<PAGE> 1
CONFORMED
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 SEPTEMBER 30, 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 000-4197
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 October 14, 1998,
3,971,165 shares of common stock, $0.10 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>
SEPTEMBER 30, DECEMBER 31,
1998 1997
------------- ------------
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 2,638 $ 2,787
Trade receivables, net 3,800 3,624
Inventories 2,969 3,001
Prepaid expenses and other assets 98 111
-------- --------
Total current assets 9,505 9,523
Property, plant and equipment at cost 68,765 52,302
Less: Accumulated depreciation and depletion (31,996) (30,896)
-------- --------
Property, plant and equipment, net 36,769 21,406
Deferred tax assets, net 2,465 2,537
Other assets, net 114 54
-------- --------
Total assets $ 48,853 $ 33,520
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current installments of long-term debt $ 2,643 $ 1,071
Accounts payable 2,648 4,437
Accrued expenses 1,834 1,594
-------- --------
Total current liabilities 7,125 7,102
Long-term debt, excluding current installments 15,500 2,167
Other liabilities 253 101
-------- --------
Total liabilities 22,878 9,370
Stockholders' Equity:
Common stock 529 529
Additional paid-in-capital 14,930 15,135
Retained earnings 24,554 22,729
-------- --------
40,013 38,393
Less treasury stock at cost; 1,322,900 and
1,342,212 shares of common stock, respectively (14,038) (14,243)
-------- --------
Total stockholders' equity 25,975 24,150
-------- --------
Total liabilities and stockholders' equity $ 48,853 $ 33,520
======== ========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
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<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 NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------------------------- --------------------------------------
1998 1997 1998 1997
----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
REVENUES $ 7,423 100.0% $ 7,725 100.0% $ 21,908 100.0% $ 25,883 100.0%
Cost of revenues:
Labor and other operating expenses 4,902 66.0% 4,537 58.7% 14,582 66.6% 18,929 73.1%
Depreciation, depletion and
amortization 702 9.5% 667 8.7% 2,062 9.4% 2,720 10.5%
----------------- ---------------- ----------------- -----------------
5,604 75.5% 5,204 67.4% 16,644 76.0% 21,649 83.6%
----------------- ---------------- ----------------- -----------------
GROSS PROFIT 1,819 24.5% 2,521 32.6% 5,264 24.0% 4,234 16.4%
Selling, general and administrative
expenses 814 11.0% 878 11.3% 2,657 12.1% 3,148 12.2%
----------------- ---------------- ----------------- -----------------
OPERATING PROFIT 1,005 13.5% 1,643 21.3% 2,607 11.9% 1,086 4.2%
Other deductions (income):
Interest expense 6 0.0% 71 0.9% 12 0.0% 372 1.4%
Other income, net (64) (0.8%) (206) (2.6%) (339) (1.5%) (299) (1.1%)
----------------- ---------------- ----------------- ------------------
(58) (0.8%) (135) (1.7%) (327) (1.5%) 73 0.3%
----------------- ----------------- ---------------- ------------------
NET INCOME BEFORE
INCOME TAXES 1,063 14.3% 1,778 23.0% 2,934 13.4% 1,013 3.9%
----------------- ----------------- ----------------- -----------------
Federal and state income
tax expense (benefit) 287 3.9% 457 5.9% 792 3.6% (1,996) (7.7%)
----------------- ----------------- ----------------- -----------------
NET INCOME $ 776 10.4% $ 1,321 17.1% $ 2,142 9.8% $ 3,009 11.6%
================= ================= ================= =================
INCOME PER SHARE
OF COMMON STOCK:
Basic $ 0.20 $ 0.34 $ 0.54 $ 0.77
======= ======= ======== ========
Diluted $ 0.20 $ 0.33 $ 0.54 $ 0.76
======= ======= ======== ========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
3
<PAGE> 4
UNITED STATES LIME & MINERALS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands of dollars)
(Unaudited)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
----------------------
1998 1997
-------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 2,142 $ 3,009
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation, depletion and amortization 2,158 2,831
Deferred income tax benefit 72 (2,220)
Amortization of financing costs -- 50
Loss on sale of property, plant and equipment 54 14
Loss on sale of Corson Lime Company assets -- 506
Current assets, net change [1] (131) 1,620
Other assets (60) 9
Current liabilities, net change [2] (1,549) (1,174)
Other liabilities 152 (487)
-------- --------
Net cash provided by operating activities 2,838 4,167
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property, plant and equipment (17,597) (5,647)
Proceeds from sale of Corson Lime Company assets, net of expenses -- 7,745
Proceeds from sale of property, plant and equipment 22 42
-------- --------
Net cash (used in) provided by investing activities (17,575) 2,140
CASH FLOWS FROM FINANCING ACTIVITIES:
Payment of pension fund liabilities (19) --
Proceeds from exercise of stock options -- 143
Payment of common stock dividends (298) (295)
Proceeds from borrowings on term loan 15,000 --
Principal payments on term loan debt (95) (857)
Proceeds from borrowing on revolving credit facility -- 2,900
Principal payments on revolving credit facility -- (2,900)
-------- --------
Net cash provided by (used in) financing activities 14,588 (1,009)
-------- --------
Net increase (decrease) in cash (149) 5,298
Cash at beginning of period 2,787 1,000
-------- --------
Cash at end of period $ 2,638 $ 6,298
======== ========
Supplemental cash flow information:
Interest paid $ 605 $ 327
======== ========
Income taxes paid $ 437 $ 451
======== ========
[1] Exclusive of net change in cash
[2] Exclusive of net change in current portion of debt
</TABLE>
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 three- and nine-month periods ended
September 30, 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) September 30, December 31,
1998 1997
------------- ------------
<S> <C> <C>
Lime and limestone inventories:
Raw materials $ 833 $ 624
Finished goods 442 844
---------- ---------
1,275 1,468
Service parts 1,694 1,533
---------- ---------
Total inventories $ 2,969 $ 3,001
========== =========
</TABLE>
3. Long-Term Debt
The Company has a financing agreement with a commercial bank. The current
agreement was entered into in August 1998, and amended the amended and
restated loan agreement which was entered into in December 1997. The prior
agreement provided for a $15,000,000 five-year secured term loan and a
$4,000,000 unsecured revolving credit facility which matured in December
1999. Both loans bore interest at the bank's prime rate but could, at the
option of the Company, be converted into LIBOR-based loans that bore
interest at LIBOR plus 1.65% for the term loan and LIBOR plus 1.50% for the
revolving credit facility. The prior agreement also allowed for 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.
As part of the prior agreement, the Company negotiated a $25,000,000
secured line of credit to provide temporary financing for capital
expenditures and acquisitions until such time as permanent financing could
be arranged. Any borrowings under this facility would have been at the
bank's prime rate or, at the discretion of the Company, converted into a
LIBOR-based loan bearing interest
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at LIBOR plus 2%. The capital expenditure and acquisition line of credit
was available, if not extended, through September 1998 and was subject to
approval by the bank.
On August 31, 1998, the Company amended its amended and restated loan
agreement which was entered into in December 1997. The amendment to the
agreement provides for an additional $3,500,000, for a total of
$18,500,000, on the five-year secured term loan. The amended term loan's
maturity was extended from July 2003 to September 2003 and requires monthly
principal repayments of $220,238 beginning on October 1, 1998. The amended
agreement includes a separate secured line of credit of $5,000,000 for
capital expenditures related to the Arkansas modernization and expansion
project. This committed capital expenditure line of credit requires
interest-only payments until its maturity in July 2000. As a result of this
line of credit, the amended agreement reduced the $25,000,000 capital
expenditure and acquisition line of credit by $5,000,000 to $20,000,000.
The amended agreement extended the capital expenditure and acquisition line
of credit, which remains subject to approval by the bank, through January
2000 from September 1998. In addition, the amended agreement required the
$4,000,000 revolving credit facility to be secured and extended its
maturity to January 2000 from December 1999. All three of the facilities
are secured by substantially all of the Company's assets and bear interest
at the bank's prime rate plus a defined interest rate spread based upon the
Company's then-current ratio of total funded debt to earnings before
interest, taxes, depreciation and amortization (EBITDA). However, at the
option of the Company, all or any portion of the amounts outstanding can be
converted into a LIBOR-based rate plus a defined interest rate spread based
upon the Company's then-current ratio of total funded debt to EBITDA. The
term loan and the committed capital expenditure line of credit bear
interest at LIBOR plus 1.50%, and these rates increase to a maximum of
LIBOR plus 2.75% if the Company's current ratio of funded debt to EBITDA
reaches a ratio of 4 to 1. The revolving credit facility bears interest at
LIBOR plus 1.40%, and its rate increases similar to the other loans based
on the leverage of the Company.
A summary of long-term debt is as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
(In thousands of dollars) September 30, December 31,
1998 1997
------------- -----------
Term loan $ 18,143 3,238
Committed capital expenditure line of credit - -
Revolving credit facility - -
--------- -----------
Subtotal 18,143 3,238
Less current installments 2,643 1,071
--------- -----------
Long-term debt, excluding current installments $ 15,500 2,167
========= ===========
</TABLE>
The additional amounts borrowed in the first nine months of 1998 were used
to partially fund the modernization and expansion project at the Texas
facility. Interest costs of $285,000 and $590,000 were capitalized as part
of the Texas project in the three- and nine-month periods ended September
30, 1998, respectively.
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 term 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
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<PAGE> 7
rates plus 1.65%, 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 term 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.
For amounts not otherwise fixed under the Swap Agreement, the Company has
elected the LIBOR-based interest option for the debt outstanding under the
term loan.
The carrying amount of the Company's long-term debt approximates its fair
value.
7
<PAGE> 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities was $2,838,000 for the nine months
ended September 30, 1998, as compared to $4,167,000 for the nine months ended
September 30, 1997. Excluding the effects of Corson Lime Company in 1997, the
decrease in cash provided by operating activities was primarily attributable to
the reduction of current liabilities from year end.
