Document E3Xq8xmmQELY1Zd6q29QYkxR

TYLER CORP. 1980 10K Order # 9348704(9/10) # DCN Company Name Doc Type Doc Date Ex Qty. Ship Loc. 9 HI082993 TYLER CORP.T983000000 10-K 12/31/1980 OTH 1 DEL TYLER CORP | Base Only / /^f\ 7"f3oOO SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ORIGINAL B 02-08? Form 10-K ^ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d THE SECURITIES EXCHANGE ACT OF 1934 / For the fiscal year ended December 31, 1980 Commission file number 1-5409 TYLER CORPORATION (Exact name of registrant as specified in its charter) Delaware (State or othur jurisdiction of incorporation or organization) 75-1225029 (I.R.S. Employer Identification No.) 3100 Southland Center, Dallas, Texas (Address of principal executive offices) 75201 (Zip Code) Registrant's telephone number, including area code: (214) 747-8251 Securities registered pursuant to Section 12(b) of the Act: Title of each class Common Stock, 50.10 par value Name of each exchange on which registered Mew York Stock Exchange Philadelphia Stock Exchange 10 1/2% Subordinated Debentures Due 1998 New York Stock Exchange Securities registered pursuant to Section 12(g) of the Act: None Indicate by cheek 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 tbc preceding 12 months (or for such shorter period that the registrant was required to filr such reports), and (2) has boen subject to such filing requirements for the past 90 days. Yes X No The aggregate market value of the voting stock held by non-af filiates of the registrant on February 23, 1981 wss 5178,448,000. The number of shares of Common Stock of the registrant outstand ing on Pebruary 23, 1981 was 9,362,006. DOCUMENTS INCORPORATED BY REFERENCE Certaiu information required by Part I and Part III of this Annual Report is incorporated by reference from the registrant's definitive proxy statement for its annual meeting of stockholders to be held April 22, 1981. I V-~ I tern 1. Business. General The principal products and services of Tyler Corporation ("Tyler") are manufactured pipe and fittings used primarily in residential, industrial and commercial construction and by munici palities; manufactured industrial explosives for the coal mining, quarrying, metal mining, construction and seismic industries; heavy hauling by motor truck; and general commodity hauling by motor truck. Tyler conducts business primarily through its four princi pal operating subsidiaries, Tyler Pipe Industries, Inc., Atlas Powder Company, C & H Transportation Co., Inc. and Thurston Motor Lines, Inc. Net sales and operating revenues and operating profits of Tyler's industry segments are set forth below for the indicated calendar years. The following table should be read in conjunction with the financial statements and notes thereto appearing elsewhere herein. INDUSTRY SEGMENTS 1978 1979 (In Thousands) 1980 Net sales and operating revenues Pipe and fittings Industrial explosives Heavy hauling General commodity carrier $171,863 105,256 113,754 ---- $396,873 $185,132 121,775 138.101 74,234* $519,242 $171,861 138,323 151,483 102.174 $563,841 Operating profits Pipe and fittings Industrial explosives Heavy hauling General commodity carrier $ 24,735 13,185 12,984 ----- 50,904 Unall-cated corporate expense Interest Other (<41..6899671) Income before income tax and extraordinary charge S 42,311 $ 22,430 15,335 16,682 2,438* 56.885 (0,577) _i3J97Bl $ 42,330 $ 24,267 15,481 15,370 2.202 57,320 (11,306) <4,197) $ 41.817 *For the last nine months Identifiable assets of Tyler's Industry segments as of December 31, 1978, 1979 and 1980 were as follows: Pipe and Flttlngs Industrial Explosives General Heavy Comudity Hauling Carrier (In Thousands) Corporata Total December 31, 1978 $80,117 $53,571 $45,883 $ ----- $17,350 $206,921 December 31, 107f 96,286 56,515 52,291 62,243 5,242 272,577 Dracanber 31, 19L0 95,260 59,385 41,781 60,075 8,147 264,648 -2- oL Principal Products and Services Pipe and Fittings Tyler, through Tyler Pipe Industries, Inc. anl certain Of its subsidiaries ("Tyler Pine"), m<\nufnatures and distributes cast iron and plastic soil pipe, fittings and related building materials used primarily in drain, waste and vent ("DWV") applica tions and water and sewage fittings used in water supply and sewer systems. Tyler Pipe, which was founded in 1935, sells substantial ly all of its DWV products as finished products to wholesale plumb ing supply houses in the United States for use primarily by con struction contractors in the residential, industrial and commercial building industries. Water and sewage fittings are used primarily by municipalities. The pipe and fittings business is seasonal to the extent that the construction industry is affected by weather. Tyler Pipe manufactures & complete line of cast iron and PVC plastic soil pipe and fittings. In the cast iron line, soil pipe is manufactured in lengths of five and ten feet, in diameters from 1 i/2 to 15 Inches, and in wall thicknesses from "service" to "extra heavy" weight. Tyler Pipe also produces and sells ap proximately 10,000 different configurations of D7V fittings and re lated products. In addition, Tyler Pipe manufactures and sells mure than 12,000 different water and sewage fittings for use in water supply and sower systems by municipalities. Tyler Pipe has developed a number of products ar.d manulecturing processes. It pioneered soil pipe in ten-foot lengths; developed the Ty-Seal gasket, a neoprene compression gasket used to connect cast iron pipe and fittings; and produces complete self-contained plumbing walls tot use - in modular construction. Tyler Pipe also was the first domestic manufacturer to use the unlinod water-cooled cupola, to employ centrifugal casting machines for ten-foot lengths of soil pipe and to produce cast iron soil pipe fittings in permanent metal molds. Tyler Pipe hat? its principal plants near Tyler, Texas and in Macungle, Pennsrlvania. The majority of sales is handled directly through offices maintained at the Tyler, Texas, plant. Sales are made both through Tyler Pipe's and manufacturers' repre sentatives throughout the UniteJ states. Transportation costs, pricing, product quality and performance, anu the whllity to service customers promptly are material factors in effecting sties of Tyler Pipe's products, as are the general level and mix of spending in the construction Industry, Tyler Pipe obtains iron, the basic raw material used in its products, by melting and refining iron and steel scrap to the required analyses. Most of the scrap material is purchased directly from scrap dealers in areas where Tyler Pipe's trucks make deliveries and is returned to the plants by itr> '-rucks as "back haul." Other basic materials used Include coke, limestone, fluorspar, resin, bentonite, silicon, sand and core oils, all of which have been generally available from multiple sources. Tyler Pipe experienced no problems In obtaining these materials during 1980. No shortages of basic raw materials used by it appear immi nent or likely. Tyler Pipe has no material contractual arrange ments with any of its suppliers of raw materials. In the sale and distribution of pipe and fittings, Tyler Pipe competes with a number of companies, such as United States Pipe & Foundry Co. (a division of Jim Walter Corp.). Central Foun dry Company, Charlotte Pipe, Roblntech Incorporated, Nlbco Inc., and several smaller companies whose sales are generally concentra ted In various regions of the United Slates. In water and 6cwage fittings, Tyler Pipe competes with United States Pipe k Foundry Co. , American Cast Iron Pipe Company, Clow Corporation and other smaller companies. In addition, Tyler Pipe's pipe and fittings products compete with those made of other materials, including vitrified clay, asbestos cement, steel, fiber and copper. Patent and trade -3- mark protection, licenses, franchises and concessions are not materially significant to the pipe and fittings business. Tyler Pipe estimates that it is the largest manufacturer of cast iron soil pipe and fittings sold in the national raarktt for DVTV. appli cations . Industrial Explosives Tyler, through Atlas Powder Company and its subsidiaries ("Atlas"), manufactures and distributes a complete line of in dustrial explosives. These products are used by a variety of end users whose demands and requirements differ widely according to industry, lc.ation, blasting conditions and technical sophisti cation. The major user of industrial explosives, on the basis of total tonnage, is the coal mining industry, followed by the quarrying, metal mining, construction and seismic industries. At its production facilities in Tamaqua, Pennsylvania, and Joplin, Missouri, Atlas manufactures nitroglycerine-based explo sives, gels, slurries, electric blasting caps, other blasting sup plies and ammonium citrate. Twelve mix plants at various locations throughout the country are used for mixing and storage of its ANFO (ammonium nitrate mixed with fuel oil) products. Atlas' products are sold by salesmen and distributors nationwide. In addition, Atlas has entered into exchange arrangements with a number of other producers and other users of ammonium nitrate to save ship ping expenses. Atlas also sells anhydrous ammonia and certain other products to third parties for agricultural uses. Principal raw materials used in the manufacture of Atlas' products include natural gas, fuel oil, ethylene glycol, glycerine, nitroaethane and ammonium nitrate. The price and allocation of natural gas are regulated by various federal and 6tafe agencies. The Federal Energy Regulatory Commission has placed natural gas, which is used as a feedstock in the manufacture of industrial explosives and agricultural products. In one of the highest prior ity categories. Although Atlas is generally able to produce or obtain most of the above materials, there can be no assurance that an adequate supply of these materials will continue to be available for use in the production of industrial explosives. Atlas rankr- second in sales among the three major manu facturers and distributors of industrial explosives products within the United States. Product reliability and performance, end user technical assistance, proximity of distributors to blasting opera tions and price are Important in effecting sales of industrial explosives. Atlas' largest competitors are E. I. du Pont de Nemours and Company and Hercules Incorporated, in that order. Atlas also competes with Austin Powder Company, Trojan Division of IMC, Apache Powder Company, IRECO Chemicals, Monsanto Company, Gulf Oil Chemi cals Co. and several smaller concerns. The top three manufacturers in the Industry, including Atlas, have complete product lines. Heavy Hauling Tyler, through C A H Transportation Co., Inc. and its subsidiaries ("C A H"), provides heavy hauling services for heavy and cumbersome Items by truck throughout the continental United States, Alaska and in certain parts of Canada and Mexico, The business was founded in 1950 and is operated under Interstate authorities granted by the Interstate Commerce Commission ("ICC"), intrastate authorities granted by various states of the United States and authorities granted by Canadian provinces. These author ities permit C t H to transport commodities of unusual slxe or weight and other classes of commodities. C A H principally hauls oil field equipment, industrial machinery, contractors' equipment, building construction material, pipe, metal and metal products ar>d many other specified commodities. C A H, as an irregular r-xute carrlur, generally has the right to use the highways, roads and routes within the territories covered toy its authorities that are the most suitable and direct for the movement of a particular shipment. -4- The following table sets forth certain information about the operations of C l H during the past five years: Year 1976 1977 1978 1979 198C Operating Revenues $ 91,078,237 102,625,257 113,754,289 13S,100,464 151,463,747 Tonnage Carrie1 1,500,535 1,643,957 1,646,930 1,705,906 1,669,346 Miles Operated 103,102,255 103.056.652 103,336,326 116,516,266 114,940,999 Average Revenue per Mile $0.88 1.00 1.10 1.19 1.32 Load Operating Ratiom Ratio(2) 82.9 83.7 85.1 85.4 82.3 88.1 88.1 88.2 87.7 89,6 (1) The load rati' s the ratio of miles traveled with revenueproducing freight to total miles traveled both loaded and empty. (2) The operating ratio is the ratio oi expenses, excluding in terest.. to operating revenue. C U is dependent upon its ability to obtain diesel fuel for its trucks. Although prices are expected to continue to in crease, diesel fuel supplies have been sufficient and are expected to remain available. C A H, like all other Interstate common carriers by motor vehicle, is subject to regulation by the ICC and the Department of Transportation for all its interstate carrier activities. CAB also is subject to the regulatory authorities of the appropriate states ior its intrastate carrier activities in those states. These agencies have broad jurisdiction generally governing such activi ties as the Issuance of certificates and permits covering routes and commodities, establishment and revision of rates, operations, establishment of uniform accounting systems, approval or disapprov al of mergers and consolidations and issuance of securities. Kotor carriers are also subject to state and federal regulations with respect to weigh'';, dimensions of equipment and safety regula tions. Tyler, as the parent of C A H and Thurston Kotor Lines, Inc., is also subject to certain provisions of the Interstate Commerce Act, including those relating to reports to the ICC, ac counting practices, issuance of certain securities and acquisition of additional operating authorities. However, the ICC has exempted Tyler from substantially all of these regulations but has reserved the right in the future, on a showing of changed conditions, to subject Tyler to such regulations. Tyler is subject to the regula tions relating to the acquisition of additional operating authori ties. C A H, like all other interstate common carriers by motor vehicle, is required to publish and file tariffs with the ICC stating its rates and charges for transportation of Interstate shipments and related services. Pilings are made either directly by C A H or by regional tariff bureaus (made up of motor carriers in various geographical regions) to which C A H belongs. Proposed rates go into effect on the date designated in the filed tariff unless an Interested party, including shippers, railroads and competing carriers, files a complaint or the ICC suspends the rates on its own motion. Upon the complaint of an Interested party or upon its oc initiative, the ICC may suspend the effec tiveness of the proposed rates for up to seven months and institute proceedings to determine their lawfulness. Unless the ICC formal ly rejects the proposed rates during the seven-month suspension, they become effective upon the expiration of the suspension period. The Kotor Carrier Act of 1980 made substantial changes In the lavs that govern the ICC's activities. Since the passage of the Act, the ICC has promulgated a number of new rules that have increased price competition and made it easier for new com panies to enter the trucking business and for existing carriers to expand into new territories. C A H Is processing applications with the ICC for additional authorities and to broaden the commod ities it can transport. S'-5- C 1 H conpetes with motor common and contract carriers such as International Transport, Inc.; Tri-State Motor Transit Co.; F-B Truck Lines; Eagle Motor Lines, Inc..; Daily Express, Inc.; Dallas 1 Mavis Forwarding Co., Inc.; Superior Trucking Company; Ace Doran H&ul'ng and Rigging; George Transfer and Rigging; H. J. Jeffries Truck Line; R. L. Jeffries Truck Line; J. H. Rose Truck Lines; and Hone Transportation Company, as well as others. C A H also competes rith railroads, freight forwarders, private carriers and waterway freight carriers. However, competition in the trans portation business is, to some extent, regulated by the ICC and various state and local regulatory agencies, and the routes, the commodities permitted to be carried and the various tariffs are subject to regulation. Private carriers, such as manufacturers, distributors and other companies transporting goods primarily for their own use, are not required to obtain operating authority from the ICC. Based upon financial information filed with the ICC, C i H appears to be the largest heavy hauler in the United States, although larger trucking firms have heavy hauling divisions. General Commodity Carrier Tyler, through Thurston Motor Lines, Inc. ("Thurston"), opera.'.s as a Motor vehicle common carrier of general commodities. The business was founded in 1032 and was acquired by Tyler In April 1979. See note 2 to Tyler's financial statements appearing else where herein. Thurston transports predominantly less-than-truckload ("LTL") shipments, which are less than 10,000 pounds, of miscellaneous general freight. Thurston provides service along the Eastern Seaboard and to the Southeastern United States and has recently extended service to the Dallas-Port Worth market under a temporary operating authority. LTL traffic commands higher rates than truckload shipments and is generally less vulnerable to competition from other forms of transportation, although the ex pense of handling LTL shipments is greater than that of handling truckload shipments. Shipments consist of general categories of commodities such as textiles and synthetic fibers, automobile and agricultural machinery parts, drugs and sundries, furniture, chemicals and paper products. Thurston maintains a special divi sion for the transportation of commodities requiring special hand ling and equipment. The following table sets forth various operating statis tics of Thurston's trucking operations during the past five years. Year Operating Revenues Tonnage Carried inter city Miles(l) Number of Shipments Operating Ratio (2) 1976 1977 1978 1979(3) 1980 $55,790,000 69,695,000 82,707,000 85,895,000 87,350,000 1,285,000 1,484,000 1,667,000 1,535,000 1,279,000 40,604,000 48,420,000 54,864,000 51,765,000 44,580,000 1,434.000 1,478,000 1,468,000 1,338.000 1,231,000 86.7 88.5 89.6 95.9 97.3 (1) "Intercity miles" ia the ICC's term for revenue miles and does not Include local pick-up and delivery mileage. (2) The operating ratio is the ratio of expenses, excluding inter est, to operating revenue. (3) For the entire year. Thurston Is dependent upon its ability to obtain diesel fuel for Its trucks. Although prices are expected to continue to increase, diesel fuel supplier have been sufficient and are expect ed to remain available. Thurston participates In interline agreements with other motor carriers and arrangements with railroad, air and water carri ers, which allow freight to be moved to and from points beyond -6- (o ! those it serves directly. Existing trailer interchange agreements j with other motor carriers permit shipments of freight to and from ! points throughout the United States without the physical transfer i of freight to another carrier's trailer. i Thurston and all similar regular route motor common i carriers use basically the same type of equipment in the transpor- ! tation of freight. The ability oi a carrier to obtain new customers and to maintain its business with existing customers is dependent j upon price, the quality of its service and its sales and marketing efforts. Like all other interstate common carriers, Thurston's ! operations are subject to the federal and state regulations govern{ ing the trucking industry, as well as changes in those regulations j and their effect on competition. See pages 5 and 6 above. Competitors of Thurston include Overnite Transportation Co.; Southeastern Freight Lines; Bowman Transportation, Inc.; Caro lina Freight Carriers Corporation; Old Dominion Freight Lines, Inc.; Pilot Freight Carriers, Inc.; Estes Express Lines; The Mason and Dixon Lines, Tnc.; and McLean Trucking Company, as well as others. Thurston also competes with railroads, freight forwarders, private carriers and waterway freight carriers. Employees At December 31, 1980, Tyler had 7,878 employees, of whom 3,018 were employed by Tyler Pipe, 1,679 by Atlas, 920 by C l H and 2,230 by Thurston. In addition, at that date C & H and Thurston had leuse agreements with owners of tractors, under which the owners provided 1,515 drivers at C & H and 151 drivers at Thurston for the leased tractors. There were 838 employees covered by col lective bargaining agreements with various unions. In July 1980, the employees of Thurston voted by more than two to one to reject representation by .he International Brotherhood of Teamsters. Tyler has experienced no significant work stoppages or strikes and considers that its relations with its employees generally have been good. Item 2. Properties. Tyler occupies buildings (including, with respect to C AH, the Dallas terminal only), office and maintenance facilities and sales offices which contain approximately 2,971,000 square feet of floor space. The principal plants, warehouses, freight terminals and offices, all of which are owned (except as otherwise Indicated in the column captioned "Expiration Date of Lease"), are described Location Dallas, Texas Swan (Tyler), Texas Macungle, PenneyIvanin Franklin Park, Illinois Approximate Square Feet of Floor Space 17,000 882,000 134.000 40,000 Expiration Date of Lease Primary Use December 31, 1984 Corporate offices of Tyler Offices, foundries, shops and ware houses used in the pipe and fittings business Offices, foundry and warehouse used in the pipe and fittings business -- Warehouse used in the pipe and fit tings business 7-7- Location Dallas, Texas Approximate Square Feet of Floor Space 177,000 Expiration Date of Lease Primary Use -- Offices, terminal, gar age and warehouse used in the heavy hauling busi ness Dallas, Texas 25,000 Joplin, Missouri * Tamaqua, Pennsylvania 326,000 Port Bienville, Mississippi 25.000 Joplin, Missouri 280,000 Charlotte, North Carolina 180,000 Memphis, Tennessee Lenoir, North Carolina Atlanta, Georgia Wilson, North Carolina Greensboro, North Carolina Raleigh, North Carollua Richmond, Virginia 66,000 58,000 55,000 52,000 44,000 38,000 1.0,000 February 28, 1385 Offices used in the in dustrial explosives busi ness Ammonia and ammonium ni trate production facility used in the industrial explosives business Research and production facility and truck ter minal used in the indus trial explosives business Office and storage facil ity used in the indus trial explosives business -- Production facility used in the industrial explo sives business Administrative offices and terminal used in the general commodity carrier business Freight terminal used in the general commodity carrier business ** Freight terminal used in the general commodity carrier business . Freight terminal used in the general commodity carrier business Freight term nal used in the general commodity ca>rier business T Freight terminal used in the general commodity carrier business -- Freight terminal used in the general commodity carrier business Freight terminal used in the general commodity carrier business * Consists of a facility htlng an annual capacity of approximately 120,000 tons of anhydrous ammonia. -0- Location Greenville, South Carolina Knoxville, Tennessee Columbia, South Carolina Charlotte, North Carolina Approximate Square Feet of Floor Fpate Expiration Date of Lease Primary Use 34,000 -- Freight terminal used in the general commod ity carrier business 30,000 -- Freight terminal used in the general commod ity carrier business 25,000 " Freight terminal used in the general commod ity carrier business 37,000 November 13, 1981 Administrative and sales office and re pair shop used by other Tyler subsidi aries C & H operates 42 motor truck terminals located in 26 states. With the exceptior of terminals at Houston, Texas; San Antonio, Texas; North Lima, Ohio; Phoenix, Arizona; Bordentovn, Nev Jersey; Charlotte, North C? i-ollna; West Columbia, South Carolina; and Tacoma, Washington, all of which are owned, terminal facilities are leased, generally under leases of less than five years duration. Ai. of December 31. 1980, C k H owned or had the use of an aggregate of 4,273 pieces of motor truck revenue equipment. Tbe following table sets forth the number of pieces of revenue equipment owned or operated by C & H >md the average and maximum ages in years with respect to the equipment owned, and the number of pieces of revenue equipment used but not owned by C AH. Rev. Eauin. (Owned! Average Maximum Age Age Number in Years in Years Rev. Equip. (Not Owned!* dumber Tractors 259 4 9 1,237 Trailers 2,744 4 12 Yard vehicles 33 8 16 * These tractors used by C A H are leased on a month-to-month basi* to C k H and are owned and maintained by drivers under lease contract to C k H. Thurston handles shipments through 43 terminals located in 23 states. Twenty of the 43 terminals are owned by Thurston. As of December 31, 1980, Thurston owned an aggregate of 3,609 pieces, and bad tbe use of an aggregate of 146 additional pieces, of motor truck revenue equipment. Tbe following table sets forth the number of pieces of revenue equipment owned or operated by Thurston and the average and maximum ages in years with respect to the equipment owned, and tbe number of pieces of revenue equipment used but not owned by Thurston. \ * \ \\ Tractors Trailers Straight trucks Service units Rev. Humber Equip. (Owned) Average Maximum Age Age in Years iri Years 910 2,516 139 44 5 6 7 3 1? 17 IS 9 Rev, t.julp. (Not Owned)' Number 146 * There tractors used by Thursti n ar<~ leased on a month-to-tnonth basis to Thurston and are owned and maintained by drlve-s under lease contract to Thurston. As of December 31, 1980, Tyler Pipe owned 116 tractors and 187 trailers used in its pipe and fittings business <;.th an average age of five years and a maximum age of ten y*:.<.rs. As of December 31, 1980, Atlas maintained approximately 84 magazine sites or bulk ammonium nitrate facilities throughout the United States, mos\ of which were leased, generally under leases of less than five years duration. In addition, Avlas maintained and operated 12 mix plants on nine owned sites and three leased sites. The leased mix plant sites are generally under one-year renews.jle leases. The motor truck terminals, machinery, equipment, build ings and facilities owned und leased by Tyler and its subsidiaries are generally well maintained and suitable for their oper ;iu.ns. Item 3. Legal Proceedings. On March 3, 1978, Kelvin A. Cook and others filed an action in the District Court of. Salt Lake County, State of Utah, against Atlas Powder Company aid its wholl owned subsidiary. Cook. Atlas Slurry Company, Inc. ("Casco"), alleging that Atlas Powder Company and Casco breached certain agreements with Cook and ,,bers relating to a venture between plaintiffs and defendants for the exploitation of explosives technology and claiming damages of at least $15,000,000, or such ether sum as may be established at trial, and alleging further that Merrill A. Cook was terminated by Casco and is entitled to severance pay of $91,666.67. Defendants have denied these claims &ad have asserted countercle1ms against the plaintiffs. Discovery has been Initiated but not completed. Based upon discovery to date, management of Tyler believes that there is no merit to the claims. The ca.ie is set l'or trial in Uay 1081. Other than the foregoing and ordl nary routine litiga tion incidental to the business of Tyler and its subsidiaries, there are no material legal proceedings pending to which Tyler or any of its subsidiaries is a party or vo which any of its or their properties is subject. Item 4. Security Ownership cf Certain Beneficial Owners and Management. The information required by Item 4 is incorporated by reference from pages 3 and 4 of Tyler's definitive proxy statement for its annual meeting of tockholders to be held April 22, 1981. The Tyler Corporation Savings and Investment Plan held of recore, but not beneficially, 1,883,991 shares of Tyler Common Stock on February 23, .'.381, rcpi^scntlng 20#1% of t.he outstanding Common Stock* PART II I tern 5. Market for the Registrant1s Common Stock and Related Security Holder Hatters. Tyler's Common Stock Is traced or bot`. the New York and Philadelphia Stor.!; Exchanges. The following table gives the high and low sales prices of Tyler Common Stock, as reported in the con solidated transactions reporting system, and the amount of divi dends paid, for the quarters indicated. First Quarter Second Quarter Third Quarter Fourth Quarter Year Stock trading price range .1379 $18 3/8-16 $17 1/6-15 1/4 $16 3/4-14 1/2 $17 1/2-14 $18 3/8-14 1980 17-11 13 1/8-JO 5/3 16 3/8-11 1/8 17 5/8-14 1/8 17 5/8-10 5/8 Dividends paid 1979 $1,122,000 $1,119,000 1380 1,194,000 1,194,000 $1,108,000 1,206,000 $1,100,000 1,214,000 $4,449,000 4,808,000 As of January 1, 1981, Tyler's loan agreements limit re tained earnings available for dividends to $9,325,000. ?:*.e number of holders of Tyler Common Stock at the close of business on February 23, 1981 was 6,169. Item 6. Selected Financial Data. The following table summarizes certain selected consoli dated financial data of Tyler and should be read In conjunction with the financial statements appearing elsewhere herein. Year Ended December 31 1976 1977 1978 .379 1!0 Net sales and operating revenues $338,080,000 $364,724,000 $390,873,000 $519,242,000 $563,841,000 Net income 19,314,000 21,360,000 23,059,000 23,457,000 23,836,000* Earnings per cannon share assuming full dilution 1.56 1.83 2.14 '.(.34 2.46* Earnings per comma and canon equivalent share 1.68 1.83 2.14 2.34 2.46* Dividend (year-end annual rate)** Total assets .25 .30 .40 .45 .50 177,493,000 177,295,000 206,921,000 272,577,000 264,648,000 long-tens debt, including current a&turlties 43,675,000 40,564,000 62,928,000 108,561,000 61,374,000 * Before an extraordinary charge related to the write-off of the entire cost of rout-J permits associated with trucking operations amounting to $10,192,000, or $1.05 per shore. ** Equal to cash dividends per share except in 1076 and 1978 when cash dividends wars $.238 and $.375, respectively. -11- 1 tern 7. Management Discussion and Analysis oi Flnanci\1 Condition and Results of Operations. Financial Condition By generally exceeding Tyler's goal of a 25% return on assets with emphasis on high asset turnover, Tyler's subsidiaries have b-jen able to service their own cash needs for capital expan sion and other purposes from operations while also providing cash flow to Tyler. During 1980, a decrease in account? receivable and basically level inventories permitted significant cash flow from operations while sales and operating revenues continued to increase. Sales and operating revenues increased 44% from 1978 to 1S80, but accounts receivable as a percentage of total assets declined from 23% in 1978 to 22% in 1980 and inventories remained fixed at 13% of total assets. In addition to the cash from operations, Tyler has available 525,000,000 under credit commitments with certain banks and $66,000,000 under unsecured revolving lines of hank credit. At December 31, 1980.- Tyler could obtain an additional $G8,500,000 unuer these arrangements. Tyler intends to maintain a debt-ta-eq'aity relationship in its capital structure that will permit Tyler t;o have access to long-term funding as future needs arise. Analysis of Results of Operations 1979 Compared with 1978 Net sales and operating revenues oi Tyler increased 33% over 1978 levels with 19% of the increase attributable to the inclusion of the general commodity carrier acquired on April 6, 1979. Heavy bauling revenues increased due to continued improve ment in load ratio and the nix of commodities hauled and to an increase in the number of trucks operated. At the lndvstrial explosives unit, physical volume was up, led by demand for slurry products. Unit volume decreased for water and sewage fittings and cast iron product , but Increased for plastics at the pipe and fittings unit. Host product and service prices were raised in 1979. Pretax profits as i percent of sales declined from 10.8% to 8.2% and gross profit margins dropped from 21.2% to 18.4%. The gains realized from an Improved load ratio and gtins involving fixed assets for th9 heavy hauler and volume Increases at the industrial explosives unit were more than offset by a drop in margin at the pipe and fittings unit and the low margin of the general commodity carrier included since acquisition, and because of Increased costs of labor, materials, fuel, maintenance, depre ciation and amortization, payroll taxes and Interest. Excluding the general commodity carrier, which contributed 21% of the 27% total Increase in costs and expenses, maintenance costs were up 18% as outside repair costs on transportation equipment contli ed to increase and as plant capacity was more fully utilized. Depre ciation and amortization of property, plant and equipment rose 8% due to inflation's effect on asset additions. Payroll tar.es increased 10% because of a slight Increase In the average number of employees in 1979 and legislated increases in FICA taxes. Compared to a 23% increase in 1078, Interest expense (net of Interest income) Increased 125% in 1979 due to sharply higher rates and Increased borrowings used to acquire the general commodi ty carrier. 1980 Compared with 1979 Met sales and operating.revenues advanced 9% In I860. Ia- elusion of twelve months* of revenue in 1980 versus nine months in 1079 for the general commodity carrier contributed to 5% of the 12- j ! iocrea.se. The heavy hauling unit's gain reflected primarily a largj er amount for diesel fuel surcharge during 1980 in addition to an improved commodity mix and slightly higher rates. The industrial i explosives unit's advance resulted from price Increases that more j than offset the physical volume decline- in all product lines. The i pipe and fittings unit experienced a substantial drop in physical volume for all of its major product lines, j j Pretax profits as a percent of sales declined from 6.2% \ to 7.4% and gross profit margins decreased from 18.4% to 18.2%. | The profit margin gains realized from cost reductions and produc tivity improvements at. the pipe and fittings unit were offset by the especially low margin at the general commodity carrier, a lower load ratio and the fuel surcharge passeu through to contract drivers at the heavy hauler and a physical volume decrease at the industrial explosives unit. The profit margin was also penalized by generally increased costs of labor, materials, fuel, maintenance, depreciation and amortization. Inflation Accounting For a discussion of the impact of general inflation and changes In specific prices, see "Inflation Accounting Data" on page P-21. Item 8. F-l). Financial Statements and Supplementary Data. (a) Consolidated Financial Statements (see index at page (b) Supplementary Data (see index at page F-l). PART III The information required by Items 9 nd 10 of Part III is incorporated by reference from the indicated pages in Tyler's definitive proxy statement "or its annual meeting of stockholders to be held April 22, 1981. Pages of Proxy Statement Itern 9. Directors and Executive Officers of the Registrant. 5- 9 1ten 10. Management Remuneration and Transactions. 9-15 PART IV Item II. Exhibits, Financial Statement Schedules and Reports - on Form 8-K. i (a) The following documents are filed as a part of this ; report: ] 1. Financial statements (see Index at page F-l). 1 2. Financial statement schedules (see index at page 3. Exhibits. 3.1 - Certificate of Incorporation of Tyler, as amended through April 18, 1979. 3.2 - By-laws of Tyler, as amended through March 16, 1981. 4.1 - Indenture dated June 1, 1978 for Tyler's 10 1/2% Subordinated Debentures Due 1998 (filed as Exhibit 2(b) to Tyler's Regis tration Statement on Form S-7 (Pile Ho. 2-61588) and incorporated herein by refer ence) . 4.2 - Note Agreement between Tyler and The Pru dential Insurance Company of America, as amended through'December 15, 1980. 4.3 - Revolving Credit and Term Loan Agreement dated December ~.l, 1978 among Tyler and certain banks (filed as Exhibit 14 to Tyler*8 Annual Report on Form 10-K for the fiscal year ended December 31, 1978 and incorporated herein by reference). 4.4 - Letter amendment dated January 22, 1979 to Revolving Credit and Term Loan Agreement dated December 31, 1978 among Tyler and certain banks (filed as Exhibit 15 to Tyler's Annual Report on Form 10-K for the fiscal year ended December 31, 1978 and incorporated herein by reference). 4.5 - Letter amendment dated June 12, 1979 to Revolving Credit and Term Loan Agreement dated December 31, 1978 among Tyler and certain banks (filed as Exhibit 5 to Tyler's Annual Report on Form 10-K for the fiscal year ended December 31, 1970 and Incorporated herein by reference). 4.6 - Letter amendment dated November 1, 1979 to Revolving Credit and Term Loan Agreement dated December 31, 1978 among Tyler and certain banks (filed as Exhibit 8 to Tyler's Annual Report on Form 10-K for the fiscal year ended December 31, 1979 and incorporated herein by reference). 4.7 - Letter amendment dited May 27, 1880 to Re volving Credit and Term Loan Agreement dated December 31, 1978 among Tyler and certain banks. -14- 4.8 - Letter amendment dated July 1, 1980 to Re volving Credit and Term Loan Agreement dated December 31, 1978 among Tyler and certain banks. 10.1 - Agreement for Purchase and Sale of Stock and Otner Assets dated July 21, 1D78 be tween Tyler and Thurston, Inc. (filed as Exhibit 16 to Tyler's Annual Report on Form 10-K for the f:.-.cal year ended December 31, 1978 and ir.c-ji.vQrated herein by reference). 10.2 - Amendment to Agreement for Purchase and Sale of Stock and Other Assets dated March C-.0, 1979 between Tyler and Thurston, Inc. (filed as Exhibit 2 to Tyler's Cur rent Report on Form 8-X dated April 6, 1979 and incorporated herein by refer ence). 10.3 - Tyler Corporation 1906 Stock Option P' an, as amended threugh January 31, 1973. 10.4 - Tyler Corporation 1976 Stock Option Plan, as amended through February 2, 1977. 10.5 - Tyier Corporation Salary Continuation Agreement. 10.6 - Tyler Corporation Management Security Agreement. 10.7 - Employment Burchell. Agreement with H. Joseph 11 - Computation of Earnings Per Share. 13 - Annual Report to Security Holders. 22 - Subsidiaries of Tyler. Tyler will furnish copies of these exhibits to stock holders upon written request and payment of $0.15 per page. (b) Reports on Form 8-K. Tyler aid not file any Current Reports on Form 8-K during the fourth quarter of 1980. -15- /S' SIGNATURES Fursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, there unto duly authorized. SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, there unto duly authorized. TYLER CORPORATION By J. F. McKinney, President and Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. Date: Date: Date: Date: Date: March 9, 19b: Date: Date: Date: Sate: Date: Date: Date: Date: D..te: Date: J. F. McKinney Chairman of the Board, President and Chief Executive Officer and Director (a principal executive officer) F. R. Meyer Executive Vice President and Director (a principal executive officer) James E. Russell Controller (principal accounting officer and a principal financial officer) David L. Smart Treasurer (a principal financial officer) J, Max B. Colson, Director Ira G. Corn, Jr., Director C. Jackson Grayson, Jr., Director Samuel S. Greeley, Director Thomas W. Landry, Director Perry J. Lewis, Director Neil J. O'Brien, Director C. A. Rundell, Jr., Director Reward 0. Smith, Director D. J. Thurston, Jr., Director John A. Warner, Director /7 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to he signed on its behalf by the undersigned, thereunto duly authorized. TYLER CORPORATION By J. F. McKinney, President and Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 193*., this report has been signed below by the following persons in behalf of the registrant and in the capacities and on the d.\tes indicated. Date: Date: Date: Date: Date: Date: March 9, 1981 Date: Date: Date: Date: Date: Date: Date: Date: j. F. McKinney Chairman of the Board, President and Chief Executive Officer and Director (a principal executive officer) F. R. Meyer Executive Vice President and Director (a principal executive officer) James E. Russell Controller (principal accounting officer and a principal financial officer) David L. Smart Treasurer (a principal financial officer) Max E<OColsop(, Director lVoo'-- ------------------- Ira G. Corn, Jr., Director C. Jackson Grayson, Jr,, Director Samuel S. Greeley, Director Thomas W.. Landry, Director Perry J. Lewis, director Neil J. O'Brien, Director C. A. Rundell, Jr., Direccor Howard 0. Smith, Director D. J. Thurston, Jr., Director SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this repor:t to be signed on its behalf by the undersigned, there unto duly authorized. TYLER CORPORATION By J. F. McKinney, President and Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed belov by the following persons on behalf of the registrant and in the capacities and on the dates indicated. Date: Date: Date: Date: Date: Da ce: Date: March 9, 1981 Date: Date: Date: Date: Date: Date: Date: Date: J. P. McKinney Chairman of the Board, President and Chief Executive Officer and Director (a principal executive officer) F. :< Meyer E'.ecutive Vice President and Director (a principal executive officer) Ja><es E. Russell Controller (principal accounting officer and a principal financial officer) David L. Smart Treasurer (a principal financial officer) Max E. Colson, Director Cjprn, Directbt c/^Jackson Graysoh, Jt"., Director Samuel S, Greeley, Director Thomas H. Landry, Director Perry J. Lewis, Director Neil J. O'Brien, Director C. A. Rundell, Jr., Director Howard 0. Smith, Director D. J. Thurston, Jr. , Director John A. Warner, Director lf SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, there unto duly authorized. TYLER CORPORATION By_________ ________________ ________ ____________ 5. F. McKinney, President and Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report h.a,, beer, signed below by the fallowing persons on behalf of the registrant and in the capacities and on the dates indicated. Date: Date: Date: Date: Date: Date: Date: Date: t j ;-j JC.t ! J. P. McKinney Chairman of the Board, President and Chief Executive Officer and Director (a principal executive officer) F. R. Meyer Executive Vice President and Director (a principal executive officer) James E. Russell Controller (principal accounting officer and a principal financial officer) David L. Smart Treasurer (a principal financial officer) Max E. Colson, Director Ira G. Corn, Jr., Director C. Jackson Grayson, Jr., Director Date: Date: Date: Date: Date: Date: Date: Thomas W. Landry, Director Perry J. Lewis, Director Neil J. O'Brien, Director C. A. Rundell, Jr., Director Howard 0. Smith, Director D. J. Thurston, Jr., Director John A. Warner, Director -16- m: Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorised. TYLER CORPORATION By J. F. McKinney, President and Chief Executive Officer Pursuant to the requirements of tne Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. / Date s Datei Date: Date: Date: Date: Date: Date: d.u. 3/9/Si Date: Date: Date: Date: Date: Date: J. F. McKinney Chairman of the Board, President and Chief Executive Officer and Director (a principal executive officer) F. R. Meyer Executive Vice President and Director (a principal executive officer) James E. Russell Controller (principal accounting officer and a principal financial officer) David L. Smart Treasurer (a r'rincipal financial officer) Max E. Colson, Director Ira G, Corn, Jr., Director C. Jackson Grayson, Jr., Director Samuel S. Greeley, Director Thomas H. Landry, Director V Perry J. Lewis, Director Neil J. O'Brien, Director C. A. Rundell, Jr., Director Howard 0. Smith, Director D. J. Thurston, Jr., Director John A. Warner, Director -3.6- <l Pursuant to the requirements of Section 13 or 15(i) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, therounto duly authorized. TVLER CORPORATION By J. F. McKinney, President and Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934 , this report has been signed below by the following persons on behalf cf the registrant and in the capacitiea and on the dates indicated. / Date: Date: Date: Date: Date: Date: Date: Date: Date: Date: March Date: 1961 Date: Date: Date: Date: J. F. McKinney Chairman of the Board, President and Chief Executive 3fficer and Director (a principal executive officer) F. R, Meyer Executive Vice President and Director (a principal executive officer) James E. Russell Controller (principal accounting officer and a principal financial officer) Cavid L. &nart Treasurer (a principal financial officer) Max C. Colson, Director ::ra G. Corn, Jr., Director C. Jat.kson Grayson, Jr., Director Samuel S. Greeley, Director Thomas /w. ^ehdry,.//Director /'-/ / / / - Perry J. /Lewi3, Director Neil J. O'Brien, Director C. A. Rondell, Jr., Director Howard 0. Smith, Director D. J. Thurston, Jr., Director John A. Warner, Director -16- cioL___ SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Kr* of 1934, the registrant has duly caused this report to be signed r. its behalf by the undersigned, thareunto duly authorized. TYLER CORPORATION Bv J. F. McKinney, President and Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of IS34, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. Date: Date: Date: Date: Date: Date: Date: Data; Date: Date: Date: Date: March 9, 19B1 Date: Date: Date: J. F. McKinney Chairman of the Board, President and Chlaf Executive Officer and Director (a principal executive officer) F. R. Meyer Executive Vice President and Director (a principal executive officer) Janes.E. Russell Controller (principal accounting officer and a principal financial officer) David L. Smart Treasurer (a principal financial officer) Max E. Colson, Director Ira C-. Corn, Jr., Director C. Jackson Grayson, Jr., Director Samuel S. treeley, Director Thomas W. Landry, Director Perry J. Lewis, Director Neil J. O'Brien, Director XdbdhaadtML.----------------------------------------------C. A. Rundeli, 3r., Director Howard 0. Smith, Director D. J. Thurston, Jr., Director John A. Warner, Director -16- SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, there- TYLER CORPORATION By J. r. McKinney, President and Cfc.ipf Executive Officer Purse. it to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persor-.s on behalf of the registrant and i.n the capacities and on the dates indicated. Date: Date: Date: Da te: Date: Date: Date: Date: Date: Date: Date: Date: Mar, h 9, 1981 C.at :: C at-K: J. F. McKinney Chairman of the Board, President and Chief Executive Officer and Director (a principal executive officer) F. R. Meyer Executive Vice President and Director (a principal executive officer) James E. Russell Controller (principal accounting officer and a principal financial officer) David L. mart Treasurer (a principal financial officer) Max E. Colson, Director Ira G. Corn, Jr., Director C. Jackson Grayson, Jr., Directnr Samuel S. Greeley, Director Thomas W. L-ndry, Director Perry J. Lewis, Director Neil J. O'Brien, Director Ct A^feunde 11, Jr., Difl^fcbor . ^Howard 0. Smith. Director x D. J. Thurston, Jr., Director John A. Warner, Director 16- SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, there unto duly authorized. TYLER CORPORATION By___________ ______________ _________ 3T F. McKinney, President and Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. Date: Date: Date: Date: Date: Date: Date: Date: Date: Cate: Date: Date: Date: ____________ _________________________________________ 3. "FI McKinney Chairman of the Beard, President and Chief Executive Officer and Director (a principal executive officer) _____________________________________________________ F. R. Meyer Executive Vice President and Director (a principal executive officer) James E. Russell Controller (principal accounting officer and a principal financial officer) _ David t. Smart Treasurer (a principal financial officer) _____________________________________________________ Max E. Colson, Director __________________________ Ira G. Corn, Jr., Director _____________________________________________________ C. Jackson Grayson, Jr., Director _____________________________________________________ Samuel S. Greeley, Director __________________________ ___________________________ Thomas W. Landry, Director __________________________________ Perry J. Lewis, Director ________________ _________________ Neil J. O'Brien,Director C. A. Rundell, Jr., Director Date: Date: HMitiia J. t. -16- cmr SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, there unto duly authorized. TYLER CORPORATION By __________ _ ________ ___________ J. F. McKinney, President and Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. bate: bate: Date: Date: Date: Date: Date: Date: Date: Date: Date: Date: Date: Date: Date: ____________ ________________________________________ J. ?. McKinney Chairman of the Board, President and Chief Executive Officer and Director (a principal executive officer) _____________________________________________________ F. R. Meyer Executive Vice President and Director (a principal executive officer) James E. Russell Controller (principal accounting officer and a principal financial officer) ______________________________ David L. Smart Treasurer (a principal financial officer) _______________________________ Max Z. Colson, Director ___________________________________ Ira G. Corn, Jr., Director C. Jackson Grayson, Jr., Director Samuel S. Greeley, Director Thomas W. Landry, Director Perry J. Lewis, Director Neil J. O'Brien, Director C. A. Rundell, Jr., Director Howard 0. Smith, Director D. Jy Thurston, Jr., Director ^^^4***^ * Jsann A. Warner, Director -16 c CONSENT OF CERTIFIED PUBLIC ACCOUNTANTS We consent to the Incorporation by reference in Post-Effective Amendment No. 5 to the Registration Statement (Form S-8, File No. 2-55697) and in Post-Effective Amendment No. 3 to the Registration Statement (Form S-8, File No. 2-61083) of Tyler Corporation and related Prospectuses of our report dated January 29, 1981 with re spect to the Company and Consolidated financial statements of Tyler Corporation included in this Annual Report (Form 10-K) for the year ended December 31, 1980. Dallas, Texas January 29, 1981 1 ^7 TYLER CORPORATION FINANCIAL STATEMENTS (COMPANY AND CONSOLIDATED) FOR INCLUSION IN ANNUAL REPOST ON FORM 10-K YEAR ENDED DECEMBER 31, 1960 TYLER CORPORATION INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES COVERED BY REPORT OF CERTIFIED PUBLIC ACCOUNTANTS (Item 11(a)) Balance sheets at December 31, 1979 and 1980: Assets Liabilities and shareholders' equity Statements of income for each of the three years io the period ended December 31, 1980 Statements of shareholders' equity for each of the three years in the period ended December 31, 1980 Statements of changes in finaccial position for each of the three years in the period ended December 31, 1980 Notes to financial statements Supplementary financial information (unaudited): Quarterly financial data Inflation accounting data Schedules for each of the three years in the period ended December 31, 1980: 11 - Amount receivable from employee of a subsidiary HI - Investments in, equity in earnings of, and dividends from subsidiaries IV - Indebtedness of and to subsidiaries - not current V - Property, plant, and equipment VI - Allowance for depreciation of property, plant, and equipment VIII - Allowance for losses IX - Short-term oorrowlngs X - Supplementary income statement information Page r .Terences Company Consolidated F-3 F-3 F-4 F-4 F-S P-6 F-7/F-8 F-7/F-8 F-9/F-11 F-12/F-19 F-lO/F-11 F-12/F-19 F-20 F-21/F-25 S-l 5-1 S-2/S-7 S-8/S-1G S-U/S-13 S-18 S-14/S-16 S-l 7 S-18 S-19 All ottyr schedules have been omltteu since the required Information Is not present or Is not present In amounts sufficient to require submission of tne schedule, or because the Information required Is Included in the financial statements, including the notes thereto. REPORT OF CERTIFIEn PUBLIC ACCOUNTANTS The Board of Directors Tyler Corporation Ve have examined the fisar.ial statements of Tyler Corporation (Company and Consolidated) listed in the accompanyinc index to financial statements. Our examinations were made in accordance with generally accepted auditing standards and, accordingly, included sucb tests of the accounting records and sucb other auditing procedures as we considered necessary in the circumstances. In our opinion, the financial statements listed in the accompanying index to financial statements present fairly the Company and Consolidated financial position of Tyler Corporation at December 31, 1979 and 1980, and the Company and Consolidated results of operations and changes in financial position for each of the three years in the period ended December 31, 1980, in conformity with generally accepted accounting principles applied on a consistent basis during tbe period. Dallas, Texas January 29, 1981 F-2 3o o 900 O o ooo O o ooo o 9 O) ooot^ fp ^^o 00 r~* to 00 4 9 CO o fH cO 9wt c 0 oo OOO O O o9 CCMM Or-H i0^>ct tCoD 00 P3tO O CD CM ^ P> H 4 11 1 11 1 c o '9 O -p o ft o Mi* N O) CM o o 9to fp <D O p4 C) 00 O ^4 H oo O o o c CtM Ot tfH- V pN* poH oo Oo OO m --i to 00 CM <9 p at oo CO o O n *- o o o ao to 2"j 3 oOo oo1 ooo CM !*-H* fP pH 0M>P i- c Cl o fp cCM CM Ml o 0A0 CO c IS 4 < [>3 0) ft.oOS X CO o> 8OS u u 2< o J< k J s oa 99 E9O 2 ooo o: to * 4e U6 Oo o c 1! tCfM> P> O o g o o o oo 41 o *4 H k oo o o oo to CM to CM lPOi Pi oo t* CM N -- p* pH o pH Oo Oc -o K CM to * a> co toH nOCM 2 0 5 ,1 o o o H oo fi> ok pi o n |H M oo o * p ao 4* CO PM 00 pH c c o p * Pi pi 1o o o K CM P4 o o o N CM --4 C4 o O CM CM* 1O oo o CM CM t* N Pi Pi pH 1 3 9 PS 9 4 t e O pH H k 9 *< w 4 H <H 0 4 2 9 H H w a 99 4 AP It 90 V 09 C pH `O 9n w* Oh CM O 6 4 40>/~t wa P fH 09 a +<r 9 C0 -H H 9 4 6 t: 9 V - M > 9 H 5u4 0 .rH 9 a ^ >r4 *H 44 4 4 < 4 O p4 > h4 F *!> 9 9 -4 *H 9 6 4HA 4>Onn I) v 4 Oh v 1 > 9 Pi 0 9 a -x O 4u u 9 A9 49 S> h e - k 9 9 CO w 6 O 9 "H DOCUO 9 MAO 4 a pH 6O H tt 9 9k *04 4 4 (ft M fip| 9 * I* 66 9 ft 9 4 k O 44 0 O 4 6 4 kO 9 0 4 4-* H 6* 6 9 fi O O 44 44 3 If* B 4 ec4 a A O 9 9 a 44 4 9 9IOhh> 9 4>> k 4O Ck 4 6 k O* M 9. > *4 ^ 9e uM F-3 M 9 9 e * o *4 6 4 p-s 9O Q 4 e9 460 H CH a ph pH 4 >. 9 4 V69 kw 9 4 0-3 ax uo >-p a 9 9 9 9 94 a * ^9 94 JO 4 VO* h9 JD -* 4 #-s 9 C CO 4 4 'a9 a 4 * 6 hi 9 t. p* a 4 4 %4 J434 9 00 V O 9 2 46 vO4 O 4 M-O 44 9 4 9k 9 n -h 9-h 9 > 4 Ok WOO U 96 e 9O J443 tJ> 9 o BO 9 +j 0 tt X c 4 a e uo 9 4 4 9 31 ooooo o o o o c c> o o o o o o> wo o5o oto o 3 f0t l0o) CfOtfot* 0^) o00 n OlOH^ttlO <0 & pH m o 00 O' o H oo o* rH * n m m M?