing to
the Defaulting Party.
(2) First Method and Loss. If the First Method and Loss apply, the
Defaulting Party will pay to the Non-defaulting Party, if a positive
number, the Non-defaulting Party's Loss in respect of this
Agreement.
(3) Second Method and Market Quotation. If the Second Method and
Market Quotation apply, an amount will be payable equal to (A) the
sum of the Settlement Amount (determined by the Non-defaulting
Party) in respect of the Terminated Transactions and the Unpaid
Amounts owing to the Non-defaulting Party less (B) the Unpaid
Amounts owing to the Defaulting Party. If that amount is a positive
number, the Defaulting Party will pay it to the Non-defaulting
Party; if it is a negative number, the Non-defaulting Party will pay
the absolute value of that amount to the Defaulting Party.
(4) Second Method and Loss. If the Second Method and Loss apply, an
amount will be payable equal to the Non-defaulting Party's Loss in
respect of this Agreement. If that amount is a positive number, the
Defaulting Party will pay it to the Non-defaulting Party; if it is a
negative number, the Non-defaulting Party will pay the absolute
value of that amount to the Defaulting Party.
(ii) Termination Events. If the Early Termination Date results from a
Termination Event: -
(1) One Affected Party. If there is one Affected Party, the amount
payable will be determined in accordance with Section 6(e)(i)(3), if
Market Quotation applies, or Section 6(e)(i)(4), if Loss applies,
except that, in either case, references to the Defaulting Patty and
to the Non-defaulting Party will be deemed to be references to the
Affected Party and the party which is not the Affected Party,
respectively, and, if Loss applies and fewer than all the
Transactions are being terminated, Loss shall be calculated in
respect of all Terminated Transactions.
(2) Two Affected Parties. If there are two Affected Parties: -
(A) if Market Quotation applies, each party will determine a
Settlement Amount in respect of the Terminated Transactions,
and an amount will be payable equal to (I) the sum of (a) one-
half of the difference between the Settlement Amount of the
party with the higher Settlement Amount ("X") and the
Settlement Amount of the party with the lower Settlement Amount
("Y") and (b) the Unpaid Amounts owing to X less (II) the
Unpaid Amounts owing to Y; and
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(B) if Loss applies, each party will determine its Loss in
respect of this Agreement (or, if fewer than all the
Transactions are being terminated, in respect of all Terminated
Transactions) and an amount will be payable equal to one-half
of the difference between the Loss of the party with the higher
Loss ("X") and the Loss of the party with the lower Loss ("Y").
If the amount payable is a positive number, Y will pay it to X; if
it is a negative number, X will pay the absolute value of that
amount to Y.
(iii) Adjustment for Bankruptcy. In circumstances where an Early
Termination Date occurs because "Automatic Early Termination" applies
in respect of a party, the amount determined under this Section 6(e)
will be subject to such adjustments as are appropriate and permitted by
law to reflect any payments or deliveries made by one party to the
other under this Agreement (and retained by such other party) during
the period from the relevant Early Termination Date to the date for
payment determined under Section 6(d)(ii).
(iv) Pre-Estimate. The parties agree that if Market Quotation applies
an amount recoverable under this Section 6(e) is a reasonable pre-
estimate of loss and not a penalty. Such amount is payable for the loss
of bargain and the loss of protection against future risks and except
as otherwise provided in this Agreement neither party will be entitled
to recover any additional damages as a consequence of such losses.
7. Transfer
Neither this Agreement nor any interest or obligation in or under this
Agreement may be transferred (whether by way of security or otherwise) by
either party without the prior written consent of the other party, except
that: -
(a) a party may make such a transfer of this Agreement pursuant to a
consolidation or amalgamation with, or merger with or into, or transfer of all
or substantially all its assets to, another entity (but without prejudice to
any other right or remedy under this Agreement); and
(b) a party may make such a transfer of all or any part of its interest in
any amount payable to it from a Defaulting Party under Section 6(e).
Any purported transfer that is not in compliance with this Section will be
void.
8. Miscellaneous
(a) Entire Agreement. This Agreement constitutes the entire agreement and
understanding of the parties with respect to its subject matter and supersedes
all oral communication and prior writings with respect thereto.
(b) Amendments. No amendment, modification or waiver in respect of this
Agreement will be effective unless in writing (including a writing evidenced
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by a facsimile transmission) and executed by each of the parties or confirmed
by an exchange of telexes or electronic messages on an electronic messaging
system.
(c) Survival of Obligations. Without prejudice to Sections 2(a)(iii) and
6(c)(ii), the obligations of the parties under this Agreement will survive the
termination of any Transaction.
(d) Remedies Cumulative. Except as provided in this Agreement, the rights,
powers, remedies and privileges provided in this Agreement are cumulative and
not exclusive of any rights, powers, remedies and privileges provided by law.
(e) Counterparts and Confirmations.
(i) This Agreement (and each amendment, modification and waiver in
respect of it) may be executed and delivered in counterparts (including
by facsimile transmission), each of which will be deemed an original.
(ii) The parties intend that they are legally bound by the terms of
each Transaction from the moment they agree to those terms (whether
orally or otherwise). A Confirmation shall be entered into as soon as
practicable and may be executed and delivered in counterparts
(including by facsimile transmission) or be created by an exchange of
telexes or by an exchange of electronic messages on an electronic
messaging system, which in each case will be sufficient for all
purposes to evidence a binding supplement to this Agreement. The
parties will specify therein or through another effective means that
any such counterpart, telex or electronic message constitutes a
Confirmation.