The Company made $17,597,000 in capital expenditures in the first nine months of
1998, compared to $5,647,000 in the same period last year. Capital expenditures
of approximately $14,763,000 and $1,820,000 were related to the modernization
and expansion project at the Texas facility in the first nine months of 1998 and
1997, respectively. The Texas project includes the installation of new stone
crushing and handling systems, the addition of a preheater to one of the
existing kilns, additional storage, screening and shipping capacity and a new
support building housing a laboratory, administrative offices and shop
facilities.
The Texas project has been constructed in phases and is substantially completed.
The new support building and the stone crushing and handling systems have been
completed. The preheater was added during the months of August and September. In
addition, as of September 30, 1998, one-half of the new storage, screening and
loadout improvements have been made, with the remainder to be completed in the
fourth quarter. The Texas Lime 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 $23,000,000. This project has been
financed through a combination of internally generated funds from operations,
the proceeds from the sale of the Corson Lime Company assets, and the term loan
provided under the Company's banking facilities.
The Company is also moving forward with the modernization and expansion plans at
the Arkansas plant. The Arkansas plans call for construction in two phases. The
first phase, currently scheduled for completion in early 2000, includes the
addition of a new 1,200-ton per day (400,000-ton per year) rotary kiln, new
stone crushing and handling systems, and new lime and ground calcium carbonate
storage and loadout facilities. The second phase of the project, which is
currently scheduled for construction in 2002, but may be accelerated, includes a
rock transportation system and additional lime storage facilities. Permit
applications have been submitted, kiln system design is being finalized, and bid
proposals have been requested for key components of the project. The preliminary
cost estimates for the planned project phases are approximately $27,000,000 and
$5,000,000, respectively. The project is contingent upon satisfactory permitting
from the various regulatory agencies and availability of financing. The Company
has secured a $5,000,000 committed capital expenditure line of credit for the
Arkansas project under its banking facilities, and expects to finance the
remaining costs of 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
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<PAGE> 9
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
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 September 30, 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 $2,920,000. 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 September 30, 1998, the Company had $18,143,000 in debt outstanding under
its 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.
RESULTS OF OPERATIONS
Revenues decreased from $7,725,000 in the third quarter of 1997 to $7,423,000 in
the third quarter of 1998, a decrease of $302,000, or 3.9%. This resulted from a
3.8% decrease in sales volume and a 0.1% decrease in prices. The decrease in
volume in the third quarter resulted primarily from lower production for
approximately 30 days due to a planned kiln outage at the Texas Lime plant. The
kiln was taken out of production in order to complete the construction of the
preheater. Revenues for the nine months ended September 30, 1998 were
$21,908,000, a decrease of $3,975,000, or 15.4%, from the $25,883,000 reported
for the nine months ended September 30, 1997. Excluding 1997 revenues from
Corson, revenues for the nine months ended September 30, 1998 increased by
$928,000, or 4.4%, from 1997, resulting from a 4.1% increase in sales volume and
a 0.3% increase in prices.
The Company's gross profit was $1,819,000 for the third quarter of 1998,
compared to $2,521,000 for the third quarter of 1997, a 27.9% decrease. Gross
profit margin as a percentage of revenues for the third quarter of 1998
decreased to 24.5% from 32.6% in 1997. Gross profit for the quarter was impacted
by the planned kiln outage at Texas Lime, which resulted in spreading the same
fixed costs over fewer units. In addition, some lime was purchased from
competitors at a loss in order to service existing customers during the
shutdown. Gross profit increased to $5,264,000 for the first nine months of
1998, from $4,234,000 for the first nine months of 1997, a 24.3% increase. Gross
profit margin for the nine months ended September 30, 1998 increased to 24.0%,
from 16.4% in 1997. The 1998 gross profit and gross profit margins were improved
by 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 the first half of 1998 at both the Texas and
Arkansas facilities and the inevitable production inefficiencies in Texas as a
result of the extensive construction activities, including the planned kiln
outage, at that facility. The 1997 gross profit and gross profit margins were
negatively impacted by the loss on the sale of the Corson assets.
Selling, general and administrative expenses ("SG&A") decreased by $64,000, or
7.3%, to $814,000 in the third quarter of 1998, as compared to $878,000 in the
third quarter of 1997. SG&A as a percentage of sales decreased to 11.0% as
compared to 11.3% in the third quarter a year ago. SG&A decreased by $491,000,
or 15.6%, to $2,657,000 in the first nine months of 1998, as compared to
$3,148,000 in the
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<PAGE> 10
first nine months of 1997, and as a percentage of sales decreased to 12.1% from
12.2% a year earlier. The SG&A expense decrease was primarily attributable to
the shut down of the Corson operations after the sale in June 1997.
Interest expense in the third quarter of 1998 was $6,000 as compared to $71,000
in 1997. Interest expense for the first nine months of 1998 was $12,000 as
compared to $372,000 in 1997. The 1998 decrease was attributable to the
capitalization of substantially all incurred interest costs as part of the Texas
modernization and expansion project. Interest costs of approximately $285,000
and $590,000 were capitalized in the third quarter and first nine months of
1998, respectively.
The Company reported net income of $776,000 ($0.20 per share) during the third
quarter of 1998, compared to net income of $1,321,000 ($0.34 per share) during
the third quarter of 1997. Net income in the third quarter of 1997 was
negatively impacted by the Texas Lime construction project, which affected
production at the plant. For the first nine months of 1998, the Company reported
net income of $2,142,000 ($0.54 per share), compared to net income of $3,009,000
($0.77 per share) in the first nine months of 1997. Net income for the first
nine months of 1997 was favorably impacted by the recognition of previously
reserved deferred tax assets of $2,300,000 ($0.59 per share) and unfavorably
impacted by the loss (net of tax benefit) on the sale of the Corson Lime Company
assets of $405,000 ($0.10 per share) in the second quarter of 1997.
YEAR 2000 COMPLIANCE
The Company has begun addressing the potential impact of the year 2000 ("Y2K")
issue on its operations. The Y2K problem arises because of computer programs
which use two digits rather than four digits to define a year. This may result
in miscalculations or complete system failures in processing data with programs
using date sensitive information.
The Company currently uses certain customized accounting software which is not
Y2K compliant. The Company is in the process of selecting commercially available
accounting software which is scheduled to be installed by the second quarter of
1999. The cost of this installation will be approximately $200,000. Certain
software used in the Company's production operations has either already been
warranted by the suppliers or publishers to be Y2K compliant, or the suppliers
and publishers have represented that such software will be compliant through
upgrades the Company will receive in 1999 under software maintenance agreements.
The Company has not taken any steps to independently verify the truth of such
warranties and representations, but has no reason to believe that the software
is not, or will not be, compliant. Management does not currently believe that
the amount of non-compliant equipment used in other systems will be found to be
significant, nor will the cost to modify or replace such equipment be material.
Management expects to obtain confirmation from its suppliers and customers that
they also are or will be Y2K compliant. The costs of seeking such confirmation
are minimal. Management believes that it will not be practical to independently
verify the responses received because it does not believe that the Company would
be given access to carry out such verification or that the costs of doing so
would be affordable. The cost of replacing, or of implementing alternative means
of communication with, non-compliant or non-responsive suppliers and customers
will not be possible to determine until the review process has been completed.
The Company plans to establish contingency plans, if needed, once its
confirmation program is complete and the risks have been more fully identified
and quantified.
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<PAGE> 11
PART II. OTHER INFORMATION
ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits:
10 First Amendment to Amended and Restated Loan Security
Agreement, dated August 31, 1998 among United States
Lime & Minerals, Inc., Arkansas Lime Company and
Texas Lime Company and First Union National Bank
11 Statement re computation of per share earnings
27 Financial Data Schedule
27.1 Restated Financial Data Schedule
b. Reports on Form 8-K:
The Company filed no Reports on Form 8-K during the quarter
ended September 30, 1998.
11
<PAGE> 12
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.
October 14, 1998 /s/ Timothy W. Byrne
----------------------------------
Timothy W. Byrne
President, Chief Executive Officer and
Chief Financial Officer
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UNITED STATES LIME & MINERALS, INC.
Quarterly Report on Form 10-Q
Quarter Ended
September 30, 1998
Index to Exhibits
<TABLE>
<CAPTION>
Exhibit No. Exhibit
- ----------- -----------------------------------------
<S> <C>
10 First Amendment to Amended and Restated Loan
Security Agreement, dated August 31, 1998
among United States Lime & Minerals, Inc.,
Arkansas Lime Company and Texas Lime Company
and First Union National Bank
11 Statement re computation of per share earnings
27 Financial Data Schedule
27.1 Restated Financial Data Schedule
</TABLE>
<PAGE> 1
EXHIBIT 10
FIRST AMENDMENT TO
AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
This First Amendment to Amended and Restated Loan and Security
Agreement (this "First Amendment") dated August ___, 1998 by and among United
States Lime & Minerals, Inc., a Texas corporation (formerly known as Scottish
Heritable, Inc.) ("U.S. Lime"), Texas Lime Company, a Texas corporation ("TLC"),
and Arkansas Lime Company, an Arkansas corporation ("ALC," and together with
U.S. Lime and TLC, collectively referred to as the "Borrowers" and individually
as a "Borrower"), and First Union National Bank, a national banking association,
as successor to CoreStates Bank, N.A. ("Bank").
BACKGROUND
A. Borrowers and Bank are parties to an Amended and Restated Loan and
Security Agreement dated December 30, 1997 (the "Loan Agreement"), pursuant to
which Bank continued and restated certain credit facilities for the benefit of
Borrowers under the terms and conditions set forth therein. All initially
capitalized terms used in this First Amendment, unless otherwise specifically
defined herein, shall have the meanings ascribed to them in the Loan Agreement.
