<PAGE> 1
FORM 10-Q
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------
(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, 1994
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 1-7210
REPUBLIC GYPSUM COMPANY
------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 75-1155922
- - ------------------------------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
811 East 30th Avenue, Hutchinson, Kansas 67502-4341
- - ---------------------------------------- ----------
(Address of principal executive offices) (Zip code)
Post Office Box 1307, Hutchinson, Kansas 67504-1307
- - ---------------------------------------- ----------
(Mailing Address) (Zip code)
316-727-2700
--------------------
(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 .
--- ---
On October 31, 1994, there were 10,550,846 shares of the registrant's Common
Stock, $1.00 par value outstanding.
<PAGE> 2
REPUBLIC GYPSUM COMPANY
FORM 10-Q
Quarterly Report
For the Quarter Ended September 30, 1994
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Reference is made to pages 2 through 5 hereof which set forth certain
consolidated financial statements of Registrant in accordance with
Part I of Form 10-Q.
The consolidated financial statements include the accounts of the
Registrant and its subsidiaries, Republic Paperboard Company, Hollis &
Eastern Railroad Company, Delta Roofing Mills, Inc. and LaPorte
Minerals Corporation.
<PAGE> 3
REPUBLIC GYPSUM COMPANY
CONSOLIDATED STATEMENTS OF INCOME
Quarters Ended September 30, 1994 and 1993 (Unaudited)
<TABLE>
<CAPTION>
1994 1993
----------- -----------
<S> <C> <C>
Gross sales_____________________________ $24,781,000 $17,772,000
Less freight and discounts______________ 3,928,000 3,294,000
----------- -----------
Net sales_______________________________ 20,853,000 14,478,000
Costs and expenses:
Cost of sales_________________________ 14,269,000 10,215,000
Selling and administrative expenses___ 2,220,000 1,943,000
----------- -----------
16,489,000 12,158,000
----------- -----------
Operating profit________________________ 4,364,000 2,320,000
Other income, net_______________________ 17,000 114,000
----------- -----------
Income before income taxes______________ 4,381,000 2,434,000
Provision for income taxes______________ 1,705,000 902,000
----------- -----------
Net income______________________________ $ 2,676,000 $ 1,532,000
=========== ===========
Net income per share____________________ $ 0.25 $ 0.14
=========== ===========
Dividends per share_____________________ $ 0.05 $ 0.03
=========== ===========
</TABLE>
See accompanying notes to financial statements.
-2-
<PAGE> 4
REPUBLIC GYPSUM COMPANY
CONSOLIDATED BALANCE SHEETS
September 30, 1994 and June 30, 1994
<TABLE>
<CAPTION>
September 30, June 30,
1994 1994
ASSETS ------------- -----------
(Unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents_____________________ $ 2,403,000 $ 910,000
Investments and marketable securities,
at cost, which approximates market__________ - 500,000
Accounts receivable, net______________________ 10,588,000 7,986,000
Income tax refunds receivable_________________ 219,000 219,000
Inventories:
Finished goods______________________________ 1,210,000 997,000
Raw materials and supplies__________________ 3,683,000 3,396,000
----------- -----------
4,893,000 4,393,000
Prepaid expenses______________________________ 374,000 366,000
Net assets held for sale______________________ 264,000 264,000
----------- -----------
Total current assets________________________ 18,741,000 14,638,000
Property, plant and equipment, at cost__________ 71,416,000 70,166,000
Less accumulated depreciation, amortization
and depletion_______________________________ 33,230,000 32,433,000
----------- -----------
38,186,000 37,733,000
Other assets____________________________________ 634,000 648,000
----------- -----------
Total assets____________________________________ $57,561,000 $53,019,000
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable______________________________ $ 5,697,000 $ 4,838,000
Accrued payroll and employee benefits_________ 1,137,000 1,339,000
Income taxes payable__________________________ 1,661,000 -
Accrued property taxes________________________ 431,000 272,000
Other current liabilities_____________________ 667,000 796,000
----------- -----------
Total current liabilities___________________ 9,593,000 7,245,000
Deferred income taxes___________________________ 3,759,000 3,715,000
Other long-term liabilities_____________________ 886,000 886,000
Stockholders' equity:
Common stock, $1 par value____________________ 10,538,000 10,538,000
Additional paid-in capital____________________ 12,211,000 12,211,000
Retained earnings_____________________________ 20,600,000 18,450,000
Less pension liability adjustment_____________ ( 26,000) ( 26,000)
----------- -----------
Total stockholders' equity__________________ 43,323,000 41,173,000
----------- -----------
Total liabilities and stockholders' equity______ $57,561,000 $53,019,000
=========== ===========
</TABLE>
See accompanying notes to financial statements.
-3-
<PAGE> 5
REPUBLIC GYPSUM COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended September 30, 1994 and 1993 (Unaudited)
<TABLE>
<CAPTION>
1994 1993
----------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net income____________________________________ $ 2,676,000 $ 1,532,000
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation, amortization and depletion____ 822,000 648,000
Write down of property, plant and equipment_ 21,000 -
Deferred income taxes_______________________ 44,000 ( 120,000)
(Gain) loss on sale of fixed assets_________ ( 1,000) 6,000
Changes in assets and liabilities:
Accounts receivable_______________________ (2,602,000) (1,417,000)
Income tax refunds receivable_____________ - 15,000
Inventories_______________________________ ( 500,000) ( 345,000)
Prepaid expenses__________________________ ( 8,000) 88,000
Accounts payable and accrued liabilities__ 687,000 86,000
Income taxes payable______________________ 1,661,000 902,000
Other non-current assets and liabilities____ 14,000 62,000
----------- -----------
Net cash provided by operating activities_____ 2,814,000 1,457,000
Cash flows from investing activities:
Additions to property, plant and equipment____ (1,297,000) (1,069,000)
Proceeds from sale of property, plant and
equipment___________________________________ - 25,000
Purchases of investments______________________ - ( 500,000)
Proceeds from sale of investments_____________ 500,000 -
Other, net____________________________________ 2,000 ( 3,000)
----------- -----------
Net cash used by investing activities_________ ( 795,000) (1,547,000)
Cash flows from financing activities:
Dividends paid________________________________ ( 526,000) ( 316,000)
----------- -----------
Net cash used by financing activities_________ ( 526,000) ( 316,000)
----------- -----------
Net increase (decrease) in cash and cash
equivalents___________________________________ 1,493,000 ( 406,000)
Cash and cash equivalents at beginning of year__ 910,000 2,474,000
----------- -----------
Cash and cash equivalents at end of period______ $ 2,403,000 $ 2,068,000
=========== ===========
</TABLE>
See accompanying notes to financial statements.
-4-
<PAGE> 6
REPUBLIC GYPSUM COMPANY
Notes to Consolidated Financial Statements
September 30, 1994 and 1993 (Unaudited)
(1) In the opinion of management of the Company, the accompanying unaudited
consolidated financial statements reflect all adjustments, of a normal
recurring nature, to fairly present the Company's financial position as of
September 30, 1994, and the results of operations for the quarters ended
September 30, 1994 and 1993. The operating results for the interim period are
not necessarily indicative of the results to be expected for a full year. It
is suggested that these consolidated financial statements be read in
conjunction with the consolidated financial statements and the notes thereto
included in the Company's Form 10-K as of June 30, 1994.
(2) Per share computations are based on the weighted average number of common
shares outstanding during each period. Earnings per common and common
equivalent share, on a fully diluted basis, are substantially the same as
primary earnings per share as presented. The number of shares used in the per
share computations were 10,592,000 for the quarter ended September 30, 1994,
and 10,580,000 for the comparable 1993 period.
(3) In connection with its preparations for a warehouse addition to its
paperboard mill located in Commerce City, Colorado, a suburb of Denver, the
Company discovered and has been investigating the presence of subsurface
petroleum hydrocarbons. The Company retained an environmental consultant who
concluded that fuel oil, jet fuel, and gasoline additives had migrated in the
subsurface of the Company's property from an adjacent property. The Company
and the adjacent property owner are jointly sponsoring additional
investigations and discussions between the parties continue. The Company has
completed the construction of the warehouse under approval of the Colorado
Department of Health. At this time, the Company has not ascertained the future
liability, if any, of the above matter.
(4) At September 30, 1994, the Company has commitments to purchase property,
plant, and equipment totaling approximately $1,000,000.
(5) Reclassification: Certain prior balances have been reclassified to
conform with current year presentation.
-5-
<PAGE> 7
Results of Operations
Quarters ended September 30, 1994 and 1993. Consolidated net sales
increased 44% and consolidated net income increased 75% due to an 11% increase
in shipments of gypsum wallboard and a 45% rise in average net selling prices
for gypsum wallboard. Operating results also were favorably affected in 1994
by the Company's newly acquired reclaimed paper facilities in Kansas City,
Missouri and Topeka, Kansas. Total shipments of paperboard decreased 10%
during the 1994 quarter, principally due to a ten day shutdown in early July at
the Hutchinson, Kansas recycled paperboard mill for boiler maintenance and new
capital equipment installations. Also, production was being ramped up at the
Denver, Colorado recycled paperboard mill in the first quarter after major
equipment installations in the prior quarter.
Operating profits were up $2,044,000 or 88% during the 1994 quarter
compared to 1993. The primary reasons were higher shipments and an increase in
average net selling prices of gypsum wallboard.
