<PAGE>
<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10 - Q
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended June 30, 1996
or
/ / TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 1-7951
WICOR, Inc.
-----------------------------------------------------
(Exact name of registrant as specified in its charter)
Wisconsin 39-1346701
------------------------------- --------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
626 East Wisconsin Avenue
Post Office Box 334
Milwaukee, Wisconsin
53201
--------------------------------------
(Address of principal executive office)
(414) 291-7026
---------------------------------------------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15 (d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest practicable
date.
Class Outstanding at July 19, 1996
- --------------------------- -----------------------------
Common Stock, $1 Par Value 18,389,279<PAGE>
<PAGE> 2
INTRODUCTION
----------------------------------------------------------------
WICOR, Inc. ("WICOR" or the "Company"), is a diversified holding
company with two principal business groups: natural gas
distribution and related services, and manufacturing of pumps and
processing equipment used to pump, control, transfer, hold and
filter water and other fluids. The Company engages in natural gas
distribution through Wisconsin Gas Company ("Wisconsin Gas"), the
oldest and largest natural gas distribution utility in Wisconsin.
Through several nonutility subsidiaries, the Company also engages
in the manufacture and sale of pumps and processing equipment. The
Company's manufactured products primarily have water system, pool
spa, agricultural, RV/marine and beverage/food service
applications. The Company markets its manufactured products in 100
countries. The Company is incorporated under the laws of the
State of Wisconsin and is exempt from registration as a holding
company under the Public Utility Holding Company Act of 1935, as
amended.
CONTENTS
--------
PAGE
------
PART I.
- ------
Financial Information................................. 1
Management's Discussion and Analysis of
Interim Financial Statements....................... 2-6
Consolidated Financial Statements of WICOR, Inc. (Unaudited):
-------------------------------------------------------------
Consolidated Statements of Income for the Three and Six
Months Ended June 30, 1996 and 1995................ 7
Consolidated Balance Sheets as of
June 30, 1996 and December 31, 1995................ 8-9
Consolidated Statement of Cash Flows for the Six
Months Ended June 30, 1996 and 1995................ 10
Notes to Consolidated Financial Statements........... 11
PART II.
- --------
Other Information.................................... 12
Signatures........................................... 13<PAGE>
<PAGE> 3
Part I - Financial Information
Financial Statements
The consolidated statements included herein have been prepared
without audit pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information and
footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such rules
and regulations, although management believes that the disclosures
are adequate to make the information presented not misleading.
These condensed financial statements should be read in conjunction
with the audited financial statements and the notes thereto
included in the latest WICOR, Inc. Annual Report on Form 10-K for
the year ended December 31, 1995.
In the opinion of management, the information furnished reflects
all adjustments, which in all circumstances were normal and
recurring, necessary for a fair presentation of the results of
operations for the interim periods.
Because of seasonal factors, the results of operations for the
interim periods presented are not necessarily indicative of the
results to be expected for the full calendar year.<PAGE>
<PAGE> 4
Management's Discussion and Analysis
of Interim Financial Statements of
WICOR, Inc.
Results of Operations
- ---------------------
Consolidated net income for the three and six months ended June 30,
1996 was $5.7 million and $36.6 million, respectively. This
represents an increase of $3.0 million, or 111%, and $9.1 million,
or 33%, over the comparable periods of the prior year. The 1996
results were record highs for both the three- and six- month
periods.
The following factors had a significant effect on the results of
operations during the three- and six- month periods ended June 30,
1996.
Energy
- ------
The Company's energy business broke even for the second quarter of
1996 compared to a net loss of $0.5 million for the 1995 second
quarter. Net income for the six months ended June 30, 1996
increased by $5.7 million, or 27%, compared to the same period of
last year.
The improvement in net income for the second quarter was due
primarily to increased gas margin which resulted from weather that
was colder than normal. The increase in transportation volumes was
due primarily to more companies purchasing gas from sources other
than Wisconsin Gas and transporting the volumes over the Wisconsin
Gas distribution system. However, the movement to transportation
from gas sales has no impact on margin. The increase in quarterly
gas margins was partially offset by increased depreciation expense.
The utility typically posts a loss in the second quarter as the
heating season declines. The increase in 1996 year-to-date net
income was due primarily to colder than normal weather and
decreased operating and maintenance expenses.
Revenues, margins and volumes are summarized below. Margin,
defined as revenues less cost of gas sold, is a better performance
indicator than revenues because the mix of volumes between sales
and transportation service affects revenues but not margin. In
addition, changes in the cost of gas sold are flowed through to
revenue under a gas adjustment clause with no resulting effect on
margin.<PAGE>
<PAGE> 5
<TABLE>
<CAPTION>
Three Months Six Months
Ended June 30, Ended June 30,
--------------- % --------------- %
1996 1995 Change 1996 1995 Change
------ ------ ------ ------ ------ ------
(Millions of Dollars)
- ---------------------
<S> <C> <C> <C> <C> <C> <C>
Gas Sales Revenues $109.2 $ 92.5 18 $328.8 $282.9 16
Cost of Gas Sold 74.4 58.1 28 211.8 173.3 22
------ ------ ------ ------
Gas Sales Margin 34.8 34.4 1 117.0 109.6 7
Gas Transport Margin 3.1 1.5 107 6.5 3.6 81
------ ------ ------ ------
Total Margin $ 37.9 $ 35.9 6 $123.5 $113.2 9
====== ====== ====== ======
Three Months Six Months
Ended June 30, Ended June 30,
--------------- % --------------- %
1996 1995 Change 1996 1995 Change
------ ------ ------ ------ ------ ------
(Millions of Therms)
- ---------------------
Utility Sales Volumes
Firm 140.8 127.4 11 548.3 486.0 13
Interruptible 43.8 79.5 (45) 121.0 173.0 (30)
Transportation Volume 58.3 25.7 127 122.7 64.0 92
------ ------ ------ ------
Total Throughput 242.9 232.6 4 792.0 723.0 10
====== ====== ====== ======
Degree Days (Normal:
2nd Qtr. = 941
Six Months = 4,363) 1,203 918 31 4,833 4,086 18
====== ====== ====== ======
</TABLE>
The 11% increase in firm sales volumes for the second quarter of
1996 as compared with the 1995 second quarter was caused
principally by 31% colder weather than the same period of last year
(28% colder than normal). For the six-months ended June 30, 1996,
the total margin increase was primarily due to a 13% increase in
firm sales volumes. The weather was 11% colder than normal during
the first six months of 1996 and 18% colder than the same period
in 1995.<PAGE>
<PAGE> 6
Operations and maintenance expenses remained relatively flat during
the second quarter of 1996 compared to the second quarter of 1995.
Year to date operation and maintenance expenses decreased $1.3
million compared with the same period of last year. The decrease
is attributable to lower labor and benefit expenses.
Depreciation expense for the three and six months ended June 30,
1996 increased by $1.3 million and $2.5 million, respectively. The
increase is due to additions to plant and increased depreciation
rates permitted by the Public Service Commission of Wisconsin
("PSCW").
Manufacturing
- -------------
Manufacturing net income for the three and six months ended June
30, 1996 increased to $5.6 million and $9.9 million, respectively,
as compared with $3.3 million and $6.5 million of manufacturing net
income for the same periods in 1995, respectively.
<TABLE>
<CAPTION>
Three Months Six months
Ended June 30, Ended June 30,
----------------- -----------------
(Millions of Dollars) 1996 1995 1996 1995
- --------------------- ------- ------- ------- -------
<S> <C> <C> <C> <C>
Revenues $115.3 $ 85.2 $221.1 $162.0
Cost of goods sold 82.8 62.4 158.6 118.2
------- ------- ------- -------
Gross profit 32.5 22.8 62.5 43.8
Operating expenses 22.0 16.5 44.0 33.3
------- ------- ------- -------
Operating income 10.5 6.3 18.5 10.5
Interest expense and other 1.5 0.8 2.8 (0.2)
------- ------- ------- -------
Net income before income taxes 9.0 5.5 15.7 10.7
Income taxes 3.4 2.2 5.8 4.2
------- ------- ------- -------
Net income $ 5.6 $ 3.3 $ 9.9 $ 6.5
======= ======= ======= =======
</TABLE>
Net sales for the second quarter of 1996 increased $30.1 million,
or 35%, to $115.3 million compared to the same period in 1995. For
the first six months of 1996, net sales increased $59.1 million,
or 36%, to $221.1 compared to the same period in 1995. The
increase was largely the result of market share gains, improved<PAGE>
<PAGE> 7
markets generally, a steady upward trend in the retail business and
new product introductions in the water systems and pool/spa
business. The inclusion of sales of Hypro Corporation ("Hypro"),
which was acquired in July 1995, for the three and six months ended
June 30, 1996, increased sales by $10.4 million and $21.9 million,
respectively.
Domestic sales in the quarter increased by 47% to $73.3 million
(including domestic Hypro sales of $9.5 million) over the
comparable period of 1995. Overall shipments for water systems,
RV/marine, food service and pool/spa products in North America
were up from last year's comparable period. Market demand was
strong in the North American professional and retail channels.
Sales for the six months ended June 30, 1996 increased $48.0
million to $144.2 million. This represented a 50% increase in
sales as compared with the first six months of 1995 and included
$20.1 million in sales attributable to Hypro.
International sales for the second quarter continued to be strong,
increasing by $6.7 million to $42.0 million, or 19% over the second
quarter of 1995. The increase in international sales was due
primarily to continuing new product sales in the European markets
and growth in the water systems and industrial markets. On a year
to date basis, international sales increased by 17% over the same
period in 1995. For the six-months ended June 30, 1996 and 1995,
international sales accounted for 35% and 41%, respectively, of
total net sales.
Gross profit margins increased from 27% to 28% for the three and
six months ended June 30, 1996 as compared to the same periods of
1995. The quarter and year-to-date increases were due primarily
to 1996 manufacturing efficiencies. Operating expenses, as a
percentage of sales, for the six months ended June 30, 1996
remained relatively flat compared to the same period in 1995.
Year-to-date operating expenses increased by $10.7 million, or 32%,
compared to the same period in 1995. The inclusion of Hypro for
the six months ended June 30, 1996, increased operating expenses
by $6.0 million.
Non-Operating Income and Income Taxes
- -------------------------------------
Interest expense was up slightly for the three and six months ended
June 30, 1996 compared to the similar periods of 1995, due
primarily to increased manufacturing borrowings, related to the
Hypro acquisition, and slightly higher interest rates.
Other income for the six months ended June 30, 1996 decreased by
$1.6 million over the same period of last year. Other income in
1995 was positively impacted by the first quarter sale of the
Company's investment in Filtron Technologies Corporation, for an
after-tax gain of $0.8 million ($0.05 per share).<PAGE>
<PAGE> 8
Income tax expense was $6.0 million higher for the first six months
of 1996, compared to the same period last year, reflecting
increased pre-tax income.
Financial Condition
- -------------------
Cash flow from operations for the six months ended June 30, 1996
decreased by $12.6 million, or 10%, from the comparable period in
1995. Due to the seasonal nature of the energy business, accrued
revenues, accounts receivable and accounts payable amounts are
higher in the heating season as compared with the summer months.