B. Borrowers have requested that Bank agree to amend the Loan Agreement
to: (i) increase from $15,000,000 to $18,500,000 the principal amount of the
Term Loan which aggregate amount would be subject to an 84 month amortization
schedule but payable over a 60 month period; (ii) establish a supplemental
committed revolving credit in the maximum principal amount outstanding at any
one time of $5,000,000 (the "Second Revolving Credit") to fund Borrowers'
initial costs and expenses related to ALC's plant expansion in Arkansas; and
(iii) modify the interest rates applicable to the Term Loan, the Revolving
Credit, the Second Revolving Credit, and the Line of Credit to a formula based
on the Borrowers' ratio of consolidated Funded Debt to EBITDA. Additionally,
Bank desires to: (x) re-secure the prompt payment and performance of the
Revolving Credit by cross-collateralizing the Revolving Credit with the security
interests in Borrowers' personal property granted to Bank to secure the Term
Loan; (y) expand Bank's security interest in Borrowers' personal property to
include all accounts receivable and inventory as additional security for the
Term Loan, the Revolving Credit and the Second Revolving Credit; and (z) reduce
the maximum principal amount which may be outstanding at any one time under the
Line of Credit from $25,000,000 to $20,000,000. Bank and Borrowers have agreed
to such modifications subject to the terms and conditions hereof.
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants set forth herein, the parties hereto, intending to be legally bound
hereby, agree as follows:
1. Ratification. This First Amendment is a modification of the Loan
Agreement pursuant to Section 9.2 thereof. Except as expressly set forth herein,
or in any amendment to any of the documents referred to herein, Borrowers and
Bank acknowledge and agree that each and every term, condition and provision of
the Loan Agreement is hereby ratified and confirmed in full.
2. Indebtedness. Borrowers hereby unconditionally acknowledge that, as
of the date hereof, the outstanding principal amount of the Term Loan is
$14,142,862, and there are no amounts outstanding under the Revolving Credit
(excluding the face amount of outstanding and undrawn letters of credit) or the
Line of Credit, and that the foregoing balance of the Term Loan, together
<PAGE> 2
with interest which shall accrue from the date hereof at the rates set forth in
the Notes, are owing to Bank without claim, counterclaim, recoupment, defense or
setoff of any kind.
3. Definitions.
3.1 New Definitions. Each of the following terms is hereby
added to Section 1.1 of the Loan Agreement and shall have the meaning herein
ascribed to it for the purposes hereof and for each of the Loan Documents:
"Cash Flow Ratio" means, for a specified period, the ratio of
Borrowers' consolidated Funded Debt to EBITDA for such period.
"EBIT" means Borrowers' consolidated Net Income for a period,
plus the sum of the following for such period (without duplication and only to
the extent each is deducted from Borrowers' revenues to determine Net Income):
(i) Interest Expense, and (ii) taxes.
"EBITDA" means Borrowers' consolidated Net Income for a
period, plus the sum of the following for such period (without duplication and
only to the extent each is deducted from Borrowers' revenues to determine Net
Income): (i) Interest Expense, (ii) taxes, (iii) depreciation, and (iv)
amortization.
"Funded Debt" means the Loans and all other obligations of
Borrowers or any Borrower for borrowed money, Capital Lease Expense, the
deferred purchase price for property of a Borrower or Borrowers, all obligations
under conditional sales or other title retention agreements of a Borrower or
Borrowers, all indebtedness for borrowed money of a third party secured by any
lien upon property of a Borrower or Borrowers (limited to the lesser of the
indebtedness or the fair market value of the property), and all indebtedness of
others of a type described above which is guarantied or endorsed by a Borrower
or Borrowers (limited to the extent of the liability of the Borrower or
Borrowers).
"Second Mortgages" means, collectively, (i) the Second
Mortgage, Assignment of Leases, Rents and Profits, Security Agreement, Financing
Statement and Fixture Filing of even date herewith, executed by ALC in favor of
Bank, and (ii) the Second Deed of Trust, Assignment of Rents, Security
Agreement, Financing Statement and Fixture Filing, of even date herewith,
executed by TLC in favor of Bank.
"Second Revolving Credit" means the aggregate secured
revolving credit facility under which Bank has undertaken to make Cash Advances
to one or more of the Borrowers, in the maximum principal amount outstanding at
any one time of $5,000,000, as more fully described in and subject to the terms
of Section 2.5 hereof.
"Second Revolving Credit Note" means the promissory note made
by Borrowers payable to the order of Bank in the original principal amount of
$5,000,000 to evidence Borrowers' joint and several repayment obligations under
this Agreement with respect to the Second Revolving Credit.
"Second Revolving Credit Termination Date" means July 31, 2000
or such later date as may be agreed to in writing by Bank and Borrowers.
2
<PAGE> 3
3.2 Amended and Restated Definitions. Each of the following
definitions in Section 1.1 of the Loan Agreement is hereby amended and restated
in its entirety as follows:
"Adjusted LIBOR Loans" means applicable portions of the
Revolving Credit, the Second Revolving Credit, the Term Loan, and the Line of
Credit bearing interest at a rate determined with reference to the Adjusted
LIBOR.
"Base Rate Loans" mean applicable portions of the Revolving
Credit, the Second Revolving Credit, the Term Loan, and the Line of Credit
bearing interest at a rate determined with reference to the Base Rate.
"Cash Advance" means any advance of cash to any Borrower under
the Revolving Credit (including draws under Letters of Credit), the Second
Revolving Credit, or the Line of Credit, subject to and in accordance with the
provisions of Article 2 hereof.
"Line of Credit" means the aggregate secured line of credit
facility under which Bank may, in its discretion, make Cash Advances to one or
more of the Borrowers, in the maximum principal amount outstanding at any one
time of $20,000,000, as more fully described in and subject to the terms of
Section 2.3 hereof.
"Line of Credit Termination Date" means January 15, 2000 or
such other date agreed to in writing by Bank pursuant to Section 2.3.1 hereof.
"Loans" mean collectively the Term Loan, the Revolving Credit,
the Second Revolving Credit, and the Line of Credit, and a "Loan" means any of
the Term Loan or any Cash Advance under the Revolving Credit, the Second
Revolving Credit or the Line of Credit, as applicable.
"Loan Documents" mean this Agreement, as amended and as may be
hereafter amended, the Notes, as amended and as hereafter may be amended, the
Mortgages, as amended and confirmed by the Mortgage Confirmations, the Second
Mortgages, all financing statements and fixture filings filed or recorded in
connection with this Agreement, and all certificates of Borrowers, or any
Borrower, delivered pursuant to this Agreement.
"Mortgages" mean collectively the mortgage granted by ALC and
TLC individually to Bank, each dated as of October 20, 1993 and executed in
connection with the Prior Documents, as confirmed and amended by the Mortgage
Confirmations, and the Second Mortgages.
"Notes" means each of the Revolving Credit Note, the Second
Revolving Credit Note, the Term Note and any Line of Credit Note, together with
any substitution therefor and any extension, supplement, amendment, allonge or
addendum thereto.
"Revolving Credit Termination Date" means January 15, 2000, or
such later date as may be agreed to in writing by Bank.
"Term Loan" means the secured term loan in the maximum
principal amount of
3
<PAGE> 4
$18,500,000 as more fully described in and subject to the terms of section 2.1
hereof.
4. Term Loan Increased. The maximum principal amount of the Term Loan
shall be increased from $15,000,000 to $18,500,000, and Bank shall, subject to
the conditions precedent set forth in Section 17 hereof, fund the additional
$3,500,000 upon request of the Borrowers in one or more installments on or
before October 1, 1998.
5. Term Loan Interest Rate. Section 2.1.1 of the Loan Agreement is
hereby amended and restated in its entirety as follows:
2.1.1 Term Loan Interest Rate. The outstanding principal balance of
the Term Loan shall bear interest at the Interest Rate Option
selected by Borrowers pursuant to a Notice of Borrowing delivered to
Bank within the applicable time periods for such Interest Rate
Option (or at the Base Rate if notice is not given within the
applicable time periods for other Interest Rate Options). The
Interest Rate Options for the outstanding principal balance of the
Term Loan shall be (i) the sum of (A) the Base Rate or the Adjusted
LIBOR on the relevant Interest Rate Determination Date as selected
by Borrowers at the time a Notice of Borrowing or Notice of Rate
Election is given pursuant to sections 2.4.1 and 2.4.2 hereof, plus
(B) an additional percentage per annum determined in reference to
Borrowers' Cash Flow Ratio set forth in the table below, or (ii) a
Fixed Rate:
Term Loan Interest Rate
<TABLE>
<CAPTION>
Cash Flow Ratio LIBOR plus Base Rate
Greater than or equal to: But less than: -------------- ----------------
<S> <C> <C> <C>
4.0:1 ----- 2.75% plus 0.25%
3.5:1 4.0:1 2.50% plus 0.25%
3.0:1 3.5:1 2.25% plus 0
2.5:1 3.0:1 1.75% plus 0
- ------- 2.5:1 1.50% minus 0.25%
</TABLE>
The Cash Flow Ratio shall be determined and calculated in accordance
with Section 6.1.13.3 hereof as of the last day of each Calendar
Quarter on a rolling four Calendar Quarter historical basis. The
applicable interest rate for the outstanding principal balance of
the Term Loan shall change when and as the Cash Flow Ratio changes
as reported to Bank on a properly completed and executed certificate
substantially in the form attached hereto as Schedule 2.1.1 (each a
"Ratio Certificate") within thirty days after the expiration of each
Calendar Quarter. Any change in the Cash Flow Ratio shall change the
interest rate applicable to all outstanding portions of the Term
Loan and shall become effective five days after Bank's timely
receipt of a properly completed and executed Ratio Certificate
without retroactive effect.
4
<PAGE> 5
6. Term Loan Amortization. Section 2.1.2 of the Loan Agreement is
hereby amended and restated in its entirety as follows:
2.1.2 Payment of Principal and Interest. Principal
with respect to the Term Loan shall be paid in equal monthly
installments of $178,571 each, commencing on the first
Business Day of the month next following the Term Loan
Amortization Date (Borrowers and Bank acknowledge that no
payments of principal have been made or were required to be
made prior to October 1, 1998). Commencing on October 1, 1998,
the outstanding principal balance of the Term Loan shall be
repaid in 59 equal monthly installments of $220,238 each, with
a final balloon payment equal to the remaining outstanding
principal balance ($5,505,958 if all monthly payments of
principal have been made), together with all accrued and
unpaid interest and Bank's Costs pertaining thereto, due on
September 1, 2003.