(f) No Waiver of Rights. A failure or delay in exercising any right, power or
privilege in respect of this Agreement will not be presumed to operate as a
waiver, and a single or partial exercise of any right, power or privilege will
not be presumed to preclude any subsequent or further exercise, of that right,
power or privilege or the exercise of any other right, power or privilege.
(g) Headings. The headings used in this Agreement are for convenience of
reference only and are not to affect the construction of or to be taken into
consideration in interpreting this Agreement.
9. Expenses
A Defaulting Party will, on demand, indemnify and hold harmless the other
party for and against all reasonable out-of-pocket expenses, including legal
fees, incurred by such other party by reason of the enforcement and protection
of its rights under this Agreement or any Credit Support Document to which the
Defaulting Party is a party or by reason of the early termination of any
Transaction, including, but not limited to, costs of collection.
10. Notices
(a) Effectiveness. Any notice or other communication in respect of this
Agreement may be given in any manner set forth below (except that a notice or
other communication under Section 5 or 6 may not be given by facsimile
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transmission or electronic messaging system) to the address or number or in
accordance with the electronic messaging system details provided (see the
Schedule) and will be deemed effective as indicated: -
(i) if in writing and delivered in person or by courier, on the date
it is delivered;
(ii) if sent by telex, on the date the recipient's answer back is
received;
(iii) if sent by facsimile transmission, on the date that transmission
is received by a responsible employee of the recipient in legible form
(it being agreed that the burden of proving receipt will be on the
sender and will not be met by a transmission report generated by the
sender's facsimile machine);
(iv) if sent by certified or registered mail (airmail, if overseas) or
the equivalent (return receipt requested), on the date that mail is
delivered or its delivery is attempted; or
(v) if sent by electronic messaging system, on the date that
electronic message is received,
unless the date of that delivery (or attempted delivery) or that receipt, as
applicable, is not a Local Business Day or that communication is delivered (or
attempted) or received, as applicable, after the close of business on a Local
Business Day, in which case that communication shall be deemed given and
effective on the first following day that is a Local Business Day.
(b) Change of Addresses. Either party may by notice to the other change the
address, telex or facsimile number or electronic messaging system details at
which notices or other communications are to be given to it.
11. Governing Law and Jurisdiction
(a) Governing Law. This Agreement will be governed by and construed in
accordance with the law specified in the Schedule.
(b) Jurisdiction. With respect to any suit, action or proceedings relating to
this Agreement ("Proceedings"), each party irrevocably:-
(i) submits to the jurisdiction of the English courts, if this
Agreement is expressed to be governed by English law, or to the non-
exclusive jurisdiction of the courts of the State of New York and the
United States District Court located in the Borough of Manhattan in New
York City, if this Agreement is expressed to be governed by the laws of
the State of New York; and
(ii) waives any objection which it may have at any time to the laying
of venue of any Proceedings brought in any such court, waives any claim
that such Proceedings have been brought in an inconvenient forum and
further waives the right to object, with respect to such Proceedings,
that such court does not have any jurisdiction over such party.
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Nothing in this Agreement precludes either party from bringing Proceedings in
any other jurisdiction (outside, if this Agreement is expressed to be governed
by English law, the Contracting States, as defined in Section 1(3) of the
Civil Jurisdiction and Judgments Act 1982 or any modification, extension or
re-enactment thereof for the time being in force) nor will the bringing of
Proceedings in any one or more jurisdictions preclude the bringing of
Proceedings in any other jurisdiction.
(c) Waiver of Immunities. Each party irrevocably waives, to the fullest
extent permitted by applicable law, with respect to itself and its revenues
and assets (irrespective of their use or intended use), all immunity on the
grounds of sovereignty or other similar grounds from (i) suit, (ii)
jurisdiction of any court, (iii) relief by way of injunction, order for
specific performance or for recovery of property, (iv) attachment of its
assets (whether before or after judgment) and (v) execution or enforcement of
any judgment to which it or its revenues or assets might otherwise be entitled
in any Proceedings in the courts of any jurisdiction and irrevocably agrees,
to the extent permitted by applicable law, that it will not claim any such
immunity in any Proceedings.
12. Definitions
As used in this Agreement: -"Additional Termination Event" has the meaning
specified in Section 5(b).
"Affected Party" has the meaning specified in Section 5(b).
"Affected Transactions" means (a) with respect to any Termination Event
consisting of an Illegality, all Transactions affected by the occurrence of
such Termination Event and (b) with respect to any other Termination Event,
all Transactions.
"Affiliate" means, subject to the Schedule, in relation to any person, any
entity controlled, directly or indirectly, by the person, any entity that
controls, directly or indirectly, the person or any entity directly or
indirectly under common control with the person. For this purpose, "control"
of any entity or person means ownership of a majority of the voting power of
the entity or person.
"Applicable Rate" means: -
(a) in respect of obligations payable or deliverable (or which would have
been but for Section 2(a)(iii)) by a Defaulting Party, the Default Rate;
(b) in respect of an obligation to pay an amount under Section 6(e) of either
party from and after the date (determined in accordance with Section 6(d)(ii))
on which that amount is payable, the Default Rate;
(c) in respect of all other obligations payable or deliverable (or which
would have been but for Section 2(a)(iii)) by a Non-defaulting Party, the Non-
default Rate; and
(d) in all other cases, the Termination Rate.