Orders and shipments continued to be strong for both paperboard and
gypsum wallboard. Selling price increases for recycled paperboard, which took
effect in July and September, caused average net selling prices for recycled
paperboard to be up 12% over the same quarter of 1993. Prices of gypsum
wallboard increased 8% this quarter over the June 1994 quarter, although
recently implemented interest rate increases may dampen demand for gypsum
wallboard as early as the 1995 calendar year. Demand for recycled paperboard,
principally packaging materials such as cans, tubes and cores, is not as
interest rate sensitive.
The price of paperstock, the principal raw material used in the
production of recycled paperboard, rose significantly during the last half of
fiscal 1994 and cost increases continued into the first quarter of fiscal 1995.
That adversely affected the September quarter's paperboard profit margins, even
though, as previously stated, the average net selling prices for paperboard
were 12% higher than the same quarter of 1993. Republic recently announced two
separate paperboard selling price increases which should offset most of the
rise in paperstock costs to date. However, the full effect of these selling
price increases will not be realized until the second quarter. There appears
to have been some stabilization in the overall pricing and demand for reclaimed
paper in recent weeks.
In connection with its preparations for a warehouse addition to its
paperboard mill located in Commerce City, Colorado, a suburb of Denver, the
Company discovered and has been investigating the presence of subsurface
petroleum hydrocarbons. The Company retained an environmental consultant who
concluded that fuel oil, jet fuel, and gasoline additives had migrated in the
subsurface of the Company's property from an adjacent property. The Company
and
-6-
<PAGE> 8
the adjacent property owner are jointly sponsoring additional investigations
and discussions between the parties continue. The Company has completed the
construction of the warehouse under approval of the Colorado Department of
Health. At this time, the Company has not ascertained the future liability, if
any, of the above matter.
Liquidity and Capital Resources
The following is a summary of certain financial statistics related to
the liquidity of the Company at September 30, 1994, and at June 30, 1994.
<TABLE>
<CAPTION>
September 30, June 30,
1994 1994
------------ ------------
<S> <C> <C>
Working Capital $ 9,148,000 $ 7,393,000
Current Ratio 2.0:1 2.0:1
Cash and investments $ 2,403,000 $ 1,410,000
</TABLE>
The Company had a $6,000,000 working capital line of credit from a
commercial bank as of September 30, 1994. To date, no amounts have been
borrowed against the line of credit which expires on November 1, 1995.
Management believes that cash and investments, internally generated funds and
possible asset sales, supplemented as needed by advances under the working
capital line of credit, will be sufficient to meet the Company's short-term,
and at least for the foreseeable future, long-term working capital
requirements.
The Company's capital expenditure budget for the 1995 fiscal year
totals approximately $8,697,000. Approximately $5,000,000 of that amount is
earmarked for paperboard mill improvements and other capital upgrades included
in the Company's five-year capital plan. Cash provided by operations and
existing cash balances should be sufficient to fund these expenditures.
On October 27, 1994, the Board of Directors of the Company declared a
quarterly cash dividend of $.06 per share on its outstanding common stock to be
paid on December 15, 1994, to stockholders of record on November 30, 1994. The
dividend payment will amount to approximately $633,000 and will be paid from
existing cash balances.
-7-
<PAGE> 9
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
There are no material pending legal proceedings involving the Company
or any of its subsidiaries, other than ordinary routine litigation
incidental to the Company's business.
Item 2. Changes in Securities
Not applicable.
Item 3. Defaults Upon Senior Securities
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders
The Company held its annual Meeting of Stockholders on October 27,
1994. At the meeting, the stockholders elected management's nine (9)
nominees for the Board of Directors. The names of the persons elected
to the Board and the votes cast for, the votes withheld and broker
non-votes with respect to each such director are set forth below:
<TABLE>
<CAPTION>
Votes Votes Broker
For Withheld Non-Votes
----- -------- ---------
<S> <C> <C> <C>
Phil Simpson 9,301,050 101,245 0
Stephen L. Gagnon 9,388,749 13,546 0
Bert A. Nelson 9,388,067 14,228 0
Talbot Rain 9,367,863 34,432 0
Gerald L. Ray 9,382,342 19,953 0
Robert F. Sexton 9,388,539 13,756 0
David P. Simpson 9,268,641 133,654 0
L.L. Wallace 9,311,035 91,260 0
David B. Yarbrough 9,368,080 34,215 0
</TABLE>
Item 5. Other Information
Not applicable.
Item 6. Exhibits and Reports on Form 8-K
Exhibit 4 Loan Agreement with The Plains National Bank of
Lubbock, dated November 1, 1994, and related Note.
Exhibit 27 Article 5 of Regulation S-X - Financial Data Schedule.
-8-
<PAGE> 10
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.
REPUBLIC GYPSUM COMPANY
November 1, 1994 /s/ Doyle R. Ramsey
Doyle R. Ramsey
Vice President and Chief
Financial Officer
November 1, 1994 /s/ John W. McCracken
John W. McCracken
Controller and Principal
Accounting Officer
-9-
<PAGE> 11
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
- - ------- ----------- ------------
<S> <C> <C>
Exhibit 4 Loan Agreement with The Plains National Bank of Lubbock,
dated November 1, 1994, and related Note.
Exhibit 27 Article 5 of Regulation S-X - Financial Data Schedule.
</TABLE>
<PAGE> 1
EXHIBIT 4
BORROWER
REPUBLIC GYPSUM COMPANY, INC.
THE PLAINS NATIONAL BANK (LOGO)
5010 University DISCLAIMER
Lubbock,Texas 79413 OF ORAL
(806) 795-7131 "LENDER" Lubbock County AGREEMENTS
ADDRESS
P O BOX 1307
HUTCHINSON, KS 67504
TELEPHONE NO. IDENTIFICATION NO.
316-727-2711
<TABLE>
<CAPTION>
- - --------------------------------------------------------------------------------------------------------------------------------
OFFICER INTEREST PRINCIPAL AMOUNT/ FUNDING/ MATURITY CUSTOMER LOAN
INITIALS RATE CREDIT LIMIT AGREEMENT DATE DATE NUMBER NUMBER
- - --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
052 VARIABLE $6,000,000.00 11/01/94 11/01/95 969410
- - --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Borrower and Lender (the "Parties") incorporate by reference into each of the
documents executed in connection with the transaction described above, the
following provision:
THIS WRITTEN LOAN AGREEMENT REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES
AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR
SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
Date: NOVEMBER 1, 1994
<TABLE>
<S> <C>
LENDER: PLAINS NATIONAL BANK OF WEST TEXAS
P 0 BOX 271
___________________________________________________
DARRELL W. ADAMS
VICE PRESIDENT
BORROWER: REPUBLIC GYPSUM COMPANY, INC. BORROWER:
/s/ PHIL SIMPSON ___________________________________________________
PHIL SIMPSON
CHAIRMAN OF THE BOARD
BORROWER: BORROWER:
___________________________________________________ ___________________________________________________
BORROWER: BORROWER:
___________________________________________________ ___________________________________________________
BORROWER: BORROWER:
___________________________________________________ ___________________________________________________
</TABLE>
1
<PAGE> 2
BORROWER
REPUBLIC GYPSUM COMPANY, INC.
THE PLAINS NATIONAL BANK (LOGO)
5010 University DISBURSEMENT
Lubbock,Texas 79413 INSTRUCTIONS
(806) 795-7131 "LENDER" Lubbock County
ADDRESS
P O BOX 1307
HUTCHINSON, KS 67504
TELEPHONE NO. IDENTIFICATION NO.
316-727-2711
<TABLE>
<CAPTION>
- - --------------------------------------------------------------------------------------------------------------------------------
OFFICER INTEREST PRINCIPAL AMOUNT/ FUNDING/ MATURITY CUSTOMER LOAN
INITIALS RATE CREDIT LIMIT AGREEMENT DATE DATE NUMBER NUMBER
- - --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
052 VARIABLE $6,000,000.00 11/01/94 11/01/95 969410
- - --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Dated: NOVEMBER 1, 1994
Borrower has borrowed money from Lender indicated above pursuant to a
PROMISSORY NOTE dated NOVEMBER 1, 1994
Borrower hereby instructs Lender to disburse the initial or complete proceeds
from the PROMISSORY NOTE in the following manner:
TITLE EXAMINATION n/a
TITLE INSURANCE COMPANY n/a
APPRAISAL FEE n/a
PAID TO PUBLIC OFFICIALS n/a
ATTORNEY FEES n/a
MORTGAGE REGISTRATION FEE n/a
CREDIT REPORTING FEE n/a
PAID TO n/a
PAID TO n/a
PAID TO n/a
PAID TO n/a
PAID TO n/a
<TABLE>
<S> <C>
BORROWER: REPUBLIC GYPSUM COMPANY, INC. BORROWER:
/s/ PHIL SIMPSON ___________________________________________________
PHIL SIMPSON
CHAIRMAN OF THE BOARD
BORROWER: BORROWER:
___________________________________________________ ___________________________________________________
BORROWER: BORROWER:
___________________________________________________ ___________________________________________________
BORROWER: BORROWER:
___________________________________________________ ___________________________________________________
</TABLE>
2
<PAGE> 3
BORROWER
REPUBLIC GYPSUM COMPANY, INC.