7. Term Loan Fee. Borrowers agree to pay to Bank a fee equal to $17,500
(calculated as 0.5% of $3,500,000) upon the execution of this First Amendment
for structuring the increase to the Term Loan.
8. Revolving Credit Interest Rate. Section 2.2.2 of the Loan Agreement
is hereby amended and restated as follows:
2.2.2 Revolving Credit Interest Rate. Cash Advances under the
Revolving Credit shall bear interest on the unpaid principal balance
thereof from the Funding Date until paid in full (whether by
acceleration or otherwise) at the sum of (i) the Base Rate or the
Adjusted LIBOR on the relevant Interest Rate Determination Date as
selected by Borrowers at the time a Notice of Borrowing or Notice of
Rate Election is given pursuant to Sections 2.4.1 and 2.4.2 hereof,
plus (ii) an additional percentage per annum determined in reference to
Borrowers' Cash Flow Ratio set forth in the table below:
Revolving Credit Interest Rate
<TABLE>
<CAPTION>
Cash Flow Ratio LIBOR plus Base Rate
Greater than or equal to: But less than: -------------- ----------------
<S> <C> <C> <C>
4.0:1 ----- 2.55% plus 0.25%
3.5:1 4.0:1 2.30% plus 0
3.0:1 3.5:1 2.10% plus 0
2.5:1 3.0:1 1.65% plus 0
- ------- 2.5:1 1.40% minus 0.25%
</TABLE>
The Cash Flow Ratio shall be determined and calculated in
accordance with Section 6.1.13.3. hereof as of the last day of
each Calendar Quarter on a rolling four Calendar Quarter
historical basis. The applicable interest rate for Cash
Advances under the Revolving Credit shall change when and as
the Cash Flow Ratio changes as reported
5
<PAGE> 6
to Bank on a properly completed and executed Ratio Certificate
within 30 days after the expiration of each Calendar Quarter.
Any change in the Cash Flow Ratio shall change the interest
rate applicable to all outstanding Cash Advances under the
Revolving Credit and shall become effective five days after
Bank's timely receipt of a properly completed and executed
Ratio Certificate without retroactive effect.
9. Line of Credit Reduced. The references to "$25,000,000" in
line six of Section 2.3.1 and in line two of Section 2.3.5 (as the maximum
amount of Cash Advances under the Line of Credit which may be outstanding at any
one time) are hereby replaced with "$20,000,000."
10. Line of Credit Interest Rate. Section 2.3.2 of the Loan
Agreement is hereby amended and restated as follows:
2.3.2 Line of Credit Interest Rate. Cash Advances under the
Line of Credit shall bear interest on the unpaid principal balance
thereof from the Funding Date until paid in full (whether by
acceleration or otherwise) at the sum of (i) the Base Rate or the
Adjusted LIBOR on the relevant Interest Rate Determination Date as
selected by Borrowers at the time a Notice of Borrowing or Notice of
Rate Election is given pursuant to Sections 2.4.1 and 2.4.2 hereof.,
plus (ii) an additional percentage per annum determined in reference to
Borrowers' Cash Flow Ratio set forth in the table below:
Line of Credit Interest Rate
<TABLE>
<CAPTION>
Cash Flow Ratio LIBOR plus Base Rate
Greater than or equal to: But less than: -------------- ----------------
<S> <C> <C> <C>
4.0:1 ------------- 2.75% plus 0.25%
3.5:1 4.0:1 2.50% plus 0.25%
3.0:1 3.5:1 2.25% plus 0
2.5:1 3.0:1 1.75% plus 0
- ------- 2.5:1 1.50% minus 0.25%
</TABLE>
The Cash Flow Ratio shall be determined and calculated in
accordance with Section 6.1.13.3 hereof as of the last day of
each Calendar Quarter on a rolling four Calendar Quarter
historical basis. The applicable interest rate for Cash
Advances under the Line of Credit shall change when and as the
Cash Flow Earnings Ratio changes as reported to Bank on a
properly completed and executed Ratio Certificate within 30
days after the expiration of each Calendar Quarter. Any change
in the Cash Flow Ratio shall change the interest rate
applicable to all outstanding Cash Advances under the Line of
Credit and shall become effective five days after Bank's
timely receipt of a properly completed and executed Ratio
Certificate without retroactive effect.
11. Notice of Borrowing and Notice of Rate Election Replaced.
Schedule 2.4.1, the form of Notice of Borrowing, and Schedule 2.4.2, the form of
Notice of Rate Election, are each hereby
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<PAGE> 7
amended and restated in the forms attached to this First Amendment as Schedule
2.4.1 and Schedule 2.4.2, respectively. The interest rates applicable to
Interest Rate Options selected by Borrowers in a Notice of Borrowing or Notice
of Rate Election shall be determined with reference to the most recent Ratio
Certificate prepared by Borrowers for the preceding Calendar Quarter.
12. Maximum Available Credit. The references to "$44,000,000" in
the fourth and fifth lines of Section 2.4.13 (as the aggregate maximum available
credit under all Loans) are hereby replaced with "$47,500,000."
13. Mandatory Payments. Section 2.4.14 of the Loan Agreement is
hereby amended and restated as follows:
2.4.14 Mandatory Payments. In the event that the principal
amount outstanding under (i) the Revolving Credit shall at any
time exceed $4,000,000, (ii) the Term Loan shall at any time
exceed $18,500,000, (iii) the Line of Credit shall at any time
exceed $20,000,000, or (iv) the Second Revolving Credit shall
at any time exceed $5,000,000, then in any such case,
Borrowers shall immediately repay the excess to Bank.
14. Second Revolving Credit. The following paragraphs are hereby
added to the Loan Agreement as Section 2.5 and related subsections:
2.5 Second Revolving Credit.
2.5.1 Amount; Duration; Minimum Advance. Subject to
the terms and conditions set forth herein, and provided that
no Event of Default or Unmatured Event of Default has occurred
and is continuing, commencing on August 19, 1998 and
terminating on the Second Revolving Credit Termination Date,
Bank shall, upon Borrowers' written request, extend to
Borrowers the Second Revolving Credit pursuant to which Bank
shall make Cash Advances to Borrowers in an aggregate amount
outstanding at any one time not to exceed $5,000,000, which
amounts shall be at least $250,000 or integral multiples
thereof, and which Borrowers may, from time to time, borrow,
repay and re-borrow. On the Second Revolving Credit
Termination Date all Cash Advances under the Second Revolving
Credit shall become due and payable in accordance with Section
2.5.3 hereof and the Second Revolving Credit shall terminate.
2.5.2 Interest Rate. Cash Advances under the Second
Revolving Credit shall bear interest on the unpaid principal
balance thereof from the Funding Date until paid in full
(whether by acceleration or otherwise) at the sum of (i) the
Base Rate or the Adjusted LIBOR on the relevant Interest Rate
Determination Date as selected by Borrowers at the time a
Notice of Borrowing or Notice of Rate Election is given
pursuant to Sections 2.4.1 and 2.4.2 hereof., plus (ii) an
additional percentage per annum determined in reference to
Borrowers' Debt to Earnings Ratio set forth in the table
below:
7
<PAGE> 8
Second Revolving Credit Interest Rate
<TABLE>
<CAPTION>
Cash Flow Ratio LIBOR plus Base Rate
Greater than or equal to: But less than: -------------- ----------------
<S> <C> <C> <C>
4.0:1 ------ 2.75% plus 0.25%
3.5:1 4.0:1 2.50% plus 0.25%
3.0:1 3.5:1 2.25% plus 0
2.5:1 3.0:1 1.75% plus 0
- ------- 2.5:1 1.50% minus 0.25%
</TABLE>
The Cash Flow Ratio shall be determined and calculated in
accordance with Section 6.1.13.3 hereof as of the last day of
each Calendar Quarter on a rolling four Calendar Quarter
historical basis. The applicable interest rate for Cash
Advances under the Second Revolving Credit shall change when
and as the Cash Flow Ratio changes as reported to Bank on a
properly completed and executed Ratio Certificate within 30
days after the expiration of each Calendar Quarter. Any change
in the Cash Flow Ratio shall change the interest rate
applicable to all outstanding Cash Advances under the Second
Revolving Credit and shall become effective five days after
Bank's timely receipt of a properly completed and executed
Ratio Certificate without retroactive effect.
Notwithstanding the provisions of Section 2.4.4 to the
contrary, all Cash Advances under the Second Revolving Credit
which are Adjusted LIBOR Loans shall have Interest Periods of
30 days.
2.5.3 Payment of Principal and Interest. The
outstanding principal balance of, and any accrued and unpaid
interest on, each Cash Advance under the Second Revolving
Credit, and all Bank's Costs pertaining thereto, shall be
payable on the earlier of the Second Revolving Credit
Termination Date or the date on which the same is payable as
provided in Section 8.2 hereof. Interest on the Second
Revolving Credit shall be payable as provided in Section 2.4.5
hereof.
2.5.4 Second Revolving Credit Note. To evidence
Borrowers' joint and several obligations under the Second
Revolving Credit, Borrowers shall execute and deliver the
Second Revolving Credit Note to Bank.
2.5.5 Maximum Second Revolving Credit. If the
outstanding principal balance of all Cash Advances under the
Second Revolving Credit exceeds $5,000,000, Borrowers shall
immediately repay such excess to Bank without demand or
notice.
2.5.6 Conditions Precedent. In addition to the terms
and conditions set forth in this Section 2.5, as conditions
precedent to the extension by Bank of each Cash Advance under
the Second Revolving Credit, Borrowers agree to provide to
Bank, in
8
<PAGE> 9
form and substance satisfactory to Bank and Bank's counsel,
the following:
(i) a copy of the invoice or definitive or
proposed agreement for the Capital Expenditure to which such
Cash Advance relates, together with copies of all other
relevant documentation relating thereto; and
(ii) such additional documents or instruments
as Bank may reasonably require.