>n o> to rl 10 o 0a> co 666 ooo * n o or. to toto M*< pH tt r> c o 5T CO COto o to pH o O o> o & CO X* * oo M 51 J oo) <0h 03 000000 0 000000 0 0c000c 0 0O0 0O0 0 O 0> to51 *1 HHDONtO 10 O <h <c (0 to n ^ u) nu*)*to ^ 0 n 1-* n O o> O pH O* <0 ONhDV^ K C* *h *P V O tn h- O t 000 O O O O 000 O O 0 O 00 O to to > OO O OQS c* 0)0 0) n ntoaton. pHto t* a ;rAt lA %n K N A* pH 00 CO co N N lA pH pH K& n pH F* 03 oi m 0 1 OOOO 0 0 OOOO 0 0& 00 0* O OO*O.4! O 0 0to Oj N nohO N OO 001 N HIOCOO OO 0)1 m ti to w 0 W* OO Kcn A H <0 X* O O 000 000 000 to to >0 n oi 0 n Nto'Tto -ito h(*N *j*o pH 0 c 0 to -r 0 (0 H 00 00 00 H) to O p pj eto> - 00 to o IOooOooOooOoc O O O 0O0 0 O0 0 O0 0c)1l lO CD hs*^o X* to to o 0 O c* 0 O0 0(>0 c KK 0to O HH N P> 0) O O CO , 000 O O Of coo O O O 0to0m0p> O O O ens 01 A0A MR AO CO -Hto N> lA O m CO 4ft rl O CO N O \n rl pH s lA pH pH 4 o *P H 4* * -- *p 9 00 v> O Oua .0 a 49 hH ft. MP O-.P0 > OK m 2n & 0 8u wa a a4 < 1* V0 a e 4> 4a> hN tpo --to *m 9- OPHS m e p 10 s0 ae c H to0H x> a aftp iCOi to top* > * > k 1. N to ec < 4* *H h4 ft* %4 fH 0 Oa V A a c a OK 3 tNo H aa a a vh HH aH va a H 4 fl kO * > a a a *< a o#4* 0 4a* 4* a* ft* a ^a4 4* Ip O 9 0 to 4* 4> H t> H ^ a c ft* K a a m IHU 9 B 4* V M O PM ** a a 1* 404 as a 0 * - 10 to *. -- 0 X e a X 4a>. M to to 9cuV bP to O* V 9 Me a a up -s * m e a e 0 > vt x xy *9 x0 au up Tl a * O v 9 a 0 U U N ** B J O > 0 +* AN B n to to Mi 1 TJ P M SO w. ' a Q < M r- O CJ ^ h 3 k U t 6 0 1a* <J O O O S 0 t. e h ac x: to O M h b -*eu9pc ** a au oeooPBv-i -- toE-COO--<M 1 0 ft* ft* -k> 6 M AM h U O Uk> c a MS e a uP >0 U0 OP K 09 3. a <o s ato F-4 O K OpHft 44 e c0 ppi 0 m 4 f0t* a 0 si a 0co >*OH ft* 0e a pH a aa 4ft4 fat* a 0 aa a 0 r- -- lA ^ ato * CO CO PaB* m co a 3^ TYLER CORPORATION STATEMENTS OF INCOME (COMPANY) Years ended Deember 31, 1978, 1979, and 27CO Costs and expenses: Operating expenses Selling, administrative, ana general expenses Interest expense Interest income .ercompany charge based on accounts with and equity of subsidiaries Income tax (Note 10): Current Deferred Income before extraordinary charge and equity in earnings of subsidiaries Equity Id earnings of subsidiaries before extraordinary caarge Income befoie extraordinary charge Extraordinary charge, including $4,976,000 of subsidiary (Note 3) Net incone 1978 1979 19S0 $ 1,281,000 $ 1,431,000 $ 1,575,000 3,937,000 5,439,000 (542,000) 10,115,000 4,120,000 10,942,000 (365.000) 16,128,000 4,543,000 11,839,000 (533,000) 17,424,000 i3,i:.3,ono 3,008,000 18,315,000 2,187,000 19,642,000 2,218,000 '.,427,000 - 1,427,000 1,355,000 (237,000) 1.118,000 (137,000) (80,000) (217,000) 1,581,000 1,069,000 2,435,000 21,478,000 22,388,000 2?.,401,000 23,059,000 23,457,000 23,836,000 10,192,000 $23.457.000 $ l.a^JliWQ See accompanylag notes F-5 33 TYLER CORPORATION STATEMENTS OF INCOME (CONSOLIDATED) Years ended December 31, 1978, 1979, and 1980 1978 1979 1980 Net sales $277,119,000 $306,90/,003 $310,184,000 f'peratirg ievenuee 113.754.000 390,873,000 212,335,000 519,242,000 253.657,000 563,841,000 Costs and expenses: Cost cf sales Operating costs Selling, administrative, and general expenses (all operations) Interest expense Income before Income tax and extraordinary charge 213,770,000 94.394.000 244.994.000 178.952.000 242.661.000 218.451.000 35.412.000 4,986,000 348,562,000 41.754.000 11.212.000 476.912.000 49.167.000 11.545.000 522.024.000 42,311,000 42,330,000 41,817,000 Income tax (Note 10)i Current Deferred 17,502,000 1,750,000 19,252,000 17,128,000 1,745,000 18,873,000 17,564,000 397.000 17.981 .000 Income before extraordinary charge 23,059,000 23,457,000 23,836,000 Extraordinary charge (Note 3) Net income 10.192.000 $ 23.059.000 $ 23.457.000 $ 13.644.000 p':r common ebare: Earnings before extraordinary charge Extraordinary charge Met etralnga $ t 2.14 $ 2.14 $ 2.34 $ 2.34 * 2.46 1.05 1.41 Average shares 19.T sum 10.040.000 See AccompanyInc note* F-e 3+ > UM 3O mo 9 4 tp Sp la o o oft O) COft CO w V* 1 o O O III O o OO o oft oft oft oft a N CO rr o in oft mft 0) CS lOft C* CO aH CO cs w o OO o oo oft oft oft N oj a e a> -4 ** 00 > V if) -4 w III a 9 MO) ee H *4 e 9e 44 u o 4) 9 Z a: Q) w O o oft n ^4 * m CO i 1 || 1 o o o oo o oo ft oa> 01 co o WO CO 00 O4 0)a <4a CO CO C4w O H 1 | 1 00 00 00 *a 0) 10 ^ 9* ft Ta CO * Ct w o O 1 Oil o O O 1 o 1 1 o ooo o o oo o ^ CO o o oo o O Oo o o ri s 00 44 H 00 00 n in cc o* -4 a lO CO CD ^4 Qi U 93 c-* CD T ww M O ID N C4 CD Oa) H wW H H0) O O) cN oo C4 9 4 ft o> h* (ft M 0O o1 II III o H oo o o ft 00 M o ft ft CO oa 0) o CD N M T* 0) O) o CD CD M Hi 1 H H 3 4* CO 1 11 In 9 A a 9 X9 O 9m 4* 44 9 O 4o4 O 9 9 la U la M *4 9 V9 u la la V T9 9 9H 9 0 9 h e s * i-t O 41 * S3 4* 9 M *>4 M >iB U 9 e o o HdSV HO H n4 H9O 9 e N 4 e bBU 0 9 On 9 9 4 A A OV Ck JC u h 9 X 9 * *a* Bla9 9 44 44 S 9 SO K 9 JO o a o * 098 9 9- a v> a o 44 a 1 Tl h * B la 44 0 6 9 a a a vi o 9 990 o 44 jo a o fa A 99 V U m fa > vi In > "l V( 9 aea a 90 0 9 Vi >> flHtigc i-' * ja *+ 9 C f- VI u a L> ** o a oo In m 9 *4 0 #"v c- 9 s -o a < tv 9 *0 9-^-* 9 O) H 4 a a saja^v a ft 9 b a a a a -e H 9 >iB fa *4 U fa a a 9 D U 9 at as ao a 9 3 J3 e o A ft H fa a a o a ft 14 a a a 9 9 H a * a MO JB J fa 4* a w A 9 D9 a c to u a n a a m O la oafa-H x o a o 9 t. ^ ft K 0 9 la JC e a v > o a ** fa CO e *> > O 9 44 A 9 .O O Tf c a so ** *-h ana * t a ^> o a *4090 4* 9 lO a 44 9 nun > a o to an a -* H a n e s *> n (O 9 V a n act a 9 9 9 T' o oo o ft a o -O O CD ft9 9 VI 0) H ft u vi v* a W4 CO H "H O % w O a o OJIOV D CH C O 13 UN4 hh a oninp o e <h 9 UN 4 a4 H 6 9 V 1 O hi* HOT) a o k a 9 C V 9 h TJ UH O (H U (1 B a G 4J *4 O *4 9 0 e o- aaoaaaorca e 9 o aa 9 9 0 9 VI > a k xt fa a -h a 9 i. a U S ^4 TJ u 1 sviaouao -h o 9 V4 a o u 9 C c 0 o OHUkUBl> a 9 QhU la TP 044 > 9 -i a a m a m 9a cb.cv a - ko aa4 *9* a IQ 9a On Dh 0 * X ft F-7 B a la n ce a t December 31, 1979 1 ,2 9 6 ,0 0 0 2 8 ,5 3 9 ,0 0 0 1 2 3 ,2 9 7 ,0 0 0 (3 7 ,5 9 7 ,0 0 0 ) 35" c o t>o% M o 9 Cl Oo r o> to4 * CO o o o oo oo oo nn o 00 o o be *4 4 I I*' * to O O 4Z as o Q o P 0> N r# d t oo oo o V oo ^< ooo nt 04 o rt o oea 3 00 oo o f- Q* o o 0) P ou *- aos *_p- oH4 00 5 oo CO ao OS u X ou H t0 X U o m3 Xo o z < H 10 to A J <X X > 3 e o X &s to* o O wu uX O to# XJ HZ u a X M to H< HX >4 M 9 W 1-4 -4 Q Ok to 9 o o o o &P) Ift * CO M O o o tHN v Jtf O o O to o 9o aO o B ci 9 o -4 o 1 O1 o o m <0 w O1 o o &N N 1 o o o * tA o 4T * H II III O o O OB ri * ^4 w a & 9 A40* 4 oo a > oto e OK I* XI to eaI So ba bM 0 O * * 0 CO to b oi o 90 3J -H >**b4 m * Ck o b %4 #>> obOaOsMo +j Uabo4Oa o o > -* V4 i JB tb9**40 cm 6 0 A *m M o o O ^ u 4 o * b 0k 2 8 > ^4 * +> m "+* a >4 0*4 cs * i* o *aH* C> mi tS o <*4 O N 0 O lO`bft 90 0 C O vot ru ^ O' I O c9 - CO U O VI b tM o iHa Ih4 H 00 V6 ** > b MBOto OO a9 to* o oo oSCo Oa 0 ** ->4 xa * a 0o0 A .0 io Q uc rl o F-B 36 8m accompanyio n o ta o . TYLEH CORPORATION STATEMENTS OF CHANGES IN FINANCIAL POSITION (COMPANY) Years ended December 31, 1978, 1979, and 1980 1978 1979 1980 Source of funds: Income before extraordinary charge $ 23,059,COO 8 23,457,000 8 23,836,000 Charges against (credits to) Income net involving working capital: Depreciation and amor tization 255,000 164,000 64.000 Equity l.i earnings ol subsiCarles before extraordinary charge (21,478.000) i[22,388,000) (21,401,000) Less dividends from subsidiaries 2,689,000 3,754,000 9,610,000 Deferred income tax (62,000) 62.000 Total from operations 4,525,000 4,925,000 12,171,000 Long-term borrowings Issuance of subordinated debentures Beduction of debenture due from Tyler Pipe Industries, Inc. Decrease in intercompany accounts (net) Undepreciated value of asset disposals Issuance of common stock Refund of escrow deposit on acquisition Otber 5,000,000 30,000,000 5,244,000 *" 21,000 3,196,000 -- 50,000,000 6,475,000 "* 1,000 4,420,000 2,500,000 - 5,900,000 15,050,000 739 ,000 - 4,970,000 *- 100,000 Application of funds: Acquisition of treasury shares $ 16,558,000 Reductions of long-term debt 12,500,000 Escrow deposit on acquisition 2,500,000 Additions to property, plant, and equipment 56,000 Casta dividends 3,983,000 Increase in intercompany accounts (net) 1,073,000 Investment In Tyler Transportation Company: Contribution to capital - Purchase of debenture - Other 1,094,000 Increase (decrease) In working capital 10,222,000 8 68.321.000 ft 36.930.000 8 15,819,000 ft 8,851,000 10,000,000 29,000,000 42,000 4,449,000 3,212,000 1,913,000 4,808,000 14,266,000 30,000,000 153,000 (9,620,000) - - -- (5.642.000) 8 47.966.000 l GB.321.000 8 38.930.000 See accompanying notes F-9 37 TYLER CORPORATION CONSOLIDATED STATEMENTS OF CHANGES IN FINANCIAL POSITION Years ended December 31- 1978, 1979, and 1980 1978 1979 19B0 Source of funds: Income before extraordinary charge Charges agaiast income not Involving working capital: Depreciation and amortization Deferred income tax Total from operations Long-term borrowings Issuance of subordinated debentures Undepreciated value of asset disposals Issuance of common stock Refund of escrow deposit on acquisition $23,089,000 11,314,000 1,215,000 38,588,000 5,000,000 30,000,000 1,802,000 3,196,000 - $23,457,000 15,206,000 2,122,000 40,785,000 50,000,000 2,217,000 4,420,000 2.500,000 $ 23,836,000 17,378,000 1.444,000 42,65B,000 5,900,000 * 2,707,000 4,970,000 - $75.566.000 599.922.000 $ 56.235.000 Application of funds: Additions to property, plant, and equipment Reductions of long-term debt Acquired business less working capital acquired of $3,986,000: Property, plant, and equipment Intangibles Other asseti Long-term debt Escrow deposit on acquisition Cash dividends Acquisition of treasury shares Other increase (decrease) in working capital $17,331,000 $23,908,000 $ 23,352,000 12,635,000 11,173,000 32,251,000 - - -- 2,500,000 3,983,000 16,558,000 3,137,000 15,442,000 37,018,000 9,273,000 342,000 (5,076,000) 4,449,000 15,819,000 1,249,000 1,767.000 - - - - 4,808,000 8,851,000 1,044,000 (14,071,000) $75.586.300 SS'9.922.000 $ 56.235.000 See accompanying notes. F-JO 38 Years ended December 31, 1978, 1979, and 1980 flee accom panying n o te s ol ao Oil 0>| H Oil r*4| ;Ol t* O'] a mo, e (o-1il ^1 OOOO O OOO o* ok o* omOO-I <0 Cl 05 wa a ^n r/ A, Ak oooo oooo oooo tl * Sk k oo ^ f)NHH * k>W wH * OoOoOoOo oooo * Sk to -4 to PH Vto o cs o ^--> Sk Sk Sk C* O M rt 4 --s oo oo o o 1 oooSk r rH O - o w oo o OO oo ca o a o* o* o* eht0ok N^40 <9* O <0 0> M* o o *o w ww o c o tros 00 A --a --k --> A, ooooo oo oo oo oo oo aa H H fa N H * -t <s ft* 10 40 w 10 V to cs --k o o o o CO r* w* --k A. --k co oo oo oo oo ooooo aaaaa 40 04 C4 CO CO o H h 1/5 4* W \y a Cl H ooo a --4 --k /> y-s oo OSk 1 ' ooo oOkOo*>OcSk tN* rr>* tcoo * 40 10 in Of o o 4 *ca 5S o oo tt"oa Ol oo 4 C5 * * 4 Oi oO 1 o oo Co> ooat 00 O in ooo* OoOOOo*OOo* oOo n0k kP <M kPS r> n ooIO te --s oo t o OOO Oa Oa O< 0C0O rOlb 4H0 00* ^ 00 4 --> o 1 OOO o OOO oa OkO*OSk Kt NeOoBi0* wb- whNOa N 1 ol o o4 C5 es cs wo4 N 4J w a X a0uu9 t o e o UB u04U) 9u c 00 +<^4 JMS o B *4 o a +* f0i c ao i vt --s o ffVutt u 41 O w/ 40J .0 4* ua1* > Ul h0 0 49) H -> -Be4 s0i 4* QH V Ooo Bn jo ft 8 keD k "O kO0O *j o u ainau 4e h 4 9K) UH" . o rt & B Q B -h U9 o K B a e Et* 9 C 4M-1 *05j UO T3 ^ -4K) W O-OO* -* *4 1 ft oi c +> e00 00M U5 a 0 A C> 004S 0B4oH-4O9 9 W 9 L. 0 S o 0 C 0 a - 4* o* *4 m O> U8 4 u d-H o U U 0 U U LfS 0^89 H H l) BO mU B <i-40,um<<to>HU O 4 v o ft fl t> M AHa --* w a* *o %e B Jud 0 ft BH 0 ft ft 0 la O 0 O ft ft * ft ^ Vk *. m oa u F-ll >3? TYLER CORPORATION NOTES TO FINANCIAL STATEMENTS ,December 31 1978, 1979, and 1980 Summary of significant accounting policies The consolidated financial statements include the accounts of the Company and its subsidiaries, all of which are wholly owned. Cost In excess of net assets of businesses acquired after October, 1970 is amortized over 40 years. Cost in excess of net assets of businesses acquired before October 30, 1970 is not amortized. Accumulated amortization at December 31, 1979 and 1980, i6 $183,000 and $414,000, respectively. Inventories are valued at the lower of cost or net realizable value. Costs of inventories are determined by the last-in, first-out (LIFO) method. Investments in consolidf.ted subsidiaries in the Company financial statements are accounted for by the equity method. Depreciation, for financial statement purposes, is provided principally by tbe straight-line method over the estimated useful lives of tbe various assets. For income tax purposes, accelerated depreciation is used with recognition of deferred lncoeM taxes for tbe resulting timing differences. Investment tax credits are applied as a reduction of Income taxes by tbe lov-througb method and amounted to $1,179,000 in 1978, $1,885,000 in 1979 and $1,134,000 in 1980. Pension plans are in effect which provide income and death benefits for substantially all employees of tbe Company. Tbe Company's policy is to fund pension cost accrued and generally amortize prior service cos*, over ten years. Acquisition of general commodity carrier On April 6, 1979, the Company acquired all of tbe business and assets of Thurston, Inc. Tbe acquisition is being accounted for by tbe purchase method of accounting and, accordingly, tbe financial statements include tbe results of operations of tbe acquired business since tbe acquisition date. F-12 Tbe following information summarizes the combined operating results of the acquired business and the Company for the years ended December 31, 1978 and 1979, on a pro forma basis as though tbe business was acquired January 1, 1978: 1978 1979 Net sales and operating revenues $480,048,000 $540,327,000 Net income $ 25,069,000 $ 23,012,000 Earnings per common share $ 2.33 $ 2.29 3. Write-off of route permits In accordance with the requirements of Statement of Fie cial Accounting Standards No. 44, Accounting for Intangible Assets of Motor Carriers, tbe Company b&s written off the entire co.^t of route permits associated with its trucking operations as ar. extraordinary charge of $10,192,000 or $1.05 per share. No rax benefit from tbe write-off has been recorded in the financial statements. 4. Compensating balance arrangements Under informal agreemehts with lending banks, tbe Company maintained an average of $985,000 as compensating balances during 1980 after adjustments for estimated float of $3,794,000 and average uncollected funds of $2,279,000. There were no outstand ing borrowings related to these agreements during 1980. Estimated float represents the average end>of-month difference between bank and book ledger balances; average uncol lected funds were computed from reports furnished tbe Company by lending banks. 5. Inventories 1979 1980 Finished goods Work in process Raw materials and supplies $37,463,000 1,557,000 12.367.000 51.387.000 $38,889,000 1,553,000 15.936.000 53.378.000 Allowance to state invent' ^les at LIFO cost 16.538.000 20,8. 8,000 $34.849.005 $35.540.000 Current replacement cost approximates the auountj show: above before the Allowance to state /entories at LIFO cost. F- 13 6. Property, plant, and equipment Company Tiff 19&S Consolidated 1979 1580 Deprecia tion lives (in years) Land $ Build ings and lease hold im prove- ments 746,000 Machinery and equip- moot 420,000 Trans porta tion equip- sent - $1,900,000 748,000 433,000 * $ 6,857,000 38,427,000 72,044,000 57.544,000 $ 8,794,000 40,835,000 77,966,000 63.350.000 10 to 30 3 to 15 3 to 8 Il.I6BJ.0fl 83.081.000 ^71.972,4.999 819C.945.0Q0 7. Creolt commitments from banks Under coamitnents from banks, the Company may borrow at tbe then effective prime rate o' interest up to $25,000,000 on an unsecured sbort-tei*i basis. Tbs Company is required to be free from borrowings under tbe commitments for at least 60 consecutive days during tbe preceding twelve months. There were no borrowing > outstanding under these commitments at December 31, 1979 and 1980. 8. Long-term debt ' Parent; 8-3/4% unsecured noto due in annual installments of $3/:OC,GOO Unsecured $60,000,000 revolving line of credit Mortgage note due May, 1083 Subsidiaries! Unsecured $6.fv',0,000 revolving line of credit, interest at prime rate % to secured notes Leis currant maturities 1979 1380 $30,0OG,0:,O $27,000,000 43,000,000 - 21,500,000 1,400,000 4,150,000 1.411.000 78.5C1,000 4.366.000 1,090,000 474.000 51,374,000 3.530.000 $74,195,000 fff.H1.Mft Tbe unsecured $60,000,000 revolving bank line of credit converts in April, 1683 to n term loan payable quarterly over five years. Interest is at 3/4% over tbe London Interbank Offered Rate P-14 Jf ' or, at tbe option of tbe Company, at 106% of prime rate through April, 1983 and at prime rate plus 1/2% thereafter. Scheduled repayments of long-term debt curing the five years following December 31, 1930, are as follows; Company Consolidated 1981 1982 1983 1984 1985 $ 3,000,000 3,000,000 7,625,000 7,500,000 7,300,000 $ 3.530,000 3,215,000 7,840,000 7,515,000 7,515,000 Subordinated debentures - On June 1, 1978, tbe Company Issued $30,000,000 c 10-1/2% subordinated debentures due June 1, 1998. Sinking fund payments beginning June 1, 1988 are calculated to retire 751 of tbe iaaue prior to maturity. Tbe detertures may be redeemed at 106.40% of the principal uncunt prior to June 1, 1981 and at declining premiums thereafter to 1988. No redemption may occur prior to 1988 out of tbe proceeds iron a borrowing having an annual Interest rate less than 10-1/2%. 9. Dividend restrictions Tbe Company's loan agreements limit retained earnings currently available for dividends to $9,325,000. Retained earnings at December 31, 1980, includes $120,494,000 undistributed earnings of subsidiaries. Tbe Interstate Commence Commission limits dividends payable to tbe Company by tbe trucking subsidiaries to 50% of tbose subsidiaries' net income for each accounting period. At December 31, 19b0, $28,972,000 of trucking subsidiaries' retained earnings wau restricted. 10. Income tax As a result of tbe application of Accounting Principles Board Opinion No. 16, in accounting for tbe acquisition of indr.etnal explosives businesses, tbe book basis of lnvsntories exceeded tbe tax basis by $5,347,000 at December 31, 1678 and by (2,128,000 at December 31, 1679 and 1980. Taxable Income for federal inco'f tix purposes exceeded income for financial statement purposes by $219,000 in 1979 as a result of tbe difference in bases. In 1978, 1979 and 1980, no individual permanent difference exceeded 5% of tbe amount resulting from multiplying consolidat'd Income before Income tax and extraordinary charge by the statutory Income tax rate except investment tax credit. In 1976, the tax effect of each individual timing difference was less than 5% of tbe amount resulting from multiplying consolidated income before income tax and extraordinary charge by tbe statutory income tax F-15 rate. In 1979 and 1980, the tax effect of $1,353-000 and $1,216,000, respectively, for excess tax over book depreciation was the only timing difference exceeding 5% of the amount resulting from multi plying consolidated income before income tax and extraordinary charge by tbe statutory income tax rate. State income tax expense was $922,000 in 1978, $1,240,000 in 1979, and $1,174,000 in 1980. Tbe Company's provision for income taxes results from tbe inclusion of Its operations in tbe consolidated tax return with ii* subsidiaries. n. Employee benefit plans Substantially all employees are participants in DOD-contributory pension plans. Pension expense was $4,415,000 in 1978, $4,223,000 in 1979 and $5,065,000 in 1980. Tbe increased cost in 1980 primarily results from a newly adopted plan for tbe general commodity carrier. The following information summarizes accumulated benefits and net assets available for benefits as of January 1, 1980. Actuarial present value of accumulated plan benefits: Vested Nonvested $19,753,000 4,809.000 Met assets available for benefits $21.736.000 Tbe weighted average assumed rate of return used in determining the actuarial present value of accumulated plan benefits was 7%. Cost related to tbe Company's savings and investment plan vac $1,601,000 in 1978, $i,618,000 in 1979 and $1,970,000 in 1980. The plan provides that tbe Company will contribute not less tban 50% of tbe eligible amount of employee contributions. Additional discretionary contributions may be made provided each subsidiary bas earnings from which to pay its contributions. F-1G W- Tbo 1976 S to ck O p tio n P lan p ro v id e s fo r tb e g ra n tin g o f n o n q u a lifie d o p tio n s to key em ployees o f the Company and i t s s u b s id ia r ie s a t p ric e s w bich re p re s e n t f a i r m a rke t v a lu e a t d a te s o f g ra n t. A summary o f o p tio n tra n s a c tio n s d u rin g 1978, 1979, and 1980 fo llo v s t HQO 4 00 Ho +a* dM 0| 0o0 0k si ab a oo oo oooo oooo M-O-hQ* O HiOOltO VV 0% toot eTOoKOH nn vo> n<-* e oooo o oo oo oo ... a} ft e N. N00.wTHwH W ft oo o ooo c A 00 T OJ W Ao 00 00 CO o . tMo n TOGO OlOOO AlOlOH #nwr tO ^ r-t n ooc ooao o o oo eTr0n0 MooN (HAHN o cnco* o oo o T o*> o 0to0 too VO CO TOOO b| cToOoOotT* at J3| oTi-Tn CO col OVHrtN'--'(v0 o o CO A o nN CO CO bo e >aua bs a a b a e >v a a sa MM e aa -o b ee -n v a as-or-at as a ae *ae vt a** eo ab a*m*sas *a* o ab aa aa a- --< O COM O b a e> o B S va> Sa3 a b oN H CO a *sbsa> b o 09 > b s at Bo ao Bo B S3 T a o ao a a o3 VI o s a o b fot M a tae aa b > a >e aa a xat 0o>0 o 00 b -< i- e u b a sA aa a oa A aa4 Tla< aH m F-17 13. In d u s try segments The Company s o ils p ro d u c ts snd s o rv lc e s to In d u s tr ia l custom ers th ro u g h I t s fo u r p r in c ip a l o p e ra tin g u n its S elected fin a n c ia l in fo rm a tio n is presented below fo r 1978, 1979, and 1980 ($000 o m itte d ). c o c o 4* 0 44 0 N mc V 9N 0 0 *4 s4 44 is 9m 9Q 02 0 ua b 90 9 0 44 09 -4 X> 4* *4 "cO 9 0 0 'O TJ 0 44 0 0 0 i 00 9O 0 9 eo is a is 0 90 4* -H 9 44 eo 0 44 90 9 44 9 9 9 *0 0 44 0 0 44 pS 44* 9 44 99 a0 0 II 90 HH 00 4* + aa 0 9 Ok 0 9 H 0 M Ck 0 o *4 4 0 *4 0 9 ias 99 90 9 09 H9s^< <0 9 -H 0 M0 0 4$ 9 A 0 %4 4 4 0 9 Q 4* ft 9 9 M a 9b9 00 ^1 9 0 C 9 CV 0 0 .-4 *4 404 404 4 w4 Gift 'w0 44 a c- 90 00 o0 sH 0 9 44 *4 0 9A ( o AM 9e is a 0e 0 9 A 0 e 4 44 c 9 a0 0 0 OO o 9 00 hN M 00 uo 0 9 Q t0* mC* 73 b*4 r-i8 In d u e tr lt.l commodity eaplotil.vea c a rrie r Other C oneclldated Heavy h a u lin g fPi lt;t>i3n agn*d 04 ft 1ft <% m4 1 <0^4 |4 | ft 04 ft ftl S 4*^ 4 ft ftl 44 1^ ft ft ftl ft oo t*. seo-v*t ft ft 4*| ft] OW 0) ft<l1 ft N H M ft ft oos ft 4 ftm ft o ST ao va *N e a ata, lOe * o TJ ca oooI aaat ae Ok ifnt! J JO o aa o 4* 4* a aa uv4 ua O0h *a* m e ae 3? mi ao e no O ** ft* a ft N - ea aa 4e 9 JO fat1l a a a ja * 4* o f<ts V^4iI *6ua OV 9 ft ft N ft 00 4od4o aato 4a4 ft ua aa. o o > "aO aaaoa> aavqfat ak oft o%00 va ve aa aft a a o a-i TJ K ae 0-4 k el aa oo^ 4a* 1aa-4 **fh4t oa aO W U Ha a oa CO P-19 ^7  oo oo > M OO oo oo oo oo o co co oo u 0 d to v *r ft to o 0) N d N 1C0O <r co to* 0* 10 0* 0 o> o ^<0 d oo CO EO KW M CO d to 0 CO 0* CO CO 0 >* 0 * d --t to t0o to to 9 si C0k 3 oi oo oo oo to CD 90 o <0 0* to to 0 oo oo o* o* r> to-b 00> n -4 m co oo 5o o o4 n so ^ 00 CO> o 10 OH OO OO o4 o ;o 0 CD dO 4 * 0 --OH .0 0 o CO 0 * to* to oo oo oo oo oo oo 'Ou t4o) oo oo o* o o o4 Q u h M to to A Ct H a Or ton stoo *> h to <0 <0 o co* 0 H to- > H CO #4 c-4 OO4 o N Ci to* (O to- (O to 0 D no SB 0% a to n *- to* d to 0 z oto to o oo o oo Oo OO oo oo <1eXe o e t0o oo 1. oo oo mn oo o T4 CO > O* CO 0* O o o4 co 0O o 0 9 so ^ 91 o a> O 01 b. z to <0 o n yr n 10 0* Nd CD 0* ao 0 o - O *4 00 1 1% < u X < to to. to to V0 o oo oo oO OO oo 8 o* o* oo oo oo* > ad < to u to 0 bu s so too t* co co ooo* IQ <0 tO * * IQ (0 0 104 % fc aocno 9k HH w CO d fA H e b 10 d n to d d j eu CL 0 E to CO 0 0 m ja to m 00 a9 o n 0o 0 to to to to 0 to 0O to A M 0 0 to 0X to O 0 o to A0 0 C to t to to 0 to to P0 to 0 4 a a A to to O <H m H 0 oa &0 0 0 TJ to 0 4 *4 4 to 44 to oo 0 o o 4-) K 0 0 to 0 *4o o 0 0 0 H w eoo 89 1k oo t> to to 4 M to 0 o m o ^4 M a 0 to ISO to rt no 0 to to to 8 taootoio- 0>0 to #4 K to. 00 |NH a 0 to g9 BHH 4 * ot*o W to bohh h %< e to to 0 ^4 *4 0 to 0 4* 30 aK 0 0 oto o0 k a0 to 0 X <3 4* SB F-20 O 0 O o tco to 0 0 A4* to C 4to4 o 0 t--o4 to ft 0 o to c -04 0 to 0 to 0 0 t0o & 0 6 O 0H H to to 0 O 21 o to Hda 8 to J* 4o o9 H to to to to Q to to O to "0 00 to U0 to Is o to o 0a to 0 to 0 0 to 0 to to G 4* to H0 0 to 0 0 to to 9 to O 4 to * 4S INFLATION ACCOUNTING DATA Introduction During periods cf high inflation, ch?nging prices can have a significant impact on business enterprises. The accompun ing State ment oi Income Adjusted for Effects of Charging Prices a d 'ive-Year Summary of Financial Data Adjusted for Effects of Changing Prices have oeen prepared in accordance with Statement, of 1 nanci l Accounting Standards No. 33, Financial Reporting anc Chaining Pries, in order to provide users cf the financial statements w.th su:niemeutary informa tion to assess the impact of inflation on Tyler Cu-poration and the Company's ability to manage in an inflationary environment. Inflation Management* The basic operating philosophy cf T>1< r Corporation works toward the effective management of operations and capital in an inflationa',y environment. The primary operating goal of the Cot,pat is to achieve a 25% return on assets through emphasis on asset tur over and operating profit margins. Asset turnover places a premium on effect?ve management of assets, including strong cash flow from receivables, rapid inventory turnover and close scrutiny of return on capital expenditures. Maintaining and improving operating profit margins requires effective control of operating osts together with expansion of sales volume to spread fixed costs. The LIFO inventory accounting method is sed in the bletorical financial statements to reflect cost increases in operations on a timely basis. The Company bas also prudently used loig-term debt to leverage its capital structure. Long-term debt nas been the primary vehicle for financing the acquisition sf each of the four operating units. Strong cash flow from tbe operating units bas been used to repay long-term debt with dollars having less purebi- ing power. As a result of the basic operating philosophy, operations on a constant dollar basis and current coat/constant dollar basis compare favorably with historical results. Statement of Income Adjusted for General Inflation (Constant Dollar) The supplementary data presented on a oonstant-doilar basis sre expressed in year-end 1980 dollars and reflect adjustments to the bletorical financial statements for changes which have occurred in tbe purchasing power of the dollar as measured by the Cooeumer Price Index for All Urban Consumers (CPI-U). The amounts do not purport to represent appraised values or any other measure of current value. In order to provide a more complete picture of the effects of inflation, tbe constant dollar computations comprehensively restate shareholders' equity and Income statement items. The underlying accounting principles are not changed. Tbe principal 1ocrease in constant-dollar costs is additional dsp"eolation oi riant and equipment costs expressed in year-end I960 dollars. Tbe purchase of approximately 82% of property, plant, and equipment since 1973 has mitigated the effect of additional depreciation on constant-dollar operating results. The Company uaee the LIFO inventory accounting method in the blstorical financial statementa. Since inventories turn over approxi mately six times s year, th December 31, 1980 inventory cost before allowance to state inventories at LIFO in the histtrlcal financial statements Is representative of inflation-adjusted co.te. Accordingly, historical coat of vales reflects a reasonable inflation-0'.justed cost at the time of sale. F-21 L i Statement of Income Adjusted for Changes in Specific Prices (Current Cost/Constant Dollar) Tbe supplementary data on a current cost/constant dollar basis are expressed in year-end 1980 dollars and reflect adjustments to tbe historical financial statements for changes vhicb have occurred In tbe purchasing pover of tbe dollar and adjustments to reflect a current cost of inventories and property, plant, and equipment of (58,773,000 and $171,552,000, respectively. Tbe current cost of inventories is based upon year-end 1880 production costs. Tbe current cost of property, plant, and equipment and tbe related depreciation expense are based on estimates of amounts tbe existing assets would cost st December 31, 1980. Several methods, including equipment and building cost indexing and Independent appraisals, were used in estimating these amounts. Tbe values represent tbe estimated current cost of existing assets and do not consider technological improvements and efficiencies associated with tbe normal replacement of productive capacity. Income Tax Income tax on tbe constant dollar and current cost/constant dollar basis represents historical expense for 1980 expressed in year-end 1980 dollars. Tbe expense bss not boen reduced for tbe tax effect of additional constant dollar and current <.oat depreciation or for tbe adjustments to express lneome statement items In year-end 1980 dollars. Tbe resulting effective tax rates of 83f {coostant dollar) and 571 (current cost/constant dollar) illustrate that federal tax laws do not provide adequately for capital recovery and "real" lneome tax rates are substantially bigber than statutory rates. Gain From Decline no Purchasing Power of Net Amounts Owed Monetary assets such as cash and accounts receivable lose purchasing power during inflationary periods. Conversely, lean purchasing povar will be required to satisfy liabilities such as long-tans debt during aucb periods. During 1980, tbe Company's net monetary liabilities' position resulted in an unrealised gain of (10,348,000. I During tbe three years ended 1980, tbe Company also invested substantial amounts of cash in treasury stock, utilising a monetary asset with declining value to Increasingly leverage tbe capital structure of tbs Cospany. Flvs-Year Summary of Financial Data - wet Sales and Operating Revenues Net sales aad operating revenues art presented for tbe four principal operating units in year-end 1980 dollars, Hat sales ol tbs beat transfer unit, which ess distributed as a dividend to tbo Company's shareholders in April, 1977, are excluded froe tbe table. Tbe beat transfer unit's sales in yesr-end 1980 dollars ware (44,977,000 in 1970 and $15,991,000 in 1977. Increase in Currant Cost of Inventories and Property, Plant, and Equipment Aa a result of goaersl inflation, inventories and property, plant, and equipment during 1980 increased an estimated (4,732,000 in excess of tbe estimated (15,273,000 increase froa specific prices. F-23 SO r-aa A u m & s <0 u 6 O OO >* O e K* 6* 0 M vA b a* c o s!6e A W o A AO tC4 Oo- too CCc*ti O 4T O o m o* o A O to AA MM AA A oooSk A* n et O ! oV o A o A A A A U Oo si t<DD Oft *o 4 Ato 9 *4 6B O ft* O o ft* O 1 8 39 Oo > O ft* u G M 4* 66 *4 O MW o V 1* o 4- *4 B m t Vo * + M A fts KB 69 ftfi 60 6 b*4*4 ft) ft**4*4 6 O 66006600 > fl 06 O 6 06 O MA mA 44 OOOtt'OOUB 6 WCb^bCkP 0<*4 9 B 0*4 9 6 > 60 09 60 ft9 * ft* 9 C ft* 9 0 0*4 * c ft* <* ev bK6 e O 6 a wo 6 6 0 0 6 6 o H < A <4 A e <o *O4 Ob'fHl w W9 Obi 9U U9 96 60 O ft* -6M*4 fO9t* 4' 9 O O 6 ft* am O9 44*4 B fi4*M C B ft. 9 KO46MO4B 6 CP I* **.-4 MU M6 f6iK# O M * O O^ 0 6 06 AO A s. X? *4 0 4* *4 * B 0 O BOO 60 A e 6 o o9 O MO (sO*4 B l*V*( C O Q <-4 o 6 6- *490*4*460*4 O OOO O0 eo Ob BO 1 HVOA o a o O H e *<h O ft* ft* ft* o o o OB^OftefiOOftefiO A M m*6B60B660 1* o 6 ft* O " O A i* 0 O A ft* O O ft* a O *4 *4 o 0*4 ao t> *4 eftCft6 4 r o B 4o4 B ** 4 h* 6 Ml A A Ks S* 0 a *4 44 o 0 o bo *4 6 ^a 6 O C4 Oe Oft* HO O *4 *4 9 ft* 6 *4 e 6 O s *4 <** O e A *o o C 6o Si L- 8 -IS B0 O0O6 ft* 6 8 O * fa oa oo o ft* b o au ft* 0*4 ao n* sfftt** 6 m 6 F-24 Excess o f in cre ss* in the cene in c re rsl ase p ir inc es plee cv ife ilc o ver p ric e s S hareholders' e q u ity s t year-end (994,000) 269,922,000 4,732,000 254,298,000 5cJ^ F lv -Y a a r nT y o f F in a n c ia l Data Adjusted Cor E ffe c ts o f Changing P rlce a ( In Year-End 1980 D o lla r* ) (c o n tin u e d ) Y-35 53 >OS *C9 8 W < ou. a a oJ a aos a K a a * a to? j O CO CO 8g i. a 8 a a6 as a >< O t ftw *a a*>4 x ua x< a& a 0 ft* < i >4 M Ja s s to m %4 Q*.+** ow a o6ft VB hft hft* HU93 A >iU a Vft 0 a + mi O -i O Ik ft| 4fJt iI a0 o O h| 3d I ftl a ftf 'ftl ** *ueH *ft-fil a a > ft m* ~9 ftX m l j j ft X OS *4 10 f>4 H 94 0ft* i ft f9t ft O a * 9 O ft ft * K ft 9 B ttl N A **\ V f4 ft ft* ft o j j j ft ft a A H a H f4 94 ft* a < ft f9t ft + O fl ft ft* 9 O ft * + ft ft. 9 X ft *-4 0) ft f ft* e 5 s-i m r * 9e4 9 B 8 X X +4 9f4t a + ft 94 94 4 f4t ft 94 X ft ft 4* ft sa 94 +* 4> ft ft* 9 X ft -4 ft 1* o #*s -ft w I CO w < O N4 CO CQ o CO ai o as Db CO o as Ed & N4 > 4 Q O as O <N H flu zo oM CO 44 CO H < o as #% b tt O & Q H > zz as < M a2* 89 6 9 9 o as 2 H4 o o 9 O M9 J >* 9 >p b4 V c a or ab 9 9 K > *4 tBB U h CO as s-- z H | *-4 M *4 CO a Q H s CO b +* a 9 V>, 9 U Vt eo 9 *-* *o <1 c CO Q 9 b 44 9 e 9 1-4 O0 SB e, * b9 99 b 09 98 Z9 b 89 * 81 Ol e o 4* o9 3 99 T) 44 29 Cb 8969 9 V O 44 9 44 b 8 t) > VI 44 -H 9 V8 9 9 oo Oo o* o 4 9 8 CO O 4J CO as o CO < w o1 o o4 *4 CD 1o o o 84 t*9 4 8 >k-- 49 O1 o o4 OS A n N oo oo oo 4 --4 4 8 ^4 8 o CO ^4 << w Oo oo o4 o 0 H 11 o1 o o a ** w V 4 44 11 11 b 89 4> o 8 O *4 + *>4 8 9b *4 9 9 44 9 0 44 9 T3 M b > < >k 9 4144 140 4 fl 00 9 L 9 4 4* .9999 MVOAh 4 9 0 vv b 9 9 a M 9 vi O 9 am ec 9 *4 *4 e *90 8 <H 9 9 A 9 b + 9 0-4 3-4 0O V <9 8 4 b9 8$ 6 *4 0 9 b 9 38 Z9 b 9 3 99 9r4 9 44 ? 44 9 %4 J 9 O4 9 fl *4 90 9 2 49 O1 o o -- e00o If)> 8 --4 09 oO oo o 4 o4 o o c*-k o 08*) as h* CO oo oc o 4 o 4 o0 CO 8 4 --V oo oo o4 o 88 CO o 4 CO* o --4 rt w` 19 -- 9 w O1 o o r4 --k #*% < < Oo oo ok o4 01 --4 9 9 44 b 4 k 9 --4 mm * rt *30 O C I* J 0 9 9 4* b fl 44 W4 a 99 fl 9 89 >098 6 9 8 O b 9 9 CO Qi o h 93 9 O 00 44 6 9-48 3 9 OS a. ~ e a* aiT)QH o b oO 9 fl (-4 44 o -* * H 8 O 44 4 9M * 9 b b O9 O<1 b! 9 Ck 3 89 C -4 C 9 9 C o> 9 b 4 E b fi b O 6 9 F4 8 2 0 an 8o O o o 4 M -4 V8 00 e +> 9 o MB3b - C V. 2O> 9ftE6 b b 98 0 9 a 9 & 44 M 5r Q H fc o u -< M a ws a ] x i Ob CO a z M a o >K M Oi o BS <n <m 5m bo. > 0 B E0 S St8 XM oCJ o 0 OQ J Zw a<t T5 0 M a 0 t. 0 0 >* D 3 SR M 0 M a s u v0 0 4) >< U0 %4 eo 0c flQ ** 0 C -I 3 - oo r G b O0 Mb9 S o o s CO o o o o o o B0 B 0 IT] Oh Ogh> Vi.i r mh B V 3 m VI 0 h0 h m o* 0 0# V > K B*-* 0 ~t a 0 <o <e 3 b 0<H +* er 0 0 0 M 0 o jd u ^ M3O Vl4 u 0 0 Vi 0 VI o 0 o 0B -BHi MB B 2 b * 0 0M 9 f4 OO . 00 I VI U IO0 o 0 n o oT 0 o o o o o o o o s o U0 3 m0 f 0 4 * 3 -4 0 VI +J 0 B VI 0O o Bb W ftb 0 & ft* M moo U voo m a0 0e H 00 gB h3* Um h0 Uo >0 *0 M9 X0X O B * 0 k MB 0 0 3 0 BO *4 H U ^<-1 H W O # 0 4" 0 0 O >O 0 0 9bi O 0 * biOBb J o b ao bO 0O0 b au 00 HJ > 90 HU V HH S-3 Conmoo s to c k , 1.,0.00.(A.) pp serr v a lu e share $1.00 1,000(4) 4,000 - - 4 ,0 0 0_ 0 -H s 56 SCHEDULE I I I - INVESTMENTS IN , EQUITY IN BARNINGS OF, AND DIVIDENDS FROM SUBSIDIARIES (CONTINUED) (COMPANY) Is A fl 40 >1 4) O *4 c0 at A 4C BQ 9 0u A fl CeH 3h Si ^0 < e a Is 0 A9 644 U Sob X fl 0 0 0 0 0 *<4 < 0 0 0 OOO OO0 OOO CO 0 cs <0 0 0 0 <s CO (0 0 *0 A CO 0 01 A < OI O O * A 0 a a m0 c O fl O 3 0 V 0a 0 0 1. fl 0 E 0 S0 0 A fl wed tf *0 U >44 m A fl T9 fl 09 be a> H A CO Is Is 00 a fl e 4* 0O V 9a Q0 ^4 TJ fl 0 te 0 A a w0a V 4fl04 0 fl ft* * 9 <B A A 0 A fl fee a a 0tja 9 3 l 0 a fl 9 0*fl 0 0 >* H 0 O fl ft* mi 9 O W 044 1 1 Q O O O. A O O O 0 4f A 1 1 Of 0 0 0 0cs 0 v* N 1 1O Q O ifl N CO w> 01 Aa OO OO OO *e O 9O Cl 0e 0O A0 oj ol 0* cp| ^0 9 O 1 Of OG O O CO 0 CO 0 0n < cs cs 0 te a 9 * 0 9 VI 0 0 0u B fl AA A fl fl 0 0A w 0 2 *1 U fal B h SH 00 fl 0 < a 44 1 1 t Of 0 0 * 0 be 0 0 M 0 te 0 50 j6 44 u BOB 9A K te 0 9 00 0A 0 A A A 90 44 fl 0 OA 0 044 BO 3 m 1 11 0 fte OB A 0> ft. 0 a* * fl ft 000 A OO fl fl B 0A A0 >a <O00 ft* 1 A B 0 O AA AU > B >1 H ft* ft* 0 B B0 9 O Ck CL O0 A0 fl B fl O 00 UA fl 0 9 t* 0 OA fl 0 fal<9 ft 0 a a 0n 0 AA * 0 a B bOA ATI ft. ft* e fl Bus 0 H fl B > 0 t< ftO ft* BO 0 a 0 A OO * H S-4 (A ) (B ) (C ) (D ) (E ) 100% owned s u b s id ia r y . Payment o f Intercom pany debenture. D isso lu tio n of subsidiary. C o n trib u tio n o f c a p ita l to s u b s id ia ry purchased during the year Issuance o f intercom pany debenture. -57 g H SmoNmI g s oae % sft >f*4t* ft % 00 A to for* to< as O 0O9 zM ^>* n o ss a s 8 < m as o o Xo OB 00 P TfOftt ft ft to s s E E to >m i mm 4 ft 4 (2 ,9 9 8 ,0 0 0 ) (1 0 ,1 0 2 ,0 0 0 )(0 ) 9.000(A ) 29,862,000 - k0 9 ftot Uc Me ma mm u + 9 e -4 3^ O3 S'0 e *-* u o9 So 00 0 n9 co occ o o o w o e o * o ft V -H 0OOa B<k U9H> *4^4 <H 9 - o o N c o fl,000(A ) 36,511,000 8,541,000 Ha %0<<9o koO A b` *P4>k9< 09ftfm<tH*.4ff*it .H0*900341 k H90 o A CO k 9 +9 ftot VI ft ft o9e u *0*4 29 ^* *a* k9 *4 2 0 Hft r a 4 O oo oo N f) A r k8 09 ft* f9t *994 *4f4t f39t %44 ft ft 4 ft 0 VI 990 Ba w 0o * *O?4! Jt0H; f9t fkat tk90 HCO kft 9 9 a f> ft 9&*9k4O0 k> kf9tfffttt ft 9fOtfC)D *4*i9*4ft 9 Oft fkt* f9ftt ufOl A 9 ^* ft ft *4 ft *04 *444 * 49k* JOOM & 9 9 k 0CO O --tOo** 9k*040l > O to B Bo kaat Omka 48 > O M -H O >OC4 0O* fi r90f*t ft O > 2ft iE .k ft 0 9 e a to to 0 ft S8S-S o u 9 Has H k O U w a a < p+ a s s %0 o a x CO o 9B s o -4 o >0 M0 oH as O oa M< * w* CO H < at a >* i. O oz O & p Q as < a O a S a 4 z o u w 69 O o Ma 9 9 M0 z e *4 u * h mb 4 >* > *4 CO HzS w m W N4 | *4 4 M H J s9 Q u8 oo u k B BB * V VI am H9 c 0O mu *a* -m4 9 -4 i2 c ^4 um O9 +* 9U I3OBXL zm Oo o o o -- (ft 0 --4 -4 n -- o 0 ***. << o o oo -- ^4 1 1 **v H 1 1o o o u-- X*9L B1 O B O --4 * o 9 m m9 09 2 0a -u4 x: 9 8 B T3 0*4 4 4 o o o-- (M I 1 o > * * <4 B 0k 0 o 9 0 w i* B 0 o o 0 V v C VI o B V 4 O ~4 B 0 V> < XOa B Ml >4| O h a co J3 9 k 0^4 V 0*B B M H B O h 1-4 9 0 w* VI . n w O o e-- 0 -4 o H B* O o o* 0 0 0k 0 1 t 1 1 l* * +> B VI O qu b cl B <H he BS a *4 u 2B u VB a p-4 9-4 2io < a k Af V k bob 3 XL z | oo oo om -4 B1 --4 << 1 oo o o * --4 r4 u B 9 B -4 B 4 +* 9 <*4 B Vk e -4 TJ B B VI 9-e Z o * J4 -4 0 o M -4 O0 o VBB u 9 t* 9 -4 B 0 8 BJ3 9 k0> Ooa aB Bkk aO B B B u aa BQ m4 O o OkOB 0B9V 4 -4 B Hk fi B BB0> adboge v u aO B B kbUftA BO hO ka <H 5-6 o k M rO0 O 0 0 B B a o9v 4 --4 H B lkCB a4&>a J o i .. a. g hkU&A ,<i U >> H s? k v4 4 X Oa X t4m 4 <* e Oft k ** 4 e _( 3^4 1o*0o < a H i- a O f) jO Va *, Sfl O o o W) o lO oo o oo oo oo X 4o F< *' CO o o o INVESTMENTS IN , EQUITY IN EARNINGS OF, AND DIVIDENDS FROM SUBSIDIARIES (CONTINUED) (COMPANY) a o o n n o ma ak AOfiO 4 O 0 -H O >H *U* V o00 9 a n e c l oo o a Hx a k B4MlOVi *M44`| ooo k >49 XC 4 P<H 0^4 O jr3mk 4m -mH V CIAO kMl O A U h9() F"> Oo o 1 ooo H10 o o4* PC fH N N 4 xc 4a Co 6O W* O &4 a 3 k 4 X +* 4X o M ca 4 * fH G 4 fl A -M 4 J3 4 k ** 4 fl *4 9 ^4 oo 1 XI < B ^4 k4 2 vi k 604 9 43 X4 o o o l 01 4* f4 < o o c m H O Oo o o oo 9 Ooh. OCoA uo X Xu O4 CO o cs CO o 4 4* * o CO * CO e CO H CO o cs m (X 4 u 0 u 9 XX Y.*43 4 ^<+* f* -M &X* 4Q3 W01 A493J e F* ^o *o A mA. X o X k < w O1 o xk Aa oe X c4o. X *4H H WO 0* c H 4 0 4 64___4-o6ko 4k I 4 > JS- .4D 3 4 u 9 4 9H H* 49 e -h a 4O vu a4 M ft fa Oi a jc o oo V <fa* 4 4 0~%4 ><a 15 u 4 O XU 4 > 493 a o * * to 4 Jt k * u O0 k 3 9h V 2 WH ft 44 ek 4 0* r > A< a -a ok k CB4H (4a4-----6-o- k BU X OCA 3ft -* 4 A > C l* O k4 X 9 ^ * 4 Y) Vi 49 OT1 e O X0 * o 4G0OOC CUMGO ^ k M c** kOXftH3 H 46<Ci fl 4U -O4 04 O~4 Xt- 0*5* 06 U*4* I Q UQ M H s-f 60 SCHBDULE I I I - (A) Chargee fo r aod paymenta o f c o rp o ra te overheat! a llo c a tlo n a O oo o o o o C*3 Ha >i1 <g0o GKO CP cT n co oo o o oo 00 A n a3u u as a <N oft CO ao*4s S s CO et* ns* t* A Cft $ 8 2 < a 5 ft* o Q o SP 9 j 0 0 M a & o 1* U fc a >* M o 2 M J ea 8 CO PS A ^ < 00 w v<wCO ^\p\ P*v*PN oo oo o o OO o o qo PX PSPs 0 xp W< SsP w<wn PS PS PsPs p-v 1 o O O O O O Of O O OO OO o o o o o OO o CDS H00Sk CO CO oici 00 W) r**k oo* n xr O Oft ww pH w wv fr <0 H 0 <m0~M4 N eH M 1 Oft Cft p* O V b* o eH H H o i X* NP1 VW Ifl X1P S<PmSP S<pP oo oo oo oo oSk oSk oSk oSk H 0 pH 0 Oft CO 0 o oq wn % pH d \ 1 1 VP(0p k<PfWfi oo oo o OO oo o oSko* o*koS 0n0 *o CIO ocCO- pH d oo Cl CO n n n m au H a G> *4 2*4 o B oo oo ok o o 0O H * <0 ft Ooo o oo o* o o d o H 0 k nSk H 1 1o o o 0 0 CO H d u 2 ca O T? > ao 0 *8 u e ft* M ft* oa 2 Oa O a pH a tj a He a t, t* C*L Oe < a uh o is H a > M a 0 fte H I* pH fr% a a M M i I* >* H t. ft* S-9 (A ) Charges fo r and payments o f c o rp o ra te overhead a llo c a tio n s . (B ) Advances to s u b s id ia ry and paym ents by s u b s id ia ry on advance a c c o u n t. 6> s os as u o BE tfi H tt o 90 C H CO as 0 t-4 H o r> fcH t- CO u < K op > 9 a o & B o9 z Q, 6 4) o o < 2 0) o o0 to* OS o w 0 9 CO 0 >4 CO a M 2 aa.* u 9 H cb >4 0 a B H > M J a 0 M B u W O o o o O o 1 o o o o o( ot o ok o* Oi *1 O Q> o> tA 9 to* CO 9 0 CO pH 0 ^4 01 wj a CO to* N H ra %4 o 9 pH t* HI 9 0 < a <0 ww yn, ^ O O oo OO a oo oo o o O* O o c o o O0 H <S t- CO <0 o 0 CO o to- 0 O 0 *4 3 0 9 0 29 9 CO CO 0 0 0 w w vw e9 9 e T5 9 44 A /*s ^ 9 < a 9 0 <0 o W wv ww c oo O O M oo oo O o o oo o o oMio*k COflO fH 0 n o 4-1 coeo * 0 *4 CD 9 ^ H 0 0 <o CO C4 to 9 <* /s A /\A 90 90 w w ww /%/N 1 O O O OO *k P op oft to* 0 O 0 to to 0 0 pH W 0 9*0 w 0 0 0 9* w I ^k '9 V 1O o o 0 H 90 w OO OO oo ft t- <0 0N 00 * 0 to- o c o 9 0 0 * to H M , o o oo o o o O o| o OU H 9 a9 o o op o o o co 0 M 0 0 to* B to 0 0 to 0 H 0*H 0 0 0 to 9 * 9 0 91 9 pH 91 0 S H * to ft* 9 H m A 9a %4 o 1 9 B e 9 ft pH 9 0 9w Mfl * to a 0 * a PH 9 a B o0 oo to 0 eO * H tak 4 0 0 44 U to o a ed Be +4 9 9 0 a e o a ph a o B O *H 44 9 *4 U 2 ua 99 o ed a 44 Ck m 0 a h 9 6 *a o U <4 pH * to u a t* a. M 9 t- a S U Ck tm t-i * dl rH ee aH e pH V to *d to to* 4oH (4 * S-10 (A) C harge* fo r and paym ent* o f c o rp o ra te overhead a llo c a tio n * . (3> Advance* to * u b * ld la r y and paym ent* by * u b * ld la r y on advance a c c o u n t. &3 d %4 9 O t* Vd fits o 9a> .H 9 md o ook tt-N N * Oo o o0k ok o oo O o 0H0 o> CO CO ^4 9 <CO0 o in W od O ^4 CO a *- 9 9M AC O* XdJ o 9 4* 09 f9i -9 9u dm *H 4* b 9O OS 1 * 1 *k i 1, M o o0k o o ok o o o| o o N O m d p< 0k no n (fi a d 1 00 t- 9 fl 44 9 o o o o o o o c o| 04 o* ok o * oj 0> H -* O V4 u O 4* H CD 0 CD H r4 00> k t* HI 1 j H d N N M n< 0 j t- 9 ,0 S 9t> 44 0* dau *i d o O oO O O ol o 0k k o o 9 9a N CO O U 6 >1 ID d d* V 9 o o a d H00 d xi a) -- N oT H H n to ^o4 9 H h d 9 >* o o^ H 4* U 1 ro. H d9 d H U <>e4 9 * 0 * o -M 4O4 tf* bC a <h o *4 * ~l fl o +4 ** P a H fl 44 d O o a c |& ft *4 kk 9 *4 rt 4 0 9 cr or 9 90 9 ma d uv o o H ab a H U -s 4 44 w 0 M> ao Vi >1 44 u bo 0a 0 Cb ft 9 O fi m ^B *a1H J0 o a d 3. u J CD MH S-ll H z u X fib 44 O O' u Q Z < o 5 Ad to j to ao bJ to o to W5 eX M Q. 0Q O to o* > u ad a uP X o a ew Ok M b w* n t 4? O 6 4) o a o a 03 a e 0) > B0) to V B *e 0u om er o Bc* *- it a fa .11 4k U J3 6 * O X3 O * M ea oa B <-i 4} B fa a *4 * fa ao a a Q < ea *4 O * P *40 4-* VB < uW B C fa B Bea o a to B -H B tfito NAO aBJO o o O9 ooo oo o ooo to (A ttoo a B ei B B to flO to B b a n ab a e> a to to a to e4 A a a <a <a < < V w vw w ^ a o o Ol O QO oo o O O o ob o o o o an va> N B a (DA r ab B H aa aB to a b BB to a O to P3 B o o O O Ol o o ooo ob ob ob e o a a to a B a b4 a B aB Bb O o b* A fb 4fa m o O O o ol o O Ooo ob Ob ob e o a o to a a B ab tBo b H PI a aa H cm A w o o o o of o o ooo ob o ob o to to r4 a aao aaB Nb ob to b O (t a to a H a a a to WM a 4N a o^ i MB fa i o a a to a BOB -H > B o oo 04 K * 4* 4* *4 fa B o aa a wh *4 &n V a va e4 B 9 O oi a 1 EL a & to o H i 3 to a a9 4* cr B B to a Oe* aB a a o *4 e a a Bo B V MB O B BJ a is> ftao 4Bfa eB4 fOa aa **44 w a <r*4 , B a 0 a e fBa to S-12 (B ) R e c la s s ific a tio n between accounts ( H z 02 X CL M a O' o CQ X a QH X X< at o ft* ft H CO hA < X ua k * X <H 9 o J< X a CL O E tc M 8 J t) >4 o sH A o os X Bfi M 0 au 0) >* o A X0 CL 1u m > > u J S3 a u X u 0} +j O oOoO o Oo 0 o oo o 04 * 9L 0* a <0 o A 0 0 X A A 0 0 9 0 t- A A A A a o >i * * ft* A O t- M 5 -0 t*- A A AM << < W l OO O 1 oo o u 0 ai oo o ft M X0 ** 0 0* A 0 ft* OX o 0M a * O o o o a o o o o fi ft* oft o * o ft 5 0 0 ft 0* A fa CO on *4 ft* A ft* A L fa | 0 A CO X 40 001 o O o o Oj 0 o oo o O e +j 00 <4 O o oo o o ft ft A H 0 A co * o A CO 0 CO A ft* o A o CO A 0X ft ft O 0 CO CO A A n < CO A o O O M A o ooo 0 a fa o o o o 4 0 ft ft ft 0 tft t* 0 0 CO oc > A CO 0 0* N C -* 0 M*< 00 * 0 A A ft ft* O A a CO 0 0X CO ft A AH o A u 0 ft* 0 * 0 fa t oA CO ft* A 000 ft* 0*4 L o O X 4 X H fa e a <* o CO A H w Q X 4* 0 et o X 0 l i a a 4 0 <*4 9 0 0 o1 * 0 A 0 p4 o 00 ft4 AX A 04 fl 0 a H 0 0 0 4* 0 i0 0 0 H 0 M > fa fa ftft 0 O a o 0 fa 0 a ft4 0 <o ** 0 X 0 0 00 V 0 09 0 fa *3 A X 0 w a 9 O o 0 0 4* X 0 o ft4 4J 0 *4 fa 4 0 0 m ft* A S-13 (o(o IMX Ck M ff az f- 5 ja G a. o a tk lh ^ s 5h <oe o uo p> ft 8 P< sj u8 03 X JffOtt u 2 C P 68 a XX e 8 H fftt O > X X s + O o o ft *4 ft o ft o c XX ft ft oo o* oX t- 00 IP o o o Q (0 ft c > -4 ft Nx COx o (A 0f0t to *4 CO CO 00 IP Oft q| 1 11 ft si rftt M a v* OS ftTaJ ft Oft o on l s^iHft Wft o oX o oX oo* o S ft * for oft IP o IP co *K4 ft* eft ioH. <1 n X fkt fkt w0 -o a c ft oh vft ft aft +> M ft ft oa n o S <010 o 8 Cl o (0 Ip f4t Iftt ft OM XX JS O ft -4 Ip < C ft <M % ft C lf.t ^fO8ftt fBt Mf<t ft O o o tn 00 o o o o 0) <0 1 JO ft N ft ei J D g ih a sft .1 fftt 99 a X) eft aft e <k .ft & ca U 22 5-14 67 000 ooo 000 i V4 * o O 699 H M H T K O aa 5tHf a * n CO x> s a > 40 n m ! i O xsl oo g o mn N to 8o c- Ci o o o o o o 10 n <T0m o CO o * o w * M o o oo o o ce- i.> woo om t- e 00 c a sa oa aM Mh lO o 00 oo to tft< ** U O to CO oM cine 8 a ** oil e a e u * II i s as o * < .r3u o <0 a n S 9a* Q9 e 9 U 9 >9 +* m *C 909 P8 89 9 O >, ~4 O c3 ts AC * *9 *0 4* 8 4# aa 9*9 jvi 8^ 8 wA u 98 +* 9 + 90 0 to 9 9 wu 11 4*9 8 e 0H 90 8a p88 P4 *U84 Q8 <VAO GP I oo oo oo o oo n n A00 t>t* ft bn m M t> o ^ << W rv < W ooo o o o w o o r4 0* w ooo ooo o % ft n n i-* *x r> -ftk ooft *1 POO POO ooo hn 10 * 40 *9 K* 9 o o o* o N n -4 00 1 4* o| o o cs *5 9 *1 So i O 9H * H Ml 4* 8 lO*4b8 *m9O884 *A890a4*109> SHo*8*>9o*84ft o0** nS 88 9 o| o c oaw1 9C(0O 3 5 e9 8 Cft e g oo 8 o i ae p 9 Ho 2 S-16 61 ? TYLER CORPORATION SCHEDULE VIII - ALLOWANCE FOR LOSSES (CONSOLIDATED) Years ended December 31, 1978, 1979 end 1980 1978 Balance at beginning of year Additions charged to costs and expenses Collection of accounts previously charged off Deductions for accounts charged off Balance at end of year 1979 Balance at beginning of year Additions cbarged to costs and expenses Collection of accounts previously charged off Deductions for accounts charged off Balance at end of year 1980 Balance at beginning of year Additions charged to costs and expenses Collection of accounts previously cbarged off Deductions for accounts charged off Balance at end of year 8 1,890,000 1,011,000 218,000 (1.231.000) S 1.685.000 $ 1,685,000 2,484,000 589,000 (2,012.000) * 2.946.000 $ 2,946,000 2,768,000 985,000 (3.386.000) 8 3.313.000 S-17 10 * o u w* ** mu a * e a M 0 U M M > 4. 3 1 o MU M au *6 9O VCP4 O4 +* -Man h0O <> aa+4a*i 3i3- 9O *00 o & o CM o o 0 s 01 o 00 u z 6 o> N 0 OB s oM e- J uo 00 b gpL BE 1z Ha p o m H CO O0 CuM t oX o <6 z < 1 >* X*4 s3e a, MOQ&3 9 o u Is Jo3 aV99 O 9 C s o o m M9m em 30 0 S*H 4-* ea IS+o" rm- i|'j u *K4 O3 9 0 o +o oumm ua *m ^M4 O> OU MO c H t> o O la SO M HBOOli a fi4 a O o o et o s I* o o o o o n 8u aa B i > *H o 12 ^ 8 04 ! !! o u ou oo oto o 8<<^ w o^<5 O'-' O^H OOMw oor oGMm 3 i 0) -s N A at **1T mCM <3o 5* s (O A CM S-18 (A ) The Company baala. Tba M f bo/row Company Is At tb o thwn required to e ffe c tiv e prim e ra te o f be fre e iro n borrow ings In te re s t up to $ 2 5 ,0 0 0 ,0 0 0 on an unsecured a b o rt-te rm under the coim itm ents fo r at le a s t 60 consecutive days d u rin g the preceding tw elve montha. 71 TYLER CORPORATION SCHEDULE X - SUPPLEMENTARY INCOME STATEMENT INFORMATION (CONSOLIDATED) Years ended December 31, 1978, 1979 and 1980 Item Maintenance and repairs 1978 1979 1980 39^4,70^000 7-S-19  EXHIBIT INDEX Exhibit Humber Exhibit 3.1 Certificate of Incorporation of Tyler, as amended through April 18, 1973. 3.2 By-laws of Tyler, 9s amended through March 16, 1981. 4.1 Indenture dated June 1, 1978 for Tyler's 10 1/2% Subordinated Tebentures Due 1998 (filed as Exhibit 2(fc; to Tyler's Regis tration Statement on Form S-7 (File Nc. 2-61538) and incorporated hereiD by refer ence). 4.2 Note Agreement between Tyler and The Pru dential Insurance Company of America, as amended through December 15, 1980. 4.3 Revolving Credit and Term Loan Agreement dated December 31, 1978 among Tyler and certain banks (filed as Exhibit 14 to Tyler's Annual Report an Form 10-K for the fiscal year ended December 31, 1978 and incorporated herein by reference). 4.4 Letter amendment dated January 22, 1979 to Revolvirg Credit and Term Loan-Agreement dated December 31, 1978 among Tyler and certain banks (filed as Exhibit 15 to Tyler's Annual Report on Porm 10-K for the fiscal year ended December 31, 1978 and incorporated herein by reference). 4.5 Letter amendment dated June 12, 1979 to Revolving Credit and Term Loan Agreement dated December 31, 1978 among Tyler and certain banks (filed as Exhibit 5 to Tyler's Annual Report on Form 10-K for the fiscal year ended December 31, 1979 and Incorporated herr o by reference). 4.6 Letter amendment dated November 1, 1979 to Revolving Credit and Term Loan Agreement dated December 31, 1978 among Tyler and certain banks (filed as Exhibit 6 to Tyler's Annual Report on Form 10-K for the fiscal year ended December 3i, 1979 and incorporated herein by reference). 4.7 Letter amen .ijer.t dated May 27, 1980 to Re volving Cradle and Term Loan Agreement dated December:* 31 , 1978 among Tyler and certain banks. 4.8 Letter amendment dated July 1, 1980 to Re voking Credit and Term Loan Agreement dated : December 31, 1978 among Tyler and cr'-Rin banks. 10.1 Agreement for Purchase and Sale of Stock and Other Assets dated July 21, 1978 be tween Tyler and Thurston, Inc. (tiled as Exhibit 16 to Tyler's Annual Report on Form 10-K for the fiscal year ended December 31, 1978 and incorporated herein by reference). Sequen xially Numbered Page s~r1 1 5- ~ io 1 11 f >f JO,JL Exhibit Number Exhibit Amendment to Agreement for Purchase and Sale of Stock and Other Assets dated March 30, 1979 between Tyler and Thurston, Inc. (filed ar Exhibit 2 to Tyler's Cur rent Report on Form 8-K datea April 6, 1979 and incorporated herein by refer ence) . Tyler Corporation 1966 Stock Option Plan, as amended through January 31, 1973. Tyler Corporation 1976 Stock Option Plan, as amended through February 2, 1977. Continuation Sequentially Numbered Page 3 CERTIFICATE rv- Tyc01?CX\T;c:; 07 SATURN INDUSTRIES, INC. ' ' . . : '' FIRST. ' The name cf the Corporation is * SATURN INDUSTRIES, INC. Sr.CCW' ). The corporatio,n*a princip* al office in the State of Delaware is located as No. 100 Wesc Tenth Street, in the City of Uilningcon, County ^ of New Catde. The nane and address of les resident agent is The Corporation Trust Company, No. 100 Vast Tenth Street, Wilmington 99, Delaware. THIRD. The nacure of the business, or objects or purposes to be tr&ns-' acted, promoted or carried or. are* - To design, develop, experiment with, manufacture, acqu-re, produce, assemble, buy, lease or otherwise acquire, hold, own, operate, use, install, equip, replace, maintain, service, process, reprocess, repair, remodel, recondition, import, ex port, sell, distribute, lease or otherwise dispose of and generally to deal in and with (as contractor, subcontractor, principal, agent, commission merchant, brolter, factor or any combination of the foregoing and at wholesale or retail or both) any and all hinds of electronic and electrical equipment, devices, instru ment's, systems, parts, products and goods, wares, merchandise and tangible prop erty of every kind used or capable of being used far any purpose whatever. To engage in research, experimental, laboratory And development work on any and all hinds of electronic mad electrical equipment, devices .-no products for governmental agencies, industry, individuals or others and. In that connection; to reader research and technical advisory services. * The manufacture, of appliance, parts for appliances and equipment for appli ances, the manufacture of any other product, similar or dissimilar thereto, the x pair; renovation, restoration, or modification of. appliances, appliance parts, appliance equipment, or other menutaccur j products similar or dissimilar thereto;, and in sueh connection with rpurer and authority to manufacture, buy, sell, deal 1m and engage ir, cotviocv and ce:ry on the business of manufacturing, buying, sailing, and dealing i . g^odr, vares and ecrr.n.indisc of every class and description. To maintain u d ipcrate factories, plants, ..hops, test houses, storehouses, laboratories, engineering facilities and buildings o; any and all klndi, end any and nil tools, jack in*a, machinery and other ctutom>n: fur manufacturing resting, H aai *11 kinda of man :accuring research and experimental work in or in voancctlon . therewith. whatsoever, nad/or any interest therein, together with all materials, nets, articles, tools, machinery and appliances entering into or suitable and convenient far the con struction or equipment thereof and together with engines, boilers, machinery and Appurtenances of all kinds and racklc apparel and furniture of all kinds; To build, set out and repair and lend money upon ships and vessels of every description. To construct and repair engines, boilers and machinery. To construct sud maintain for the use of the Company or for letting out on hire graving and other docks aid other coaver f er - * fr rhe 1-ilding, repairing or docking of ships and other vessels and to.aid in or contribute to the construction of any such works. To buy or otherwise acquire ships and vessels complete or' not complete, sound or out of repair, for the purpose of improving, reletting, let-out to hire or otherwise staking profit out of the same. * ' To cvn and control and acquire by lease, pledge, construction or otherwise steam chips, barges and vessels of *11 Kinds cr interests 'herein and to operate roe same on oceans, seas, gulfs, lakes, rive and any a:.: all navigable 'raters .'in ar.v place or parts of the world between ports and otherwise for a transportation line for passengers and freights of all kinds with power also to purchase, build, construct, repair, lease, sell, . ortgage, pledge, convey and operate vessels of all kinds and all machinery, sp?Hances and apparatus incidentally necessary or convenient thcrte, or any way connected therewith; with power also to do a tow ing business and also to purchase, own, lease, construct, control and operate docks, varchsuscs, 'try docks and dock machinery, appliances'and apparatus of all kinds; And with the power also to do a general ship-building stevedoring dockage, warehouse salvage, fishing and commission business. % To pur.-.hasc, taka in, exchange or otherwise acquire and hold ships and vessels or ar.y shares or interests fn ray ships and vessel* ar.d also shares, 'stocks and secu rities of any companies possessed of or interested in any ships or vesiol.i and to > C!M V.* **>* '>i *-t mi i ;*,) ,> 7, r ' 11 r  otherwise deal with or dispose of any ship sj vessels or share: or. securities as aforesai To curry on all or any of Che business of ship owninrs, ship brokets, Insurance brokers. managers of shipping property, freight contractors, carriers by land and sea, barge owners. lighternen, forwarding agents, ice merchants, refrigerating storekeepers, warehousemen,, wharfingers and general traders. '{ To earry on the business, ot mechanical and marine engineers and dealers la aachinery a: laaufaccuiere of plants, engines and other machinery, tool makers, brass founders, Mtal workers, boiler ankers, oill-wrights, machinists, iron and steel converters, (niths, builder metallurgist?, electrical, civil r.nd water supply engineers, and ee buy, sell, aanufsecure, r bridges, viaducts, canals, hotels, wharves, piers or any like work of internal iaproveaant, public use or utility. So manufacture, fabricate, assemble, and to take, purchase and otherwise acquire, own, hold, use, sell, assign, transfer, exchange, lease and otherwise dispose of, sod to invest, trade, deal in and deal with goods, warts, merchandise and supplier and all other personal oparty of every character and deacripti' r. 1 / <4 [" To carry on the trade or business, or any portion or portions or part or parts of the I business of engineers, founders, smiths, machinists, manufacturers, patentees, licensees, or licensors; with full power and authority to purchase or Co lease, or to otherwise acquire ar. land, houses, offices, workshops, building, and premises, and fixed and/or uovable machinery I tools, engines, boilers, plants, implements, patterns, stock in trade, patents and patent (rights, convenient to be used in or about any such trade or business, or portion or part the I of and to enter into any contracts in relation to any said trade or business or any portion portions thereof, and with power and authority to erect, construct, maintain, alter, repair, Ipull down and restore, alone or jointly with other persons or business entitles, works or (buildings or improvements of any character or description, generally the business of contrac ting, with full power and authority to carry on and conduct a general contracting business or I specialized contracting business, including the power and authority to design, or construct I enlarge, or repair, or remodel, or otherwise engage in any work upon any building manufactu..product or article of commerce, the business of dealing generally with patents and patent rights, and products of any sort covered by, patents or patent rights, with power and auchor I to purchase or otherwise acquire letters patent, concessions, licenses. Inventions; rights .a|privileges, subject to royalty or otherwise, whether exclusive, non-exclusive or limited, or I Iany .part Interest in any such letters patent, concessions, licenses, inventions, rights and j privileges, whether in the United States or any other part of the world, and with right and lauthoricy to sell, let or grant any patent rights, concessions, licenses, inventions, rights lor privileges which the corporation may acquire or any interest in the same, and with power authority to register any patent`or patents, or any invention or inventions, to obtaiu 7 ('-Iillusive er ether p'riv.