The decrease in gas in storage related cash flows of $20.1 million
was due primarily to a 31% decrease in withdrawals during the first
six months of 1996 compared to the same period in 1995. Gas in
storage at December 31, 1995 was 5.7 million dekatherms lower than
the amount in storage at December 31, 1994 due to a marginally
colder than normal fourth quarter of 1995 and the unusually warm
fourth quarter of 1994. Year-to-date withdrawals from gas in
storage reflected a weighted average cost of gas ("WACOG") that was
18% lower than the same period in 1995. In addition, the injection
WACOG during the second quarter of 1996 was 41% higher than the
same period in 1995. Cash flow from operations in the first six
month's of 1996 did not benefit from the one-time pipeline refunds
which were received in the comparable period of 1995. Such refunds
were ultimately returned to customers during the latter half of
1995. Increased net income in the first six months of 1996
partially offset decreases in cash flow from operations during this
period.
In July 1995, in order to finance the acquisition of Hypro, a
subsidiary of the Company entered into a $65 million bridge
financing agreement maturing in July 1996 that was guarantied by
the Company. The subsidiary subsequently transferred the debt to
Hypro. At June 30, 1996, total principal of $27 million remains
outstanding under this borrowing. In July 1996, the maturity date
was extended to July 1997.
Capital expenditures for the six months ended June 30, 1996
amounted to $20.4 million and additional capital expenditures of
$39 million are expected for the remainder of 1996.
There will be a need for additional short-term borrowing during the
third and fourth quarters of 1996 to finance working capital needs
primarily related to gas purchased for injection into storage and
accounts receivable. The Company has existing lines of credit to
satisfy these working capital needs.<PAGE>
<PAGE> 9
On July 24, 1996, the directors of the Company authorized an
increase in the Company's per share common stock dividend to $0.42
per quarter ($1.68 per share on an annual basis). The first
quarterly payment at the new amount will be made August 30, 1996
to shareholders of record on August 9, 1996.
Regulatory Matters
- ------------------
Wisconsin Gas voluntarily reduced its base rates by $1.5 million
and $3.0 million on an annualized basis effective August 1, 1995,
and November 1, 1995, respectively. With these reductions,
Wisconsin Gas' rates recover $4.5 million per year less than the
maximum margin allowed by the PSCW's November 1994 rate order.
Wisconsin Gas has the ability to raise or lower margin rates within
a specified range on a quarterly basis.
On June 27, 1996, the PSCW approved a Wisconsin Gas proposal to
conduct a two year pilot program ("Gas Advantage"), beginning
November 1, 1996, to test the introduction of competition to 1,200
small commercial and 1,000 residential customers. Customers who
enroll in the pilot will have the ability to choose the supplier
of natural gas from various gas marketers under an open market
concept. Wisconsin Gas will continue to distribute the gas to
participating customers at the same margin rate it charges for
bundled sales services. Wisconsin Gas will bill the gas marketers
for transporting natural gas to the customers. Customers will
receive their monthly bills from the marketers. The Gas Advantage
program is designed to enhance competition by enabling customers
to compare services and prices available from Wisconsin Gas and
third party marketers.
On July 2, 1996, the PSCW indicated in open meeting discussions
that they wanted to move away from the dollar-for-dollar recovery
of gas costs that occurs under the current purchased gas adjustment
clause mechanism. The Commissioners agreed not to place
restrictions on which gas cost recovery mechanisms ("GCRM") local
distribution companies ("LDC") could use and agreed not to require
LDC's to use the same mechanism. Under the GCRM, the utility will
assume the risk of under-recovering its gas and interstate capacity
costs but will have the opportunity to earn incentives if it keeps
its costs below the established benchmark levels. The Company
expects that the earliest that it could file and obtain approval
for a GCRM would be the second quarter of 1997.<PAGE>
<PAGE> 10
WICOR, INC.
Consolidated Statements of Income (Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
---------------------- ----------------------
1996 1995 1996 1995
---------- ---------- ---------- ----------
(Thousands of Dollars) (Thousands of Dollars)
<S> <C> <C> <C> <C>
Operating Revenues:
Energy......................... $ 112,316 $ 93,986 $ 335,271 $ 286,469
Manufacturing.................. 115,284 85,213 221,076 162,034
---------- ---------- ---------- ----------
227,600 179,199 556,347 448,503
---------- ---------- ---------- ----------
Operating Costs and Expenses:
Cost of gas sold............... 74,443 58,120 211,768 173,273
Manufacturing cost of sales.... 82,761 62,446 158,599 118,237
Operations and maintenance..... 45,960 40,711 95,427 86,679
Depreciation and amortization.. 8,771 7,171 17,438 14,262
Taxes, other than income taxes. 2,365 2,295 4,872 4,748
---------- ---------- ---------- ----------
214,300 170,743 488,104 397,199
---------- ---------- ---------- ----------
Operating Income ................ 13,300 8,456 68,243 51,304
---------- ---------- ---------- ----------
Interest Expense................. (4,489) (4,147) (9,072) (8,869)
Other Income and (Expenses)...... 397 362 427 2,076
---------- ---------- ---------- ----------
Income Before Income Taxes....... 9,208 4,671 59,598 44,511
Income Tax Provision............. 3,556 1,993 22,997 17,044
---------- ---------- ---------- ----------
Net Income....................... $ 5,652 $ 2,678 $ 36,601 $ 27,467
========== ========== ========== ==========
Per Share of Common Stock:
Income Per Common Share........ $ 0.31 $ 0.16 $ 2.00 $ 1.62
========== ========== ========== ==========
Cash Dividends Per Common Share $ 0.41 $ 0.40 $ 0.82 $ 0.80
========== ========== ========== ==========
Average Common Shares
Outstanding (Thousands)....... 18,365 16,939 18,332 16,936
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE>
<PAGE> 11
WICOR, INC.
Consolidated Balance Sheets
<TABLE>
<CAPTION>
June 30,
1996 December 31,
(Unaudited) 1995
------------- ------------
(Thousands of Dollars)
<S> <C> <C>
Assets
- ------
Current Assets:
Cash and cash equivalents......................... $ 51,831 $ 20,380
Accounts receivable, less allowance for
doubtful accounts of $13,874 and $10,343,
respectively.................................... 151,533 132,203
Accrued utility revenues.......................... 8,454 48,847
Manufacturing inventories......................... 66,280 68,236
Gas in storage, at weighted average cost.......... 20,627 24,117
Deferred income taxes............................. 20,315 20,256
Prepayments and other............................. 15,916 14,990
------------- ------------
334,956 329,029
Property, Plant and Equipment (less accumulated ------------- ------------
depreciation of $461,380 and $440,942,
respectively)................................... 433,651 436,040
------------- ------------
Deferred Charges and Other:
Regulatory assets................................. 103,209 104,145
Goodwill.......................................... 62,678 61,096
Prepaid pension costs............................. 35,242 33,073
Systems development costs......................... 25,929 28,868
Other............................................. 17,095 16,263
------------- ------------
244,153 243,445
------------- ------------
$ 1,012,760 $ 1,008,514
============= ============
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE>
<PAGE> 12
WICOR, INC.
Consolidated Balance Sheets
<TABLE>
<CAPTION>
June 30,
1996 December 31,
(Unaudited) 1995
------------- ------------
(Thousands of Dollars)
<S> <C> <C>
Liabilities and Capitalization
- ------------------------------
Current Liabilities:
Accounts payable.................................. $ 60,552 $ 63,920
Refundable gas costs ............................. 58,165 34,347
Short-term borrowings............................. 51,958 106,377
Current portion of long-term debt................. 4,904 6,836
Accrued taxes..................................... 10,717 6,940
Accrued payroll and benefits...................... 20,187 16,340
Other............................................. 18,127 19,638
------------- ------------
224,610 254,398
------------- ------------
Deferred Credits and Other:
Postretirement benefit obligation................. 67,046 67,306
Regulatory liabilities............................ 63,627 64,896
Deferred income taxes............................. 39,604 39,282
Accrued environmental remediation costs........... 36,268 36,381
Unamortized investment tax credit................. 7,377 7,724
Other............................................. 20,548 18,548
------------- ------------
234,470 234,137
------------- ------------
Capitalization:
Long-term debt.................................... 182,881 174,713
Common stock...................................... 18,383 18,237
Other paid-in capital............................. 223,045 219,133
Retained earnings ................................ 135,060 113,491
Unearned compensation - ESOP and restricted stock. (5,689) (5,595)
------------- ------------
553,680 519,979
------------- ------------
$ 1,012,760 $ 1,008,514
============= ============
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE>
<PAGE> 13
WICOR, INC.
Consolidated Statement of Cash Flows (Unaudited)
(Thousands of Dollars)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
-----------------------
1996 1995
---------- ----------
<S> <C> <C>
Operations:
Net income.......................................... $ 36,601 $ 27,467
Adjustments to reconcile net income to net
cash flows:
Depreciation and amortization..................... 27,879 23,854
Deferred income taxes............................. 216 301
Change in:
Receivables..................................... 21,242 23,835
Manufacturing inventories....................... 2,280 (1,541)
Gas in storage.................................. 3,490 23,582
Other current assets............................ (1,175) (751)
Accounts payable................................ (3,538) (7,991)
Refundable gas costs............................ 23,818 32,506
Accrued taxes................................... 4,116 (435)
Accrued payroll and benefits.................... 3,067 2,818
Other current liabilities....................... (1,511) (3,335)
Other non-current assets and liabilities, net... (4,142) 4,589
---------- ----------
112,343 124,899
Investment Activities: ---------- ----------
Capital expenditures.............................. (20,439) (24,852)
Proceeds from sale of investment.................. 318 5,099
Other ............................................ 83 210
---------- ----------
(20,038) (19,543)
Financing Activities: ---------- ----------
Change in short-term borrowings................... (52,091) (90,794)
Reduction in long-term debt ...................... (4,182) (4,289)
Issuance of long-term debt........................ 7,693 6
Issuance of common stock ......................... 2,759 577
Dividends paid on common stock, less
amounts reinvested ............................ (15,033) (13,550)
---------- ----------
(60,854) (108,050)
---------- ----------
Change in Cash and Cash Equivalents................... 31,451 (2,694)
Cash and Cash Equivalents at Beginning of Period...... 20,380 35,138
---------- ----------
Cash and Cash Equivalents at End of Period............ $ 51,831 $ 32,444
========== ==========
</TABLE>
The accompanying notes are an integral part of these statements.<PAGE>
<PAGE> 14
Notes to Consolidated Financial Statements (Unaudited):
- -------------------------------------------------------
1) At June 30, 1996 WICOR had borrowings of $17.8 million under
total unsecured lines of credit of $204.7 million with
several banks. The Company reclassified $9.0 million of
commercial paper and $5.6 million of borrowings under lines
of credit as long-term debt as of June 30, 1996.
A total of $7.2 million of commercial paper, classified as
short-term debt, was outstanding as of June 30, 1996 at a
weighted average interest rate of 5.6%.