THE PLAINS NATIONAL BANK (LOGO)
5010 University COMMERCIAL
Lubbock,Texas 79413 REVOLVING OR DRAW
(806) 795-7131 "LENDER" Lubbock County NOTE-VARIABLE RATE
ADDRESS
P O BOX 1307
HUTCHINSON, KS 67504
TELEPHONE NO. IDENTIFICATION NO.
316-727-2711
<TABLE>
<CAPTION>
- - --------------------------------------------------------------------------------------------------------------------------------
OFFICER INTEREST PRINCIPAL AMOUNT/ FUNDING/ MATURITY CUSTOMER LOAN
INITIALS RATE CREDIT LIMIT AGREEMENT DATE DATE NUMBER NUMBER
- - --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
052 VARIABLE $6,000,000.00 11/01/94 11/01/95 969410
- - --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
PROMISE TO PAY
FOR VALUE RECEIVED, Borrower promises to pay to the order of Lender indicated
above the principal amount of SIX MILLION AND NO/100 Dollars ($6,000,000.00)
or, if less, the aggregate unpaid principal amount of all advances made by the
Lender to the Borrower, plus interest on the unpaid principal balance at the
rate and in the manner described below. All amounts received by Lender shall be
applied first to expenses, then to accrued unpaid interest, and then to
outstanding principal, or in any other manner as determined by Lender, in
Lender's sole discretion, as permitted by law.
INTEREST RATE: This Note has a variable rate feature. Interest on the Note may
change from time to time if the Index Rate identified below changes. Interest
shall be computed on the basis of 360 days per year (and in any event, 365 or
366 days per year during periods when the Maximum Lawful Rate which is defined
on the reverse is in effect) and the actual number of days elapsed. So long as
there is no default under this Note, interest on this Note shall be calculated
at the variable rate of NO/1000 percent (0.000%) per annum over the Index
Rate, provided that such rate shall not exceed the Maximum Lawful Rate. The
Initial Index Rate is currently SEVEN AND 750/1000 percent (7.750%) per annum.
Therefore, the initial interest rate on this Note shall be SEVEN AND 750/1000
percent (7.750%) per annum. Any change in the interest rate resulting from a
change in the Index Rate will be effective on:
THE DATE THE INDEX RATE CHANGES
INDEX RATE: The Index Rate for this Note shall be: THAT CERTAIN RATE DESCRIBED
AS THE HIGHEST PRIME RATE AND APPEARING IN THE SOUTHWEST EDITION OF THE WALL
STREET JOURNAL AS ISSUED FROM TIME TO TIME
If the index becomes unavailable during the term of the loan, Lender may
substitute another index which is similar.
MINIMUM RATE/MAXIMUM RATE: The minimum interest rate on this Note shall be
n/a percent (n/a%) per annum. The maximum interest rate on this Note shall not
exceed n/a percent (n/a%) per annum, or the Maximum Lawful Rate, whichever is
less.
DEFAULT RATE: In the event of a default under this Note, the Lender may, in its
sole discretion, determine that all amounts owing to Lender shall bear interest
as follows: n/a or the Maximum Lawful Rate, whichever is less.
PAYMENT SCHEDULE: Borrower shall pay the principal and interest according to
the following schedule:
ON DEMAND, BUT IF NO DEMAND IS MADE, THEN INTEREST ONLY PAYMENTS
BEGINNING DECEMBER 1, 1994 AND CONTINUING AT MONTHLY TIME INTERVALS
THEREAFTER. A FINAL PAYMENT OF THE UNPAID PRINCIPAL BALANCE PLUS
ACCRUED INTEREST IS DUE AND PAYABLE ON NOVEMBER 1, 1995.
All payments will be made to Lender at its address in the county described
above and in lawful currency of the United States of America.
RENEWAL: If checked (X) this Note is given in renewal of, but not in novation
or discharge of, Loan Number 969410.
SECURITY: To secure the payment and performance of obligations incurred under
this Note, Borrower grants Lender a security interest in, and pledges and
assigns to Lender all of Borrowers rights, title, and interest in all monies,
instruments, and savings, checking, and other deposit accounts of Borrower's,
(excluding IRA, Keogh, and trust accounts and deposits subject to tax penalties
if so assigned), that are now or in the future in Lender's custody or control.
Upon default, and to the extent permitted by applicable law, Lender may
exercise its security interest in all such property which shall be in addition
to Lender's right of common law setoff. ( ) If checked, the obligations under
this Note are also secured by a lien and/or security interest in the property
described in the documents executed in connection with this Note as well as any
other property designated as security for this Note now or in the future.
PREPAYMENT: This Note may be prepaid in part or in full on or before its
maturity date. If this Note contains more than one installment, all prepayments
shall be applied as determined by Lender and as permitted by law.
REVOLVING OR DRAW FEATURE: This Note possesses a revolving or draw feature as
indicated below.
(X) This Note possesses a revolving feature. Borrower shall be entitled to
borrow up to the full principal amount of the Note from time to time
during the term of this Note.
( ) This Note possesses a draw feature. Borrower shall be entitled to make
one or more draws under this Note. The aggregate amount of such draws
shall not exceed the full principal amount of this Note.
Lender shall maintain a written ledger of the amounts loaned to and repaid by
Borrower under this Note. The aggregate unpaid principal amount shown on such
ledger shall be rebuttable presumptive evidence of the outstanding principal
amount owing and unpaid on this Note. The Lender's failure to record the date
and amount of any advance on such ledger shall not limit or otherwise affect
the obligations of the Borrower under this Note to repay the outstanding
principal amount of the advances together with all accrued, unpaid interest
thereon. Lender shall not be obligated to provide Borrower with a copy of the
ledger on a periodic basis, however, Borrower shall be entitled to inspect or
obtain a copy of the ledger during Lender's business hours.
CONDITIONS FOR ADVANCES: Borrower shall be entitled to borrow monies under this
Note (subject to the limitations described above) under the following
conditions:
________________________________________________________________________________
BORROWER ACKNOWLEDGES THAT BORROWER HAS READ, UNDERSTANDS, AND AGREES TO THE
TERMS AND CONDITIONS OF THIS NOTE INCLUDING THE PROVISIONS ON THE REVERSE SIDE.
BORROWER ACKNOWLEDGES RECEIPT OF AN EXACT COPY OF THIS NOTE.
THIS NOTE AND RELATED DOCUMENTS HAVE BEEN SIGNED IN THE COUNTY OF LENDER'S
ADDRESS UNLESS OTHERWISE SPECIFIED:
<TABLE>
<S> <C>
NOTE DATE: NOVEMBER 1, 1994
BORROWER: REPUBLIC GYPSUM COMPANY, INC. BORROWER:
/s/ PHIL SIMPSON ___________________________________________________
PHIL SIMPSON
CHAIRMAN OF THE BOARD
BORROWER: BORROWER:
___________________________________________________ ___________________________________________________
BORROWER: BORROWER:
___________________________________________________ ___________________________________________________
BORROWER: BORROWER:
___________________________________________________ ___________________________________________________
</TABLE>
3
<PAGE> 4
TERMS AND CONDITIONS
1. COMPLIANCE WITH APPLICABLE LAW: It is Lender's intention to comply fully
with Texas law, and federal law as applicable, regulating credit terms,
interest, fees, charges, expenses, and other amounts. For purposes of
determining Lender's compliance with such laws, the following shall apply to
the extent permitted by law: (a) any contract, charge or receipt by Lender,
whether occurring now or in the future, shall be strictly limited by this
provision; (b) the "Maximum Lawful Rate" shall mean the maximum lawful ceiling,
rate or amount that Lender could have contracted to charge or receive under
Texas law or applicable federal law, whichever permits the highest maximum
ceiling, rate or amount; (c) to the extent Texas Article 5069-1.04, as amended,
provides the Maximum Lawful Rate, the "indicated rate ceiling" shall apply
unless changed by Lender in accordance with Texas law; (d) Lender may calculate
rates or amounts by aggregating, amortizing, prorating, allocating, and
spreading amounts contracted for, charged or received over the full term of the
transaction; (e) no contract, charge or receipt shall obligate Borrower or any
obligor to pay any amount in excess of the Maximum Lawful Rate or waive any
right under Texas Article 5069; and (f) any contract, charge or receipt that in
the event of acceleration or under any other contingency purports to require
the payment or collection of any amount in excess of the Maximum Lawful Rate
shall automatically be reformed to not obligate Borrower or any other obligor
to pay any amount in excess of the Maximum Lawful Rate. If Lender ever
contracts for, charges or receives a rate or amount in excess of the Maximum
Lawful Rate, the excess (whether denominated principal, interest or otherwise)
shall be automatically subject to reallocation, cancellation, credit,
application, or refund to eliminate any amount in excess of the Maximum Lawful
Rate.
2. DEFAULT: Borrower will be in default under this Note in the
event that Borrower or any guarantor:
(a) fails to make any payment on this Note or any other indebtedness
to Lender when due;
(b) fails to perform any obligation or breaches any warranty or
covenant to Lender contained in this Note or any other present or
future written agreement regarding this or any indebtedness of
Borrower to Lender;
(c) provides or causes any false or misleading signature or
representation to be provided to Lender;
(d) allows any loss, diminution, or impairment of the physical
condition, value, title, priority, possession, or control of any
collateral securing this Note or Borrower's or Lender's rights
therein, including, but not limited to, allowing any part of the
collateral to be placed into receivership, removed, impaired, lost,
stolen, destroyed, damaged, seized, confiscated or affected in any
material way;
(e) permits the entry or service of any garnishment, judgment, tax
levy, attachment or lien against Borrower, any guarantor, or any of
their property;
(f) dies, becomes legally incompetent, is dissolved or terminated,
ceases to operate its business, becomes insolvent, makes an
assignment for the benefit of creditors, or becomes the subject of
any bankruptcy, insolvency or debtor rehabilitation proceeding; or
(g) causes Lender to deem itself insecure in good faith.
