Form 8-K

-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, OE7Bq4uIhzJ6ZuB7sFNzdIz+88v9MmJWvg3mEjKNfmHOsMyaYX442RqdIknSOAJ1 0Bnh/IaCtUTSB0E5dRVOKA== 0001193125-03-025771.txt : 20030729 0001193125-03-025771.hdr.sgml : 20030729 20030729172730 ACCESSION NUMBER: 0001193125-03-025771 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20030725 ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits ITEM INFORMATION: Regulation FD Disclosure FILED AS OF DATE: 20030729 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PENTAIR INC CENTRAL INDEX KEY: 0000077360 STANDARD INDUSTRIAL CLASSIFICATION: SPECIAL INDUSTRY MACHINERY (NO METALWORKING MACHINERY) [3550] IRS NUMBER: 410907434 STATE OF INCORPORATION: MN FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-11625 FILM NUMBER: 03809501 BUSINESS ADDRESS: STREET 1: 5500 WAYZATA BLVD. STREET 2: SUITE 800 CITY: GOLDEN VALLEY STATE: MN ZIP: 55416 BUSINESS PHONE: 763-545-1730 FORMER COMPANY: FORMER CONFORMED NAME: PENTAIR INDUSTRIES INC DATE OF NAME CHANGE: 19790327 8-K 1 d8k.htm FORM 8-K Form 8-K

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): July 25, 2003

Commission file number 1-11625

Pentair, Inc.

(Exact name of Registrant as specified in its charter)

Minnesota		41-0907434
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification number)

5500 Wayzata Blvd, Suite 800, Golden Valley, Minnesota		55416
(Address of principal executive offices)		(Zip code)

Registrant’s telephone number, including area code: (763) 545-1730

ITEM 5. OTHER EVENTS.

On July 25, 2003, Pentair, Inc. entered into an Amended and Restated Credit Agreement dated as of July 25, 2003 among Pentair, Inc., various subsidiaries of Pentair, Inc., and various financial institutions listed therein, and Bank of America, N.A., as Administrative Agent. This Credit Agreement replaces the previously existing Long-Term Credit Agreement dated September 2, 1999.

On July 25, 2003, Pentair, Inc. entered into a Note Purchase Agreement dated as of July 25, 2003 for $50,000,000 4.93% Senior Notes, Series A, due July 25, 2013, $100,000,000 Floating Rate Senior Notes, Series B, due July 25, 2013, and $50,000,000 5.03% Senior Notes, Series C, due October 15, 2013. The proceeds of the July Notes issued were utilized to repay existing indebtedness of the Registrant.

ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.

(c)

Exhibits – The following exhibits are provided as part of the information furnished under Item 9 and Item 12 of this Current Report on Form 8-K:

Exhibit		Description
10.21		Amended and Restated Credit Agreement dated as of July 25, 2003 among Pentair, Inc., various subsidiaries of Pentair, Inc., and various financial institutions listed therein, and Bank of America, N.A., as Administrative Agent.
10.22		Note Purchase Agreement dated as of July 25, 2003 for $50,000,000 4.93% Senior Notes, Series A, due July 25, 2013, $100,000,000 Floating Rate Senior Notes, Series B, due July 25, 2013, and $50,000,000 5.03% Senior Notes, Series C, due October 15, 2013.
99.1		Pentair, Inc. press release dated July 25, 2003 announcing the execution of the foregoing credit facilities.

ITEM 9. REGULATION FD DISCLOSURE

On July 29, 2003, Pentair, Inc. issued a press release announcing execution of the foregoing credit facilities. A copy of the release is furnished herewith as Exhibit 99.1 and incorporated herein by reference. This Current Report on Form 8-K and the press release attached hereto are being furnished by Pentair pursuant to Item 9 and Item 12 of Form 8-K.

SIGNATURE

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, on July 29, 2003.

		PENTAIR, INC. Registrant

		By		/s/ David D. Harrison
				David D. Harrison
				Executive Vice President and Chief Financial Officer
				(Chief Accounting Officer)

EX-10.21 3 dex1021.txt AMENDED AND RESTATED CREDIT AGREEMENT Exhibit 10.21 AMENDED AND RESTATED CREDIT AGREEMENT dated as of July 25, 2003 among PENTAIR, INC., Various Subsidiaries of Pentair, Inc., Various Financial Institutions, BANK ONE, NA, U.S. BANK NATIONAL ASSOCIATION and THE BANK OF TOKYO - MITSUBISHI, LTD., CHICAGO BRANCH, as Co-Documentation Agents, BANK ONE, NA, LONDON BRANCH, as UK Lender, BANK ONE, NA, CANADA BRANCH, as Canadian Lender, BANK OF AMERICA, N.A., as EMU Lender, U.S. BANK NATIONAL ASSOCIATION, as Swing Line Lender, and BANK OF AMERICA, N.A., as Administrative Agent and Issuing Bank BANC OF AMERICA SECURITIES, LLC Sole Lead Arranger and Sole Book Manager ARTICLE I DEFINITIONS AND TERMS........................................................1 1.01 Definitions.......................................................................1 1.02 Rules of Interpretation..........................................................16 ARTICLE II THE COMMITTED FACILITY......................................................17 2.01 Commitments......................................................................17 2.02 Procedure for Committed Borrowings...............................................17 2.03 Conversion and Continuation Elections for Committed Borrowings...................18 2.04 Interest on Committed Loans......................................................19 2.05 Optional Prepayments.............................................................20 2.06 Reduction or Termination of the Commitments......................................20 2.07 Optional Increase in Total Commitment............................................20 ARTICLE III THE UK SUBFACILITY..........................................................21 3.01 UK Commitment....................................................................21 3.02 Procedure for UK Borrowings......................................................21 3.03 Continuation Elections for UK Loans..............................................22 3.04 Interest on UK Loans.............................................................22 3.05 Prepayments of UK Loans..........................................................22 3.06 Participations in UK Loans.......................................................22 ARTICLE IV THE CANADIAN SUBFACILITY....................................................23 4.01 Canadian Commitment..............................................................23 4.02 Procedure for Canadian Borrowings................................................24 4.03 Conversion and Continuation Elections for Canadian Loans.........................24 4.04 Interest on Canadian Loans.......................................................25 4.05 Prepayments of Canadian Loans....................................................25 4.06 Participations in Canadian Loans.................................................26 4.07 Maximum Rate of Return...........................................................27 ARTICLE V THE EMU SUBFACILITY.........................................................27 5.01 EMU Commitment...................................................................27 5.02 Procedure for EMU Borrowings.....................................................28 5.03 Continuation Elections for EMU Loans.............................................28 5.04 Interest on EMU Loans............................................................28 5.05 Prepayments of EMU Loans.........................................................28 5.06 Participations in EMU Loans......................................................29

-i- ARTICLE VI THE SWING LINE SUBFACILITY..................................................30 6.01 Swing Line Commitment............................................................30 6.02 Procedure for Swing Line Borrowings..............................................30 6.03 Interest on Swing Line Loans.....................................................31 6.04 Prepayments of Swing Line Loans..................................................31 6.05 Participations in Swing Line Loans...............................................31 6.06 Refunding of Swing Line Loans....................................................31 6.07 Funding Participations in Swing Line Loans.......................................32 ARTICLE VII THE LETTER OF CREDIT SUBFACILITY............................................32 7.01 Letters of Credit................................................................32 7.02 Issuance, Amendment and Renewal of Letters of Credit.............................33 7.03 Participations, Drawings and Reimbursements......................................35 7.04 Repayment of Participations......................................................36 7.05 Role of the Issuing Bank.........................................................37 7.06 Obligations Absolute.............................................................38 7.07 Letter of Credit Fees............................................................39 7.08 Uniform Customs and Practice.....................................................39 7.09 Letters of Credit for the Account of Subsidiaries................................39 ARTICLE VIII COMPETITIVE BID FACILITY....................................................39 8.01 Competitive Bid Loans............................................................39 8.02 Procedures for Bid Borrowings....................................................40 ARTICLE IX GENERAL CREDIT TERMS........................................................42 9.01 Repayment........................................................................42 9.02 Payment of Interest..............................................................42 9.03 Payments.........................................................................43 9.04 Adjustment of Sublimits..........................................................43 9.05 Loan Accounts....................................................................43 9.06 Notes............................................................................43 9.07 Fees.............................................................................44 9.08 Computation of Fees and Interest.................................................44 9.09 Currency Exchange Fluctuations...................................................44 9.10 Participation Obligations Unconditional..........................................45 9.11 Order and Proration of Payments..................................................45

-ii- 9.12 Judgment Currency................................................................47 ARTICLE X CHANGE IN CIRCUMSTANCES.....................................................48 10.01 Increased Cost and Reduced Return................................................48 10.02 Limitation on Types of Loan......................................................49 10.03 Changes in Law Rendering Eurocurrency Loans Unlawful.............................49 10.04 Funding Losses...................................................................50 10.05 Taxes............................................................................51 10.06 Right of Lenders to Fund through Other Offices...................................52 10.07 Discretion of Lenders as to Manner of Funding....................................52 10.08 Mitigation of Circumstances; Replacement of Affected Lender......................53 10.09 Economic and Monetary Union in the European Community............................53 10.10 Conclusiveness of Statements; Survival of Provisions.............................53 ARTICLE XI CONDITIONS TO CREDIT EXTENSIONS.............................................54 11.01 Initial Credit Extension.........................................................54 11.02 All Credit Extensions............................................................55 11.03 Certain Credit Extensions........................................................55 ARTICLE XII REPRESENTATIONS AND WARRANTIES..............................................56 12.01 Corporate Existence and Power....................................................56 12.02 Corporate and Governmental Authorization; Contravention..........................57 12.03 Binding Effect...................................................................57 12.04 Financial Information............................................................57 12.05 Litigation.......................................................................58 12.06 Compliance with ERISA............................................................58 12.07 Taxes............................................................................58 12.08 Subsidiaries.....................................................................58 12.09 Not an Investment Company........................................................58 12.10 Environmental Matters............................................................58 12.11 Tax Shelter Regulations..........................................................59 12.12 Insurance........................................................................59 12.13 Default..........................................................................59 12.14 Use of Proceeds..................................................................59 ARTICLE XIII COVENANTS...................................................................59 13.01 Information......................................................................59