<^^s with retpecc to the s-~-,^^t.ny p.-.rt' of the world, ' tr.i ta apply for, exercise, use ;r.d otherwise deal with or turn :o cecavn: any peter.: rights, concessions,'monopolies, or other rights or privileges, either ir. the United Sceccs or any other pert o: the world, end generally co usriuiietc.ru, : reduce-and trade, end deal in all machinery, plants, articles, appliances, end # things capable of being manu;..cturcd, produced or traded in, by virtue of or in connection with any letters patent, concessions, licenses, inventions tr privileges as aforesaid, or otherwise, .. To purchase, acquire, own, hold, use, lease (either as lessor or lessee), , grant, sail, exchange.' subdivide, mortgage, convey in-crust, nonage, improve, I '' construct, operate and generally deal in any and all real estate, improved or unimproved, scores,, office buildings, dwelling houses, apartment houses,'hotel, ssar.u featuring plants and other buildings, and any and all ocher property of every kind or descripcion, real, personal and mixed, and wheresoever situated, etcher . in Delaware, ocher scaccs of the Unicod States ` the District of Columbia, territories and colonies of the United States, or foreign countries. . . 'To acquire, by purchase-or otherwise, the goodwill, business, nropercy rights, franchises and assets of'every kind, with or without undertaking, either'wholly or In part, the liabilities of any person, firm, association or corporation, ded to acquire any property or business as a going concern or * . otherwise .(1) by purchase of. the assecs thereof wholly or in port, (2} by pcqutslclon of the. shares or any parr thereof, or (3) in any ocher manner, and co pay fur the. same in cash or in-shores or bonds or ocher evidence of indebtedness o. cols corporation, or ocnerwise, to hold, maintain and operate or ir. any * i 1' . manner dispose of, the whole or ony part of the goodwill, business rights' end . property co acquired, and to conduct'ir. any lawful manner the whole or any part of any business so acquired; and co exercise all the powers necessary or convenient in tr.d about the manegeacnc of such business. To cake, purchase-and etherwis-. acquire, hold, own, uso, cell, assign, ' trace far, exchange, lca-.e, mortgage, eonvey in trust, pledge, hypothecate, ' f * licfii'.scs 1a *cpccc o* and ocliczvlso dispose d 'locceto pscenc o i,Kg * 1 United States or any foreign country, pacenc righet, license-: end privileges. ** , , inventicr.c, improvements end processes, copyrights, trade-marks and trade Bisas. and governmental, state', territoricl, county and municipal g-.-ancs end senses*i.-. * every character which this corporation-way deem advantageous in the prosecution * its. business -r '.n the it;inn.nance, opcracien, development or extension of f ;. - . a-,.- r c'.et. . '  - To Cnf.'f into, r.taUu, perform and carry cj: contracts of every kind fc.r any lawful purpose without limit *s to aisour.c, vich any person, firm, a = s c e ia t for. 6? corporation, municipality, county, parish, acacc, ccrrieory, jovtr;,;ur.: or other municipal or governmental sub-division. . ', To become a partner (either general or limited or bocii) and to enter into; sgreener.: a of partnership, with one or more other persons or corporations, for .. ' . ' the purpose of carrying on any business whatsoever which 'this corporation s.sy Sees proper or eonveaior.c in connection with any of che purposes herein sot * forth or ocharwisa, or which may be calculated, dtveecly or indirectly, co it'umut,: tliu Jncevciits of chiu corporation or co .enhance che value of its * f, property or business, . Prom time-co cine'apply for, purchase, acquire by assignment, transfer or otherwise, exercise, carry out and enjoy ar,y benefit, right,.privilege, prerogative or power conferred by, acquired under or granted by sny statute, ordinance, order, license, power, authority, franchise, coamts sics, right or privilege which any government or authority or governmental agency or corporation or other public ,' body may be empowered to enact, cuke, or grant, co pay for, aid in, and contribute coward carrying cho same into effect and co appropriato any of this --orpo rat ion's shares, bonds and/or assets co defray che costs, charges and expenses thereof. To subscribe or-cause co be subscribed for, and co cake, purchase and other- * * Vise acquire, own,'hold, use,'cell, .assign, transfer, exchange, distribute and . otherwise' dispose of, ch'o whole or any part of che chares of che capital stock, beads, coupons, corcgages, deeds of (.rust, debentures, securities, obligations evidences of Indebtedness, notes, goodwill, rights, assets and property of ary *' , cad every kind, or any part thereof, of any other corporation or corporations, association or associations, firm or firms, or .parson or percent, together with sharec, rights, units or inccrescs in or in respect of, any crust estate, now or hereafter existing, and whether created by che laws of the State of Delaware or of any other i-tc.ee, territory or country; and co operate manage and control such properties, or any of chea cither In che name of such ocher corporation # or corporations or in cha name of .this corporation, and while the owners of ar.y of said shares of capital stock, co exercise all the rights, powers and privileges' a; ownership of ovary kind and description, including che rlghc to voce thereon, with power.to designate some person or persona for chat purpose cisae sc ''-so, and to site stmt exeunt as natural`persona night or could da. , ,' o To pra.*aa:e or co aid In any tanner, financially or otherwise, any person. debentures asother eecu^^lcs or cviics.'ia of indcbs<^^ss ivc held directly or indirectly'by this corporation; and'fer this* purpose to guarantee the con tract, dividends, shares, bonds, deb:r. cures, no cos end* ocher oblige tiers of such Other persar.s, firstf, corporations or associations, and to do any other acts or things designed co P*ctccc, preserve, improve or enhance the value of ouch shares, bonds, notes, debentures or ether securities or evidence of Indebtedness, To bc-rrov or raise moneys for any o the purposes 'of the corporation and, from tine to time, without limit cs to arsour.c co draw, make, accept, endorse, execute and issue promissory notes, drafts, bills of exchange, warrants, bor.es, debentures, and other negotiable or non-negoclablc ir.scruuencs and evidences of. indebtedness, and 'co secure the payment of any thereof and of cho inccresc thereon by mortgage' upon or^pledge, conveyance or assignment in cruet of the whole or any part of the property of the corporation, whether at che clmo owned a or thereafter acquired, and to soil, pledge or*otherwise dispose of such bonds or other obligations of the corporation for its corporate purposes'. To loan co any person, firm or corporation any of les funds, either -* with or without security*,. : * To purchase, hold, sell and transfer the shores of Its own capital stock, provided it shall r.oc use its funds or propcrcy for the purchase of ice own shares of capital scock when such use would cause any impairment of its capital except as otherwise permitted by .law, and provided further that shares of its *. so* own capital stock belonging co it shall not ba voted upon directly or indirectly. To have one or mote offices, to carry on all*or any of its operations and i V-siaeso and wichout restriction or limit as to amount to purchase or otherwloc acquire,-hold, own, mortgage, sclj, convey, or'ochcrwisc dispose of real and personal property of every class and description in any of the Scocce, Diotricco. * Territories or Colonic# of the United State#, and*in any and all foreign councriea, subject to the. laws of such State, Discricc, Territory, Colony or Country. To losuc bonds, nc-ces, deboncurc# or ochor .obligations of chio corporation from time co cimc for any of cho obje'eta or purposea of chi* corporation, .and to secure the acme by mortgage, deed o; eruat, pledge or. otherwise, or to i Issue che came unsecured, ,,o purchase or otherwise acquire it# oi n bondc, . da,,cr..crcc, us other ^evidences .if its -ndebtednesa os* obligation#, co purchase, hold, sell and transfer che chares of ii. own c/ipl.cal #sock to the extent and in i~c manner provided by che lawa of the Scei cay be hereafter amended. f Delaware as che came are now in force < I * To purchase, acquire, take, hold, own, use and enjoy, and to sell, lease, transfer, pledge, mortgage, convey, grant, assign or otherwise dispose of, and generally to invest, trade, deal in and with oil royalties, mineral rights of all kinds, mineral-bearing lands, and hydrocarbon products of all kinds, oil, gas and mineral leases, and all rights and interests therein, and in general products of the earth and deposits, both subsoil and surf'.ce of every nature and description. To subscribe for, purchase, invest in and otherwise acquire, own and hold, either directly or through a subsidiary corporation, all or any part of the shares or capital stock and other securities of and interests in (i) corporations and firms engaged in the insurance underwriting business, including the underwriting of life, fire, marine casualty, credit or any other kind of insurance risk, and <U> corporations and firms engaged In the financing of wholesale and retail credit - purchases of any and all kinds of real and personal property. To manufacture, process, sell and otherwise deal in and with building supplies and materials of all kinds. ' *--- In general, to carry on any other business in connection with the foregoing . and to have and exercise all the powers conferred by the laws of Delaware upon corporations formed under the General Corporation Law of the State of Delaware and to do any or all of the things hereinbefore set forth. The cojects raid purposes specified in the foregoing clauses shall, except where otherv/ise expressed, be in nowise limited or restricted by r .eren -e to, ' or Inference from, the terms or any other clause in this Certificate of Incorporation, but the objects and purposes specified in each of the foregoing clauses of this article shall bt regarded as independent objects and purposes. m c- z\ to Lr. Civs million oin hs^'rad. f i'/ttv-fivn t::rv.-.3iMir*, .jiir.dved 21,. .ly-r.cvati and on? half (r,V.'>,6J7l-) .?! or million (jJ,CjJ,OOOj oT s'.cres r.V.nll :>e co m- r.tor."-, ton cn: tn pvr preferier stork. of which n. ni ` ur. r:': ciiL.'ty-fivo t'.ou3?rd. (935,000) j'.trcs be preferred at-.oe*:, t*> -lollers ($19.00) par vxiluc cocht nd six "*.-;c^Ted ef.jf.ity-seren sad or*: h?lf (fi37&) shores skill bn pr?f-rr-' stock, thirty Q.IO.OO) -nr volnn sc oh. Titter, "'older of prefer.*?* stock, thirty dollnr* (530.00) t'or value sock, a'..nil 'o* every nnat.in;; of the stoektioldnr* bn eutltlod to tventy (20) voton iii p-:r ;or or by nroxy fur each nunli char* bold by vxh it--'<*older; and o"?';. holder of nil other cInsane of capital stock ; 11 at everv Bsntlrty of tin-. stockholders bo oi.titled to ono (1) "3te in parr-on or by nror.y for ooels suet: uro of the eopltol atick, rf-.er then preferred stoe* thirty dollars (-539 90) par value sseh, hold by such. atoe'.ihol or. Shares of preferred stock say b* leaned froo tie to tlau In .poe or more aeries, each such series to have "uch distinctive declaration or title es nay be fixed by the Bovrd or Directors prior to tho issuance of ary share* thereof. SubJoet to tho preceding paragraph, each suck eerie* shell hnvn such voting powers and such preferences end relative, perfcicipntiny, option.'1 or other r.peeinl rir.hts, with aseii qualifications, 1U:L fen`.ions, or r.*v..,'ietionn el nueh preferences *r*i/or rlrhte es s>i.i l.- ?trt*d in t**r rnoolution or rnsolutione nrovidlr.y for the issue of r.neh aerl'-s of preferred tack, bj nry be e adopted fror. tine to tins t. the T'*:rd nf Director* prior to the Urnen .? oy r.'rren thereof, 1- eeeordonc.n wit tbo lima *f the Stela if T` i\s'*nre. Vrch s', or*: of :.tiy cor ins nf .'referred stock ahull b* 1 t'.c*.l with nil other -I'-rroc of ouch serirn, except c* to the duty 'h,sr. which irrursuVite'! p'-fiforrad dlvlrfotdj, if nny, atin 11 be curriloS'.vn, 9 ot *a!Aoli*or of Vila C jr'.'OT t inn V;'i -11 by i* oli*!::. -. :r'rttr. of ony *X.. V ' r:V iir* ^.T'i l'-' : o ^: ofir r i yht to -r.-- * -ir or 0""'wiv ` bo t ' r - .V. .>r :ny ?lr m aC "t- Jor pnr- tion, nw.r -,r "frt-rtrr to nr r*r;f '.ol- , :~.bda. a : .fcvrltias c.nriwvrti hi- ir.t ai% c j-rryi*. to -"r * a? shares of r;; cl .-no., ns or b tar r:*i?tlor :>r not t'sn la:..unr.ee of na.` ruck ^ '{rot or bands, or othr nec\-r itioa v:iuld cdv'.rsely nffecc t'.-.v dlrldeud ay yeti'; r 1'ht? of such stockholder, stliar ttan micu risVits, if cry, os the . i9?r af r-irecvors, .in its discretion, 0137 fix: i nf! tho ioard of Dire?': >rs rv>y iarve ohures of nrry eloss of fc'iis Corporation, or nay notes, debentures, bonds, or other securities -or.''ortibla Into or eerryir. optlonr or i'nr;c::ts to -urfi .sao V:roa nf nny aifsa without -offerin; nnjr such shares of any cl:n:, either .! -iholr. or in purt, to t': existing stoc'cho'lfers of ear class. T7'",u:, cumlntivo voting for the nlectinn of directors shell not ho permitted. t-rrr. The ininum c:ount of cspitnl with uhich the corporation will c:i3**nco business is one Thovs'irrl Eollnrs (#1,000). The nonce end pieces of residence of the inearporotra 7.J ere is follows: 1. Hares 5. n. litesey ?. -T, Obore, Jr, a. oriev ", Hesldcncos . Vllnin^ton, Dnlnwere vrilninyton, Beirut're ''iltnlnytcn, Belrurre '1 " * -10- 1 iii; 5*-> !r 'SlCHTff. The eorpoi-rtlon is have pe.*petual existence. BIRTH. Toe private property of the stockholders shall not be sub ject to the pagnsent of the corporate debts to any extent.whatever. ' TSfcTR. The following provisions ere adopted for the wanageaent of business aadfor the conduct of the affairs of the corporation, and .fOr ezeating> daficing, Uniting and regulating the powers of the cor- pocatlon. its directors and stockholders: .. The business of the corporation shall be nanaged by Its Uv w Board of Directors'end the Board of* Directora shell have power to exercise. ell the powers of the corporation, including (bat without limiting the generality hereof) the power, to create Mortgages upon the whole* or any part of .tbs property of the .?* ; corporation, red or personal, without any action of -or wy ItH V the stockholders, except as otbenrf.se provided by statute o*. bjr`$he By-Laws. y (h) She iiadwr of directors which shall constitute .the whole Boexd shall be snob as is froa tiaw to ftps fixed in the ri. provided In the By-laws; bat *in no esse she* ll the nuuber be lass thsn three (3). ' * . * ** * . ,* - (c) The* directors shall be elected at the annual westing ? %* ft f. I-' of stockholder*, and each director shall continue in * off ice until *143 successor shall have been elected and qualified, or until his death, or until he shall rssign. or . * . ** ' " rll- it' *** 0. % <+i I shall have hoea renewed ov adequate cause. AC each election the persons receiving the greatest nusbsr of votes sh. 11 be the directors. (d) The Board of Directors shall have power to make and alter By-Laws, tub- jeer to such restrictions upon the exercise of cuch power as say be Imposed by the stockholders in any By-Laws adopted by theca from tice to tine. (e) The Board of Directors shall have power la its discretion to fix, determine, aai vary from time to time the amount to be retained as surplus, and the amount or amounts to he sot apart out of any of the funds of the cor poration available for divldeads, as working capital, or a reserve or reserves for eny proper purpose, and to abolish say such reserve in Che manner in which * it was created. (f) The Board of Directors shall have power in its discretion from time to time to determine whether sad to what extent and st Whet times sad pieces and under what conditions and regulations the hooks end accounts of the cor poration; or any of than, other than the stock ledger shall ha open to the inspection of the stockholders; and no stockholder shell here cay right to o # inspect say account or booh or document of the corporation, except oo conferred by lew or authorized by resolution of the directors or of (he stockholders. (g) Upon any sale, exchange or ocher disposer, of the property and/or assate of the eotporarlon, payment therefor may be mads either to the corpocmtxon directly to the stoektu;lders In proportion to their interests, upon in* t.-r- reader of their 'respective stoex certif icates,* wr otherwise, as the Board of d * Idricurs may determine. (h) She Board of Directors shall hive the pcoer, by resolution adopted by the affirmative voce of .a.majority of the whole Board, to appoint one or more 4 committees, including, but sot limited to, an executive cecatliCee, each coat- * Bitten to consist of two or core of the directors' of the Corporation. Any Spch committee or cosalttees, to the extent provided in the resolution or In *o the By-Laws of the Corporation or in the laws of the State of Delaware and subJset thereto, shall have and may exercise do powers of the Board of Di rsctors la ths maaagaxeat of .h* buslnsss and .affairs of tbs Corporation. o* (1) A special meeting of the stockholders, for any purpose or purposes, waless otherwise prescribed by statuco,. may ha called by the Chairman of the Board or by the President and shall he called by the President or leer?tary at the request fa writing of a majority of the Board of Directors, or the i<r request in writing of stockholders ov:nlng a majority in amount oi' tho entire capital stock of the Corporation issued and outstanding and entitle to vote. (i) Hotice of each meeting of stockholders, vfoethcr annual or special, shall, at least ten days before the day on whloh the meetins is to be held, be given to each stockholder of record entitled to vote by delivering a written or printed notice thereof to him personally, or by ailing such notice in a postage prepaid envelops addressed to him at his address as it appears on the stock books of thr Corporation; pro vided, that no notice of any character of any meet ag of stockholders need be given to any stockholder to whoa the delivery, mailing or other giving of such notice would be unlawful (either absolutely or without official license or consent) pursuant to the provisions of any law of the United States or any rule, regulation, proclamation, or executive order Issued pursuant thereto. Except as otherwise requ red by statute, no publication of any notice of a meeting of stockholders shall be required. Every notice of a special meeting of stockholders, besides stating the time and place of the meeting, shall state briefly the objects thereof. ELEVgKTi'. Whenever a compromise or arrangement la proposed between this Cor poration and Its creditore or any class of' them and/cr between thia Corporation and its stockholders or any class of then, any court of equitable Jurisdiction within the State of Delaware may, on the appllcatioa in a summary way of this Corporation or of any crodltor or stockholder thereof, or on the application of any receive, or receivers appointed for this Corporation under the provisions of Section 291 of Title $ of the Delaware Code, or on the application of trustees in diesolution or of arty receiver or receivers appointed, for this Corporation under the provisions of Section 279 of Tir:3e 8 of the Delaware Code, order a meeting of the creditors or clsss of e* creditors, and/or of the stockholder! or class of stockholders of this Corporation, as the case may he, to be summoned iu such manner as the ssld court directs. If a majority in auaber representing three-fourths la value of the creditors or class af creditors, and/or of the stockholders, or dess of stockholders of this Corpora tion, as the case nay be, agree to an/ compromise or arrangement and to any reorganlnation of thia Corporation as consequence of such compromise or arrangement, the said compromise or arrangement and the said reorganisation shall, if sanctioned by the court to which the soil application has been made, be binding on ell tlu cre ditors or class af cradltora, and/or on all tho stockholders or last.'of stockholder i this Corporation, aa the case cay he. and also on this Corporation. TVH7.TTH. So contract or other transactions between the Corporation and any ocher corporation, firs or individual shall be affected or Invalidated by the fact chat ar.y one or sore of the directors or officers of this corporation is or are iatarasced in or is a director or officer of such other corporation, or a member of such firm, sad say director or officer. Individually or Jointly, nay ho a party to or say be interested in any contract, or transaction, of this corporation or in, vhlch this corporation Is iaterestod, and no contract, act or transaction of this carpers cion with soy person or persons, firms or corporations, shall he affected or invalidated by the fact that any director or officer ef this corporation is a party to or interested in such contract, act or transaction, or in any way connected with such parson or persons, firms or corporations, and each and every parson who my beeecaa a director or officer of this corporation la hereby relieved frets say liability that might otherwise exist from contracting vith the corporation or tbs benefit of himself or any firm or corporation in which he my bo in anywise . laterosred. mathdliH. Keatings of stockholders may bo bold outside the State of Delaware, it the By-laws so provide. The books of the Corporation may be kept (subject to of provision confined is the statstea) outside the Scats of Delaware at such place or places as msy be designated from tins to tlm'by the board of Directors ar in the by-laws' of the Corporation, ti actions of directors amd w, be by ballet aaioss the by-laws of the Corporation shall so provide. PPUtimra. ihe Corporation reserves tbs right to mead, altar, cbesgs or b to|sT say proviaioa coatsload la this Certificate of Incorporation, in the maooc 'o w or v----prescribed by statute, aad all rights conferred apes stockholders * o hsrsia are granted subject to this rasorvetioa. ^ Vs, the undersigned, belag each sf the incorporators hereinbefore stand, fee the purpose of forming o corporacion pursuant to the Csmral Corporation low of a tha teats ef Dclsvrrt, do mke Ala cartifloses, hereby dotlsting sod eartlfylag that the fanes hsrsia stated ere true, sad accordingly have hereunto sot our hoods aad seals this 28th day sf January, k.. 19M. _5 !; ' . ` *. **.'' &r> .' stoe o? ^pT.rJAlMS eosm or designation of "$3 Series C Cumulative Convertible Preferred Stool., $1C Par Value** (the "Series C Preferred Stock?'), the series to consist of 20, 000 shares of the par value of Ten Dollars ($10.00) per share, of which the preferences and relative, participating, optional or other special rights, and the qualifications, limitations or res trictions thereof, shall be as follows: Cesh Dividends on Series C Preferred Stock. ' (a) The holders of the Series C Preferred Stock shall be to receive, when and ss declared by the Board at' Directors out of the hands of the Corporation legally available ' therefor, subject to the provisions of subparagraph (b), com lative cash dividends at the annual rata of $3,00 par share, payable semi-annually on the 1st day of Janaary and July In year, eonwBeing July 1, I860. Cash dividends on shares ef Sorias C Prefsrrsd Stock issued subsequent to December 31, 1067 wffll commence to accrue sad will he cumulative from Jthe dft* of their issue. If the dividend on the Series C Preferred 8toek far any dividend period shall not have been paid or set apart In full for the Series C Preferred Stock, the aggregate deficiency shall be cumulative and shall be fully paid or sat apart for payment before may dividends shall be paid upon or sat apart for the Common Stock. Accumulations of dividends on (be Series C Preferred Stock shall not boar interest. '* -1- `\ ( (to) The .Corporation may not fully pay all of the dividends due, including amount currently due and unpaid accrued dividends, on the Series C Preferred Stock unless at the same time it fully pays all.dividends due on the $50 Series B-2 Cumulative Conver- tftA* Preferred Stock, $30.00 Par Value, of the Corporation/ sometimes herein called the Series B-2 Preferred Stock. Redemption of Series C Preferred Stock. (a) The outstanding Series C Preferred Stock shall he nxleemable, in whole or in part, at the option of the Corporation at any time after December 31, 1867, at $100.00 per share, phis ' n dividends accrued and unpaid on the Series C Preferred Stock > up to the date fixed for redemption upon giving the notice herein- 4 (to) The Corporation shall redeem all outstanding shares of tbs Series C Preferred Stock on the fifth anniversary of their . of fasae, at $100 per share, phis ell dividends accrued end on the shares to be redeemed up to the date fixed for rwlampHnn. upon giving the notice as hereinafter provided. (c) if the Corporation does not, because of lack of legally available funds or for any other reason, redeem all of the' Series C Preferred Stock required to he redeemed on or before As date of redemption described in paragraph 3(b), the Corporation xaey net declare or pay a dividend on, or make e distribution with respset to, or acquire by purehast, retirement, redemption. "S!vr*V" or otherwise, any shares of its Common Stock until it has first redeemed all shares of the Series C Preferred Stock required to be redeemed under paragraph 2(b). So long as any of the Series C Preferred Stock required to be redeemed under paragraph 2(b) is outstanding, the Corporation shall on each January 1 and July 1 after the date of redemption described in paragraph 2(b), redeem all outstanding shares of Series C Preferred Stock which it is required and not prohibited by law or otherwise from redeeming. ~ (d) If the Corporation redeems less than the entire amount of Series C Preferred Stock required to be redeemed at any cm " time, the number of shares to be redeemed shall be allocated ratably among all the respective holders of all the outstanding shares of Series C Preferred Stock'required to be redeemed as of the dale Qxed for redemption so that the number of shares of Scries C Preferred Stock of each holder redeemed shall bear the same ratio to the total number of shares of the'holder required . to be redeemed. Ho fractional shares of Series C Preferred Stock shall be redeemed; the number of shares to be redeemed, based upon the aforesaid allocation shall with respect to each holder be reduced to the next lowest number of whole shares of Series C Preferred Stock. (a) If the Corporation redeems shares pursuant to paragraph (a), they shall bs redeemed f.n the manner described m \ .am t in paragraph (d) from the shares first required to be redeemed under paragraphs (b) and (c). (0 After May 15, 1969, if any shares of Series B-2 Preferred Stock are outstanding, the Corporation may not declare or pay a dividend on or make a distribution in dissolution or otherwise with respect to or acquire by purchase, retirement, redemption or otherwise any shares of Series C Preferred Stock until it has first redeemed all shares of Series B-2 Preferred Stock. to Hot less than thirty (30) nor more than sixty (60) days prior to the date fixed for redemption of the Series C Preferred . Stock or any part thereof, a notice specifying the time and place thereof will be given by mail to the holders of record of the shares of Series C Preferred Stock selected fbr redemption at their respective addresses as they appear on the stock bocks ' ,t ei the Corporation, bat failure to mail the notice or aqy`defect therein or In the mailing thereof shall not affect the validity of the proceedings for redemption. Any notice which was mailed i * , fn the meaner herein provided shall be conclusively presumed la have been duly giv*n whether or not the holder receives the notice. Upon the redemption dato, or upon such earlier date as Am Board of Directors shall designate for payment of the redemp tion price (unless the Corporation shall default in the payment of .AM redemption price as set forth In the notice), the holders of * shares of Series C Preferred Stock selected for redemption and a-fl =13--Jk- to whom notice has been duly given shall cease to be stockholders with respect to those shares and shall lave no interest In or <o?<Tn against the Corporation by virtue thereof, other than the right of the holders to exercise the privilege of conversion, if any, not theretofore expiring, and shall have no.voting or other rights with respect to the shares except the right to receive the smount payable on redemption from the Corporation, without interest thereon, upon surrender (and endorsement, if required .* by the Corporation) of the certificates, and the shares represented - thereby shall he deemed to be no longer outstanding, Seriea C Preferred Stock redeemed by the Corporation or converted into ftmwiMi Stock shall be cancelled and shall not be reissued. After the giving of any notice by the Corporation of redemption and *e 4 . prior to the close of business on the tenth day prior to the redemp tion date, as hereinafter provided, the holders of Series C Pre ferred Stock called for redemption may convert the stock into Cf--uw Stock oi the Corporation in accordance with the conver sion privileges set forth is paragraph 4. . Priority of Series C Preferred Stock in Event of Dissolution.' la the event of any liquidation, dissolution, or winding . ef lbs affairs of the Corporation, whether voluntary or otherwise, after payment or provision for payment of the debts and other liabOitiss of the Corporation and required payment to the holders of Series B-l Preferred Stock or other prior preferred stock/ the holders of the Series C Preferred Stock will be entitled to receive $100.00 per share out of the remaining net assets of the Corporation, in cash for each share held, plus an amount equal to all dividends accrued and unpaid on each share up to the date fixed for distribution, before any distribution shall he made to the holders of the Common Stock of the Corporation; available for distribution to the holders of* Series C Preferred Stock if the assets are insufficient to provide for payment of the aforesaid amounts, the assets wQl be distributed xatably per share. Upon payment of the aforesaid amounts to the holders of the Series C Preferred Stock, no farther payments will be required, and . the rights of the holders of the Series C Preferred Stock will terminate. Conversion of Series -red Stock into Common Stock. - (a) Subject teB , > sions of this paragraph 4, the holder at record of any sha^: , c* ries C Preferred Stock shall have the right, st Ms option, at aqy time after the issuance of the shares of . Series C Preferred Stock, to convert each share of Series C Pre ferred Stock into four shares of fully-paid and non-assessable Corn- seen Stock of the Corporation. The right of conversion in respect to sharas of Series C Preferred Stoek called for redemption shad ter minate at the does of business on the tenth day prior to the date fixed for the redemption, unless default shall be made in payment of the redemption price. (b) Any holder of Series C Prefexrcd Stock desiring to r K* e .m * , t convert Series C Preferred Stock into Common Stock shall surrender the certificate representing the shares of Series C Preferred Stock to be converted, duly endorsed to the Corporation or in blank, at the office of any Transfer Agent for the Series C Preferred S' :,ck or pich ether place as maybe designated by the Corporation, and shall give written notice to the Corporation at. its office that he elects to convert the shares, and setting forth the name or names (with the address or addresses) in which the a shares of Common Stock are to be issued. If the last day for exer- * else at the conversion right in the city of the principal place of business o: any Transfer Agent for the Series C Preferred Stock (or in the city of the principal office of such other entity as the . Corporation shall have designated as the place to surrender Series C Preferred Stack for conversion) to a legal holiday, the conversion sight may he exercised in the city on the next succeeding business d*y. (c) Conversion of Series C Preferred Stock shall be . subject to tbs following terms: % v (1) As promptly as practicable after Series C Preferred Stock to surrendered ter conversion, the Corpora tion shall cause to he delivered at the principal r 'ice of any Transfer Agent for the Series C Preferred Stock (or such other place as may be designated by the Corporation), to *1 ' ' or upon the written order of the holder of the Series C Preferred Stock, certificates representing the shani s of Common Stock issuable upon the conversion, issued in. the name or names directed by the holder, and cash !n respect to any fraction of a share as provided in subparagraph (3) below. Shares ofjihe Series C Preferred Stock-will be deemed to have been converted as of the d. je of business *p. car the date of surrender of the Series C Preferred Stock 1 " ' lor conversion, as provided above, and the rights of the holder of the' Series C Preferred Stock shall ceasA at that time, and the person or persons hi whose name or names (he certificates for the Common Stock are to be issued shall be treated for ell purposes as having became the record bolder or holders of the Common Stock at that time; provided If the surrender is on a date when thp stock transfer books vt the Corporation are closed, the person or persons in whose name or names the certificates for Common Stock are to be issued shall be deemed the record bolder or holders thereof comm :ncing at the close of business on the next day on which the irtcck transfer books are open. (2) The Corporation shall make no payment or adjust ment on account of any dividends accrued on shares of Series C Preferred Stock surrendered for conversion. (3) The Corporation shall not be required to issue 1 any fractions of shares of Common Stock upon conversion of . Series C Preferred Stock. The number of full shares of Common Stock which are issuable to each holder upon con version of shares of Series C Preferred Stock will, be computed on the basis of the aggregate number of shares of Series C Preferred Stock surrendered by the holder. If any interest in a fractional share of Common Stock would otherwise be deliv erable upon the conversion of Series C Preferred Stock, the Corporation shall make adjustment for the fractional share . interest hy payment of an amount in cash equal to the same fraction of the market price of a full share of Common Stock of the Corporation. The market price of a share of Common. Stock shall be the mean between the high and low selling price' of the Common Stock on the largest exchange on which the Common Stock is trading on the date of conversion of the Series Preferred Stock (4) If the Corporation subdivides or combines into a greater or lesser number of shares the outstanding shares of. Common Stock, the number of shares of Common Stock issuable upon conversion of the Series C Preferred Stock . shall be proportionately Increased in the ease of a subdivision, aaddecreased In the case of a combination, effective In either esse at the close of business on the date when such subdivision or combination bee omes effective. (5) . If the Corporation is recapitalized, consolidated with or merged into any other corporation, or sells or conveys to any other corporation substantially all of Us property, pro* vision shall be made as part of the terms of the recapitalization, consolidation, merger, sale or conveyance so +H%t a holder of Series C Preferred Stock may thereafter receive In lieu of the Common Stock otherwise issuable 'c> him upon conversion of Us Series C Preferred Stock, the same kind and amount of securities or assets as arc distributable upon the recap!tali- , * * *% cation, consolidation, merger, sale or conveyance, udth respect to the Common Stock of the Corporation at the appli- . . eablo conversion rate hereun der. t *t 1 , () If the Corporation shall at any time pay to tha < holders of Common Stock s dividend In Comm on Stock or split ,* < , its Common Stock, tbs number of shares of C mracc Stock Issuable upon conversion of toe Series C Preferred Stock shall be proportionately increased, effective at the dose of business on the record date for determination of the holders of Common Stock entitled to such dividend. ..... (7) No adjustment of the conversion ratio shall be - made by reason of any declaration or payment to the holders * t % I*- . e the Common Stock of the Corporation of a dividend or distribution payable in any property or securities other than Common Stock, any redemption of the Common Stock, mnj- issuance of any securities convertible into Common Stock, or for any other reason, except as expressly provided herein. (8) The Corporation shall at all times reserve and keep available solely for the purpose of issue upon conver sion of Series C Preferred Stock, as herein provided, such number of shares of Common Stock as shall be issuable upon the conversion of. all outstanding Series C Preferred Stock. (d> The issuance of certificates for shares of Common BiyW upon conversion of the Series C Preferred Stock shall be without charge for any tax. If any certificate la to issued in ansae other than that of the bolder of record of the Series C Pre fined Stock converted, the peraon or persons requesting the issuance thereof shall pay to the Corporation the amount of any tax which may be payable in. respect of any transfer involved in such issuance, or shall establish to tbs satisfaction of the Corporation that the tax' has been paid or is not due and payable. - Toting Bights. At every meeting of stockholders of the Corporation,' every header of Series C Preferred Stock shall be entitled to one vote for sash share of Series C Preferred Stock standing In his name on the -.It -  : V books of the Corporation, -with the same and identical voting right*, except as expressly provided herein, as a holder of a share of Common Stock. IN WITNESS WHEREOF, Sahara Industries, Inc. has caused Its corporate seal to be hereunto affixed and this certificate to be signed by Joseph F. MeKinney, its President, and Neil J, O'Brien, its Secretary, this day of December, 10S7. SATURN INDU3TRI INC, resident NeilJ. CHBrien, Secretary - THE STATE OF TEXAS > COUNTS' OF DALLAS ) BN IT REMEMBERED day of December, 1967, personally ceme Wot* tOa^y^Ay^ Or/4/i^/a Votary Public * " // Jb and for (he County and State aforesaid, JOSEPH P. /McIONNEY, President id Saturn Industries, Inc., a corporation of the State of Delaware, the corpo ration described in and Which executed the foregoing certificate, known to ase personally to be such, and he, tb said JOSEPH F. KcXStNEY, as such President, duly executed Urn certificate before me end acknowledged tha said certifioato to be Ms act and dsad and the act and deed of said corporation; that 7* . >3J V# the signatures of the said President and of the Secretary of said corporation to said foregoing certificate are in the handwriting of the said President and Secretary of said corporation, respectively, and that the seal affixed to said certificate is the common or corporate seal of said corporation. IN WITNESS WHEREOF, I have hereunto set xny'hand and seal of office the day and year aforesaid. 3*/ 14 * ,1 / CERTIFICATE OF AMENDMENT : .1 .of CERTIFICATE OF INCORPORATION of SATURN INDUSTRIES, INC. (Pursuant to Section 242 of Title 8, Chapter 1 of the Delaware Code of 1853) Saturn Industries, Inc. (hereinafter called the ''corporation"), a corporation organized and existing under and by virtue of the provisions of an Act of the General Assembly of the State of Delaware entitled "An Act Providing a General Corporation Daw", approved March 10, 1888, and the Acts amendatory thereof and supplemental thereto, the Certificate of Incorpora tion of which was filed in the Office of the Secretary of State of Delaware on January'28, 1868, and recorded in the Office of the Recorder of Deeds for New Castle County, State of Delaware, on January 28, 1886, does hereby certify: FIRST: That, it appearing by the Certificate of the Judges appointed for the purpose of conducting the Annual Meeting of Stockholders of the above corporation held on the 23rd day of April, A.D. 1868, in the City of Dallas, State of Texas, at 10:00 o'clock in the forenoon for the consideration of the amendment hereinafter set forth, and the vote of the stockholders for and against the adoption of said amendment, that the persons or bodies corporate bolding the majority of the voting power of the issued and outstanding voting stock of said corporation have voted in favor thereof, and that the persons or bodies corporate holding at least a majority of the issued and outstanding Cbmmon Stock, $0.10 par value, voting as a class, have voted in favor thereof, the following amendment to the Certificate of Incorporation of the above corpora tion was duly adopted in accordance with the provisions of Section 242 of the General Corporation Law of the State of Delaware, as amended: Article Fourth is amended to hereafter read as follows: "FOURTH. Thic Corporation b authorized to Inue cloven million share* of capital stack. Tea Bullion (10,000,000) ol the authorized -hare* shall ba common atock, ten cents (80.10) par value each, and one million (1,000,000) of the eatbnrizad riians shall be preferred atock, ten dollar* ($104)0) par valut each. Bad* holder of both classes of capita! atock shall at every meeting of th# stock holders be entitled to one (1) vote in person or by prosy lor each share of the oqpilal ilnrtr hnlri by the ahaichotdcr. 33 i Shares of preferred stock may he issued from lime to time in one or more series, cadi such series to have such distinctive designation or title as may be fixed by the Board at Directors prior to the issuance of any shares thereof. Subject to the preceding paragraph, each such scries sliall have such voting powers and tech pref erences and relative, participating, optional or other special rights, with such qualifi cations, limitations, or restrictions of such preferences and/or rights as shall be stated in the resolution or resolutions providing for the issue of such series of preferred stock, as may be adopted from time to time by the Board of Directors prior to the issuance of any shares thereof, in accordance with the laws of the State of Delaware. Bach share of any series ot preferred stock shall be identical with all ether shares of such series, except as to the date from which accumulated preferred dividends, if any, shall be cumulative. Ho stockholder of this Corporation shall by reason of his holding shares of any >l have any pre-emptive or preferential right to purchase or subscribe to any 'abases of any class of the Corporation, now or hereafter to be authorized, or any notes, debentures, bonds, or other securities convertible into or carrying warrants or'options to purchase shares of any doss, now or hereafter to be authorized, whether or not the issuance of any such shares or such notes, debentures, bonds, or other securities would adversely affect the dividend or voting rights of such stockholder, other than such rights, if any, as tho Board of Directors, in its discre tion, may fix; and the Board of Directors may issue shares of any class of this Corporation, or any rotes, debentures, bonds, or other securities convertible into or carrying options or warrants to purchase shares ot any class, without ottering any such shares ot any class, eitherin whole or in part, to the existing stockholders owaf a"Vny clas1 s." ,,^ BECOHD: The capital of the corporation will not be reduced under or by reason of this amendment. IN WITNESS WHEREOF, the said Saturn Industries, Inc. has caused Its corporate seal to be hereunto affixed and this Certificate to be signed by C. A. Rundell, Jr., its Executive Vice President, and Neil J. O'Brien,. Its Secretary this 30th day of April, A.D., 1969. CCtftpSgEUCSXB) SATURN INDUSTRIES, IHC. CORPORATE SEAL DELAWARE 195$. SATURN INDUSTRIES. INC. By O.A. t C. A. Rundell, Jr., Executive Vice President m THE STATE OF TEXAS 1 I COUNTY OF DALLAS I Be it remembered that on the 50th day of April, A. D., 1969 personally came before me f)*t a Notary Public in and for the County andictate aforesaid, C. A. Rundell, Jr., Executive Vice President of Saturn Industries, Inc., a corporation of the State of Delaware, the corporation' described in and which executed the foregoing Certificate, known to me personally to be such, and he. the said C. A. Rundell, Jr., such Executive Vice President, duly executed said Certificate before me and acknowledged the said Certificate to be bis act and deed and the act and deed of said corporation and further acknowledged that the facts contained therein are true; that the signatures of the said Executive Vice President and Secretary of said Corporation to said foregoing Certificate are in the handwriting of the Baid Executive Vice President and Secretary, respectively,' and that the seal affixed to said Certificate Is the common or corporate seal of said corporation. IN WITNESS WHEREOF, I have hereunto set my hand and seal of office the day and year aforesaid. OBBTOBgieear. commission expires June 1. 1969 NOTARY PUBLIC COUNTY OF DALLAS, TEXAS February 26, 970 10:06 A.M. CERTIFICATE OK AMENDMENT of CERTIFICATE OF INCORPORATION of SATURN INDUSTRIES. INC. (Pursuant to Section 242 of Title 8. Chapter 1 of the Delaware Code of 1953) Saturn Industries, Inc. (hereinafter called the "corporation"), a corporation organized and existing under and by virtue of the provisions of an Act of the General Assembly of the State of Delaware entitled "An Act Providing a Ceneral Corporation Law", approved March 10, 1888, and the Acts amendatory thereof and supplemental thereto, the Certificate of Incorporation of which was filed in the Offico of the Secretary of State of Delaware on January 28, 1966, and recorded in the Office of the Recorder of Deeds for New Castle County, Stale of Delaware, on January 28, 1966, docs hereby cc 'Ify: FIRST: That, It appealing ty the Certificate of the Judges appointed for the purpose of conducting tne Special Meeting of Stockholders of the above corporation held on the 2Sth day of February, A. D., 1970, in the City of Dallas, State of Texas, at 10:00 o'clock In the forenoon for the consideration of the amendment hereinafter set forth, 'and the vote of the stockholders for and against the adoption of said amendment, that the persons or bodies corporate holding the majority of the voting power of the issued and outstanding voting stock of said corporation have voted in favor thereof, the following amendment to the Certificate of Incorporation of the above corporation was duly adopted in accordance with the provisions' of Section 242 of the General Corporation Law of the State of Delaware, as amended: Article First Is amended to hereafter read as follows: "FIRST; The name of the Corporation la TYLER CORPORATION." flRCOKD: The capital of the corporation w 111 not be reduced under or by reason of said amendment to Article FOURTH. / IN WITNESS WHEREOF, the said Saturn Industries, Inc. has caused Its corporate seal to be hereunto affixed and this Certificate to be signed by Joseph F. McKinney, its President and Neil J. O'Brien, its Secretary, this 25th day of February, A. D., 1970. By. Brien, Secretary [ Corporate Seal] THE STATE OF TEXAS COUNTY OF DALLAS ) Be It remembered that on this 25th day of February, A. D., 1970, personally came before me. Public in and for the County and State aforesaid, JOSEPH F, McKINNEY, President of Saturn Industries, Inc., a corporation of the State of Delaware, the corporation described In and which executed the foregoing Certificate, known to me personally to be such, and he, the said JOSEPH F. M< KINNEY, as such President, duly executed said Certificate before me and acknowledged the said Certificate to be his act and deed ant5 the act and deed of ;aH corpo ration, and further acknowledged that th* facts contained therein are true; that the signatures of the said President and Secretary of said Corporation ; to said foregoing Certificate are In the handwriting of the said President and Secretary, respectively, and that the seal affixed to said Certificate Is the common or corporate seal of saL! corporation. IN WITNESS WHEREOF, I have hereunto set my hand and seal of office the day and year aforesaid. (Notarial Seal] .A., FjO/Hiy cptiuivtiBsion expires fj/ 'June 1, .-.Tit '-FV ,/c?/ 'V4* Notary Public in and forDallas County, Texas CERTIFICATE OF THE PURCHASE OF SHARES OF $3 SERIES C CUMULATIVE CONVERTIBLE PREFERRED STOCK, S10 PAR VALUE, OF TYLER CORPORATION (Pursuant to Section 243 of the General Corporation Law of the State of Delaware:- TYLER CORPORATION, hereinafter called the "Corporation", a corporation organized and existing under the General Corporation Law of the State of Delaware, does hereby certify that: 1. Pursuant to authority conferred on the Board of Directors by the Certificate of Incorporation, as amended, of the Corporation, and pursuant to the provisions of Section 151 of the Gei *ral Corporation Law of the State of Delaware, said Board of Directors, at a meeting duly held on December 20, 1967, duty adopted a resolution (the "December 20, 1967 Resolution") providing for the Issuance of a series of 20, COO shares of the preferred stock, $10 par value, designated as $3 Series C Cumulative Convertible Preferred Stock, $1G Par Value (the "Series C Preferred Stock"). The December 20, 1967 Resolution further provided that upon redemption or conversion of Series C Preferred Stock in the manner set forth therein,. Series C Preferred Stock so acquired by the Corporation shall be cancelled and shall not be reissued. The De< ember 20, 1967 Resolution is set forth in the Certificate of the Designation, Preferences, Rights and Limiiiiions of the Series C Preferred Stock, (the "Designation Certificate"), which was filed in the Office of the Secretary of State of the State of Delaware acd recorded in the Orfice of the Recorder of New Castle County, Delaware on December 22, 1967, as required by Section 151 of the General Corporation Law of the State of Delaware. \ 2. Since the December 20. 196? Resolution was adopted by the Board " of Directors and ihe Designation Certificate setting forth the December 20, 1937 Resolution wp.j filed and recorded as aforesaid, an aggregate of 17,592 shares of Series C Preferred Stock hav? been issued to date by the Corporation. S. On December 12, 1272, 7,614 of the issued and outstanding shares of Se C Preferred Stock not theretofore converted into Common Stock of the Corporation or redeemed were purchased by the Corporation for a per share consideration in excess of the ,'<*r share par value of the Series C Preferred Stock; such shares were purchased to the extent of $10 per share out of the capital of the Corporation. Accordingly, the capital of the Corporation was reduced by the aggregate amount of $ 76,140.00. The assets of the Corporation remaining after such reduction of capital were sufficient to pay any debts of the Corporation, the payment of which was not otherwise provided. 4. Pursuant to Section 151 of the General Corporation Law of the State of Delaware and not contrary, tc the provisions contained In the December 20, 1967 d Resolution, which provide that only shares oi Series C Preferred Stock converted into Common Stock or redeemed by tSu Corporation shall be cancelled and shall 2 not be reissued and contain no restrictions on the reissuanco of -hares of Series C Preferred Stock purchased by the Corporation, such 7,6X4 shares of Series C Preferred Stock so purchased shall, upon the filing of this Certificate In the Office of the Secretary of State of the State of Delaware and the recording of this Certificate in the Office of the Recorder of New Castle County, Delaware, have the status of authorized and unissued shares of preferred .stock, $10 par value, of the Corporation and the number of shares of preferred stock, $10 par value, or the Corporation designated as Series C Preferred Stock shall accordingly be reduced by the 7,614 shares so purchased by the Corporation. IN WITNESS '.VHEREOF, TYLER CO.RP ORATION has caused its corporate eal.to be hereunto affixed and this Certificate to be signed by Frederic* R. Keycr Its Vice President . and Nell j. O'Brien, its Secretary, this 26th day of December, 1972., ` TYLER CORPORATION Nell J. ff'tUicn, Secretary fCerporace Seal] CERTin-'ATE OF THE CONVERSION ANT) RETIREMENT OF SHARES OF S3 SERIES C CUMULATIVE CONVERTIBLE PREFERRED STOCK. $10 PAR VALUE, OF TYLER CORPORATION (Pursuant to Section 243 of the General Corporation Law of the State of Delaware) TYLER CORPORATION, hereinafter called the 11 Corporation", a corporation organized and existing under the General Corporation Law of tie Stale of Delaware, does hereby certify that: 1. Pursuant to authority conferred on the Board of Directors by the Certificate of Incorporation, as amended, of the Corporation, and pursuant to the provisions of Section 151 of the General Corporation Law of the State of Delaware, said Board of Directors, at a meeting duly held on December 20, 1961, duly adopted a resolution (the "December 20, 1967 Resolution") providing for the issuance of a series of 20,000 shares of the preferred stock, $10 par value, designated as $3 Series C Cumulative Convertible Preferred Stock, $10 Far Value (the "Series C Preferred Stoek"). T*,a December 20, 1907 Resolution further provided that upon redemption or conversion of Series C Preferred Stoek in the manner set forth therein,. Series C Preferred Stock so acquired by the Corporation shall be cancelled, and shall not be reissued. The December 20, 1907 * Resolution is st forth in the Certificate of the resignation. Preferences, Bights 4 and Limitations of the Series C Preferred Stock, (the "Designation Certificate"), which was filed in the Office of the Secretary of State of the State of Delaware and recorded in the Office of the Recorder of New Castle County, Delaware on December 22, 1967, as required by Section 151 of the General Corporation Law of the State of Delaware. 2. Since the December 20, 19S7 Resolution war adopted uy the Board cf Directors and the Designation Certificate setting forth the December 20, 1967 Resolution was filed and recorded as aforesaid, an aggregate of 17,592 shares of Series C Preferred Stock have been issued to date by the Corporation. 3. Daring the period beginning immediately following the date of initial issuance of the shares of Series C Preferred Stock and ending at the clone of business on December 10, 1872, an aggregate of 7,978 shares of Series C Preferre Stock had been duly converted, from time to time, into an aggregate of 31,912 shares of Common Stock, $0. 10 par value, of the Corporation, as provided in the December 20, 1987 Resolution. A ccordingly, pursuant to a resolution duly adopted by the Board of Directors of the Corporation, the capital of the Corporation was reduced to the extent of the difference between the aggregate par value ot the 7,978 shares of Series C Preferred Stock so converted sad the aggregate par value of the31, 912 shares of Common Stock Issued on such conversion, being an aggregate reduction of capital of $70,588.80. The assets of the Corporation remaining after such reduction of capital were sufficient to pay any debts of the 2' Corporation, the payment of which was not otherwise provided. 