3. RIGHTS OF LENDER ON DEFAULT: If there is a default under this Note, Lender
will be entitled to exercise one or more of the following remedies without
notice or demand (except as required by law):
(a) to declare the principal amount plus accrued interest under this
Note and all other present and future obligations of Borrower
immediately due and payable in full;
(b) to collect the outstanding obligations of Borrower with or without
resorting to judicial process;
(c) to lawfully and peaceably take possession of any collateral;
(d) to require Borrower to deliver and make available to Lender any
collateral at a place reasonably convenient to Borrower and Lender;
(e) to sell, lease or otherwise dispose of any collateral and collect
any deficiency balance in the manner permitted by law;
(f) to set-off Borrower's obligations against any amounts due to
Borrower including, but not limited to, monies, instruments, and
deposit accounts maintained with Lender; and
(g) to exercise all other rights available to Lender under any other
written agreement or applicable law.
Lender's rights are cumulative and may be exercised together, separately, and
in any order.
4. DEMAND FEATURE: If this Note contains a demand feature, then notwithstanding
anything to the contrary contained in this Note, Lender's rights with respect
to the events of default identified above shall not be limited, restricted,
impaired or otherwise adversely affected by the demand feature of this Note.
Lender's right to demand payment, at any time and from time to time, shall be
in Lender's sole and absolute discretion, whether or not any default has
occurred.
5. FINANCIAL INFORMATION: Borrower will provide Lender with current financial
statements including, but not limited to, balance sheets and profit and loss
statements and other information upon request.
6. MODIFICATION AND WAIVER: The modification or waiver of any of Borrower's
obligations or Lender's rights under this Note must be contained in a writing
signed by Lender. Lender may perform any of Borrower's obligations or delay or
fail to exercise any of its rights without causing a waiver of those
obligations or rights. A waiver on one occasion will not constitute a waiver on
any other occasion. Borrower's obligations under this Note shall not be
affected if Lender amends, compromises, exchanges, fails to exercise, impairs
or releases any of the obligations belonging to any co-borrower or guarantor or
any of its rights against any co-borrower, guarantor or collateral.
7. SEVERABILITY: If any provision of this Note violates the law or is
unenforceable, the rest of the Note will remain valid.
8. ASSIGNMENT: Borrower will not be entitled to assign any of its rights,
remedies or obligations described in this Note without the prior written
consent of Lender which may be withheld by Lender in its sole discretion.
Lender will be entitled to assign some or all of its rights and remedies
described in this Note without notice to or the prior consent of Borrower in
any manner.
9. NOTICE: Any notice or other communication to be provided to Borrower or
Lender under this Note shall be in writing and sent to the parties at the
addresses described in this Note or such other address as the parties may
designate in writing from time to time.
10. APPLICABLE LAW: THIS NOTE SHALL BE GOVERNED BY THE LAWS OF THE STATE OF
TEXAS AND APPLICABLE FEDERAL LAWS. BORROWER CONSENTS TO THE JURISDICTION AND
VENUE OF ANY COURT LOCATED IN THE COUNTY IN WHICH THIS NOTE IS SIGNED OR IN
WHICH BORROWER RESIDES IN THE EVENT OF ANY LEGAL PROCEEDING UNDER THIS NOTE.
11. COLLECTION EXPENSES: If Lender hires an attorney (who is not a salaried
employee of Lender) to assist in collecting any amount due or enforcing any
right or remedy under this Note, Borrower agrees to pay Lender's reasonable
attorneys' fees and collection costs subject to court award.
12. MISCELLANEOUS: This Note is being executed for commercial purposes.
Borrower and Lender agree that time is of the essence. Borrower waives
presentment, demand for payment, notice of intent to accelerate, notice of
acceleration, notice of dishonor and protest. All references to Borrower in
this Note shall include all of the parties signing this Note. If there is more
than one Borrower, their obligations will be joint and several. This Note and
any related documents represent the complete and integrated understanding
between Borrower and Lender pertaining to the terms and conditions of those
documents.
13. ADDITIONAL TERMS:
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<PAGE> 5
BORROWER
REPUBLIC GYPSUM COMPANY, INC.
THE PLAINS NATIONAL BANK (PNB LOGO)
- - -----------------------------------
5010 University
Lubbock, Texas 79413 COMMERCIAL
(806) 795-7131 "LENDER" Lubbock County LOAN
AGREEMENT
ADDRESS
P O BOX 1307
HUTCHINSON, KS 67504
TELEPHONE NO. IDENTIFICATION NO.
316-727-2711
GRANTOR OWNER OF COLLATERAL
ADDRESS ADDRESS
TELEPHONE NO. IDENTIFICATION NO. TELEPHONE NO. IDENTIFICATION NO.
AGREEMENTS
1. FINANCING. Subject to the following conditions, Lender shall provide
Borrower with the advances, loans and/or other financial accommodations
identified in Schedule A, as may be amended from time to time, which is
incorporated into this Agreement by this reference, as well as any other loans
and/or financial accommodations that Borrower and Lender may agree to in
writing.
Such advances, loans and/or other financial accommodations shall be evidenced
and, if applicable, guarantied by guarantors pursuant to and/or secured by
collateral set forth in loan documents that are acceptable to Lender in its
sole discretion including, but not limited to, the documents identified in
Schedule B, as amended from time to time (collectively "Loan Documents"), which
is incorporated into this Agreement by this reference.
Borrower shall pay to Lender the principal, interest, fees, expenses and any
other amounts pertaining to the advances, loans and/or other financial
accommodations as described in this Agreement and the Loan Documents.
2. GUARANTIES AND COLLATERAL.
a. GUARANTIES. / / If checked, Borrower shall cause:
whose tax identification and/or social security number(s) is _________
______________ and who is a resident of the State(s) of ______________
___________ or a _______________________ duly organized, validly
existing, and in good standing under the laws of the State(s) of _____
_____________; to jointly and severally, absolutely and unconditionally
guaranty the payment and performance of all of the Borrower's present
and future, joint and/or several, direct and indirect, absolute and
contingent, express and implied, indebtedness, liabilities,
obligations and covenants to Lender as described in this Agreement and
the Loan Documents; and
whose tax identification and/or social security number(s) is _________
______________ and who is a resident of the State(s) of ______________
___________ or a _______________________ duly organized, validly
existing, and in good standing under the laws of the State(s) of _____
_____________; to jointly and severally, absolutely and unconditionally
guaranty the payment and performance of all of the Borrower's present
and future, joint and/or several, direct and indirect, absolute and
contingent, express and implied, indebtedness, liabilities,
obligations and covenants to Lender as described in this Agreement and
the Loan Documents; and
whose tax identification and/or social security number(s) is _________
______________ and who is a resident of the State(s) of ______________
___________ or a _______________________ duly organized, validly
existing, and in good standing under the laws of the State(s) of _____
_____________; to jointly and severally, absolutely and unconditionally
guaranty the payment and performance of all of the Borrower's present
and future, joint and/or several, direct and indirect, absolute and
contingent, express and implied, indebtedness, liabilities,
obligations and covenants to Lender as described in this Agreement and
the Loan Documents; and
whose tax identification and/or social security number(s) is _________
______________ and who is a resident of the State(s) of ______________
___________ or a _______________________ duly organized, validly
existing, and in good standing under the laws of the State(s) of _____
_____________; to jointly and severally, absolutely and unconditionally
guaranty the payment and performance of all of the Borrower's present
and future, joint and/or several, direct and indirect, absolute and
contingent, express and implied, indebtedness, liabilities,
obligations and covenants to Lender as described in this Agreement and
the Loan Documents; (collectively "Guarantor").
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<PAGE> 6
b. COLLATERAL.
Borrower shall grant and/or cause:
Owner of Collateral identified above whose tax identification and/or
social security number(s) is ___________________________ and who is a
resident of the State(s) of ____________________ or a ________________
duly organized, validly existing, and in good standing under the laws
of the State(s) of _______________________; and/or Grantor identified
above who tax identification and/or social security number(s) is _____
____________________ and who is a resident of the State(s) of ________
_________________ or a _______________________ duly organized, validly
existing, and in good standing under the laws of the State(s) of _____
_____________; (collectively Owner of Collateral and Grantor identified
above will be referred to as "Debtor") to grant
Lender a lien, security interest or other encumbrance upon the
collateral (collectively "Collateral") belonging to the Borrower
and/or any Debtors, as described in the Loan Documents to secure the
payment and performance of all of the Borrower's present and future,
joint and/or several, direct and indirect, absolute and contingent,
express and implied, indebtedness, liabilities, obligations and
covenants to Lender as described in this Agreement and the Loan
Documents.