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"consent" includes a consent, approval, action, authorization, exemption,
notice, filing, registration or exchange control consent.
"Credit Event Upon Merger" has the meaning specified in Section 5(b).
"Credit Support Document" means any agreement or instrument that is specified
as such in this Agreement.
"Credit Support Provider" has the meaning specified in the Schedule.
"Default Rate" means a rate per annum equal to the cost (without proof or
evidence of any actual cost) to the relevant payee (as certified by it) if it
were to fund or of funding the relevant amount plus 1% per annum.
"Defaulting Party" has the meaning specified in Section 6(a).
"Early Termination Date" means the date determined in accordance with Section
6(a) or 6(b)(iii).
"Event of Default" has the meaning specified in Section 5(a) and, if
applicable, in the Schedule.
"Illegality" has the meaning specified in Section 5(b).
"law" includes any treaty, law, rule or regulation and "lawful" and "unlawful"
will be construed accordingly.
"Local Business Day" means, subject to the Schedule, a day on which commercial
banks are open for business (including dealings in foreign exchange and
foreign currency deposits) (a) in relation to any obligation under Section
2(a)(i), in the place(s) specified in the relevant Confirmation or, if not so
specified, as otherwise agreed by the parties in writing or determined
pursuant to provisions contained, or incorporated by reference, in this
Agreement, (b) in relation to any other payment, in the place where the
relevant account is located, (c) in relation to any notice or other
communication, including notice contemplated under Section 5(a)(i), in the
city specified in the address for notice provided by the recipient and, in the
case of a notice contemplated by Section 2(b), in the place where the relevant
new account is to be located and (d) in relation to Section 5(a)(v)(2), in the
relevant locations for performance with respect to such Specified Transaction.
"Loss" means, with respect to this Agreement or one or more Terminated
Transactions, as the case may be, and a party, an amount that party reasonably
determines in good faith to be its total losses and costs (or gain, in which
case expressed as a negative number) in connection with this Agreement or that
Terminated Transaction or group of Terminated Transactions, as the case may
be, including any loss of bargain, cost of funding or, at the election of such
party but without duplication, loss or cost incurred as a result of its
terminating, liquidating, obtaining or reestablishing any hedge or related
trading position (or any gain resulting from any of them). Loss includes
losses and costs (or gains) in respect of any payment or delivery required to
have been made (assuming satisfaction of each applicable condition precedent)
on or before the relevant Early Termination Date and not made, except, so as
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to avoid duplication, if Section 6(e)(i)(1) or (3) or 6(e)(ii)(2)(A) applies.
Loss does not include a party's legal fees and out-of-pocket expenses referred
to under Section 9. A party will determine its Loss as of the relevant Early
Termination Date, or, if that is not reasonably practicable, as of the
earliest date thereafter as is reasonably practicable. A party may (but need
not) determine its Loss by reference to quotations of relevant rates or prices
from one or more leading dealers in the relevant markets.
"Market Quotation" means, with respect to one or more Terminated Transactions
and a party making the determination, an amount determined on the basis of
quotations from Reference Market-makers. Each quotation will be for an
amount, if any, that would be paid to such party (expressed as a negative
number) or by such party (expressed as a positive number) in consideration of
an agreement between such party (taking into account any existing Credit
Support Document with respect to the obligations of such party) and the
quoting Reference Market-maker to enter into a transaction (the "Replacement
Transaction") that would have the effect of preserving for such party the
economic equivalent of any payment or delivery (whether the underlying
obligation was absolute or contingent and assuming the satisfaction of each
applicable condition precedent) by the parties under Section 2(a)(i) in
respect of such Terminated Transaction or group of Terminated Transactions
that would, but for the occurrence of the relevant Early Termination Date,
have been required after that date. For this purpose, Unpaid Amounts in
respect of the Terminated Transaction or group of Terminated Transactions are
to be excluded but, without limitation, any payment or delivery that would,
but for the relevant Early Termination Date, have been required (assuming
satisfaction of each applicable condition precedent) after that Early
Termination Date is to be included. The Replacement Transaction would be
subject to such documentation as such party and the Reference Market-maker
may, in good faith, agree. The party making the determination (or its agent)
will request each Reference Market-maker to provide its quotation to the
extent reasonably practicable as of the same day and time (without regard to
different time zones) on or as soon as reasonably practicable after the
relevant Early Termination Date. The day and time as of which those quotations
are to be obtained will be selected in good faith by the party obliged to make
a determination under Section 6(e), and, if each party is so obliged, after
consultation with the other. If more than three quotations are provided, the
Market Quotation will be the arithmetic mean of the quotations, without regard
to the quotations having the highest and lowest values. If exactly three such
quotations are provided, the Market Quotation will be the quotation remaining
after disregarding the highest and lowest quotations. For this purpose, if
more than one quotation has the same highest value or lowest value, then one
of such quotations shall be disregarded. If fewer than three quotations are
provided, it will be deemed that the Market Quotation in respect of such
Terminated Transaction or group of Terminated Transactions cannot be
determined.
"Non-default Rate" means a rate per annum equal to the cost (without proof or
evidence of any actual cost) to the Non-defaulting Party (as certified by it)
if it were to fund the relevant amount.