4. Pursuant to the December 20, 1967 Resolution such 7,978 shares of Series C Preferred Stock so converted into Common Stock were cancelled by virtue of the provisions contained in the December 20, 1967 Resolution to the effect that upon conversion such shares of Series C Preferred Stock shall be cancelled and shall not be reissued. Accordingly, the authorized preferred stock, $10 par valuu, of the Corporation was reduced to tbe extent of the aggregate par value of such 7,978 ' shares of Series C Preferred Stock. IN WITNESS WHEREOF, TYLER CO.RPORATION has caused its corporate seal to be hereunto affixed and this Certificate to be signed by Frederick R. Meyer its Vice President , and Neil J. O'Brien, Its Secretary, this 26th day of , December, 1972. TYLER CORPORATION BY. ________ _ --------------------- Frederick R. Meyer, y-ice President (Corporate Seal) CERTIFICATE OF THE REDEMPTION AND RETIREMENT OF SHARES OF S3 SERIES C CUMULATIVE CONVERTIBLE PREFERRED STOCK. S10 PAR VALUE, OF TYLER CORPORATION (Pursuant to Section 243 of the General Corporation Law of the State of Delaware) TYLER CORPORATION, hereinafter called the "Corporation", a corporation organized and existing under the General Corporation Law of the State of Delaware, does hereby certify that: 1. Pursuant to authority conferred on the Board of Directors by the Certificate of Incorporation, as amended, of the Corporation, and pursuant to the provisions of Section 151 of the General Corporation Law of the State of Delaware, said Board of Directors, at a meeting duly held on December 20, 1967, duly adopted a resolution (the "December 20, 1967 Resolution") providing for the issuance of a series of 20, 000 shares of the preferred stock, $10 par value, designated as $3 Series C Cumulative Convertible Preferred Stock, $10 Par Value (the "Series C Preferred Stock"). The December 20, 1967 Resolution farther provided that upon redemption or conversion of Series C Preferred Stock in the manner set forth therein. Series C Preferred Stock so acquired by the Corporation shall be cancelled and shall not be reissued. The December 20, 1967 Resolution is set forth in the Certificate of the Designation, Preferences, Rights and Limitations of the Scries C Preferred Slock, (the ' Designation Certificate"), which was filed in the Office of the Secretary of State of the State of Delaware and recorded in the Office of the Recorder of New Castle County, Delaware on December 22, 1967, as required by Section 151 of the General Corporation Law of the State of Delaware. 2. Since the December 20, 7.967 Resolution was adopted.by the Board of Directors and the Designation Certificate setting forth the December 20, 1967 Resolution was filed and recorded as aforesaid, an aggregate of 17, SS2 shares of Series C Preferred Stock have been issued to date by the Corporation. 3. On December 20, 1972, an aggregate of 2000 shares of Series C Preferred Stock, being all of the issued and outstanding shares of Series C Preferred Stock not theretofore converted into Common Stock or purchased by the Corporation, were redeemed by the Corporation at the per share redemption priee set forth in the December 20, 1967 Resolution, plus accrued and unr*id dividends to the date of redemption; such shares were redeemed to the extent of $10 per share out of the capital of the Corporation. Accordingly, the capital of the Corporation was reduced by the aggregate amount of $ 20,000.00. The assets of the Corporation remaining after such reduction of capital were sufficient to pay any debts of the Corporation, the payment of which was not otherwise pro- m vided. 4 -2- . 4. Pursuant to the December 20, 1967 Resolution, such shares of Series C Preferred Stock so redeemed were cancelled by virtue of the provisions contained in the December 20, 1967 Resolution to the effect that upon redemption such shares shall be cancelled and shall not be reissued. Accordingly, the sutborized preferred stock, $10 par value, of the Corporation was reduced to the extent of the aggregate pax value of such 2,000 shares of SerHfs C Preferred Stock. IN WITNESS WHEREOF, TYLER CORPORATION has caused Us corporate seal to be hereunto affixed and this Certificate to be signed by Frederick R. Meyer Its Vice President , and Neil J. O'Brien, Its Secretary, this 26th day of December, 1872, * TYLER CORPORATION Frederick R. Meyer j/V;ice President (Corporate Seal] -3- CERTIFICATE OF DECREASE OF NUMBER OF SHARES OP THE SERIES OF PREFERRED STOCK, $10 PAR VALUE DESIGNATED AS THE $3 SERIES C CUMULATIVE CON VERTIBLE PREFERRED STOCK, SIC PAR VALUE OF TYLER CORPORATION Lsuant to Section 1S1 cf the General Corporation Law of the State of Delaware) TYLER CORPORATION, hereinafter called the "Corpora tion", a corporation organized and existing under the General Corporation Law of the State of Delaware, does hereby certify that, pursuant to authority conferred upon the Board of Direc tors by the provisions of Section 151 of the General Corpora- tion Law of the State of Delaware, said Board of Directors, at a Meeting duly held on December 26, 1972, duly adopted a resolu tion authorizing and directing the decrease of the number of shares of the series of preferred stock, $10 par value, of the Corporation designated as the $3 Series C Cumulative Convertible. Preferred Stock, $10 Par Value, by 2,408 shares, fron 2,403 shares fee no shares, which resolution is as follows* WHEREAS, this Board of Directors at a meeting held on December 20, 1967 adopted a resolution providing for the issuance of a series of 20,000 shares of Preferred Stock, $10 par value, which was designated ns $3 Series C Cusuletive Convertible Preferred Stock, $10 Par Value (the "Series C Preferred Stock"), said resolution baing set forth in a certificate of the designation, prefer ences, rights and liiaitationc of the Series C Preferred Stock, dated Deeenber 2C, 1967, which was filed in the Office of the Secretary of State of the State of Dela ware and recorded in the Office of the Recorder of New Castle County, Delaware on December 22, 1967) and I VttEREAS, an aggregate of 17,592 shares of Series C pref 'rred Stock have been issued to date by the Company, of w;.ich an aggregate of 9,978 shares have been can celled and may not be reissued, and an aggregate of 7#614 r'-ares have been purchased by the Corporation and aire no nger outstanding and upon the filing and recording of the c -tificats of purchase of shares of Series C Pre ferred Stock, he^ai naf- 'T referred to, the purchased shares wil have ins status of authorized and unissued shares o.; Preferred Stock, $10 par value, of the Com pany, air. as set forth and described in the certificate of conversion, certificate of purchase and certificate of redemption relating to the shares of Series C Pre ferred Stock, eat dated as of December 26, 1972 and filed in the Offi. ; of the Secretary of State of Dela ware and recorded in the Office of the Recorder of New Castle County, Delaware; MOW, THEREFORE, BE IT PESOLVED, that the number of authorized shares of the series of Preferred stock $10 par value, designated as $3 Series C Cumulative Convert ible Preferred Stock, $10 Par Value, as set forth in the resolution of this Board of Directors adopted at its meeting held on December 20, 1967, as reduced by the certificate of conversion, certificate of purchase and certificate of redemption relating to the shares of Series C Preferred Stock referred to above, be and it hereby is authorized and directed to be decreased by 2,408 shares, from 2,408 shares to no shares; that such 2,408 shares by which the number ofauthorized-shares of .Series C Preferred Stock has been so decreased fee re turned to the status of authorized but unissued and un designated shares of Preferred Stock, $10 par value, of the Company. IN WITNESS WHEREOF, TYLER CORPORATION has caused its cor porate seal to be hereunto affixed and this Certificate to he signed by Frederick R. Meyer, its Vice President, amd attested by Neil J. O'Brien, its Secretary, this 26th day of December, 1972. TYLER {CORPORATION ' // (Corporate Seal] -2 #' CERTIFICATE OF AMENDMENT OF CERTIFICATE OF INCORPORATION OF TVT.RR CORPORATION Tyler Corporation/ a corporation duly organized and existing vidar and by virtue of the General Corporation Law of the State of Delaware (the "Corporation"'), DOES HEREBY CERTIFY: FIRST: That the Board of Directors of the Corporation# acting at a regular meeting duly called and held on February 2, 1977, adopted resolutions <i) setting forth the proposed anendnent to Article Fourth of the Certificate of Incorporation, (ii) declaring the advisability of amendment and (iii) directing that such amendment be submitted for consideration by the stockholders at the Annual Meeting of Stock holders to be held April 20, 1977* ' SECOND: Shat thereafter, pursuant to resolution of its Board of Directors, the Annual Meeting of Stockholders of the Corporation mas duly called and held on April 20, 1977, at which nesting holders of a majority of the outstanding shares of capital stock of the Corporation entitled to veto on the proposed amandaest voted in favor of the fol lowing anandnant to the Caxtificata of Incorporation of the Corporation: i Article fourth is amendad to hereafter read as follows: . H;\' <TH. This Corporation is authorized o issue twenty mil ioi nine hundred ninety thousand and twenty two (20,990,022/ shares of capital stock. Twenty million (20,000,000) of the authorized shares shall be common stock, ten cents ($0.10) par value each, and nine hundred ninety thousand and twenty two (990,022) of the authorized shares shall be preferred stock, ten dollars ($10.00) par value each. Each holder of both classes of capital stock shall at every meeting of the stockholders be entitled to one (1) vote in person or by proxy for each share of the capital stock held by the stockholder. Shares of pr< erred stock may be issued from time to time in one or more seri i, each uuch series to have such distinctive designation or itle as nay be fixed by the Board of Directors prior to the , uance of any shares thereof. Subject to the preceding parraph, each such series shall have such voting powers and su - preferences and relative, participating, optional or other special rights, with such qualifications, limitations, or restrictions of such preferences and/or rights as shall be stated in the resolution or resolutions providing for the issue of such series of preferred stock, as may ba adopted from tine to time by the Board of Directors prior to the issuance of any shares thereof, in accordance with the laws of the State of Delaware* Each share of any series of preferred stock shall be identical with all other shire3 of such series, except as to the date from \ich accumulated preferred dividends, if any, shall be cuaulati ... No stockholder of this Corporation shall by reason of his holding shares of any class have any pre-emptive or preferential right to purchase or subscribe to any shares of any class of the Corporation, now or hereafter to be authorized, or any notes, debentures, bonds, or other securities convertible Into or carrying warrants or options to purchase shares of any class, now or hereafter to be authorized, whether or not the issuance of any such shares or such notes, debentures, bonds, or ether securities would adversely affect tie dividend or voting rights of such stockholder, other than such rights, if any, as the Board of Directors, in its discretion, may fix; and the Board of Directors may issue shares of any class of this Corporation, or *!'/ notes, debentures, bonds, or other securities convertible intc . c carrying options or warrants to purchase shares of say class, without offering any such sharen of my class, either in. whole or in part, to the existing stockholders of any class." THIRD* That such amendment was duly adopted in accordance with the provisions of Section 242 of the General Corporation iav of the State of Delaware. -2- * FOURTH: That the capital of the Corporation will not be reduced uri&ez ,r by reason of such amendment. IN WITNESS WHEREOF, Tyler Corporation has caused its corporate seal to be hereunto affixed and this Certificate to be signed by J, S', McKinney, its President, and attested by Neil J. O'Brien, its Secretary, this 22nd day of April, 1977. ICorporate Sea*.j ATTEST: i 'Liisrfs' Brian, Secretary S o'-u V tf*i- k STATE OF DELAWARE OFFICE OF SECRETARY OF STATE I, CLEW) C. KENTON, Secretary of State of the State of Delaware, do hereby certify that the above and foregoing pages numbered from 1 to 29, both numbers inclusive, is a true and correct copy of Certificate of Incorporation of the "SATURN INDUSTRIES. INC.", as received and filed in this office the twenty-eighth day of January, A.D. 1966, at 10 o'clock A.H., as amended and in effect May 4, 1969; And I do hereby further certify that the above and foregoing pages numbered froa 1 to 3, both numbers Inclusive, is a true and correct copy of Certificate of Amendment of the "SATURN INDUSTRIES, INC.", as received and filed In this office the fifth day of May, A.D.'1969, at 10 o'clock A.M.; And I do hereby further certify that the above and foregoing pages numbered from 1 to 2, both numbers inclusive, is a true and correct copy of Certificate of Amendment of the "SATURN INDUSTRIES, INC.", as received and filed in this office the twenty-sixth day of February, A.D. 1970, at 10:06 o'clock A.K.; And I do hereby further certify that the above end foregoing pages numbered froa 1 to 3, both numbers inclusive, is a tTue and correct copy of Certificate of Purchase of Shares of $3 Sexles C Cumulative Convertible Preferred Stock of the "TYLER CORPORATION", as received and filed in this office the sixteenth day of February, A.D. 1973, at 10 o'clock A.M.: And 1 do hereby further certify that the above anJ foregoing pages numbered from 1 to 3, both umbers inclusive, is a true and correct copy of Certificate of the Conversion and Retirement of Shares of $3 Series C Cumulative Convertible Preferred Stock of the "TYLER CORPORATION", as received and filed in this office the sixteenth day of February, A.D. 1973, at 10 o'clockA.M.; And T do hereby further certify chat the above and foregoing pages numberd from 1 to 3, boch numbers inclusive, is a true and correct copy of Certificate of the Redemption and Retirement of Shares of $3 Series C Cumulative Convertible Preferred Stock of the "TYLER CORPORATION", as received and filed in this office the sixteenth day of February, A.D. 1973, at 10:05 o'clock A.M.; And I do hereby further certify that the above and foregoing pages numbered from 1 to 2, both numbers inclusive, la a true and correct copy of Certificate of Decrease of $3 Series C Cumulative Convertible Preferred Stock of the "TYLER CORPORATION", as received and filed in this office the sixteenth day of February, A.D. 1973, at 10:10 o'clock A.H, And I do hereby further certify that the obowe and foregoing pages numbered /com 1 to 3, both numbers inclusive. Is e true -nd correct copy of Certificate of Amendment of the "TYLER CORPORATION", as received and filed in this office the twenty-eighth day of April, A.D. 1977, at 10 o'clock A.H. ' 5U fytalr nf Bflmnon f- IN J. Dugan, Jr. Macmdataf tWi An fhm Goad* Caaatj, f>ri--rr. fawty eartfr tiat Cartifad Capj *1 Certlflc>ce of Aaemtaent of Che "Tyler Corporation" mm nettaai far raeati m dda aiea am May 16. 1979 aad dm mm* affian aj raeati m dm Mataritr'i Ofiea fat mU Caamty. Wtmammjiaai May OfkU3*d,*b Sixteenth JLD. 1979 " iff O' Cs Macmiar. 5*+ CERTIFICATE OF AMENDMENT OF CERTIFICATE OF INCORPORATION OF TYLER CORPORATION Tyler Corporation, a corporation duly organized and ex isting under and by virtue of the General Corporation Lav. of the State of Delaware (the `Corporation"), DOES HEREBY CERTIFY: FIRST: That the Board of Directors of the Corporation, acting at a regular meeting duly called and held on February 1, 1979, adopted resolutions (i) setting forth the proposed amend ment to Article Fourth of the Certificate of Incorporation, (li) declaring the advisability of such amendment and (iil) directing that such aaendnent be submitted for consideration by the stock holders at the Annual Heeting of Stockholders to be .held-April 18, 1979. feCONDi That thereafter, pursuant to resolutions of the Corporation's Board of Directors, the Annual Heeting of Stock holders of the Corporation vss duly celled and held on April 18, 1979, at which meeting holders of a majority of the outstanding shares of capital stock of the Corporation entitled to vote on the proposed amendment votod in favor of the following amendment to the Certificate of Incorporation of the Corporations Article Fourth is amended to hereafter read as followst a "FOURTH. This Corporation is authorised to iasue thirty million nine hundred ninety thousand and tventy-tvo (30,990,022) shares of capital stock. Thirty million (30,000,000) of the authorized shares shall be common stock, ten cents ($0.10) par value each, and nine hundred ninety thousand and tventy-tvo (990,022) of the authorized shares shall be preferred stock, ten dollars ($10 JO) ptr value each. Each bolder of both classes of capital stock shall at every meeting of the stockholders be entitled to one (1) vote in person or by proxy lor each share of the capital stock held by the stockholder. Shares of preferred stock nay be issued from tine to tine in one or more series, each such series to have such distinc tive designation or. title es nay be fixed by the Board of Directors prior to the issuance of any shares thereof. Subject to the pre ceding paragraph, each such series shall have such voting powers and such preferences and relative, participating, optional or other special rights, with such qualifications, liaitations, or restric tions on such preferences and/or rights as shall be stated in the resolution or resolutions providing for the issue of such series of preferred stock, as nay be adopted from tine to time by the Board of Directors prior to the issuance of any shares thereof, in accordance with the laws of the State of Delaware. Each share of any series of preferred stock shall be identical with all other shares of such series, except as tc the'date fron which accumulated preferred dividends, if any, shall be cumulative. No stockholder of this Corporation shall by' reason of his holding shares of any class have any pre-emptive or preferen tial right to purchase or subscribe to any shares of any class of the Corporation, now or hereafter to be authorized, or any notes, debentures, bonds or other securities convertible into or carrying warrants or options to purchase shares of eny class, now or here after to be authorized, whether or not the issuance of any such shares or such notes, debentures, bonds or other securities would adversely affect the dividend or voting rights of such stockholder, other than such rights, if any, as the Board of Directors, in its discretion, may fix; and the Board of Directors may issue shares of any class of this Corporation, or any notes, debentures, bonds or other securities convertible into or carrying options or warrants to purebasa shares of any class, without offering any.such shares of any clans, either in whole or in part, to the existing stock holders of any class.* THIRD; That such amendment was duly adopted in accor dance with the provisions of Section 242 of the General Corporation taw of the State of Delaware. FOURTHi That the capital of tba Corporation will not be reduced under or by reason of such amendment. -2- 5(o *r *  `a State of DELAWARE Office of SECRETARY OF Si>TE t/ Glenn C. Kenion ^ {Stale ^ SStcde Qhlcuna*e* da- Ae*eiy> cm^t tfud tAe cdot*e cu*djla*eyainy ii, a- true artel correct e^> ^ Certificate of Aseiuhent of tbe "Tyler Corporation", received and filed in thl* office the tvestf-fourth day of April, A.D. 1979, t 9 o'clock A.M. Id Testimony Whereof,^u Aereunie w my> hand artd official*ealed ^ue twenty-fourth April yeeut ffiauet Sfiarcl arte ihauAanclnine hundredartel aeveacy Bine. RESTATED KARCB 16, 1981 BY-LAWS OF TYLER CORPORATION ARTICLE I OFFICES Section 1. The principal office shall be in the city ot Wilmington, County of Nee Castle, State of Delsvara. Section 2. The corporation may also have offices at such other places both within and without the State of Delaware as the board of directors may from time to time determine or the business of the corporation aay require. ARTICLE IX MEETINGS OF STOCKHOLDERS Section 1. All meetings of the stockholders shall be held at such time and place, within or without the State of Delaware, as shall be determined by the board of directors and stated in the notice of the meeting or in a duly executed waiver of the notice thereof. At least ten days' notice shall be given to the stockholders of the time and place designated for meetings of stockholders. Section 2. The Annual meeting of the stockholders shall be held on the fourth Wednesday of April of each year if not a legal holiday, and if a legal holiday, then the next secular day following, or at such other date as the board of directors of the corporation may determine commencing at such tine as the board of directors shall detsrmlne; at the annual neeting of the stockholders, the stockholders shall elect by a plurality vote a board of directors and transact such other business as may properly be brought before the masting* Section 3. Written notice of the annual seating shall be given to each stockholder entitled to vote thereat at least ten days before the date of the neeting. Section *. A complete list of the stockholders entitled to vote at any election of directors, arranged in alphabetical order and showing the address of each stockholder and the number of voting shares held by each, shall be prepared by the officer in charge of the stock ledger and shall be filed at the place where the election is to be held dr at another place 91 within the city, town or village where the election is to he held (which place, if other than the aeeting place,.shall oe specified in the notice of the meeting) at least ten (10) days before such election, and shall at all tines prior to the election during the usual hours for business, and during the whole tine of said election, be open to exaaination end inspec tion of any stockholder. Section 5. Special meetings of the stockholders, for any purpose or purposes, unless otherwise prescribed by statute or by the certificate of incorporation, aay be called by the Chairman of the Board or by the President and shall be called by the President or Secretary at the request in writing of a majority of the board of directors, or at the request in writing of stockholders owning a majority in amount of tha antire capital stock of the corporation issued and outstanding and entitled to vote. Such request shall state the purpose or purposes of the proposed meeting. Section 6. Written notice of s special meeting of stockholders, stating the time, place and object thereof, shall be given to each stockholder entitled to vote thereat, at least ten days before the date for the meeting. Section 7. Business transacted at any apacial masting of stockholders shall be limited tc the purposes stated in the notice. Section 8. The holders of s majority of the stock Issued and outstanding and entitled to vote thereat, prasent in person or represented by proxy, shall constitute a quorum at all meetings of tha stockholders for the transaction of business except as otherwise provided by statute or by the certificate of incorporation. If, however, such quorum shall not be present or represented at any meeting of the stockholders, the stock holders entitled to vote thereat, present in person or repre sented by proxy, shall have power to adjourn the meeting from tlms to time, without notice other then announcement at tha meeting, until a quorum shall be present or represent'd. At such adjourned nesting at which a quorum shall ba present or represented, any business nay be transacted whioh might have been transacted at the aeeting am originally notified. Section 9. When a quorum la present at any meeting the vote of the holders of a majority of the stock having voting power present in person or represented by proxy shall decide any question brought before such meeting, unless the question is one upon which by express provision of tbs statutes or of the certificate of incorporation, a different vote is required, * in which case such express provision shall govern r.S control tha decision of such question. i -2- Section 10. Except as provided In the certificate of incorporation, each stockholder shall at every Meeting of the stockholders be entitled to one vote in person or by proxy for each share cf the capital stock having voting power held by such stockholders. No proxy shall be voted on after one year froo its date. Except where the transfer books of the corpora tion have been closed or a date has been fixed as a record date for the determination of its stockholders entitled to vote, no share of stock ahall be voted on at any election for directors which has been transferred on the books of the cor poration within twenty days next preceding such election of directorn. Section 11. Nhenever the vote of stockholders at a meeting thereof, is required or permitted to be taken in connection with any corporate action by any provisions of the statutes or of the certificate of incorporation, the meeting and vote of stockholders may be dispensed with if all tbs stockholders who would have been entitled to vote upon the action if such meeting were held shall consent in writing to such corporate action being taken. XKTICLE III DIRECTORS Section 1. She number of directors shall be the number fixed from time to time by resolution of the board of directors) provided that the number shall be not less than three (3) nor more than fifteen (15). Unless otherwise provided in the certificate of incorporation, the directors shall be elected annually and each director shall continue in office until his successor shall have been elected and qualified, or until his death, or until ha shall resign, or shall have been removed for adequate cause. Directors need not be stockholders. 8eetion_2. Vacancies and newly created directorsbipe resulting from any increase in the authorised number of direc tors may be filled by vote of a majority of the directors then in Office, though lass than a qmorun, and the directors so chosen shall bold office until tba nest annual election and until their successors are duly elected and shall qualify, unless sooner displaced. lection 3. Tba business of the corporation shall be managed by its board of directors which any exercise all such powers of the corporation and do all such lawful acts and , thing* as are not by statute or by the certificate of incorpo ration or by these by-lava directed or required to be exercised or dose by the stockholders. MEETINGS OF THE BOARD OP DIRECTORS Section 4. The board of directors of the corporation ay hold meetings, both regular and special, either within or without the State of Delaware. Section 5. The first neeting of each new elected board of directors shall be held immediately following the meeting of stockholders at which such directors were elected, or be fixed by the vote of the stockholders at the annual meeting and no notice of such meeting shall be necessary to the newly elected directors in order legally to constitute the meeting, provided a quorum shall be present. In the event such meeting is not held immediately following the annual meeting, or at the time and place ao fixed by the stockholders, the meeting nay ^e held at auch time and place as shall be specified in a notice given as hereinafter provided for special meetings of the board of directors, or as shall be specified in s written waiver signed by all of the directors. Section 6. Regular meetings of the board of directors shall be held without special notice at such time and at such place as shall from time to Lime be -determined by the board. Section 7. Special meetings of the board of directors ay be called by the Chairman of the Board or by the president, or, on the written request of two directors, by the Secretary on twenty-four hours' notice to each director either personally or by mail or talegram. Section 8. At any stated or special meeting of the board of directors a majority of the directors at the time in office (but r>ot less than one-third of the whole board) shall constitute a quorum for the transaction of business and the act of a majority of tha directors present at any mseting at whl<-h a quorum is present shall be the act of the board of directors except as may be otherwise specifically provided by statute or by the certificate or Incorporation. In the absence of a quorum a majority of the directors present may adjourn any meeting from time to time until a quorum Is present. Mo notice of any adjourned meeting need be given. COMMITTEES 0/ DIRECTORS Section 9. The board of directors may, b> resolution passed by a majority of tha whole board, designate one or more corns!ttees, each committee to consist of one or more of the directors of the corporation. The board may designate ope or . more directors as alternate members of anj committee, who may replace any absent or disqualified member at any meeting of the committee. Ary such committee, to the extant provided in tha resolution of the board of directors and not prohibited by -4- Jaw, shall have and nay exercise all the powers jnd authority of the board of directors in the management of the business and affairs of the corporation, and may authorize the seal of the corporation to be affixed to all papers which may requite it. At any meeting of a eomnittee a majority of the members of the committee shall constitute a quorum for the transaction of business, and the act of a majority of the members present at any meeting at which a quorum is present-shall be the act cf the committee. Section 10. The committee shall keep regular minutes of tneir proceedings and report thi same to the board of directors, when required. COMPENSATION CF DIRECTORS Section 11. The directors my be paid their expenses, if any, of attendance at each meeting of the board of directors and may if authorize^ by the board of directors be paid a fixed sum for attendance at each meeting of the board of direc tors or a stated salary as a director. No such payment shall preclude any director from serving the corporation in any other capacity and receiving compensation therefor. Members of special or standing committees maj be allowed like compensa tion for attending committee meetings. Section 12. Any action required or permitted to be taken at any meetingof the board of directors or of any coumittee thereof may be taken without a meeting, if prior to such action a written consent thereto is signed by all members of the board or of such committee as the case may be, and such written consent is filed with the minutes of the proceedings of the board or committees. ARTICLE IV NOTICES Section 1. Notiees to directors and stockholders shall be in writing"and delivered personally or mailed to the directors or stockholders at their addresses appearing on the Crake of the corporation. Notice by mail shall be deemed to be given at the time when the same shall be mailed. Notice to directors may also be given personally and by telegram. Section 2. Whenever any notice is required to be given under the provisions of the statutes or of the certificate of Incorporation or of these by-laws, a waiver thereof in writing, signed by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equiva lent thereto. 5- .V ARTICLE V OFFICERS Section 1, The elected officers of the corporation shall be a President (who shall be a director), one or sore Vice Presidents, with or without such descriptive titles as the board of directors shall dees appropriate, a Secretary, a Treasurer, and a Controller and, if the board of directors so elects, a Chairman of the Board (who shall be a director). The board of directors by resolution shall also appoint one or more Assistant Secretaries, Assistant Treasurers, Assistant Controllers and such other officers and agents as from time to tins may appear to be necessary or advisable in the conduct of the affairs of the corporation. Any two or more offices may be held by the same person except the offices of President and Secretary. Section 2. The board of directors at its first meeting after each annual meeting of stockholders shall elect end appoint the officers to fill the positions designated in Section 1 of this Article V. Section 3. .The salaries of atl elected officers of the corporation shall'be fixed by the board of directors. Section 4. The officers of the corporation shall hold office until their successors are chosen and qualify. Any officer elected or appointed by the board of directors may be removed at any time by the affirmative vote of a majority of the whole board of directors. Any vacancy occurring in any office of the corporation by death, resignation, removal or otherwise shall be filled by the board of directors. CHAIRMAN OF THE BOARD Section 5. The Chairman of the* Board shall preside when present at all meetings of the board of directors. He shall advise and counsel the President and other officers of the corporation, and shall exercise such powers and perform such duties as shall be assigned to or required of him from time to time by the Board of Directors. PRESIDENT Section 6. The President shall be the chief executive officer ?f the corporation, and, subject to the provisions of t>.es* by-laws, shall have general supervision of the affairs of the corporation end shall have general and active control of all itrt business. He shall praside, when present, at all . meetings < f. stockholders, except as may otherwise be provided by statute, end, in the absence of any other person designated thereto by these by-laws, at all meetings of the board of 6- V* directors and the executive committee, respectively. Be shall have general authority to execute bonds, deeds and contracts in the name of the corporation and to affix the corporate seal thereto! to sign stock certificates; to cause the employment or appointment of such employees and agents of the corporation as the proper conduct of operations may require, and to fix their compensation, subject to the provisions of these by-lavs; to remove or to suspend any employee or agent who shall have been employed or appointed under his authority or under authority of an officer subordinate to him; to suspend for cause, pending final action by the authority which shall have elected or appointed him, any officer subordinate to the President, end, in general, to exercise all the powers usually appertaining to the ofLice of president of a corporation, except as otherwise provided in these by-laws. In the absence of the President, his duties shall be performed and his powers may be er.ercised by such other officer as he shall designate in writing or (failing such designation) by the executive committee, subject, in either case, to review and superseding setion by the board of directors. VICE PRESIDENT-FINANCE Section 7. The chief financial and accounting officer of the corporation shall be designated Vice President-Finance. Be shall have active control of and responsibility for all matters pertaining to the financial affairs of the corporation and its subsidiaries. Sis authority shall include the authori ties of the Treasurer end Controller. Be shall he responsible for approval of ali filings with governmental agencies. Be cha'l have the authority to execute and deliver bonds, deads, contracts and stock certificates of and for the corporation, and to affix the corporate seal thereto by handwritten or fac simile signatuvs and all other powers customarily appertaining to his offtee, except to the extent otherwise limited or en larged. He shall report to the President and to the executive committee and the board of directors of tbs corporation at their request on all financial matters of the corporation. TBB SECRETARY AMD ASSISTANT SECRETARIES Section 8. The Secretary shall attend all nestings of the board ol! directors and all meetings of the stockholders and record all proceedings of the meetings of the stockholders of the corporation and of tbs board of directors in a book to be kept for that purpose, and shall perform like duties for the standing commlttets whan required. Be shall give, or causa to be given, notice of all meetings of the stockholders and msstinga - of the board of directors. Ha shall be under the supervision of the President and shall perform such other duties as may be prescribed by the President. He shall have charge of the seal of the corporation and have authority to affix tbs same to any -7- Instrument requiring it, and when so affixed, it shall be attested by his signature or by the signature of the Treasurer or an Assistant Secretary, which may be in facsimile. He shall keep and account far all books, documents, papers and records of the corporation except those for which some other officer or agent is properly accountable. He shall have autho rity to sign stock.certificates, and shall generally perform all the duties usually appertaining to the office of the secre tary of a corporation. Assistant Secretaries in the order of their seniority, unless otherwise determined by the board of directors, shall assist the Secretary, and in the absence or disability of the Secretary, perform the duties and exercise the powers of the Secretary. They shall perform such other duties and have such other powers as the board of directors may from time to time prescribe. TREASURER AMD ASSISTANT TREASURERS Section 9. The Treasurer shall have the responsibility for and custody over all assets of the corporation, and the responsibility for handling of the liabilities of the corpora tion. Be shall cause proper entries of all receipts and dis bursements of the corporation to be recorded in its books of account. Be shall have the responsibility for all matters pertaining to taxation and insurance. He shall have the autho rity to endorse for deposit or collection, or otherwise, all commercial paper payable to the corporation, and to give proper receipts or discharges for all payments to the corporation. He shall be responsible for all terms of credit granted by the corporation and for the collection of all of its accounts. He shall have the authority to execute and deliver bonds, deeds, contracts and stock certificates of and for the corporation, and to affix the corporate eeal thereto by handwritten or facsimile signature and all other powers customarily apper taining to his office, except to the extent otherwise limited or enlarged. The Treasurer shall be under the supervision of the Vice PresidsntFinance and he shall perform such other duties as say be prescribed to him by the Vice President-Finance. He shall raport to the Vice President-Finance ail material matters and all matters requested of him by the Vice PresidentFinance. Any action taken or decision made by the Treasurer shall be subject to the review and approval of, and rescission by, the Vice President-finance. Assistant Treasurers, in the order of their seniority, shall assist the Treasurer, and in the absence or disability of the Treasurer, perform the duties and exercise tha powers of the Treasurer. -8- 7 CONTROLLERS AND ASSISTANT CONTROLLERS Section 10. The Controller shall be responsible for all matters pertaining to the accounts of the corporation, Its subsidiaries and divisions, with the supervision of the boohs of account, their installation, arrangement, and classification. He shall maintain adequate records Of all assets, liabilities and transactions; shall audit all payrolls and vouchers for paynent by the corporation and all documents pertaining to such vouchers; see that an adequate system of internal audit thereof is currently and regularly maintained; coordinate the efforts of the corporation's independent public accountants in its external audit program; receive, review, and consolidate all operating and financial statements of the corporation and its various departments and subsidiaries; and prepare financial statements, reports and analyses. Be shall have supervision of the account practices of the corporation and of each subsi diary and division of the corporation, and shall prescribe the duties and powers of the chief accounting personnel of the subsidiaries and divisions. Be shall cause to be maintained an adequate system of financial control through a program of budgets, financial planning and Interpretive reports. He shall initiate and enforce accounting-measures and procedures whereby the business of the corporation and its subsidiarias and divisions shall be conducted with the maximum efficiency and economy. Be shall have all other powers customarily apper taining to bis office, except to the extent otherwise limited or enlarged. The Controller shall be under the supervision of the Vice President-Finance. Be shall report to the Vice Presi dent-Finance all material matters and all matters required of him by the Vice PresldentPinance. Any action taken or decision made by the Controller shall be subject to the review and approval of, and rescission by, the Vice President-Finance. The Assistant Controllers, in the order of their seniority, shall assist the Controller, and if the Controller Is unavailable, perform the duties and exercise the powers of the Controller. INDEMNIFICATION Section 11. The corporation may indemnify any present -r former director, officer, employee or agent of the corporation and any person who may have served or who serves at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against (a) expenses (Including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative 01 investigative (except of the sort referred to in clause (b) hereof) to which such person was or is threatened to be made a party by reason of service by such person in such capacity, if`such person acted in good faith and in a manner reasc .:bly believed to tea in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding* had no reasonable cause to believe that such conduct was unlawful; and (b) expenses (including attorneys' fees) and amounts paid in settlement actually and reasonably incurred by him in con nection with the defense or settlement of any threatened* pending or completed action or suit by or in the right of the corporation to procure a judgment in favor of the corporation against such person by reason of service by such person in such capacity, if such person acted in good faith and in a manner reasonably believed by auch person to be in or not opposed to the best Interests of the corporation and except that no indemnification shall be made with respect to any claim, issue or matter as to which such person shall have been adjudged to be liable for negligence or misconduct in the performance of his duty to the corporation unless the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnification for such expenses, in which event the corporation may, but shall not be required to, indemnify such person for such expenses; provided, however, that the corporation shall indemnify any such person against such expenses actually and reasonably incurred in connection with the successful defense, on the merits or other wise, of any action, suit or proceeding of the sort referred to in clauses (a) and (b) hereof. The determination as to whether a person Is entitled to indemnification hereunder shall be made (1) by the board of directors by a majority vote of a quorum consisting of directors who were not or are not threatened to be made a party to such action, suit or proceeding, or (2) if such a quorum is not obtainable, or if a quorum of disinterested directors so directs, by independent legal counsel in a written opinion, or (3) by the shareholders. In making such determination, the termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which such person reasonably believed to be in or not opposed to the best interests of the corporation and, with respect to any criminal action or proceeding, had reasonable cause to believe that his conduct was unlawful. The indamnification provided by this Section shall be in addi tion to any other rights which those indemnified may have under any law, agreement or resolution of the board of direc tors or stockholders of the corporation. Expenses incurred in defending a civil or criminal action, suit or proceeding may be paid by the corporation in advance jot the final disposition of such ection, suit or proceeding as authorized by the board of directors in the specific case upon receipt of an indertaking by or on behalf of the director, officer, employee or agent to repay such amount unless it shell ultimately be determined that he is entitled to be lndnnniilci by the corporation as ne. forth In this Section. 1C' Upon resolution passed by the board of directors, the corporation nay purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against such person and incurred by such person in any such capacity, or arising out of such person's status as such, whether or not the corporation would have the power to indemnify such person against such liability under the provisions of this Section. ARTICLE VI CERTIFICATES OP STOCK Section 1. Every holder of stock in the corporation shall be entitled to have a certificate, signed by, or in the name of the corporation by, the President or Vice President and the Treasurer or an Assistant Treasurer or the Secretary or an Assistant Secretary of the corporation. If the corpora tion shall be authorised to issue more than one class of stock, the designations, preferences and relative, participating, optional or other special rights of each class and the quali fications, limitations or restrictions of such preferences and/or rights shall be set forth in fell or summarized on the face or back of the certificate which the corporation shall issue to represent such class of stock; provided, however, except as otherwise provided in Section 194 of the General Corporation Law of Delaware, 1953, in lieu of the foregoing requirements, there may be set forth on the face or the back of the certificate which the corporation shall issue to repre sent such class or series of stock, a statement that the corporation will furnish without charge to each stockholder who so requests, the designations, preferences and relative, participating, optional or other special rights of each class of stock or shares thereof and the qualifications, limitations or restrictions of such preferences and/or rights. Section 2. Where e certificate is countersigned by a transfer agent, other than the corporation or its employee, or by a registrar, other than the corporation or its employee, any other signature on such certificate may be a facsimile, engraved, stamped or printed. In case any officer or officers who have signed, or whose facsimile signature or signatures have been used on any such certificate or certificates shall cease to be such officer or officers of the corporation whether because of death, resignation or otherw*e, before sl vi certi ficate or certificates have been delivered ky the corporation, fcuch certificate or certificates may nevertheless be adopted by the corporation and may be issued and delivered as though 11- the person or persons who signed such certificate or certifi cates or whose facsimile signature or signatures have been used thereon had not ceased to be such officer or officers of the corporation. LOST CERTIFICATES Section 3. The board of directors may direct a new certi ficate or certificates to be issued in place of any certificate or certificates theretofore Issued by the corporation alleged to have been lost or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost or destroyed. When authorising such issue of a new certificate or certificates, the board of directors may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost or destroyed certifi cate or certificates, or his legal representative, to advertise the same in such manner as it shall require and/or to give the corporation a bond in such sum as it may direct as indemnity against any claim that may be made against the corporation with respect to the certificate alleged to have been lost or destroyed. TRANSFER OF STOCK Section 4. Upon surrender to the corporation or the transfer agent of the corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignment or authority to transfer, it shell be the duty of the corporation to issue a new certificate to the person en titled thereto, cancel the old certificate an-l record the transaction upon its books. CLOSIt J OF TRANSFER BOOKS Section 5. The board of directors may close the stock transfer books of the corporation for a period not exceeding sixty days preceding the date of any meeting of stockholders or the date for payment of any dividend or the date for ths allotment of rights or the date when any change or conversion or exchange of capital stock shall go into safest or for a period of not exceeding sixty days in connection with obtaining the consent of stockholders for any purpose. In lieu of closing the stock transfer books as aforesaid, ths board of directors may fix in advance a date, not exceeding sixty days preceding the date zf any meeting of stockholders, or the date for the payment of any dividend, or the date for the allotment of rights, or the date when any changa or conversion or exchange of capital stock shall go into effect, or a data in connection with obtaining such consent, as a record date for the determina tion of the stockholders entitled to notice of, and to vote at, any such meeting, and any adjournment thereof, or entitled -12- to receive payment of any suc^i dividend, or to any such allot ment of rights, or to exercise the rights in respect of.any such change, conversion or exchar.qe of capital stock, or to give such consent, and in such case such stockholders and only such stockholders as shall be stockholders of record on the date so fixed shall be entitled to such notice of, and to vote at, such meeting and any adjournment thereof, or to receive payment of such dividend, o.. receive such allOvsent c rights, or to exercise such lights, or to give such consent, as the case may be, notwithstanding any transfer of anv stock on the books of the corporation after any such record ~ate fixed as aforesaid. REGISTERED STOCKHOLDERS Section 6. The corporation shall be ertitled to recognize the exclusive right of a person regishe.' C jn ita books as the owner of shares to receive dividends, >.d to vote as such owner, and to hold liable for calls and t-isessnents, a person registered on its books as the owner of stores, and shall not be bound to recognize an equitable or other claim to or intarest in such share or shares on the part of any other person, whether or not it shall have express or other-notice thereof, except as otherwise provided by the laws of Delaware. STOCK OPTIONS AND AGREEMENTS Section 7. Any stockholder of this corporation may enter into agreements giving to any other stockholder or stockholders or any third party an option to purchase any of his stock in the corporation; and such shares of stock shall thereupon be subject to such agreement and transferable only upon proof of compliance therewith, provided, however, that a copy of such agreement be filed with the corporation and reference thereto . placed upon the certificates representing said shares of stock. ARTICLE VII GENERAL PROVISIONS DIVIDENDS Section 1. Dividends upon the capital stock of the eorporstlon subject the provisions of the certificate of incorpora tion, if any, nay be declared by the board of directors at any regular or special meeting, pursuant to law. Dividends may be paid in cash, in property, or in shares of the capital atock, subject to the provisions of the certificate of incorporation. Section 2. before payment of any dividend, there may be set aside out of any funds of the corporation available for dividends such sum or sums as tha directors from tire to time, in their absolute discretion, think proper as a reserve or -13- m reserves to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the corporation, or for such other purposes as the directors shall think con ducive to the interest of the corporation and the directors ay modify or abolish any such reserve in the manner in which it was created. ANNUAL STATEMENT t Section 3. The board of directors shall present at each annual meeting and when called for by vote of the stockholders at any special meeting of the stockholders, a full and clear statement of the business and condition of the corporation. CHECKS Section!. All checks or demands for money and notes of the corporation shall be signed by such officer or officers or such other person or persons as may from time to time be desig nated by or pursuant to resolution of the board of directors. FISCAL YEAR Section 5. The fiscal year of the corporation shall be fixed by resolution of the board of directors. SEAL Section 6. The corporate seal shall have inscribed there on the name of the corporation, the year of its c'-ganiration and the words "Corporate Seal, Delaware." The eeel nay be need by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise. /> ARTICLE VIII / AMENDMENTS Section 1. The by-laws may be altered or repealed at any regular meeting of the stockholders or of the bo.icd of directors or any special meeting of the stockholders or ol; the board of directors if notice of the proposed alteration or reperl is contained in the notice of the special meeting. -14- 73 EXHIBIT 4.2 P COMPOSITE COPY (ancorparadnc raendmenti to December IS, 19*0) TYLER CORPORATION 8!4% Peomissoey Notc due July 1, 1989 Sfatr Agmmrtrt THE PRUDENTIAL INSURANCE COMPANY OF AMERICA r Dued: August I, 1973 THIS IS A COMPOSITE COPY OF THE ABOVE NOTE AGREEMENT AS AMENDED TO DECEMBER IS, 19*0 f AS SO AMENDED. THE "NOTE AGREEMENT"). THIS COMPOSITE COPY HAS BEEN PREPARED FOR PURPOSES OF ADMINISTRATIVE CONVENIENCE AND DOES NOT, AND IS NOT INTENDED TO. AMEND. MODIFY OR OTHERWISE CHANGE THE NOTE AGREEMENT. TO THE EXTENT, IF ANY. ANY PROVISION OF THIS COMPOSITE CORY CONFLICTS WITH ANY PROVISION OF THE NOTE AGREEMENT. THE PROVISION OF THE NOTE AGREEMENT SHALL CONTROL. TABLE OF CONTENTS (Not Part of Agreement) PAGE 1. Authorisation of Issue of Note---------------------------------------------------------- 1 2. Purchase and Sale of Note---------- ------------------------------------------------------- 1 3. Conditions ------------ -------------- ---- ------------------------------------------------------ 1 4. Prepayments--------- --- ---------------------------------------------------------------------------- 3 5. Affirmative Covenants______________________________________________ 5A Financial Statements-----------------------------------------------------------------5B Inspection of Property--------------------------------------------------------------------5C Covenant to Secure Note Equally------------------------------------- -----------5D Issuance of Debentures for Notes------------------------------------------------ 5 5 6 6 6 6. Negative Covenants 6A Working Capital Requirement------------------------------------------------------- 6B Dividend Limitation----------------------- --------------------------------------------8 6C Lien, Debt and Other Restrictions------------------------------------------------ 9 6CV1) Liens------------------------------------------------------------------------------ 9 fiC(2) Debt 10 6C(3) Loans, Advances and Investments------------------------------------- 6C(4) Sale of Stock and Debt of Subsidiaries------------------------------- 6C(5) Merger and Sale of Asaeta---------------------------------------- 6C(6) Lease Rentals 13 6C(7) Sale and Lease-Back-------------------------- 6C(8) Sale or Discount of Receivables------- -- , --------- 6C(9) Certain Contracts------------------------------------------------------------- 6D Issuance of Stock by Subsidiaries------------------------------------------------- 8 8 11 12 12 13 13 13 14 7. Events of Default----------------------------------------------------------------------------- 14 H. Representations and Warrantee------------------------------------------------------- 15 9. Representation of the Purchaser------------------------------------------------------------------ 18 10. Definitions 18 11. Mlscellsneons---------------------------------------------------------------------------------- 20 11 TYLER CORPORATION 3121 Southland Center Dallas, Texas 75201 August 1,1973 Thx Prudential Insurance Company or AvsaiOA Prudential Plaza Newark, New Jersey 07101 Attention: Vice Preeuieat m Charge of Lie Bond end Commercial Loan Department Gentlemen: The undersigned, Tylex Cobfobatick (herein called the "Company"), a Delaware corporation, hereby agrees with you as follows: 1. Authorisation of Issue of ITcte. The Company has authorized the issue of its promissory note (herein, together with any notes which may be issued hereunder in sub stitution therefor, called the "Note" or "Notes") in tbs principal amount of $40,000,000, to be dated the date of issue thereof, to mature July 1, 1989, to bear interest on the unpaid principal balance thereof from the date thereof until the principal thereof shall become due and payable at the rate of 8%% Pr annum, and to be substantially in the form of Exhibit A hereto attached. 