-iii- 13.02 Maximum Leverage Ratio...........................................................61 13.03 Minimum Interest Coverage Ratio..................................................61 13.04 Negative Pledge..................................................................61 13.05 Consolidations, Mergers and Sales of Assets; Acquisitions........................63 13.06 Subsidiary Debt..................................................................63 13.07 Use of Proceeds..................................................................63 13.08 Compliance with Contractual Obligations and Law..................................64 13.09 Securitization Transactions......................................................64 13.10 Insurance........................................................................64 13.11 Ownership of Borrowers...........................................................64 13.12 Subsidiary Guaranty..............................................................64 ARTICLE XIV EVENT OF DEFAULT............................................................65 14.01 Events of Default................................................................65 14.02 Notice of Default................................................................67 14.03 Cash Collateral for Letters of Credit............................................67 ARTICLE XV THE ADMINISTRATIVE AGENT....................................................68 15.01 Appointment and Authorization....................................................68 15.02 Delegation of Duties.............................................................69 15.03 Liability of Administrative Agent................................................69 15.04 Reliance by Administrative Agent.................................................69 15.05 Notice of Default................................................................69 15.06 Credit Decision..................................................................70 15.07 Indemnification of Administrative Agent..........................................70 15.08 Administrative Agent in Individual Capacity......................................71 15.09 Successor Administrative Agent...................................................71 15.10 Withholding Tax..................................................................72 15.11 Funding Reliance.................................................................72 15.12 Other Agents.....................................................................73 15.13 Subsidiary Guaranty..............................................................73 15.14 Administrative Agent may file Proofs of Claim....................................73 ARTICLE XVI MISCELLANEOUS...............................................................74 16.01 Notices..........................................................................74 16.02 No Waiver........................................................................75

-iv- 16.03 Expenses; Documentary Taxes; Indemnification.....................................75 16.04 Amendments and Waivers...........................................................76 16.05 Collateral.......................................................................76 16.06 Successors and Assigns...........................................................76 16.07 Governing Law....................................................................79 16.08 Counterparts; Effectiveness......................................................79 16.09 Borrowers' Agent.................................................................79 16.10 Confidentiality..................................................................79 16.11 Waiver of Jury Trial.............................................................80 16.12 Consent to Jurisdiction..........................................................80 ARTICLE XVII GUARANTY....................................................................81 17.01 Guaranty.........................................................................81 17.02 Guaranty Unconditional...........................................................81 17.03 Discharge only upon Payment in Full; Reinstatement in Certain Circumstances......82 17.04 Waiver by Company................................................................82 17.05 Subrogation......................................................................82 17.06 Stay of Acceleration.............................................................82 ARTICLE XVIII AMENDMENT AND RESTATEMENT; EXISTING AGREEMENTS..............................82 18.01 Amendment and Restatement........................................................82 18.02 Existing Agreement...............................................................83 18.03 Existing 364-Day Agreement.......................................................83