"Non-defaulting Party" has the meaning specified in Section 6(a).
16
<PAGE> 17
"Potential Event of Default" means any event which, with the giving of notice
or the lapse of time or both, would constitute an Event of Default.
"Reference Market-makers" means four leading dealers in the relevant market
selected by the party determining a Market Quotation in good faith (a) from
among dealers of the highest credit standing which satisfy all the criteria
that such party applies generally at the time in deciding whether to offer or
to make an extension of credit and (b) to the extent practicable, from among
such dealers having an office in the same city.
"Scheduled Payment Date" means a date on which a payment or delivery is to be
made under Section 2(a)(i) with respect to a Transaction.
"Set-off" means set-off, offset, combination of accounts, right of retention
or withholding or similar right or requirement to which the payer of an amount
under Section 6 is entitled or subject (whether arising under this Agreement,
another contract, applicable law or otherwise) that is exercised by, or
imposed on, such payer.
"Settlement Amount" means, with respect to a party and any Early Termination
Date, the sum of: -
(a) the Market Quotations (whether positive or negative) for each Terminated
Transaction or group of Terminated Transactions for which a Market Quotation
is determined; and
(b) such party's Loss (whether positive or negative and without reference to
any Unpaid Amounts) for each Terminated Transaction or group of Terminated
Transactions for which a Market Quotation cannot be determined or would not
(in the reasonable belief of the party making the determination) produce a
commercially reasonable result.
"Specified Entity" has the meaning specified in the Schedule.
"Specified Indebtedness" means, subject to the Schedule, any obligation
(whether present or future, contingent or otherwise, as principal or surety or
otherwise) in respect of borrowed money.
"Specified Transaction" means, subject to the Schedule, (a) any transaction
(including an agreement with respect thereto) now existing or hereafter
entered into between one party to this Agreement (or any Credit Support
Provider of such party or any applicable Specified Entity of such party) and
the other party to this Agreement (or any Credit Support Provider of such
other party or any applicable Specified Entity of such other party) which is a
rate swap transaction, basis swap, forward rate transaction, commodity swap,
commodity option, equity or equity index swap, equity or equity index option,
bond option, interest rate option, foreign exchange transaction, cap
transaction, floor transaction, collar transaction, currency swap transaction,
cross-currency rate swap transaction, currency option or any other similar
transaction (including any option with respect to any of these transactions),
(b) any combination of these transactions and (c) any other transaction
identified as a Specified Transaction in this Agreement or the relevant
confirmation.
17
<PAGE> 18
"Terminated Transactions" means with respect to any Early Termination Date (a)
if resulting from a Termination Event, all Affected Transactions and (b) if
resulting from an Event of Default, all Transactions (in either case) in
effect immediately before the effectiveness of the notice designating that
Early Termination Date (or, if "Automatic Early Termination" applies,
immediately before that Early Termination Date).
"Termination Event" means an Illegality or, if specified to be applicable, a
Credit Event Upon Merger or an Additional Termination Event.
"Termination Rate" means a rate per annum equal to the arithmetic mean of the
cost (without proof or evidence of any actual cost) to each party (as
certified by such party) if it were to fund or of funding such amounts.
"Unpaid Amounts" owing to any party means, with respect to an Early
Termination Date, the aggregate of (a) in respect of all Terminated
Transactions, the amounts that became payable (or that would have become
payable but for Section 2(a)(iii)) to such party under Section 2(a)(i) on or
prior to such Early Termination Date and which remain unpaid as at such Early
Termination Date and (b) in respect of each Terminated Transaction, for each
obligation under Section 2(a)(i) which was (or would have been but for Section
2(a)(iii)) required to be settled by delivery to such party on or prior to
such Early Termination Date and which has not been so settled as at such Early
Termination Date, an amount equal to the fair market value of that which was
(or would have been) required to be delivered as of the originally scheduled
date for delivery, in each case together with (to the extent permitted under
applicable law) interest, in the currency of such amounts, from (and
including) the date such amounts or obligations were or would have been
required to have been paid or performed to (but excluding) such Early
Termination Date, at the Applicable Rate. Such amounts of interest will be
calculated on the basis of daily compounding and the actual number of days
elapsed. The fair market value of any obligation referred to in clause (b)
above shall be reasonably determined by the party obliged to make the
determination under Section 6(e) or, if each party is so obliged, it shall be
the average of the fair market values reasonably determined by both parties.
IN WITNESS WHEREOF the parties have executed this document on the respective
dates specified below with effect from the date specified on the first page of
this document.
CORESTATES BANK, N.A. UNITED STATES LIME & MINERALS, INC.
---------------------------- ------------------------------------
(Name of Party) (Name of Party)
By: \s\ William T. Breesmen By: \s\ F. Gene Winfield
---------------------------- -----------------------------
Name: William T. Breesmen Name: F. Gene Winfield
Title: Vice President Title: Treasurer
Date: April 3, 1998 Date: April 22, 1998
18
<PAGE> 19
SCHEDULE
to the
MASTER AGREEMENT
dated as of April 3, 1998 between
CORESTATES BANK, N.A. ("Party A")
and UNITED STATES LIME & MINERALS, INC. ("Party B")
I. Termination Provisions
----------------------
(a) "Specified Entity" for purposes of Section 5(a)(v) means each party's
Affiliates. If a party or any Credit Support Provider of a party is a
partnership, then for purposes of Sections 5(a)(v), 5(a)(vi), 5(a)(vii)
and 5(b)(ii), "Specified Entity" also means each general partner of that
partnership:
(b) "Specified Transaction" has its meaning as defined in Section 12,
provided that "Default under Specified Transaction" excludes Force
Majeure as defined below.