2. Purchase and Sale of Hots. The Company hereby agrees to sell to you and, subject to ihe terms and conditions herein set forth, yon agree to purchase from the Company the Note, registered in your name, in the principal amount of $40,000,000, at 100% of the principal amount thereof. The Company will deliver the Note to you at 11 X)0 A.M. New York time on August 17, 1973 at your office at Prudential Pinza, Newark, New Jersey, against payment of the purchase price thereof by credit to the Company's account # 00104432 at First National City Bank, Now York, Now York. 3. Conditions. Your obligation to purchase and nay for the Note is subject to the satisfaction, on or before the date of dosing, of the following conditions: 3A. Opinion of Purchaser's Special Counsel. You shall have received from Messrs. Debevoise, Plimpton, Lyons A Gates, who are acting as special counsel for you is con nection with this transaction, a favorable opinion satisfactory to you as to: (i) the due organization, existence and good standing of the Company; (ii) the due authorization (including any consent of stockholders required by law or by the charter or by-laws of the Company or otherwise), execution and delivery by the Company and the validity of this Agreement and the Note; (iii) the exemption of the sale and delivery of the Note under the Federal Securities Act of 1933, an amended; (iv) the subordination of the out standing Subordinated Debt of the Company to the prior payment of the Notes; and (v) such other matters incident to the matters herein contemplated as you may reasonably request, including the form of all papers and the validity of all proceedings. 3B. Opinion of Company's Counsel. You shall have received from Messrs. Wynne JatTe & Tinsley, counsel for the Company, a favorable opinion satisfactory to you and your special counsel as to the matters specified in paragraph 3A and as to: (i) the due organization, existence and good standing of each Significant Subsidiary; (ii) the corporate power of the Company and each sueh Subsidiary to carry on their respective businesses as then being conducted; (iii) the due quulilk'atiou of the Company as a foreign corporation to transact business and its good standing in each jurisdiction iu which the nature of the business conducted by it makes such cualificution necessary; (iv) insofar as ia known to such counsel, the absence of any requirement of authorization or other action by any governmental authority in connection with the issuance and sale of the Note by the Company and the execution, delivery and performance by the Company of this Agree ment; (v) the acquisitions referred to in paragraph 8L having been effected in full compliar *e with ail applicable laws, rules, regulations and orders of governmental authorities, including compliance with applicable orders, approvals and consents of the Federal Trade Commission; and (vi) the execution and delivery of this Agreement by the Company and the issuance by the Company of the Note not conflicting with or resulting iu a breach of the terms, conditions or provisions of, or constituting a default under or resulting in u violation of, or requiring any authorization, consent, approvul or other action by or-notice to nny court or administrative or governmental body pursuant to, the charter or by-laws of the Company or any of Us Subsidiaries or (insofar as is known to such counsel) any applicable law (including any applicable securities or Blue Sky law), statute, rule or regulation or (insofar as is known to such counsel) any agreement, order, judgment or decree to which the Company or any of its Kubsidiatics is subject. :'C, Representations <.nd Warranties; Ho Default. The representations and war ranties contained in paragraph 8 shall be true on and as of the date of closing in all material respects, except to the extent of changes caused by the transactions heroin con templated; there shall exist on such date of closing no Event of Default or Default; and the Company shnll have delivered to you an Officer's Certificate, dated the date of doting, to both such effects. .`ID. Accountants' Letter. Tim Company shall have delivered to you a letter of Arthur Young & Comimny, addressed to you, stating that such firm has reviewed the F(>d'>rnl income tax returns of the Company and its Subsidiaries filed for all fiscal years which have not been examined ami re;iorted on by the taxing authorities (or closed by applicable statutes) and that, in the opinion of such firm, such returns properly reflect the Federal income taxes of flu* Company and its hubsidiHries for the |K>riods covered thereby and the Company and its Subsidiaries have paid or have made provision for the psymentof all Federal and State income taxes adequate in nil respects mntnriifi in relation to the Company and the Company's consolidated financial statements for the Aseul year ended Decemlier 31, 1972. 3K. Purchase Permitted by Applicable Laws. The purchnse of and payment for the Note shnll not be prohibited by any applicable low or governmental regulation (including, without limitation, Regulations Q and T of the Board of Governors of the Federal 2 Reserve System) and shall not subject you to any penalty or other onerous condition under or pursuant to any applicable law or governmental regulation, and you shall have received such ccrtiticates or other evidence as you may request to establish compliance with this condition. 3F. Proceedings. AH cor{)orntc ami other proceedings to l>e taken by the Company in connection with the transactions contemplated hereby and all documents incident thereto shall be satisfactory in substance and ("nil to you and your special counsel, and you and your special counsel shall have received all such count' rpart originals or certified er other copies of such documents as you or they may rcasonaoly request 4. Prepayments. The Note shall be subject to prepayment with respect to the required prepayments specified in paragraph 4A and also under any one or more of the circumstances set forth in paragraphs 4B to 4D, inclusive. 4A. Bequired Prepayments. Until the Note shall bo paid in full, the Company shall apply to the prepayment of the Note, without premium, the sum of $2,500,000 on July 1 in each of tiie years 197b to 1979, inclusive, and the sum of $3,000,000 on July 1 in each of the years 1980 to 1988, inclusive, and such principal Amounts of the Note, together with interest thereon to the prepayment dates, shall become due on such prepayment dates. No partial prepayment of the Note pursuant to paragraph IB or 4D shall relieve the Company of its obligation to make the required prepayments pursuant to this para graph 4A. 4B. Annual Optional Prepayment Without Premium. The Note shall be subject to prepayment, at the option of the Company, without premium, on any date on which a prepayment is required to be made by the provisions of paragraph 4A, in amounts (mul tiples of $1,000) not exceeding the amount required to be prepaid on such date pursuant to the provisions of paragraph 1A, such option to be noncumulative; provided, however, that the aggregate principal amount of all prepayments made pursuant to this paragraph 4B shall not exceed $8,000X00. 4C. Optional Prepayment Without Premium If Vo Consent to Additional Debt. The Note shall be subject to prepayment, as a whole but not in part, at any time at the option of the Company, without premium: 4C(1) Under the circumstances and subject, to the conditions specified in para graph 5 Djor 4C(?) If (i) within 75 days prior to the giving of notice of such prepayment, the Company shall have requested in writing your consent to the creation or incurring by the Company of unsecured Funded Debt in a specified amount in addition to that permitted by the provisions of paragraph 6C(2), solely for the purpose of securing additional funds for the Company and not in whole or in part for the purpose of prepaying thi Note, (ii) your unqualified written consent to such request shall not have been given within 30 days after the receipt by you of such request, and (iii) the Company shall have on hand, at the time of giving notice of prepayment, a firm and bona fide commitment in customary form from a lesponsible lender or responsible lenders for a loan, to mature more than one year from the date thereof, or a bona fide commitment in customary form from responsible underwriters for the purchase or distribution of obligations of the Company, in either case in an amount at least equal to 3 the sum of the principal amount of the Note at the time outstanding, the principal amount of any other Funded Debt which is then being prepaid and the principal amount of the additional Funded Debt, if any, specified in such request for such consent, and shall have delivered to you an Officer's Certificate to such effect 4D. Optional Prepayment in Whole or in Part With Premium. The Note shall be subject to prepayment in whole or from time to time in part (in multiples of $1,000) at the option of the Company on any interest payment date at the following applicable per centage of the prl i^al amount so prepaid: If prepaid during the 12 months' period ending on July 1, Vw 1974_____ 1975-------1976_____ 1977......... 1978......... 1979-------1980_____ 1981-------- . Percentage _____ 106.75 _____ 106.75 _____ 108.75 ______ 108.08 ______ 107.40 ___ _ 106.73 ______ 106.06 ____ 105.39 Veer Ptrcestage 1982_____ _______________ 104.71 1983.____ _______________ 104.04 1984 103.37 1985 102.69 1966 102.02 1967--................................. 101.35 1988 ___ 100.67 1989____________________ 100.00 ; provided, however, that (i) no such prepayment pursuant to this paragraph 4D of less than the entire unpaid principal amount of the Note may be made unless, after giving effect thereto, the Company and its Subsidiaries would have (a; no Funded or Current Debt outstanding other than the Note and Funded or Current Debt of any Subsidiary to the Company or another Subsidiary and (b) adequate working capital (determined to be adequate hv the Board of Director* of the Company) without die necessity of incurring any Debt to replace funds used to make nch prepayment, and (it) no such prepayment pur suant to this paragraph 4D may be made prior to July 1,1983 as a part of a refunding or anticijtated refunding operation, by the application, directly or indirectly, of borrowed funds having an interest rate or an interest cost to the Company (computed in accordance with accepted financial practice) of less than 8%% per annum or having a final maturity date earlier than Jnly 1,1989, except that the Notes may be so prepaid prior to July 1,1983 out of the proceeds of the sale of shares of capital stock, or warrants for the purchase thereof, of the Com|>any or adtlitional Subordinated Debt, or a combination thereof, at the applicable prepayment price provided above in this paragraph 4D plus an additional premium of $4,000,000. 4E. Notice of Prepayment, The Company shell give yon written notice of each pre payment (other than prepayments pursuant to paragraph 4A) not less than 30 days prior to the prepayment date, specifying such prepayment date, the principal amount of the No|e to be prepaid on euch date and the paragraph pursuant to which such prepay ment is to be made, whereupon thi principal amount of the Note specified in such notice, together with interest thereon to the date of prepayment and together with the premium, if any, herein provided, shall become due and payable on such date. 4 5. Aftrautire Covenants. 5A. Financial Statements. The Company covenants that, so long as you shall hold 0/ be obligated to purchase the Note, it will deliver to you in duplicate: (i) as soon as practicable and in any event within 60 days after the end of each quarterly period (other than the last quarterly period) in each fiscal year, a consoli dating and consolidated profit and loss statement and reconciliation of surplus state ment of the Company and its Subsidiaries for the period from the beginning oi the current fiscal year to the end of such quarterly period, and a consolidating and consolidated balance sheet of the Company and its Subsidiaries as at the end of such quarterly period, setting forth in each cace in comparative form corresponding con solidated figures for the corresponding period in the preceding fiscal year, all in reasonable detail and certified by an authorized financial officer of the Company, subject to changes resulting from year-end adjustments; (ii) aa toon as practicable and in any event within 90 days after the end of each fiscal y .-ar, a consolidating and consolidated profit and loss statement and reconcilia tion of surplus statement of the Company and its Subsidiaries for such year, and a consolidating and consolidated balance sheet of the Company and Us Subsidiaries aa at the end of such year, setting forth in each case in comparative form corresponding consolidated figures from the preceding annual audit, all in reasonable detail and satis factory in scope to you and certified (as to consolidated figures) to the Company by independent public accountants of recognized standing selected by the Company whose certificate shall be in scope and substance satisfactory to you; (iii) as soon as practicable, copies of all such financial statements and reports as it shall send to its stockholders and of all registration statements and all regular or periodic reports which it is or may be required to file with the Securities and Exchange Commission or any governmental body or agency anoceeding to the func tions of the Securities and Exchange Commission; and (iv) with reasonable promptness, stub other financial data aa you may reason ably request Together with each delivery of financial statements required by clauses (i) and (ii) above, the Company will deliver to you an Officer's Certificate setting forth (except to the extent specifically set forth in such financial statements) the aggregate amount of interest ex penses on Funded and Current Debt of the Company and Subsidiaries (if any) during the fiscal period covered by such financial statements, the aggregate amount of rental pay ments made during such fiscal period by the Company and Subsidiaries (if any) which were of the kinds subject to the restrictions of paragraph 6C(6) and, with y ~ar end state ments only, the aggregate amount of all rental payments mode during such year by the Company and Subsidiariei (if any), the dates of the beginning and end of the most recent period of at least 30 (or 60 as applicable) consecutive days during which the Company shall have been free from all Current Debt permitted by clause (x) of paragraph 6C(2), and the amount of depreciation on physical property charged on the books of the Company and Subsidiaries (if any) during such fiscal period, and stating that there exists no Event of Default or Default, or, if any such Event of Default or Default exists, specifying the nature thereof, the period of existence thereof and what action the Company proposes to take with respect thereto. Together with each delivery of financial statements required by 0 clause (ii) above, the Company will deliver to you a certificate of said accountants stating that, in making the audit necessary to the certification of such financial statements, they have obtained no knowledge of any Event of Default, or, if any such Event of Default or Default exists, specifying the nature and period of existence thereof; and setting forth the amount of all liabilities for past services under pension plans and other employee benefit plans of the Company and its Subsidiaries which have not been funded by the Company and its Subsidiaries or for which appropriate reserves have not been established. The Company also covenants that forthwith upon the President cr chief financial officer of the Company obtaining knowledge of an Event of Default or Default under this Agreement, it will deliver to you an Officer's Certificate specifying the nature thereof, the period of exist ence thereof, and what action the Company proposes to lake with respect thereto. Yon are hereby authorized to deliver a copy of any financial statement delivered to you pursuant to this paragraph 5A to any regulatory body having jurisdiction over you. 5B. Inspection of Property. The Company covenants that, so long as you shall hold or be obligated to purchase the Note, it will permit any Person designated by you in writing, at your expense, to visit and inspect any of the properties, corporate books and financial records of the Company and its Subsidiaries, and to discuss the affairs, finances and accounts of any of such corporations with the principal officers of the Company, all at such reasonable fines and as ofton as you may reasonably request 5C. Covenant to 8eenre Note Equally. The Co ; ay covenants that, if it or any Subsidiary shall create or assume any Lien upon an\ of its property or assets, whether now owned or hereafter acquired, other than Liens excepted by the provisions of para graph 6C(1) (unless prior written consent to the creation or assumption thereof contain ing a waiver of the requirements of this paragraph 5C shall have been obtained pursuant to paragraph 11C), it will make or cause to be made effective provision whereby the Note will be secured by such Lien equally and ratably with any and all other Debt thereby secured as long as any such other Debt shall be so secured. 5D. Issuance of Debentures for Votes. The Company covenants that, upon the written request of the holders of not less than 66%% of the principal amount of the Notes at the time outstanding, the Company will, at its expense, as promptly as is reasonably ]Kwsible, exeem and deliver to a bank or trust company selected by the Company having capital, surplus and undivided profits, as shown by its last published report to its stockholders, of not less than $10,000,000 and having its principal office in the Borough of Manhattan, The City of New York, an indenture providing for tho issuance, and will authorize the ieeuaseo thereunder, of a rnncipal amount of debentures equal to the unpaid principal amount of the Notes then outstanding. Such indenture and the debentures issued thereunder shall, insofar as may be appropriate, respectively embody the substance of all of the terms, cove nants, conditions and provisions of this Agreement and of the Notes, together with all cus tomary formal provisions, and shall provide for registered debentures without coupons in the denominations of $1,00C and ail multiples thereof. Said indenture and debentures shall be ia form satisfactory to the holders of the Notes making such request and their counsel. Thereafter upon surrender of any Note by the holder thereof the Company wit\o;:t charge, and subject to compliance with the Trust Indenture Act of 1939, as then in force, or the Securities Act of 1933, as then in force, or any -inular Federal htatute then in force (which the Company will use its beat efforts to accomplish at its rxpenee), shall deliver to or upon the order of such holdt. in exchange therefor debea- 6 S3 tores in the same aggregate unpaid principal amount as the Note surrendered, in Buch authorized form and denominations as such holder may elect and bearing interest from the date io which interest shall have been paid on the Note so surrendered. In the event of such execution of an indenture, yor. agree that you will, at the request and expense of the Company, exchange all of the Notes then held by you for debentures as soon as prac ticable after receiving such request. If at the time of the issuance of ' nch debentures, the Trust Indenture Act of 1939, as then in force, or any similar Federal statute then in force, Bhall require the qualification of such indenture thereunder in order to enable the public sale of any such debentures obtained in exchange for Notes, or, if at such time the Securities Act of 1933, aB then in force, or any similar Federal statute then in force, shall require registration of any such debentures thereunder in order to enable the public sale of such debentures, or if at such time the consent, authorization or approval of any other governmental agency is required for the public sale of the debentures, the Company will, if requested in writing by the holders of not less than 66%% of the Notes or debentures at the time outstanding, at its expense (including the cost of printing such number of copies of any prospectus as such holders may reasonably request), use its best efforts so to qualify such indenture and/or to register such debentures and/or to obtain such consent, authorization or approval. In the event of any such registration, the Company hereby agrees to indemnify each such holder, each of the directors and officers of each such holder, and each person, if any, who controls oach such holder within the meaning of Section 15 of the Securities Act of 1933, against all losses, claims, damages and liabilities caused by any untrue statement of a material fact contained in the registration statement or prospectus (and as amended or supplemented if the Company slmll have furnished any amendments or supplements thereto) or ary prelim inary pros|>ectus, or caused by any omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, except in o far as such losses, claims, damages or natalities are caused by any untrue statement of a material fact contained in, or any material fact omitted from, information furnished in writing to the Company by such holder expressly for use therein. You agree that you will furnish to the Company in writing such information as shall be reasonably requested by the Company for use in any such registration statement or prospectus relating to any of such debr- ores held by you and will indemnify the Company, its directors and officers, and each per. .i, if any, who controls the Company within the meaning of Section 15 of the Securities Act of 1933, against all losses, claims, damages and liabilities caused by any untrue statement of a material fact contained in, or any material fact omitted from, information so furnished in writing by you e- V for use therein. At the time- of delivery of any such debentures to any such ho' `ompany will at its expense deliver to such holder a counsel opinion satisfactory tu r to the effect that the debentures have !>een duly authorized, executed, au;b'*i. ued and delivered, and, subject to bankruptcy, reorganization and other lav., . ih creditors' rights, are legal, valid and binding obligations of the Company enfo: accordance with their terms and are entitled to the benefits nf the indenture in with thei<* ".nd its * rms; that * lie indenture has boon duly authorized, exefttcii 1 ered, and subject to bankruptcy, reorganization and other laws affecting '<>,' rights a legal, valid and binding instrument enforceable in accordance with its ternm; and, cither (i) that the Trust Inden ture Act of 193f>, as then in force, or sny similar Federal statute then in force, does not require the qualification of such indenture thereunder in order to ennblo such holder to 7 si / sell such debentures publicly, and that the Securities Act of 1933, as then in force, or any similar Federal statute then in force, does not require registration of such debentures thereunder in order to enable such bolder to sell such debentures publicly, or (ii) that such qualification and such registration is required and that the Company has duly complied with such requirements. The foregoing covenants of this paragraph 5D are subject to the provision that, in lieu of such execution Bud delivery of such indenture and of such debentures the Company may, wi*hin 150 days after the receipt of such written request, elect to prepay the entire unpaid principal amount of the Notes witliin 45 days thereafter, without premium, in the manner provided in paragraph 4E. 6. Mogativt Oovunauta, 6A. Voridsf Capital Ksqulrsmsnt. The Company covenants that it will not permit Consolidated Working Capital to he less than $30,000,000 st any time prbr to December 31,1973 and leu than $32,500,000 thereafter. 6B. Dividend Limitation. The Company covenants that it will not pay or declare any dividend on any class of its stock or make any other distribution on account of any class of its stock, or redeem, purchase or otherwise acquire, directly or indirectly, any shares of its stock, <*r redeem, pnrehase or otherwise acquire for a consideration (other than the issue of `hares of <apitai *'<ock of the Company) any Subordinated Debt in any caee prior to apptfcab . * fixed prepayment, or sinking or retirement fund dates or in amounts in excess of 'ie principal amounts required to be so prepaid (all of tbs foregoing being herein called "Restricted Payments"), except out of Consolidated Net Hornings Available For Restricted Payments. "Consolidated Net Bantings" shall mean consolidated gross revenues of the Company and its Subsidiaries less all operating and non-operating expenses of the Company and its Subsidiaries including all charges of a proper character (including current and deferred taxes on income, provision for taxes on unremitted foreign earnings included in Consolidated Not Earnings and current additions to reserves), but not including in gross revenues any gains (net of expenses and taxes applicable thereto) in excess of losses resulting from the sale, conversion or other disposition of capital assets (*.., assets other than current assets), any gains result ing from the write-up of as' ets, any equity of the Company or any Subsidiary iu the undistributed earnings of an corporation which is not a Subsidiary, any earnings of any Person acquired by the Company or any Subsidiary through purchase, merger or con solidation or otherwise for any time prior to the date of acquisition (other than undis tributed earnings for the year of acquisition of any corporation acquired in a pooling of interests), or any deferred credits representing the excess of equity in any Subsidiary at the date of acquisition over the coet of the investment in such Subsidiary, all determined in accordance with generally accepted accounting principles, "Consolidated Net Earnings Available For Restricted Payments" Khali mean nn amount equal to (1) $25,000,000 plus 50% (or minus 100% in case of a loss) of Consolidated Net Eh ruing* for tin* period (taken as one accounting (tcrlod) commencing on January 1, 1978, and terminating at the end of the last Ascnl. quarter preceding the date of any proposed Restricted Payment, less (2) the sum of (e) the aggregate amount of all dividends and other distribution* paid or declared by the Company on any class of its stock after December 31, 1977, \b) the aggregate amount expended, directly or indirectly, after December 31, 197. for the redemption, purchase or other acquisition of any Bultordinated Debt constituting u Restricted Payment, mid (r) the excess of the aggregate amount expended, directly or indirectly, after December 31. 1977, for the redemption, purchase or other acquisition 8 of any shares of the Company's stock owr the agirrcn >tc amount received hy llie <'oinpnny and its Subsidiaries after December .'ll, 1977 as the net cask proceeds of the sale of any shares of the Company's stock. Theiv shall not lx included n Rostrated Pnvnients or in any computation of Consolidated N'et Kami rigs Available For Restricted Payments; i x) dividends payable in stock of the Company; <n ty) exchanges of stock of one or more classes ef the Company, except to the extent that cash or other value is involved in such exchange. The term "Restricted Payments" as used in this paragraph (ill shall not include amounts paid bv the Company to holders if its employee stock options in satis faction and termination of such options, provided, however, that any such amounts not included as Restricted Payments -Wall he treated ns an operating expense or the Company when paid for purposes of computation of ('onsolidated Not Ranting*. The term "stock" us used in this paragraph 6R shnll include warrants or options to purchase stock. 6C. Debt and Other ftestrietiou. The Company covenants that it will no', and will not permit any Subsidiary to; 6C(1) Liens--Create, assume or suffer to exist any Lien upon any of its propertyor assets (other titan the shares of the Company's common stock referred to in para graph 81), whether now owned or hereafter acquired (whether or uot provision is made for the equal and ratahie securing of the Note in accordance with the provisions of paragraph 5C), except (i) Liens for 'axes not yet due or which are- being contested in good faith by appropriate proceedings, (ii) other Liens incidental to the conduct of its business or the owner-hip of its property and asset* which worn not incurred in connection with the bo. .owing of money or the obtaining of advances or credit, and which do not in the aggre gate materially detract from the value <>f its property or assets or materially impair the use thereof Ln the operation of its business, (iii) Liens on property or assets of a Subsidiary <c secure obligr ons of such Subsidiary to the Company or another Subsidiary :v Liras existing on thii date hereof to secure outstanding obligation of SubsiuiurUi (rcrmitted by She provisions of clause (iv) of paragraph 60(2), (iv) any Lten existiug vn any projieity of any corporation at the time it hereafter becomes a Subsidiary, or existing prior to the tine of acquisition upon any property hereafter acquired by the Company or uuy Subsidiary through purchase, merger or consolidation or otherwise, whether er not assumed by the Company or such Subsidiary, or hereafter placed upon property at the time of acquisition of such property by the Company or any Subsidiary to secure a portion of the purchase price thereof, provided, however, that () any such Lion shall not encumber any other protieriy of the Company or such Subsidiary, and (f>) the aggregate amount of Debt secured by all such Liens and er.y Liens permitted by clause (v) of this paragraph 6C(1) does not violate tho proviso to clause (ii) of paragraph 6C(2), (v) any Lion renewing, extending or refunding a'>/ Lien permitted by clause (iv) above, provid'd, however, that the principal amount secured js not increased, and the Lien is iot extended to other property, 9 (vi) Liens upon tfao inventory of airplanes of Thurston Aviation, Inc. to isecnre Debt of Thurston Aviation, Inc. permitted by clause (ii) of paragraph 60(2), provided, however, that the aggregate amouit of Debt secured by all such Liens shall not exceed $2,150,000 at any time out standing, and (vii) Liens on life insurance policies owned by the Company and any of its Subsidiaries securing Debt of the Company and such Subsidiaries evidencing premium loans on said policies, 6C(2) IMA--Create, incur, assume or suffer to exist an} Funded or Curt cut Debt, except (i) Funded Debt represented by the Note, (ii) Funded or Current Debt of tbe (Company or any hubsid'sry secured by Liens permitted by the provisions of clauses (iv), (v) and (vi) cf paragraph tiC'(l) or unsecured and either issued or assumed b" the Company or &tir Sub sidiary in connection with payment to sellers of properties or usiiiesaes acquired by tbe Company or auy Subsidiary or payable by a Subsiding and outstanding a< tbe time it became a Subsidiary, provided, however, that (a) the aggregate principal amount of all such Debt which shall be so secured shall not exceed $2.HO,000 at any time outstanding and (6) the aggregate principal amount of all such Debt shall not exceed $5,000,000 at any turn: outstanding, for tbe Company and all Subsidiaries, (iii) Funded or Current Debt of any Subsidiary to the Comjwny or say other Subsidiary, (iv) Funded Debt of Subsidiaries existing on June 30,1973 is tbe aggregate principal amount of not more than $2^500,000 and indebtedness of Kinetics Inter national Corporation outstanding on tbe date hereof in an aggregate principal amount not exceeding $77,000 eecured by mortgage on land located in Denton County, .Texas, but in i ? *mcli case iitcluding any extension or renewal thereof, (v) additional Funded Debt of the Company evidenced by its Subordinated Debt, provided, however, tbe aggregate principal amount of all Subordinated Debt of the Company shall not exceed $35,000,000 at any time outstanding, (vi) additional unsecured Funded Debt of the Company in an aggregate principal amount not exceeding $60,000,000 incurred and to be ineurrod pursuant to the Bevolving Credit and Term Loan Agreement, dated December 31, 1978, as amended to 51ay 19,1980, approximately $30,000,000 of which har Iwen incurred in connection with the acquisition (o) by Tyler Aviation Company of all the outetanditig stock of Thurston Aviation, Inc. and (5) by Tyler Transportation Company of alt the- outstanding stock of Tliurnton Motor Lines, Inc. and all other asuets of Thurston, Inc., and tb balmne of which has been or is to bo incurred in connection with the financing of ati(!i'.>oiu.i capital expenditnres for the Company mod its Subsidiaries and for working capital jmriwses of the Company, provided, how ever, that such Funded Debt shall, if tbe same shall then be outstanding, be eon- 10 verted to i fiv -year term loan not later than 1983 and such Funded Debt may not be extended, renewed or refunded after the conversion to such term loan, (vii) additional Funded Debt, provided, however, that the aggregate amount at any time outstanding of all such additional Funded Debt permitted l-y this clause (vii) shall not exceed $15,000,000 less the then outstanding aggregate amount of Debt permitted by clause (ii) above and clause (viii) below, (via) unsecured Debt of Thurston Motor Lines, Inc. under its existing revolving credit agreement with North Carolina National Bank, provided, how ever, that such Debt shall not exceed ififlOQJOQO at any time outstanding, (ix) Debt evidenced by life insurance premiouji loans secured by Liens per mitted by clause (vii) of paragraph 6C(1), and (x) other unsecured Current Debt of the Company, provided, however, that (a) die aggregate principal amount of all such Current Debt at any time outstand ing siull not $25,000,000, and (5) the Company shall not create, incur, naqir>A or softer to exist any Current Debt permitted by this danse (x) on any day unless there shall have hues a period of at least 60 consecutive days within the 12 months' period immediately preceding such day during which the Company shall have baas free from all Current Debt permitted by tins clause (x); 6C(v/ Loans, A&naem tad Iavsatwmfs Mihi or permit to remain outstanding any loan or advance to, or guarantee (other than the Company's guarantee re ferred to in paragraph 6C(2)(v)), endorse or otherwise be or become contingently Sable, directly or indirectly, in collection with the obligations, stock or dividends cf, or own, purchase or acquire any stoek, obligations or securities of, or any interest in, or make any capital contribution to, any other Person escoptthat (i) the Company or any Subsidiary may make or permit to remain outstand ing loans or advances to any Subsidiary, (ii) the Company or any Subsidiary may own, purchase or acquire stoek, obligations or securities of a Subsidiary or of a corporation which immediately after such purchase or acquisition will he a Subsidiary, (iii) tbs Company or any Subsidiary may acquire and own stock, obligations or securities received in settlement of debts (eisated in the ordinary course of business) owing to tbo Company or any Subsidiary, (iv) tha Company may own, purchase or acquire (a) commsrcisl paper nutating not in excess of one year from the data of acquisition and rated PI by Moody's Investors Service, Inc. or A1 by Dun Bradsireet, Ine. on the data of acquisition, (6) certificates of dsposit in United States or Canadian com mercial banks (having capital resources in excess of $60,000,000) maturing not in excess of one year from tbo date of acquisition and (c) obligations of the United 8tates Government or any agency thereof and obligations guarantied by the United States Government, or any Agency thereof, (v) the Compeny or any Subsidiary may endorse negotiable instrm. -at* for collection in the ordinary course of business, 11 (vi) the Company may guarantee (a) the obligations of Tyler Pipe Indus tries, Inc. under a lease of computer equipment, (b) payment of trade accounts payable of Subsidiaries incurred in the ordinary course of business and which are not prohibited by paragraph 6C(2); and any Subsidiary may guarantee the payment of trade accounts payable of any other Subsidiary incurred in the ordinary course of business and which are not prohibited by paragraph 6C(2), provided, however, that all of the stock of every class of any such other Subsidiary is owned, either directly or through Subsidiaries, by the Subsidiary guaranteeing such payment of trade accounts payable, (c) the obligations of Atlas Po* ar Company for the payment of workmen's compensation liabilities dne and to become due under the laws of the various states in which Atlas Powder Company transacts business, and may indemnify The Aetna Casualty and Surety Company, or other casualty insurance company selected by Atlas Powder Company, for any loss which may be incurred or sustained as a result of furnishing any bond re quired by the insurance commissioner or similar authority in any State in wbieh Atlas Powder Company may elect to w'J-insure workmen's compensation claims, and (d) industrial development revenue bonds in the aggregate principal amount not exceeding $900,000 issued by Hancock County, Mississippi in connection with the fluffing of the acquisition and construction of a shipping and receiving terminal facility leased by Hancock County, Mississippi to Atlas International, In&, (vit) the Company may permit to remain outstanding guaranties of perform ance bonds in effect on March 25,1977, hid bonds and theu existing, non-renewable and non-cxtondihic lease obligations of Southwestern Engineering Company ("Southwestern"), in an aggregate amount not exceeding $25,000,000, provided that such guaranties with respect to such performance bonds and lease obligations shall not exceed $19,000,000 and such guaranties with respect to bid bou-ls issued in connection with contracts bid by Southwestern prior to April 15, i977 and extensions thereof, and performance bonds issued after March 25, 1977 in con nection with contracts awarded to Southwestern relating to such bid bonds shall not, in the aggregate at any time outstanding, exceed $6,000,000, and provided that the Company h"s (pursuant to an existing, valid and binding agreement) full, absolute and unconditional recourse to Cronus Industries, Inc. for any amount which might be payable by the Company pursuant to any such guaranties. (viii) the Com.,aay or any of its Subsidiaries may guarantee Debt of Thurs ton Aviation, Inc. permitted by danse (ii) of paragraph 6C(2) in the aggregate principal amount not exceeding $2,150/Jfl0, and Thurston Aviation, Inc. may guarantee indebtedness incurred by its customers to third parties in order to purchase inventory from Thurston Aviation, Inc. in the aggregate principal amount not exceeding $600,000, (ix) Thurston Motor Lines, Inc. may own a purchase obligation in the princi pal amount of approximately $235,000 representing the purchase price of an airplane sold by Thnreton Motor Lines. Inc.. (x) the Company may make or permit to remain outstanding loans or advances to, or guarantee, endorse or otherwise be or become contingently liable in connection with the obligations, stock or dividends of, or own, purchase or acquire stock, obligations or securities of, any other Person and any Subsidiary may make or permit to remain outstanding loans or advances to any other Person, provided, however, that the aggregate principal amount of such loans and advances, plus the aggregate amount of such eontingant liabilities, plus the 12 aggregate amount of the investment (at cost) in such stock, obligations and securi ties at any time outstanding shall net exceed $1,000,000, (xi) the Company or Atlas Powder Company may make or permit to remain oatstanding loans or advances to, or guarantee, endorse or otherwise be or become contingently liable in connection with the obligations, stock or dividends of, or own, pnrehase or acquire stock, obligations or securities of, DISAP Ltd., pro vided, however, that the aggregate principal amount of such loans and advances, plus the aggregate amount of such contingent liabilities, pins the aggregate amount of the investment (at cost) in such stock, obligations and securities at any time outstanding shall not exceed $1,700,000, and (xii) the Company or Atlas Powder Company may be a limited partner in Axom Limited Partnership of which C8G Exploration Company, a subsidiary of Cities Service Gas Company, is the general partner, provided, howev er, that the aggregate investment in sash partnership shall not exceed $3,700,000 and provided further, however, that neither the Company nor Atlas Powder Company shall, directly or indirectly be liable for any indebtedness or othet obligation (whether contingent or otherwise; of such limited partnership; 60(4) Sale of Mode and Debt of SobaUUarioa--Sell or otherwise dispose of any shares of stock or Funded or Current Debt of any Subsidiary, except to the Company or n Subsidiary, and sxcspt that all shares of stoek and Debt of say Subsidiary at the time owned by or owed to the Company and all Subsidiaries may be sold as an entirety for a consideration which represents the fair value (as determined in good faith by the Board of Directors of the Company) at the time of sale of the shares and Debt so sold, provided that the assets of such Subsidiary do not constitute a sub stantial part of the consolidated assets of the Company and all Subsidiaries and that inch Subsidiary shall not have contributed a substantial part of Consolidated Net Earnings (as defined in paragraph 6B) for any of the three fiscal years then most recently ended, and farther provided that, the time of soeh sals, sneh Subsidiary shall not own, directly or indirectly, any shares of stoek or Debt of any other Subsidiary (nuless all of the shares of stock and Debt of such other Subsidiary owned, directly or indirectly, by the Company and all Subsidiaries are simultaneously being sold as permitted by this paragraph 6C(4)) or of the Company; 6C(5) Merger and Sale of Amts Merge or consolidate with any other corpora tion or sell, lease or transfer or otherwise dispose of all or a substantial part of its assets, or assets which shall have contributed a substantial part of Consolidated Met Earnings (as defined in paragraph 6B) for any of the three fiscal years than most recently endod, to any Person, except that (i) any Subsidiary may merge or consolidate with the Company (provided that the Company shall be the continuing or surviving corporation) or with any one or more other Subsidiaries, (ii) any Subsidiary may sell, lease, transfer or otherwise dispose of any of its assetr. to the Company or another Subsidiary, (iii) any Subsidiary may sell or otherwise dbipose of all or substantially aL of its assets subject to the conditions specified in paragraph 6C(4) with respect to a sale of the stock of such Subsidiary, 18 i i1 :! i! ;j i II (iv) the Company may merge or consolidate with any other corporation, provided that (al the Company shall he the continuing or surviving corporation, (6' the previously outstanding stock of the Company shall not be changed into or exchanged for the stock or other securities of any Person other than the Company in connection with such merger or consolidation, and (c) the Company s the continuing or survmng corporation shall not, immediately after such merger or consolidation, be in default under any of the obligations of the Company under this Agreement or the Note, including all covenants herein and therein contained, and 6C(6) * Kantals--Enter into, or permit to remain in effect, any agreements to rent or lease (as lessee) any real or personal property (other than sales and administrative offices, data processing equipment and passenger automotive equip ment) for initial terrne (including options to renew or extend any term, whether or not exercised) of more than three years providing for payments by the Company and all Subsidiaries, on a consolidated basis, in an aggregate annual amount under all such agreements in excess of $2,000,000, provided, however, that the provisions of this paragraph 6C(6) shall not apply to any lease constituting Fended Debt of the Company or any Subsidiary permitted under the provisions of paragraph 6C(2); 6C(7) Sale and Lease-Back--Eater into any arrangement with any bank, insur ance company or other lender or investor or to which such lender or investor is a party providing for the leasing by the Company or any Subsidiary of real or personal property which has been or is to be sold or transferred by the Company or any Subsidiary to such lender or investor or to any Person to whom funds have been or are to be advanced by such lender or investor on the security of such property or rental obligations of the Company or any Subsidiary; 8C(8> Sal* or Discount of BocoivaMoa -Discount or sell with recourse, or sell for less than the face value thereof, any of its notes or accounts receivable; or 6C(9) Certain Contract!--Enter into or be a party to (i) any contract providing for the making of loans, advances or capital con tributions to any Parson other than a Subsidiary (except when the obligation is limited to a fixed maximum amount which is within the limitations of danse (vii) of paragraph 60(3)), or the purchase of any property from any Peraoif, in order to enable such Purson to maintain working capital, net worth or any other balance sheet condition or to pay debts, dividends or expense*, or (ii) any contract for the purchase of materials, supplies or other property if such contract (or any related document) require# that payment for such matsrials, supplies or other property shall be made regardless of whether or not deliv ery of such materials, supplies or other property is ever made or tendered, or (iii) any contract to rent or lease (as lessee) any real or personal property if such contract (or any related document) provides that the obligation to make payments therounder ir, absolute and unconditional under conditions not cus tomarily found in commercial leases then in general use or requires that ths lessee purchase or otlierwiso acquire securities or obligations of the lessor, or 14 (iv) any contract for the iale or ue (as vendor, lessor or hirer) of materials, supplies or other property if inch contract (or any related document) requires that payment for such materials, supplies or other property, or the nse thereof, shall be subordinated to any indebtedness (of the purchaser or user f such materials, supplies or other property) owed or to be owed to any Person, or (v) any other eontrnet which, in economic effect, i* substantially equivalent to a guarantee, except as permitted by clauses (v) to (vii), inclusive, ami bv clause (xi), of paragraph 6C(3). CD. If*"?*** of Stock by Snbaidlarias. The Company covenants that it will not permit any Subsidiary to issue, sell or dispose of any shares of its stock of any elass (othsr than directors' qualifying shares) except to the Company or another Subsidiary. 7. Sweats of Estate. If any of the following events shall occur and be eontinning for any reason whatsoever (and whether sneb occurrence shall bo voluntary or involuntary or come about or be effected by operation of law or otherwise): U the Company defaults in the payment of any principal of or premium, if say, on any Note when the same shall become due, either by the terms thereof or otherwise as herein provided; or If the Com pany defaults in the payment of any interest on nay Note for wore than 10 days after tbs data due; or if the Coanpany or any Subsidiary defaults in any payment of principal of or premium, if any, or interest on an? other obligation for borrowed money (or any obliga tion under conditional sale or other title retention agreement or any obligation issued or assumed aa full or partial payment for property whether or not secured by purchase money mortgage or any obligation under notes payable or drafts seesptsd repressstiaf extensions of credit) beyond any period of grace provided with respect thereto or definite in the performance of any other agreement, term or condition contained in any agreement under which any such obligation is created (or if any othsr default under any sods agree ment shall occur and be continuing) if the affect of such default is to cense, or to permit the holder or holders of such obligation (or a trustee on behalf of such holder or holders) to cense, such obligation to become duo prior to its stated maturity; or If any material representation or warrant? made by the Company Ikrein or in any writing furnished in connection with or pursuant to this .Agreement shall be false in any material icepsot on the date as of which made; or if the Company defaults in the performance or observance of any agreement contained in paragraph 6; or if tbs Company defaults in the perform ance or observance of any other agreement, term or condition contained herein and such default shall not have been remedied within 80 days after written notice thereof shall have been received by the Company from you; or if the Company or any Subsidiary makes sn assignment for the benefit of creditors or admits in writing its inability to pay its debts generally as they bocoms due; or if sn order, judgment or decree is entered adjudicating the Company or any Subsidiary bankrupt or insolvent; or if the Company or any Subsidiary petitions or applies to any tribunal for the appointment of a trustee or receiver of the Company or any Subsidiary, or of any substantial part of the assets of the Company or any Subsidiary, or commences any proceedings (other than proceedings for the voluntary liquidation and dissolution of a Subsidiary) relating to tbs Company or any Subsidiary under any bankruptcy, reorganization, arrangement, insfiveno/, readjustment of debt, dissolution or liquidation lew of any jurisdiction, whether now or hereafter in effect; or if any such petition or application is filed, or any such proceedings are com- 15 menced, against the Company or any Subsidiary, and the Company or such Subsidiary by any act indicate* its approval thereof, consent thereto, or acquiescence therein, or an order, judgment or decree is entered appointing any inch trustee or receiver, or adjudi cating the Company or any Subsidiary bankrupt or insolvent, or approving the petition in any such proceedings, and such order, judgment or decree remain uuatayed and in effect for sure than 60 days; or if any order, judgment or decree is entered in any pro ceedings against the Company or any Subsidiary decreeing the dissolution of the Company or such Subsidiary and each order, judgment or deeree remains unstayed and in effect for r.ore than 60 days; or if any order, judgment or decree ia entered in any proceedings against the Company or any Subsidiary decreeing a split-up of the Company or inch Subsidiary and such order, judgment or decree remains unstayed and in effect for more than 60 days; then the holder or holders of at least two-thirds of the principal amount of the Notes outstanding may, at its or their option, by notice in writing to the Company, declare all of the Notes to be, and all of the Notes shall thereupon be and become, forth with due and payable together with interr at accrued thereon. 8. Representations and Warranties. The Company represents and warrants: 8A. Orgaaintten and Qnaliflcatioa. The Company is a corporation dnly organized and existing in good standing under the law* of the 8tate of Delaware, each Subsidiary is dnly organized and existing in good standing under the laws of the jurisdiction in which incorporated, and the Company has and each Subsidiary has the corporate power to own its respective property and to carry on its respective business as now being conducted, and the Company is and each Subsidiary is dnly qualified as a foreign corporation to do business pd ii. *ood standing in every jurisdiction in which the nature of the respective business conducted by it makes such qualification naooasary. 8B. Financial Statements. The Company has famished yon with the following finan cial statements, identified by a principal financial officer of the Company: (i) consoli dated balance sheets of the Company and its Subsidiaries at December 81 ia each of the years 1971 and 1972, and consolidated statements of income and retained earnings of the Company and tie Subsidiaries for the fiscal years then ended, together with the reports thereon of Arthur Young & Company, and (ii) consolidated balance sheet of the Company and its Subsidiaries at March 31, 1978 and consolidated statement of income and retain**] earnings of the Company and its Subsidiaries for the throe months' period then ended, prepared by the Company. All ench statements have been prepared in accor dance with generally accepted accounting principles on a consistent basis during tmch periods. Snob balance sheets fairly present tbs condition of the corporations to which they relate aa at the dates thereof, and auch stetemanta of income and retained earnings fairly present the results of the operations of auch oorporetions for the period* Indicated. There has been no material adverse change in the condition, financial or otherwise, of the Com* pany and its Subsidiaries since March 31,1973. 8C. Actions Fending. There is no action, enit, Investigation or proceeding pending or, to the knowledge of the Company, threatened against the Company or any of its Subsidiaries before any court, arbitrator or administrative or governmental body, which might result is any material adverse change in the business or financial condition of the Company or such Subsidiary. In this connection (he Company ha* furnished /ou u letter from its counsel, dated the date hereof, with respect to a controversy involving employee taxes of C&H Transportation Co., Inc. 16 8D. Outstanding Debt Neither the Company cor any of its Subsidiaries has out standing any Debt except ea permitted by paragraph 6C(2). There eziata no default seder the provisions of any instrument evidencks ?ny soch Debt or of any agreement relating thereto. 8E. Title to Fropertiea. The Company baa and each of its Subsidiaries has good and marketable title to its respective properties and assets, including the properties and assets reflected in the balance sheet as at December 31, 1972 hereinabove described, except (i) properties and assets sold nr otherwise disposed of since that date in the ordinary course of business, (ii) to** property, wi-h improvements thereon, formerly owned by Aerobics International, Inc. and located at 12100 Preston Bood, Dallas, Texas, sold for an aggregate sales price of approximately $1,100,000, and (iii) the property formerly owned by the Company and located on Plano Boad, Dallas, Tessa, add for an aggregate sales price of approximately $295#X>, payable in installments, subject to no Lien of any kind except Liens permitted by paragraph 60(1). 8F. Taxes. The Company has and each of its Snbaidiarias has Hied all Federal, State and Canadian federal and provincial income tax returns which art required to be filed, end each has paid ell taxee as shown oc mid retnrns and on ell assessments received by it to the extent that each taxes have beeome dne. The Federal income tax Habilitus of tha Company and all of its Subsidiaries have bean tramlnad and reported on by the Internal Bevenue Berrios (or closed by applicable statutes) and satisfied for all fiscal years prior to and including the fiscal year ended Deoember 31, 1966. SO. Q'n.etoMf Agnmaati and Charter Frvrkleae. Neither the Company nor any of its Subsidiaries is a party to any contrast or agreement or subject te any charter or other corporate restriction which materially and adversely affects its business, property or assets, or financial condition. Neither the execution and delivery of this Agreement end the Note nor fulfillment of nor compliance with the terms and provisions hereof and of the Note will conflict with, or result in a breach of the terms, conditions or provisions of, or constitute a default under, or result in any violation of, or require any authorization, oonaest, approval, exemption or other action by or notice to any court or administrative or governmental body pursuant to, the charter or by-laws of the Company or any of its Subsidiaries or any agreement, instrument, order, judgment, decree, statute, lew (includ ing say securities or Bine Bky law), rule or regulation to which the Company or any of its Subsidiaries is subject. 