3. SUPERIOR AND CONTINUING LIENS AND GUARANTIES.
a. Superiority of Lender's Lien. The liens, security interests and
other encumbrances granted to Lender shall be superior to any
other liens, security interests, encumbrances and claims with
respect to the Collateral (unless specifically noted otherwise
in the Loan Documents).
b. Guaranties, Liens and Other Encumbrances. The guaranties and
liens, security interests, and other encumbrances described in
the Loan Documents shall continue and not be released until
all of the indebtedness, liabilities, obligations and
covenants guarantied or secured thereby shall have been paid
and performed in full and Lender shall not be obligated to
provide any additional advances, loans or other financial
accommodations to or for the benefit of Borrower (or, if
applicable, any of the Debtors) of any kind.
4. CONDITIONS PRECEDENT. Lender's obligation to provide Borrower with any
advances, loans and/or other financial accommodations shall be subject to the
following conditions precedent. All of the information, UCC and lien searches,
insurance policies, environmental risk assessments, opinion letters, and other
materials and documents provided or to be provided to Lender and all of the
actions taken or to be taken for the attachment, creation, perfection,
recording, maintenance, subordination, release, termination, and giving of
notice with respect to the liens, security interests, and other encumbrances in
the Collateral shall be provided or taken at Borrower's expense:
a. Evidence of Good Standing. Lender shall be provided with such
written evidence of the Borrower and any Guarantors and
Debtors' legal names and good standing, authorization to
conduct business, and authorization to execute and perform
their respective obligations under this Agreement and the Loan
Documents as required by Lender;
b. Execution and Delivery. Borrower shall execute and deliver
this Agreement and cause any Guarantors and Debtors to execute
and deliver to Lender the Loan Documents in a form acceptable
to Lender;
c. Authorization. Lender shall be provided with such written
evidence as required by Lender that the representatives of the
Borrower and any Guarantors and Debtors are authorized to
execute this Agreement and the Loan Documents on behalf of
those parties and bind the Borrower and any Guarantors and
Debtors to the terms and conditions set forth therein;
d. Liens. Lender's liens, security interests, and other
encumbrances upon the Collateral shall be attached, created,
filed, perfected and recorded in accordance with applicable
law and notice of such liens, security interests and
encumbrances shall be provided to such parties as required by
Lender;
e. Lien Searches. Lender shall be provided with UCC searches,
title insurance policies, or other written evidence as
required by Lender with respect to the validity,
enforceability and priority of its liens, security interests
and other encumbrances upon the Collateral;
f. /s/ PS
g. Legal Opinions. Lender shall be provided with such opinions of
legal counsel as required by Lender;
h. Financial Information. Borrower shall provide and cause any
Guarantors and Debtors to provide Lender with such financial
information and business records as required by Lender in its
sole discretion. Such financial information and business
records shall be acceptable to Lender in its sole discretion
and shall not cause Lender to believe in good faith that the
Borrower or any Guarantors or Debtors shall not be able to
perform its respective obligations under this Agreement or the
Loan Documents;
i. Absence of Breach. All the respective representations and
warranties of the Borrower or any Guarantor or Debtor under
this Agreement or the Loan Documents shall be true and correct
on and as of the date of the execution of those documents or
date of any initial advances and/or extensions of the loans
and/or other financial accommodations described therein;
j. Absence of Events of Default. No other event of default shall
exist under this Agreement or the Loan Documents nor shall any
circumstances exist that would constitute such an event of
default except for notice or the passage of time or both on or
before the execution of those documents or the initial
advances and/or extensions of the loans and/or other financial
accommodations described therein; and
k. Other:
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<PAGE> 7
5. Representations, Warranties and Covenants. Borrower represents and
warrants to and covenants with Lender that:
a. Tax Identification. The tax identification and/or social
security numbers of Borrower are as follows: Tax I.D.
#751155922
b. Borrowers Residency. Borrower is a resident of the State(s) of
PS or a Corporation duly organized, validly existing and
in good standing under the laws of the State(s) of DELAWARE
and licensed to conduct business in all of the jurisdictions
in which its business is conducted;
c. Guarantor's Tax Identification and Residency. Guarantors are
residents of the State(s) of or duly organized, validly
existing and in good standing under the laws of the State(s)
shown in Section 2 of this Agreement and licensed to conduct
business in all of the jurisdictions in which their business
is conducted. Guarantors' tax identification and/or social
security numbers are those shown in Section 2 of this
Agreement;
d. Debtor's Tax Identification and Residency. Debtors are
residents of the State(s) of or duly organized, validly
existing and in good standing under the laws of the State(s)
shown in Section 2 of this Agreement and licensed to conduct
business in all of the jurisdictions in which their business
is conducted. Debtors' tax identification and/or social
security numbers are those shown in Section 2 of this
Agreement;
e. Ownership of Collateral. Borrower and any Debtors are and
shall remain sole owners of their respective Collateral free
of all tax and other liens, security interests, encumbrances
and claims of any kind except for those specifically described
in this Agreement and the Loan Documents;
f. Location of Offices. The sole executive offices, places of
business, offices where their business records are located,
residences and domiciles of the Borrower and any Guarantors
and Debtors are specifically described in this Agreement and
the Loan Documents. Borrower shall immediately advise and
cause any Guarantors and Debtors to immediately advise Lender
in writing of any change in or addition to the foregoing
addresses;
g. Restructuring. Neither Borrower nor any Guarantor or Debtor
shall become a party to any restructuring of its form of
business or participate in any consolidation, merger,
liquidation or dissolution* without obtaining Lender's prior
written consent thereto;
h. Beneficiaries. Each of the Guarantors and Debtors, if any, by
virtue of their interest in or relation to Borrower, shall
receive a substantial benefit from Lender's advances, loans
and/or other financial accommodations to Borrower and such
benefit shall constitute adequate consideration for the
obligations assumed by any Guarantor and Debtors under this
Agreement and the Loan Documents;
i. Change of Name. Borrower shall provide and cause any
Guarantors and Debtors to provide Lender with at least thirty
(30) or more days' prior written notice of the nature of any
intended change in their respective names, or the use of any
tradename, and when such change or use shall become effective;
j. Location of Collateral. All of Borrower and any Debtors'
property constituting a portion of the Collateral is and shall
be located at Borrower and such Debtors' respective executive
offices, places of business, residences and domiciles
specifically described in this Agreement and the Loan
Documents or at such locations to which Borrower and such
Debtors have obtained Lenders prior written consent;
k. Use of Collateral. Borrower shall use and cause any Debtors to
use the Collateral solely in the ordinary course of their
respective businesses, for the usual purposes intended by the
manufacturer (if applicable), with due care, and in compliance
with the laws, ordinances, regulations, requirements and rules
of all federal, state, county and municipal authorities and
insurance policies. Borrower shall not make and cause any
Debtors to refrain from making any alterations, additions or
improvements to the Collateral without the prior written
consent of Lender. Without limiting the foregoing, all
alterations, additions and improvements made to the Collateral
shall be subject to the security interest belonging to Lender,
shall not be removed without the prior written consent of
Lender, and shall be made at Borrower and the Debtors' sole
expense. Borrower shall take and cause any Debtors to take all
actions and make any repairs or replacements needed to
maintain the Collateral in good condition and working order;
l. Insurance. Borrower shall maintain and cause any Debtors to
maintain insurance on the Collateral in an amount and form and
from such companies as are acceptable to Lender and/or
specifically provided in the Loan Documents. The insurance
policies shall require the insurance companies to provide
Lender with at least 30 days' written notice before such
policies are altered or cancelled in any manner. The insurance
policies shall name Lender as a loss payee and provide that no
act or omission of Borrower, any Debtor, or any other person
shall affect the right of Lender to be paid the insurance
proceeds pertaining to the loss or damage of the Collateral;
m. Possession of Chattel Paper. Borrower shall provide and cause
any Debtors to provide Lender with possession of all chattel
paper and instruments constituting a portion of the Collateral
and mark such chattel paper and instruments to reflect
Lender's security interest therein;
n. Enforceability of Certain Collateral. All of Borrower and any
Debtors' accounts, contract rights, chattel paper, documents,
general intangibles, instruments, and other rights and
agreements constituting a portion of the Collateral are and
shall be valid, genuine and legally enforceable obligations
and rights belonging to Borrower and such Debtors against one
or more third parties and are not and shall not be subject to
any claim, defense, setoff or counterclaim of any kind;
o. Substitution of Certain Collateral. Borrower shall not amend,
modify, replace or substitute and shall cause any Debtors not
to amend, modify, replace or substitute any account, contract
right, chattel paper, document, general intangible,
instrument, or other right or agreement constituting the
Collateral without the prior written consent of Lender;
p. Collection Practices. Borrower shall continue to apply and
cause any Debtors to continue to apply their established
credit policies with respect to all future credit
transactions. Borrower shall use and cause any Debtors to use
their best efforts to collect from their account debtors and
other third parties, as and when due, any and all amounts
owing under or with respect to each account, contract right,
document, general intangible, instrument or other agreement
(including, without limitation, engaging legal assistance to
collect delinquent obligations from their account debtors and
other third parties) and apply the collected amounts against
the outstanding balances on those obligations and agreements;
q. Records. Borrower shall maintain and cause any Guarantors and
Debtors to maintain complete and accurate books and records of
their respective financial conditions, businesses and
properties and with respect to the Collateral and such records
shall be maintained at the following location(s):
811 EAST 30TH AVENUE HUTCHINSON, KANSAS 67502-4341 PS
* IN WHICH IT IS NOT THE SURVIVING PARTY
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<PAGE> 8
r. Financial Information. Borrower shall deliver and cause any
Guarantors and Debtors to deliver to Lender such financial
statements, data and other information describing and
pertaining to their respective financial conditions,
businesses and properties and the Collateral as Lender shall
request from time to time;
s. Inspection of Records. Borrower shall permit and cause any
Guarantors and Debtors to permit officers, agents and
employees of Lender to examine their business and financial
records and properties and the Collateral and to discuss any
issues pertaining to their business operations, financial
conditions or the Collateral with their officers, employees,
accountants and other representatives and agents;
t. Information. All information that has been and shall be
provided to Lender by or on behalf of Borrower or any
Guarantor or Debtor is and shall be true and correct and does
not and shall not omit any material fact necessary to make
such information not misleading. Neither Borrower nor any
Guarantor or Debtor is aware of any fact which has or might
have a material and adverse effect on their business
operations, financial conditions, or assets or the Collateral
or have failed or shall fail to disclose any material facts to
Lender that might be relevant to Lender's decision to enter
into or continue to advance money or provide financial
accommodations under this Agreement or any of the Loan
Documents;
u. Obligations. By its execution of this Agreement and each Loan
Document, Borrower shall acknowledge that such agreements
constitute its legal and binding obligations that are fully
enforceable in accordance with their respective terms and
conditions;
v. Conflict of Laws. Borrower and any Guarantors and Debtors'
execution of this Agreement and the Loan Documents and
performance of their respective obligations thereunder does
not and shall not conflict with the provisions of any statute,
regulation, ordinance, rule of law, contract or other
agreement which may now or hereafter be binding on those
entities;
w. Repayment. Borrower and any Guarantors and Debtors shall duly
and punctually repay the advances, loans and other financial
accommodations evidenced by this Agreement and the Loan
Documents and perform all of their other respective obligations
thereunder;
x. Default in Other Obligations. Neither Borrower nor any
Guarantor or Debtor are or shall be in default under any
material loan agreement, indenture, mortgage, security
agreement or other agreement or obligation to which they are a
party or by which any of their respective properties may be
bound;
y. Litigation and Claims. No action or proceeding is or shall be
pending or threatened against Borrower or any Guarantor or
Debtor which might result in any material and adverse change
in their respective business operations or financial
conditions or materially affect the Collateral and there are
and shall be no outstanding judgments against Borrower or any
Guarantor or Debtor;
z.