(c) "Cross Default" applies to both parties, but excludes Force Majeure.
"Force Majeure" means nonpayment resulting solely from a wire transfer or
operational problem or error (so long as sufficient funds are available),
or from the general unavailability of the relevant currency due to
exchange controls or other similar governmental action, but only if
payment is made within three Business Days after the problem has been
corrected, the error has been discovered or the currency becomes
available.
With respect to Party B, "Cross Default" is amended by inserting at the
end of Section 5(a)(vi): "or (3) any default, event of default or other
similar condition or event (however described) under any Financial
Agreement."
"Specified Indebtedness" means any obligation (whether present, future,
contingent or otherwise, as principal or surety or otherwise) in respect
of borrowed money or relating to the payment or delivery of funds,
securities or other property (including, without limitation, collateral).
"Threshold Amount" means, with respect to Party A, an amount (including
its equivalent in another currency) equal to the higher of $10,000,000 or
2% of its stockholders' equity as reflected on its most recent financial
statements or call reports, and with respect to Party B, any amount of
Specified Indebtedness.
(d) "Credit Event Upon Merger" applies to both parties.
(e) "Automatic Early Termination" does not apply to either party.
(f) Payments on Early Termination. "Market Quotation" and the "Second Method"
apply, subject to the following:
(i) "Market Quotation" for any Terminated Transaction that is, or is
subject to, any unexercised option shall be determined by taking into
account the economic equivalent of the option.
1
<PAGE> 20
(ii) The Non-defaulting Party may, upon the occurrence of an Early
Termination Date, offset payments due by it under this Agreement (or
under any Specified Transaction) against, and apply such payments to the
satisfaction of, any obligations owing by the Defaulting Party (including
any Office of the Defaulting Party) to the Non-defaulting Party or any of
the Non-defaulting Party's Affiliates (including any Office of the Non-
defaulting Party or its Affiliates) whether matured or unmatured, and it
is a condition precedent to the Non-defaulting Party's obligation to make
any such payments that such obligations of the Defaulting Party have been
paid in full or satisfied by offset as contemplated hereunder. For this
purpose, the Non-defaulting Party may convert any such payments or
obligations into the currency of the other at a rate of exchange
(including premiums and costs of exchange) at which it could purchase the
relevant currency acting in good faith.
II. Documents
---------
(a) Delivery of Documents. When it delivers this Agreement, Party B shall
also deliver to Party A the Closing Documents in form and substance
reasonably satisfactory to Party A. For each Transaction, Party B shall
deliver, promptly upon request, a duly executed incumbency certificate
for the person(s) executing the Confirmation for Party B for that
Transaction.
(b) "Closing Documents" means an opinion of counsel covering Party B's Basic
Representations under Section 3(a), or in lieu thereof, Party B's
Authorizing Documents for this Agreement and the Transaction(s) and a
duly executed incumbency certificate for the person(s) executing this
Agreement for Party B.
(c) "Authorizing Documents" of a party or its Credit Support Provider means a
certified copy of the board of directors' resolutions of that party' or
Credit Support Provider (or for a partnership, a copy of its partnership
agreement and a certified copy of the resolutions of the partnership or
of each general partner).
III. Miscellaneous
-------------
(a) Addresses for Notices.
To Party A: To Party B:
CORESTATES BANK, N.A. UNITED STATES LIME & MINERALS, INC.
1500 Market Street 12221 Merit Drive, Suite 500
Center Square West Dallas, TX 75251
P.O. Box 7618
FC 1-3-91-8
Philadelphia, PA 19101-7618
Attention: Wendy Havens Attention: Gene Winfield
Fax: (215) 973-8388 Fax: (972) 385-1340
Phone: (215) 973-2385 Phone: (972) 991-8400
2
<PAGE> 21
(b) "Calculation Agent" means Party A.
(c) "Credit Support Document" means each document which by its terms secures,
guarantees or otherwise supports Party' B's obligations hereunder from
time to time, whether or not this Agreement, any Transaction, or any type
of Transaction entered into hereunder is specifically referenced or
described in any such document.
"Credit Support Default" is amended by adding at the end of Section
5(a)(iii)(1):
", any default, event of default or other similar condition or event
(however described) exists under any Credit Support Document, any action
is taken to realize upon any collateral provided to secure such party's
obligations hereunder or under any Transaction, or the other party fails
at any time to have a valid and perfected first priority security
interest in any such collateral;"
(d) "Credit Support Provider" means each party' to a Credit Support Document
that provides or is obligated to provide security, a guaranty or other
credit support for Party B's obligations hereunder.
(e) "Affiliate" has its meaning as defined in Section 12, except for Party A
under Section 5(a)(v), "Affiliate" means CoreStates Financial
Corporation.
(f) Governing Law. This Agreement will be governed by and construed in
accordance with the law (and not the law of conflicts) of the State of
New York.
(g) Waiver of Jury Trial. To the extent permitted by applicable law, each
party irrevocably waives any and all right to trial by jury in any legal
proceeding in connection with this Agreement, any Credit Support Document
to which it is a party, or any Transaction.