8H. Interest Bqualisation Tax. The Company is a "United States person" and will not apply the proceeds of the Note to the "acquisition" of "stock" of a "foreign issuer" or "debt obligation" of a "foreign obligor", as such terms are defined in Chapter 41 of the United Status Internal Bevenue Code, as amended. The Company has not taken and will not take any action which would subject your acquisition of the Note to the United States Interest Equalization Tax or any similar tax designed to limit or restrict invest ments in foreign stock or debt obligations. 81. legislation B, etc. At tbe time of the closing, neither the Company nor any Sub sidiary will own any margin securities within the meaning of Regulation O of the Board Of Governors of tbe Federal Reserve System, other than not more than 362,521 shares of 17 the Company's common stock acquired by (and held in the treasury of) the Company by the application of the proceeds of indebtedness outstanding under its Revolving Credit Agreement dated October 13,1972 which indebtedness is not to be retired or refunded by application of any of the proceeds of the sale of the Notes. Neither this Agreement nor fulfillment of nor compliance with the terms and provisions hereof and of the Note will violate Regulation G, Regulation T or any other regulation of the Board of Governors of the Federal Reserve System or the Federal Securities Exchange Act of 1934, each as in effect now or as the same may hereafter be in effect on the date of dosing. 8J. Torvign Direct Investments. The Company will not, and will not permit any of its Subsidiaries to, directly or indirectly, ure any part of the proceeds of the sale of the Note to you for the purpose of any foreign direct investment which would result in whole or in part in a violation of Executive Order No. 11387 or the Foreign Direct Invest ment Regulations, 15 CFR Part 1000, or making any loan or investment which would con stitute "foreign loans and investments inconsistent with the Foreign Direct Investment Program" or which would cause tbo Note to be deemed "covered assets", as sueh terms are used in section III of the Federal Reserve Foreign Credit Restraint Guidelines as issued 'November 11, 1971 by the Board of Governors of the Federal Reserve System, or any regulations, interpretations or rulings Jhereunder or supplements or intendments thereto. 8IL Offering of Bicnritfes, etc. Neither the Company nor any agent acting on its behalf has offered the Note or any similar securities of the Company for sale to, or solicit'd any offers to boy the Note or any similar securities of the Company from, any Person or Persons other than yon and not more than two oth' i- institutions, and neither the Company nor any agent acting on its behalf will take any action which would subject the issuance or of the Not? to the provisions of Section 5 of the Securities Act of 1933, as amended. 8L. AoqalattioB of Ktastios International Corporation and Baploslvss DMrica. The Company (i) through its Subsidiary, Tyler Bolding Company ("THC") her acquired approximately 98.7% of the outstanding capital stock of Kinetics Internationa i Corpora tion for u total consideration consisting of $4,090,639222 eash, 2,096 shares of th' Company's common stock, and $1,900,000 principal amount of THC's 5% Convertible Subordinated Debentures due 1983, all pursuant to an agreement dated March 20, 1973, a true end cor rect copy of which the Company has delivered to you; and (ii) through its Subsidiary, Atlas Powder Company ("Atlas") has acquired substantially all of the assets and business of the former Explosives Division of ICI America Inc. ("1CIA"), for a total considera tion estimated to be not more than $16,500,000, of which $8,000,000 was paid to ICIA on July 30,1973, all pursuant to the contract dated March 20,1973, a true and correct copy of which the Company bae delivered to you. 8M. Application of Procoeds. Of the net each proceeds of the sale of the Note to you, approximately $13,000,000 will be used to retire in full the indebtedness of the Com pany outstanding under its Credit Agreement dated as of June 1, 1973, approximately $11,900,000 will he used to retire in full tue indebtedness of the Company outstanding under its Term Loan Agreement dated ns of September 30,1972, approximately $15,000,000 will be used to retire in full the indebtedness of the Company outstanding under its open 18 line of credit from three commercial basks, and the balance will be used to prepay in part the indebtedness of the Company outstanding under its Equipment Financing Agree ment dated as of December 20, 1972. No part of the proceeds of the sale of the Note will be* applied (i) to prepay any part of the Company's indebtedness outstanding under its Revolving Credit Agreement dated as of October 13, 1972, in the amount of $5,625,000 as at July 1, 1973, the proceeds of which indebtedness were applied to the purchase of capital stock of the Company for its Treasury or (ii) to the purchase of, or to the reduc tion or retirement of any indebtedness incurred to purchase, any margin security within the meaning of Regulation G of tl j Board of Governors of the Federal Reserve System. 9. Representation at tha Purchaser. You represent and in making this sale to you it is specifically understood and agreed that you are acquiring the Note for the purpose of investment and not with a view to or for sale in connection with any distribution thereof, provided that the disposition of your property shall at all times be and remain within yonr control. 10. 1? SirfttsMS- For the purpose of this Agreement, the following terms shall have the following meanings: IOA. "Parsam" shall mean and include an individual, a partnership, a corporation, a trust, a joint venture, an unincorporated organisation and a government or any depart ment or agency thereof. IOB. "ItibskHsry" shall mean any corporation organized under the laws of aay state of ti.e United States of America, Canada, or any province of Canada, which con ducts the major portion of its business in the United Stater of America or Canada, and all of the stock of every class of which (exeept directors' qualifying shares) shall, at the time as of which any determination is being made, be owned by the Company either directly or through Subsidiaries, provided that for all purposes of this Agreement Tylsr Pipe Industries Ine^ a Texas corporation, and Kinetiea International Corporation, a Delaware corporation, shell each constitute a Subsidiary so long as the Company shall hold at least 99% and 97%, respectively, of the outstanding stock of every class rf such corporations. IOC. "Funded Debt" shall mean any obligation payable more than one year froTM the date of the creation thereof, which under generally accepted accounting principles is shown on the balance sheet as a liability (excluding reserves for deferred income taxes and other reserves to the extent that sueh reserves do not constitute an obligation), plus (without duplication) Amounts equal to the aggregate net rentals (after making allowance for any interest, tazes, maintenance or other expenses included therein) payable more than one year from the dite of the creation thereof under any lease of real or personal property (whether or not such rentals accrue and become payable only on an annuel or other periodic basis) which lease (i) constitutes the substantial equivalent of a purchase of the property subject to such lease, or (u) has an initial term materially lees then the useful life of such property and provides that the lessee has the option to renew such lease for the remaining useful life of such property at a rental which at the inception of such lease appears to be substantially less than the fair rental value of such property, or (iii) provides an option to the lessee to acquire the property subject to such lease at 19 lyppjj.iH- ji.ij.ph m i. !u. r- a price which, at the inception of such lease, appears to he substantially leas than the probable fair value of such property at the time or times of permuted acquisition by the lessee, or (iv) otherwise meets the capitalization criteria under genoraPv accepted account ing principles for leasing transactions entered into on or after January 1,1977. "Current Debt" 3haII mean any obligations for borrowed money {and any notes payable and drafts accepted representing extensions of credit whether or not representing obligations for borrowed money) payable on demand or within a period of one year from the date of the creation thereof; provided ihat any obligation ehuli be treated as Funded Debt, regardless of its term, if such obligation is renewable pu-su ml to the terms thereof or of u revolving credit or similar agreement effective for more than one year after the date of the creation of such obligation, or may be payable out of the proceeds of a similar obligation pursuant to the terms of such obligation or of any such agreement. A.ny obligation secured by a Lien on, or payable ont of the proceeds of prodnetion from, property of the Company or any Subsidiary shall be deemed to b( Funded or Current Debt, an the case may be, of the Company or such Subsidiary even though such obligation shall not be assumed by the Company or such Subsidiary. "Debt" shall mean Funded and/or Current Debt, as the case may be. IOD. `'Consolidated Working Oaphal" ahall moan the excess of consolidated current assets over consolidated current liabilities of the Company and its Subsidiaries both determined in accordance with generally accepted accounting principles, provided that there shall not be included in current assets (i) any loans or advances (other than pursuant to paragraph 6C(3)(iv)) made by the Company or any Subsidiary, nor (u) any assets located outside (including sny amounts payable by Persons located outside) the United 8tates of America and Canada, and provided, further, that then shall be included in current liabilities all indebtedness of the Company and its Subsidiaries, unless contingent and not ueterminable, maturing on demand or within one year from the date as of which Consolidated Working Capital is to be determined and not renewable or extendible by the terms thereof, at the option of the debtor, beyond such year (including, without limita tion, amounts due within such year with respect to the principal of and premium, if any, and accrued interest on the Notes o? other indebtedness). IOE. "grant of Default" shall mean any of the events epeetiled in paragraph 7, pro. ided that there has been satisfied any requirement in connection with sue'a event for the giving of notice, or the lapse of time, or the happening of any further condition, event or act, and Default" shall mean any of such events, whether or not any such requirement has been satisfied. IOF. "OSoer'i Certificate" shall mean a certificate signed in the name of the Com pany by its President, one of its Vice President* or its Treasurer. 100. "Lien" shall mean any mortgage, pledge, security interest, encumbrance, lien or charge of any kind (including any conditional sale or other title retention agreement, any lease in the nature tliereof, *nd the filing of or agreement to give any financing state ment under the Uniform Commercial Code of any jurisdiction). 1011. "finbar(limited Debt" shall mean Funded Debt of the Company consisting of its 5% Convertible Subordinated Debentures due 1903 ar, 1 other Fanded Debt which is 20 n r~ expressly by Its terms made junior end subordinate to the prior payment in full of the Notes by terms t. least as restrictive as those set forth in Exhibit D hereto attached. 101. "Bifnificaut Subsidiary" shall mean a Subsidiary of the Company which consti tutes a significant subsidiary as defined in Section 210.1-02(t) of Regulation S-X of the Securities and Exchange Commission and includes Tyler Pipe Industries, Inc., a Texas corporation, CAH Transportation Co., Inc., a Texas corporation, (Southwestern Engineering Company, a !>elaware corporation, Allas Powder Company, a Delaware corporation, and Tyler Holding Company, a Delaware corporation. 11. XisMlkftMU. IIA. Has* Offlee Payment. The Company agrees that, as long as you shall hold any Note, it will make payments of principal thereof and interest and premium, if any, thereon, by crediting your account, No. 8264)0-027, in Morgan Guaranty Trust Company of New York, 15 Broad Street, New York, New York or inch other account in your name in a bank as you may designate in writing, notwithstanding any contrary provision herein or in any Note with respect to the place of payment Yon agree that, before disponing of any Note, you will make s notation thereon of all principal payments previously made thereon and of the date to which interest thereon has been paid, and will notify die Com pany of the name and address of the transferal of such Note. IIB. xpenMS. The Company agrees, whether or not the transactions hereby con templated shall be consummated, to pay, and save you harmless against liability for the payment of, all out-of-pocket expenses arising in connection with this transaction, includ ing any United States documentary stamp taxes (including interest and penalties, if any) which may be determined to be payable in respect of the execution and delivery of any Note, any tax (including interest and penalties, if any) which may be determined to be payable under the provisions of Chapter 41 of the United States Internal Revenue Code or any similar statute, in respect of your acquisition of any Note, the reasonable fees and expenses of your special counsel and the expense of printing this Agreement sad any Notes. IIC. Consent to Amendments. This Agreement may he amended, and the Company may take any action herein prohibited, or emit to perform nay act herein required to be performed by it, if the Company shall obtain your written eminent to such amendment, action or omission to act Each bolder of any Note at the time or thereafter outstanding shall be bound by any content authorized by thia paragraph HO or paragraph 11D(3), whether or not such Note shull have been marked to indies to such consent, but any Note issued thereafter shall contain a reference or bear a notation referring to any such consent IID. Provisions Applicable if Any Mote Bold. In the e/ent that you ahull sell any Note or any part thereof, the following provisions shall apply: 11D(1) Notices to Subsequent Holder. If any Noto shall have been transferred to another holder pursuant to paragraph HE and such bolder shall have designated in writing the address to which communications with respect to such Note shall be mailed, ell notices, certificates, requests, statements and other documents required or permitted to be delivered to you by any provision hereof shall also be delivered to each ''cider, except tlmt financial statements and other documents provided for 21 n 5`i'f. * rf-& wmm -R?!H8!5!IBSH? m mmmmmm in paragraph 5A need nut hi delivered to any each holder holding lets than lO^fc of the aggregate principal amount of Notes from time to time intitanding. 11D(2) Pro Eats Payments. All interest payments and payments or prepayments of principal and premium shall be made and applied pro rata on all Notes at the time outstanding. 11I>(3) Consent by Holders of 66%%. Any consent, approval, notice or de mand required or permitted to be given by you by any provision hereof shall be suffi cient if given by the registered holder or holders of at least two-thirds of the principal amount of Notes at the time outstanding except that, without the written consent of the holder or holders of all Notes at the time outstanding, no amendment to this Agree ment shall extend the maturity of any Note, or reduce the rate of interest or any premium payable with respect to any Note, or affect the time or amonnt of any required prepayments, or reduce the proportion of the principal amount of the Notes required with respect to any consent IIE. Fans, Registration, Transfer and Exchange ci Votes. The Notes are issuable only as registered Notes in the denominations of $100,000 and any larger integral multiple of $10,000. The Company shall keep at its principal office s register in which the Company shall provide for the registration of Notes sad of transfers of Notes. Upon surrender for registration of transfer of any Note at the office of the Company, tha Company shall execute and deliver, at its expense, one or more new Notes of a like aggregate principal amonnt registered in tha name of the designated transferee or transferees. At the option of the holder of any Note, such Note may be exchanged for other Notes of any authorized denominations, of a like aggregate principal amount, upon surrender of the Note to be exchanged at the office of the Company. `Whenever any Notes are so surrendered for exchange, the Company shall execute and deliver, at its expense, the Notes which the Note holder making the exchange is entitled to restive. Every Note presented or surrendered for registration of transfer shall be duly endorsed, or bo accompanied by a written instrument of transfer duly executed, by tha holder of such Note or his attorney dnly authorized in writing. Any Note or Notes issued fat exchange for any Note or upon transfer thereof shall carry the rights to unpaid interest and interest to accrue which were carried by the Note so exchanged or transferred, and neither gain nor lose of interest shall result from any such transfer or exchange. IIF. Versons Dearned Owners. The Company may treat the Person in whose name any Note is registered as the owner and holder of snob Note for the pnri>ooo of receiving payment of principal of (and nremium, if any), and interest on, such Note and for all other purpose* whatsoever, whether or not snch Mote shall be overdue, and the Company shall not be affected by notice to the contrary. IIG. Survival of tsprssontations and Warranties. All representations and warran ties contained herein or made in writing by the Company in connection herewith shall survive tiie execution and deliver/ of this Agreement and of the Note. IIH. 'nooesbors and Assigns. All covenants and agreements in this Agreement con tained by or on behalf of either of the parties hereto shall bind and inure to tlw benefit of the respee ve successors and assigns of the parties hereto whether so expressed or not. 111. KoLieee. All communications provided for hereunder shall be sent by first class mail and, if to you, addressed to yon in the manner (except as otherwise provided in paragraph 11A with respect to payments of principal of and interest and premium, if any, on the Note) in which this letter is addressed, and if to the Company, at its offices at 3121 Southland Center, Dallas, Texas 73201, or to such other sddress with respect to either party as such party shall jotify the other in writing. 1U. Descriptive Headings. The descriptive headings of the several paragraphs of this Agreeur nt are inserted for convenience only and do not constitute a part of this Agreement IIK. Governing Law. This Agreement shall be construed and enforced in accordance with, and the rights of the parties shall be governed by, the law of the State of New York. IIL. Counterparts. This Agreement may be executed simultaneously in two or more counterparts, each of which shall be deemed an original, and it shall not be necessary in making proof of this Agreement to produce or account for more than one inch counterpart. If you are in agreement with the foregoing, please sign tbs form of seeeptsaeo on the enclosed counterpart of this letter and return the seme to the undersigned, whereupon this letter shall become a binding agreement between you end the undersigned. Very truly yours, Tnaa Coaxmanow By J. F. McKnrnr PrtMemi The foregoing Agreement is hereby accepted ss of the date first above written. Tas Psubswtm. Lrsonasos Comarr or Isatoi By Eowaao B. Stuaovs Vice Pretident TYLER CORPORATION 3100 Southland Center Dallas, Texas 75201 May 27, 1980 First National Bank in Dallas P. O. Box 63000 Dallas, Texas 75283 Attention: Mr* Don R* Kuykendall, Vice President Bank of America National Trust and Savings Association 1 Allen Center 500 Dallas, Suite 3100 Houston, Texas 77002 Attention: Mr* William R. LaRue, Vice President Citibank, N.A. 399 Park Avenue New York, New York 10022 Attention: Mr. Frank G. Creamer, Jr., Vice President First'National Bank in Dallas Administrative Bank P. 0. Bex 83000 Dallas, Texas 75283 Attention: Mr* Don R. Kuykendall, Vice President RE: Revolving Credit and Term Loan Agreement Gentlemen: Reference is made to that certain Revolving Credit and Term Loan Agreement dated as of December 31, 1978, as amended by letter agreement dated November 1, 1979 (the "Loan Agreement"), among Tyler Corporation, a Delaware corporation (the "Company")# and each of you. Onless otherwise defined herein, each term used herein with its initial latter capitalized shall have the same meaning as in the Loan Agreement. The proceeds o the initial advances being made pursuant to this letter agreement will be used to repay all outstanding in debtedness under the Loan Agreement on the date hereof; and upon and by virtue of such repayment, and in accordance with the intent of the Banks and the Company to discharge and ex tinguish all liabilities, indebtedness and obligations of the Company to the Banks arising under or by virtue of the presently existing Interim Notes, all such liabilities, indebtedness and obligations shall be discharged, released and terminated, and such presently existing Interim Notes shall be marked "canceled and paid in full" and returned to the Company, The Company and each of you hereby agree that the Loan Agree ment should be, and hereby is, amended as follows: 1. Paragraph (j) of Section 1.01 of the Loan Agreement is amended to read as follows: (j) - "Termination Date" means April 30, 1983. 2. The table in Section 2.Cl of the Loan Agreement is amended to read as follows: Bank Commitment ft of All Commitments Dallas Bank of America Citibank $24,000,000 18,000,000 18,000,000 40.00ft 30.00 30.00 $60,000,000 100.00ft 3. The last sentence of the first paragraph of Section 2.01 of the Loan Agreement is amended by substituting a semicolon for the period and adding the following: provided, however, that if at any time the rate in (i) above prevails, any subsequent reductions ir. the rate in (li) above or increases in the rata in (i) above shall not reduce the rate of Interest which the Interim Notes bear below the rate in (1} above until the total amount of interest accrued on the Interim Motes after May 27, 1980 equals tbe amount of interest which would have thereafter accrued if the rate in {11} above had at all times been in effect. 4. Exhibits A-l, A-2 and A-3 to tha Loan Agreement are hereby amended by deleting in their entirety Exhibits A-l, A-2 and A-3 currently attached to the Loan Agreement and by substi tuting in lieu thereof the Exhibits A-l, A-2 and A-3, respectively, attached hereto as Appendices A, B arid C, respectively: and the term "Interim Notes" as used in the Loan Agreement shall mean the promissory notes of the Company as so attached hereto. -2 5. The obligations of each Bank to accept new Interim Notes hereunder and to return the presently existing Interim Motes to the Company are subject to the condition that, prior to or simul taneous with such acceptance and return by each Bank, the Adminis trative Bank shall have received the documents described in Section 5.01 of the Loan Agreement, in form and substance satisfactory to the Administrative Bank and in sufficient, number to provide one to each Bank, with the following exceptions: (a) Documents and legal opinions relating to Significant Subsidiaries shall be eliminated. (b) The opinion of legal counsel need express no opinion as to the matters contained in paragraphs (d), (e), (g), (h), (i), (j) and (k) of Section 3.01 of the Loan Agreement. * (c) Clauses (iii) and (iv) of paragraph (f) of Section 5.01 of the Loan Agreement shall be eliminated. Except as expressly amended hereby, the Loan Agreement is and shall be unchanged, and all of the terms, covenants, provi sions, and conditions thereof shall remain in full force and effect and are hereby ratified, confirmed, and incorporated herein by reference as if set forth verbatim. If you are in agreement with the foregoing, please sign the enclosed copies of this letter in the space provided below and return the same to Administrative Bank, whereupon this letter shall.become a binding agreement among the Company and each of you. Very truly yours TYLER CORPORATION The foregoing is agreed to: FIRST NATIONAL BANK IN DALLAS Treasurer -3- PTIERIM P/Cf-aSSPRY tCTE $24,000,000 Dallas, Texas May 27, 1980 Ch April 30, 1983, FOR VALOE RECEIVED, the undersigned, TYLER CORPORATION, a Delaware corporation ("Cccpary"), hereby promises to pay to the order of FIRST NATIONAL BANK IN DAUAS, a national banking association ("Bank"), the principal cub of IVenty-Four Million Dollars ($24,000,000), or, if less, the aggregate unpaid principal arount of all Advances made by Bank to Company pursuant to the Revolving Credit and Term Loan Agreement (hereinafter defined), together with interest an ary and all principal amounts retaining unpaid hereunder from time to time from the date hereof until payment in full, which interest is payable cn the lest day of each March, June, September and December during the term hereof, and cn the maturity hereof, at a rate per annum equal to the lesser of (i) the highest lawful rate, or (ii) a rate (calculated on the basis of actual days elapsed but amputed as if each calendar year consisted of 360 days) equal to 106% of the base cvnercial rate of interest established fros time to time by Bark for short-term, unsecured loans to substantial and responsible ccmoetcial borrowers, as such rate shall change from time to time, each change in the rate to become effective cn the effective date of such change without notice to Ccnpany; provided, however, that if at any tine the rate in (i) above prevails, any subse quent reductions in the rate in (ii) above or increases in the rate in (1) above shall not reduce the rate of interest which this Note bears below the rate in (1) above until the total amount of interest accrued cn this Note after May 27, 1980 equals the amount of interest which would have thereafter accrued if the rate in (ii) above had at all times been in effect. Both principal and interest are payable in lawful money of the United States of America at the office at Bank, as Administrative Bark under said Revolving Credit and Term Loan Agreement (`Administrative Bank"), at 1401 Elm Street, Dallas, Texas 75202, in immediately available funds. 'ibis Note is one of the Interim Notes referred to in, and is entitled to the benefits of, the Revolving Credit and Term Loan Agreement dated as of Decmfcer 33 , 1978, as amended by letter agreements dated November 1, 1979 and May 27, 1980 (such Revolving Credit and Asm Loan Agreement, as so amended, beirg herein called the "Revolving Credit and Tern Loan Agreement"), among Company, Bank, Administrative Bank, Bank, of America National Trust and Savings Association and Citlbvk, N.A. Ccnpary shall be entitled to prepay the principal of this Note from time to time and at any time, in whole or in part, without premium or penalty. Prepayments shall be applied as provided in the Revolving Credit and Ter* loan Agreement. Upon the occurrence of an Event of Default, as that tens Is defined in, and iqx the conditions stated in, the Revolving Credit and Ten Lean Agreement, the holder hereof may, at its option, declare the entire unpaid principal of and in terest cn this Note immediately due and payable, without notice, demand or pre sentment, all of which are hereby waived, and the holder hereof shall have tint right to offset against this Note any sum or suras owed by the holder hereof to Ccnpany or ary at its subsidiaries. TTUSt CORPORATION By________________ Treasurer QHIBIT Arl APPENDIX A i interim pfetassore note $16,000,000 Dallas, Tbxas May 27, 1980 Ch April 30, 1983, FDR VALUE RECEIVED, the undersigned, TOLER CORPORATION, a Delaware corporation ("Cr nary*), hereby premises to pay to the order of BANK OP AMERICA NATIONAL THJST A SAVECS ASSCCIATICN, a national barking association ("Bank*}, the principal sin >. Eighteen Million Dollars ($18,000,000), or, if less, the aggregate unpaid principal amount of all Advances made by Bank to Ccnpary pursuant to the Revolvi. Credit and Tens Loan Agreement (hereinafter defined), together with interest an any and all principal amounts remaining unpaid hereunder frem tine to tine frm the date hereof until payment in full, which interest is payable on the last day of each March, June, September and Decent*-r during the tern hereof, and an the maturity hereof, at a rate per unit equal a the lesser of fi) the highest - vful rate, or (ii) a rate (calculated an the basis of actual days elapsed but . nputed as if each calendar year consisted cf 360 days) equal to 1061 of the base cotnercial rate of interest established from tine to by First National Bank in Dallas ("Dallas*) for short-term, unsecured loans to substantial and responsible casacrcial borrowers, as such rate shall change from time to time, each change in the rate to became effective on the effective date of such change without notice to Company) provided, however, that if at any time the rate in (i) above prevails, ary subsequent reductions in the rate in (ii) above or increases in the rate in (i) abrve shall not reduce the rate of interest which this Note beats below the rate in (i) above until the total amount of interest accrued an this Note after May 27, 1980 equals the amount of interest which would have thereafter accrued if the rate in (ii) above had Ht all tiroes been in effect. Both principal and interest are payable in lewnoncy cf the United States of America at the office of Dallas, as Ad ministrative Ltark under said Revolving Credit and Tern Loan Agreement ("Adminis trative Bark*), at 1401 Elm Street, Dallas, Texas 75202, in immediately available .finds. This Note is one of the Interim Notes referred to in, and is entitled to the benefits of, the Revolving Credit and Tern Loan Agreement dated as of Deceefaer 31, 1978, as amended by letter agreements dated November 1, U79 and May 27, 1980 (such Revolving Credit and Term Loan Agreen^-n'. as so amended, being herein called the "Revolving Credit and Tern Loan Agreement"), among Ccnpary, Bank, Adodnistrative Bark, Citibank, N.A., and Dallas. Campary shall be entitled to prepay the principal of this Note from time to tire and at any time, in whole or in part, without prmiun or penalty. Prepayments shall be applied as provided in the Revolving Credit and Term Loan Agreement. Opan the occurrence of an Event of Default, as that term is defined in, and upon the conditions stated in, the Revolving Credit and Tea Loan Agreement, the holder hereof may, at its option, declare the entire unpaid principal cf and in terest on this Note immediately due and payable, without notice, demand or pre sentment, all cf which are hereby waived, and the holder hereof shall have the right to offset against this Note any sum or Buns owed by the holder hereof to Caqpery or ary of its subsidiaries. TOLER CDKPCRAffTCH EXHIBIT Ar2 APPENDIX B INTERIM PRailSSCfftt MOTE $18,000,000 Cellos, Texas May 27, 1980 On April 30, 1983, FOR VALUE RECEIVED, the undersigned, TYLER O3RP0BKTXCN, a Delaware corporation ("Gcnpaiy"), herety promises to pay to the order of CITIBANK, N.A., a national banking association ('Bark"), the principal sun of Eighteen Million Collars ($18,000,000), or, i less, the aggregate unpaid principal amount of all Advances made by Bank to Ccxipany pursuant to the Revolving Credit and Term Loan Agreement (hereinafter defined), together with interest, on ary and all principal amounts retaining unpaid hereunder from time to time free the date hereof until payment in full, which interest is parable on the last day of each.Hardi, June, September and Decenber Airing the term hereof, and on the maturity hereof, at a rate per annum equal to the lesser of (i) the hi<est lawful nte, or (ii) a rate (calculated on the basis of actual, days elapsed but as if each calendar year consisted of 360 days) equal to 106% of tle base cmwercial rate of interest established from time to time .ty first National Bank In Pallas ("Dallas") foe short-term, unsecured loans to substantial and responsible ccomercial borrowers, as such rate shall chance from time to time, each change in the rate to become effective on the effective date of such change without notice to Ccnpaiy; provided, however, that if at any time the rate in (i) above prevails, any subsequent reductions in the rate in (ii) above or increases in the rate in (i) above shall not reduce the rate of interest rfiich this Note bears below tbe rate in (i) above until the total amount of interest accrued an this Mote after May 27, 1980 equals the amount of interest which would have thereafter accrued if the rate in (ii) above had at all times been in effect. Both principal and interest are payable in lawful money of tbe United States of America at the office of Dallas, as Administrative Barit under said Revolving Credit and Term Loan Agreement ("Administrative Bank"), at 1401 Elm Street, Dallas, Texas 75202, in ^mediately available fords. s< Note is one of the Interim Notes referred to in, and is entitled to the benefits 'of, the Revolving Credit and Term Loan Agreement dated as at Decoder 31, 1978, as by letter agreements dated November 1, 1979 and May 27, 1980 (such Involving Credit and Term Loan Agreement, as so amended, being herein called the "Revolving Credit and Ten loan Agreement"), along Oospany, Bank, Administratis Baric, Baric of America National Trust and Savings Association and Dallits. Canary shall be entitled to prepay the principal of this Note from time to time and at ary time, in whole or in part, without premiua or penalty. Prepsyaents shall be applied as provided in the Revolving Credit and Term Loan Agreement. Upon the occurrence of an Event of Default, as that term is defined in, and upon the conditions atsted in, the Revolving credit and Tern Loan Agresjant, the holder hereof may, at its cptian, declare the entire unpaid principal of and in terest an this Note isnediately due and payable, without notice, demand or presentment, all of which are hereby wived, and the holder hereof shall have the right to offset agsinet this Note any sum or sums owed by the holder hereof to Ccepery or any of its subsidiaries. TYLER OOWORAXICN PHIBIT A-3 APPENDIX C .9 . (k) *A1 arnate Rate" means an annual rate of inter est equal to the les:.er of (i) the highest lawful rate* (ii) a rate (calculated on the basis of actual days elapsed but computed as if each calendar year consisted of 360 days) agreed to by the Company and the Administrative Bank (on behalf of all Banks) for the amount of Principal Balance (not less than $S,000,000) and for the number of days (either 30, 60, 90 or 180, as extended to the first Business Day occurring thereafter if any such period ends on a day other than a Business Day) covered by the Request or (iii) 3/4 of II above the rate (calculated on the basis of actual days elapsed but computed as if each calendar year consisted of 360 days) offered by the Administrative Bank for United States dollar deposits in the London interbank market as of 2:00 p.m., London time, on the date of receipt by the Administrative Bank of a Re quest, for the amount of Principal Balance (not less than $5,000,000) and for the number of days (either 30, 60, 90 or 180, as extended to the first Business Day occurring thereafter if any such period ends on a day other than a Business Day) covered by the Request. (l) "Request" means a written or oral request by the Com pany to the Administrative Bank for a quotation of an Alternate Rate, containing a requested principal amount, term (not extending beyond the Termination Date) and interest rate. 2. Section 2.01 of the Loan Agreement is amended by the addi tion of the following immediately after the first paragraph thereof: Notwithstanding the foregoing, upon due acceptance by the Company of an Alternate Rate furnished by the Administrative Bank in response to a Request, the portion of the Principal Balance covered by the Request (applied pro rata to each Interim Note) shall bear interest at the Alternate Rate for the period covered by the acceptance, payable on the last day of each such period. At the expira tion of the Alternate Rate period the interest rate with respect to that portion of the Principal Balance shall re vert to the rate specified in the immediately preceding para graph. No prepayment may be made under Section 2.03 hereof of any portion (the `Alternate Rate Loan") of the Principal Balance which is at the time subject to an Alternate Rate. If any change ir< applicable law or in the interpre tation or administration thereof by any tribunal (whether or not having the force of law) shall impose, modify, or deem applicable any reserve requirement of the Board of Governors of the Federal Reserve System on any Bank's por tion of any Alternate Rate Loan, or any other reserve, special deposit, or similar requirement against assets of, deposits with or for the account of, or credit extended *n; uank or shall impose -in any Bank or the London m interbank naf-rket any other condition affecting this agree ment or any Bank's portion of any Alternate Rate Loan and the result or * any of the foregoing is to increase the cost to any Bank . of making or maintaining its portion of any Alternate Loan, then the Company shall pay to such Bank upon der^aand of such Bank as additional interest on the portion of si-'uch Alternate Rate Loan or Loans held by such Sank such additional amount or amounts as will compensate 6uch Bank foi't such additional cost. Each Bank shall give notice to th* Company upon becoming aware of any such change or imposition which may result in any such increase. A cer tificate of such Bank setting forth the basis for the deter mination of csuch amount necessary to compensate such Bank as aforesaid shall be delivered to the Company and shall be conclusive* as to such determination and such amount, absent manif'-*5- -rikJ'*r- 3. Exhibit-s A-l, A-2 and A-3 to the Loan Agreement are hereby amended by deleting in their entirety Exhibits A-l, A-2 cn4 A_3 currently attached to the Loan Agreement and by substi tuting i' lieu thereof the Exhibits A-l, A-2 and A-3, respectively attached hereto ars Appendices A, B and C, respectively; and the term 'Interim Not*?*" as used in the Loan Agreement shall mean the promissory notes csf the Company as so attached hereto. Except m expressly amended hereby, the Loan Agreement is and shall be unchanged, and all of the terms, covenants, provi sions and conditions thereof shall remain in full force and effect and are hereby ratified, confirmed, and incorporated herein by reference as if? forth verbatim. If you are if'1 agreement with the foregoing, please sign the enclosed cooies of this letter in the space provided below and return the same t/> Administrative Bank, whereupon this letter shall become a bidding agreement among the Company and each of you Very truly yours. TILER CORPORATION The foregoing is agreed tot FIRST NATIONAL BANK IN DALLAS / Treasurer Vice President -3- nnfcRiM promissory tpre 524,000,000 Dallas, Ttexas July 1, 1980 On April 30, 1983, FOR VALOE RBOSVH), the undersigned, TYLER OOBFOWttICM, a Delaware corporation ("Canpaiy"), hereby premises to pay to the order of FUST NTfflCTOL BANK IN DALLAS, a natioral barking association ("Bank"), the principal ssa of TVenty-Four Killion Celiacs ($24,000,000), or, if less, the aggregate unpaid principal amount of all Advances made by Bark to Coepany pursuant to the Revolving Credit artf Term Loan Agreement (hereinafter defined), together wim interest on aty and all principal amounts resuming unpaid hereunder fraa tiix- to tine frm the date hereof until payaent in full, at a rate per annua equal to tlx lesser of (i) the highest lawful rate, or (ii) a rate (calculated on the basis c actual days elapsed but anputed as if each calendar year cansisted af 3CQ days) equal to 1061 of the base comaercial rate of interest established froa tbs tn tine by Bark for short-term, wsecjred loans to substantial and responsible ccnmercial borrowers, as such rate shall change frea tine to time, each change in the rate to becane effective an the effective date of such change without notice to Oanpany; provided, however, that if at ary tins the rate in (1) above prevails, ary subsequent reductions in the rate in (ii) above or incresses in' the rate in (1) above shall not reduce tt* rate of interest vbich this Note tears below the rate in (i) abate until the total amount of interest accrued cn this Note after Hay 27, 19BO equals the aeacuit of interest which would have Hereafter accrued if the rate in (ii) above had at all times been in effect. Notwithstanding the foregoing, under the terms and conditions set forth in the Revolving Credit and Term Loan Agreement, all or a portion or portions c the principal of this Note shall bear interest at the Alternate Bate or Rates and for the period or periods referred to in the Revolving Credit and Term Loan Agreement. Interest hereon shall be payable cn the last day of each Hatch, June, Sephenber and December during the term hereof cn the portion hereof not abject to an Alternate Rate, cn the last day of each aipiicabl* period of tine as to each portion Lereof subject to an Alternate Rate, and on the maturity hereof. Both principal and interest are payable in lawful money of the United States cf America at the office of Bank, as Adeinistrative Bank aider said Re volving Credit and Term Icon Agreement ("Adnlnistrative Bank"), at 1401 E2s Street, Jallas, Texas 75202, in immediately available funds. This Note is one of the Interim Notes referred to In, and is entitled to the benefits of, the Revolving Credit end Arm Loan Agreement dated as of Ptcrthet 31, 1978, ss amended fcy letter agreements dated Novenber 1, 1979, flay 27, 1980 and July 1, 1980 (such Revolving Credit and Term loan Agreement, as so amended, being herein called the "Revolving Credit and Term loan Agree ment"), among Ccepvy, Bark, Administrative Berk, Baric cf America National Trust end Savings Association and Citibank, N.A. ampary shall be entitled to prepay the principal of this Note fraa time to time and at any time, in whole or in pert, except for portions subject to an Alternate Bate, and no pnmitsn or penalty shall be charged in respect of any prepayment which may be made hereunder. Prepayments shall be applied as provided in the Revolving Credit and Term Lean Agreement. ESQBIT A-l APPENDIX A ft m * Upon the occurrence of an Event of Default, as that term is cbfined in, and upon the conditions stated in, this Revolving Credit and Item loan Agreement, the holder hereof nay, at its cpticn, declare the entire unpaid principal of and in terest on this Note immediately due and payable, without notice, demand or pre sentment, all of which are hereby waived, and the holder hereof shall have the right to offset against this Note any sun or sums owed by the holder hereof to Qtnpary or ary of"its subsidiaries. TflER CDRPCRflTICH By__________ Treasurer 2 - INTERIM HCtgSSORSf NOTE $18,000,000 Dallas, Texas July 1, 1980 On April 30, 1933, FOR VALUE RECEIVED, the undersigned, TYLER CORPORATION, a Delaware corporation ("Conpary"), hereby premises to pay to the order of BANK OP AMERICA tnZTCNAL TOST AND SAVINS ASSOCUflTCN, a national banking association ("Baric"), the principal sun of Eighteen Million Dollars ($18,000,000), or, if lesr the aggregate urpaid principal anount of all Advances made by Bark to Ccnpary pursuant to the Revolving Credit and Tern loan Agreement (hereinafter defined), together with interest on aiy and all principal amounts remaining unpaid hereunder from tine to tine froa the date hereof until payment in full, at a rate per annua equal to the lesser of (i) the highest lawful rate, or (ii) a rate (calculated on the basis of actual days elapsed but ccnpuced as If each calendar year consisted of 360 days) equal bo 2068 cf the base :annercial rate of interest established froa tine to tine by First National Bank in Dallas (`Dallas") for short-term, unsecured loans to substantial and responsible corner^ dal borrowers, as such rate shall change from tine to tine, each change in the rate to beooee effective an the effective date of such change without notice to Cospary; provided, however, that if at ary tine the rate in (i) above prevails, any subsequent reductions in the rate in (ii) above or increases in the rate in (i) above shall not reduce the rate cf interest which this Rote bears b'ilow the rate in (i) above until the total anount cf interest accrued on this Note after May 27, 1980 equals the mount of interest thich would have thereafter accrued if the rate in (ii) above had at all tines been in effect. Notwith standing the foregoing, under the terns and conditions set forth in the Revolving Credit and Term loon Agreement, all or a portion or portions of the principal of this Note shall bear interest at the Alternate Rate or Rates and for the period or periods referred to in the Revolving Credit and Tana Loan Agreement. Interest hereon shall be payable on the last day of eadh March, June, Septenter and Dsceafaer during the term hereof an the portion hereof not subject to an Alternate Rate, on the last dey cf each applicable period of time aa to each portion hereof subject to an Alternate Rate, and an the maturity hereof. Both principal and interest are pavable in lawful money of the United States of America at the office cf Dallas, as Administrative Bank under snid Revolving Credit and Ten lam Agreement ("Administrative Bank"), at 1401 Elm Street, Dallas, Texas 75202, in lamedlately available funds. This Note is one of the Interim Notes referred to in, and is entitled to the benefits of, the Revolving Credit and Term Loan Agreement dated os of Oacasfaer 31, 1978, as emended by letter agreements dated Novmfcer 1, 1979, May 27, 1980 end July 1, 1980 (such Revolving Credit and Tern Loan Agreement, ae ao amended, being herein called the "Revolving Credit and Term Loan Agree ment"), among Gcopany, Bank, Administrative Bank, Citibank, N.A., and Dellas. Ocapsiy shall be entitled to prapey the principal of this Note froa time to time and it ary time, in wide or in part, except for portion* subject to an Alternate Rate, and no premium nr penalty shall be charged in respect of aiy prap^smnt which my be made hereunder. Prepayments shall be applied as provided in the Revolving Credit and Tern loan Agreement. OKIBIT Ar2 APPENDIX B Upon the occurrence of an Event of Default, as that term is defined in, and upon the conditions stated in, the Revolving Credit and Kern Loan Agreement, the holder hereof say, at its option, declare the entire unpaid principal of and in terest on this Note immediately due and payable, without notice, desend or pre sentment, all of which are hereby waived, and the holder hereof shall have the right to offset against this Note any sun or suns owed by the holder hereof to Ccrpany or any of its subsidiaries. TYLER CORPORATION By Treasurer -2- INTERIM PROMISSORY N3TE $18,000,000 Dallas, Teas July 1, 1980 On Aps.il 30, 1983, FOR VALUE RECEIVED, the undersigned, TflER OORsawiIGN, a Delaware corporation ("Ccnpaiy*), hereby premises to pay to the order of CITIBANK, N.A., a national barking association ("Bank*), the principal saiof Eighteen Million Dollars ($18,000,000), or, if less, the aggregate unpaid principal onuwit of all Advances made by Bank to Ccmpaiy pursuant to the Revolving Credit and Tens loan Agreement (hereinafter defined), together with interest on any and all principal amounts remaining unpaid hereunder free time to time from the data hereof until payment in full, at a rate per annun equal to the lesser of (i) the highest lairful rate, or (ii) a rate (calculated on the basis of actual days elapsed tout ccnputed as if each calendar year consisted of 360 days) equal to 106% of the base ccmmercial rate of interest established from time to time by First National Bank in Dallas ("Dallas') for short-term, unsecured loans to substantial and responsible ccmmercial borrowers, as such rate shall change frea^ime to time, each charge in the rate to beccne effective an the effective date of such change without notice to Ocupany; provided, hewever, that if at ary time the rata in (i) abtve prevails, ary subsequent reductions in the rate in (ii) above or increases in the rate in (i) above shall not reduce the rate of interest tfiich this Note bears below the rate in (i) above until the total amount of interest accrued cn this Note after May 27, 1980 equals the arrant of interest uhiefa would have thereafter accrued if the rate in (ii) above had at all times been in effect. Notwithstanding the foregoing, uider the teas and conditions set forth in the Revolving Credit and Tams loan Agreement, all or a portion or portions of the principal of this Note shall bear interest at the Alternate Rate or Rates and for the period or periods referred to in the Revolving Credit and Tem loan Agreeient* Interest hereon shall be payable an the last day of each March, June, Saptsmber and Deceeber during the term hereof cn the portion hereof not subject bo an Alternate Rate, on the list dqy of each applicable period of time na to each portion hereof subject to on Alternate Sate, and on the maturity hereof. Both principal and interest an payable in lawful money of the United Stater of America at the office of Dallas, as Administrative Baric under said Revolving Credit and Term Doan Agreement ('Administrative Baric"), at 1401 Elm Street, Dallas, Texas 75202, in iamediately swilable funds. Ibis Note is one of the interim Notes referred to In, and is entitled to the benefits of, the Revolving Credit and Term Loan Agreement dated aa of December 31, 1978, as amended by letter agreements dated November 1, 1979, May 27, 1980 end July 1, 1980 (suen Revolving Credit and Term Loan Agreement, as so amended, being herein called the "Revolving Credit and Term Loan Agreement*), among Com pany, Baric, Administrative Baric, Baric of America National Trust and Savings Association and Dallas. Caspary shall be entitled to prepay the principal of this Note from time to time nd at any time, in whole or in part, except for portions subject to an Altcrnata Rate, and no prasdum or penalty shall be charged in respect of any prepayment which may be made hereunder. Prepayments shall be applied as provided in the Revolving Credit and Tarn Loan Agreement. EXHIBIT A-3 APFntDU C 9 lun the occurrence of an Event of Default, as that term is defined in, and upon the conditions stated in, the Revolving Credit and Term Loan Agreement, the holder hereof nay, at its cpticn, declare the entire unpaid principal of and in terest on this Note imediately due and payable, without notice, demand or pre sentment, all of which are hereby waived, and the holder hereof shall have the right to offset against this Note any sun or suns owed by the holder hereof to Ccnpary or any of its subsidiaries. TYLER CORPORATION BY __________ Treasurer -2- EXHIBIT 10,3 /30 TYLER CORPORATION STOCK OPTION PLAN 1. Purpose. It is the purpose of the Plan to provide key employees with a proprietory interest in the Company through the granting of options which will ' (a) increase the interest in Company's welfare of those key employees who share the primary responsibility far the management, growth and protection of the business of the Company; (b) Juruien an incentive to such employees to con tinue their services for the Company; and (c) provide a means through which the Company may attract able persons to ester its employ. :i. Administration. The Plan shall be administered by the Executive Committee of the Board of Directors of the Company, except to the extent that it covers employees who are officers or directors of the Company; sod the Compensation Committee of the Board of Directors of the Company shall administer the Pisa to tbs extent that it covers employees who are officer* or directors of the Company. S. Participant*. The Committee shall from time to time select the particular employees from among those key employees of the Company or of aqr sifcsldi* ty of the Company to whom options are to be granted, and such 4. Restrictions on Eligibility. No option shall be granted to (a) a director of the Company who is not an employee of the Company or of a subsidiary; or (b) an employee who is sixty-five (65) years of age or ove. 5. Shares Subject to Plan. The total number of shares which may be issued pursuant to options granted under the Plan may not exceed 250,000 shares of Common Stock of the Company, but this cumber may be adjusted to re'lect, if deemed appropriate by the Committee, any stock dividend, stock split, share combination, or other recapitalization, of or by the Company. The Committee may grant options for a larger number of shares, but the terms of the options must be such that no more than the number of shares specified la the previous sentence may be Issued on exercise of options granted umWr the Plan. Shares to be optioned and sold may be made available from either authorised but unii sued Common Stock or treasury stock held by the Company. Shares that by reason of the expiration of an option or otherwise are nu longer subject to purchase pursuant to an option granted under the Plan may be reoffered under the Plan. 6. Allotment of Shares. The Committee shall determine the number of shares of Common Stock o be offered from time to time by grant rf options to key employees of the Company or itn subsidiaries. The grunt of an option to an employee shall not be deemed either to entitle such employee to, or disqualify sueh employee fi on. participation in any other grant of options under the Plan, except no option shall be granted to ary employee who owns (or is regarded as owning) stock possessing more than live percent (5%) of the total combined voting power or value of all classes of stock of the Company or a parent or subsidiary. ?, Grants of Options. The Committee is authorized to grant options under the Plan. The grant of options shall be evidenced by stock option agreements containing such terms and provision as are approved by the Committee, but not inconsistent with the Flan. The Committee may grant Qualified Options, Non qualified Options, or a combination of both, under the Plan. The Company shall execute stock option agreements upon instructions from the Committee. 8. Option Price. The option price for shares subject to options granted under the Plan shall not be less than 100 percent of (he fair market value per share of the Common Stock on the date the option's granted. The fair market value of the stock on the date of grant of the option shall be the reported closing price of Common Stock on the New York Stock Exchange on the date of grant of the option, or if no sale of the Common Stock shall have been reported on such date of grant, on the next preceding day or the last day prior to the date of grant when a sale was reported. 3. Option pgi-iod. The Option Period will begin on the date the option ts granted, which will be the date the Committee authorizes the option unless the Committee specifies a later date. The Option Period will be se specified by the Committee, but may not be longer than Eve years in the ease of Qraltfied Options and ten years In the case of Nonqualified Options. The Committee may provide for the exercise of options in installments and upon such terms, conditions and restrictions as may be determined by the Committee. The C TimKtee may provide for termination of the option in the esse of termination of employment, dishonesty or any other reason. 10. fUgnts in Event of Death. If a pai-ticlpant dies prior to the termination of his right to exercise an option in accordance with the provisions of the stock option agreement, without having totally exercised the option, the option may be exercised to the extent of the shares with respect to which the option could have been exercised on the date of participant's death, by the participant1 c estate or a person who acquired the right to exercise the option by bequest or inheritance or by reason of the death of the participant, provided the period during which the option may be exercised shall not continue beyond its date of expiration or one year from the date of the participant's death, whichever first occurs. 