2.5.7 Second Revolving Credit Fee. Borrowers shall pay to
Bank a fee equal to $25,000 (calculated as 0.5% of $5,000,000)
for establishing the Second Revolving Credit.
2.5.8 Use of Proceeds. The proceeds of the Second
Revolving Credit shall be used by Borrowers for capital
improvements related to the ALC plant.
15. Additional Collateral.
15.1 Revolving Credit and Second Revolving Credit
Collateralized. Borrowers hereby ratify and confirm the grant of security
interests in and to the personal property of Borrowers described in Section
3.1.1 of the Loan Agreement to secure the prompt and full payment of the Term
Loan Indebtedness and performance of the Loan Documents, and Borrowers hereby
re-grant, re-assign and deliver to Bank a security interest in the personal
property described in Section 3.1.1 to secure the prompt and full payment of all
Cash Advances, Bank's Costs and other costs, fees and expenses arising under or
in connection with the Revolving Credit and the Second Revolving Credit.
15.2 Accounts; Inventory As additional collateral security for
the prompt and full payment of all of the Indebtedness, all Bank's Costs in
connection therewith and performance of the Loan Documents, in consideration of
the increase to the Term Loan and the establishment of the Second Revolving
Credit, each Borrower hereby grants to Bank a security interest in and lien on
all of such entity's right, title and interest in, to, and under the following
assets, whether now owned or hereafter acquired, created, or reacquired:
(i) all Accounts (as defined in the Uniform
Commercial Code as enacted in Pennsylvania), including without limitation,
accounts receivable, contract rights, book debts, notes, drafts and other
obligations or indebtedness owing to any Borrower that evidence or arise from
the sale, lease, or exchange of goods or other property and/or the performance
of services, rights to any goods, services or other property represented by the
foregoing (including returned or repossessed goods and unpaid Sellers' rights of
rescission, replevin, reclamation and rights to stoppage in transit), moneys due
or to become due to any Borrower under all contracts for the sale, lease or
exchange of goods or other property and/or performance of services (whether
earned by performance), and all proceeds of the foregoing and all collateral
security and guaranties of any kind given by any person with respect to the
foregoing;
(ii) all Inventory (as defined in the Uniform
Commercial Code as enacted in Pennsylvania) wherever located, including without
limitation, finished goods, raw materials,
9
<PAGE> 10
work in process, parts, materials, supplies (including packaging and shipping
materials) used or consumed in the quarrying, pyroprocessing, crushing of
limestone or otherwise in the production or manufacture of goods or services for
sale, including all returned and repossessed goods; and
(iii) all proceeds of the foregoing, including
proceeds of proceeds.
15.3 Covenants Regarding Accounts. Except as otherwise
provided herein, each Borrower shall continue to collect, at its own expense,
all amounts due or to become due such Borrower under the Accounts. In connection
with such collections, each Borrower may take such action as such Borrower may
deem necessary or advisable to enforce collection of the Accounts; provided,
that Bank shall have the right at any time after the occurrence of an Event of
Default to: (a) notify the customers or obligors on any Accounts of the
assignment of such Accounts to Bank and to direct such customers or obligors to
make payment of all amounts due or to become due directly to Bank; (b) enforce
collection of any such Accounts; and (c) adjust, settle or compromise the amount
or payment of such Accounts. After the occurrence of an Event of Default: (i)
all amounts and proceeds (including instruments) received by any Borrower with
respect to the Accounts shall be received in trust for the benefit of Bank,
shall be segregated from other funds of Borrowers and shall be forthwith paid
over to Bank in the same form as so received (with any necessary endorsement);
and (ii) no Borrower shall adjust, settle or compromise the amount of payment of
any Account, or release wholly or partly any customer or obligor thereof, or
allow any credit or discount thereon without the prior consent of Bank.
15.4 Bank Appointed Attorney-in-Fact.
(a) Each Borrower hereby irrevocably appoints Bank as
such Borrower's attorney-in-fact, with full authority in the place and stead of
such Borrower and in the name of such Borrower, Bank or otherwise, from time to
time, upon the occurrence and during the continuance of an Event of Default, in
Bank's reasonable discretion to take any action and to execute any instrument
that Bank may deem necessary or advisable to accomplish the purposes of this
Agreement, including, without limitation:
(i) to obtain and adjust insurance required to be
paid to Bank;
(ii) to ask, demand, collect, sue for, recover,
compound, receive and give acquittance and receipts for moneys
due and to become due under or in respect of any of the
Collateral;
(iii) to receive, endorse, and collect any drafts
or other instruments, documents and chattel paper, in
connection with clauses (i) and (ii) above;
(iv) to file any claims or take any action or
institute any proceedings that Bank may deem necessary or
desirable for the collection of any of the Collateral or
otherwise to enforce the rights of Bank with respect to any of
the Collateral;
(v) to pay or discharge taxes or liens levied or
placed upon or threatened against the Collateral, the legality
or validity thereof, and the amounts necessary to discharge
the same to be determined by Bank in its sole discretion, and
10
<PAGE> 11
such payments made by Bank to become obligations of such
Borrower to Bank, due and payable immediately without demand;
(vi) to sign and endorse any invoices, freight or
express bills, bills of lading, storage or warehouse receipts,
assignments, verifications and notices in connection with
Accounts; and
(vii) generally to sell, transfer, pledge, make any
agreement with respect to or otherwise deal with any of the
Collateral as fully and completely as though Bank were the
absolute owner thereof for all purposes, and to do, at Bank's
option and Borrowers' expense, at any time or from time to
time, all acts and things that Bank reasonably deems necessary
to protect, preserve or realize upon the Collateral.
(b) Notwithstanding any limitation on the exercise of the
Bank's power contained in (a) above, each Borrower hereby irrevocably appoints
Bank as such Borrower's attorney-in-fact, with full authority in the place and
stead of such Borrower and in the name of such Borrower, Bank or otherwise, at
all times and from time to time, in Bank's discretion, to sign and endorse any
financing statements, continuation statements and other documents necessary or
advisable to perfect the security interests relating to the Collateral.
Each Borrower hereby ratifies, confirms and approves all acts of Bank made or
taken pursuant to this Section. Neither Bank nor any person designated by Bank
shall be liable for any acts or omissions or for any error of judgment or
mistake of fact or law unless the same shall constitute gross negligence or
willful misconduct. This power, being coupled with an interest, is irrevocable
so long as this Agreement shall remain in force.
16. Financial Covenants. Section 6.1.13.3 of the Loan Agreement is
hereby deleted and replaced with the following:
6.1.13.3 Cash Flow Ratio. Maintain at all times the Borrowers' Cash
Flow Ratio at no greater than 4.5:1. Borrowers' Cash Flow Ratio
shall be tested quarterly by Borrowers' delivery to Bank within 30
days after each Calendar Quarter of a completed and executed Ratio
Certificate as of the last day of such Calendar Quarter on a
rolling four Calendar Quarter historical basis, commencing with the
Calendar Quarter ending December 31, 1998;
6.1.13.4 Interest Coverage Ratio. Maintain at all times the ratio
of Borrowers' EBIT to Interest Expense at no less than 1.5:1 which
shall be tested annually upon Borrowers' submission of their
audited consolidated Financial Statements, commencing with the
Fiscal Year ending December 31, 1998.
17. Representations and Warranties. To induce Bank to enter into this
First Amendment, Borrowers jointly and severally represent and warrant to Bank
as follows:
11
<PAGE> 12
17.1 After giving effect to the modifications contained
herein, all representations, warranties and covenants made by Borrowers to Bank
in the Loan Agreement (except those relating to a specific date) are true and
correct in all material respects as of the date hereof, with the same force and
effect as though made as of the date hereof;
17.2 No Event of Default or Unmatured Event of Default has
occurred and is continuing under the Loan Agreement as of the date hereof;
17.3 Each Borrower is a corporation validly subsisting under
the laws of the state of its incorporation; the execution, delivery and
performance of this First Amendment and any other documents and instruments
executed and delivered to Bank in connection herewith (i) are within each
Borrower's corporate powers, (ii) have been duly authorized by each Borrower's
Board of Directors, (iii) do not contravene any provision of law or any
indenture, agreement or undertaking to which any Borrower is a party or is
otherwise bound, any Borrower's Certificate of Incorporation, bylaws, or any
resolution of the Board of Directors of any Borrower, and (iv) require no
consent or approval of any governmental authority or any third party; and
17.4 This First Amendment and any other documents and
instruments executed and delivered to Bank in connection herewith have been
validly executed and are enforceable against the Borrower or Borrowers party
thereto in accordance with their respective terms.
Any breach by Borrowers of any of the representations and warranties contained
in this First Amendment shall constitute an Event of Default under the Loan
Agreement.
18. Conditions Precedent. The effectiveness of this First Amendment,
and the performance by Bank of its obligations described herein, are subject to
the conditions precedent that Bank shall have received, in form and substance
satisfactory to Bank:
18.1 an Allonge to the Amended and Restated Term Note in the
form attached hereto as Exhibit "A" duly executed by Borrowers;
18.2 an Allonge to the Amended and Restated Note in the form
attached hereto as Exhibit "B" duly executed by Borrowers;
18.3 the Second Revolving Credit Note in the form attached
hereto as Exhibit "C" duly executed by Borrowers;
18.4 the Second Mortgages in the forms attached hereto as
Exhibits "D" and "E" duly executed by Borrowers;
18.5 title searches of the Real Estate dated within 15 days
prior to the date hereof in all respects satisfactory to Bank;
18.6 a completed and executed Ratio Certificate for the
Calendar Quarter ended June 30, 1998;
18.7 a certificate signed by the Secretary of each Borrower
certifying that there have been no amendments or other alterations to such
Borrower's Certificate of Incorporation or
12
<PAGE> 13
Bylaws since December 30, 1997, or if there has been any such modifications,
attaching a true, correct and complete copy thereof;
18.8 resolutions of the Boards of Directors of each Borrower
authorizing the execution, delivery and performance of this First Amendment, and
the other documents and instruments executed and delivered to Bank in connection
herewith, certified by such Borrower's Secretary that the same are true and
complete copies of the originals thereof and remain in full force and effect,
not having been modified or rescinded, as of the date hereof; and
18.9 UCC-1 Financing Statements listing each Borrower as
debtor and Bank as secured party with respect to the Accounts and Inventory.