-v- Schedules Schedule 1.01 Pricing Schedule Schedule 1.02 Mandatory Cost Formulae Schedule 2.01 Commitments and Pro Rata Shares Schedule 7.01 Existing Letters of Credit Schedule 11.03 Matters To Be Included in Opinions of Foreign Legal Counsel to Borrowers Schedule 12.05 Litigation Schedule 13.04 Liens Schedule 13.06 Subsidiary Debt Schedule 16.01 Notice Addresses Exhibits Exhibit A Form of Note (Section 1.01) Exhibit B Form of Notice of Committed Borrowing (Section 1.01) Exhibit C-1 Form of Notice of Conversion/Continuation (Company) (Section 1.01) Exhibit C-2 Form of Notice of Conversion/Continuation (Canadian Borrowers) (Section 1.01) Exhibit D Form of Competitive Bid Request (Section 8.02) Exhibit E Form of Invitation for Competitive Bids (Section 1.01) Exhibit F Form of Competitive Bid (Section 8.02) Exhibit G-1 Form of Request for Increase in Commitments (Section 2.07) Exhibit G-2 Form of Request for Consent to Increase (Section 2.07) Exhibit G-3 Form of Request for Additional Committed Lender (Section 2.07) Exhibit H Form of Assignment and Acceptance (Section 1.01) Exhibit I Form of Subsidiary Guaranty Exhibit J Form of Borrower Designation Exhibit K Form of Confirmation of Subsidiary Guaranty -vi- AMENDED AND RESTATED CREDIT AGREEMENT THIS AMENDED AND RESTATED CREDIT AGREEMENT dated as of July 25, 2003 (this "Agreement") is among PENTAIR, INC. (the "Company"); PENTAIR UK GROUP LIMITED ("Pentair UK"); PENTAIR CANADA INC. ("Pentair Canada"); EUROPENTAIR GmbH ("EuroPentair"); PENTAIR GLOBAL SARL ("Pentair Global"), any other subsidiary of the Company designated as a "Canadian Borrower," "EMU Borrower" or "UK Borrower" pursuant to the terms hereof (the Company, Pentair UK, Pentair Canada, EuroPentair, Pentair Global and each such designated subsidiary are sometimes referred to collectively as the "Borrowers" or each individually as a "Borrower"); the financial institutions which from time to time are parties hereto as lenders under the Committed Facility (collectively the "Committed Lenders" and each individually a "Committed Lender"); BANK ONE, NA, LONDON BRANCH, in its capacity as lender under the UK subfacility (the "UK Lender"); BANK ONE, NA, CANADA BRANCH, in its capacity as lender under the Canadian subfacility (the "Canadian Lender"); BANK OF AMERICA, N.A., in its capacity as lender under the EMU subfacility (the "EMU Lender"); BANK OF AMERICA, N.A., as Issuing Bank; U.S. BANK NATIONAL ASSOCIATION, as Swing Line Lender; BANK ONE, NA, U.S. BANK NATIONAL ASSOCIATION and THE BANK OF TOKYO - MITSUBISHI, LTD., CHICAGO BRANCH, as Co-Documentation Agents; and BANK OF AMERICA, N.A., as Administrative Agent. WITNESSETH: WHEREAS, the Lenders are willing to make available (a) a committed revolving credit facility of up to US$500,000,000, with subfacilities for (i) loans to the UK Borrowers by the UK Lender, (ii) loans to the Canadian Borrowers by the Canadian Lender, (iii) loans to the EMU Borrowers by the EMU Lender, (iv) letters of credit issued by the Issuing Bank and (v) swing line loans to the Company by the Swing Line Lender and (b) an uncommitted competitive bid facility, in each case subject to the terms and conditions set forth herein; NOW, THEREFORE, the parties hereto agree as follows: ARTICLE I DEFINITIONS AND TERMS 1.01 Definitions. For the purposes of this Agreement, in addition to the definitions set forth above, the following terms shall have the respective meanings set forth below: Absolute Rate - see subsection 8.02(c)(ii)(C). Acquisition means any transaction or series of related transactions that result, directly or indirectly, in (a) the acquisition of all or substantially all of the assets of a Person, or of all or substantially all of any business or division of a Person, (b) the acquisition of in excess of 50% of the capital stock, partnership interests, membership interests or equity of any Person, or otherwise causing any Person to become a Subsidiary, or (c) a merger or consolidation or any other combination with another Person (other than a Person that is a Subsidiary) provided that the Company or the Subsidiary is the surviving entity. Adjusted Eurocurrency Rate means, for any Interest Period for a Eurocurrency Loan made to the Company, a rate of interest per annum determined pursuant to the following formula: Eurocurrency Rate Adjusted Eurocurrency = ----------------------- Rate 1 - Reserve Requirement Administrative Agent means Bank of America in its capacity as administrative agent for the Lenders hereunder, together with any replacement administrative agent arising under Article XV. Affected Lender means any Committed Lender which has made a claim for compensation under Section 10.01 or 10.05 or has given a notice (which has not been withdrawn) of the type described in Section 10.02 or 10.03. Affected Loan - see Section 10.03. Affiliate means, as to any Person, any other Person which, directly or indirectly, is in control of, is controlled by, or is under common control with such Person. A Person shall be deemed to control another Person if the controlling Person possesses, directly or indirectly, the power to direct or cause the direction of the management and policies of such other Person, whether through the ownership of voting securities or membership interests, by contract or otherwise. Agent-Related Persons means the Administrative Agent and any successor thereto in such capacity hereunder, together with their respective Affiliates and the officers, directors, trustees, employees, agents and attorneys-in-fact of such Persons and Affiliates. Agreement - see the Preamble. Applicable Currency means, with respect to any Loan, the currency in which such Loan is denominated. Applicable Lending Office means, as to any Lender, the office or offices of such Lender (or of an Affiliate of such Lender) which shall be making or maintaining any Loan hereunder as specified from time to time by such Lender to the Company and the Administrative Agent. Applicable Margin means a rate per annum determined in accordance with Schedule 1.01. Assignee - see Section 16.06. Assignment and Acceptance means an Assignment and Acceptance substantially in the form of Exhibit H. Available Currency means (i) with respect to Committed Loans to the Company, British Pounds Sterling, Canadian Dollars and Euros, and (ii) with respect to the EMU Loans, British Pounds Sterling and Euros. -2- Bank of America means Bank of America, N.A. Bid Borrowing means a borrowing hereunder consisting of one or more Bid Loans made to the Company on the same day by one or more Committed Lenders and having the same Interest Period. Bid Loan means a Loan made in US Dollars by a Committed Lender to the Company under Article VIII. Borrower - see the Preamble. Borrowing means a Bid Borrowing or a Committed Borrowing. Borrowing Date means, with respect to any Loan, the date on which such Loan is to be made. British Pounds Sterling means the lawful currency of the United Kingdom of Great Britain and Northern Ireland. Business Day means any day other than a Saturday or Sunday or a day on which commercial banking institutions located in Charlotte, Chicago, Minneapolis, New York or San Francisco are authorized or required by law or other governmental action to close and (i) with respect to all notices, determinations, fundings and payments in connection with any Eurocurrency Loan, any day that is also a day for trading by and between banks in the Applicable Currency in the applicable interbank eurocurrency market; (ii) with respect to all matters relating to UK Loans, Canadian Loans or EMU Loans, a day on which the UK Lender, the Canadian Lender or the EMU Lender, as the case may be, is open for business at its Payment Office and (iii) if a reference to Business Day relates to the date for the payment or purchase of any sum denominated in Euro, in addition, a day which is a Target Day. Canadian Borrowers means, collectively, Pentair Canada and any other Subsidiary of the Company organized under the laws of Canada that the Company designates as a Canadian Borrower hereunder by written notice to the Administrative Agent substantially in the form of Exhibit J. Canadian Dollars or CAN $ means the lawful currency of Canada. Canadian Lender - see the Preamble. Canadian Loan - see Section 4.01. Canadian Participation Funding Notice means a written notice from the Canadian Lender informing the Administrative Agent that an Event of Default has occurred and is continuing and directing the Administrative Agent to notify all Committed Lenders to fund their participations in the Canadian Loans as provided in Section 4.06. Canadian Sublimit means the Dollar Equivalent principal amount of US$50,000,000, as such amount may be adjusted from time to time pursuant to Section 9.04. -3- Closing Date means July 25, 2003. Code means the Internal Revenue Code of 1986, as amended, and any regulations promulgated thereunder. Committed Borrowing means a borrowing hereunder consisting of Committed Loans made to the Company on the same day by the Committed Lenders in accordance with their Pro Rata Shares and, in the case of a borrowing of Eurocurrency Loans, in the same currency and having the same Interest Period. Committed Lender - see the Preamble. Committed Loan means a loan made by a Committed Lender to the Company pursuant to Article II. Commitment means, with respect to any Committed Lender, its commitment to make Committed Loans and to participate in the various subfacilities hereunder in the amount set forth on Schedule 2.01, as adjusted from time to time in accordance with the terms hereof. Company - see the Preamble. Competitive Bid means an offer by a Committed Lender to make a Bid Loan in accordance with subsection 8.02(c). Competitive Bid Request - see Section 8.02. Computation Date means the last Business Day of each calendar month, each date on which a Borrower borrows, converts or continues any Loan hereunder and each date on which the Dollar Equivalent principal amount of an Affected Loan is required to be determined under Section 10.03. Consolidated Shareholders' Equity means, at any date, the consolidated shareholders' equity of the Company and the Consolidated Subsidiaries. Consolidated Subsidiary means, as of any date, any Subsidiary or other entity the accounts of which would be consolidated with those of the Company in its consolidated financial statements as of such date. Conversion/Continuation Date means the date on which a Committed Loan or a Canadian Loan is converted from a Loan of any Type to the other Type or is continued as a Eurocurrency Loan for a new Interest Period. Credit Extension means the making of a Loan or the issuance of a Letter of Credit hereunder. Debt of any Person means at any date, without duplication, (i) all obligations of such Person for borrowed money, (ii) all obligations of such Person evidenced by bonds, debentures, notes or other similar instruments, (iii) all obligations of such Person to pay the deferred -4- purchase price of property or services, except trade accounts payable arising in the ordinary course of business, (iv) all obligations of such Person as lessee under capital leases, (v) all Debt of others secured by a Lien on any asset of such Person, whether or not such Debt is assumed by such Person, (vi) the aggregate outstanding investment or claim held by purchasers, assignees or transferees of (or of interests in) receivables of such Person in connection with any Securitization Transaction, (vii) all non-contingent reimbursement obligations of such Person under letters of credit, and (viii) all Debt (as defined above) of others Guaranteed by such Person. Dollar Equivalent means, with respect to a specified amount of any currency, the amount of US Dollars into which such amount of such currency would be converted, based on the applicable Spot Rate of Exchange. EBITDA means, for any period, the sum of the consolidated net income of the Company for such period excluding the effect of any extraordinary or non-recurring gains and any extraordinary or non-recurring non-cash losses in such period plus, to the extent deducted in determining such consolidated net income, Interest Expense, income tax expense, depreciation and amortization for such period. EMU Borrowers means, collectively, EuroPentair, Pentair Global and any other Subsidiary of the Company organized under the laws of Germany or Luxembourg that the Company designates as an EMU Borrower hereunder by written notice to the Administrative Agent substantially in the form of Exhibit J. EMU German Sublimit means the Dollar Equivalent principal amount of US$75,000,000, as such amount may be adjusted from time to time pursuant to Section 9.04. EMU Legislation means legislative measures of the European Council for the introduction of, changeover to or operation of a single or unified European currency (whether known as the euro or otherwise), being in part the implementation of the third stage of EMU. EMU Lender - see the Preamble. EMU Loan - see Section 5.01. EMU Lux Sublimit means the Dollar Equivalent principal amount of US$75,000,000, as such amount may be adjusted from time to time pursuant to Section 9.04. EMU Participation Funding Notice means a written notice from the EMU Lender informing the Administrative Agent that an Event of Default has occurred and is continuing and directing the Administrative Agent to notify all Committed Lenders to fund their participations in the EMU Loans as provided in Section 5.06. Environmental Claims means all claims, however asserted, by any Governmental Authority or other Person alleging potential liability or responsibility for violation of any Environmental Law, or for release or injury to the environment. Environmental Laws means all federal, state and local laws, statutes, common law duties, rules, regulations, ordinances and codes, together with all administrative orders, directed duties, -5- requests, licenses, authorizations and permits of, and agreements with, any judicial, regulating or other governmental authority, in each case relating to environmental, health, safety and land use matters. ERISA means the Employee Retirement Income Security Act of 1974, as amended from time to time, and any successor statute and all rules and regulations promulgated thereunder. ERISA