11. Payments. Full payment for shares purchased upon exercising an option shall be made at the time of exercise. No shares shall be Issued until full payment has been made, and a participant shall have none of the rights of a stockholder until shares are issued to him. 12. Exercise of Option. Options granted uaderr the Pisa may be exercisable during the option period, at such dimes, in such amounts. In -4- FWMPBn**aWMI accordance with such terru3 and conditions, and subject to such restrictions as are set forth in the stock option agreements evidencing the grant of such options. In no event shall an option be exercised or shares be issued pursuant to an option if any requisite action, approval ot consent of any governmental authority of any kind having jurisdiction over the exercise of options shall not have been taken or tenured. 13. Capital Adjustments. The number of shares of Common Stock covered by each outstanding option granted under the Plan, and the option price thereof, may be adjusted to reflect, as may be deemed appropriate by the Committee, any stock dividend, stock split, share combination, exchange of shares, recapitalization, merger, consolidation, reorganization, liquidation or the like, of or fay the Company. 14. Mon-Assignability. Options may not be transferred other than by will or by the lawc of descent and distribution. During a participant's lifetime, options granted to Mm shall be exercisable only by him. 15. Interpretation. The Committee shall interpret the Plan end shall prescribe such rules and regulations ia connection with the operation of the Plan as tt shall determine to be necessary or advisable for the administration of the Plan consistent with the purposes thereof. The Committee may rescind, amend and modify its ruiea and regulations. 16. Amendment or Discontinuance. The Plan may be amended, altered or discontinued by the Board without the approval of the shareholders, except the -6- % I AT Board shall not have the power or authority to change the employees or class of employees who are eligible to receive options or the aggregate number of shares which may be issued under options. 17. Effect of the Plan. Neither the adoption of this Plan nor any action of the Board or the Committee shall be deemed to give any officer or employee any right to be granted an option to purchase Common Stock of the Company or any other rights thereunder except as may be evidenced by a stock option agreement, or any amendment thereto, duly executed on behalf of the Company and then only to the extent and on the terms and conditions expressly set forth therein. IS. Term. The Committee may not grant options after February 1, 1976, but options granted before that date shall continue to be effective and subject to the terms of the Plan. 19. Definitions. For the purpose of this Stock Option Plan, unloaa the context requires otherwise, the following words shall have the meanings indicated; (a) "Flan" shall mean this Stock Option Plan as the aame may be amended from time to time. (b) "Company" shall moan Tyler Corporation. (c) "Board" shall mean the Board of Directors of the Company. (d) "Committee" shall mean the Executive Committee or the Compensation Committee of the Tjoard, whichever is administering the Plan with respect to s particular grantee. -6- (e) "Common Stock" shall mean the common stock which the Company is currently authorized to issue or may in the future be authorized to Issue {so long as the common stock varies from that currently authorized, if at all, only in amount of par value). (f) "Parent" shall mean any corporation in an unbroken chain of corporations ending with the Company if, at the time of the granting of the option, each of the corporations other than the Company owns stock possessing 50 percent or more of the total combined voting power of al) classes of stock in one of the other corporations in such chain. (g) "Subsidiary" shall mean any corporation in an unbroken chain of corporations beginning with the Company if, at the time of the granting of the option, each of the corporations other than the last corporation in the unbroken chain owns stock possessing 50 percent or more of the total combined voting power of all classes of stock in one of the other corporations in such chain. (h) "Option period" shall mean the period during which an option may be exercised. (i) "Key employees" shall mean those employees of the Company and its subsidiaries whose principal duties consist of iwana^ng or supervising the work of other employees. (j) "Qualified Option" means an option granted under the plan which meets the requirements of section 422 of the Internal Revenue Coce. (k) "Nonqualified Option" means an option granted under the Plan which is not a Qualified Option. TES TILER CORPORATION 1976 STOCK OPTION PLAN (As amended and restated on February 2, 1577) 1. Purpose. It Is the purpose of the Plea to provide key employees with a proprietary interest in the Company through the . granting of options which will (a) increase the interest in the Company's welfare of those key employees who share the primary responsibility far the management/ growth and protection of the business of the Company; (b) furnish an incentive to such employees to con tinue their services for the Company; and (c) provide a means through which the Company may attract able persons to enter its employ. 2. >*< ulstration. The Executive Committee of the Board of Directors of the Company shall administer the Plan, except that the Compensation Audit Committee of the Board of Directors of the Company shall administer the Plan to the extent that it covers employees who ere officers or directors of the Company. 3. Participants. The committee shell from time to time select the particular employees from among those key employees of the Csmpanv or of any subsidiary of the Company to vhon options are to be granted, and such esployees upon the grant of options to then shall becciae participants in the Plan. 4. Restrictions cn Elicihility. No option shall be granted to (a) a director of the Company who is not an employee of the Corapany or of a subsidiary) or (b) an employee who is sixty-five (65) years of age or over. 5. Shares Subject to Plan. The total number of shares which may be issued pursuant to options granted under the Plan may not exceed 125,000 shares of Common Stock of the company, but this number may be adjusted to reflect, if deemed appropriate by the Coemittee, any stock dividend, stock split, share combination, or other recapitalisation of or by the Company. The Committee may grant options for a larger number of shares, but the terms of the options must be such that no more than the number cf shares speci fied in the previous sentence may be issued cn exercise of option* granted under the Plan. Shares to be optioned and sold may be made available from either authorized but unissued Common Stock or trea sury stock held by the Company. Shares that by reason of the expira tion of an option or otherwise are no longer subject to purchase pursuant to an option granted under the Plan may be reoffered under tbe Plan. 6. Allotment of Shares. The Ccusoittee si.all determine the number of shares of Ccmmen Stock to be offered from time to time by grant of options to kny employees of the Company or its subsidiaries. The grant of an option to an employee shall not be deemed either to antitie such employee to, or disqualify such employee from, partisi- -2- 120 fm the New Vcrk Stock Exchange on the cate of grant of the option, or if no sale of the Common Stock shall have been reported on such date of grant, on the next preceding cay or the last day prior to the date of grant when a sale was reported. 9. potion Period. The Option Period will begin on the date the option is granted, which will be the date the Committee authorizes the option unless the Committee specifies a later &u` e. The Option Period will be as specified by the Committee, but may not be longer than five years in the case of Qualified Options and ten years in the case of Nonqualified Options. The Committee nay provide for the exercise of options in installments end upon such terms, conditions and restrictions as may ha determined by the Committee. The Committee may provide for termination of the option in the case of termination of employment, dishonesty or any other reason. 10. Sights in Sver.t of Death. If a participant dies prior to the termination of his right to exercise an option in accordance with the provisions of the stock option agreement, without having totally exercised the option, the option may be exercised to the extent of the shares with respect to which the option could have been exercised on the date of participant's death, by the partici pant's estate or a person who acquired the right to exercise the option by beqnest or inheritnce or by reason of the death of the participant, provided the period during which the option may be -4- /Si- exercised shall net continue beycr.d its d;-te of expiration or one year from the date of the participant1s death, whichever first occurs. 11 Payments. Full payment for shares purchased upon exercising an option shall be race at the tine of exercise. Ho shares shall be issued until full payment has boen cede, and a participant shall have none of the rights of a stockholder until shares are issued to hist. 12. Exercise of Potion. Options granted under the Plea aay be exercisable during the option period, at such tines, in such amounts, in accordance with such terms and conditions, and subject to such restrictions as are set forth in the stock option agreements evidencing the grant of such options. In no event shall an option be exercised or shares be issued pursuant to an option if any requisite action, approval or consent of any governmental author ity of any kind laving ju.v is diction over the exercise of options shall not h*ve been taken or secured The Comalttee cry offer optionholder tae right t<"> receive cash in liau of stock on exercise of the option (and *-'ithcut payment, by the holder of the exercise price) in an amount equal to the excess of the fuir market value per share on the etc of exercise over the per share exercise price undor the option, multiplied by the number of rhares covered by the option or portion thereof being exercised. 13. Capital Adjustments. The number of shares of Common Stock covered by each outstanding opticu granted under the Plan, 5 tnc che cpticn pries thereof, say be adjusted to reflect, as nay be aeet-ed appropriate by the Connittse, ar;y stock dividend, stock split, share corhir.atior., exchange of shares, recapitalization, merger, consolidation, reorganization, liquidation or the like, of or by the Company. 14. Non-As sirnatailitv. Options may not be transferred other than by will or by the laws of descent and distribution. During a participant's lifetime, options granted to him shall be exercisable only by him or by his guardian or legal representative. 15. Int eroretatlcn. The Ccmmitta shall interpret the Plan and shall prescribe such rules and regulations in connection with the operation of the Plan as it shall determine to be necessary or advisable for the administration of the Plan consistent with the purposes thereof. The Committee stay rescind, amend and modify its rules and regulations. 16. Amendment or Discontinuance, ^e Plan may be amended, altered or discontinued by the Board without the approval of the shareholders, except the Board shall not have the power or authority to chance the employees or cless of employees who are eligible to receive options or the aggregate number of shares which may be issued under options. 17. Effect of the Plan. Neither the adoption of this Plan nor any action of `die Board or the Committee shall be deemed to -6- give try officer cr employes ar.y right to be grsr.tad an option to purchase Common Stock of the Company or any other rights thereunder except as nay be evidenced by a stock option agreement/ or any amendment thereto/ duly executed cn behalf of the Company and then only to the extent and on the terms and conditions expressly set forth therein. 18. Term. This Plan shall be effective February 1, 1976, subject to shareholder approval. The Committee may not grant options after January 30, 1986, but options granted before that date shall continue to be effective and subject to the terms of the Plan. 19. Definitions. For the purpose of this Stock Option Plan, unless the context requires otherwise, the following words shall have the meanings indicated: (a) 'Plan" shall mean this Stock Option Plan as tha same may be amended from time to time. (b) "Company* shall mean Tyler Corporation. (c) "Board" shall mean the Board of Directors of the Company. <d) "Committee" shall mean tha Exacutive Committee or tha Compensation Audit Committee of the Hoard, whichever is administering the Plan with respect to a particular grsntae. (e) "Common Stock" shall mean tha cocaasm stock which tbs Company is currently Authorized to issue or may in the future be authorized to issue (so long as Che coianon stack varies from that currently authorized, if at all, only in amount of par value). I3r () "Parent" shall mean any corporation in an unbroken chain of corporations ending with the Company if, at the tine of the granting of the option, each of the corporations other than the Company owns stock possessing 50 percent or aore of the total combined voting power of all classes of stock in one of the other corporations in such chain. <9} "Subsidiary" shall man any corporation in an unbroken chain of corporations beginning with the company if, at the tiae of the granting of the option, each of the corporations other than' the last corporation in the unbroken chain owns stock possessing 50 percent or aore * of the total coebined voting power of all classes of stock in one of the other corporations in such chain. CO "Option period" shell nean the period during which an option may be exercised. (i) "Key employees" shall man those employees of the Coopany end its subsidiaries whose performance and responsi bilities are determined by the Coasalttoe to be influential ,,*' tbt success of the Coopany. (j; "Qualified Option" moans an option grantad undar tba Plan which moots the requirements of section 422 of the Internal Revenue Coda. (k) "nonqualified Option" means an option granted sdor the Plan which la set a Qualified Option. -I- t AMEfti.MENT RO. 1 TO THE TYLER CORPORATION 1976 STOCK OPTION PLAN AS AMENDED AND RESTATES ON FEBOTMCf 2, 1977 Pursuant to paragraph 16 of the Tyler Corporation 1976 Stoak Option Plan as arendad and restated on February 2, 1977 (the "Plan")* the Board of Directors agree that the Flan ahali be anaadad* effective February 1* 1978* as follcwes 1. The second sentence of paragraph 6 shall ne amended by deleting the language "except no option shall be granted to any aaployee who owns (or is regarded as owning) stock possessing aore than five percent (5%) of the total combined voting power or mine of el?, classes of stock of the Company or s parent or subsidiary* and by changing the coon that cores inredietaly before such laagungs to e period. 2. Paragraph 7 shell be aiaanflsd to read as foUresi 7. fiURtf gt, Optimp- TheCoreittee is authorised to grant options under the Plan. She grant of options hall be evidenced by stock option agreaeants containing sudb terre and proeiaions as are approved by th*i Coassittee, bet not inconsistent with the Plan. She Company shall enscete stock option agrasrents upon instructions faun the CBnnitxee. A stock option agzaemnt.ngy provide* if the Co--d etee so detersdnes* that upon the ereroiM of tbs optica the Coaaalttsc nay elect to pay*. in linn of receipt iixtm the optionholder of the exercise prv.ce and Issuance of certificates for the shares of stock exercised* an anctffit equal to the excess of the fair narket value per share ca the date of exercise over the per share exarelse pries of the option* nultiplisd by the nuafeer of shares covered by the option or the portion thereof being exercised i"Stock Appreciation")* If such an slecties is reds* the Stock Appreciation shall be paid to the optionholder either in cash or in Cosnan Stock or in each and Cannon Stock (based on the fair narket value of such 137 stock on the date of election by the optionholder), as the Committee shall determine. The option to purchase shares shall terminate with respect to the number of shares for which the Stock Appreciation is paid. 3. The second sentence of paragraph 9 shall be amended to read as followsi She Option Period will be as specified by the Com mittee, but may not be longer than tan years. 4. The last sentence of paragraph IV shall be amended to read a* follows i The Committee say offer an optionholder, upon such conditions and restrictions as it deems advisable and in lieu of receipt from hisi of the exercise price and issuance of certificates for the shares of stock exer cised, the right to elect payment in cash. Common Stock, or a combination of cash and Common Stock as tha Com mittee shell determine in an amount equal to tha Stock Appreciation. 5. Paragraph 19 shall bo aasadod by delating subparagraphs (j) "Qualified Option" and (k) 'Boi-Cuaiified option". X, Vail J. O'Brian, Secretary of Tyler Corporation, hereby certify that the foregoing was adopted by the Board of Directors of Tyler Corporation at its-mooting duly bold on the 1st day of JObruary, 197* * AMENDMENT NO. 2 TO THE TYLER CORPORATION 1976 STOCK OPTION PLAN AS AMENDED AND RESTATED ON FEBRUARY 2, 1977 Pursuant to Paragraph 16 of The Tyler Corporation 1976 Stock Option Plan as amended and restated on February 2, 1977, Paragraph 4 of the Flan is anended, effective January 1, 1979, to read as follows: 4. Restriction on Eligibility. No option shall b granted to a director of the Coopany who ie not an employee of the Company or of e subsidiary. IN WITNESS WHEREOF, the undersigned has executed this Amendment as of April 18, 1979 TYLER CORPORATION KXEIBIT 10.5 H-D (r | TYLER CORPORATION SALARY CONTINUATION AGREEMENT This Salary Continuation Agreement Is entered Into thisqay of , 19, by and between Tyler Corporation, a Delaware corporation (`'Tyler") and ("Employee"). 1. Tyler and Eoployee desire to enter Into this Salary Continuation Agreement to provide for payment of compensation to the designee of Employee In the event of his death while employed by Tyler or one of Its controlled subsldlii-ies. This Agreement covers compensation regularly payable to Employee for his customary services to Tyler. 2. If Employee's death occurs while he Is an eeployee of Tyler or one of Its controlled subsidiaries and before Eaployee has attained the age of 65, Tyler will pay to the Beneficiary designated In the manner provided In Schedule A attached to this Agreement (and as amended from time ts tiss by ntual agree ment) , the amounts per month for the matter of months set forth In such Schedule A (as amended), commencing with the first month following Ms death. In the ab sence of designation by Employee, Tyler shall make the payments to Ms wife or to the representative of his estate. If for any reason Tyler has reasonable doubt es to the proper person to whom to make payment, Tyler*1 2m3ay withhold payment until Instructed to aete payment by an order of e court of competent jurisdiction. Any payment of a<y monthly Installssnt made by Tyler In good faith shall fully dis charge Tyler from Its obligations with respect to the payment of the monthly In stallment. 3. Tyler Intends to fund Its obligation hereunder through the purchase of life Insurance on the life of Employee. Employee agrees to cooperate In the securing of life Insurance on Ms life by furnishing such Information es Tyler or the Insurance company nay require, taking physical examinations that may be necessary, and taking any other action which may be appropriate or necessary to obtain the Insurance. Ty1er will be the sole owner of the life Insurance policy with all Incidents of ownership therein, Including right to terminate the policy. Employee agrees to pay to Tyler the amount per month set forth In Schedule A at tached to this Agreement, and as amended from time to time by mutual agreement, comnenclng the date this Agreement becomes effective and continuing thereafter during the term of this Agreement or until Employee's death, whichever Is first to occur. Tyler shall have no obligation to Employee hereunder if Tyler pur chases life Insurance on his life pursuant to tills Agreement, and for any reason the Insurance company falls to pay the proceeds of Insurance to Tyler. 4. The Committee shall be the administrator and named fiduciary under this Agreement. As a named fiduciary, the Conelttee shall discharge Its duties solely In the interests of Employee, Ms designee or any other person with bene fits payable hereunder and for the exclusive purpose of providing benefits under this Agreement; discharge Its responsibilities with the care, skill, prudence and diligence a prudent man would use in similar clrcinstances; and conform with the provisions of this Agreement which govern It. The Coenlttee must also re frain from engaging In any prohibited transactions as specified In Sections 406 and 408 of the Employee Retirement Inane Security KA of 1974 ("ERISA"). The Committee shall comply with any reporting, disclosure and other obligations that It may hava as administrate: of this Agreement under ERISA. 5. This Agreement shall become effective on the date that Tyler obtains life Insurance In the amount of $on the life of Employee et standard rates, or 60 days from the date hereof, whichever Is first to occur. Tylnr may terminate this Agreement, at any time upon notice to Employee. If Tyler terminates this Agreement, voluntarily or Involuntarily, while a policy of life insurance Is In force upon the life of Employee, If Employee's enployment with Tyler or one of Its controlled subsidiaries terminates other than by death or retirement, or If Tyler determines for any reason to terminate the policy on his life. Employee shall (1) after five years of employment after the date of this Agreement without the consent of Tyler, and (11) within five years from the date of this Agreement with the consent of Tyler, have the right to purchase the life Insurance contract on <i1s life from Tyler by paying to Tyler the cash surrender value thereof. 6. It Is agreed that none of the benefits or payments which may be derived from this Agreement may be subject to seizure for payment of any debts or judgments against Employee, his designee or any other person with benefits payable hereunder, and neither Employee, his designee nor any other person with benefits payable hereunder, shall have any right to transfer, mod.fy, anticipate or enewber any benefits or rights hereunder, and none of the payments which nay be d and owing Employee or any such other person shall be transferable by op- ration of law In the event Employee becomes Insolvent or bankrupt. 7. If &ployee's services w< ' ~lar and Its controlled subsidiaries are terminated prior to Ms retirement, sement trill become void and upon Em ployee's subsequent death neither Ee wife nor his estate nor any other person shall be entitled to any p&y>-, :<; <eunder. 8. If Tyler should reorgan: .or.rolldate or merge with another cor- portatlon, this Agreement shall become an obligation of the new entity or of any business taking over the assets, duties or responsibilities of Tyler. 9. If Tyler liquidates due to Insolvency or any other event, this Agree ment shall terminate end be considered u fully and conpletely discharged. 10. Neither Employee nor any other person shall acquire any right, title or Interest In or to any benefits hereunder except by actual payment of the amount In accordance with the provisions of this Agreement. 11. This Agreement shall not In any way limit the right of Tyler to ter minate the employment of Employee, nor shall any of the terms of this Agreement in any way affect the terras of employment of Employee or give Employee the right of any employment. 12. Notices hereunder shall be effective only If in writing and mailed by registered or certifies letter to the person entitled to the notice at which ever of the following add'esses is applicable: If to Employee, to: If to Tyler, to: Tyler Corporation 3121 Southland Center Dallas, Texes 75201 A party may change his address by notice to the other party. 13. This Agreement shall be binding upon the parties hereto, their heirs, assigns, successors, designees, executors and administrators, and the pertlei agree to execute any and all instrueents necessary for fulfillment of the terns hereof. This Agreement may be amended only by Instrument In writing signed by the parties. 14. If Employee is employed by a subsidiary of Tyler the subsidiary will be entitled to the rights conferred on ar^ subject to the obligations imposed on Tyler hereunder. IN WITNESS WHEREOF, we sec our hands and seal the day and year first above written. TYLER CORPORATION (Corporate Seal) By EMPLOYEE * TYLER CORPORATION MANAGEMENT SECURITY AGREEMENT This Agreement Is made and entered Into as of .. W by and between TYLER CORPORATION, a Delaware corporation, and___________________ (hereinafter referred to as "Employee") for the purpose of enrolling Employee In the Management Security Program. Coepany shall be defined to Include Tyler Corporation, and Its rajorlty- owned subsidiaries (Including majority-owned subsidiaries of such subsidiaries) which are hereinafter collectively referred to as "Company". In consideration of each other's undertakings In this Agreement, Company and Employee agree as follows: 1. Retirement Benefit after Age S5. If Employee has remained an active, full-time esployee of Company until age 65, and if this Agreement has been kept in force until such time, tapany will pay to Employee out of Company's general assets, as a Retirement "eneflt, the amounts per month for the motor of months set forth In Schedule A attached to this Agreement, and as amended from time to time by mutual agreement, comaenclng on the first day of the month following Em ployee's retirement from Company after attaining age 65, unless a different method of payment is selected under Paragraph 3 hereof. If Employee dies after becoming entitled to such Retirement Benefit payments, or before all such payments are aide, the remaining Retirement Benefit payments shall bm paid monthly to Eraloyee's Beneficiary. If Employee dims while employed by Company after attaining age 65, all such Retirement Benefit payments shall be paid monthly to Employee's Benefi ciary. Should Employe# retire prior to age 65 with the consent of the Tyler Corporation Employee Welfare and Benefits Coralttee (hereinafter referred to as the "Committee"), Employee shell ba entitled to a Retirement Benefit for the seme raePer of months set forth In Schedule A after such retirement date in a 1aster amount to be determined exclusively fay the Committee. 2. Definition of "Beneficiary*. The term "Beneficiary" as used In this Agreement shall oean the person or the estate of Employee entitled to receive any death benefits under this Agreement, as further defined In Schedule A. Employee shall have the right to designate and to change Beneficiary, as provided in Sched ule A. If Company has any doubt as to the proper person to receive any payments due hereunder. Company shall have the right to withhold such payments until the matter Is finally adjudicated. In any event, each payment made by Company in good faith, under this Agreement, shall fully discharge Company from all further obligations with respect to such payment. 3. Payment Potions. After written application by Employee to the Com mittee at least 12 months prior to retirement, and with the consent of the'Com mittee, Employee may receive In a lump sua the discounted cash value of any Re tirement Benefit payable hereunder or may waive any Retirement Benefit payable hereunder over a period of months longer than that set forth In Schedule A, with an appropriate reduction In the amount of the monthly payments, as determined exclusively by the Cemlttee. Payment trill be made under these options. If Em ployee becomes entitled to payment, on the first day of the month following the earlier of Employee's 'actual retirement or Employee's death aftar attaining age 65. 4. Termination of Employment. This Agreement does not In any way ob ligate Company to continue the employment of Employee with Coepany, nor does this Agreement Unit the right of Company to terminate Employee's employment at any time and for any reason wlthfbpany. Termination of Employee's enplnymant with Company prior to attainment of age 65 for any reason, whether by action of Company or Employee, shall Immediately terminate this Agreement and all further obliga tions, hereunder. In no event shall this Agreement by Its terms or Implications constitute tn employment contract of any nature whatsoever between Company and Employee. 2- 5. Termination of Amendment of Agreement. Company reserves In Its sole discretion the right to elect to amend or discontinue at any time and from time to time the program to which this Agreement pertains and to terminate or amend this Agreement by giving Employee not less than 30 days' written notice to such effect; provided, however, that Company shall not have the right to terminate or amend this Agreement after the payment of ary benefits under this Agreement has commenced. 6. Other Benefits and Agreements. The benefits provided for Enployee and Employee's Beneficial y hereunder are In addition to any other benefits avail* able to Employee wider any other plan or program of Conpany for Its respective employees, and, except as otherwise expressly provided for hereunder, this Agree ment shall supplement and shall not supersede any other plan or program of Conpany. 7. Restrictions on Alienation of Benefits. The parties hereto expressly agree that neither Exployee, Ms designee nor any other person shall have any right to transfer, modify, anticipate, or encumber any benefit or rights hereunder. 8. Notices. Any notice which shall be or may be given under this Agree ment shall be If writing and shall be mailed by United States mall, postage pre paid, addressed as follows: (a) Notice to Employee: (b) Notice to Company or the Committee: Tyler Corporation 3121 Southland Center Dallas, Texas 75201 ATTN: Owaln C. Kline Any party hereto may, from time to tint, change the address to which notices shall be mailed by giving written notice of such new address. -3- 9. Miscellaneous. (a) If Tyler Corporation liquidates due to Insolvency or any other event, this Agreement shall terminate and be considered fully and completely discharged without any obligation whatsoever to Company. (b) It is understood and agreed that payment of Retirement Benefits hereunder i; not funded fay any specific assets of Ccoptuiy and that Employee will look only to Company's general assets for payment hereunder. (c) This Agreement shall be binding upon the parties hereto, their heirs, assigns, successors, designees, executors, and administrators, and the parties hereto expressly agree to execute any and all Instruments nec essary for fulfillment of the terns and conditions hereof. This Agreement say be amended only by Instrument In writing signed by the parties hereto duly authorized. (d) This Agreement shall be governed and construed under the laws of the State of Texas as in effect at the tine of Its execution. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed on the day. month and year first written above. TYLER CORPORATION By:________ __________________________ T*nm I TYLER corporation NANAGOTNT SECURITY AGREEMENT Schedule A 1. Employee's Covered Salary: $. per month This represents the full Mount of Employee's base earnings eligible for coverage at the date of elocution of this Schedule A. 2. Retirement Benefit (after age 5): $. per month for 60 months 3. Employee hereby designates as Primary Beneficiary under this Agreement and feaoloyee hereby designates as Secondary Beneficiary under this Agreement The term Beneficiary, as used herein, shall mean the Primary Beneficiary If Such Primary Beneficiary survives tap1oyee by at least 30 days, and shell mean the Secondary Beneficiary If Primary Beaeflclary does net survive Em ployee ty at least 30 days, and shall mean the estate of Employee If neither Primary Beneficiary nor Secondary Beneficiary survives Employee by a. least 30 days. Employee shall have the right tc change Employee's designation of Primary Btneflclary and/or Secondary Beneficiary fnw time to time In suchmanner as shall be required hy Company, It being agreed that no change In Beneficiary shall be effective until acknowledged In writing by Company. (If Beneficial is to be Irrevocable, (trika and Initial prevluus sentenr- * III WITNESS WHEREOF, Company and Employee have executed this Schedule A ai of TYLER CORPORATION Bvcorcr & Ft i I : EXHIBIT 10.7 k (S3 EMPLOYMENT AGREEMENT This employment agreement is between Atlas Powder Company (the "Company") and H. Joseph Burchell. 1. Employment: The Company hereby employs Burchell, and Burchell hereby ac cepts employment with the Company upon the terms and conditions here inafter set forth. 2. Term: Except as otherwise provided herein, the term of this agree ment shall begin on the first day Burchell is ready for employment and shall terminate three years later or upon Burchell's prior death. Burchell will be ready lor employment not later than August 1, 1978. 3. Duties: Burcholl is engaged by the Company to serve lu an executive capacity as President of the Company subject to the direction and con trol of the Beard of Directors of the Company, Burchell shall not, during the term of this agreement, be engaged in any other business activity, whether or not. such bunln*.* : activity is pursued for gain or other pecuniary advantage, except investments of assets in such form and manner as will not require bis services, except for his acting as a director of a business or charitable organization where there would be no conflict of interest or except with the Company's prior consent. EMPLOYMENT AGREEMENT Page 2 h. Compensation: For che services to be rendered by Burchell under this agree ment, the Company shall pay Burchell a minimum of $100,000 In U.S. Funds a year, payable in equal monthly installments, less usual withholdings, plus travel and other appropriate expenses, during the term of this a- greement and while this agreement is in force. Burchell shall have an opportunity to earn up to a 80% bonus on his previous year's earnings depending upon performance as outlined in the Tyler Discretionary Bonus Plan for paying bonuses. . Burchell shall have the same rights and priv ileges and be entitled to the same benefits including savings plans and stock option plans as a senior executive would have with 27 and 1 years' service with the Company. Pension benefits will accrue as if Burchell's entire working life to date bad been spent at the Company. This pension will then bt paid to Burchell on terms of*the Company's pension. Whatever C1L pays Burchell in pension will offset the amount paid by the Company so tb-vt bis total effective pension will be as if it were all earned at the Company. 5. Convenant Hot To Compete: Burchell convenanta and agrees, which convenant and agreement be acknowledges are of the essence of this agreement, that he will not, for a period of three year# from August 1, 1978, engage, directly or indirectly, in ths commercial explosives business except for benefit employment agreement Page 3 of the Company. The Company has the right to enforce this restriction by suit for specific performance or by seeking Injunctive relief or in any other legal manner except with our prior written consent. 6. Termination: The Company may not terminate Burchell'a employment under this agreement except (1) for fraud, misappropriation, embezzlement, dishonesty or similar conduct, or (ii) if Burchell becomes so disabled as to preclude him from :*endering the services called for hereunder for in excess of six months, or (lii) if Burchell shall have committed a material breach of any provision of this agreement. IN V1TNE8S WHEREOF, tbs parties have executed this agreement on the day and year above set forth. ATLAS POWDER COMPANY Earnings per share computations for the years end-d Decem ber 31, 1978, 1979 and 1980 are as follows] 1978 1979 1980 Earnings per common and COmmnn equivalent shares: Met income for computation of earnings per common and common equivalent share $23,059,000 323,457,000 $23,836,000* Weighted average number of common shares outstanding during the year Met shares to be issued upon exercise of dilutive stock options after applying treasury stock method Weighted average number of common and common eouiva lent shares outstanding during the year 10,591,000 9,867,000 173,000 173,000 10,764,000 10,040,000 9,572,000 126,000 9,698,000 Mote: Share amount for 1978 reflects a two-for-one split in August 1978. * Before an extraordinary charge related to the write-off of the en tire cost of route permits associated with trucking operations amounting to $10,192,000. |5"8 Tyler Corporation Annual Report 1980 III A Decade ofGrowth Contents Corporate Profile.......................................... 1 Highlights................................................... 2 Performance Charts..................................... 3 President's Letter......................................... 4 Operations Review................................... 7 Financial Comment..................................... 15 Management Discussioi* and Analysis -- 18 Ten-Year Financial Summary Table..............20 Consolidated Financial Statements.............. 22 Notes to Consolidated Financial Statements.......................................... 26 Report of Certified Public Accountants -- 30 Supplementary Financial information....... 31 Directors and Management.........................36 Corporate Data and Directory..................... 38 Corporate Profile page / Tyler Corporation, with headquarters in Dallas, provides products and services to industrial customers through four operating subsidiaries: Atlas Ponder --The nation's second largest manufacturer of commercial and industrial explosives. C&HTransportation -- The largest motor carrier specializing in hauiing heavy and cumbersome items. Thurston Motor Lines -- One of the nation's leading regional general commodity carnets. Tyler Pipe--The largest manufacturer of pipe and fittings for drain, waste and vent applications. Tyler Corporation's sales growth has earned entry of the Company into the Fortune 500 listing of U.S. industrial companies in recent years. Throughout the decade of the 1971X8, Tyler has ranked in or done to the top ten percent of these companies in terms of return (before extraordinary charges) on shareholders'equity. Most of the Company's products and services are marketed throughout the United States. Only a small part of revenues is derived from exports and operations have Uttie vulnerability to foreign competition. With its primary objective of superior long-term rewards to shareholders, Tyler has built an organization composed of a few, large industry-leading operations capable of realizing outstanding returns on those assets employed in their businesses. Each unit seeks to produce a 25% pretax return on its assets with emphasis on high asset turnover. Strong cash how from consistently exceeding this standard has permits d Tyler to finance relatively rapid expansion. This cash flow has also allowed major acquisitions made in pursuit of diversification, supplemental acquisitions to strengthen industry position, accelerated debt repayment, repurchase of oommon stock and regular cash dividend increases. Tyler Corporation's management has stated a goal of realizing 15% annual growth in fully diluted earnings pet share. This goal has been exceeded in eig^tt of the last ten years. Five-year and ten-year compound growth rates in fully diluted earnings per share before extraordinary charges have been 16% and 23%, respectively. At th; end of 1960, Tyier had approximately 7,900 employees and 6,204 shareholders of record. U.3 / page2 Highlights Earnings PerShare (assuming full dilution) Before Extraordinary Charge............. Income Before Extraordinary Charge Net Sales and Operating Revenues.. Dividend (year-end annual rate) -- Pretax Returnon Assets Used in Operations................ Return on Ending Shareholders' Equity.................................... Vires Ended December 31 I9W Mas 1980 CV*T 1979 S 2.34 23,457,000 519,242,000 .45 $ 2.46* 23336,000* 563341300 30 5% 2% 9% 27% 26% 20.3% 193% Rv-Yar Ten-Year Compound Cocnrv-md Growth Rite Growth >sj* 16% 23% 10% 20% 14% 16% omy ifBBH^poii wiBWiioiMiccBuif cooi romr pcnrag smpompq wpd nuncing operations and amounting to $10,192300, orSLOB per dune. Major events and achievements of 1980 indude: Record sales and profit performance for the tenth successive year Overall pretax return of 26% on assets used in the operations, exceeding theCompany's goal for the tenth consecutive year, Return of 19.8% on ending shareholders' equity; Increases in the annual cash dividend from $.45 to .50 per share in February 1980 and U> $.55 per share in January 1981; p Strong cash flow which permitted: Net capital investments of $20.6 million, indudhig initial expenditures on a $9 million expansion ot Tyler Pipe's major foundry; Reduction of total debt, mostly in borrowings sensitive to the prime interest rate, from $108.6 million to $81.4 million; Further purchases of the Company's common stock, reducing by 35% thefuliy diluted number ofshares since the stock repurchase program began in 1972. Fiesk 'Tit's Letter In many ways, the past year was the most satisfying '> the history of Tyler Corporation. I v\ old like co quote from the President's Letter in our Annual Report: oolong ahead. 1980 shares up as a very stiff challenge. - xtending our string to ten years of record ean *s per share, a cherished ambition for quite a while, will be an uphili battle.'' It soon became appa. it that "uphill" was i ore than 90 degrees because physical volume and profits nosed ov er in late April and the dedhne continued until October. We had all but abandoned our hopes for a `-nth straight camings-per-share record. Because of the strength of our operating people, however, wo have die enormous pleasure of reporting that per share earnings for 1960 reached $2.46 versus $2 34 for 1979. This was done in a year When the prime interest rate swung wildly to 20%, then 11%, then21Vi% affecting both interest expense and construction activity, When recession and doubledigit inflation demonstrated their willingness to co-exist; Wlien the first stages of trucking deregulation let slip the dogs of rate war into an already recessive environment; When for most of the year our general commodity hauler was preoccupied with its eventually successful fight to defeat the Teamsters' unionization bid. Contrary to our traditional pattern of seasonality, the fourth quarter was the year's best in sales and income. Earnings per share in the final three months rose to $1.C4 versus $.53 a year earlier. For the full year sales reached $563.8 million and Income before the extraordinary charge reached $23.8 million. The extraordinary charge, amounting to $10.2 million, was announced on October 2,1980, and refers to the write-off of trucking authorities which we considered devalued by deregulation legislation. We intend to daim most of the write-off as a deduction for Federal income tax purposes, but, due to uncertainty regarding die ultimate treatment, no tax benefit has been recorded in the financial statements. If earnings performance was impressive, the job done by our operating people in die areas of asset management and cash production was a masterpiece. Receivables and inventories were held to a minimum. Overall asset turnover actually rose to 2.5 trines. Total debt was reduced from $108.6 million to S81.4 million. Prime-rate sensitive debt was slashed trom page 5 &T.2 mUlk.n > ,? r-end 1979 to $22 r> million ?t y,-*ar-e*,d arte*-$20.n milUon tor internal .apit:.l speeding, i'.bou* $5 miHio.-1 in cash dividend; <i;k` the coritirr ition Tt common sti-d; r nurchast;: oi . of the market. Our c^nsoiidated return on assets goal was met for the tenth consecutive year, . vs noted in tlv- past, the corollary of a s' ic- .esefui strategy emphasisingreturn on assets is superior ability to service debt. Li the past decade, lire have completed tw. > major diversifying acquisitions a.. d a dozc i. small rr supplemental ones, all for <-sh We hr v<; spent $8.3 million on poUutiv..ontrci at Vy1 -< Pipe alone and have added aggressively, though selectively, to our growing plant and equipment accounts for modernisation u- i increased productivity. Ten years ago, debt represented 70% of our total capitalization; in 1979,4e%; and at the end of 1960,40'.<. Again, this is after diverting a substantial amount of cash from possible debt reduction to common stock repurchase, a transaction which si/uultarc-ously reduces our equity account. Since beginning stock repurchases in 1972, the fully diluted number of shares has diminished from 14,640,000 to 9,463,000 at December 31,1960. All of our cumpanies did a solid, p >. *ssional job in coptng with the bizarre e lomy of 1900. Adis Powder increased Si ...s in the s-asmic and. coal industries, thou gh was partially offset by a dedine in the coiv>'h* ucn and quarrying areas. Profits incr isea .;* thzn sales primarily due to ntv naiv cost i^suras. C St H m^m ji.ied its outstanding rei< '.m uxi assr performance in spite of the MIy mo>f tnf det 'guiatkxi of the trucking -vd.^rv 'afits, i'wwever, were below the 97S k v-.` Hr .edsiveachoi. of Thurston empfeytes in voting down the- Teamsters and tnat company's goed p tformanoe in the fourth quarter indicate - desire to grow and improve productivity. Much remains to be done, but 1900 wasa year of substantial progress for Thurston. A special salute mu:; be directed to the dionxighbred performers at iy(e-. Pipe. That compar/s day-and-night commit:A.v.t to improving productivity, ir nearing n-.irke: share and maintaining ler " :p pc.sitot.n in its industry' was never me'-' 'ppuenf than , >/ competitive superioritv'was vviden>.<l i jgh the efforts of every employee. In April 1900, Perry J. Lewis was elected to the Board of Directors. Lewis is president of MacKay-Lewis Inc., a financial consulting firm, and was previously a director of Smith Barney, Harris Upham k. Co. Incorporated, investment bonkers. For nine years, we have sponsored the Tyier Cup Invitational, a two-miie run for senior corporate executives designed to promote physical fitness programs throughout the busirte*., community. The 1980 event, run on O ber 18, indudea 160 invited business lead .shorn the United States .*nd Europe ho represented more than two million employees. In association with Tyler Cup IX, we were pleased to award the second annual Kenneth H. Cooper Prize for Aerobics Leadership to Jess A. Beil, President of Bonne BeB, Inc., in recognition of his outstanding contribution to preventive medicine through physical fitness. In December, we were happy to join members of the medical and business communities in saluting the completion of ten years of outstanding work by Dr. Cooper at the Institute for Aerobics Research in Dallas. Unfortunately, Dr. Cooper's Aerobics Activity Center, physiofly apart from the Institute, was seriously damaged by fire on January 2. Reconstruction has begun and the new facility should be in fuB operation on an expanded basis within a year. At the moment, 1961 is unreadable, it is difficult not to have confidence, though, after 1900's flying finish. We thank our employees, many of them stockholders, for hammering out the results that make this kind nf letter possible. Yoursery truly. Ean** Vk- iNwitw Tntmui *. tkprmd f'nmantf f. StttUnmy ttiMptiF. McKinney ftMdtnt end ChM Eamiovr Officer Nteur.y 5. itoi Operations Review page 7 1980 became the tenth consecutivt year in which the corporate goal of 25% return on assets used in the business has been exceeded. While less than the 27% return recorded in 1979, the 1980 return of 26% was particularly notable in a difficult year and was primarily the result of excellent asset management by the operating units. The highlights of the Company's ten-year operating record are tabulated in the Operating Performance Summary slown below. Operating profits of 357.3 million were 1% higher than in 1979 and represented a 17% compound growth rate over the past ten years. The operating profit margin narrowed to 10% in 1980, the fir>t time in ten years that this indicator sapped below 11%. The reduction was due in large part to the continuing low margin of Thurston Motor Lines at only 2%. Tlte success of the subsidiaries' asset management programs is evidenced by die itcrease in asset turnover to 2.5 times. Much of the benefit resulted from a reduction in accounts receivable and good inventory management, fhis performance is especially noteworthy in a year in which, due to high t rates, customers generally take longer to pay their bills. Sales in 1980 advanced 9% to $563.8 million, rounding out a ten-year compound growth rate of 16%. All operating units except Tyler Pipe recorded sales gains. C AH TRANSPORTATION C&H Transportation, the nation's largest carrier ofheavy and cumbersome items, has been a dynamic memberofthe heavy hauling industry for 30 years. Thecompany transports machine tools, budding materials, pipe, pewer transforms, structural steel, refinery and oilfield equipment, construction equipment and other heavy machu sry. Generally, leads ere transportedfrom point of origin tofinal destination urith no cargo transfers emvute. C&H has long led its industry as meai ured by principal performance indicators, hxludiwj sales and profits. With the industry's most extensive geographic and market coverage, the company operates in 49 continental states and sections ofCanada andMexico. From Dallas headquarters, C&H operates 42 terminals nationwide. At the ettd of1980, this unit had 1/496 tractors, of which 17 percent were company-oumedand 83 percent were leasedfrom their owner-operators, 2,744 company-oumed traders andabout 1,800drivers. In 1900, C&H Transportation reported a 10% gain in revenues, but operating profits declined 8%. 1979 benefited (Dfc*OTm!!So^rCtTFr> 1971 wn 1973 1974 vm 1976 197' 1978 1979 mo WWIMH.................. Operating pwftteU)......... Operating profit mopn... Avenge eeeete employed in operation*............ . Aewt turnover(2).......... Return onM (3)......... (128,7 S 17.1 13.3* (55.0 Zi 31* 131.5 19.2 12.6-. 63.1 2.4 3fi* 193 9 22.4 11.6? Mlti 44 m: 286.0 32.0 11.2* 118.4 2.4 27* 293.6 336.1 36.8 45.0 12.5*. 134? 128.6 135.4 2.3 2.5 m 33V 364.7 46.6 12.171 138.3 26 347 390 9 S0.9 13.0? 153 7 2.5 3.3* 5192 MM 56.9 era Mil* 10.2V 214.8 Bli 24 2.5 27*. 26V (t) Operating piatiM - brfonr utm end brtorr cotpurele overhead inctiuiln#!ntnvt exprmr (2) Aeerl turnover - Selee Mid operating rt-vmun + Avenge Meet* (3) Return oneeeeto Anet, turouvwr x Operating profit merpn Ifcl page H from unusually large gains involving fixed assets. An important fac*-r in the revenue gain and margin shrinkage is a fuel surcharge which is included in revenues but which is passed on to the company's contract divers. Over the past ten years, revenues have grown at a compound rate of 14% while operating income his advanced at a rate of 12%. In 1960, die company's operating ratio (the ratio of costs and expenses to revenues) was 90%, reflecting in part the effect of the fuel surcharge referred to above. This was the thinnest profit margin in more titan a decade and the first time that the operating ratio exceeded 89%. Nevertheless, of the hundred largest U.S. truckers of all types, C& H continues as one of only two ranked among the top ten in terms of profitability in each of the past ten years. Despite the decline in profits, C&H managed to achieve an impressive 37% return on assets. Over the past ten years, return on assets has averaged 37%, well above Tyler Corporation's goal of 25%, and tias not been below 32h. An outstanding feature of C & H's asset management in 1960was a reduction in accounts receivable despite the gain in revenues. C k H has acquired a site in Laredo, Texas and begun construction of a major terminal which will serve the compan/ * increasing business in Mexico. In addi; on. the company acquired a terminal fadli.y in Charlotte, North Carolina. This facility > < centrally located on the main trucking thoroughfare between the Southwest and the Eastern states and will permit better coverage of the Southeast. The nominal deregulation of the interstate trucking industry has ofcourse, affected the operations of C & r. and its competitors. Easier entry into the business has resulted in more but weaker competitors. Price competition has increased pressure fat greater efficiency. The result will eventually be fewer but larger and more efficient trucking companies. C&ii expects to continue to be m the industry leader. 1980 market conditions appear to be extending into 1981, with cost increases, . smaller rate increases and continuing margin pressures. Business for heavy haulers will be available, but 1981 will not be a period of much growth in the total market TYLER PIPE Tyler Pipe ic the nation's leading manufacturer of pipe andfittings for dram, waste and i ent applications in commercial, Must-rial and residential construction and c' cast iron water and sewagefittings for use by municipalities. Within its industry, which has estimate sales ofaround S7S0 million, the. unit is ranked first in soles, profitsand " profit margins. For 45 years, Tyler Pipe has beat manufacturing products with cast iron and has added plastic products to its catalogs. With headquarters and principal production facilities in Tyler, Texas, the company also has a plant in Pennsylvania. 