aa.
ab. Insider Loans. Borrower shall not make a loan to any of its
shareholders, directors, officers or employees or any other
person outside the ordinary course of Borrower's business
without the prior written consent of Lender;
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<PAGE> 9
ac. Capital or Leasehold Expenditures. Borrower shall not make any
capital or leasehold expenditures in excess of: FIFTEEN
MILLION AND NO/100 ($15,000,000.00) during any twelve (12)
month period without the prior written consent of Lender;
ad. Solvency. Borrower and any Guarantors and Debtors are solvent
and shall continue to be solvent after the execution of this
Agreement and the Loan Documents and the creation of Lender's
security interest in the Collateral, are able and shall be
able to pay their debts as they mature, and have and shall
have sufficient capital to conduct their businesses and other
financial transactions;
ae. Tax Returns. Borrower and each Guarantor or Debtor has filed
and shall file all tax returns required to be filed by
federal, state or local law (including, but not limited to,
all income, franchise, employment, property and sales tax
returns) and has paid and shall pay all of the tax liabilities
and other fees and assessments charged against that entity or
its property when due. Neither Borrower nor any Guarantor or
Debtor knows of any pending investigation of those entities by
any taxing or other governmental authority or of any pending
but unassessed tax liability or other fee or assessment owing
by those entities;
af. Margin Stock. Neither Borrower nor any Guarantor or Debtor is
engaged principally, or as one of its important activities, in
the business of extending credit for the purpose of purchasing
or carrying margin stock (within the meaning of Regulations G,
T, U or X of the Board of Governors of the Federal Reserve
System), and no part of the loans and/or other financial
accommodations provided by Lender under this Agreement or any
of the Loan Documents shall be used to purchase or carry any
such margin stock or to extend credit to others for the
purpose of purchasing or carrying margin stock. Neither
Borrower, any Guarantor or Debtor, nor any person acting on
their behalf has taken or shall take any action that might
cause the transactions contemplated by this Agreement or the
Loan Documents to violate Regulations G, T, U or X or to
violate the Securities Exchange Act of 1934, as amended;
ag. Compliance with ERISA. Borrower and any Guarantors and Debtors
have complied and shall comply with all applicable
minimum funding and other requirements of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"),
and there are and shall be no existing conditions that would
give rise to liability thereunder including, without
limitation, any current or potential withdrawal liability from
a multiemployer plan (as defined in Section 3(37) of ERISA).
No reportable event (as defined in Section 4043 of ERISA) has
occurred or shall occur in connection with any employee
benefit plan of those entities that might constitute grounds
for the termination thereof by the Pension Benefit Guaranty
Corporation or for the appointment of a trustee to administer
that plan. Borrower shall immediately provide and cause such
Guarantors and Debtors to immediately notify Lender of any
fact (including, but not limited to, any "reportable event" as
that term is defined in Section 4043 of ERISA) arising in
connection with any employee benefit plan belonging to those
entities which might constitute grounds for the termination
thereof by the Pension Benefit Guaranty Corporation or for the
appointment of a trustee to administer that plan and,
following such notification, Borrower shall provide or cause
such Guarantors and Debtors to provide Lender with any
additional information or documents as may be requested by
Lender with respect thereto;
ah. Investment Company. Neither Borrower nor any Guarantor or
Debtor is or shall be an "investment company" within the
meaning of the Investment Company Act of 1940, as amended;
ai. Holding Companies and Affiliates. Neither Borrower nor any
Guarantor or Debtor is or shall be a "holding company" or a
"subsidiary company" of a "holding company" or an "affiliate"
of a "holding company" or a "public utility" within the
meaning of the Public Utility Holding Company Act of 1935, as
amended;
aj. Compliance with Applicable Environmental Law. Borrower, each
Guarantor and Debtor, and their respective properties are and
shall be in compliance with all applicable environmental,
health and safety laws, rules and regulations and neither
Borrower nor any Guarantor or Debtor is or shall be subject to
any liability or obligation for remedial action thereunder. No
investigation or inquiry by any governmental authority is or
shall be pending or threatened against Borrower, any Guarantor
or Debtor, or any of their respective properties with respect
to any toxic, waste, toxic substance or Hazardous Material as
defined herein. No Hazardous Materials are or shall be located
on or under Borrower or any Guarantor or Debtor's properties.
Neither Borrower, nor any Guarantor or Debtor has caused or
permitted or shall cause or permit any toxic or hazardous
waste or substance to be stored, transported, or disposed of
on or under or released from any of its properties. The term
"Hazardous Materials" shall mean any substance, material, or
waste which is or becomes regulated by any governmental
authority including, but not limited to; (i) petroleum, (ii)
asbestos, (iii) polychlorinated biphenyls, (iv) those
substances, materials or wastes designated as a "hazardous
substance" pursuant to Section 311 of the Clean Water Act or
listed pursuant to Section 307 of the Clean Water Act or any
amendments or replacements to these statutes, (v) those
substances, materials or wastes defined as a "hazardous waste"
pursuant to Section 1004 of the Resource Conservation and
Recovery Act or any amendments or replacements to that
statute, or (vi) those substances, materials or wastes defined
as a "hazardous substance" pursuant to Section 101 of the
Comprehensive Environmental Response, Compensation and
Liability Act, or any amendments or replacements to that
statute;
ak. Compliance with Other Laws. Neither Borrower nor any Guarantor
or Debtor has violated or shall violate any applicable
federal, state, county or municipal statute, regulation or
ordinance which may materially and adversely affect its
respective business operations or financial condition or the
Collateral. No event of default (or circumstances which, with
notice or the passage of time or both, would constitute an
event of default) has occurred or shall occur under this
Agreement or the Loan Documents;
al. Notification Regarding Events of Default. Without limiting any
of the foregoing representations, warranties and covenants,
Borrower shall immediately notify and cause any Guarantors and
Debtors to immediately notify Lender of: (i) the occurrence
of any event of default (or circumstances which, with notice
or the passage of time or both, would constitute an event of
default) under this Agreement or the Loan Documents, (ii) the
commencement of any action, suit, or proceeding or any other
matter that might have a material adverse effect on the
Borrower, any Guarantor or Debtor, or the Collateral, (iii)
any change in the management of Borrower, and (iv) any
circumstances that might give rise to a claim, defense, setoff
or counterclaim against Lender or with respect to the various
rights and obligations described in this Agreement and the
Loan Documents;
am. Commercial Purpose. This Agreement and the Loan Documents and
the obligations described therein are executed and incurred
for commercial and not for personal, family, or household use
and all proceeds of Lenders loan and other financial
accommodations to Borrower shall be used exclusively in the
Borrower's business and for no other purpose;
an. Lender's Influence. Lender has not exercised or attempted to
exercise, directly or indirectly, any degree of control or
influence of any kind whatsoever over the internal business
operations or financial affairs of Borrower, or to the best of
its knowledge, any Guarantor or Debtor and Borrower shall
immediately notify and cause any Guarantors and Debtors to
immediately notify Lender in writing of any actions that they
consider to constitute an exercise or attempt to exercise such
control or influence in the future. Lender has not acted as a
business, investment or financial consultant or advisor to
Borrower or any Guarantor or Debtor. Borrower shall notify and
cause such Guarantors and Debtors to notify Lender in writing
of any attempt by Lender to act as a consultant or advisor to
those entities in the future;
ao. Lender's Duty. Lender does not have and shall not have any
fiduciary or similar duty to Borrower, or to the best of its
knowledge, any Guarantor or Debtor;
9
<PAGE> 10
ap. Lender's Relationship. Lender has not participated and shall
not participate in any type of joint venture or partnership
with Borrower or, to the best of its knowledge, any Guarantor
or Debtor and the execution and consummation of this Agreement
and the Loan Documents and the transactions contemplated
therein do not and shall not constitute or amount to a joint
venture or partnership;
aq. Lender Not an Agent. Except as expressly set forth in this
Agreement or the Loan Documents, Lender has not acted and
shall not act in any respect as the agent of Borrower or any
Guarantor or Debtor for any purpose and no agency relationship
has been or shall be created by the execution of this
Agreement and the Loan Documents or the consummation of the
transactions contemplated thereby;
ar. Absence of Lender Representations. Except as expressly set
forth in this Agreement or the Loan Documents, Lender has not
made any representations or statements of material fact to
Borrower or, to the best of its knowledge, any Guarantor or
Debtor and such entities have not relied and shall not rely
upon any representations or statements of Lender in connection
with the negotiation, execution, delivery or effect of this
Agreement or the Loan Documents or the consummation of the
transactions contemplated thereby;
as. Borrower's Agreement to Take Action. Borrower shall execute
and deliver and cause any Guarantors and Debtors to execute
and deliver to Lender any documents and take any actions as
may be requested by Lender to carry out the intent and
purposes of this Agreement and the Loan Documents and the
transactions contemplated thereby and to preserve and perfect
Lender's liens, security interests and other encumbrances in
the Collateral; and
at. NOT TO PLEDGE. BORROWER SHALL NOT PLEDGE OR ENCUMBER THE
ACCOUNTS RECEIVABLE OR INVENTORY PRESENTLY OWNED OR THAT IT
MAY ACQUIRE BY ANY MEANS IN THE FUTURE.