In addition to the conditions precedent set forth above,
Borrowers agree to obtain within 120 days after the date hereof Phase I
environmental site assessments (the "Site Assessments") of each of the Arkansas
Real Estate and the Texas Real Estate performed by an environmental engineering
firm or firms satisfactory to Bank and promptly and fully to communicate to Bank
the results of such Site Assessments. Borrowers shall comply with all applicable
laws, ordinances, rules, and regulations regarding the cleanup and disposal of
any hazardous substances, pollutants, contaminants, hazardous waste, residual
waste, or solid waste (as such terms are defined in Section 5.1.14 of the Loan
Agreement) on, in and under the Real Estate. It shall be an additional Event of
Default under the Loan Agreement if the anticipated costs of environmental
remediation required by such laws, ordinances, rules and regulations would
result in a Materially Adverse Effect on any Borrower or materially reduce the
value of the Real Estate as a whole or the mineral reserves therein.
19. Miscellaneous.
19.1 Entire Agreement. The Loan Agreement, as amended by this
First Amendment, and the other Loan Documents, embody the entire agreement and
understanding between Bank and Borrowers. The Loan Agreement, together with this
First Amendment, and all documents executed and delivered herewith, supersede
all prior agreements and understandings relating to subject matter hereof. This
First Amendment together with the Loan Agreement, and the documents executed and
delivered in connection herewith and therewith shall be construed as one
agreement, and in the event of any inconsistency, the provisions of any
promissory note evidencing a portion of the Indebtedness shall control over the
provisions of this First Amendment.
19.2 Counterparts. This First Amendment may be executed in any
number of counterparts and by different parties on separate counterparts, each
of which counterparts, when so executed and delivered, shall be deemed to be an
original and all of which counterparts, taken together shall constitute but one
and the same agreement. This First Amendment shall be effective upon the
execution and delivery of a counterpart hereof by each of the parties hereto.
19.3 Captions. The captions or headings in this First
Amendment are for convenience of reference only and in no way define, limit, or
describe the scope or intent of any provision of this First Amendment.
19.4 Successors and Assigns; Governing Law. This First
Amendment shall be binding upon and inure to the benefit of the respective
successors and assigns of the parties hereto
13
<PAGE> 14
and shall be governed by, and construed and enforced in accordance with, the
internal laws of the Commonwealth of Pennsylvania without regard to its
principles of conflicts of laws.
IN WITNESS WHEREOF, the undersigned have executed this First Amendment
as of the day and year first written above.
BANK:
FIRST UNION NATIONAL BANK
(successor to CoreStates Bank, N.A.)
By:
--------------------------
CLIFFORD W. KEWLEY,
Vice President
BORROWERS:
UNITED STATES LIME & MINERALS, INC.
Attest:
By: /s/ LARRY T. OHMS By: /s/ TIMOTHY W. BYRNE
-------------------- ----------------------------
Larry T. Ohms, Controller Timothy W. Byrne, President
and Assistant Treasurer
TEXAS LIME COMPANY
By: /s/ LARRY T. OHMS By: /s/ TIMOTHY W. BYRNE
-------------------- ----------------------------
Larry T. Ohms, Controller Timothy W. Byrne, President
and Assistant Treasurer
ARKANSAS LIME COMPANY
By: /s/ LARRY T. OHMS By: /s/ TIMOTHY W. BYRNE
-------------------- ----------------------------
Larry T. Ohms, Controller Timothy W. Byrne, President
and Assistant Treasurer
14
<PAGE> 15
Schedule 2.1.1
Cash Flow Ratio Certificate for the Calendar Quarter ended ___________
Clifford W. Kewley, Vice President
1339 Chestnut Street
Transportation, Leasing and Construction Industry Services
11th Floor, Widener Building
FC #1-8-11-24
Philadelphia, PA 19101
I, ___________________, the undersigned officer of each of United
States Lime & Minerals, Inc. ("U.S. Lime"), Arkansas Lime Company ("ALC") and
Texas Lime Company ("TLC") (U.S. Lime, ALC and TLC shall be referred to herein
collectively as the "Borrowers"), hereby certify to First Union National Bank,
as successor to CoreStates Bank, N.A. ("Bank") that the following information,
with respect to the determination of Borrowers' Cash Flow Ratio for compliance
with the financial covenant in Section 6.1.13.3 of the Amended and Restated Loan
and Security Agreement dated December 30, 1997, as amended, by and among
Borrowers and Bank (the "Loan Agreement") and determining the applicable
additional spread over the Interest Rate Options, is true and correct as of the
date hereof::
<TABLE>
<CAPTION>
Funded Debt
<S> <C> <C>
Term Loan $________________
Revolving Credit $________________
Second Revolving Credit $________________
Line of Credit $________________
Other Funded Debt $________________
Total Funded Debt (A) $__________________
EBITDA
Net Income $________________
plus Interest Expense $________________
plus Federal and State taxes $________________
plus Depreciation $________________
plus Amortization $________________
EBITDA (B) $___________________
Ratio (A): (B) ___________________
Maximum Ratio 4.5:1
</TABLE>
All initially capitalized terms herein that are not defined herein
shall have the meanings
15
<PAGE> 16
ascribed to them in the Loan Agreement, unless the context requires to the
contrary.
The undersigned hereby certifies that no Event of Default or
Unmatured Event of Default under the Loan Agreement has occurred and is
continuing.
UNITED STATES LIME & MINERALS, INC.
ARKANSAS LIME COMPANY
TEXAS LIME COMPANY
By:
----------------------------
16
<PAGE> 17
Schedule 2.4.1
NOTICE OF BORROWING
United States Lime & Minerals, Inc.
Arkansas Lime Company
Texas Lime Company
Clifford W. Kewley
Vice President
First Union National Bank
1339 Chestnut Street
Transportation, Leasing and Construction Industry Services
11th Floor, Widener Building
FC #1-8-11-24
Philadelphia, PA 19101
_________, 19__
This Notice of Borrowing ("Notice") is provided to First
Union National Bank ("Bank") to evidence the request of United States Lime &
Minerals, Inc., Arkansas Lime Company and Texas Lime Company ("Borrowers") to
borrow funds pursuant to Section 2.4.1 of the Amended and Restated Loan and
Security Agreement, dated December 30, 1997, as amended, by and among Borrowers
and Bank (the "Loan Agreement"). All capitalized terms not defined herein shall
have the same meanings as provided in the Loan Agreement unless the context
clearly requires to the contrary.
Borrowers desire to borrow _____________________________
__________ to be funded on ____________, 19__ (the "Funding Date"). This Notice
is provided to Bank by 11:00 am. (Philadelphia time) on the same Business Day as
the Funding Date.
The Cash Advance requested hereby is to be under the:
[ ] Revolving Credit;
[ ] Line of Credit, and is accompanied (or preceded) by
the documents listed in Section 2.3.6 of the Loan
Agreement;
[ ] Second Revolving Credit, and is accompanied by the
documents listed in Section 2.5.6 of the Loan Agreement.
The representations and warranties set forth in the Loan
Agreement and the other Loan Documents (except those which relate to a specific
date) are true and correct as if made on the date hereof. [Include if applicable
- -- Borrowers hereby request Bank to open Letters of Credit in the face amount of
$__________ in form of ___________________ with an expiration date of
_____________ to be paid in accordance with the notation attached hereto.]
17
<PAGE> 18
The undersigned hereby certifies that no Event of Default or Unmatured Event of
Default under the Loan Agreement has occurred and is continuing.
UNITED STATES LIME & MINERALS, INC.
ARKANSAS LIME COMPANY
TEXAS LIME COMPANY
By:
----------------------------
This Notice is provided to Bank to confirm a telephone
Notice of Borrowing by Borrowers on __________________, 19__, at approximately
_________________ _.m. (Philadelphia time), as provided in subsection 2.4.1 of
the Loan Agreement.
UNITED STATES LIME & MINERALS, INC.
ARKANSAS LIME COMPANY
TEXAS LIME COMPANY
By:
----------------------------
18
<PAGE> 19
Schedule 2.4.2
NOTICE OF RATE ELECTION
United States Lime & Minerals, Inc.
Arkansas Lime Company
Texas Lime Company
Clifford W. Kewley
First Union National Bank
Vice President
1339 Chestnut Street
Transportation, Leasing and Construction Industry Services
11th Floor, Widener Building
FC #1-8-11-24
Philadelphia, PA 19101
_________, 19__
This Notice of Rate Election ("Notice") is provided to First Union
National Bank ("Bank") to evidence the desire of United States Lime & Minerals,
Inc., Arkansas Lime Company and Texas Lime Company ("Borrowers") to continue or
change the basis for determining the interest rate on Loans pursuant to the
Amended and Restated Loan and Security Agreement, dated December 30, 1997, as
amended, by and among Borrowers and Bank (the "Loan Agreement"). All capitalized
terms not defined herein shall have the same meaning as provided in the Loan
Agreement.
Borrowers desire to (change) (continue) $____________ of (Revolving
Credit Loans) (Term Loans) (Line of Credit Loans) (Second Revolving Credit
Loans) for which (there is no present Interest Period) (the Interest Period
expires on _________) (to) (as) (Adjusted LIBOR Loans) (a Fixed Rate Loan) as
follows:
$___________ Adjusted LIBOR Loans with an Interest Period of _____________
months, pursuant to Section 2.4.2 (or with an interest period
of one month pursuant to Section 2.5.2) of the Loan Agreement;
the first day of such Interest Period is hereby requested to be
______.
$___________ Base Rate Loan commencing _______________.