2) For purposes of the Consolidated Statements of Cash Flows,
income taxes paid, net of refunds, and interest paid
(excluding capitalized interest) were as follows:
For the six months
ended June 30,
----------------------
1996 1995
---------- ----------
(Thousands of Dollars)
Income taxes paid $ 20,252 $ 18,606
Interest paid $ 8,487 $ 9,134
<PAGE>
<PAGE> 15
Part II - Other Information
- ---------------------------
Item 4. Submission of Matters to a Vote of Security Holders
- -----------------------------------------------------------
At the Company's annual meeting of shareholders held on April 25,
1996, Jere D. McGaffey, Thomas F. Schrader and Stuart W. Tisdale
were elected as directors of the Company for terms expiring in
1999. The following table sets forth certain information with
respect to the election of directors at the annual meeting:
Shares Withholding
Name of Nominee Shares Voted For Authority
- -------------------- ---------------- ------------------
Jere D. McGaffey 14,674,317 149,843
Thomas F. Schrader 14,686,620 137,540
Stuart W. Tisdale 14,674,888 149,272
The following table sets forth the other directors of the Company
whose terms of office continued after the 1996 annual meeting:
Year in Which
Name of Director Term Expires
- ------------------------- --------------
Willie D. Davis 1997
Guy A. Osborn 1997
William B. Winter 1997
Wendell F. Bueche 1998
Daniel F. McKeithan, Jr. 1998
George E. Wardeberg 1998
Essie M. Whitelaw 1998
Item 6. Exhibits and Reports on Form 8-K
- ----------------------------------------
(a) Exhibits
4.1 Loan Agreement Amendment effective July 11, 1996,
by and among Hypro Corporation and Citibank, N.A.,
Firstar Bank Milwaukee, N.A., Harris Trust and
Savings Bank and M&I Marshall & Illsley Bank and
Citibank, N.A. as agent.
4.2 Securities Loan Agreement, effective June 22, 1996,
among Citibank, N.A. and Sta-Rite Industries.
27 Financial data schedule (EDGAR version only).
(b) Reports on Form 8-K - There were no reports on Form 8-K
filed by the Company during the second quarter of 1996.
<PAGE>
<PAGE> 16 SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
WICOR, INC.
Dated: July 30, 1996 By: /s/ Joseph P. Wenzler
--------------------------
Joseph P. Wenzler
Vice President, Treasurer
and Chief Financial Officer<PAGE>
<PAGE> 17
WICOR, Inc.
Exhibit Index - Form 10-Q
Exhibit No. Exhibit
- ----------- ------------------------------------------
4.1 Loan Agreement Amendment effective July 11,
1996, by and among Hypro Corporation and
Citibank, N.A., Firstar Bank Milwaukee,
N.A., Harris Trust and Savings Bank and M&I
Marshall & Illsley Bank and Citibank, N.A.
as agent.
4.2 Securities Loan Agreement, effective June
22, 1996, among Citibank, N.A. and Sta-Rite
Industries.
27 Financial data schedule (EDGAR version
only).
<PAGE>
<PAGE>
<PAGE> 1
EXECUTION COPY
AMENDMENT NO. 1
July 11, 1996
To the Lenders listed on the
signature pages below
Ladies and Gentlemen:
We refer to the Credit Agreement, dated as of July 18, 1995
(the "Credit Agreement"), among the undersigned, you and
Citibank, N.A.., as Agent. Unless otherwise defined herein, the
terms defined in the Credit Agreement are used herein as therein
defined.
We hereby request that the Lenders agree to amend the
definition of "Termination Date" set forth in Section 1.01 of
the Credit Agreement to read in its entirety as follows:
"Termination Date" means the earlier to occur of
(I) July 3, 1997 and (ii) the date of termination or
reduction in whole of the Commitments pursuant to
Section 2.04 or Section 6.01.
If you consent to the foregoing amendment, please evidence
such consent by executing and returning five counterparts of
this Amendment No. 1 (this "Amendment") to the Agent, in care
of King & Spalding, 120 West 45th Street, 32nd Floor, New York,
New York 10036, Attention: Judy Shatzoff. This Amendment shall
become effective when, and only when, the Agent shall have
received the following:
(I) counterparts of this Amendment executed by the
Borrower and all the Lenders;
(ii) a consent, duly executed by the Guarantor, in the
form of Exhibit A hereto (the "Consent");
(iii) a certificate of a duly authorized officer of the
Borrower (the statements contained in which shall
be true) as to the accuracy, both before and
after giving effect to this Amendment, of the
representations and warranties set forth in
Section 4.01 of the Credit Agreement and Section
5 of the Guaranty and as to the absence, both
before and after giving effect to this Amendment,
of any Event of Default or event that, with the
giving of notice or the passage of time, or both,
would constitute an Event of Default;<PAGE>
<PAGE> 2
(iv) certified copies of the resolutions of the Board
of Directors or the Borrower authorizing, and of
all Governmental Approvals required in connection
with, the execution, delivery and performance by
the Borrower of this Amendment and of the Credit
Agreement, as amended hereby (the "Amended Credit
Agreement");
(v) certified copies of the resolutions of the Board
of Directors of the Guarantor authorizing, and of
all Governmental Approvals required in connection
with, the execution, delivery and performance by
the Guarantor of the Consent and the performance
of the Guaranty, after giving effect to this
Amendment;
(vi) a legal opinion of Robert A. Nuernberg, the
senior legal advisor of the Borrower and the
Guarantor, substantially in the form of Exhibit B
hereto; and
(vii) a legal opinion of King & Spalding, special New
York counsel to the Agent, substantially in the
form of Exhibit C hereto.
Upon the effectiveness of this Amendment, on and after the
date hereof, (I) each reference in the Credit Agreement to
"this Agreement", "hereunder", "hereof" or words of like import
referring to the Credit Agreement, and each reference in the
Notes to "the Credit Agreement", "thereunder", "thereof" or
words of like import referring to the Credit Agreement, shall
mean and be a reference to the Amended Credit Agreement, and
(ii) each reference in the Credit Agreement and the Notes to
the "Loan Documents" shall mean and include a reference to the
Amended Credit Agreement.
Except as specifically amended above, the Credit Agreement
and the Notes are and shall continue to be in full force and
effect and are hereby in all respects ratified and confirmed.
the execution, delivery and effectiveness of this Amendment
shall not, except as expressly provided herein, operate as a
waiver of any right, power or remedy of any Lender or the Agent
under the Credit Agreement or the Notes, nor constitute a waiver
of any provision of the Credit Agreement or the Notes.
THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.<PAGE>
<PAGE> 3
This Amendment may be executed in any number of
counterparts and by any combination of parties hereto in
separate counterparts, each of which counterparts shall be an
original and all of which taken together shall constitute one
and the same agreement.
Very truly yours,
HYPRO CORPORATION
as successor to HC 1995
ACQUISITION, INC.
By
Name:
Title:
Agreed as of the date
first above written:
CITIBANK, N.A., as Agent and Lender
By
Name:
Title:
FIRSTAR BANK MILWAUKEE, N.A.
By
Name:
Title:
HARRIS TRUST AND SAVINGS BANK
By
Name:
Title:
M&I MARSHALL & ILSLEY BANK
By
Name:
Title:<PAGE>
<PAGE> 4
CONSENT
July 11, 1996
The undersigned, WICOR, INC., a Wisconsin corporation, as
Guarantor under the Guaranty, dated as of July 18, 1995 (the
"Guaranty"), in favor of the Lenders parties to the Credit
Agreement referred to in Amendment No. 1, dated July 11, 1996
(the "Amendment"), among Hypro Corporation, as successor to HC
1995 Acquisition, Inc., the Lenders and Citibank, N.A. as Agent
for the Lenders, hereby consents to the Amendment and hereby
confirms and agrees that the Guaranty is, and shall continue to
be, in full force and effect and is hereby ratified and
confirmed in all respects except that, upon the effectiveness
of, and on and after the date of, the Amendment, each reference
in the Credit Agreement, the Guaranty and the Notes to the Loan
Documents or any thereof, "thereunder", "thereof" or words of
like import shall mean and include a reference to the Credit
Agreement, as amended by the Amendment.
WICOR, INC.
By: Joseph P. Wenzler
---------------------------
Title: Vice President, Treasurer &
Chief Financial Office<PAGE>
<PAGE>
<PAGE> 1
[Image] Public Securities Association
40 Broad Street, New York, NY 10004-2373
Telephone (212) 809-7000
MASTER SECURITIES LOAN AGREEMENT
Dated as of
June 25, 1996
Between:
CITIBANK, N.A.
and
Sta-Rite Industries, Inc.
This Agreement sets forth the terms and conditions under which
one party ("Lender") may, from time to time, lend to the other
party ("Borrower") certain securities against a pledge of
collateral. Capitalized terms not otherwise defined herein shall
have the meanings provided in Section 26.
The parties hereto agree as follows:
1. Loans of Securities.
1.1 Subject to the terms and conditions of this Agreement,
Borrower or Lender may, from time to time, orally seek
to initiate a transaction in which Lender will lend
securities to Borrower. Borrower and Lender shall
agree orally on the terms of each Loan, including the
issuer of the securities, the amount of securities to
be lent, the basis of compensation, and the amount of
Collateral to be transferred by Borrower, which terms
may be amended during the Loan.
1.2 Notwithstanding any other provision in this Agreement
regarding when a Loan commences, a Loan hereunder
shall not occur until the Loaned Securities and the
Collateral therefor have been transferred in
accordance with Section 16.
1.3 WITHOUT WAIVING ANY RIGHTS GIVEN TO LENDER HEREUNDER,
IT IS UNDERSTOOD AND AGREED THAT THE PROVISIONS OF THE
SECURITIES INVESTOR PROTECTION ACT OF 1970 MAY NOT
PROTECT LENDER WITH RESPECT TO LOANED SECURITIES
HEREUNDER AND THAT, THEREFORE, THE COLLATERAL
DELIVERED TO LENDER MAY CONSTITUTE THE ONLY SOURCE OF
SATISFACTION OF BORROWER'S OBLIGATIONS IN THE EVENT
BORROWER FAILS TO RETURN THE LOANED SECURITIES.<PAGE>
<PAGE> 2
2. Transfer of Loaned Securities.
2.1 Unless otherwise agreed, Lender shall transfer Loaned
Securities to Borrower hereunder on or before the
Cutoff Time on the date agreed to by Borrower and
Lender for the commencement of the Loan.
2.2 Unless otherwise agreed, Borrower shall provide
Lender, in each Loan in which Lender is a Customer,
with a schedule and receipt listing the Loaned
Securities. Such schedule and receipt may consist of
(a) a schedule provided to Borrower by Lender and
executed and returned by Borrower when the Loaned
Securities are received, (b) in the case of securities
transferred through a Clearing Organization which
provides transferors with a notice evidencing such
transfer, such notice, or (c) a confirmation or
other document provided to Lender by Borrower.