6. PRESENTMENT, DEMANDS AND NOTICES. Borrower hereby waives and shall
cause any Guarantors and Debtors to waive all of their respective rights to
presentment, demand, protest, notice of intent to accelerate, notice of
acceleration and other notices (including, but not limited to, notice of
dishonor, default, non-payment, and the creation, existence and extension of
any and all indebtedness and obligations under this Agreement and the Loan
Documents and of any security and collateral therefor) to the maximum extent
permitted by law.
7. DEFAULT. Borrower shall be in default under this Agreement and the
Loan Documents in the event that Borrower, any Guarantor and Debtor, or any
other party guarantying or securing the loans and/or other financial
accommodations described therein:
a. fails to pay any obligation to Lender when due;
b. fails to perform any obligation or breaches any warranty or
covenant to Lender contained in this Agreement or the Loan
Documents or any other present or future written agreement;
c. allows or causes the Collateral to be damaged in any material
respect, destroyed, lost, stolen, seized, or confiscated;
d. seeks to revoke, terminate or otherwise limit its liability
to Lender; or
e. causes Lender to deem itself insecure in good faith for any
reason.
8. RIGHTS OF LENDER ON DEFAULT. If there is a default under this
Agreement or any of the Loan Documents, Lender shall be entitled to exercise
one or more of the following remedies without notice or demand (except as
required by law):
a. Acceleration - to declare Borrower and any Guarantors or
Debtors' obligations to Lender to be immediately due and
payable in full (less any rebates or credits as applicable);
b. Collection Without Judicial Process - to collect Borrower and
any Guarantors or Debtors' outstanding obligations with or
without resorting to judicial process;
c. Delivery of Collateral - to require Borrower and any Debtors
to deliver and make available to Lender any Collateral at a
place reasonably convenient to Lender and those entities;
10
<PAGE> 11
d. Take Possession - to take immediate possession, management and
control of the Collateral without seeking the appointment of a
receiver;
e. Collection of Proceeds - to collect all rents, issues, income,
profits and proceeds from the Collateral until Borrower and
any Guarantors and Debtors' obligations to Lender are
satisfied in full;
f. Appointment of Receiver - to apply for and obtain, without
notice and upon ex parte application, the appointment of a
receiver for the Collateral without regard to Borrower or any
Guarantors and Debtors financial condition or solvency, the
adequacy of the Collateral to secure the payment or
performance of the obligations of those entities to Lender, or
the existence of any waste to the Collateral;
g. Foreclosure - to foreclose any deed of trust, mortgage, lien,
security interest or other encumbrance on the Collateral;
h. Setoff - to setoff Borrower and any Guarantors and Debtors'
obligations to Lender against any amounts due to those
entities including, but not limited to, the Borrower and
Guarantors and Debtors' monies, instruments, and deposit
accounts maintained with Lender; and
i. Lender's Contractual Rights - to exercise all other rights
available to Lender under the Loan Documents, any other
written agreement, or applicable law.
Lender's rights are cumulative and may be exercised together, separately, and
in any order. In the event that Lender institutes an action seeking recovery of
any of the Collateral by way of a prejudgment remedy in an action against
Borrower or Debtors, Borrower hereby waives and shall cause Debtors to waive
the posting of any bond which might otherwise be required.
9. WAIVER OF EXEMPTIONS. Borrower hereby waives and shall cause any
Debtors to waive all homestead exemptions and other exemptions, to the extent
they may lawfully do so, to which those entities would otherwise be entitled
with respect to the Collateral under any applicable law.
10. HOLD HARMLESS AND INDEMNIFICATION. Lender shall not be responsible for
the performance of any of Borrower or any Debtors' obligations with respect to
the Collateral under any circumstances.
Borrower hereby indemnifies and holds Lender harmless, and shall cause any
Guarantors and Debtors to indemnify and hold Lender harmless, from all claims,
damages, liabilities (including attorneys' fees and legal expenses), causes of
action, actions, suits and other legal proceedings (cumulatively, "Claims")
pertaining to their respective businesses or the Collateral (including, but not
limited to, those Claims involving Hazardous Materials). Borrower shall
immediately provide and cause any Guarantors and Debtors to immediately provide
Lender with written notice of any such Claim. Borrower, upon the request of
Lender, shall defend or cause such Guarantors and Debtors to defend Lender from
such Claims, and pay the attorneys' fees, legal expenses and other costs
incurred in connection therewith. In the alternative, Lender shall be entitled
to employ its own legal counsel to defend such Claims at Borrower and/or such
Guarantors and Debtors' cost.
11. REIMBURSEMENT FOR EXPENSES. Upon demand, Borrower shall immediately
reimburse or cause any Guarantors and Debtors to immediately reimburse Lender
for all amounts (including attorneys' fees and legal expenses) expended by
Lender, to the extent permitted by applicable law, in the: (i) negotiation,
preparation, amendment, extension, modification, replacement or substitution of
this Agreement or the Loan Documents, (ii) the administration of the loans and
other financial accommodations described in this Agreement and the Loan
Documents, (iii) attachment, creation, filing, perfection, and recording of
Lender's liens, security interests, and other encumbrances in the Collateral or
any UCC and other searches and title or insurance policies in connection
therewith, (iv) defense of the validity and priority of Lender's liens,
security interests and other encumbrances against the Collateral, and (v)
enforcement or defense of any obligation or the exercise of any right or remedy
described in this Agreement or the Loan Documents. These sums shall bear
interest at the lower of the highest rate described in any of the Loan
Documents or allowed by law from the date of payment until the date of
reimbursement and be secured by the Collateral.
12. APPLICATION OF MONIES. All payments to Lender made by or on behalf of
Borrower or any Guarantors and Debtors or monies received by Lender from the
Collateral or otherwise may be applied against any amounts paid by Lender in
connection with the exercise of its rights or remedies described in this
Agreement and the Loan Documents (including attorneys' fees and legal expenses
together with interest at the rate described in the foregoing paragraph) and
then to the payment of the remaining obligations under this Agreement and the
Loan Documents in whatever order Lender chooses.
13. POWER OF ATTORNEY. Borrower hereby appoints and shall cause any
Guarantors and Debtors, jointly and severally, to appoint Lender as their
attorney-in-fact to endorse their names on all instruments and other documents
payable to those entities. In addition, Lender shall be entitled, but not
required, to perform any action or execute any document required to be taken or
executed by Borrower or any Guarantors and Debtors under this Agreement or the
Loan Documents. Lender's performance of such action or execution of such
documents shall not relieve Borrower or any Guarantors and Debtors from any
obligation to cure any default under this Agreement and the Loan Documents. The
powers of attorney described in this paragraph are coupled with an interest and
are irrevocable.
14. ESSENCE OF TIME. Borrower and Lender agree that time is of the essence
with respect to this Agreement and the Loan Documents.
15. MODIFICATION AND WAIVER. The modification or waiver of any of
Borrowers or any Guarantors and Debtors' obligations or Lender's rights under
this Agreement or the Loan Documents must be contained in a writing signed by
Lender. Lender may perform any of Borrowers or any Guarantors and Debtors'
obligations or delay or fail to exercise any of its rights without causing a
waiver of those obligations or rights. A waiver on one occasion shall not
constitute a waiver on any other occasion. Borrowers and any Guarantors and
Debtors' obligations to Lender under this Agreement and the Loan Documents
shall not be affected if Lender amends, compromises, exchanges, fails to
exercise, impairs or releases any of the obligations belonging to any
co-Borrower, Guarantor or obligor or any of its rights against any co-Borrower,
Guarantor, obligor or Collateral.