$___________ Fixed Rate Loan to bear interest at __% per annum for the
period from ___________ to _____________, pursuant to Section
2.1.4 of the Loan Agreement.
This Notice, if requesting an Adjusted LIBOR Loan, shall be irrevocable
on and after the Interest Rate Determination Date requested herein. The
undersigned hereby certifies that no Event of Default or Unmatured Event of
Default under the Loan Agreement has occurred and is continuing.
UNITED STATES LIME & MINERALS, INC.
ARKANSAS LIME COMPANY
TEXAS LIME COMPANY
By:
----------------------------
<PAGE> 20
Exhibit "A"
ALLONGE
TO
AMENDED AND RESTATED TERM NOTE
ALLONGE, dated August ___, 1998 attached to and forming a
part of the Amended and Restated Term Note, dated December 30, 1997 (the "Term
Note"), made by UNITED STATES LIME & MINERALS, INC., a Texas corporation
(formerly known as Scottish Heritable, Inc.), TEXAS LIME COMPANY, a Texas
corporation, and ARKANSAS LIME COMPANY, an Arkansas corporation (collectively,
the "Borrowers"), payable to the order of First Union National Bank, as
successor to CoreStates Bank, N.A. (the "Bank") in the original principal amount
of $15,000,000.
The first paragraph of the Term Note is amended and restated
to read in full as follows:
FOR VALUE RECEIVED, UNITED STATES LIME & MINERALS, INC., a
Texas corporation (formerly known as Scottish Heritable,
Inc.), TEXAS LIME COMPANY, a Texas corporation, and ARKANSAS
LIME COMPANY, an Arkansas corporation (collectively referred
to herein as "Borrowers"), jointly and severally promise to
pay to the order of First Union National Bank, a national
banking association, as successor to CoreStates Bank, N.A.,
its successors and assigns ("Bank"), the principal sum of
Eighteen Million Five Hundred Thousand Dollars ($18,500,000)
together with interest thereon at (i) a fluctuating rate per
annum equal to the Base Rate or the Adjusted LIBOR plus an
additional percentage per annum determined with reference to
Borrowers' Cash Flow Ratio pursuant to the table set forth in
Section 2.1.1 of the Amended and Restated Loan and Security
Agreement of even date herewith, as amended (the "Loan
Agreement") by and among Bank and Borrowers, which fluctuating
rate shall change at the times and under the conditions set
forth in the Loan Agreement, or (ii) at a Fixed Rate per
annum, payable in accordance with Section 2.1 of the Loan
Agreement.
The third paragraph of the Term Note is amended and restated
to read in full as follows:
Principal shall be paid in equal monthly installments of
$178,571 each commencing on the first business day of the
month next following the Term Loan Amortization Date
(Borrowers and Bank acknowledge that no payments of principal
have been made or were required to be made prior to October 1,
1998). Commencing on October 1, 1998, the outstanding
principal balance of the Term Loan shall be repaid in 59 equal
monthly installments of $ 220,238 each followed by a final
balloon payment of the remaining outstanding principal balance
of the Term Loan, together with all accrued and unpaid
interest and Bank's Costs pertaining thereto, due on September
1, 2003. Each installment of principal hereunder, including
the final balloon payment, shall be due on the first Business
Day of each month.
<PAGE> 21
In all other respects, the Term Note is confirmed, ratified
and approved and, as amended by this Allonge, shall continue in full force and
effect.
IN WITNESS WHEREOF, the Borrowers and the Bank have caused
this Allonge to be executed and delivered by their respective duly authorized
officers as of the date and year first above written.
Attest: UNITED STATES LIME & MINERALS, INC.
By: /s/ LARRY T. OHMS By: /s/ TIMOTHY W. BYRNE
----------------------------- ------------------------------
Larry T. Ohms, Controller Timothy W. Byrne,
and Assistant Treasurer President
Attest: TEXAS LIME COMPANY
By: /s/ LARRY T. OHMS By: /s/ TIMOTHY W. BYRNE
----------------------------- ------------------------------
Larry T. Ohms, Controller Timothy W. Byrne,
and Assistant Treasurer President
Attest: ARKANSAS LIME COMPANY
By: /s/ LARRY T. OHMS By: /s/ TIMOTHY W. BYRNE
----------------------------- ------------------------------
Larry T. Ohms, Controller Timothy W. Byrne,
and Assistant Treasurer President
Accepted and agreed to:
FIRST UNION NATIONAL BANK,
(successor to CoreStates Bank, N.A.)
By:
------------------------------
Clifford W. Kewley
Vice President
( 2 )
<PAGE> 22
Exhibit "B"
ALLONGE
TO
AMENDED AND RESTATED NOTE
ALLONGE, dated August 31, 1998 attached to and forming a
part of the Amended and Restated Note, dated December 30, 1997 (the "Note"),
made by UNITED STATES LIME & MINERALS, INC., a Texas corporation (formerly known
as Scottish Heritable, Inc.), TEXAS LIME COMPANY, a Texas corporation, and
ARKANSAS LIME COMPANY, an Arkansas corporation (collectively, the "Borrowers"),
payable to the order of First Union National Bank, as successor to CoreStates
Bank, N.A. (the "Bank") in the original principal amount of $4,000,000.
The third paragraph of the Note is amended and restated to
read in full as follows:
"Borrowers also promise to pay interest on the unpaid
principal amount of all Cash Advances from the date
made to maturity (whether by acceleration or
otherwise) or earlier repayment at a fluctuating rate
per annum equal to the Base Rate or the Adjusted LIBOR
plus an additional percentage per annum determined
with reference to Borrowers' Cash Flow Ratio pursuant
to the table set forth in Section 2.2.2 of the Loan
Agreement, which fluctuating rate shall change at the
times and under the conditions set forth in the Loan
Agreement."
In all other respects, the Note is confirmed, ratified and
approved and, as amended by this Allonge, shall continue in full force and
effect.
IN WITNESS WHEREOF, the Borrowers and the Bank have caused
this Allonge to be executed and delivered by their respective duly authorized
officers as of the date and year first above written.
Attest: UNITED STATES LIME & MINERALS, INC.
By: /s/ LARRY T. OHMS By: /s/ TIMOTHY W. BYRNE
------------------------------ --------------------------------
Larry T. Ohms, Controller Timothy W. Byrne,
and Assistant Treasurer President
[Signatures continued on next page]
<PAGE> 23
Attest: TEXAS LIME COMPANY
By: /s/ LARRY T. OHMS By: /s/ TIMOTHY W. BYRNE
------------------------------ --------------------------------
Larry T. Ohms, Controller Timothy W. Byrne,
and Assistant Treasurer President
Attest: ARKANSAS LIME COMPANY
By: /s/ LARRY T. OHMS By: /s/ TIMOTHY W. BYRNE
------------------------------ --------------------------------
Larry T. Ohms, Controller Timothy W. Byrne,
and Assistant Treasurer President
Accepted and agreed to:
FIRST UNION NATIONAL BANK,
(successor to CoreStates Bank, N.A.)
By:
--------------------------------
Clifford W. Kewley
Vice President
( 2 )
<PAGE> 24
Exhibit "C"
SECOND REVOLVING CREDIT
NOTE
$5,000,000 August 31, 1998
FOR VALUE RECEIVED, UNITED STATES LIME & MINERALS, INC., a Texas
corporation (formerly known as Scottish Heritable, Inc.), TEXAS LIME COMPANY, a
Texas corporation, and ARKANSAS LIME COMPANY, an Arkansas corporation
(collectively referred to herein as "Borrowers"), jointly and severally promise
to pay to the order of FIRST UNION NATIONAL BANK, a national banking
association, as successor to CoreStates Bank, N.A., and its successors and
assigns ("Bank"), the lesser of (x) Five Million Dollars ($5,000,000) or (y) the
aggregate unpaid principal amount of all Cash Advances made by Bank to Borrowers
or any Borrower under the Second Revolving Credit pursuant to the Amended and
Restated Loan and Security Agreement dated December 30, 1997, by and among
Borrowers and Bank, as amended by the First Amendment to Amended and Restated
Loan and Security Agreement of even date herewith (collectively, the "Loan
Agreement"), which principal amount and all accrued and unpaid interest thereon
and Bank's Costs pertaining thereto shall be payable on July 31, 2000, or such
later date as may be agreed to in writing by Bank.
This Note is issued pursuant to and entitled to the benefits of the
Loan Agreement to which reference is hereby made for a more complete statement
of the terms and conditions with respect hereto. All initially capitalized terms
used herein shall have the same meanings as ascribed to them in the Loan
Agreement unless the context clearly requires to the contrary.
Borrowers promise to pay interest on the unpaid principal amount of all
Cash Advances from the date made to maturity (whether by acceleration or
otherwise) or earlier repayment, at a fluctuating rate per annum equal to the
sum of the Base Rate or the Adjusted LIBOR plus an additional percentage per
annum determined with reference to Borrrowers' Cash Flow Ratio pursuant to the
table set forth in Section 2.5.2 of the Loan Agreement, which fluctuating rate
shall change at the times and under the conditions set forth in the Loan
Agreement.
Interest shall be payable on the outstanding principal balance hereof
as set forth in Section 2.4.5 of the Loan Agreement, at the Interest Rate Option
selected pursuant to Section 2.4.2 of the Loan Agreement. Interest shall be
calculated on the basis of a 360 day year, and charged for the number of days
actually elapsed during any year or part thereof.
This Note may be prepaid at the times, in the amounts and with the
prepayment premiums set forth in Section 2.4.8 of the Loan Agreement.
All payments hereunder shall be made by Borrowers jointly and severally
without defense, set off, or counterclaim and in same day funds and delivered to
Bank not later than 12:00 noon (Philadelphia time) on the date due at Bank's
office located at 1339 Chestnut Street, Transportation, Leasing and Construction
Industry Services, 11th Floor, Widener Building, FC #1-8-11-24, Philadelphia, PA
19101, or such other place as shall be designated in writing for such purpose in
accordance with the terms of the Loan Agreement.