3. Collateral.
3.1 Unless otherwise agreed, Borrower shall, prior to or
concurrently with the transfer of the Loaned
Securities to Borrower, but in no case later than the
close of business on the day of such transfer,
transfer to Lender Collateral with a market value at
least equal to a percentage of the market value of the
Loaned Securities agreed to by Borrower and Lender
(which shall be not less than 100% of the market value
of the Loaned Securities) (the "Margin Percentage").
3.2 The Collateral transferred by Borrower to Lender, as
adjusted pursuant to Section 8, shall be security for
Borrower's obligations in respect of such Loan and for
any other obligations of Borrower to Lender. Borrower
hereby pledges with, assigns to, and grants Lender a
continuing first security interest in, and a lien
upon, the Collateral, which shall attach upon the
transfer of the Loaned Securities by Lender to
Borrower and which shall cease upon the transfer of
the Loaned Securities by Borrower to Lender. In
addition to the rights and remedies given to Lender
hereunder, Lender shall have all the rights and
remedies of a secured party under the New York Uniform
Commercial Code. It is understood that Lender may use
or invest the Collateral, if such consists of cash, at
its own risk, but that (unless Lender is a
Broker-Dealer) Lender shall, during the term of any
Loan hereunder, segregate Collateral from all
securities or other assets in its possession. Lender
may pledge, repledge, hypothecate, rehypothecate,
lend, relend, sell or otherwise transfer the<PAGE>
<PAGE> 3
Collateral, or re-register Collateral evidenced by
physical certificates in any name other than
Borrower's, only (a) if Lender is Broker-Dealer or (b)
in the event of a Default by Borrower. Segregation of
Collateral may be accomplished by appropriate
identification on the books and records of Lender if
it is a "financial intermediary" or a "clearing
corporation" within the meaning of the New York
Uniform Commercial Code.
3.3 Except as otherwise provided herein, upon transfer to
Lender of the Loaned Securities on the day a Loan is
terminated pursuant to Section 5, Lender shall be
obligated to transfer the Collateral (as adjusted
pursuant to Section 8) to Borrower no later than the
Cutoff Time on such day or, if such day is not a day
on which a transfer of such Collateral may be effected
under Section 16, the next day on which such a
transfer may be effected.
3.4 If Borrower transfers Collateral to Lender, as
provided in Section 3.1, and Lender does not transfer
the Loaned Securities to Borrower, Borrower shall have
the absolute right to the return of the Collateral;
and if Lender transfers Loaned Securities to Borrower
and Borrower does not transfer Collateral to Lender as
provided in Section 3.1, Lender shall have the
absolute right to the return of the Loaned Securities.
3.5 Borrower may, upon reasonable notice to Lender (taking
into account all relevant factors, including industry
practice, the type of Collateral to be substituted and
the applicable method of transfer), substitute
Collateral for Collateral securing any Loan or Loans;
provided, however,, that such substituted Collateral
shall (a) consist only of cash, securities or other
property that Borrower and Lender agreed would be
acceptable Collateral prior to the Loan or Loans and
(b) have a market value such that the aggregate market
value of such substituted Collateral, together with
all other Collateral for Loans in which the party
substituting such Collateral is acting as Borrower,
shall equal or exceed the agreed upon Margin
Percentage of the market value of the Loaned
Securities. Prior to the expiration of any letter of
credit supporting Borrower's obligations hereunder,
Borrower shall, no later than the Cutoff Time on the
date such letter of credit expires, obtain an
extension of the expiration of such letter of credit
or replace such letter of credit by providing Lender
with a substitute letter of credit in an amount at
least equal to the amount of the letter of credit for
which it is substituted.<PAGE>
<PAGE> 4
3.6 Lender acknowledges that, in connection with Loans of
Government Securities and as otherwise permitted by
applicable law, some securities provided by Borrower
as Collateral under this Agreement may not be
guaranteed by the United States.
4. Fees for Loan.
4.1 Unless otherwise agreed, (a) Borrower agrees to pay
Lender a loan fee (a "Loan Fee"), computed daily on
each Loan to the extent such Loan is secured by
Collateral other than cash, based on the aggregate par
value (in the case of Loans of Government Securities)
or the aggregate market value (in the case of all
other Loans) of the Loaned Securities on the day for
which such Loan Fee is being computed, and (b) Lender
agrees to pay Borrower a fee or rebate (a "Cash
Collateral Fee") on Collateral consisting of cash,
computed daily based on the amount of cash held by
Lender as Collateral, in the case of each of the Loan
Fee and the Cash Collateral Fee at such rates as
Borrower and Lender may agree. Except as Borrower and
Lender may otherwise agree (in the event that cash
Collateral is transferred by clearing house funds or
otherwise), Loan Fees shall accrue from and including
the date on which the Loaned Securities are
transferred to Borrower to, but excluding, the date on
which such Loaned Securities are returned to Lender,
and Cash Collateral Fees shall accrue from and
including the date on which the cash Collateral is
transferred to Lender to, but excluding, the date on
which such cash Collateral is returned to Borrower.
4.2 Unless otherwise agreed, any Loan Fee or Cash
Collateral Fee payable hereunder shall be payable:
(a) in the case of any Loan of securities other than
Government Securities, upon the earlier of (i)
the fifteenth day of the month following the
calendar month in which such fee was incurred or
(ii) the termination of all Loans hereunder (or,
if a transfer of cash in accordance with Section
16 may not be effected on such fifteenth day or
the day of such termination, as the case may be,
the next day on which such a transfer may be
effected); and
(b) in the case of any Loan of Government Securities,
upon the termination of such Loan.<PAGE>
<PAGE> 5
Notwithstanding the foregoing, all Loan Fees shall be
payable by Borrower immediately in the event of a
Default hereunder by Borrower and all Cash Collateral
Fees shall be payable immediately by Lender in the
event of a Default by Lender.
5. Termination of the Loan.
Unless otherwise agreed, (a) Borrower may terminate a Loan
on any Business Day by giving notice to Lender and
transferring the Loaned Securities to Lender before the
Cutoff Time on such Business Day, and (b) Lender may
terminate a Loan on a termination date established by
notice given to Borrower prior to the close of business on
a Business Day. The termination date established by a
termination notice given by Lender to Borrower shall be a
date no earlier than the standard settlement date for
trades of the Loaned Securities entered into on the date of
such notice, which date shall, unless Borrower and Lender
agree to the contrary, be (i) in the case of Government
Securities, the next Business Day following such notice and
(ii) in the case of all other securities, the third
Business Day following such notice. Unless otherwise
agreed, Borrower shall, on or before the Cutoff Time on the
termination date of a Loan, transfer the Loaned Securities
to Lender; provided, however,, that upon such transfer by
Borrower, Lender shall transfer the Collateral (as adjusted
pursuant to Section 8) to Borrower in accordance with
Section 3.3.
6. Rights of Borrower in Respect of the Loaned Securities.
Except as set forth in Sections 7.1 and 7.2 and as
otherwise agreed by Borrower and Lender, until Loaned
Securities are required to be redelivered to Lender upon
termination of a Loan hereunder, Borrower shall have all
of the incidents of ownership of the Loaned Securities,
including the right to transfer the Loaned Securities to
others. Lender hereby waives the right to vote, or to
provide any consent or to take any similar action with
respect to, the Loaned Securities in the event that the
record date or deadline for such vote, consent or other
action falls during the term of the Loan.<PAGE>
<PAGE> 6
7. Dividends, Distributions, Etc.
7.1 Lender shall be entitled to receive all distributions
made on or in respect of the Loaned Securities which
are not otherwise received by Lender, to the full
extent it would be so entitled if the Loaned
Securities had not been lent to Borrower, including,
but not limited to: (a) cash and all other property,
(b) stock dividends, (c) securities received as a
result of split ups of the Loaned Securities and
distributions in respect thereof, (d)interest
payments, and (e) all rights to purchase additional
securities.
7.2 Any cash distributions made on or in respect of the
Loaned Securities, which Lender is entitled to receive
pursuant to Section 7.1, shall be paid by the transfer
of cash to Lender by Borrower, on the date any such
distribution is paid, in an amount equal to such cash
distribution, so long as Lender is not in Default at
the time of such payment. Non-cash distributions
received by Borrower shall be added to the Loaned
Securities on the date of distribution and shall be
considered such for all purposes, except that if the
Loan has terminated, Borrower shall forthwith transfer
the same to Lender.
7.3 Borrower shall be entitled to receive all cash
distributions made on or in respect of non-cash
Collateral which are not otherwise received by
Borrower, to the full extent it would be so entitled
if the Collateral had not been transferred to Lender.
Any distributions of cash made on or in respect of
such Collateral which Borrower is entitled to receive
hereunder shall be paid by the transfer of cash to
Borrower by Lender, on the date any such distribution
is paid, in an amount equal to such cash distribution,
so long as Borrower is not in Default at the time of
such payment.<PAGE>
<PAGE> 7
7.4
(a) Unless otherwise agreed, if (i) Borrower is required
to make a payment (a "Borrower Payment") with respect
to cash distributions on Loaned Securities under
Sections 7.1 and 7.2 ("Securities Distributions"), or
(ii) Lender is required to make a payment (a "Lender
Payment") with respect to cash distributions on
Collateral under Section 7.3 ("Collateral
Distributions"), and (iii) Borrower or Lender, as the
case may be ("Payor"), shall be required by law to
collect any withholding or other tax, duty, fee, levy
or charge required to be deducted or withheld from
such Borrower Payment or Lender Payment ("Tax"), then
Payor shall (subject to subsections (b) and (c)
below), pay such additional amounts as may be
necessary in order that the net amount of the
Borrower Payment or Lender Payment received by the
Lender or Borrower, as the case may be ("Payee"),
after payment of such Tax equals the net amount of the
Securities Distribution or Collateral Distribution
that would have been received if such Securities
Distribution or Collateral Distribution had been paid
directly to the Payee.
(b) No additional amounts shall be payable to a Payee
under subsection (a) above to the extent that Tax
would have been imposed on a Securities Distribution
or Collateral Distribution paid directly to the Payee.
(c) No additional amounts shall be payable to a Payee
under subsection (a) above to the extent that such
Payee is entitled to an exemption from, or reduction
in the rate of, Tax on a Borrower Payment or Lender
Payment subject to the provision of a certificate or
other documentation, but has failed timely to provide
such certificate or other documentation.
(d) Each party hereto shall be deemed to represent that,
as of the commencement of any Loan hereunder, no Tax
would be imposed on any cash distribution paid to it
with respect to (i) Loaned Securities subject to a
Loan in which it is acting as Lender or (ii)
Collateral for any Loan in which it is acting as
Borrower, unless such party has given notice to the
contrary to the other party hereto (which notice shall
specify the rate at which such Tax would be imposed).
Each party agrees to notify the other of any change
that occurs during the term of a Loan in the rate of
any Tax that would be imposed on any such cash
distributions payable to it.<PAGE>
<PAGE> 8
7.5 To the extent that, under the provisions of Sections
7.1 through 7.4 (a) a transfer of cash or other
property by Borrower would give rise to a Margin
Excess (as defined in Section 8.3 below) or (b) a
transfer of cash or other property by Lender would
give rise to a Margin Deficit (as defined in Section
8.2 below), Borrower or Lender (as the case may be)
shall not be obligated to make such transfer of cash
or other property in accordance with such Sections,
but shall in lieu of such transfer immediately credit
the amounts that would have been transferable under
such Sections to the account of Lender or Borrower (as
the case may be).