Affiliate, as applied to the Company, means any Person or trade or business which is a member of a group which is under common control with the Company, who, together with the Company, is treated as a single employer within the meaning of Section 414(b) or (c) of the Code or, for purposes of Section 412 of the Code, Section 414(m) or (o) of the Code. Euro or (euro) means the single currency of Participating Member States. Eurocurrency Loan means a Loan for which the rate of interest is determined by reference to the Eurocurrency Rate or the Adjusted Eurocurrency Rate. Eurocurrency Rate means, for any Eurocurrency Loan for any Interest Period, (a) in the case of a US Dollar Eurocurrency Loan, the rate of interest per annum (carried to five decimal places) determined by the Administrative Agent as the rate at which deposits in US Dollars in the approximate amount of the US Dollar Eurocurrency Loan of Bank of America included in the applicable Borrowing, and having a maturity comparable to such Interest Period, are offered by Bank of America's Grand Cayman Branch, Grand Cayman, B.W.I. (or such other office as may be designated by Bank of America from time to time) to major banks in the offshore interbank market at approximately 10:00 a.m. (Chicago time) two Business Days prior to the commencement of such Interest Period; (b) in the case of a UK Loan, (i) the rate per annum (rounded upward, if necessary, to the nearest 1/100 of 1%) which appears on the Reuters Screen LIBO Page as the London interbank offered rate for deposits in British Pounds Sterling at approximately 11:00 A.M. (London, England time) on the first day of such Interest Period for a term comparable to such Interest Period; provided that if more than one applicable rate is specified on the Reuters Screen LIBO Page, the rate shall be the arithmetic mean of all such rates; or (ii) if for any reason the rate described in clause (i) is not available, the rate per annum (carried to five decimal places) determined by the UK Lender as the rate at which deposits in British Pounds Sterling in the approximate amount of such UK Loan, and having a maturity comparable to such Interest Period, are offered by the UK Lender to major banks in the interbank market at approximately 11:00 A.M. (London, England time) on the first day of such Interest Period; and (c) in the case of any other Eurocurrency Loan, the rate per annum (rounded upward, if necessary, to the nearest 1/100 of 1%) determined by the Administrative Agent (or, in the case of UK Loans, Canadian Loans or EMU Loans, by the UK Lender, the Canadian Lender or the EMU Lender, respectively) as (i) the rate which appears on Telerate Page 3750 or the other appropriate Telerate Page (or any successor page) as the London interbank offered rate for deposits in the Applicable Currency at approximately 11:00 A.M. (London, England time) two Business Days prior to the first day of such Interest Period for a term comparable to such Interest Period; or (ii) if for any reason the rate described in clause (i) is not available, the rate per annum -6- which appears on the Reuters Screen LIBO Page as the London interbank offered rate for deposits in the Applicable Currency at approximately 11:00 A.M. (London, England time) two Business Days prior to the first day of such Interest Period for a term comparable to such Interest Period; provided that if more than one applicable rate is specified on the Reuters Screen LIBO Page, the rate shall be the arithmetic mean of all such rates (carried to five decimal places).] EuroPentair - see the Preamble. Event of Default means any event described in Section 14.01. Existing 364-Day Agreement means the 364-Day Credit Agreement dated as of September 2, 1999 among the Company and various financial institutions, including Bank of America, as Administrative Agent. Existing Agreement means the Long Term Credit Agreement dated as of September 2, 1999 among the Company, various Subsidiaries of the Company and various financial institutions, including Bank of America, as Administrative Agent. Existing Letter of Credit means a letter of credit listed on Schedule 7.01. Facility Fee Rate means a rate determined in accordance with Schedule 1.01. Federal Funds Rate means, for any day, the rate per annum equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers on such day, as published by the Federal Reserve Bank of New York on the Business Day next succeeding such day; provided that (a) if such day is not a Business Day, the Federal Funds Rate for such day shall be such rate on such transactions on the next preceding Business Day as so published on the next succeeding Business Day, and (b) if no such rate is so published on such next succeeding Business Day, the Federal Funds Rate for such day shall be the average rate charged to the Administrative Agent (in its individual capacity) on such day on such transactions as determined by the Administrative Agent. Fronting Margin means a rate determined in accordance with Schedule 1.01. Foreign Overnight Rate means, for any day with respect to any amount in any currency (other than US Dollars), the rate of interest per annum at which overnight deposits in such currency, in an amount approximately equal to the amount with respect to which such rate is being determined, would be offered for such day to major banks in the London or other applicable offshore interbank market by (i) in the case of an amount payable by or to the UK Lender, the Canadian Lender or the EMU Lender, such Lender, and (ii) in the case of any other amount, Bank of America's London Branch. Foreign Subsidiary means any Subsidiary (i) organized under the laws of a jurisdiction other than the United States or a state thereof and (ii) which conducts substantially all of its business and operations in a jurisdiction other than the United States. FRB means the Board of Governors of the Federal Reserve System (or any successor). -7- GAAP means generally accepted accounting principles set forth in pronouncements of the Financial Accounting Standards Board, the Accounting Principles Board or the American Institute of Certified Public Accountants or which have other substantial authoritative support and are applicable in the circumstances as of the date of a report, as such principles are from time to time supplemented and amended. Governmental Authority means any federal, state, municipal, national or other governmental department, commission, board, bureau, court, agency or instrumentality or political subdivision thereof or any entity or officer exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to any government or any court, in each case whether associated with a state of the United States, the United States, or a foreign entity or government. Guarantee by any Person means any obligation, contingent or otherwise, of such Person directly or indirectly guaranteeing any Debt of any other Person or in any manner providing for the payment of any Debt of any other Person or otherwise protecting the holder of such Debt against loss (whether by agreement to keep-well, to purchase assets, goods, securities, services, or to take-or-pay or otherwise); provided that the term Guarantee shall not include endorsements for collection or deposit in the ordinary course of business. The term "Guarantee" used as a verb has a correlative meaning. Honor Date - see subsection 7.03(b). Indemnified Liabilities - see subsection 16.03(b). Indemnified Person - see subsection 16.03(b). Interest Coverage Ratio means, for any period, the ratio of (i) EBITDA plus rent expense for such period to (ii) Interest Expense plus rent expense of the Company and its Subsidiaries for such period. Interest Expense means the sum, without duplication, of consolidated interest expense (including the interest component of capital leases, the interest component of Synthetic Lease Obligations, facility, commitment and usage fees, and fees for standby letters of credit) plus consolidated yield or discount accrued on the aggregate outstanding investment or claim held by purchasers, assignees or other transferees of (or of interests in) receivables of the Company and its Subsidiaries in connection with any Securitization Transaction (regardless of the accounting treatment of such Securitization Transaction). Interest Payment Date means (a) as to any US Base Rate Loan or Prime Rate Loan, the last Business Day of each calendar quarter; (b) as to any Swing Line Loan, each Business Day (or, so long as the Committed Lenders have not become obligated to purchase participations in Swing Line Loans pursuant to Section 6.07, as otherwise agreed by the Company and the Swing Line Lender), and (c) as to any other Loan, the last day of each Interest Period applicable to such Loan and, in the case of any such Loan other than a Bid Loan which has an Interest Period which exceeds three months, the three-month anniversary of the first day of such Interest Period. -8- Interest Period means (a) for any Eurocurrency Loan, a period commencing on the date such Eurocurrency Loan is made, continued or converted and each subsequent period commencing on the last day of the immediately preceding Interest Period for such Eurocurrency Loan and ending, at the applicable Borrower's option in accordance with the terms hereof, on the date one, two, three or six months thereafter (or such other periods as may be agreed to by the applicable Borrower, the Administrative Agent and each applicable Lender); and (b) for any Bid Loan, a period of not less than 7 nor more than 183 days; provided that: (i) if an Interest Period would end on a day which is not a Business Day, such Interest Period shall be extended to the next Business Day (unless, in the case of a Eurocurrency Loan, such extension would cause such Interest Period to end in the succeeding calendar month, in which case such Interest Period shall end on the next preceding Business Day); and (ii) no Interest Period shall extend past the scheduled Termination Date. Invitation for Competitive Bids means a notice substantially in the form of Exhibit E. IRS means the Internal Revenue Service of the United States. Issue means, with respect to any Letter of Credit, to issue or to extend the expiry of, or to renew or increase the amount of, such Letter of Credit; and the terms "Issued," "Issuing" and "Issuance" have corresponding meanings. Issuing Bank means Bank of America in its capacity as issuer of one or more Letters of Credit hereunder, together with any replacement therefor in such capacity. L/C Advance means each Lender's participation in any L/C Borrowing in accordance with its Pro Rata Share. L/C Amendment Application means an application form for amendment of an outstanding Letters of Credit as shall at the relevant time be in use by the Issuing Bank. L/C Application means an application form for issuance of a standby letter of credit as shall at the relevant time be in use by the Issuing Bank. L/C Borrowing means an extension of credit resulting from a drawing under any Letter of Credit which shall not have been reimbursed on the date when made nor converted into an US Base Rate Loan under subsection 7.03(c). L/C Fee Rate means a rate per annum determined in accordance with Schedule 1.01. L/C Obligations means at any time the sum of (a) the aggregate undrawn Dollar Equivalent amount of all Letters of Credit then outstanding, plus (b) the Dollar Equivalent amount of all unreimbursed drawings under all Letters of Credit, including all outstanding L/C Borrowings. -9- L/C-Related Documents means the Letters of Credit, the L/C Applications, the L/C Amendment Applications and any other document relating to any Letter of Credit, including any of the Issuing Bank's standard form documents for letter of credit issuances. Lead Arranger means Banc of America Securities, LLC. Lenders means the Committed Lenders, the UK Lender, the Canadian Lender, the EMU Lender, the Swing Line Lender and the Issuing Bank; and Lender means any of the foregoing. Letter of Credit means any standby letter of credit Issued by the Issuing Bank pursuant to Article VII (including any Existing Letter of Credit deemed to be a Letter of Credit pursuant to Section 7.01(a)). Leverage Ratio means, as of any date, the ratio of (a) the sum (without duplication) of (i) all Debt of the Company and its Consolidated Subsidiaries plus (ii) all Synthetic Lease Obligations of the Company and its Consolidated Subsidiaries, all determined on a consolidated basis, to (b) EBITDA for the period of four consecutive fiscal quarters most recently ended on or before such date for which financial statements have been delivered pursuant to subsection 13.01(a) or (b); provided that for purposes of calculating EBITDA pursuant to this clause (b), the consolidated net income of any Person or business unit acquired (or divested or liquidated, if the sales revenue generated by such Person or business unit in the 12 months prior to such divestiture or liquidation was $25,000,000 or more) by the Company or any Subsidiary during such period (plus, to the extent deducted in determining such consolidated net income, Interest Expense, income tax expense, depreciation and amortization of such Person or business unit) shall be included (or, in the case of a divestiture or liquidation, excluded) on a pro forma basis for such period (assuming the consummation of each such acquisition and the incurrence or assumption of any Debt in connection therewith (or the consummation of such divestiture or liquidation) occurred on the first day of such period) in accordance with Article 11 of Regulation S-X of the Securities and Exchange Commission. LIBO Rate means, for any Business Day, the offered rate for deposits in US Dollars (rounded upward, if necessary, to the nearest 1/100 of 1%), for delivery of such deposits on such day, for a period of one month, which appears on the Reuters Screen LIBO page as of the time selected by the Swing Line Lender on such day. If at least two rates appear on the Reuters Screen LIBO Page, the rate shall be the arithmetic mean of such rates (rounded as provided above). If fewer than two rates appear, the rate may be determined by the Swing Line Lender based on other services selected for such purpose by the Swing Line Lender or based on rates