FORM 10-K FOR FISCAL YEAR ENDED DECEMBER 31, 1998

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

4. Long-Term Debt

Convertible Notes. The Company’s convertible notes at December 31, 1998 and 1997, consist of $115,000,000 of 6.25% Convertible Subordinated Notes due 2006. The Notes were issued on November 25, 1996, and will mature on November 15, 2006. The Notes are convertible into common stock of the Company at the option of the holders at any time prior to maturity at an adjusted conversion price of $31.534 per share, subject to adjustment upon the occurrence of certain events. The original conversion price of $34.6875 was adjusted downward to reflect the October 1997 10% stock dividend. Interest on the Notes is payable semiannually on May 15 and November 15, and commenced with the first payment on May 15, 1997. On or after November 15, 1999, the Notes are redeemable for cash at the option of the Company, with certain restrictions, at 104.375% of principal, declining to 100.625% in 2005. Upon certain changes in control of the Company, if the price of the Company’s common stock is not above certain levels, each holder of Notes will have the right to require the Company to repurchase the Notes at the principal amount thereof, together with accrued and unpaid interest to the date of repurchase, but after the repayment of any Senior Indebtedness, as defined.

Interest expense on the Notes, including amortization of debt issuance costs, totaled $7,544,650 and $7,514,967 in 1998 and 1997, respectively.

Bank Borrowings. In August 1998, the Company closed its new $250.0 million revolving credit facility with a syndicate of ten banks (the "New Credit Facility"). At December 31, 1998, the Company had outstanding borrowings of $146.2 million under its New Credit Facility. At December 31, 1997, the Company had outstanding borrowings of $7.9 million under its borrowing arrangements. At December 31, 1998, the New Credit Facility consisted of a $250.0 million revolving line of credit with a $170.0 million borrowing base. The interest rate is either (a) the lead bank’s prime rate (7.75% at December 31, 1998) or (b) the adjusted London Interbank Offered Rate ("LIBOR") plus the applicable margin depending on the level of outstanding debt (a weighted average of 6.34% at December 31, 1998). The applicable margin is based on the Company’s ratio of outstanding balance on the New Credit Facility to the last calculated borrowing base. Of the $146.2 million borrowed at December 31, 1998, $145.0 million was borrowed at the LIBOR rate.

The terms of the New Credit Facility include, among other restrictions, a limitation on the level of cash dividends (not to exceed $2.0 million in any fiscal year), requirements as to maintenance of certain minimum financial ratios (principally pertaining to working capital, debt, and equity ratios), and limitations on incurring other debt. Since inception, no cash dividends have been declared on the Company’s common stock. The Company is currently in compliance with the provisions of this agreement, as amended in mid-March 1999 to modify the cash flow-to-debt covenant. The New Credit Facility will extend until August 2002.

Previously, the Company’s credit facilities consisted of a $100.0 million revolving line of credit with an $80.0 million borrowing base and a $7.0 million revolving line of credit with a $5.1 million borrowing base. These facilities were with a two-bank group. Depending on the level of outstanding debt, the interest rate on the $100.0 million revolving line of credit was (a) either the bank’s base rate or the bank’s base rate plus 0.25% or (b) the LIBOR rate plus 1% to 1.5%. The interest rate on the $7.0 million revolving line of credit was the bank’s base rate less 0.25%.

In addition to interest on these credit facilities, the Company pays a commitment fee to compensate the banks for making funds available. The fee on the revolving line of credit is calculated on the average daily remainder, if any, of the commitment amount less the aggregate principal amounts outstanding, plus the amount of all letters of credit outstanding during the period. The aggregate amounts of commitment fees paid by the Company were $114,000 in 1998 and $31,000 in 1997.

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