8. Mark to Market.
8.1 Borrower shall daily mark to market any Loan hereunder
and in the event that at the close of trading on any
Business Day the market value of the Collateral for
any Loan to Borrower shall be less than 100% of the
market value of all the outstanding Loaned Securities
subject to such Loan, Borrower shall transfer
additional Collateral no later than the close of the
next Business Day so that the market value of such
additional Collateral, when added to the market value
of the other Collateral for such Loan, shall equal
100% of the market value of the Loaned Securities.
8.2 In addition to any rights of Lender under Section 8.1,
in the event that at the close of trading on any
Business Day the aggregate market value of all
Collateral for Loans by Lender shall be less than the
Margin Percentage of the market value of all the
outstanding Loaned Securities subject to such Loans (a
"Margin Deficit"), Lender may, by notice to Borrower,
demand that Borrower transfer to Lender additional
Collateral so that the market value of such additional
Collateral, when added to the market value of all
other Collateral for such Loans, shall equal or exceed
the agreed upon Margin Percentage of the market value
of the Loaned Securities. Unless otherwise agreed,
such transfer is to be made no later than the close of
the next Business Day following the day of Lender's
notice to Borrower.
8.3 In the event that at the close of trading on any
Business Day the market value of all Collateral for
Loans to Borrower shall be greater than the Margin
Percentage of the market value of all the outstanding
Loaned Securities subject to such Loans (a "Margin
Excess"), Borrower may, by notice to Lender, demand
that Lender transfer to Borrower such amount of the<PAGE>
<PAGE> 9
Collateral selected by Borrower so that the market
value of the Collateral for such Loans, after
deduction of such amounts, shall thereupon not exceed
the Margin Percentage of the market value of the
Loaned Securities. Unless otherwise agreed, such
transfer is to be made no later than the close of the
next Business Day following the day of Borrower's
notice to Lender.
8.4 Borrower and Lender may agree, with respect to one or
more Loans hereunder, to mark the values to market
pursuant to Sections 8.2 and 8.3 by separately valuing
the Loaned Securities lent and the Collateral given in
respect thereof on a Loan-by-Loan basis.
8.5 Borrower and Lender may agree, with respect to any or
all Loans hereunder, that the respective rights of
Lender and Borrower under Sections 8.2 and 8.3 may be
exercised only where a Margin Excess or Margin Deficit
exceeds a specified dollar amount or a specified
percentage of the market value of the Loaned
Securities under such Loans (which amount or
percentage shall be agreed to by Borrower and Lender
prior to entering into any such Loans).
9. Representations. Each party to this Agreement hereby makes
the following representations and warranties, which shall
continue during the term of any Loan hereunder:
9.1 Each party hereto represents and warrants that (a) it
has the power to execute and deliver this Agreement,
to enter into the Loans contemplated hereby and to
perform its obligations hereunder; (b) it has taken
all necessary action to authorize such execution,
delivery and performance; and (c) this Agreement
constitutes a legal, valid and binding obligation
enforceable against it in accordance with its terms.
9.2 Each party hereto represents and warrants that the
execution, delivery and performance by it of this
Agreement and each Loan hereunder will at all times
comply with all applicable laws and regulations
including those of applicable regulatory and
self-regulatory organizations.
9.3 Each party hereto represents and warrants that it has
not relied on the other for any tax or accounting
advice concerning this Agreement and that it made its
own determination as to the tax and accounting
treatment of any Loan and any dividends,
remuneration or other funds received hereunder.<PAGE>
<PAGE> 10
9.4 Borrower represents and warrants that it is acting for
its own account. Lender represents and warrants that
it is acting for its own account unless it expressly
specifies otherwise in writing and complies with
Section 10.3(b).
9.5 Borrower represents and warrants that (a) it has, or
will have at the time of transfer of any Collateral,
the right to grant a first security interest therein
subject to the terms and conditions hereof, and (b) it
(or the person to whom it relends the Loaned
Securities) is borrowing or will borrow the Loaned
Securities (except for Loaned Securities that qualify
as "exempted securities" under Regulation T of the
Board of Governors of the Federal Reserve System) for
the purpose of making delivery of such securities in
the case of short sales, failure to receive securities
required to be delivered, or as otherwise permitted
pursuant to Regulation T as in effect from time to
time.
9.6 Lender represents and warrants that it has, or will
have at the time of transfer of any Loaned Securities,
the right to transfer the Loaned Securities subject to
the terms and conditions hereof.
10. Covenants.
10.1 Each party hereto agrees and acknowledges that (a)
each Loan hereunder is a "securities contract," as
such term is defined in Section 741(7) of Title 11 of
the United States Code (the "Bankruptcy Code"), (b)
each and every transfer of funds, securities and other
property under this Agreement and each Loan hereunder
is a "settlement payment" or a "margin payment," as
such terms are used in Sections 362(b)(6) and 546(e)
of the Bankruptcy Code, and (c) the rights given to
Borrower and Lender hereunder upon a Default by the
other constitute the right to cause the liquidation of
a securities contract and the right to set off mutual
debts and claims in connection with a securities
contract, as such terms are used in Sections 555 and
362(b)(6) of the Bankruptcy Code. Each party hereto
further agrees and acknowledges that if a party hereto
is an "insured depository institution," as such term
is defined in the Federal Deposit Insurance Act, as
amended ("FDIA"), then each Loan hereunder is a
"securities contract" and "qualified financial
contract," as such terms are defined in the FDIA and
any rules, orders or policy statements thereunder.
10.2 Borrower agrees to be liable as principal with respect
to its obligations hereunder.<PAGE>
<PAGE> 11
10.3 Lender agrees either (a) to be liable as principal
with respect to its obligations hereunder or (b) to
execute and comply fully with the provisions of Annex
I (the terms and conditions of which Annex are
incorporated herein and made a part hereof).
10.4 Promptly upon (and in any event within seven (7)
Business Days after) demand by Lender, Borrower shall
furnish Lender with Borrower's most recent
publicly-available financial statements and any other
financial statements mutually agreed upon by Borrower
and Lender. Unless otherwise agreed, if Borrower is
subject to the requirements of Rule 17a-5(c) under the
Exchange Act, it may satisfy the requirements of this
Section by furnishing Lender with its most recent
statement required to be furnished to customers
pursuant to such Rule.
10.5 Except to the extent required by applicable law or
regulation or as otherwise agreed, Borrower and Lender
agree that Loans hereunder shall in no event be
"exchange contracts" for purposes of the rules of any
securities exchange and that Loans hereunder shall not
be governed by the buy-in or similar rules of any such
exchange, registered national securities or other
self-regulatory organization.
11. Events of Default. All Loans hereunder may, at the option
of the non-defaulting party exercised by notice to the
defaulting party (which option shall be deemed to have been
exercised, even if no notice is given, immediately upon the
occurrence of an event specified in subsection (e) below),
be terminated immediately upon the occurrence of any one or
more of the following events (individually, a"Default"):
(a) if any Loaned Securities shall not be transferred to
Lender upon termination of the Loan as required by
Section 5;
(b) if any Collateral shall not be transferred to Borrower
upon termination of the Loan as required by Sections
3.3 and 5;
(c) if either party shall fail to transfer Collateral as
required by Section 8;<PAGE>
<PAGE> 12
(d) if either party (i) shall fail to transfer to the
other party amounts in respect of distributions
required to be transferred by Section 7, (ii) shall
have received notice of such failure from the
non-defaulting party, and (iii) shall not have cured
such default by the Cutoff Time on the next day after
such notice on which a transfer of cash may be
effected in accordance with Section 16;
(e) if (i) either party shall commence as debtor any case
or proceeding under any bankruptcy, insolvency,
reorganization, liquidation, dissolution or similar
law, or seek the appointment of a receiver,
conservator, trustee, custodian or similar official
for such party or any substantial part of its
property, (ii) any such case or proceeding shall be
commenced against either party, or another shall seek
such an appointment, or any application shall be filed
against either party for a protective decree under the
provisions of the Securities Investor Protection Act
of 1970, which (A) is consented to or not timely
contested by such party, (B) results in the entry of
an order for relief, such an appointment, the issuance
of such a protective decree or the entry of an order
having a similar effect, or (C) is not dismissed
within 15 days, (iii) either party shall make a
general assignment for the benefit of creditors, or
(iv) either party shall admit in writing its inability
to pay its debts as they become due;
(f) if either party shall have been suspended or expelled
from membership or participation in any national
securities exchange or registered national securities
association of which it is a member or other
self-regulatory organization to whose rules it is
subject or if it is suspended from dealing in
securities by any federal or state government agency
thereof.
(g) if either party shall have its license, charter, or
other authorization necessary to conduct a material
portion of its business withdrawn, suspended or
revoked by any applicable federal or state government
or agency thereof;
(h) if any representation made by either party in respect
of this Agreement or any Loan or Loans hereunder shall
be incorrect or untrue in any material respect during
the term of any Loan hereunder;<PAGE>
<PAGE> 13
(i) if either party notifies the other, orally or in
writing, of its inability to or its intention not to
perform its obligations hereunder or otherwise
disaffirms, rejects or repudiates any of its
obligations hereunder; or
(j) if either party (i) shall fail to perform any material
obligation under this Agreement not specifically set
forth in clauses (a) through (i) above, including but
not limited to the payment of fees as required by
Section 4, and the payment of transfer taxes as
required by Section 14, (ii) shall have received
notice of such failure from the non-defaulting party
and (iii) shall not have cured such failure by the
Cutoff Time on the next day after such notice on which
a transfer of cash may be effected under Section 16.
12. Lender's Remedies. Upon the occurrence of a Default under
Section 11 entitling Lender to terminate all Loans
hereunder, Lender shall have the right (without further
notice to Borrower), in addition to any other remedies
provided herein or under applicable law, (a) to purchase a
like amount of Loaned Securities ("Replacement Securities")
in the principal market for such securities in a
commercially reasonable manner, (b) to sell any Collateral
in the principal market for such Collateral in a
commercially reasonable manner and (c) to apply and set off
the Collateral and any proceeds thereof (including any
amounts drawn under a letter of credit supporting any Loan)
against the payment of the purchase price for such
Replacement Securities and any amounts due to Lender under
Sections 4, 7, 14 and 17. In the event Lender shall
exercise such rights, Borrower's obligation to return a
like amount of the Loaned Securities shall terminate.