offered to the Swing Line Lender for US Dollar deposits in the interbank Eurodollar market. Lien means any interest in property securing any obligation owed to, or a claim by, a Person other than the owner of the property, whether such interest is based on the common law, statute or contract, and including but not limited to the lien or security interest arising from a mortgage, encumbrance, pledge, security agreement, conditional sale or trust receipt or a lease, consignment or bailment for security purposes. Loans means Committed Loans, UK Loans, Canadian Loans, EMU Loans, Swing Line Loans and Bid Loans; and Loan means any of the foregoing. -10- Mandatory Cost means a rate per annum determined in accordance with Schedule 1.02. Material Adverse Effect means a material adverse effect on (i) the business, assets, operations or condition (financial or otherwise) of the Company and its Subsidiaries taken as a whole or (ii) the ability of any Borrower to perform its obligations hereunder. Material Financial Obligations means Debt or Synthetic Lease Obligations of the Company or any Subsidiary in an aggregate amount (for all applicable Debt and Synthetic Lease Obligations, but without duplication) equal to or greater than the lesser of (i) a Dollar Equivalent amount of US$25,000,000 or (ii) at any time the Company or any Subsidiary has Debt outstanding, obtained through one or more public or private placements thereof to institutional investors, with a Dollar Equivalent principal amount of US$25,000,000 or more outstanding, which has a threshold for cross-default (similar to subsection 14.01(e)) lower than a Dollar Equivalent amount of US$25,000,000, the lowest threshold amount under any such financing. Material Subsidiary means (a) each Borrower other than the Company and (b) each other Subsidiary of the Company that at the time of determination constitutes a "significant subsidiary" (as such term is defined in Regulation S-X of the Securities and Exchange Commission as in effect on the date of this Agreement). Minimum Tranche means (a) in the case of US Dollars, US$5,000,000 or a higher integral multiple of US$1,000,000; and (b) in the case of any Available Currency, an amount equal to US$5,000,000 or a higher integral multiple of 1,000,000 units of such currency. Moody's means Moody's Investors Service, Inc. Note means a promissory note issued by a Borrower to a Lender substantially in the form of Exhibit A, with appropriate insertions, evidencing Loans by such Lender to such Borrower hereunder. Notice of Committed Borrowing means a notice substantially in the form of Exhibit B executed by a Senior Financial Officer of the Company. Notice of Conversion/Continuation means a notice substantially in the form of Exhibit C-1 of a continuation or conversion of Committed Loans pursuant to subsection 2.03(b) or a notice substantially in the form of Exhibit C-2 of the conversion or continuation of a Canadian Loan pursuant to subsection 4.03(b). Other Taxes means any present or future stamp, court or documentary taxes or any other excise or property taxes, charges or similar levies which arise from any payment made hereunder or from the execution, delivery, performance, enforcement or registration of, or otherwise with respect to, this Agreement or any Note. Participant - see subsection 16.06(e). Participating Member State means any member state of the European Union that has elected the Euro as its lawful currency. -11- Payment Office means, with respect to the Administrative Agent, the UK Lender, the Canadian Lender, the EMU Lender and the Swing Line Lender, as the context may require, the office of such Person specified on Schedule 16.01 or such other office as such Person may from time to time designate. Payment Sharing Notice means any of (a) a Canadian Participation Funding Notice, (b) a EMU Participation Funding Notice, (c) a UK Participation Funding Notice or (d) a written notice from any Committed Lender to the Administrative Agent and the Company (i) advising them that an Event of Default has occurred and is continuing and (ii) directing the Administrative Agent to allocate all payments and other recoveries received from or on behalf of the Company in accordance with subsection 9.11(b). PBGC means the Pension Benefit Guaranty Corporation and any successor thereto. Pentair Canada - see the Preamble. Pentair Global - see the Preamble. Pentair UK - see the Preamble. Permitted Acquisition means any Acquisition by the Company or a Subsidiary which satisfies each of the following requirements: (i) no Event of Default or Unmatured Event of Default has occurred and is continuing at the time of, or will result from, such Acquisition; (ii) if the aggregate consideration to be paid by the Company and its Subsidiaries in connection with such Acquisition (including Debt assumed, but excluding capital stock of the Company) exceeds US$10,000,000, the Company shall have delivered to the Administrative Agent a certificate demonstrating that, after giving effect to such Acquisition, the Company will be in pro forma compliance with Sections 13.02 and 13.03; and (iii) in the case of the Acquisition of any Person, the Board of Directors (or equivalent governing body) of the Person being acquired shall have approved such Acquisition. Person means an individual, limited liability company, partnership, corporation, trust, unincorporated organization, association, joint venture or other entity or a government or agency or political subdivision thereof. Plan means at any time an employee pension benefit plan which is covered by Title IV of ERISA or subject to the minimum funding standards under Section 412 of the Code and is either (i) maintained by the Company or any ERISA Affiliate for employees of the Company or such ERISA Affiliate or (ii) maintained pursuant to a collective bargaining agreement or any other arrangement under which more than one employer makes contributions and to which the Company or any ERISA Affiliate is then making or accruing an obligation to make contributions or has within the preceding five plan years made contributions. Prime Rate means, for any day, the rate of interest per annum designated by the Canadian Lender as its "prime rate" at its offices in Toronto, Canada. The "prime rate" set by the Canadian Lender based upon various factors including its costs and desired return, general economic conditions and other factors, and is used as a reference point for pricing some loans, which may be priced at, above or below such announced rate. Any change in the prime rate -12- announced by the Canadian Lender shall take effect at the opening of business on the day specified in the public announcement of such change. Prime Rate Loan means a Canadian Loan for which the rate of interest is determined by reference to the Prime Rate. Pro Rata Share means, with respect to any Committed Lender at any time, the percentage equivalent (expressed as a decimal, rounded to the ninth decimal place) at such time of (a) prior to termination of the Commitments, (i) such Committed Lender's Commitment divided by (ii) the Total Commitment; and (b) after termination of the Commitments, (i) the aggregate Dollar Equivalent principal amount of such Committed Lender's Loans plus the sum of the participations of such Committed Lender in the aggregate Dollar Equivalent principal amount of all UK Loans, Canadian Loans, EMU Loans, Swing Line Loans and (without duplication) L/C Obligations, divided by (ii) the Total Outstandings. Required Lenders means Committed Lenders having Pro Rata Shares of more than 50%. Requirement of Law means, as to any Person, any law (statutory or common), treaty, rule or regulation or determination of an arbitrator or of a Governmental Authority, in each case applicable to or binding upon the Person or any of its property or to which the Person or any of its property is subject. Reserve Requirement means, for any day for any Eurocurrency Loan to the Company or any Swing Line Loan, the maximum reserve percentage (expressed as a decimal, rounded upward, if necessary, to an integral multiple of 1/100th of 1%) in effect on such day (whether or not applicable to any Lender) under regulations issued from time to time by the FRB for determining the maximum reserve requirement (including any emergency, special, supplemental or other marginal reserve requirement) with respect to Eurocurrency funding (currently referred to as "Eurocurrency liabilities" in Regulation D of the FRB). Same Day Funds means (i) with respect to disbursements and payments in US Dollars, immediately available funds, and (ii) with respect to disbursements and payments in any other currency, same day or other funds as may be determined by the Administrative Agent (or, with respect to UK Loans, Canadian Loans or EMU Loans, the UK Lender, the Canadian Lender or the EMU Lender, as the case may be) to be customary in the place of disbursement or payment for the settlement of international banking transactions in such currency. Securitization Transaction means any sale, assignment or other transfer by the Company or any Subsidiary of accounts receivable, lease receivables or other payment obligations owing to the Company or such Subsidiary or any interest in any of the foregoing (other than sales of defaulted receivables, foreign receivables or similar items in the ordinary course of business consistent with past practice), together in each case with any collections and other proceeds thereof, any collection or deposit accounts related thereto, and any collateral, guaranties or other property or claims in favor of the Company or such Subsidiary supporting or securing payment by the obligor thereon of, or otherwise related to, any such receivables. -13- Senior Financial Officer means the chief financial officer, principal accounting officer, treasurer or controller of the Company. S&P means Standard & Poor's Ratings Group, a division of McGraw-Hill Companies, Inc. Spot Rate of Exchange means for any amount denominated in any currency other than US Dollars, an amount of US Dollars into which the Administrative Agent could convert such currency by using the applicable quoted spot rate as reported on the appropriate page of the Reuters Screen at 11:00 A.M. (London, England time) two Business Days preceding the day such determination is requested to be made. Sublimit means each of the UK Sublimit, the Canadian Sublimit, the EMU German Sublimit and the EMU Lux Sublimit. Subsequent Participant means a member state that adopts the Euro as its lawful currency after the Closing Date; Subsidiary means any Person in which more than 50% of its outstanding voting stock or rights or more than 50% of all equity interest is owned directly or indirectly by the Company. Subsidiary Guarantor means, on any day, each Subsidiary that has executed a counterpart of the Subsidiary Guaranty on or prior to that day (and has not been released from its obligations thereunder in accordance with the terms hereof). Subsidiary Guaranty means a Subsidiary Guaranty issued by various Subsidiaries of the Company, substantially in the form of Exhibit I. Swing Line Lender means U.S. Bank National Association in its capacity as Swing Line Lender hereunder, together with any replacement therefor in such capacity. Swing Line Loan - see Section 6.01. Swing Line Rate means for any day a rate per annum (rounded upward, if necessary, to the nearest 1/16 of 1%) determined pursuant to the following formula, which rate shall continue in effect until the next succeeding Business Day: LIBO Rate Swing Line Rate = -------------------------- 1.00 - Reserve Requirement Synthetic Lease Obligations means obligations under operating leases (as determined pursuant to Statement of Financial Accounting Standards No. 13) of properties which are reported for United States income tax purposes as owned by the Company or a Consolidated Subsidiary. The amount of Synthetic Lease Obligations under any such lease shall be determined in accordance with GAAP as if such operating lease were a capital lease. -14- Target Day means any day that is not (i) a Saturday or Sunday, (ii) Christmas Day or New Year's Day, or (iii) any other day on which the Trans-European Automated Real-time Gross Settlement Express Transfer System (or any successor settlement system) is not operating. Taxes means any and all present or future taxes, levies, assessments, imposts, duties, deductions, fees, withholdings or similar charges, and all liabilities with respect thereto, excluding, in the case of each Lender and each Agent, respectively, taxes imposed on or measured by its net income by the jurisdiction (or any political subdivision thereof) under the laws of which such Lender or such Agent, as the case may be, is organized or maintains a lending office. Termination Date means the earlier to occur of (i) July 25, 2006, or (ii) the date on which the Commitments terminate or are reduced to zero. Total Commitment means the aggregate amount of the Commitments of all Committed Lenders. The initial Total Commitment is US$500,000,000. Total Outstandings means at any time the aggregate US Dollar Equivalent principal amount of all Loans plus (without duplication) the L/C Obligations. Type of Loan or Borrowing refers to the interest rate basis for a loan or borrowing. The "Types" of Committed Loans or borrowings are US Base Rate Loans or borrowings and Eurocurrency Loans or borrowings. The "Types" of Canadian Loans are Prime Rate Loans and Eurocurrency Loans. UK Borrowers means, collectively, Pentair UK and any other Subsidiary of the Company organized under the laws of the United Kingdom that the Company designates as a UK Borrower hereunder by written notice to the Administrative Agent substantially in the form of Exhibit J. UK Deferral Date means the earlier of (a) January 24, 2004, or (b) the date that is five Business Days after the date on which the Administrative Agent and the Company shall have received notice from each Committed Lender required under subsection 10.05(f) to submit a claim for relief from United Kingdom income tax that such Committed Lender has been granted such relief from United Kingdom income tax on (i) usage fees payable by each UK Borrower to such Committed Lender and (ii) interest which may at any time be