(h) Netting of Payments. If payments are due by each party on the same day
under two or more Transactions, then Section 2(c)(ii) will not apply to
those payments if a party gives notice to the relevant Office(s) of the
other party on or before the second New York Business Day before that
payment date stating that those payments will be netted or, if given by
the Calculation Agent, stating the net amount due.
(i) Recorded Conversations. Each party may electronically record all
telephone conversations between them in connection with this Agreement or
any Transaction, and any such recordings may be submitted in evidence in
any proceeding to establish any matters pertinent to this Agreement or
any Transaction.
(j) Additional Representations. Section 3 is amended by adding the following
Sections 3(e) and 3(f):
"(e) for any Relevant Agreement: (i) it acts as principal and not as
agent, (ii) it acknowledges that the other party acts only at arm's
length and is not its agent, broker, advisor or fiduciary in any respect,
3
<PAGE> 22
and any agency, brokerage, advisory or fiduciary services that the other
party (or any of its affiliates) may otherwise provide to the party (or
to any of its affiliates) excludes the Relevant Agreement, (iii) it is
relying solely upon its own evaluation of the Relevant Agreement
(including the present and future results, consequences, risks, and
benefits thereof, whether financial, accounting, tax, legal, or
otherwise) and upon advice from its own professional advisors, (iv) it
understands the Relevant Agreement and those risks, has determined they
are appropriate for it, and willingly assumes those risks, and (v) it has
not relied and will not be relying upon any evaluation or advice
(including any recommendation, opinion, or representation) from the other
party, its affiliates or the representatives or advisors of the other
party or its affiliates (except representations expressly made in the
Relevant Agreement or an opinion of counsel required thereunder).
"Relevant Agreement" means this Agreement, each Transaction, each
Confirmation, any Credit Support Document, and any agreement (including
any amendment, modification, transfer or early termination) between the
parties relating thereto or to any Transaction.
(f) it is an "eligible swap participant" within the meaning of 17 C.F.R.
"35.1."
(k) Joint Party. If more than one entity or natural person is executing
this Agreement as Party B, then (i) the obligations of Party B hereunder
and under each Transaction shall be the joint and several obligations of
each such entity or natural person, (ii) any Event of Default or
Potential Event of Default occurring with respect to any such entity or
natural person shall be an Event of Default or Potential Event of
Default, respectively, with respect to Party B, (iii) the death, release
or discharge, in whole or in part, of any such entity or natural person,
or the occurrence of any bankruptcy, liquidation, dissolution or any
other event described in Section 5(a)(vii) with respect to any such
entity or natural person, shall not discharge or affect the liabilities
of any other such entity or natural person; (iv) unless the context
otherwise requires, each reference herein or in any Confirmation to
"party" shall, as applied to Party B, be construed as a joint and
several reference to each such entity or natural person; and (v) any
person or entity receiving notices given to Party B at the address shown
above shall be deemed to receive such notices on behalf of each such
entity or person.
IV. ISDA Definitions
----------------
(a) Incorporation. This Agreement and each Transaction are subject to the
1991 ISDA Definitions (as published by the International Swaps and
Derivatives Association, Inc.) and will be governed by the provisions of
the ISDA Definitions, without regard to any amendments to the ISDA
Definitions subsequent to the date hereof. The provisions of the ISDA
Definitions are incorporated by reference in, and shall be deemed to be
part of, this document and each Confirmation.
(b) Inconsistency. In the event of any inconsistency between the provisions
of this document and the ISDA Definitions, this document will prevail.
4
<PAGE> 23
V. Additional Terms
----------------
(a) Covenants of Financial Agreements. (i) Party B shall provide Party A at
all times hereunder with the same covenant protection as Party A requires
of Party B under Financial Agreements. Therefore, in addition to the
Cross Default provisions of this Agreement, and notwithstanding the
satisfaction of any obligation or promise to pay money to Party A under
any Financial Agreement, or the termination or cancellation of any
Financial Agreement, Party B hereby agrees to perform, comply with and
observe for the benefit of Party A hereunder all affirmative and negative
covenants contained in each Financial Agreement applicable to Party B
(excluding any obligation or promise to pay money under any Financial
Agreement) at any time Party B has any obligation (whether absolute or
contingent) under this Agreement.
(ii) For purposes hereof: (A) the affirmative and negative covenants of
each Financial Agreement applicable to Party B (together with related
definitions and ancillary provisions, but in any event excluding any
obligation or promise to pay money under any Financial Agreement) are
incorporated (and upon execution of any future Financial Agreement, shall
automatically be incorporated) by reference herein (mutatis mutandis);
(B) if other lenders or creditors are parties to any Financial Agreement,
then references therein to the lenders or creditors shall be deemed
references to Party A; and (C) for any such covenant applying only when
any loan, other extension of credit, obligation or commitment under the
Financial Agreement is outstanding, that covenant shall be deemed to
apply hereunder at any time Party B has any obligation (whether absolute
or contingent) under this Agreement.
(iii) Notwithstanding the foregoing, if the incorporation of any
provision by reference from any Financial Agreement would result in the
violation by Party B of the terms of that Financial Agreement, this
Agreement shall not incorporate that provision.