Lender may similarly apply the Collateral and any proceeds
thereof to any other obligation of Borrower under this
Agreement, including Borrower's obligations with respect to
distributions paid to Borrower (and not forwarded to
Lender) in respect of Loaned Securities. In the event that
(i) the purchase price of Replacement Securities (plus all
other amounts, if any, due to Lender hereunder) exceeds
(ii) the amount of the Collateral, Borrower shall be liable
to Lender for the amount of such excess together with
interest thereon at a rate equal to (A) in the case of
purchases of Foreign Securities, LIBOR, (B) in the case of
purchases of any other securities (or other amounts, if
any, due to Lender hereunder), the Federal Funds Rate or
(C) such other rate as may be specified in Schedule B, in
each case as such rate fluctuates from day to day, from the
date of such purchase until the date of payment of such
excess. As security for Borrower's obligation to pay such
excess, Lender shall have, and Borrower hereby grants, a<PAGE>
<PAGE> 14
security interest in any property of Borrower then held by
or for Lender and a right of setoff with respect to such
property and any other amount payable by Lender to
Borrower. The purchase price of Replacement Securities
purchased under this Section 12 shall include, and the
proceeds of any sale of Collateral shall be determined
after deduction of, broker's fees and commissions and all
other reasonable costs, fees and expenses related to such
purchase or sale (as the case may be). In the event Lender
exercises its rights under this Section 12, Lender may
elect in its sole discretion, in lieu of purchasing all or
a portion of the Replacement Securities or selling all or a
portion of the Collateral, to be deemed to have made,
respectively, such purchase of Replacement Securities or
sale of Collateral for an amount equal to the price
therefor on the date of such exercise obtained from a
generally recognized source or the most recent closing bid
quotation from such a source. Subject to Section 19, upon
the satisfaction of all obligations hereunder, any
remaining Collateral shall be returned to Borrower.
13. Borrower's Remedies. Upon the occurrence of a Default under
Section 11 entitling Borrower to terminate all Loans
hereunder, Borrower shall have the right (without further
notice to Lender), in addition to any other remedies
provided herein or under applicable law, (a) to purchase a
like amount of Collateral ("Replacement Collateral") in the
principal market for such Collateral in a commercially
reasonable manner, (b) to sell a like amount of the Loaned
Securities in the principal market for such securities in a
commercially reasonable manner and (c) to apply and set off
the Loaned Securities and any proceeds thereof against (i)
the payment of the purchase price for such Replacement
Collateral (ii) Lender's obligation to return any cash or
other Collateral and (iii) any amounts due to Borrower
under Sections 4, 7 and 17. In such event, Borrower may
treat the Loaned Securities as its own and Lender's
obligation to return a like amount of the Collateral shall
terminate; provided, however, that Lender shall immediately
return any letters of credit supporting any Loan upon the
exercise or deemed exercise by Borrower of its termination
rights under Section 11. Borrower may similarly apply the
Loaned Securities and any proceeds thereof to any other
obligation of Lender under this Agreement, including
Lender's obligations with respect to distributions paid to
Lender (and not forwarded to Borrower) in respect of
Collateral. In the event that (i) the sales price received
from such Loaned Securities is less than (ii) the purchase
price of Replacement Collateral (plus the amount of any
cash or other Collateral not replaced by Borrower and all
other amounts, if any, due to Borrower hereunder), Lender
shall be liable to Borrower for the amount of any such
deficiency, together with interest on such amounts at a<PAGE>
<PAGE> 15
rate equal to (A) in the case of Collateral consisting of
Foreign Securities, LIBOR, (B) in the case of Collateral
consisting of any other securities (or other amounts due,
if any, to Borrower hereunder), the Federal Funds Rate or
(C) such other rate as may be specified in Schedule B, in
each case as such rate fluctuates from day to day, from the
date of such sale until the date of payment of such
deficiency. As security for Lender's obligation to pay such
deficiency, Borrower shall have, and Lender hereby grants,
a security interest in any property of Lender then held by
or for Borrower and a right of setoff with respect to such
property and any other amount payable by Borrower to
Lender. The purchase price of any Replacement Collateral
purchased under this Section 13 shall include, and the
proceeds of any sale of Loaned Securities shall be
determined after deduction of, broker's fees and
commissions and all other reasonable costs, fees and
expenses related to such purchase or sale (as the case may
be). In the event Borrower exercises its rights under this
Section 13, Borrower may elect in its sole discretion, in
lieu of purchasing all or a portion of the Replacement
Collateral or selling all or a portion of the Loaned
Securities, to be deemed to have made, respectively, such
purchase of Replacement Collateral or sale of Loaned
Securities for an amount equal to the price therefor on the
date of such exercise obtained from a generally recognized
source or the most recent closing bid quotation from such a
source. Subject to Section 19, upon the satisfaction of all
Lender's obligations hereunder, any remaining Loaned
Securities (or remaining cash proceeds thereof) shall be
returned to Lender. Without limiting the foregoing, the
parties hereto agree that they intend the Loans hereunder
to be loans of securities. If, however, any Loan is deemed
to be a loan of money by Borrower to Lender, then Borrower
shall have, and Lender shall be deemed to have granted, a
security interest in the Loaned Securities and the proceeds
thereof.
14. Transfer Taxes. All transfer taxes with respect to the
transfer of the Loaned Securities by Lender to Borrower and
by Borrower to Lender upon termination of the Loan shall be
paid by Borrower.<PAGE>
<PAGE> 16
15. Market Value.
15.1 Unless otherwise agreed, if the principal market for
the securities to be valued is a national securities
exchange in the United States, their market value
shall be determined by their last sale price on such
exchange on the preceding Business Day or, if there
was no sale on that day, by the last sale price on the
next preceding Business Day on which there was a sale
on such exchange, all as quoted on the Consolidated
Tape or, if not quoted on the Consolidated Tape, then
as quoted by such exchange.
15.2 Except as provided in Section 15.3 or 15.4 or as
otherwise agreed, if the principal market for the
securities to be valued is the over-the-counter
market, their market value shall be determined as
follows. If the securities are quoted on the National
Association of Securities Dealers Automated Quotations
System ("NASDAQ"), their market value shall be the
closing sale price on NASDAQ on the preceding Business
Day or, if the securities are issues for which last
sale prices are not quoted on NASDAQ, the closing bid
price on such day. If the securities to be valued are
not quoted on NASDAQ, their market value shall be the
highest bid quotation as quoted in any of The Wall
Street Journal, the National Quotation Bureau pink
sheets, the Salomon Brothers quotation sheets,
quotations sheets of registered market makers and, if
necessary, dealers' telephone quotations on the
preceding Business Day. In each case, if the relevant
quotation did not exist on such day, then the relevant
quotation on the next preceding Business Day in which
there was such a quotation shall be the market value.
15.3 Unless otherwise agreed, if the securities to be
valued are Government Securities, their market value
shall be the average of the bid and ask prices as
quoted on Prophesy at 3:30 P.M. New York time on the
Business Day preceding the date on which such
determination is made. If the securities are not so
quoted on such day, their market value shall be
determined as of the next preceding Business Day on
which they were so quoted. If the securities to be
valued are Government Securities that are not quoted
on Prophesy, their market value shall be determined as
of the close of business on the preceding Business Day
in accordance with market practice for such
securities.
15.4 Unless otherwise agreed, if the securities to be
valued are Foreign Securities, their market value
shall be determined as of the close of business on the
<PAGE> 17
preceding Business Day in accordance with market
practice in the principal market for such securities.
15.5 Unless otherwise agreed, the market value of a letter
of credit shall be the undrawn amount thereof.
15.6 All determinations of market value under Sections
15.1, 15.2, 15.3 and 15.4 shall include, where
applicable, accrued interest to the extent not already
included therein (other than any interest transferred
to the other party pursuant to Section 7), unless
market practice with respect to the valuation of such
securities in connection with securities loans is to
the contrary. All determinations of market value that
are required to be made at the close of trading on any
Business Day pursuant to Section 8 or otherwise
hereunder shall be made as if being determined at the
commencement of trading on the next Business Day. The
determinations of market value provided for in this
Section 15 shall apply for all purposes under this
Agreement, except for purposes of Sections 12 and 13.
16. Transfers.
16.1 All transfers of securities hereunder shall be by (a)
physical delivery of certificates representing such
securities together with duly executed stock and bond
transfer powers, as the case may be, with signatures
guaranteed by a bank or a member firm of the New York
Stock Exchange, Inc., (b) transfer on the books of a
Clearing Organization, or (c) such other means as
Borrower and Lender may agree. In every transfer of
securities hereunder, the transferor shall take all
steps necessary (i) to effect a "transfer" under
Section 8-313 of the New York Uniform Commercial Code
or, where applicable, under any U.S. federal
regulation governing transfers of securities and (ii)
to provide the transferee with comparable rights under
any applicable foreign law or regulation.
16.2 All transfers of cash Collateral hereunder shall be by
(a) wire transfer in immediately available, freely
transferable funds or (b) such other means as Borrower
and Lender may agree. All other transfers of cash
hereunder shall be made in accordance with the
preceding sentence or by delivery of a certified or
official bank check representing next-day New York
Clearing House Funds.<PAGE>
<PAGE> 18
16.3 All transfers of a letter of credit from Borrower to
Lender shall be made by physical delivery to Lender of
an irrevocable letter of credit issued by a "bank" as
defined in Section 3(a)(6)(A)-(C) of the Exchange Act.
Transfer of a letter of credit from Lender to Borrower
shall be made by causing such letter of credit to be
returned or by causing the amount of such letter of
credit to be reduced to the amount required after such
transfer.
16.4 A transfer of securities, cash or letters of credit
may be effected under this Section 16 on any day
except (a) a day on which the transferee is closed for
business at its address set forth in Schedule A hereto
or (b) a day on which a Clearing Organization or wire
transfer system is closed, if the facilities of such
Clearing Organization or wire transfer system are
required to effect such transfer.
17. Contractual Currency.
17.1 Borrower and Lender agree that: (a) any payment in
respect of a distribution under Section 7 shall be
made in the currency in which the underlying
distribution of cash was made; (b) any return of cash
shall be made in the currency in which the underlying
transfer of cash was made and (c) any other payment of
cash in connection with a Loan under this Agreement
shall be in the currency agreed upon by Borrower and
Lender in connection with such Loan (the currency
established under clause (a), (b) or (c) hereinafter
referred to as the "Contractual Currency").
Notwithstanding the foregoing, the payee of any such
payment may, at its option, accept tender thereof in
any other currency; provided, however, that, to the
extent permitted by applicable law, the obligation of
the payor to make such payment will be discharged only
to the extent of the amount of Contractual Currency
that such payee may, consistent with normal banking
procedures, purchase with such other currency (after
deduction of any premium and costs of exchange) on the
banking day next succeeding its receipt of such
currency.<PAGE>
<PAGE> 19
17.2 If for any reason the amount in the Contractual
Currency received under Section 17.1, including
amounts received after conversion of any recovery
under any judgment or order expressed in a currency
other than the Contractual Currency, falls short of
the amount in the Contractual Currency due in respect
of this Agreement, the party required to make the
payment will (unless a Default has occurred and such
party is the non-defaulting party) as a separate and
independent obligation and to the extent permitted by
applicable law, immediately pay such additional
amount in the Contractual Currency as may be necessary
to compensate for the shortfall.
17.3 If for any reason the amount in the Contractual
Currency received under Section 17.1 exceeds the
amount in the Contractual Currency due in respect of
this Agreement, then the party receiving the payment
will (unless a Default has occurred and such party is
the non-defaulting party) refund promptly the amount
of such excess.