payable by any UK Borrower to the UK Lender in which such Committed Lender has a participating interest. UK Lender - see the Preamble. UK Loan - see Section 3.01. UK Participation Funding Notice means a written notice from the UK Lender informing the Administrative Agent that an Event of Default has occurred and is continuing and directing the Administrative Agent to notify all Committed Lenders to fund their participations in the UK Loans as provided in Section 3.06. UK Sublimit means the Dollar Equivalent principal amount of US$50,000,000, as such amount may be adjusted from time to time pursuant to Section 9.04. -15- Unfunded Vested Liabilities means, with respect to any Plan at any time, the amount (if any) by which (i) the present value of all vested nonforfeitable benefits under such Plan exceeds (ii) the fair market value of all Plan assets allocable to such benefits, all determined as of the then most recent valuation date for such Plan, but only to the extent that such excess represents a potential liability of the Company or any ERISA Affiliate to the PBGC or such Plan under Title IV of ERISA. Unmatured Event of Default means any event which if it continues uncured will, with lapse of time or notice or both, constitute an Event of Default. Usage Fee Rate means a rate determined in accordance with Schedule 1.01. US Base Rate means, for any day, the higher of: (a) 0.50% per annum above the latest Federal Funds Rate; or (b) the rate of interest in effect for such day as publicly announced from time to time by Bank of America as its "reference rate." (The "reference rate" is a rate set by Bank of America based upon various factors including Bank of America's costs and desired return, general economic conditions and other factors, and is used as a reference point for pricing some loans, which may be priced at, above or below such announced rate.) Any change in the reference rate announced by Bank of America shall take effect at the opening of business on the day specified in the public announcement of such change. US Base Rate Loan means a Committed Loan denominated in US Dollars for which the rate of interest is determined by reference to the US Base Rate. US Dollar Eurocurrency Loans means Committed Loans which are Eurocurrency Loans and are denominated in US Dollars. US Dollars or US$ means dollars constituting legal tender for the payment of public and private debts in the United States of America. 1.02 Rules of Interpretation. (a) All accounting terms not specifically defined herein shall have the meanings assigned to such terms and shall be interpreted in accordance with GAAP applied on a consistent basis; provided that if the Company notifies the Administrative Agent that the Company desires to amend any covenant in Article XIII (or any related definition) to eliminate the effect of any change in GAAP on the operation of such covenant (or such definition), or the Administrative Agent notifies the Company that the Required Lenders desire to amend any such covenant (or any such definition) for such purpose, then the Company's compliance with such covenant shall be determined (or such definition shall be interpreted) on the basis of GAAP as in effect immediately before such change became effective, until either such notice is withdrawn or such covenant (or such definition) is amended in a manner satisfactory to the Company and the Required Lenders. (b) The headings, subheadings and table of contents herein are solely for convenience of reference and shall not affect the meaning, construction or effect of any provision hereof. -16- (c) Except as otherwise expressly provided, references herein to articles, sections, paragraphs, clauses, annexes, exhibits and schedules are references to articles, sections, paragraphs, clauses, annexes, exhibits and schedules in or to this Agreement. (d) All definitions set forth herein shall apply to the singular as well as the plural form of the applicable defined term, and all references to the masculine gender shall include reference to the feminine or neuter gender, and vice versa, as the context may require. (e) References to "including" means including without limiting the generality of any description preceding such term. (f) All references to any agreement or document as amended, modified or supplemented, or words of similar effect, shall mean such agreement or document as amended, modified or supplemented from time to time. (g) In the event that pursuant to Section 10.09 hereof any amount is borrowed and repaid in the Euro rather than any particular Applicable Currency, then references to such Applicable Currency and all definitions related to or derived from a reference to such Applicable Currency shall be deemed to be, or be related to or derived from, references to the Euro, in the sole discretion of the applicable Lender, and shall be deemed modified to the extent necessary to effect the intent of this Agreement with respect to borrowings in such Applicable Currency. ARTICLE II THE COMMITTED FACILITY 2.01 Commitments. Subject to the terms and conditions of this Agreement, each Committed Lender severally agrees (a) to make Committed Loans to the Company in US Dollars or any Available Currency from the Closing Date until the Termination Date in such Committed Lender's Pro Rata Share of such aggregate amounts as the Company may request from time to time from all Committed Lenders; and (b) to participate in the various subfacilities as more fully set forth below; provided that (i) the Total Outstandings shall not at any time exceed the Total Commitment and (ii) the aggregate Dollar Equivalent principal amount of all Committed Loans of any Committed Lender plus such Committed Lender's Pro Rata Share of the Dollar Equivalent principal amount of all UK Loans, Canadian Loans, EMU Loans, Swing Line Loans and L/C Obligations shall not at any time exceed such Committed Lender's Commitment. 2.02 Procedure for Committed Borrowings. (a) Each Committed Borrowing shall be made upon irrevocable written notice from the Company to the Administrative Agent, which notice must be received by the Administrative Agent not later than (i) 10:00 A.M. (Chicago time) two Business Days prior to the requested Borrowing Date, in the case of US Dollar Eurocurrency Loans; (ii) 11:00 A.M. (Chicago time) four Business Days prior to the requested Borrowing Date, in the case of Eurocurrency Loans in an Available Currency; and (iii) 11:00 A.M. (Chicago time) on the requested Borrowing Date, in the case of US Base Rate Loans. Each such notice shall specify: -17- (A) the amount of the Committed Borrowing, which shall be in an aggregate amount not less than the Minimum Tranche; (B) the requested Borrowing Date, which shall be a Business Day; (C) the Type of Loans comprising the Committed Borrowing ; and (D) in the case of a Borrowing of Eurocurrency Loans, the Applicable Currency (which shall be US Dollars or any Available Currency) and the duration of the initial Interest Period therefor. (b) Upon receipt of a Notice of Committed Borrowing, the Administrative Agent will promptly notify each Committed Lender thereof and of the amount of such Committed Lender's Pro Rata Share of the Committed Borrowing. (c) Each Committed Lender will make the amount of its Pro Rata Share of each Committed Borrowing available to the Administrative Agent for the account of the Company at the Administrative Agent's Payment Office on the Borrowing Date requested by the Company in Same Day Funds and in the requested currency (i) in the case of a Committed Borrowing comprised of Committed Loans in US Dollars, by noon (Chicago time) and (ii) in the case of a Committed Borrowing in any Available Currency, by such time as the Administrative Agent may specify. The proceeds of all such Loans will promptly be made available to the Company by the Administrative Agent in like funds as received by the Administrative Agent. (d) After giving effect to any Committed Borrowing, there may not be more than 15 different Interest Periods for all Committed Borrowings. 2.03 Conversion and Continuation Elections for Committed Borrowings. (a) The Company may, upon irrevocable written notice to the Administrative Agent in accordance with subsection 2.03(b): (i) elect, as of any Business Day, in the case of US Base Rate Loans, or as of the last day of the applicable Interest Period, in the case of US Dollar Eurocurrency Loans, to convert any Committed Loans (or any part thereof in an amount not less than the Minimum Tranche) into Committed Loans in US Dollars of the other Type; or (ii) elect, as of the last day of the applicable Interest Period, to continue any Committed Loans having Interest Periods expiring on such day (or any part thereof in an amount not less than the Minimum Tranche) as Committed Loans of the same Type and in the same currency with a new Interest Period; provided that if at any time the aggregate amount of US Dollar Eurocurrency Loans in respect of any Committed Borrowing is reduced, by payment, prepayment or conversion of part thereof, to be less than the Minimum Tranche, such US Dollar Eurocurrency Loans shall automatically convert into US Base Rate Loans. -18- (b) The Company shall deliver a Notice of Conversion/Continuation to be received by the Administrative Agent not later than (i) 10:00 A.M. (Chicago time) two Business Days prior to the Conversion/Continuation Date, if US Dollar Eurocurrency Loans are to be continued for a new Interest Period or Committed Loans are to be converted from US Base Rate Loans into US Dollar Eurocurrency Loans; (ii) 11:00 A.M. (Chicago time) four Business Days prior to the Conversion/Continuation Date, if Committed Loans in any Available Currency are to be continued as Eurocurrency Loans; and (iii) 10:00 A.M. (Chicago time) on the Conversion/Continuation Date, if Committed Loans are to be converted from US Dollar Eurocurrency Loans into US Base Rate Loans. Each such notice shall specify: (A) the proposed Conversion/Continuation Date; (B) the aggregate amount and currency of the Committed Loans to be converted or continued; (C) the Type of Committed Loans resulting from the proposed conversion or continuation; and (D) other than in the case of conversions into US Base Rate Loans, the duration of the requested Interest Period. (c) If upon the expiration of any Interest Period applicable to US Dollar Eurocurrency Loans, the Company has failed to timely select a new Interest Period to be applicable to such US Dollar Eurocurrency Loans, the Company shall be deemed to have elected to convert such US Dollar Eurocurrency Loans into US Base Rate Loans effective as of the expiration date of such Interest Period. If upon the expiration of any Interest Period applicable to Committed Loans in any Available Currency, the Company has failed to timely select a new Interest Period to be applicable to such Committed Loans, the Company shall be deemed to have elected to continue such Committed Loans as Eurocurrency Loans for a one-month Interest Period. (d) The Administrative Agent will promptly notify each Committed Lender of its receipt of a Notice of Conversion/Continuation pursuant to this Section 2.03 or, if no timely notice is provided by the Company, the Administrative Agent will promptly notify each Committed Lender of the details of any automatic conversion or continuation. All conversions and continuations of Committed Loans shall be made ratably according to the respective Pro Rata Shares of the Committed Lenders. (e) Unless the Required Lenders otherwise agree, during the existence of an Event of Default or Unmatured Event of Default, the Company may not elect to have a Committed Loan converted into or continued as a US Dollar Eurocurrency Loan. (f) After giving effect to any conversion or continuation of Committed Loans, there may not be more than 15 different Interest Periods for all Committed Loans. 2.04 Interest on Committed Loans. The Company shall pay interest on the unpaid principal amount of each Committed Loan made to the Company, from the date such Committed Loan is made to the date such Committed Loan is paid in full, as follows: -19- (a) so long as such Committed Loan is a US Base Rate Loan, at a rate per annum equal to the US Base Rate plus the Applicable Margin for US Base Rate Loans and Prime Rate Loans; and (b) so long as such Committed Loan is a Eurocurrency Loan, at a rate per annum equal to the Adjusted Eurocurrency Rate for each applicable Interest Period plus the Applicable Margin for Eurocurrency Loans; provided that, upon the request of the Required Lenders at any time (and for so long as) an Event of Default exists, the interest rate applicable to each Committed Loan shall be increased by 2%. 2.05 Optional Prepayments. The Company may from time to time prepay Committed Loans in whole or in part, in an aggregate Dollar Equivalent principal amount of at least US$5,000,000 and an integral multiple of 1,000,000 units of the Applicable Currency. The Company shall deliver a notice of prepayment to be received by the Administrative Agent not later than 10:00 A.M. (Chicago time) (a) in the case of US Dollar Eurocurrency Loans, three Business Days in advance of the prepayment date, (b) in the case of Eurocurrency Loans in an Available Currency, four Business Days in advance of the prepayment date and (c) in the case of US Base Rate Loans, on the prepayment date. Each such notice shall specify the Loans to be prepaid and the date and amount of such prepayment. The Administrative Agent will promptly notify each Committed Lender of its receipt of such notice and of such Committed Lender's Pro Rata Share of such prepayment. Any prepayment of Eurocurrency Loans shall include accrued interest on the principal amount prepaid and, unless made on the last day of an Interest Period therefor, shall be subject to the provisions of Section 10.04. 2.06 Reduction or Termination of the Commitments. (a) The Company may, upon not less than three Business Days' prior written notice to the Administrative Agent, (i) terminate the Commitments upon payment in full by the Borrowers of all outstanding obligations hereunder or (ii) permanently reduce the amount of the Commitments, by an amount equal to US$10,000,000 or a higher integral multiple of US$1,000,000, to an amount which is not less than the Total Outstandings. (b) Once reduced pursuant to this Section, no Commitment may be increased (except pursuant to Section 2.07). Any reduction of the Commitments shall be applied to reduce the Commitments of the Committed Lenders pro rata in accordance with their respective Pro Rata Shares. 