1yler Pipe has a longstanding record of innovation in the design, manufacture and application ofits broad range ofproducts. It introduced soil pipe in ten-foot lengths and was the first domestic manufacturer to employ centrifugal casting ofsoil pipe in one-piece metal molds. Tyler Pipe Misled die industry in the use of service-weight and no-hub products, replacing the heavier, mote costly and more energy-intensive extra-heavy-weight pipe und fittings. Operating profits for: ^ler Pipe increased 8% in 1980 despite a 7% decline in revenues and u slurp drop in physical volume of products sold. Sales were below 1979 levels page 10 p> p '\ primarily as a result of a general slowdown in commerdal and industrial construction. While sales were lower in each of the company's major product lines, a gain in operating profits from cast iron drain, waste and vent products more than offset declines in income from water and sewage fittings and plastic pipe and fitting. The gain in profit margin resulted primarily from an effecth'e program of cost reduction and productivity improvement. The company has recorded a ten-year compound growth rate of 12% in sales and 14% in operating profits. Return on assets in 1900 was .16% marking ten consecutive years of meeting or exceeding the 25% standard. Over this period, return cn assets has averaged 32%. ATLAS POWDER Atlas Powder, ranked second in sales among domestic manufacturers ofcommercial and industrial explosives, has earned a reputation for superior products and outstanding marketing and technical service assistance throughout its 69-year Ufe. Over the last several years. Atlas has expanded its dam offoe total explosives market which is estimated at over $500 million. With headquarters m Dallas. Allas has production facilities in Missouri, Pennsylvania and Texas. Besides these manufacturingfaciities, it operates mixplants at 12 sites throughout thenation. Atlas produces and distributes a complete product tine which includes nitroglycerine-based dynamites, gels, slurries, ANFO, ammonium nitrate, electric Hasting caps and other related supplies. About halfofall industrial explosives consumed hi the U.S. is used by the ail mining industry. Other major users an thequarrying, construction, metal mining and seismic industries. Tyler Pipe continued to lead its industry, increasing its market share to approximately 26% overall and to more than 40% in cast iron drain, waste and vent products. In order to expand its capacity to maintain market leadership, and its ponition as the lowest-cost producer in its industry, the company is implementing a major expansion at in foundry in Tyler, Texas. The new facilities, budgeted at about $9 million, indude an automatic molding system, tand supply, pouring stations and related fKiBries. Virtually a new foundry, die addition will assure improved productivity and customer service and availability of all cast iron products. For 1961, Tyler Pipe expects to continue to increase market penetration in drain, waste and vent pipe aind fittings and in water and sewage fittings. As the year progresses, the total market should also Improve. Atlas Powder's net sales wive up 14% in 1900, and operating profit increased 1%. A decline in physical volume of products sold reflected a slowdown In general construction spending. In each full year since Adas Powder became a part of Tyler Corporation in 1973, it has met die retunvomassets goal, achieving 26% in 1980. Over the same six years, H has had a compound growth rate of 12% in net sales and 13% in operating profits. WanAAnflwdr 1971 map^nlmt ham. Ben-- M l huttnn haw amOmU wrt IW.fc r4 'AiTMfi, amjmMiiniktm, unfummmmtmiSM,- During 1960, the company expanded its capacity for the manuLcture of packaged slurry explosives. In addition, sales of high page 13 quality explosives to the seismic industry increased, reflecting the oil industry's expanding search for oil and gas. The major market for industrial explosives, the coal mining industry, has excellent long-term growth prospects. The economic advantage of cool as an energy source, even with environmental expenses, is overwhelming. A possible coal strike in early 1961 could slow but not reverse this growth trend. The quarry and construction industries will probably continue to be soft, especially in the first half of 1961, but this will be offset partially by the growth in oil and gas exploration. In its first full year as a member of the Tyler family, Thurston Motor Lines was hard hit \rf tite effects of the economic recession and a union organwig effort. While year-to-year comparisons are not available, overall results for 1980 were below standard. Return on assets was an unsatisfactory 4%, It is encouraging that most of the return was earned in the latter part of die year and the annualized return on assets for the fourth quarter was significantly better, although stili below the 25% standard. THURSTON MOTOR LINES Thurston Motor Lines, headquartered in Charlotte, North Carolina, is one of the nation's leading regions! general commodity carters. Founded in 1932, Thurston has operatea in 23 states, concentrated m the Southeastern states. The busmas and tivtscfThurston were purchased by Tyler in 1979. New routeauthorities haveincreased substantially the unit's coverage ofthe Southeastern United States and the Eastern Seaboard. Service has recently been extended to the Dallas/Ft. Worth and Birmingham markets with temporary authorities. Thurston's motorfleet at the end of 1980 consisted of910 tractors, 2,516 trailers, 139 straight trucks and 44 automobiles and seivice units. Services are coordinated through 43 terminals. At the end of 1980, Thurston hud 1.230 full-time employees, Cargo handled by Thurston represents a broad range ofproducts, but typically the major commodities shipped are textiles and synthetic fibers, automotive parts, drugs and toilet preparations, furniture, chemicals and allied products and paperproducts. Nona TIotmiMu** uni irp--J m AHIW* pwdW bii. Optiw>% fue pmtr yam me mi omfmakk uprated km pm>jt hrstar ilAyiuw ri ne<frduir ltd mmm tmvmamm *44* pm dtrat+mmm. During the second half of the year, Thurston nude considerable progress toward increasing its business volume and profitability, it extended its operating territory by obtaining new authorities and starting operations in Birmingham, Dallas and Albany, Georgia. Further ^tensions of its routes are in process. It began operation of a new break-bulk terminal in Charlotte, North Carolina to increase efficiency of its bervioes. In July, the employees ofThurston voted by mote than two to one to reject representation by the International Brotherhood ofTeamsters. The election represented on important step in improving the operations at Thurston. In 1961, Thurston expects to increase its market share in a very competitive environrre.it. Thurston also expects to continue productivity improvement programs which will result In an improved operating ratio and improved return on assets. Financial Comment pu* <5 Despite some minor disappointments. Tyler Corporation ended 1980 with a generally good record and in strong financial condition, as measured by several key indicators. (As earlier indicated, references in this Financial Comment section to income relate to income before an extraordinary charge.) . lname For the tenth consecutive year, Tyler posted record income in 1980. Income has increased more than six times in the decade, from $3.7 million in 1970 to $23.8 milbor. in 1980. Return on Equity Income of $23.8 million in 1980 resulted in a return on veai-end shareholders' equity of 19.8% compared with 20.37<> in 1979. Retum on equity is usually considered by investors to be an important gauge of a company's performance. By this measure, Tyler Corporation has an impressive record, generally ranking among the top ten percent of the 500 leading industrial companies as listed by Fortune magazine. The Company's record is set forth in the table and chart below, ItmtowsSw) ___________ _ 1971 Nci iname....................... StuKhaldm ofay............. Return unenJingequity........ $ 6.5 M0.9 15.9% 1 Ektwrtn*iJ*iaryiin!ri<'jl0.2imHk*i 1972 8.1 50.9 19.7% 1971 8.8 475 185% 1974 12.6 59.0 21.4% 1975 15.0 72-4 20.7% 1976 19.1 97.4 19.8% 1977 21.4 102.2 20.9% 1978 21.1 107.9 21.4% 1979 I9S0 21.5 2M* 115.5 120.5 20.1% IM%* nnimmtiwiRiinniniM Lunr-trm (JA fndukvr m iuwbiI Wtinfawol Othamn, SwWim'Ew mmmntiniiwmmiirM H Tjiif Cupmaji T<*i 10%<4 Foi "XT* " | Main Fimm "W ill VViampanynFiwtm "500" ' Furuk "SOP" data fu (980 0(nt*mtdAt m *r aw Mi wjmim Th uumnd k uaudb ndukd m a Maj mm MimUm k> Forum Miyaftw'i forrudu. town m meant SuAtJ b/ mint Amd/ilm' eu*d> ml mr Cash Flaw The sum of depredation and amortization charges of S17.4 millk'n added to income produced cash flow or $41.2 million in 1900. Because Tyler operating managers generally have met or exceed the Company's standard for return on assets, subsidiaries have been able to finance their own growth without corporate capital contributions. In addition, the regular flow of cash from the operating units to the Company in recent year* has permitted: internal net capital investment in 1980 of $30.6 million, of which about rwo-thirds was spent for plant modernisation and productivity improvements and one-third for transportation equipment; annual increases (with two increases each in 1976 and 1978) of the cash dividend from its initial level of 5.05 per share in 1973 to the present rate of $.55 per share declared in January 1981; a stock repurchase program which, since its inception in late 1972, has reduced the fully diluted number of shares by 35% at the ettd of 1980; thv spin-off of i former subsidiary to Vyier shareholders as a Ux-free stock dividend; early retirement of a previous $21.3 million issue of convertible subordinated debentures; acquisitions of major and supplemental operating units; reduction in long-term debt during 1980 of $27.2 million, mostly in borrowings sensitive to the prime rate. Capitalisation At the end of 1980, the Company's total capitalization of$201.9 million consisted of$120.5 million in shareholders' equity and $81.4 million in total debt MtvGthMdSw pugd 1.7 Early in 19.', the Company increased its unsecured line of credit to $60 million. Exceptional cash generation during the year made it possible tn reduce substantially the outstanding bal&'tce of this line ofcredit from $43.0 million a: year-end 1979 to $21.0 million at year-end 1980. Interest is at 14% over the London Interbank Offered Rate or, at the option of the Company, at 106% of prime rate through April 19B3 and at prime race plus Vi% for the remaining five years of the loan agreement. Total debt indudes $30 milium pitndpa1. amount of 10`/5% subordinated debentures issued in June 1978 and due in 1998 and a $27 million remaining balance on an 814% loan from The Prudential Insurance Company of America. In addition, the Company has unsecured credit agreements with its banks for 525 million at prime rate for working capital. There were no borrowings under these agreements in 1960. Tyler's capital structure has varied considerably over the post ten years (see chart on page 15). From the end of 1970 to the end of 1980, shareholders' equity has grown irom $26.1 million to $120.5 m'Uion. Change*; irdebt position, including current maturib^s of long-term debt, have produced year-end debt/equity ratios of 70/30 in 1970,48/57. in 1979 and 40/60 in 1980. Industry Standings In recent yean, the Compai ty has ranked high in Fortune magidnt'u ien-year analyses of the nation's largest industrial companies in terms of key indicators of corporate performance. The study of 1980 performance is not available as this report is published. However, according to the tabulation in the magazine's May 5,1960issue which analyzes 1979 results, Tyler Corporation was ranked 88th in return on equity for the year and 88th in ten-year growth of earnings per share. In total return to shareholders, the Company ranked 34th for the ten years through 1979. Entaa ftrShat By Qiamr lUBUBaa Am <%> .. - frumtiipun* 'Wim/iibjiii.t Thmhfttntr Fnhptnr n tox 18 Management Discussion and Analysis of Financial Condition and Results of Opesations FimncUl Condition By generally exceeding ihe Company's goal of a 25% return on assets with emphasis on nigh asset turnover, the Company's subsidiaries have been able to service their own cash needs for capital expansion and other purposes from operations while also providing cash flow to the Company. During 1900, a decrease in accounts receivable and basically level inventories permited significant cash flow front cpt-iatioib while sides and operating revenues continued to increase. Sales and operating revenues increased 44% from 1978 to I960, but accounts recer/f bte as a percentage cf total assets dednv**d from 23% m 1978 to 22% in 1960 and inventories remained fixed at 13% of total assets. In addition to the cash from operations, die Company has available 525,000,000 under credit commitments with certain banks and $66,000,000 under unsecured revolving lines of bank credit At December 31, I960, the Company could obtain an additional $66,500,000 under these arrangements. Tire Company intends to maintain a debt-to-equity relationship in its capital structure that will permit the Company to have access to long-term funding as future needs arise. Analysis of Results of Operations 1979 Compared with 197o Net sales and operating revenues o< file Company increased 33% over 1978 levels with 19% of the increase attributable to the inclusion of the general commodity currier acquired on April 6,1979. Heavy hauling revenues increased due to conimued improvement in load ratio and the mix of commodities hauled and toan increase in the number of trucks operated. At the industrial explosives unit, physical volume was up, led bydemand for shiny products. Unit volume decreased for water and sewage fittings and cast iron products but increased for plastics at the pipe and fittings unit. Most product and service prices were raised in 1979. Pietax profits as a percent of sales declined from 10.6% to 8.2% and gross profit margins dropped from 21.2% to 16.4%. The gains realized from an improved load ratio and gains invoiving fixed assets fix the heavy haulrr and volume increases at th industrial expkxr'es unit were more than offset by a drop in margin at the pipe and fitting? unit and the low margin of the general commodity* carrier included since acquisition, and because of increased costs oihbor, materials, fuel, 8p maintenance, depredation and amortization, payroll taxes and interest. Excluding the general commodity carrier, which contributed 2% of the 37% total increase in costs and expenses, maintenance costs w ere up 18% as outside repair costs on transportation equipment continued to incre;i9e and as plant rapacity was more fully utiliz'd. Depreciation and amortization of property, plant and equipment rose 8% due to inflation's effect on asset additions. Payroll taxes increased 10% because of a slight increase in the average number ofemployees in 1979 and legislated increases in FTCA taxes. Compared to a 23% increase in 1978, interest expense (net of interest income) increased 125% in 1979 due to sharply higher rates and increased borrowings used to acquire tire gen ?raJ commodity carrier. 1980 Compared with 1979 Net sales and operating revenues advanced 9% in 1991). Inclusion of twelve months of revenue in 1960 versus nine months in 1979 for the general commodity carrier contributed 5% of the increase. The heavy hauling unit's gain reflected primarily a larger amount for diesel fuel surcharge during 1980 in addition to an improved commodity' mix and slightly higher rates. The industrial explosives unit's advance resulted from price increases that more than offset the physical volume decline in >.ii product lines. The pipe and fittings unit experienced a substantial drop in physical volume fo* I of its major product lines. Pretax profits as a p nt of sales declined from 8.2% to 7.4% and gross profit margins decreased from 18.4% to 18.2%. The profit margin gains realized from cost reductions *nd productivity improvements at the pipe and fittings unit were offset by the especially low margin at the general commodity carrier, a lower bad ratio and the fuel surcharge passed through to contract drivers at the heavy hauler and a physical volume decrease at the industrial explosives unit. The profit margin was also penalized by general! increased costs of labor, materials., fuel, maintenance, depreciation and amortization. Inflation Accounting For a discussion of the impact of general inflation and changes in specific prices, see "Inflation Accounting Data" on page 32. Financial Summary Table Interest expense Corporate.................... Operating companies. 971 . S128.719 . 112,996- 3,015 4E6 lnoxrre before income tax income tax....................... Netmcome..................... 12,252 5,762 6,490 . loxn't-!............................................................................ 5.M% 47% Eomingi per common share-- assuming full dil tion. . S .50 Avera,*e shares......................................................... 14,240 Earnings per comnon anr* common equivalent siure. . $ .64 Average shares......................................................... 10.176 Total sseets.................................................................. . $ 97,873 Long-term ret*, indu ling current maturities......... 40,442 Debt/equity tatio......................................................... 50/50 Capital expenditures (net)........................................... . $ 6,513 Ooredatior. and amortization................................... 4,264 Prve/eamings ratio range................ Book value per share....................... .$ . 6%-yv* 14-7 . $ 3.26 industry segment summary: Net sales and operating revenues Industrial explosives........... General commodity earner, . $ 69.080 48.532 . 11,1Of $128,719 'fit'. upe ai 'Heavy hauling.................. ' ndustrial expSosivw 'lencmlccnunodii, &. -. Other.............................. . $ 11,321 5,793 -- 25 r//.3i Uruilitxated corporate expense I rest................................ Ctw...................................... . (3,015) ..a>22) . $ 12,252 W72 $r51,520 153,851 2,3*1 396 14,932 6,869 8,063 5.32% 46% S .60 r4,428 $ .68 11,920 $107,757 51,225 56/44 $ 9,364 4,5% $-- 14-9 $ 3.70 $ 81,13!) 51,860 -- Wf505 $151,520 $ 12,163 6,112 -- 907. 19,177 (2,341) (1,904) $ 14,932 1973 S193.948 173,293 4,439 184 15,932 7,169 8.763 4.52% 45% $ .71 13,160 S .80 10,956 $144,095 72,829 61/39 $ 10,388 5,978 $ .05 6%-2% 9-4 $ 4.47 $ 96,58* 62,&T: 19,280 15,558 $193,948 $ 12.837 7,213 1,737 (G7 22,394 (4,439) (2,023) $ 15,932 Vluini f.'Sfnm.BllikilkmoflK- /mA,rettatM)Mvifijr'a?*rextthirn, /Wrrr gitfxin4th/iiydki;ffHii*Aik,u < vUrenmi ufrrn\*ffrmttimuLutinlvtthinubtixuirrulimt*utwttiutx fc tl6,192^7 cri'Wt jm-vutr*. f tyual lO'tSuinftfftvh pfttkort ex\A* < t'!/b mil 1478 *4r,t falniiwlrtm urrr $.118 oivt$..)7S, mfxctiniii. N71 256,066 301 23,751 11,163 12,366 *4.40% 47% $' 1,01 13404 $ 1.16 10,912 $164,806 75,026 56/44 $ 21,473 8,279 $ .10 5`/-3l/4 5-3 $ 5.55 9125,614 77,591 66,390 14,406 $286,001 $ 15,121 10,574 7,400 J1APJ 31,972 . (5,883) (2,338) $ 23,751 \fTr> 5293,645 260,255 5,868 40 27,482 12.504 14,978 5.10% 45.5% S 1.19 13a 0 S 1.38 10,864 $170,808 61,745 46/54 $ 10,164 9431 $ .15 6'/m-3Vk 5-3 $ 641 $111,895 83,061 74,096 24,603 $293,645 $ 133)9 9,695 17,327 0,600) 36,811 (5,868) (3,461) $ 27,462 W76 5336,080 296,147 4,6% 120 35,117 15,003 19,314 5.75% 45% $ 1.56 12,536 $ 1.68 11,514 $177,493 43,675 31/69 $ 16,342 9,309 $ .25 11%-5V( 7-3 $ 8.40 $128,106 91,078 87,153 29,741 $336,080 $ 15,612 10,670 17,387 1,352 45,021 (4,6%) (5,208) $ 35,117 fw - I 1977 5364,724 321,849 3,973 68 38,834 17,474 21,360 5.%% 45% S 1.83 11,704 $ 1.83 11,690 $177,295 40,564 28/72 $ 16,482 9,576 $ .30 12Vr9% 7-5 $ 9.17 1978 S390.R73 343,576 4,1*57 09 42,371 19,252 23,059 5.90% 45.5% $ 2.14 10,787 S 114 10,764 $206,921 61928 37/63 $ 15,529 11,314 $ .40 1914-lOVi 9-5 S 10.61 $154,606 102,625 96,544 10,947 $364,724 $22,763 11,862 11,350 657 46,632 (3,973) (3,825) $ 38,634 $171,863 113,754 105,256 -- $390,873 $ 24,735 12,964 13,185 -- 50,904 (4,897) (3,6%) $ 42,311 1979 5519,242 465,700 10,577 635 41330 18,873 23,457 4.52% 44.6% S 2.34 10,010 $ 2.34 10,040 $272377 108,561 4852 $ 21,691 15,206 $ .45 18Vrl4 rs6 $ 1116 $185,132 136,101 121,775 74,234 -- $619,242 $ 22,430 16,682 15,335 2,438 - %,o85 (10,*.77) J7.97N) S 42330 _jm___ $563,841 510,179 11306 239 4i, nr 17,'Wi 23;a* 4.2%* 41% S 2-46* ojm $ 2.46* im $26040 81.J74 4M0 $ 20,645 17,370 $ .50 179V10K 7-4* $ 12.95 $171,061 151/405 131423 102,174 $363441 $ 24-267 15470 15401 2402 57420 (11406) (4,197) $ 41417* (%2 Consolidated Statements of income Yobsended December31 Net sales............................................... Operating revenues............................... Costs and expenses Cost of sates.................................. Operating costs............................... Setting administrative and genera! expenses (all operations) ... Interest expense............................. Income before income tax and extraordinary charge....................... Income tax Current............ ................................ Deterred........................................ Lncoms Ic-fore extraordinary charge........ Extraordinary charge............................ . Net income......................................... Per common share Ea nings before extraordinary charge. E> traordinary charge...................... Net earnings................................. Av stage shares.............................. See aoa. mpanying notes. m1 Is H 1978 $277,119,000 113.734.000 390.873.000 213,770,000 94,394,000 35,4124)00 4,966,000 348,562,000 42,311,000 19,252.000 23,0*9,000 $ 23.059.000 $ 2.14 S 2.14 10,764,000 1979 S306.9O7.U00 212.335.000 519.242.000 244.994.000 178.952.000 41.754.000 11.212.000 476,912,000 42330,000 17,128,000 1,745,000 18.873.000 23.457.000 S 23,457,000 $ 2.34 S 234 10,040400 1490 $310,184,000 2S3557500 sajuifioo 242561500 ZUAKijm 49,167400 11545400 52X024400 41,817400 17584400 397400 17,981400 23438400 iO.192400 5 13444400 $ 7.46 1.05 141 9^891^000 Consolidated Balance Sheets Ceoember 31 fuge 2i Assets Cunvnt asots Cash ana .-'ion-term investments..................................... ....... Accounts rectiv-.ble 'k :s allowance far losses of $2,446,030 in ,'J *3,313,000 in 1980)..................... ....... Inventories.......................................................................... ....... Prepaid expense -- .............................................. ....... Total current asset? .............................................. S 6.822,000 62,391,000 34,849,000 5,023.000 309,065,000 Property, plant and equiprr. -nt, at c.t..................................... ....... Less allowance for depredation......................................... .. .. Other assets Cost in excess of net assets of businesses acquired and other intangible assets............................................. ....... Sundry............................................................................... ....... 174,872,000 68,699,000 106,173,000 49,702,000 7,617XXX) 57,319,000 8272,577,000 1980 $ 8,542X100 58^48X100 35440XX10 WJOO i/nj&7jxn 190,945X100 81,270XXXI 109475XXX) 39495X100 8481X00 47.936400 8264448400 Liabilities and Shareholders'Equity Current liabilities Accounts payable and accrued liabilities........................ Income tax................................................................... Current maturities of long-term debt................ ............ Total current liabilities............................................... ...... 47,173,000 Deferred income tax............................................................ ........ Long-term debt, less current maturities................................ ...... Subordinated debentu. .i.................................................... Shareholders' equity 'common sharesoutstanding at end of year 1979--9,499,713; 1980--9,320,752).............. See a xompanying notes. 5474,000 74,195,000 8272,577,000 % 43,758400 9,906X100 3430400 59,196400 7,11*400 47444XXW 30400400 120490400 8264448400 Consolidated Statements of Shareholders' Equity Years ended December 31,1978.1979 and 1980 Balance at December 31,1977.................. Two-for-one stock split effected by a 100% stock dividend............. Issuance of 66,470 treasury shares upon exercise of stockoptions...... Sale of209,296 treasury shares to the Tyler Corporation Savings and Investment Flan Trust........... Purchase of 1,260,600 shares of common stock............................. Federal income tax benefits from exercise of nonqualified stock options.............................. Net income................................... Dividends ($.375 per share) -- Common stock S. 10 per value S 648,000 Capital surplus $29,748,000 Retained earnings S 85,213,000 Treasury stock 5(13,397,000) 648,000 (648,000) (4r ,000) 749,000 35,000 2,607,000 (16,558,000) -- 262,000 -- -- -- -- 23,059,000 -- -- -- (3,983,000) -- Balance at December 31,1978.................. Issuance of 37,150 treasury shares upon exercise ofstock options....... Sale of 255,239 treasury shares to the TylerCorporation Savings and Investment Plan Trust........... Purchase of 960,094 shares of common stock............................. Federal income tax benefits front exerdse of nonqualified stock options.............................. Net income................................... Dividends ($.45 per share).............. Balance at December 31,1979.................. Issuance of66,194 treasury shares upon exercise of stock options....... Sale of 305,216 treasury shams to the Tyler Corporation Savings and Investment Plan Trust........... Purchase of 550,371 shares of common stock.................. ........ Federal `ncome tax benefits from exerd ie of nonqualified stock options.............................. Net income................................... Dividends ($.50 per share).............. 1,296,000 28,940,000 104,289,000 (26,599,000) (425,000) 622,000 1 (167,000) 4,199,000 (15,819,000) -- -- --- 1,296,000 191,000 -- -- 28,539,000 -- 23,457,000 (4,449,000) 123,297,000 -- -- -- (37,597,000) (717,000) ljonjooo (696,000) "" 5,029,000 (8,851,000) -- 279,000 -- -- --- -- 13,644,000 -- -- -- (4,808,000) -- iii Balarce at December 31,1980.................. *1,296,000 $27/4054)00 $132,1334)00 See accompanying notes. Consolidated Statements of Changes in Financial Position Yean ended December 31 page 25 Source of Funds: Income before extraordinary charge ..., Chargrs against income not involving working capital Depredation and amortization -- Deferred income tax .................. Total from operations.............. Long-term borrowings....................... Issuance ofsubordinated debentures... Undepreciated value ofasset disposals . Issuance of common stock.................. Refund of escrow deposit on acquisition Application of Funds: Additions to property, plant and equipment Reductions of long-term debt..................... Acquired business less working capital acquired of $3,966,000 Property, plant and equipment........... Intangibles......................................... Other assets..................................... Long-term debt................................ Escrow deposit on acquisition................... Cash dividends.................................. -- Acquisition of treasury shares................... Other.................................................... Increase (decrease) in working capital....... Changes la Components of Working Capital: Increase (decrease) in current assets: Cash and short-term investments.......... Accounts receivable............................. Inventories .... -................................ Prepaid expense.................................. (Increase) decrease in current liabilities: Accounts payable and accrued liabilities . Income tax........................................... Current maturities of long-term debt. .. Increase (decrease) in working capital.......... See accompanying notes. 1978 $2?,059.000 1979 $23,457,000 1900 $23X36X00 11,314,000 1,215,000 35,558,000 5,000,00) 30,000,010 1,802,000 3,196,000 -- $75,586X00 15,206,000 2,122,000 40,785,000 50,000,000 -- 2217,000 4,420,000 2,500,000 $99,922,000 17,378X00 1X44X00 42X68X00 5,900X00 -- 2,707X00 4,970X00 -- $56236X00 $17,331,000 12,635,000 $23,908,000 $23X62X00 11,173,000 32261X00 -- -- -- 2,500,000 3,983,000 16,558,000 3,137,000 19,442,000 $75,586,000 37,018X00 9,273X00 342X00 (5,076,00b) -- 4,449,000 15,819,000 1,249,000 1,767,000 899,922,000 -- -- -- -- 4,808X00 451X00 1X44X00 (14,071X00) $56,236X00 $ 7,646,000 10,491,000 1,526,000 111,000 (1,776,000) 1,443X00 1,0)0 $19,442,000 $(7,367,000) 14,190,000 7,110,000 (144,000) (9,851,000) (441,000) (1,730,000) $ 1,767,000 1,720X00 0X43X00) 691X00 (916,000) (7,613X00) (9,246X00) 836X00 KMXnXTO) patfn 26 Notes to Consolidated Financial Statements Summary of Significant Accounting Policies The consolidated financial statements indude the accounts of the Company and its subsidiaries, all of which are wholly owned. Cost in excess of net assets of businesses acquired after October 1970 is amortized over 40 years. Cost in excess of net assets of businesses acquired before October 30,1970 is not amortized. Accumulated amortization at December 31,1979 and 1980 is $183,000 and $414,000, respectively. Inventories are valued at the lower of cost or net realizable value. Costs of inventories are determined by die last-in, tirst-out(UFO) method. Depredation, for financial statement purposes, is provided principally by the straight-line method over the estimated useful lives of the various assets. For income tax purposes, accelerated depreciation is used with recognition of deferred income taxes for the resulting timing differences. Investment tax credits are applied as a reduction of Income taxes by the flow-through method and amounted to $1,179,000 in 1978, $1,865,000 in 1979 and $1,134,000 in 1980. Pension plans are in effect which provide income and death benefits for substantially all employees of the Company. The Company's policy is to fund pension cost accrued and generally amortize prior service cost over ten years. Acquisition of General Commodity Carrier On April 6,1979, the Company acquired all of the business and assets of Thurston, Inc. The acquisition is being accounted for by the purchase method of accounting, and, accordingly, the financial statements include the results of operation:. of the Acquired business since the acquisition date. The following information summarizes v1:' combined operating results of the jjrcd business and the Company for the y<?An ended December 31,1978 snd 1979 on a pro forma basis as though the business was acquired January 1, 1978: 1978________1979 Net sales and operating revenues.........$480,048,000 $540,337,000 Net income........................$ 25.089,000 $ 23,00000 Earnings per common share.............. S 2.33 $ US Write-offof Route Permits In accordance with the requirements of Statement of Financial Accounting Standards Nc.. 44, Accounting for Intangible Assets of Motor Camels, the Company has written off the entire cost ofroute permits associated with its trucking operations as an extraordinary charge of $10,192,000 or $1.05 per share. No tax benefit from the write off has been recorded in the financial statements. ' Compensating BalanceArrangements Under informal agreements with lending banks, the Company maintained an average of $985,000 as compensating balances during 1960 after adjustments for estimated float of $3,794,000 and average uncollected funds of$2,279,000. There were no outstanding borrowings related to these agreements during 1980 Estimated float represents the average end-of-month difference between bank and book ledger balances; average uncollected funds were computed from reports furnished the Company by lending banks. Inventories Finished good? ... Wcik in proeeM .. Raw materials andauppiiM ... Allowance to state inventories at LIFO cost........ 1979 MS0 $37,463,000 $34809,000 1,557,000 1,553,000 12,367,000 15,936,000 51,387,000 54,378,000 16,538,000 20438,000 $34,849,000 $38,840,000 > fxiKt 27 Current replacement cost approximates the amounts shown above before the allowance to state inventories at UFO cost. Property. Plant and Equipment Depredation lives fin vea| Land............ Buildings and leasehold improve ments....... MsdJnery and equip ment......... Transports- torn equip ment......... 10 to 30 3 to 15 3toS 1979 19S0 $ 6,857,000 $ 1,794,000 36,427,000 72,044,000 77,b,000 57,544,000 63490400 5174,877,00) 0197 446400 Credit Commitments From Banks Under commitments from banks, the Company may borrow at the then effective prime rate of interest up to 525,000,000 on an unsecured short-term basis. The Company is required to be free from borrowings under the commitments for at least 60 consecutive days during the preceding twelve months. There were no borrowings outstanding under these commitments at December 31,1979 and 1980. Long-Term Debt Parent 8>/4% unsecured note due in annual installments of $3,000,000 ............. Unsecured $60,000,000 revolving line of credit...................... Mortgage notv due May 1983 ............... Subsidiaries: Unsecured $6,01;'),000 revolving iiiu- of credit, interest at prime rate.............. 6% to 8% secured notes...................... Lekicurreriir 'l,rittes -- 1979 $30,000,000 43,000,000 _ 4,150,000 1,411,000 78,561,000 4,366,On $74jl95jOOO 1980 $27,000400 21,000400 1,400,nao 1400400 474,000 51,374400 $47444400 II 9 The unsecured $60,000,000 revolving hank line of credit converts in April 1963 tc a term loan payable quarterly over five years. Interest is at V% over the London Interbank Offered Rate or, at the option o* the Company, at 106% of prime rate through April 1963 and at prune rate plus Vi% thereafter. Scheduled repayments of long-term debt during the five years following December 31,1980, are as follows: 1981 -- $3,530,000; 1982--$3,215,000: 1983--$7,840,000; 1984--57,515,000; 1985--$7,515,000. Subordinated Debentures On June 1978, the Company issued $30,000,000 of 10te% subordinated debentures due June 1,1998. Sinking fund payments beginning June 1,1988 are calculated to retire 75% of the issue prior to maturity. The debentures maybe redeemed at 108.40% of the principal amount prior to June 1,1981 and at dedining premiums thereafter to 1968. No redemption may occur prior to 1988 out of the proceeds from a borrowing laving an annual interest rate less than Dardend Restrirtvtis The Company's loan agreements limit retained earnings currency available for dividends to $9425,000. The Interstate Commerce Commtcsic u limits dividends payable to the Company by the trucking subsidiaries to 50% of those srhsidiaries' net income for each accounting period. Income Tax As a resuh of the application of Accounting Principles board Opinion No. 16, in accounting for the acquisition of industrial explosives businesses, the took buris of inventories exceeded the tax basis by $5,347,000 at December31,1978and by $5,128,000 at December 31,1979 and 1980. Taxable income for federal income ta> purposes exceeded income for financial statement purposes by 219.000 in 1979 as a result of the difference in bases. In 1978,1979 and 1980, no individual permanent difference exceeded 5% of the amount resulting from multiplying consolidated income before income tax and extraordinary charge by the statutory income tax rate except investment tax credit. In 1978, the tax effect of each individual timing difference was less than 5% of the amount resulting from multiplying consolidated income before income tax and extraordinary charge bv the statutory income tax rate. In 1979 and 1980 the tax effect of $1,353,000and $1,216,000, respectively, for excess tax over book depreciation was the only timing difference exceeding D% of the amount resulting from multiplying consolidated income before income tax and extraordinary charge by the statutory income tax rate. State income tax expense was $922,000 in 1978, $1,240,000 in 1979, and $1,174,000 in 1980. Employee Benefit Plans Substantially afi employees are participants in non-contributory pension plans. Pension expense was $4,415,000 in 1978, $4,223,000 in 1979 and $5,065,000 in 1980. The increased cost in 1980 primarily results from a newly adopted plan for the general commodity carrier. The following information summarizes accumulated benefits and net assets available fur benefits as of January 1,1980. two Actuarial preterit value of accumulated plan I -unfits; Vested........................................ Non-vesteb................................. *19,753,000 4,009,000 mttioon Net assets available for benefits................ $a,736j>UO The weighted average assumed rat-.- of return used in determining the actuarial present value of accumulated plan benefits was 7%. Cost related to the Company's savings and investment plan was $1,601,000 in 1978, $1,618,000 in 1979 and $1,970,000 in 1900. Ute plan provides that the Company will contribute not less than 50% of the eligible amount of employee contributions. Additional disaetionary contributions may be made provided each subsidiary has earnings iiom which to pay its contributions. Shareholders' Equity Common slock, S. 10 par value, 30,000,000 thaws authorized, 12,957,162 shares issued............... Capital turpiut............. Retained earning*......... Less 3,457,449 treasury shares In 1979 and 3,636,410 shares in I960, at cost........................... 1979_________ 19S0 S 1,296,000 28,539,000 123,297,000 153,132,000 * 1.294,000 VAOSOOO 132,U? ,000 U0JBVU0 37,597,000 40,314,000 $115,535,000 SjUOgQgKj The Company has authorized 990,022 shares of $10 par value voting prefi rred stock. The 1976 Stock Option Plan provides for the granting of nonqualified options to key employees of the Compary and its subsidiaries iKigL 2 9 at prices which represent fair market value at dates of grant. A summary ot option transactions during 1979 and 1980 *ol' \vs: Outstandingbeginning oft if................................... Granted............................. .......................................... Canceled ................................................................... Exerdsed........................................................................ 1979 Shares Total option price 369,994 112,500 (12.500) ,37.150) 52,878,000 1.879,000 (148,000) (197,000) 1990 Shares Total option pries 432444 49400 (21400) (66,194) $4412400 753400 (2974001 058.000) Outstanding at end ot year ana icserved tar issuance . 432,844 54.412,000 193450 $4310400 Fxerrisabk at end of vear................................................ Reserved tor luture opiums.......................................... 289.094 is:,.250 52,366.000 281,850 158,050 $2411,000 Industry Stsgmertts The Company sells products and services to industrial customers through its four principal ope' - ating units. Selected financial information is presented below for 1978,1979 and 1980 ($000 omi' ted). Pipelt fittings Heavy hauling General Industrial commodity explosives carrier Other Consolidated 1978 Capital expenditures............ Capital asset disposals.......... Capital expenditures, net---- 5 7.6% _iS> 5 7,122 S 34% 5 5.7G2 $ 3.683 (1.013) S_2.670 S-- -- $- S 56 (21) S 35 5 17,331 (1,802) * 15,529 Depreciation and amortization S5,929 S 2,955 5 2,122 S - 5 308 S 11,314 Tangible assets...................... Intangible assets................... Identifiable assets................. S59.743 30,374 $90,117 SJ5.7I9 10,16* 545,883 553,521 50 $53,571 5-- -- $-- 517,350 - 517,350 $166,333 40,588 >206 721 1979 Capital expenditures............ Capital asset disposals.......... Capital expenditures, net___ $ 8,443 (307) * 8,136 7,117 (655) S 6,46? $ 2,388 (851) $J,537 S 5.916 (402) $ 5,516 S 42 _ J2) 5 .' $ 23.908 (2,117) $ 21,691 Depredation and amortization & 6,331 S 3,357 $24*, 5 3498 $ 164 $ 15,206 Tangible assets..................... Intangible uwr.................... Identifiable assets................. I960 Capital expenditures............ Capital asset disposals.......... Capital expenditures, net .... $65412 30,374 $96,286 $42,099 10,192 $.2,291 $ 8478 (197) 8481 $4487 (4121 $_3, 5 $56,474 4i $56,515 $ 3ya (510) $ 2,938 $53,148 9,095 $62,243 .* ' SSS $ 5442 4 5,242 BSB3= $ 5025 J1JSM) 8 3,437 S 1.914 - 5J.V14 S222.875 49,7112 5272,577 3B&79SS $ 23452 c2,7U7) $ 20/45 Depreciation and amortization Tangible assets..................... Intangible asset ................... ldentifiNe assets................. * l-9* 564486 30474 $95460 $ 3464 $41,781 $41,781 8 4431 $69479 6 $69,385 $ 4,411 $51,200 8,875 $60,075 S * l (.147 -- 8 8,147 $ 17478 $225,393 99455 *464.648 Net sale-i and operating revenues, operating profits and unallocated corporal' * '.n-erhedd and interest expense for i978,1979 and 1980, presented on page 20 under the htridii g "Industry segment summary," are .n integral par*, of this note. m Report of Certified Public Accountants The Board of Directors and Shareholders of Tyler Corporation We have examined the accompanying consolidated balance sheets of Tyler Corporation at December 31,1979 and 1980 and the related consolidated statements of income, shareholders' equity' and charges in financial position for each of the diree years in the period ended December 31,1960. Our examinations were made in accordance with generally accepted; uditing standard " and, accordingly, included such tests of the accounting records and such other auditing procedures as we considered necessary in the areumstanoes. in our opinion, the statements mentioned above present fairly the consolidated financial position of Tyler Corporation at December 31, 1979 and 1960 and the consolidated results of operations and changes in financial position for each of the three years m the period ended December 31, 1900, in conformity with generally accepted accounting principles applied on a consistent basis during the period. Dates, Sexas January'' IWI Supplementary Financial Information put?- ?l : arterly Financial Data Met sales and operating revenues 1979......................................... two................................... Gross Profit 1979 ......................................... two......................................... Income before extraordinary charge 1979....................................... two......................................... Net income (loss) 1979......................................... 1980......................................... Earnings per common share before extraordinary charge 1979......................................... mo................................... Net earnings (loss) per common share 1979......................................... 1980......................................... Stock trading price range 1979......................................... 1980......................................... Dividends 1979......................................... 1980......................................... hi"t Quarts. S'Cac^d Quarter Third Quaker Fourth Quarter Year $ H9.396.0U0 5 43.610,000 5147.165,000 $131,061,000 S51`,212,000 133.177,000 18,130400 M24S3400 149,681400 561441400 1.4454400 19J8S4U0 2.S` 1,000 24,4 1400 27,%1,000 26,167400 23,797,000 95.296,000 31403400 102429,000 2,595,000 2,55,000 it t- ,,ooo 4,901,000 7.573,000 6,191400 5443,000 10486400 r.,457,000 23,836400 2,595,000 2486408 S.ote.iai 4,900,08 7,573400 5,243,000 <44014001* 10406400 21,457,000 1)444400* .25 .80 .76 .53 2.34 .27 .51 .63 1.04 2.46 .25 33 18V-16 17 -11 1,122,000 1,194400 .30 .51 17 .--13 < U'A-tOY. 1,11S.(U) l.m.nrw .76 (.12)* 16V1W: ttiww i.imt.000 1406,000 .53 1.04 17Vrl4 \7*rUV. 1,100,000 1UM,000 2.54 l.,l* MiA*, 1796-11R4 4,419,0(0 4408,000 Affr* extrarduant Jur\v u) S1U, WS.UIMI (il .OS yet ever) reh/liup hi ilir n- -or -if the attire east f mute permits aswcalni int/i trueeoiK afsratioKS. Inflation Accounting Data Introduction During periods of high inflation, changing prices tan have a significant impact on business enterprises. The accompanying Statement of Income Adjusted for Effects of Changing Pricesand Five-Year Summary of Financial Data Adjusted for Effects of Changing Prices have been prepared in accordance with Statement of Financial Accounting Standards No. 33, Financial Reporting and Changing Prices, tn order to provide users of the financial statements with supplementary information to mot the impact if inflation on Tyier Corporation and the Company's ability to manage in an inflationary environment Inflation Management The baaic operating philosophy of Tyier Corporation works toward the effective management of operations and capital in an inflationary enviioninent. The primary operating goal of the Company ia to achieve a 25% return on assets through empharis on asset turnover and operating profit tnaiguv-. Asset turnover places a premium on effective management of assets, including strong cash flow from receivables, rapid inventory turnover and dear scrutiny of ictum on capital expenditures. Maintaining and improving operating profit margins requires effective control of operating coats together with npinawi of sales volume to spread fixed costs. The LIFO inventory accounting method '* used in iSe historical financial statements to reflect cost increases in operations on a tamely basis. The Company has also prudently used long-term debt to leverage its capital structure. Long-term debt has been the primary vehicle for financing the acquisition of each of the four operating units. Strong cash flow from the operating units has been used to repay long-term debt with dollars having less purchasing power. As a result of the basic operating philosophy, operations on a constant dollar basis and current cost/constant dollar basis compare favorably with historical results. Statement ofIncome Adjusted ftr Genera! Inflation (Constant Dollar) The supplementary data presented on a constant-doflar basis ate expressed to year-end W90 defiant and reflect adjustments to the historical financial statements for changes which have occurred in the purchasing power of the dollar * measured by the Consumer Price Index for AB Urban Consumers (CIT-U). The amounts d; not purport to represent appraised vahujs or any other measure of current value. In order to provide a more complete picture cf: the efforts of Maiion, the constant dollar cctnputatfoeis comprehensive!/ restate shareholders' equity and roome statement items. The underlying acmuntttg principles are not changed. The prindpsl increase mconbiatt*dollar costs is additional depredation-f ptent and equipment a-sts exptwWd in yt;' end 1980 ddlm. The purchase of approximately 83% of property, plant and equipment dnee W73hasriitig^therifoci.>fjiddJional depredation on constant-doliar operating results. The Company uses the UFO inventory accounting method in rile historical financial statements. Since inventories turn aver approximately six times a yeur, tire December 31, WfiO inventory cost before aflowanoe to state inventories at UFO in the htaoriml financial statements Is representative of inflation-adjusted costs. Accordingly, historical cost of sales reflects a reasonable Inflation Rusted cost at the time of sale. mum. yr- pane 33 iIiIl,l * i Statement of Income Adjusted for Changes in Specific Prices (Current Cost/Constant Dollar) Cain From Decline in Purchasing Power of Net Amounts Owed I The supplementary data on a current Monetary assets such as cash and cost/constant dollar basis are expressed in accounts receivable lose purchasing power year-end 1900 dollars and reflect adjustments duringinflationary periods. Conversely, less to the historical financial statements for purchasing power Hill be required to satisfy changes which have occurred in the liabilities such as long-term debt during purchasing power of the dollar and such periods. adjustments to reflect a current cost of During 1900, the Company's net inventories and property, plant and monetary Babiitties' position resulted in an equipment of $56,773,000 and $171,552,000, unrealized gain of $10,348,000. respectively. During the three years ended 1980, the The current cost of inventories based Company also invested substantial amounts upon year-end 1960 production costs. The ofcash in treasury stock, utilizing a monetary current cost of property, plant and equipment asset with dedinfeigvalue to increasingly and the rrlsted depredation expense are leverage the capital structure ofthe Company. based on estimates erf amounts the existing assets would cost at December 31, MO. Several methods, including equipment and Fwe-YearSumtmry ofFinancial Data --\ 4 Sales and Operating Revenues building cost indexing and independent Net sales and operating revenues are appraisals, were used in estimating these presented Cor the four principal oyrerating amounts. The values represent the estimated units in year-end 1900dollars. Net tales of the amentoust ofexisting assets and do not heat transfer unit, which teas distributed as a consider technological improvements and dividend to the Company's shareholders in efficiencies associated with the normal April 1977, are excluded from the table. The replacement of productive capacity. heat transfer unit's sales in year-end 1900 Income Tax doRort were $44,977,000 in 1976and $15,991,000in 1977. Income tax on the constant dollar and current cost/constant dollar basis represents historical expense far 1900 expressed in Increase m Current Cost of Irrxr.taies and Property, Plantand Equipment year-end 1960 dollars. The expense has not As a result of general inflation, been reduced for the tax effect of additional inventories and property, plant and caetant dollar and current oost depreciation equipment during 1900 increased an or i tr the adjustments to ttxneun income estimated$4,732400 in excess of the stat-anant hems in year-end 1980 dogars. estimated $15,273,000 increase from The resulting effective tax rates of 53% specificprices. (constant dollar) and 57% (current cost constant doflar) ttustratr that federal tax laws do not provide adequately for capital recovery and "real" income tax roles are substantially higher than statutory rates. Statement of Income Adjustedfor Effects of Changing Paces Year Ended Dumbr 31,1980_________________________ Net rales and opr rating revenues.................................... costs "and expense* Cost u< sales and operating expenses........................ Selling, administrative and general expenses............ Depreciation............................................................ Interest expense....................................................... Income before income tax. extracrdinaiydiargeind gain hum dedine in purchasing power o< net amounts owed......................................................... Income tax...................................................................... Income beiora eraratadiriiiy chwge and pan torn dedine in purchasing powerof net amounts owd .. Cam from dedine in purchasing power of net amounts owed.................................................... lno.ne before extraordinarychargeand including gafn from dedinein purdsasingpowerot netamounti owed...................................................................... Per axeman share burerabefore extraordinarychargeand gain from dedinein porehadngpower o< netamounts owed................................................................ Gam from dedinein purchasingpower of net amounts owed................................................. Income before extraordinarychargeand induding pan bomdedine in pucdusing powerotnat amounts owed.................................................. Average them.................................................... , HitXweal Ftnsrail Stater Mnt> $563.141,000 446 702,000 .634.000 V', 143.000 '1,545,000 ? 22,024.000 41317,000 17,981300 23.836300 -- $ 23336,000 2.46 Adjusted for Genrcal Inflation (Curatam Dcfor) $390,061,000 471.025300 48355,000 23.lTO.00u 12.175,000 555.225.000 34336.000 18.527300 16,309300 10,348300 S 26357300 1.68 1.07 Adiufrfni ftr Oun*c3in Spcdtir hnce* (Current Coit' Cimstant Duilaj) 5590,061.03. 471325.000 48,855,000 15,485300 12.175,000 557,540,000 32.521,000 18.527300 13.994,000 10.348.000 $ 24.342,000 1.44 1.07 !*N Ftve-Year Summary of Financial Data Adjustedfor Effects of Changing Prices (In Year-end 1980 Dollars! __________ Years Ended December 31 1976 19771978lvhISM) ___________________________________ Net sales and operating revenues................... $463,966,000 ^03,225,000 SS15.H47.0I10 $614,601,000 $590,061,000 Historicalcosl/consUnt dollar information adjusted for general inflation: Incomebeforeextraordinarycharge and inductinggain fromdedinein punhasingpower of netamounts owed.................................................. 31,564,000 26,657,000 Income beforeextraordinary charge and including gainfrom dedine in purchasing powerof net amounts owed r common share..................... 3.14 2.75 "K iel.-I .it' equity *r year end.............. 231,340,000 2Zm0tJX)C Cu. - .ctcost; lumatkm: Iroomebt re extraordinarycharge and Indji. tg^ain front dedhae in purdiMing pot>>eratnetamounts owed.................................................. 28,260.000 MJiljOOO income before extraordinary charge and indudiaggain from dedine in purchasingpower c4 netamounts owed per common share..................... 2.81 2.51 Excessof increase in die generalprice level over increase as specific prices -- (994,000) 4,722^00 SharrhnMen' equity a' year end.............. 269,922.000 2M.2IMO0 Gain horn dedine in punch*sing power oi net amounts owed................................. Cash dividends per common share .............. Market price per common share at year end... .36 16.86 .43 17.53 .49 20.60 9,631,001) .51 17.29 10441^00 .52 16.13 Year-end consumer price indrx...................... t74.3 186.1 202.9 229,9 236.4 Diiectacs and Management pa# 37 Joseph F. McKinney* PnmaAmt. Oiu* f-ju'iijr:** Offur Ourmun of rfr Fn >. orf Dmvftir r>k' Gmijunw Mr. M .'-A'ney has headed management since the Company's formation in 1966 and was elected Chairman of the Board in 1972. He owns 530,410 shares of the Company's stock. Frederick R. Meyer* Dunam' Ikv Pmtfent anti IVntirrf WvCampmy Director since 1967, Mr. Meyer was named to his current position in 1977. He owns 126,346 shares of the Company's stock. Howard O. Smith* PnskL'Ut tint/GiUi f.uvu/nv UffiuT (# C d> H Tntasutfi/Rm Dtnectxw at th' Ctmpwu Director since 1967, Mr. Smith has been with C 6c H tor 29 years, serving as President of that unit since 1966. He owns 25,121 shares of the Company's stock. John A. Warner* [`midentia^ChtiLiecanrOtfkrra TieUr Pipe and DmrkT a( the Cempane Mr. Warner has been with Tyier Pipe for 31 years and has served as President since 1965. Elected Director in 1968, he owns 91,347 shares of the Company's stock. Max E. Cofoon** Dmdurid theCatipmu and Charman id Min Powder l"*rior to his retirement, Mr. Colson was with Atlas for 39 years. Elected Director in 1974. he owns 14,500 shares of the Company's stock. Ira C. Coin"** Owrtorfr Wr Company Chairman and Chief Executive Officer of Michigan General Corporation, Mr. Com was circled Director in 1966, He is trustee of Ns efiildren's trust which owns 26,000 shares of the Company's stock. C. Jadcaon Gtayrsm, Jt** Oiratur di (At Gmsany Director *ance 1973, Mr. Grayson is Founder and Chairman of the American Productivity' Center. He owns 13,500 shares of the Company's saxk. SamuelS, Creetay-- Director a) the Ci*pmi Dire .tor since 1976, Mr. Greeley is Chairman-af Masonite Corporation. He owns 1,000 sharas of the Company's stock. Thomas W. Landry** Lhrafcra! the Company Elected a Director in 1976, Mr. Landry is Head Coach of the Dallas Cowboys football team. He owns 1,500 shares of the Company's stock. Perry J. Lewis** Orator it c.mfoitv President of MacKay-Lews Jnc., Mr. Lewis was elected Director in I960. He owns 500 shares of the Company's stock. Neil J. O'Brien*** Suntan mi Dirntiw at We Cumjwi* Elected Director in 1966, Mr. O'Bryan is a partner in the law firm of Gardere 4c Wynne Ho owns 30,006 shares of the Company's sto k. C A. Randan, Jr.~ Dim-ltwaltheCoupon. President and Chief Executive Officer of Cronus Industries, Inc.. Mr. Rundeil was elected Director in 1966. He owns 14,326 shares of the Company's stock. D. J. ThstOttm, Jt. Dmctorif thrOmpmry Mr. Thurston is Founder and CTuurma.'i of Thurston Motor Lines. Elected Director in 1979, he owns 36,014 shares of the Company's stock. H. Joseph Btudwil Pimdent and CWEatmt* Oflwr of Abet Powder Mr. 3urcheU joined Adas Powder in his present position in 1978. He owns 4,218 shares of the Company's stock. Fobs F. Hoiacber PKvdna and OetefEj/cuinr Officerid Vwnton Metorlnet Mr. Hoischer has been with Thurston for U years. He has served as President since 1977 and was named CEO in t979. He owns 1,663 shares of the Company's stock. Ben R. Murphy VicrPreeident M:. Murphy, a CPA, joined Tyier in 1970. He owns 85,636 shares of the Company's stock. James E. RuaaeO Controller Mr. Russell joined corporate management in 1979 following 11 years with Tyier Pipe. A CFA, he o-vm 6,319 shares of the Company's stock. Gnrki L. Smart Tmr.nnr Mr. Smart has been associated with Tyier jwe 1970 and waa named treasurer in 1979. A CPA, he owns 5,671 shares of the Company's stock. 'Marker <dthe KxemtM Cmmtttte "Member ofthe Audit Commhtee '"Member id the Com/rnwiio.i Audit Cormtttee Nate: Starttiddinp iddimlunend mav/tment include dtam owned idmad mtaetlas beneficial Intern! in them held by thetmvktym' wvinjfi-and amertment plan end whom penana! truth. pwst1 *8 Corporate Data and Directt**, Legal Counsel Gardere (. Wyn... , Dallas Teyjs Auditors Arthur Young St Compan < Transfer Agent and Registry First National Bank in Dallas, Dal.'as, Texas Trustees 10*/j% Subordinated Debentures Due 1998 First National Bank in Dallas, Dallas, Texas Operating Companies Atlas Powder Compaq 12700 PaA Central Place Suite 1700 Dallas, Texas 75251 214/387-2400 C & H Transportation Co., Inc. P.O, Box 270535 Dallas, Texas 75227 214/288-3000 Thurston Motor Lines, Inc 400 Johnston Road Charlotte, North Carolina 28206 704/373-1933 Tjf'ter Pipe Industries. Inc. P.O, Box 2027 Tyler, Texas 75710 2)4/882-5511 Tvler Ct'T| oration common jU>ck is traded o'.? both the .view York a*' J Philadelphia Stock Evohnnges. The G/.npany's stock symbol isTYil Annual stockholders' mretin* will be he'd at 10 A.M., AprJ 22,1981 in the Gift O'Or Room on the second floor of the Slteraton Dallas Hotel. The Company's Form 10-K ^nd/or the Company's Statistical Data booklet may be obtained without charge by Mr. Beit R. Murphy Tyler Corporation 3100 Southland Cvn t .n Dallas, Texas 75201 214/747-8251 zoo EXHIBIT 32 <301 Name Tyiar Corporation State of Incorporation Delaware C ( B Transportation Co., Inc Tyler Pipe Industries, Inc. Tyler '.*ipe Industries of Texas, Inc. Hade, Inc. Tyler Plastics Company Tyler Pipe Industries, Inc. East Penn foundry Company Texas Delaware Texas Virginia Texas Pennsylvania Pennsylvania atlas Powder Company East Kentucky Explosives, Inc. Atlas International, Inc. Delaware Kentucky Delaware Tyler Transportation Company Thurston Motor Lines, Inc. Delaware North Carolina The financial statements of the foregoing subsidiaries re Included in the consolidated financial statements of Tyler Corporation.