18. ERISA. Lender shall, if any of the securities transferred
to the Borrower hereunder for any Loan have been or shall
be obtained, directly or indirectly, from or using the
assets of any Plan, so notify Borrower in writing upon the
execution of the Agreement or upon initiation of such Loan
under Section 1.1. If Lender so notifies Borrower, then
Borrower and Lender shall conduct the Loan in accordance
with the terms and conditions of Department of Labor
Prohibited Transaction Exemption 81-6 (46 Fed. Reg. 7527,
Jan. 23, 1981; as amended, 52 Fed. Reg. 18754, May 19,
1987), or any successor thereto (unless Borrower and Lender
have agreed prior to entering into a Loan that such Loan
will be conducted in reliance on another exemption, or
without relying on any exemption, from the prohibited
transaction provisions of Section 406 of the Employee
Retirement Income Security Act of 1974, as amended, and
Section 4975 of the Internal Revenue Code of 1986, as
amended). Without limiting the foregoing and
notwithstanding any other provision of this Agreement, if
the Loan will be conducted in accordance with Prohibited
Transaction Exemption 81-6, then:
(a) Borrower represents and warrants to Lender that it is
either (i) a bank subject to federal or state
supervision, (ii) a broker-dealer registered under the
Exchange Act or (iii) exempt from registration under
Section 15(a)(1) of the Exchange Act as a dealer in
Government Securities.<PAGE>
<PAGE> 20
(b) Borrower represents and warrants that, during the term
of any Loan hereunder, neither Borrower nor any
affiliate of Borrower has any discretionary authority
or control with respect to the investment of the
assets of the Plan involved in the Loan or renders
investment advice (within the meaning of 29 C.F.R.
Section 2510.3-21(c)) with respect to the assets of
the Plan involved in the Loan. Lender agrees that,
prior to or at the commencement of any Loan
hereunder, it will communicate to Borrower information
regarding the Plan sufficient to identify to Borrower
any person or persons that have discretionary
authority or control with respect to the investment of
the assets of the Plan involved in the Loan or that
render investment advice (as defined in the preceding
sentence) with respect to the assets of the Plan
involved in the Loan. In the event Lender fails to
communicate and keep current during the term of any
Loan such information, Lender rather than Borrower
shall be deemed to have made the representation and
warranty in the first sentence of this clause (b).
(c) Borrower and Lender agree that:
1. the term "Collateral" shall mean cash, securities
issued or guaranteed by the United States
government or its agencies or instrumentalities,
or irrevocable bank letters of credit issued by a
person other than Borrower or an affiliate
thereof;
2. prior to the making of any Loans hereunder,
Borrower shall provide Lender with (A) the most
recent available audited statement of Borrower's
financial condition and (B) the most recent
available unaudited statement of Borrower's
financial condition (if more recent than the most
recent audited statement), and each Loan made
hereunder shall be deemed a representation by
Borrower that there has been no material adverse
change in Borrower's financial condition
subsequent to the date of the latest financial
statements or information furnished in accordance
herewith;<PAGE>
<PAGE> 21
3. the Loan may be terminated by Lender at any time,
whereupon Borrower shall deliver the Loaned
Securities to Lender within the lesser of (A) the
customary delivery period for such securities;
(B) five Business Days and (C) the time
negotiated for such delivery between Borrower and
Lender; provided, however, that Borrower and
Lender may agree to a longer period only if
permitted by Prohibited Transaction Exemption
81-6; and
4. the Collateral transferred shall be security only
for obligations of Borrower to the Plan with
respect to Loans, and shall not be security for
any obligation of Borrower to any agent or
affiliate of the Plan.
19. Single Agreement. Borrower and Lender acknowledge that, and
have entered into this Agreement in reliance on the fact
that, all Loans hereunder constitute a single business and
contractual relationship and have been entered into in
consideration of each other. Accordingly, Borrower and
Lender hereby agree that payments, deliveries and other
transfers made by either of them in respect of any Loan
shall be deemed to have been made in consideration of
payments, deliveries and other transfers in respect of any
other Loan hereunder, and the obligations to make any such
payments, deliveries and other transfers may be applied
against each other and netted. In addition, Borrower and
Lender acknowledge that, and have entered into this
Agreement in reliance on the fact that, all Loans hereunder
have been entered into in consideration of each other.
Accordingly, Borrower and Lender hereby agree that (a) each
shall perform all of its obligations in respect of each
Loan hereunder, and that a default in the performance of
any such obligation by Borrower or by Lender (the
"Defaulting Party") in any Loan hereunder shall constitute
a default by the Defaulting Party under all such Loans
hereunder, and (b) the non-defaulting party shall be
entitled to set off claims and apply property held by it in
respect of any Loan hereunder against obligations owing to
it in respect of any other Loan with the Defaulting Party.
20. APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK WITHOUT GIVING EFFECT TO THE CONFLICT OF LAW
PRINCIPLES THEREOF.<PAGE>
<PAGE> 22
21. Waiver. The failure of a party to this Agreement to insist
upon strict adherence to any term of this Agreement on any
occasion shall not be considered a waiver or deprive that
party of the right thereafter to insist upon strict
adherence to that term or any other term of this Agreement.
All waivers in respect of a Default must be in writing.
22. Remedies. All remedies hereunder and all obligations with
respect to any Loan shall survive the termination of the
relevant Loan, return of Loaned Securities or Collateral
and termination of this Agreement.
23. Notices and Other Communications. Unless another address is
specified in writing by the respective party to whom any
notice or other communication is to be given hereunder, all
such notices or communications shall be in writing or
confirmed in writing and delivered at the respective
addresses set forth in Schedule A attached hereto. All
notices shall be effective upon actual receipt, provided,
however, that if any notice shall be received by a party on
a day on which such party is not open for business at its
office located at the address set forth in Schedule A, such
notice shall be deemed to have been received by such party
at the opening of business on the next day on which such
party is open for business at such address.
24. SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL.
24.1 EACH PARTY HERETO IRREVOCABLY AND UNCONDITIONALLY (A)
SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY
UNITED STATES FEDERAL OR NEW YORK STATE COURT SITTING
IN NEW YORK CITY, AND ANY APPELLATE COURT FROM ANY
SUCH COURT, SOLELY FOR THE PURPOSE OF ANY SUIT, ACTION
OR PROCEEDING BROUGHT TO ENFORCE ITS OBLIGATIONS
HEREUNDER OR RELATING IN ANY WAY TO THIS AGREEMENT OR
ANY LOAN HEREUNDER AND (B) WAIVES, TO THE FULLEST
EXTENT IT MAY EFFECTIVELY DO SO, ANY DEFENSE OF AN
INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION
OR PROCEEDING IN ANY SUCH COURT AND ANY RIGHT OF
JURISDICTION ON ACCOUNT OF ITS PLACE OF RESIDENCE OR
DOMICILE.
24.2 EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES ANY RIGHT
THAT IT MAY HAVE TO TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING
TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY.<PAGE>
<PAGE> 23
25. Miscellaneous. This Agreement supersedes any other
agreement between the parties hereto concerning loans of
securities between Borrower and Lender. This Agreement
shall not be assigned by either party without the prior
written consent of the other party and any attempted
assignment without such consent shall be null and void.
Subject to the foregoing, this Agreement shall be binding
upon and shall ensure to the benefit of Borrower and Lender
and their respective heirs, representatives, successors and
assigns. This Agreement may be terminated by either party
upon written notice to the other, subject only to
fulfillment of any obligations then outstanding. This
Agreement shall not be modified, except by an instrument in
writing signed by the party against whom enforcement is
sought. The parties hereto acknowledge and agree that, in
connection with this Agreement and each Loan hereunder,
time is of the essence. Each provision and agreement herein
shall be treated as separate and independent from any
other provision herein and shall be enforceable
notwithstanding the unenforceability of any such other
provision or agreement.
26. Definitions. For the purposes hereof:
26.1 "Broker-Dealer" shall mean any person that is a broker
(including a municipal securities broker), dealer,
municipal securities dealer, government securities
broker or government securities dealer as defined in
the Exchange Act, regardless of whether the activities
of such person are conducted in the United States or
otherwise require such person to register with the
Securities and Exchange Commission or other regulatory
body.
26.2 "Business Day" shall mean, with respect to any Loan
hereunder, a day on which regular trading occurs in
the principal market for the Loaned Securities subject
to such Loan, provided, however, that for purposes of
Section 15, such term shall mean a day on which
regular trading occurs in the principal market for
the securities whose value is being determined.
Notwithstanding the foregoing, (i) for purposes of
Section 8, "Business Day" shall mean any day on which
regular trading occurs in the principal market for any
Loaned Securities or for any securities Collateral
under any outstanding Loan hereunder and "next
Business Day" shall mean the next day on which a
transfer of Collateral may be effected in accordance
with Section 16; and (ii) in no event shall a Saturday
or Sunday be considered a Business Day.<PAGE>
<PAGE> 24
26.3 "Clearing Organization" shall mean The Depository
Trust Company, or, if agreed to by Borrower and
Lender, such other clearing agency at which Borrower
(or Borrower's agent) and Lender (or Lender's agent)
maintain accounts, or a book-entry system maintained
by a Federal Reserve Bank.
26.4 "Collateral" shall mean, whether now owned or
hereafter acquired and to the extent permitted by
applicable law, (a) any property which Borrower and
Lender agree shall be acceptable collateral prior to
the Loan and which is transferred to Lender pursuant
to Section 3 or 8 (including as collateral, for
definitional purposes, any letters of credit mutually
acceptable to Lender and Borrower), (b) any property
substituted therefor pursuant to Section 3.5, (c) all
accounts in which such property is deposited and all
securities and the like in which any cash collateral
is invested or reinvested, and (d) any proceeds of any
of the foregoing. For purposes of return of Collateral
by Lender or purchase or sale of securities pursuant
to Section 12 or 13, such term shall include
securities of the same issuer, class and quantity as
the Collateral initially transferred by Borrower to
Lender.
26.5 "Customer" shall mean any person that is a customer of
Borrower under Rule 15c3-3 under the Exchange Act or
any comparable regulation of the Secretary of the
Treasury under Section 15C of the Exchange Act (to the
extent that Borrower is subject to such Rule or
comparable regulation).
26.6 "Cutoff Time" shall mean a time on a Business Day by
which a transfer of cash, securities or other property
must be made by Borrower or Lender to the other, as
shall be agreed by Borrower and Lender in Schedule B
or otherwise orally or in writing or, in the absence
of any such agreement, as shall be determined in
accordance with market practice.
26.7 "Default" shall have the meaning assigned in Section
11.
26.8 "Exchange Act" shall mean the Securities Exchange Act
of 1934, as amended.<PAGE>
<PAGE> 25
26.9 "Federal Funds Rate" shall mean the rate of interest
(expressed as an annual rate), as published in Federal
Reserve Statistical Release H.15(519) or any
publication substituted therefor, charged for federal
funds (dollars in immediately available funds borrowed
by banks on an overnight unsecured basis) on that day
or, if that day is not a banking day in New York City,
on the next preceding banking day.