16. SUCCESSORS AND ASSIGNS. This Agreement and the Loan Documents shall be
binding upon and inure to the benefit of Borrower, Lender, and their respective
successors, assigns, trustees, receivers, administrators, personal
representatives, legatees and devisees.
17. ASSIGNMENT AND PARTICIPATIONS. Borrower and any Guarantors and Debtors
shall not be entitled to assign any of their rights, remedies or obligations
described in this Agreement or the Loan Documents without the prior written
consent of Lender which may be withheld by Lender in its sole discretion.
Lender shall be entitled to grant participations in or assign some or all of
its rights and remedies described in this Agreement and the Loan Documents
without notice to or the prior consent of Borrower or any Guarantors and
Debtors in any manner. Each actual or proposed participant or assignee shall be
entitled to receive all information provided to Lender regarding Borrower, any
Guarantors and Debtors, Collateral or otherwise pertaining to the loans and/or
other financial accommodations evidenced by this Agreement and the Loan
Documents.
18. NOTICES. Any notice or other communication to be provided under this
Agreement or the Loan Documents shall be in writing and sent to the parties at
the addresses described in this Agreement or the Loan Documents or such other
address as the parties may designate in writing from time to time.
11
<PAGE> 12
19. SEVERABILITY. If any provision of this Agreement or the Loan Documents
violates the law or is unenforceable, the remainder of this Agreement and the
Loan Documents shall continue to be valid and enforceable in all respects.
20. COMPLIANCE WITH APPLICABLE LAW. It is Lender's intention to comply
fully with Texas law, and federal law as applicable, regulating credit terms,
interest, fees, charges, expenses, and other amounts. For purposes of
determining Lender's compliance with such laws, the following shall apply to the
extent permitted by law: (a) any contract, charge or receipt by Lender,
whether occurring now or in the future, shall be strictly limited by this
provision; (b) the "Maximum Lawful Rate" shall mean the maximum lawful ceiling,
rate or amount that Lender could have contracted to charge or receive under
Texas law or applicable federal law, whichever permits the highest maximum
ceiling, rate or amount; (c) to the extent Texas Article 5069-1.04, as amended,
provides the Maximum Lawful Rate, the "indicated rate ceiling" shall apply
unless changed by Lender in accordance with Texas law; (d) Lender may
calculate rates or amounts by aggregating, amortizing, prorating, allocating,
and spreading amounts contracted for, charged or received over the full term of
the transaction; (e) no contract, charge or receipt shall obligate Borrower or
any obligor to pay any amount in excess of the Maximum Lawful Rate or waive any
right under Texas Article 5069; and (f) any contract, charge or receipt that in
the event of acceleration or under any other contingency purports to require
the payment or collection of any amount in excess of the Maximum Lawful Rate
shall automatically be reformed to not obligate Borrower or any other obligor
to pay any amount in excess of the Maximum Lawful Rate. If Lender ever
contracts for, charges or receives a rate or amount in excess of the Maximum
Lawful Rate, the excess (whether denominated principal, interest or otherwise)
shall be automatically subject to reallocation, cancellation, credit,
application, or refund to eliminate any amount in excess of the Maximum Lawful
Rate.
21. APPLICABLE LAW. EXCEPT TO THE EXTENT THAT THE VALIDITY AND PERFECTION
OR THE PERFECTION AND THE EFFECT OF PERFECTION OR NON-PERFECTION OF ANY
SECURITY INTEREST CREATED HEREBY, OR REMEDIES HEREUNDER, IN RESPECT OF ANY
PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE
STATE OF TEXAS, THIS AGREEMENT SHALL BE SUBJECT TO AND CONSTRUED AND ENFORCED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS WITHOUT GIVING EFFECT TO ANY
CONFLICTS OF LAWS PRINCIPLES. BORROWER CONSENTS TO THE JURISDICTION AND VENUE
OF ANY COURT LOCATED IN THE COUNTY IN WHICH THIS NOTE IS SIGNED OR IN WHICH
BORROWER RESIDES IN THE EVENT OF ANY LEGAL PROCEEDING UNDER THIS NOTE.
22. MISCELLANEOUS. All references to Borrower shall refer to all of the
parties signing below. Borrower's obligations to Lender shall be joint and
several. This Agreement and the Loan Documents represent the complete and
integrated understanding between Borrower, any Guarantors or Debtors, and
Lender pertaining to the terms and conditions of those documents and the loans
and other financial accommodations described therein.
23. ADDITIONAL TERMS.
WORKING CAPITAL AND RATIO. BORROWER AGREES TO MAINTAIN WORKING CAPITAL
OF NOT LESS THAN $7,000,000.00 AND A CURRENT RATIO OF NOT LESS THAN
1.8:1.
STOCKHOLDERS EQUITY AND RATIO. BORROWER AGREES TO MAINTAIN
STOCKHOLDERS EQUITY OF NOT LESS THAN $39,000,000.00 AND A LEVERAGE RATIO
NOT TO EXCEED .5:1.
ACCOUNTS RECEIVABLE AND INVENTORY REPORTING. BORROWER AGREES TO
PROVIDE A CONSOLIDATED ACCOUNTS RECEIVABLE AGING REPORT AND A
CONSOLIDATED INVENTORY VALUATION REPORT ON A MONTHLY BASIS WITHIN
THIRTY (30) DAYS OF THE PREVIOUS MONTH-END.
ADVANCES ON LOANS. BORROWER AGREES THAT ADVANCES AND ANY OUTSTANDING
BALANCE ON THE REVOLVING LINE OF CREDIT WILL BE BASED ON 80% OF
ELIGIBLE ACCOUNTS RECEIVABLE AND 50% OF INVENTORY VALUED AT COST.
ELIGIBLE ACCOUNTS RECEIVABLE CAN BE DEFINED AS ACCOUNTS RECEIVABLE
NINETY (90) DAYS OR LESS OUTSTANDING.
FINANCIAL STATEMENTS. BORROWER AGREES TO PROVIDE AN AUDITED ANNUAL
FINANCIAL STATEMENT FOR THE FISCAL YEAR ENDING JUNE 30, 1995 WITHIN
NINETY (90) DAYS OF THE FISCAL PERIOD END AS WELL AS COMPANY PREPARED
MONTHLY FINANCIAL STATEMENTS WITHIN THIRTY (30) DAYS OF THE PREVIOUS
MONTH-END. BORROWER ALSO AGREES TO PROVIDE THE SEC FORM 10-K AND FORM
10-Q WITHIN A REASONABLE AMOUNT OF TIME FROM THE COMPLETION OF THE
INFORMATION.
Dated this 1ST day of NOVEMBER, 1994.
This Agreement and related documents have been signed in the County of Lender's
address unless otherwise specified:
<TABLE>
<S> <C>
LENDER: PLAINS NATIONAL BANK OF WEST TEXAS
P 0 BOX 271
________________________________________
DARRELL W. ADAMS
VICE PRESIDENT
BORROWER: REPUBLIC GYPSUM COMPANY, INC. BORROWER:
/s/ PHIL SIMPSON
_______________________________________ ________________________________________
PHIL SIMPSON
CHAIRMAN OF THE BOARD
BORROWER: BORROWER:
_______________________________________ ________________________________________
BORROWER: BORROWER:
_______________________________________ ________________________________________
BORROWER: BORROWER:
_______________________________________ ________________________________________
</TABLE>
12
<PAGE> 13
SCHEDULE A
<TABLE>
<CAPTION>
INTEREST PRINCIPAL AMOUNT/ FUNDING/ MATURITY CUSTOMER LOAN
RATE CREDIT LIMIT AGREEMENT DATE DATE NUMBER NUMBER
-------- ----------------- -------------- -------- -------- ------
<S> <C> <C> <C> <C> <C>
VARIABLE $6,000,000.00 11/01/94 11/01/95 969410
</TABLE>
SCHEDULE B
13
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
ART. 5 FDS FOR 1ST QUARTER 10-Q
</LEGEND>
<S> <C>
<PERIOD-TYPE> QTR-1
<FISCAL-YEAR-END> JUN-30-1995
<PERIOD-END> SEP-30-1994
<CASH> 2,403,000
<SECURITIES> 0
<RECEIVABLES> 10,967,000
<ALLOWANCES> 379,000
<INVENTORY> 4,893,000
<CURRENT-ASSETS> 18,741,000
<PP&E> 71,416,000
<DEPRECIATION> 33,230,000
<TOTAL-ASSETS> 57,561,000
<CURRENT-LIABILITIES> 9,593,000
<BONDS> 0
<COMMON> 10,538,000
0
0
<OTHER-SE> 32,785,000
<TOTAL-LIABILITY-AND-EQUITY> 57,561,000
<SALES> 20,853,000
<TOTAL-REVENUES> 20,853,000
<CGS> 14,269,000
<TOTAL-COSTS> 14,269,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 124,000
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 4,381,000
<INCOME-TAX> 1,705,000
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,676,000
<EPS-PRIMARY> 0.25
<EPS-DILUTED> 0.25
</TABLE>