(b) "Financial Agreement" means each existing or future agreement or
instrument relating to any loan or extension of credit from Party A to
Party B (whether or not anyone else is a party thereto), as the same
exists when executed and without regard to any termination or
cancellation thereof, or unless consented to in writing by Party A, any
amendment, modification, addition, waiver or consent thereto or thereof.
5
<PAGE> 24
IN WITNESS WHEREOF, the parties have executed this Schedule by their duly
authorized signatories as of the date hereof.
CORESTATES BANK, N.A.
By: \s\ William T. Breesmen
-------------------------------
Name: William T. Breesmen
Title: Vice President
UNITED STATES LIME & MINERALS, INC.
By: \s\ F. Gene Winfield
-------------------------------
Name: F. Gene Winfield
Title: Treasurer
6
<PAGE> 25
CoreStates Bank, N.A.
CoreStates Capital Markets and
Funding Operations
P0 Box 8590
Philadelphia PA 19101-8590
INTEREST RATE SWAP CONFIRMATION
UNITED STATES LIME & MINERALS. INC.
Attention: GENE WINFIELD
12221 MERIT DRIVE
SUITE 500
DALLAS, TX 75251
Dear Customer:
The purpose of this document is to confirm the terms and conditions of the
Rate Swap Transaction entered Into between CoreStates Bank, N.A. and UNITED
STATES LIME & MINERALS. INC., on the contract date specified below.
The definitions and provisions contained in the 1991 ISDA Definitions (as
published by the International Swap Dealers Association. Inc.) are
Incorporated into this Confirmation. In the event of any inconsistency
between those definitions and provisions and this Confirmation. this
Confirmation will govern.
This confirmation supplements, forms part of, and is subject to, the Interest
Rate Agreement dated as of April 3, 1998, as amended and supplemented from
time to time (the "Agreement"), between you and us. All provisions contained
or incorporated by reference in the Agreement shall govern this Confirmation
except as expressly modified below;
Notional Amount: 9,000,000.00 USD
Our Transaction No: 129410
Trade Date: 03APR98
Effective Date: 01MAY98
Termination Date: 01JUL03
FLOATING Rate Payer: CoreStates Bank, N.A.
FIXED Rate Payer: UNITED STATES LIME & MINERALS. INC.
Fixed Rate: 7.4500
Day Count Fraction: ACTUAL/360
1
<PAGE> 26
Payment Dates:
01JUN98, 01JUL98, 03AUG98, 01SEP98, 01OCT98, 02NOV98, 01DEC98, 04JAN99,
01FEB99, 01MAR99, 01APR99, 04MAY99, 01JUN99, 01JUL99, 02AUG99, 01SEP99,
01OCT99, 01NOV99, 01DEC99, 04JAN00, 01FEB00, 01MAR00, 03APR00, 02MAY00,
01JUN00, 03JUL00, 01AUG00, 01SEP00, 02OCT00, 01NOV00, 01DEC00, 02JAN01,
01FEB01, 01MAR01, 02APR01, 01MAY01, 01JUN01, 02JUL01, 01AUG01, 04SEP01,
01OCT01, 01N0V01, 03DEC01, 02JAN02, 01FEB02, 01MAR02, 02APR02, 01MAY02,
03JUN02, 01JUL02, 01AUG02, 03SEP02, 01OCT02, 01NOV02, 02DEC02, 02JAN03,
03FEB03, 03MAR03, 01APR03, 01MAY03, 02JUN03, 01JULO3.
Business Day Convention: MODIFIED FOLLOWING BANK DAY
Floating Rate Option: 1M USD/BBA LIBOR
Spread: 1.6500%
Initial Floating Rate: TO BE SET (INCLUSIVE OF SPREAD)
Day Count Fraction: ACTUAL/360
Reset Dates:
01MAY98, 01JUN98, 01JUL98, 03AUG98, 01SEP98, 01OCT98, 02NOV98, 01DEC98,
04JAN99, 01FEB99, 01MAR99, 01APR99, 04MAY99, 01JUN99, 01JUL99, 02AUG99,
01SEP99, 01OCT99, 01NOV99, 01DEC99, 04JAN00, 01FEB00, 01MAR00, 03APR00,
02MAY00, 01JUN00, 03JUL00, 01AUG00, 01SEP00, 02OCT00, 01NOV00, 01DEC00,
02JAN01, 01FEB01, 01MAR01, 02APR01, 01MAY01, 01JUN01, 02JUL01, 01AUG01,
04SEP01, 01OCT01, 01NOV01, 03DEC01, 02JAN02, 01FEB02, 01MAR02, 02APR02,
01MAY02, 03JUN02, 01JUL02, 01AUG02, 03SEP02, 01OCTO2, 01NOV02, 02DEC02,
02JAN03, 03FEB03, 03MAR03, 01APR03, 01MAY03, 02JUNO3.
Payment Dates:
01JUN98, 01JUL98, 03AUG98, 01SEP98, 01OCT98, 02NOV98, 01DEC98, 04JAN99,
01FEB99, 01MAR99, 01APR99, 04MAY99, 01JUN99, 01JUL99, 02AUG99, 01SEP99,
01OCT99, 01NOV99, 01DEC99, 04JAN00, 01FEB00, 01MAR00, 03APR00, 02MAY00,
01JUN00, 03JUL00, 01AUG00, 01SEP00, 02OCT00, 01NOV00, 01DEC00, 02JAN01,
01FEB01, 01MAR01, 02APR01, 01MAY01, 01JUN01, 02JUL01, 01AUG01, 04SEP01,
01OCT01, 01NOV01, 03DEC01, 02JAN02, 01FEB02, 01MAR02, 02APR02, 01MAY02,
03JUN02, 01JUL02, 01AUG02, 03SEP02, 01OCT02, 01NOV02, 02DEC02, 02JAN03,
03FEB03, 03MAR03, 01APR03, 01MAY03, 02JUN03, 01JUL03.