2.07 Optional Increase in Total Commitment. (a) The Company may, no more than once a year, by written notice to the Administrative Agent substantially in the form of Exhibit G-1, request the Lenders to increase the Total Commitment, which notice shall be accompanied by the resolutions of the board of directors of the Company approving such increase certified by the Secretary or an Assistant Secretary of the Company; provided that in no event shall the Total Commitment be increased by more than US$100,000,000 in the aggregate (for all increases pursuant to this Section 2.07) without the written consent of all Lenders. -20- (b) Any optional increase shall be permitted only if (i) the Company is in compliance with Sections 13.02 and 13.03 before and after giving effect to such increase; and (ii) no Event of Default or Unmatured Event of Default has occurred and is continuing. (i) The Administrative Agent shall transmit any increase request to each Committed Lender within one Business Day after its receipt thereof. Each Committed Lender will have the option, in its sole discretion, to subscribe for its Pro Rata Share of such requested increase. The Committed Lenders shall respond in writing to the Company's request through the Administrative Agent within 15 Business Days by submitting a letter in the form of Attachment I to Exhibit G-1. Any Committed Lender not responding within 15 Business Days shall be deemed to have declined to participate in the increase request. At the option of the Company, any part of the increase not so subscribed may be assumed, within 20 Business Days of the Committed Lenders' response, by one or more existing Committed Lenders or assumed by other financial institutions designated by the Company and acceptable to the UK Lender, the Canadian Lender, the EMU Lender, the Swing Line Lender, the Issuing Bank and the Administrative Agent, which consents shall not be unreasonably withheld, upon submission of a letter in the form of Exhibit G-2, in the case of an existing Lender, or Exhibit G-3, in the case of a new party to this Agreement. ARTICLE III THE UK SUBFACILITY 3.01 UK Commitment. Subject to the terms and conditions of this Agreement, the UK Lender agrees to make loans (each a "UK Loan" and collectively the "UK Loans") in British Pounds Sterling to each UK Borrower during the period from the Closing Date to the Termination Date in a Dollar Equivalent amount at any time outstanding not to exceed the UK Sublimit; provided that the Total Outstandings shall not at any time exceed the Total Commitment. Subject to the terms and conditions hereof, each UK Borrower may borrow under this Section 3.01, prepay under Section 3.05 and reborrow under this Section 3.01 from time to time. 3.02 Procedure for UK Borrowings. (a) Each UK Loan shall be made upon irrevocable written notice from the applicable UK Borrower to the UK Lender and the Administrative Agent, which notice must be received not later than 11:00 A.M. (London, England time) at least two Business Days prior to the requested Borrowing Date (or such later time as the UK Lender may approve in its sole discretion). Each such notice shall specify (i) the amount of such UK Loan, which shall be (pound)1,500,000 or higher integral multiple of (pound)500,000; (ii) the requested Borrowing Date, which shall be a Business Day; and (iii) the duration of the initial Interest Period for such Loan. (b) Unless the UK Lender has received (i) written notice from the Administrative Agent prior to 9:00 A.M. (London, England time) on the proposed Borrowing Date of any UK Loan directing the UK Lender not to make such UK Loan because such UK Loan is not permitted under Section 3.01 or (ii) written notice of the type and by the time described in -21- subsection 9.10(b) from any Committed Lender, the UK Lender may make any requested UK Loan on the proposed Borrowing Date. 3.03 Continuation Elections for UK Loans. Any UK Borrower may elect to continue any of its outstanding UK Loans for a new Interest Period by giving irrevocable written notice to the Administrative Agent and the UK Lender not later than 11:00 A.M. (London, England time) at least two Business Days prior to the first day of such new Interest Period. Each such notice shall specify the duration of such new Interest Period (or, if such UK Loan is to be divided into two or more UK Loans which have different Interest Periods, each such new Interest Period, provided that each such Loan shall be in the principal amount of (pound)1,500,000 or a higher integral multiple of (pound)500,000). If upon the expiration of any Interest Period for a UK Loan, any UK Borrower has failed to timely select a new Interest Period for such UK Loan (and has not given a timely notice of prepayment of such UK Loan), such UK Borrower shall be deemed to have elected to continue such UK Loan for a one-month Interest Period. 3.04 Interest on UK Loans. Each UK Borrower shall pay interest on the unpaid principal amount of each UK Loan made to such UK Borrower, from the date such UK Loan is made to the date such UK Loan is paid in full, at a rate per annum equal to the Eurocurrency Rate for each applicable Interest Period plus the applicable Mandatory Cost on the first day of such Interest Period plus the Fronting Margin. 3.05 Prepayments of UK Loans. (a) If on any date the aggregate Dollar Equivalent principal amount of all UK Loans exceeds the UK Sublimit, one or more of the UK Borrowers shall promptly make a prepayment of UK Loans (in accordance with the procedures set forth in subsection (b) below) in an aggregate amount equal to or greater than such excess. (b) Any UK Borrower may from time to time prepay UK Loans in whole or in part, in an amount equal to (pound)1,500,000 or a higher integral multiple of (pound)500,000. Any UK Borrower will deliver a notice of prepayment to be received by the UK Lender not later than 10:00 A.M. (London, England time) two Business Days in advance of the prepayment date, specifying the Loans to be prepaid and the date and amount of such prepayment. Any prepayment of a UK Loan shall include accrued interest on the principal amount prepaid and, unless made on the last day of an Interest Period therefor, shall be subject to the provisions of Section 10.04. 3.06 Participations in UK Loans. (a) Each Committed Lender agrees that it shall at all times have a participation in, and acknowledges that it is irrevocably and unconditionally obligated, upon receipt of notice that the Administrative Agent has received a UK Participation Funding Notice, to fund (or to cause an Affiliate to fund) its participation in, each outstanding UK Loan in an amount equal to its Pro Rata Share of the amount of such UK Loan. (b) The Administrative Agent shall promptly notify each Committed Lender of its receipt of a UK Participation Funding Notice. Promptly (and in any event within three Business Days) upon receipt of such Notice, each Committed Lender shall (or shall cause an Affiliate to) make available to the Administrative Agent for the account of the UK Lender an amount in -22- British Pounds Sterling and in Same Day Funds equal to its Pro Rata Share of all outstanding UK Loans (it being understood that no Committed Lender which is an Affiliate of the UK Lender shall be obligated to make any amount available to the UK Lender unless otherwise required by the UK Lender). If any Committed Lender so notified fails to make available to the Administrative Agent for the account of the UK Lender the full amount of such Committed Lender's participations in all UK Loans by the date which is three Business Days after its receipt of such notice from the Administrative Agent, then interest shall accrue on such Committed Lender's obligations to fund such participations, from such date to the date such Committed Lender pays such obligations in full, at a rate per annum equal to the Foreign Overnight Rate in effect from time to time during such period. (c) From and after the date on which the UK Lender has delivered to the Administrative Agent a UK Participation Funding Notice, all funds received by the UK Lender in payment of the UK Loans, interest accrued thereon after the third Business Day following delivery of such notice and other amounts payable in respect thereof shall be delivered by the UK Lender to the Administrative Agent, in the same funds as those received by the UK Lender, to be distributed to all Committed Lenders in accordance with their Pro Rata Shares (i.e., giving effect to the funding of participations pursuant to this Section 3.06), except that the Pro Rata Share of such funds of any Committed Lender that has not funded its participations as provided herein (and of any Committed Lender which is an Affiliate of the UK Lender) shall be retained by the UK Lender. (d) If the Administrative Agent or the UK Lender is required at any time to return to any UK Borrower, or to a trustee, receiver, liquidator or custodian, or any official in any bankruptcy or insolvency proceeding, any portion of any payment made by any UK Borrower to the Administrative Agent or the UK Lender in respect of any UK Loan or any interest or fee thereon, each Committed Lender shall, on demand of the Administrative Agent, forthwith return to the Administrative Agent for the account of the UK Lender the amount of its Pro Rata Share of the amount so returned by the Administrative Agent or the UK Lender plus interest thereon from the date such demand is made to the date such amount is returned by such Committed Lender to the Administrative Agent, at a rate per annum equal to the Foreign Overnight Rate from time to time in effect. (e) The Required Lenders, the UK Lender and the Administrative Agent may agree on any other reasonable method (such as making assignments of UK Loans) for sharing the risks of UK Loans ratably among all Committed Lenders according to their Pro Rata Shares so long as such method does not materially disadvantage any Committed Lender. ARTICLE IV THE CANADIAN SUBFACILITY 4.01 Canadian Commitment. Subject to the terms and conditions of this Agreement, the Canadian Lender agrees to make loans (each a "Canadian Loan" and collectively the "Canadian Loans") in Canadian Dollars to each Canadian Borrower during the period from the Closing Date to the Termination Date in a Dollar Equivalent amount at any time outstanding not to exceed the Canadian Sublimit; provided that the Total Outstandings shall not at any time -23- exceed the Total Commitment. Subject to the terms and conditions hereof, each Canadian Borrower may borrow under this Section 4.01, prepay under Section 4.05 and reborrow under this Section 4.01 from time to time. 4.02 Procedure for Canadian Borrowings. (a) Each Canadian Loan shall be made upon irrevocable written notice from the applicable Canadian Borrower to the Canadian Lender and the Administrative Agent, which notice must be received not later than (i) 10:00 A.M. (Toronto time) at least two Business Days prior to the proposed date of such Loan, in the case of a Eurocurrency Loan; and (ii) 10:00 A.M. (Toronto time) on the proposed date of such Loan, in the case of a Prime Rate Loan (or, in each case, such later time as the Canadian Lender may approve in its sole discretion). Each such notice shall specify (i) the amount of such Canadian Loan, which shall be CAN$1,000,000 or higher integral multiple of CAN$100,000; (ii) the requested Borrowing Date, which shall be a Business Day; (iii) the Type of Canadian Loan requested; and (iv) in the case of a Eurocurrency Loan, the duration of the initial Interest Period for such Loan. (b) Unless the Canadian Lender has received (i) written notice from the Administrative Agent prior to 9:00 A.M. (Toronto time) on the proposed Borrowing Date of any Canadian Loan directing the Canadian Lender not to make such Canadian Loan because such Canadian Loan is not permitted under Section 4.01 or (ii) written notice of the type and by the time described in subsection 9.10(b) from any Committed Lender, the Canadian Lender may make any requested Canadian Loan on the proposed Borrowing Date. (c) After giving effect to any Canadian Loan, there may not be more than eight different Interest Periods for all Canadian Loans. 4.03 Conversion and Continuation Elections for Canadian Loans. (a) Any Canadian Borrower may, upon irrevocable written notice to the Canadian Lender, in accordance with subsection 4.03(b): (i) elect, as of any Business Day, in the case of a Prime Rate Loan, or as of the last day of the applicable Interest Period, in the case of a Eurocurrency Loan to such Canadian Borrower, to convert any Canadian Loan (or any part thereof in an amount not less than CAN$1,000,000 and an integral multiple of CAN$100,000) into a Canadian Loan of the other Type; or (ii) elect, as of the last day of the applicable Interest Period, to continue any Eurocurrency Loan to such Canadian Borrower having an Interest Period expiring on such day (or any part thereof in an amount not less than CAN$1,000,000 and an integral multiple of CAN$100,000) as a Canadian Loan of the same Type with a new Interest Period; provided that if at any time the aggregate amount of any Canadian Loan which is a Eurocurrency Loan is reduced, by payment, prepayment or conversion of part thereof, to be less than the CAN$1,000,000, such Eurocurrency Loan shall automatically convert into a Prime Rate Loan. -24- (b) The applicable Canadian Borrower shall deliver a Notice of Conversion/Continuation to be received by the Canadian Lender not later than (i) 10:00 A.M. (Toronto time) two Business Days prior to the Conversion/Continuation Date, if a Canadian Loan is to be converted from a Prime Rate Loan into a Eurocurrency Loan; and (ii) 10:00 A.M. (Toronto time) on the Conversion/Continuation Date, if a Canadian Loan is to be converted from a Eurocurrency Loan into a Prime Rate Loan. Each such notice shall specify: (A) the proposed Conversion/Continuation Date; (B) the amount of the Canadian Loan to be converted or continued; (C) the Type of Canadian Loan resulting from the proposed conversion or continuation; and (D) other than in the case of conversion into a Prime Rate Loan, the duration of the requested Interest Period. (c) If upon the expiration of any Interest Period applicable to a Eurocurrency Loan to a Canadian Borrower, such Canadian Borrower has failed to timely select a new Interest Period to be applicable to such Eurocurrency Loan, such Canadian Borrower shall be deemed to have elected to convert such Eurocurrency Loan into a Prime Rate Loan effective as of the expiration date of such Interest Period. After giving effect to any conversion or continuation of a Canadian Loan, there may not be more than eight different Interest Periods for all Canadian Loans. 