Each Borrower authorizes Bank to charge such Borrower's demand deposit
account with
<PAGE> 25
Bank in order to cause timely payment to be made to Bank of all principal,
interest and fees hereunder as provided in Section 1.5 of the Loan Agreement.
Whenever any payment on this Note shall be stated to be due on a day
which is not a Business Day, such payment shall be made on the next succeeding
Business Day and such extension of time shall be included in the computation of
interest on this Note.
Any principal payment hereon not paid when due, and to the extent
permitted by applicable law, any interest payment hereon not paid when due, and
any other amount due to Bank hereunder, under the Loan Agreement or under any
other Loan Document not paid when due, in any case whether at stated maturity,
by notice of prepayment, by acceleration or otherwise, shall thereafter bear
interest payable upon demand at a rate which is, with respect to Adjusted LIBOR
Loans only, 5% per annum in excess of the Adjusted LIBOR until the expiration of
the then applicable Interest Period, and after the expiration of the then
applicable Interest Period, and in all cases with respect to Base Rate Loans, at
a rate which is 2.75% per annum in excess of the Base Rate.
It shall be an event of default hereunder if an Event of Default shall
have occurred under the Loan Agreement (a "Default"). In addition to other
remedies of Bank as set forth in this Note, the Loan Agreement, or any other
Loan Document, upon the occurrence of a Default which shall be continuing, Bank
may, without demand, by written notice to Borrowers, cause this Note to become
immediately due and payable in the manner, upon the conditions and with the
effect provided in the Loan Agreement.
THE FOLLOWING SETS FORTH A WARRANT OF ATTORNEY TO CONFESS JUDGMENT
AGAINST BORROWERS OR ANY BORROWER. IN GRANTING THIS WARRANT OF ATTORNEY TO
CONFESS JUDGMENT AGAINST BORROWERS OR ANY BORROWER, EACH BORROWER, FOLLOWING
CONSULTATION WITH (OR DECISION NOT TO CONSULT WITH) SEPARATE COUNSEL FOR SUCH
BORROWER, AND WITH KNOWLEDGE OF THE LEGAL EFFECT HEREOF, HEREBY WAIVES ANY AND
ALL RIGHTS SUCH BORROWER HAS, OR MAY HAVE TO PRIOR NOTICE AND AN OPPORTUNITY TO
BE HEARD UNDER THE CONSTITUTIONS AND LAWS OF THE UNITED STATES AND THE
COMMONWEALTH OF PENNSYLVANIA. EACH BORROWER SPECIFICALLY ACKNOWLEDGES THAT BANK
HAS RELIED ON THIS WARRANT OF ATTORNEY IN GRANTING THE FINANCIAL ACCOMMODATIONS
DESCRIBED HEREIN.
EACH BORROWER IRREVOCABLY AUTHORIZES AND EMPOWERS ANY ATTORNEY OF ANY
COURT OF RECORD TO APPEAR FOR SUCH BORROWER IN ANY AND ALL ACTIONS, AND UPON THE
OCCURRENCE OF A DEFAULT TO: (I) ENTER JUDGMENT AGAINST SUCH BORROWER FOR THE
PRINCIPAL SUM HEREOF; OR (II) SIGN FOR SUCH BORROWER AN AGREEMENT FOR ENTERING
IN ANY COMPETENT COURT AN AMICABLE ACTION OR ACTIONS TO CONFESS JUDGMENT AGAINST
SUCH BORROWER FOR ALL OR ANY PART OF THE INDEBTEDNESS; AND IN EITHER CASE FOR
INTEREST AND COSTS TOGETHER WITH A REASONABLE COLLECTION FEE. EACH BORROWER
FURTHER IRREVOCABLY AUTHORIZES AND EMPOWERS ANY ATTORNEY OF ANY COURT OF RECORD
TO APPEAR FOR AND ENTER JUDGMENT AGAINST SUCH BORROWER AND IN FAVOR OF BANK OR
ANY HOLDER HEREOF WITH RESPECT TO AN AMICABLE ACTION OF REPLEVIN OR ANY OTHER
ACTION TO RECOVER POSSESSION OF ANY COLLATERAL. EACH BORROWER WAIVES ALL
( 2 )
<PAGE> 26
RELIEF FROM ANY AND ALL APPRAISEMENT OR EXEMPTION LAWS NOW IN FORCE OR HEREAFTER
ENACTED. IF A COPY OF THIS NOTE, VERIFIED BY AFFIDAVIT OF AN OFFICER OF BANK OR
ANY OTHER HOLDER HEREOF, SHALL BE FILED IN ANY PROCEEDING OR ACTION WHEREIN
JUDGMENT IS TO BE CONFESSED, IT SHALL NOT BE NECESSARY TO FILE THE ORIGINAL
HEREOF AND SUCH VERIFIED COPY SHALL BE SUFFICIENT WARRANT FOR ANY ATTORNEY OF
ANY COURT OF RECORD TO APPEAR FOR AND CONFESS JUDGMENT AGAINST EACH BORROWER AS
PROVIDED HEREIN. JUDGMENT MAY BE CONFESSED FROM TIME TO TIME UNDER THE AFORESAID
POWERS WHICH SHALL NOT BE EXHAUSTED BY ONE EXERCISE THEREOF.
Borrowers hereby individually and collectively waive presentment,
demand for payment, notice of dishonor, protest or notice of protest and any and
all notices or demands and, to the full extent permitted by law, the right to
plead any statute of limitations as a defense to any demand hereunder in
connection with the delivery, acceptance or performance of this Note. The joint
and several liabilities and obligations of Borrowers hereunder shall be
unconditional without regard to the liability or obligations of any other party
and shall not be in any manner affected by any indulgence whatsoever granted or
consented to by Bank, including, but not limited to, any extension of time,
renewal, waiver or other modification. Any failure of Bank to exercise any right
hereunder shall not be construed as a waiver of the right to exercise the same
or any other right at any time and from time to time thereafter.
This Note shall be governed as to its validity, interpretation and
effect by the internal laws of the Commonwealth of Pennsylvania. Any and all
actions at law or in equity relating to this Note and the Indebtedness shall be
brought, and jurisdiction may be had, in the courts of Philadelphia County,
Pennsylvania, or at the election of the holder hereof, the United States
District Court for the Eastern District of Pennsylvania. Borrowers consent in
advance to service of process by registered mail, return receipt requested, to
the address set forth in Section 9.3 of the Loan Agreement.
EACH BORROWER AND BANK EXPRESSLY WAIVE ANY RIGHT TO TRIAL BY JURY IN
ANY ACTION BROUGHT BY ANY PARTY WITH RESPECT TO THE INDEBTEDNESS OR ANY LOAN
DOCUMENT.
This Note may not be changed or amended orally but only by an agreement
in writing and signed by the party against whom enforcement of any waiver,
change, modification or discharge is sought.
This Note is entitled to the benefits of certain other Loan Documents.
If any provision of this Note shall for any reason be held to be
invalid or unenforceable, such invalidity or unenforceability shall not affect
any other provision hereof, but this Note shall be construed as if such invalid
or unenforceable provision had never been contained herein.
( 3 )
<PAGE> 27
Borrowers promise to pay all Bank's Costs and expenses, including reasonable
attorneys' fees, as provided in Section 1.6 of the Loan Agreement, incurred in
the collection and enforcement of this Note. Each Borrower and endorsers of this
Note hereby consent to renewals and extensions of time at or after the maturity
hereof, without notice.
IN WITNESS WHEREOF, and intending to be legally bound hereby, Borrowers
have executed this Note, as an instrument under seal, the day and year first
above written.
Attest: UNITED STATES LIME & MINERALS, INC.
By: /s/ LARRY T. OHMS By: /s/ TIMOTHY W. BYRNE
------------------------------ --------------------------------
Larry T. Ohms, Controller Timothy W. Byrne,
and Assistant Treasurer President
TEXAS LIME COMPANY
By: /s/ LARRY T. OHMS By: /s/ TIMOTHY W. BYRNE
------------------------------ --------------------------------
Larry T. Ohms, Controller Timothy W. Byrne,
and Assistant Treasurer President
Attest: ARKANSAS LIME COMPANY
By: /s/ LARRY T. OHMS By: /s/ TIMOTHY W. BYRNE
------------------------------ --------------------------------
Larry T. Ohms, Controller Timothy W. Byrne,
and Assistant Treasurer President
( 4 )
<PAGE> 28
TRANSACTIONS ON NOTE
<TABLE>
<CAPTION>
Amount of Outstanding
Amount of Loan Principal Paid Principal Balance Notation Made
Date Made This Date This Date This Date By
- ---- -------------- -------------- ----------------- -------------
<S> <C> <C> <C> <C>
</TABLE>
( 5 )
<PAGE> 1
EXHIBIT 11
STATEMENT RE COMPUTATION
OF PER SHARE EARNINGS
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------------- -------------------------
1998 1997 1998 1997
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Numerator:
Net income for basic and
diluted earnings per share $ 776,000 $1,321,000 $2,142,000 $3,009,000
---------- ---------- ---------- ----------
Denominator:
Denominator for basic earnings
per common share -
weighted-average shares 3,971,165 3,922,512 3,965,220 3,922,073
Effect of dilutive securities:
Employee stock options 9,832 2,436 9,606 13,345
---------- ---------- ---------- ----------
Denominator for diluted earnings
per common share -
weighted-average shares 3,980,997 3,944,948 3,974,826 3,935,418
========== ========== ========== ==========
Basic earnings per common share $ 0.20 $ 0.34 $ 0.54 $ 0.77
========== ========== ========== ==========
Diluted earnings per common share $ 0.20 $ 0.33 $ 0.54 $ 0.76
========== ========== ========== ==========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JUL-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 2,638
<SECURITIES> 0
<RECEIVABLES> 3,800
<ALLOWANCES> 0
<INVENTORY> 2,969
<CURRENT-ASSETS> 9,505
<PP&E> 68,765
<DEPRECIATION> (31,996)
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