26.10 "Foreign Securities" shall mean, unless otherwise
agreed, securities that are principally cleared and
settled outside the United States.
26.11 "Government Securities" shall mean government
securities as defined in Section 3(a)(42)(A)-(C) of
the Exchange Act.
26.12 "LIBOR" shall mean for any date, the offered rate for
deposits in U.S. dollars for a period of three months
which appears on the Reuters Screen LIBO page as of
11:00 A.M., London time, on such date (or, if at least
two such rates appear, the arithmetic mean of such
rates).
26.13 "Loan" shall mean a loan of securities hereunder.
26.14 "Loaned Security" shall mean any security which is a
security as defined in the Exchange Act, transferred
in a Loan hereunder until such security (or an
identical security) is transferred back to Lender
hereunder, except that, if any new or different
security shall be exchanged for any Loaned Security by
recapitalization, merger, consolidation or other
corporate action, such new or different security
shall, effective upon such exchange, be deemed to
become a Loaned Security in substitution for the
former Loaned Security for which such exchange is
made. For purposes of return of Loaned Securities by
Borrower or purchase or sale of securities pursuant to
Section 12 or 13, such term shall include securities
of the same issuer, class and quantity as the Loaned
Securities, as adjusted pursuant to the preceding
sentence.<PAGE>
<PAGE> 26
26.15 "Plan" shall mean (a) any "employee benefit plan" as
defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974 which is subject to Part 4
of Subtitle B of Title I of such Act; (b) any "plan"
as defined in Section 4975(e)(1) of the Internal
Revenue Code of 1986; or (c) any entity the assets of
which are deemed to be assets of any such "employee
benefit plan" or "plan" by reason of the Department of
Labor's plan asset regulation, 29 C.F.R. Section
2510.3-101.
By: James J. Monnat
Title: Treasurer
Date: June 25, 1996
By:
Title:
Date:<PAGE>
<PAGE> 27
ANNEX I
Lender Acting as Agent
This Annex sets forth the terms and conditions governing
all transactions in which a party lending securities ("Agent")
in a Loan is acting as agent for one or more third parties
(each, a "Principal"). Unless otherwise defined, capitalized
terms used in this Annex shall have the meanings assigned in the
Securities Loan Agreement of which it forms a part (such
agreement, together with this Annex and any other schedules or
exhibits, referred to as the "Agreement") and, unless otherwise
specified, all section references herein are intended to refer
to sections of such Securities Loan Agreement.
1. Additional Representations and Warranties. In addition
to the representations and warranties set forth in
Section 9 of the Agreement, Agent hereby makes the
following representations and warranties, which shall
continue during the term of any Loan: Principal has
duly authorized Agent to execute and deliver the
Agreement on its behalf, has the power to so authorize
Agent and to enter into the Loans contemplated by the
Agreement and to perform the obligations of Lender
under such Loans, and has taken all necessary action
to authorize such execution and delivery by Agent and
such performance by it.
2. Identification of Principals. Agent agrees (a) to
provide Borrower prior to any Loan under the Agreement
with a written list of Principals for which it intends
to act as Agent (which list may be amended in writing
from time to time with the consent of Borrower), and
(b) to provide Borrower, before the close of business
on the next Business Day after orally agreeing to
enter into a Loan, with notice of the specific
Principal or Principals for whom it is acting in
connection with such Loan. If (i) Agent fails to
identify such Principal or Principals prior to the
close of business on such next Business Day or (ii)
Borrower shall determine in its sole discretion that
any Principal or Principals identified by Agent are
not acceptable to it, Borrower may reject and rescind
any Loan with such Principal or Principals, return to
Agent any Loaned Securities previously transferred to
Borrower and refuse any further performance under such
Loan, and Agent shall immediately return to Borrower
any Collateral previously transferred to Agent in
connection with such Loan; provided, however, that (A)
Borrower shall promptly (and in any event within one
Business Day) notify Agent of its determination to
reject and rescind such Loan and (B) to the extent<PAGE>
<PAGE> 28
that any performance was rendered by any party under
any Loan rejected by Borrower, such party shall remain
entitled to any fees or other amounts that would have
been payable to it with respect to such performance if
such Loan had not been rejected. Borrower acknowledges
that Agent shall not have any obligation to provide it
with confidential information regarding the financial
status of its Principals; Agent agrees, however, that
it will assist Borrower in obtaining from Agent's
Principals such information regarding the financial
status of such Principals as Borrower may reasonably
request.
3. Limitation of Agent's Liability. The parties expressly
acknowledge that if the representations and warranties
of Agent under the Agreement, including this Annex,
are true and correct in all material respects during
the term of any Loan and Agent otherwise complies with
the provisions of this Annex, then (a) Agent's
obligations under the Agreement shall not include a
guarantee of performance by its Principal or
Principals and (b) Borrower's remedies shall not
include a right of setoff against obligations, if any,
of Agent arising in other transactions in which Agent
is acting as principal.
4. Multiple Principals.
a. In the event that Agent proposes to act for more
than one Principal hereunder, Borrower and Agent
shall elect whether (i) to treat Loans under this
Agreement as transactions entered into on behalf
of separate Principals or (ii) to aggregate such
Loans as if they were transactions by a single
Principal. Failure to make such an election in
writing shall be deemed an election to treat
Loans under this Agreement as transactions on
behalf of separate Principals.
b. In the event that Borrower and Agent elect (or
are deemed to elect) to treat Loans under the
Agreement as transactions on behalf of separate
Principals, the parties agree that (i) Agent
will provide Borrower, together with the notice
described in Section 2(b) of this Annex, notice
specifying the portion of each Loan allocable to
the account of each of the Principals for which
it is acting (to the extent that any such Loan is
allocable to the account of more than one
Principal); (ii) the portion of any individual
Loan allocable to each Principal shall be deemed
a separate Loan under the Agreement; (iii) the
mark to market obligations of Borrower and Lender<PAGE>
<PAGE> 29
under Section 8 of the Agreement shall be
determined on a Loan-by-Loan basis (unless the
parties agree to determine such obligations on a
Principal-by-Principal basis); and (iv)
Borrower's and Lender's remedies under the
Agreement upon the occurrence of a Default shall
be determined as if Agent had entered into a
separate Agreement with Borrower on behalf of
each of its Principals.
c. In the event that Borrower and Agent elect to
treat Loans under this Agreement as if they were
transactions by a single Principal, the parties
agree that (i) Agent's notice under Section 2(b)
of this Annex need only identify the names of its
Principals but not the portion of each Loan
allocable to each Principal's account; (ii) the
mark to market obligations of Borrower and Lender
under Section 8 shall, subject to any greater
requirement imposed by applicable law, be
determined on an aggregate basis for all Loans
entered into by Agent on behalf of any Principal;
and (iii) Borrower's and Lender's remedies upon
the occurrence of a Default shall be determined
as if all Principals were a single Lender.
d. Notwithstanding any other provision of the
Agreement (including without limitation this
Annex), the parties agree that any transactions
by Agent on behalf of a Plan shall be treated as
transactions on behalf of separate Principals in
accordance with Section 4(b) of this Annex (and
all mark to market obligations of the parties
shall be determined on a Loan-by-Loan basis).
5. Interpretation of Terms. All references to "Lender" in
the Agreement shall, subject to the provisions of this
Annex (including among other provisions the
limitations on Agent's liability in Section 3 of this
Annex), be construed to reflect that (i) each
Principal shall have, in connection with any Loan or
Loans entered into by Agent on its behalf, the rights,
responsibilities, privileges and obligations of a
"Lender" directly entering into such Loan or Loans
with Borrower under the Agreement, and (ii) Agent's
Principal or Principals have designated Agent as their
sole agent for performance of Lender's obligations to
Borrower and for receipt of performance by Borrower of
its obligations to Lender in connection with any Loan
or Loans under the Agreement (including, among other
things, as agent for each Principal in connection with
transfers of securities, cash or other property and as <PAGE>
<PAGE> 30
agent for giving and receiving all notices under the
Agreement). Both Agent and its Principal or Principals
shall be deemed "parties" to the Agreement and all
references to a "party" or "either party" in the
Agreement shall be deemed revised accordingly (and any
Default by Agent under paragraph (e) or any other
applicable provision of Section 11 shall be deemed a
Default by Lender).
By: James. M. Tabacchi, CITIBANK, N.A.
Title:Vice President
Date: June 25, 1996
By:
Title:
Date:<PAGE>
<PAGE> 31
Schedule A
NAMES AND ADDRESSES FOR COMMUNICATIONS
(fill in as needed)
- ----------------------------------------------------
- ----------------------------------------------------
- ----------------------------------------------------
- ----------------------------------------------------
- ----------------------------------------------------
- ----------------------------------------------------
- ----------------------------------------------------
- ----------------------------------------------------
- ----------------------------------------------------
- ----------------------------------------------------
- ----------------------------------------------------
- ----------------------------------------------------
- ----------------------------------------------------<PAGE>
<PAGE> 32
Schedule B
DEFINED TERMS AND SUPPLEMENTAL PROVISIONS
- ----------------------------------------------------
Cutoff Time[s]
- ----------------------------------------------------
- ----------------------------------------------------
- ----------------------------------------------------
- ----------------------------------------------------
- ----------------------------------------------------
(fill in as needed)<PAGE>
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
This schedule contains summary information extracted from the WICOR, Inc. FORM
10-Q for the three and six months ended June 30, 1996 and is qualified in its
entirety by reference to such financial statements and the related footnotes.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 370,794
<OTHER-PROPERTY-AND-INVEST> 62,857
<TOTAL-CURRENT-ASSETS> 334,956
<TOTAL-DEFERRED-CHARGES> 244,153
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 1,012,760
<COMMON> 18,383
<CAPITAL-SURPLUS-PAID-IN> 223,045
<RETAINED-EARNINGS> 129,371
<TOTAL-COMMON-STOCKHOLDERS-EQ> 370,799
0
0
<LONG-TERM-DEBT-NET> 182,881
<SHORT-TERM-NOTES> 27,000
<LONG-TERM-NOTES-PAYABLE> 150,000
<COMMERCIAL-PAPER-OBLIGATIONS> 7,236
<LONG-TERM-DEBT-CURRENT-PORT> 4,904
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 419,940
<TOT-CAPITALIZATION-AND-LIAB> 1,012,760
<GROSS-OPERATING-REVENUE> 556,347
<INCOME-TAX-EXPENSE> 22,997
<OTHER-OPERATING-EXPENSES> 488,104
<TOTAL-OPERATING-EXPENSES> 511,101
<OPERATING-INCOME-LOSS> 45,246
<OTHER-INCOME-NET> 427
<INCOME-BEFORE-INTEREST-EXPEN> 45,673
<TOTAL-INTEREST-EXPENSE> 9,072
<NET-INCOME> 36,601
0
<EARNINGS-AVAILABLE-FOR-COMM> 36,601
<COMMON-STOCK-DIVIDENDS> 15,033
<TOTAL-INTEREST-ON-BONDS> 554
<CASH-FLOW-OPERATIONS> 112,343
<EPS-PRIMARY> 2.00
<EPS-DILUTED> 2.00
</TABLE>