Business Day Convention: MODIFIED FOLLOWING BANK DAY
Compounding: INAPPLICABLE
Amortizing: APPLICABLE
Amortization Schedule:
01MAY98 01JUN98 9,000,000.00
01JUN98 01JUL98 9,000,000.00
01JUL98 03AUG98 9,000,000.00
03AUG98 01SEP98 8,892,857.14
01SEP98 01OCT98 8,785,714.28
2
<PAGE> 27
01OCT98 02NOV98 8,678,571.42
02NOV98 01DEC98 8,571,428.56
01DEC98 01JAN99 8,464,285.70
04JAN99 01FEB99 8,357,142.84
01FEB99 01MAR99 8,249,999.98
01MAR99 01APR99 8,142,857.12
01APR99 04MAY99 8,035,714.26
04MAY99 01JUN99 7,928,571.40
01JUN99 01JUL99 7,821,428.54
01JUL99 02AUG99 7,714,285.68
02AUG99 01SEP99 7,607,142.82
01SEP99 01OCT99 7,499,999.96
01OCT99 01NOV99 7,392,857.10
01NOV99 01DEC99 7,285,714.24
01DEC99 04JAN00 7,178,571.38
04JAN00 01FEB00 7,071,428.52
01FEB00 01MAR00 6,964,285.66
01MAR00 03APR00 6,857,142.80
03APR00 02MAY00 6,749,999.94
02MAY00 01JUN00 6,642,857.08
01JUN00 03JUL00 6,535,714.22
03JUL00 01AUG00 6,428,571.36
01AUG00 01SEP00 6,321,428.50
01SEP00 02OCT00 6,214,285.64
02OCT00 01NOV00 6,107,142.78
01NOV00 01DEC00 5,999,999.92
01DEC00 02JAN01 5,892,857.06
02JAN01 01FEB01 5,785,714.20
01FEB01 01MAR01 5,678,571.34
01MAR01 02APR01 5,571,428.48
02APR01 01MAY01 5,464,285.62
01MAY01 01JUN0l 5,357,142.76
01JUN01 02JUL01 5,249,999.90
02JUL01 01AUG01 5,142,857.04
01AUG01 04SEP01 5,035,714.18
04SEP01 01OCT01 4,928,571.32
01OCT01 01NOV01 4,821,428.46
01NOV01 03DEC01 4,714,285.60
03DEC01 02JAN02 4,607,142.74
02JAN02 01FEB02 4,499,999.88
01FEB02 01MAR02 4,392,857.02
01MAR02 02APR02 4,285,714.16
02APR02 01MAY02 4,178,571.30
01MAY02 03JUN02 4,071,428.44
03JUN02 01JUL02 3,964,285.58
01JUL02 01AUG02 3,857,142.72
01AUGO2 03SEP02 3,749,999.06
03SEP02 01OCT02 3,642,857.00
01OCT02 01NOV02 3,535,714.14
01NOV02 02DEC02 3,428,571.28
02DEC02 02JAN03 3,321,428.42
02JAN03 03FEB03 3,214,285.56
03FEB03 03MAR03 3,107,142.70
03MAR03 01APR03 2,999,999.84
3
<PAGE> 28
01APR03 01MAY03 2,892,856.98
01MAY03 02JUN03 2,785,714.12
02JUNO3 01JUL03 2,678,571.26
Business Days For Payments:
NEW YORK
LONDON
Our Instructions
CORESTATES BANK, N.A.
ABA 031000011
A/C# 0132-0313
ATTN: INVESTMENT OPERATIONS
UNITED STATES LIME & MINERALS, INC. Payment Instructions
USLM General Account
ABA 031000011
A/C# 0174-3009
Please confirm that the foregoing correctly sets forth the terms of the
transaction by signing and returning it to us.
CORESTATES BANK, N.A.
Accepted and confirmed:
By: \s\ Lisa A. Lunny By: \s\ F. Gene Winfield
------------------------ ------------------------
Name: Lisa A. Lunny Name: F. Gene Winfield
Title: Vice President Title: Treasurer
Transaction introduced by CoreStates Securities Corp
4
<PAGE> 1
Exhibit 11
STATEMENT RE COMPUTATION
OF PER SHARE EARNINGS (LOSS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
March 31,
------------------------
1998 1997
---------- ----------
<S> <C> <C>
Numerator:
Net income for basic and
diluted earnings per share $ 303,000 $ (488,000)
---------- ----------
Denominator:
Denominator for basic earnings per
common share - weighted-average shares 3,954,196 3,921,853
Effect of dilutive securities:
Employee stock options - 8,692
---------- ----------
Denominator for diluted earnings per
common share - weighted-average shares 3,954,196 3,930,545
========== ==========
Basic earnings (loss) per common share $ 0.08 $ (0.12)
========== ==========
Diluted earnings (loss) per common share $ 0.08 $ (0.12)
========== ==========
</TABLE>
E - 2
<TABLE> <S> <C>
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0
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