4.04 Interest on Canadian Loans. Each Canadian Borrower shall pay interest on the unpaid principal amount of each Canadian Loan made to such Canadian Borrower, from the date such Canadian Loan is made to the date such Canadian Loan is paid in full, as follows: (a) so long as such Canadian Loan is a Prime Rate Loan, at a rate per annum equal to the Prime Rate plus the Applicable Margin for US Base Rate Loans and Prime Rate Loans; and (b) so long as such Canadian Loan is a Eurocurrency Loan, at a rate per annum equal to the Eurocurrency Rate for each applicable Interest Period plus the Applicable Margin for Eurocurrency Loans; provided that, upon the request of the Canadian Lender at any time (and for so long as) an Event of Default exists, the interest rate applicable to each Canadian Loan shall be increased by 2%. 4.05 Prepayments of Canadian Loans. (a) If on any date the aggregate Dollar Equivalent principal amount of all Canadian Loans exceeds the Canadian Sublimit, one or more of the Canadian Borrowers shall promptly make a prepayment of Canadian Loans (in accordance with the procedures set forth in subsection (b) below) in an aggregate amount equal to or greater than such excess. (b) Any Canadian Borrower may from time to time prepay Canadian Loans in whole or in part, in an amount equal to CAN$1,000,000. -25- or a higher integral multiple of CAN$100,000. Any such Canadian Borrower shall deliver a notice of prepayment to be received by the Canadian Lender not later than 10:00 A.M. (Toronto time) (a) in the case of a Eurocurrency Loan to such Canadian Borrower, two Business Days in advance of the prepayment date, and (b) in the case of a Prime Rate Loan, on the prepayment date. Each such notice shall specify the Loan to be prepaid and the date and amount of such prepayment. Any prepayment of a Eurocurrency Loan shall include accrued interest on the principal amount prepaid and, unless made on the last day of an Interest Period therefor, shall be subject to the provisions of Section 10.04. 4.06 Participations in Canadian Loans. (a) Each Committed Lender agrees that it shall at all times have a participation in, and acknowledges that it is irrevocably and unconditionally obligated, upon receipt of notice that the Administrative Agent has received a Canadian Participation Funding Notice, to fund (or to cause an Affiliate to fund) its participation in, each outstanding Canadian Loan in an amount equal to its Pro Rata Share of the amount of such Canadian Loan. (b) The Administrative Agent shall promptly notify each Committed Lender of its receipt of a Canadian Participation Funding Notice. Promptly (and in any event within three Business Days) upon receipt of such Notice, each Committed Lender shall (or shall cause an Affiliate to) make available to the Administrative Agent for the account of the Canadian Lender an amount in Canadian Dollars and in Same Day Funds equal to its Pro Rata Share of all outstanding Canadian Loans (it being understood that no Committed Lender which is an Affiliate of the Canadian Lender shall be obligated to make any amount available to the Canadian Lender unless otherwise required by the Canadian Lender). If any Committed Lender so notified fails to make available to the Administrative Agent for the account of the Canadian Lender the full amount of such Committed Lender's participations in all Canadian Loans by the date which is three Business Days after its receipt of such notice from the Administrative Agent, then interest shall accrue on such Committed Lender's obligations to fund such participations, from such date to the date such Committed Lender pays such obligations in full, at a rate per annum equal to the Foreign Overnight Rate in effect from time to time during such period. (c) From and after the date on which the Canadian Lender has delivered to the Administrative Agent a Canadian Participation Funding Notice, all funds received by the Canadian Lender in payment of the Canadian Loans, interest accrued thereon after the third Business Day following delivery of such notice and other amounts payable in respect thereof shall be delivered by the Canadian Lender to the Administrative Agent, in the same funds as those received by the Canadian Lender, to be distributed to all Committed Lenders in accordance with their Pro Rata Shares (i.e., giving effect to the funding of participations pursuant to this Section 4.06), except that the Pro Rata Share of such funds of any Committed Lender that has not funded its participations as provided herein (and of any Committed Lender which is an Affiliate of the Canadian Lender) shall be retained by the Canadian Lender. (d) If the Administrative Agent or the Canadian Lender is required at any time to return to any Canadian Borrower, or to a trustee, receiver, liquidator or custodian, or any official in any bankruptcy or insolvency proceeding, any portion of any payment made by any Canadian Borrower to the Administrative Agent or the Canadian Lender in respect of any Canadian Loan -26- or any interest or fee thereon, each Committed Lender shall, on demand of the Administrative Agent, forthwith return to the Administrative Agent for the account of the Canadian Lender the amount of its Pro Rata Share of the amount so returned by the Administrative Agent or the Canadian Lender plus interest thereon from the date such demand is made to the date such amount is returned by such Committed Lender to the Administrative Agent, at a rate per annum equal to the Foreign Overnight Rate from time to time in effect. (e) The Required Lenders, the Canadian Lender and the Administrative Agent may agree on any other reasonable method (such as making assignments of Canadian Loans) for sharing the risks of Canadian Loans ratably among all Committed Lenders according to their Pro Rata Shares so long as such method does not materially disadvantage any Committed Lender. 4.07 Maximum Rate of Return. Notwithstanding any provision to the contrary contained in this Agreement, in no event shall the aggregate "interest" (as defined in Section 347 of the Criminal Code, Revised Statutes of Canada, 1985, C. 46 as the same may be amended, replaced or re-enacted from time to time) payable under this Agreement in respect of Canadian Loans exceed the effective annual rate of interest on the "credit advanced" (as defined in such Section 347) under this Agreement in respect of such Loans lawfully permitted under such Section 347 and, if any payment, collection or demand pursuant to this Agreement in respect of "interest" (as defined in such Section 347) is determined to be contrary to the provisions of such Section, such payment, collection or demand shall be deemed to have been made by mutual mistake of the applicable Canadian Borrower and the Canadian Lender and the amount of such payment or collection shall be refunded to the applicable Canadian Borrower; for purposes of this Agreement, the effective annual rate of interest shall be determined in accordance with generally accepted actuarial practices and principles over the term of the applicable credit advanced on the basis of annual compounding of the lawfully permitted rate of interest and, in the event of dispute, a certificate of a Fellow of the Canadian Institute of Actuaries appointed by the Canadian Lender will be conclusive for the purposes of such determination. ARTICLE V THE EMU SUBFACILITY 5.01 EMU Commitment. Subject to the terms and conditions of this Agreement, the EMU Lender agrees to make loans (each an "EMU Loan" and collectively the "EMU Loans") in any Available Currency to each EMU Borrower during the period from the Closing Date to the Termination Date in a Dollar Equivalent amount at any time outstanding not to exceed (i) in the case of EMU Borrowers organized under the laws of Germany, the EMU German Sublimit and (ii) in the case of EMU Borrowers organized under the laws of Luxembourg, the EMU Lux Sublimit; provided that the Total Outstandings shall not at any time exceed the Total Commitment. Subject to the terms and conditions hereof, each EMU Borrower may borrow under this Section 5.01, prepay under Section 5.05 and reborrow under this Section 5.01 from time to time. -27- 5.02 Procedure for EMU Borrowings. (a) Each EMU Loan shall be made upon irrevocable written notice from the applicable EMU Borrower to the EMU Lender and the Administrative Agent, which notice must be received not later than 11:00 A.M. (Frankfurt time) at least four Business Days prior to the requested Borrowing Date (or such later time as the EMU Lender may approve in its sole discretion). Each such notice shall specify (i) the Available Currency of such Loan, (ii) the amount of such EMU Loan, which shall be the Dollar Equivalent principal amount of US$5,000,000 or a higher integral multiple of 1,000,000 units of the applicable Available Currency; (ii) the requested Borrowing Date, which shall be a Business Day; and (iii) the duration of the initial Interest Period for such Loan. (b) Unless the EMU Lender has received (i) written notice from the Administrative Agent prior to 9:00 A.M. (Frankfurt time) on the proposed Borrowing Date of any EMU Loan directing the EMU Lender not to make such EMU Loan because such EMU Loan is not permitted under Section 5.01 or (ii) written notice of the type and by the time described in subsection 9.10(b) from any Committed Lender, the EMU Lender may make any requested EMU Loan on the proposed Borrowing Date. (c) After giving effect to any EMU Loan, there may not be more than nine different Interest Periods for all EMU Loans. 5.03 Continuation Elections for EMU Loans. Any EMU Borrower may elect to continue any of its outstanding EMU Loans for a new Interest Period in the same Applicable Currency by giving irrevocable written notice to the Administrative Agent and the EMU Lender not later than 11:00 A.M. (Frankfurt time) at least three Business Days prior to the first day of such new Interest Period. Each such notice shall specify the duration of such new Interest Period (or, if such EMU Loan is to be divided into two or more EMU Loans which have different Interest Periods, each such new Interest Period, provided that each such Loan shall be the Dollar Equivalent principal amount of US$5,000,000 or a higher integral multiple of 1,000,000 units of the applicable Available Currency). If upon the expiration of any Interest Period for an EMU Loan, any EMU Borrower has failed to timely select a new Interest Period for such EMU Loan (and has not given a timely notice of prepayment of such EMU Loan), such EMU Borrower shall be deemed to have elected to continue such EMU Loan for a one-month Interest Period. After giving effect to any continuation of an EMU Loan, there may not be more than nine different Interest Periods for all EMU Loans. 5.04 Interest on EMU Loans. Each EMU Borrower shall pay interest on the unpaid principal amount of each EMU Loan made to such EMU Borrower, from the date such EMU Loan is made to the date such EMU Loan is paid in full, at a rate per annum equal to the Eurocurrency Rate for each applicable Interest Period plus the applicable Mandatory Cost on the first day of such Interest Period plus the Fronting Margin. 5.05 Prepayments of EMU Loans. (a) If on any date the aggregate outstanding Dollar Equivalent principal amount of all EMU Loans made to EMU Borrowers organized under the laws of Germany exceeds the EMU -28- German Sublimit, one or more of such EMU Borrowers shall promptly make a prepayment of EMU Loans (in accordance with the procedures set forth in subsection (c) below) in an aggregate amount equal to or greater than such excess. (b) If on any date the aggregate outstanding Dollar Equivalent principal amount of all EMU Loans made to EMU Borrowers organized under the laws of Luxembourg exceeds the EMU Lux Sublimit, one or more of such EMU Borrowers shall promptly make a prepayment of EMU Loans (in accordance with the procedures set forth in subsection (c) below) in an aggregate amount equal to or greater than such excess. (c) Any EMU Borrower may from time to time prepay EMU Loans in whole or in part, in a principal amount equal to the Dollar Equivalent principal amount of US$5,000,000 or a higher integral multiple of 1,000,000 units of the applicable Available Currency. Any such EMU Borrower prepaying EMU Loans will deliver a notice of prepayment to be received by the EMU Lender not later than 11:00 A.M. (Frankfurt time) four Business Days in advance of the prepayment date, specifying the Loans to be prepaid and the date and amount of such prepayment. Any prepayment of an EMU Loan shall include accrued interest on the principal amount prepaid and, unless made on the last day of an Interest Period therefor, shall be subject to the provisions of Section 10.04. 5.06 Participations in EMU Loans. (a) Each Committed Lender agrees that it shall at all times have a participation in, and acknowledges that it is irrevocably and unconditionally obligated, upon receipt of notice that the Administrative Agent has received an EMU Participation Funding Notice, to fund (or to cause an Affiliate to fund) its participation in, each outstanding EMU Loan in an amount equal to its Pro Rata Share of the amount of such EMU Loan. (b) The Administrative Agent shall promptly notify each Committed Lender of its receipt of an EMU Participation Funding Notice. Promptly (and in any event within four Business Days) upon receipt of such Notice, each Committed Lender shall (or shall cause an Affiliate to) make available to the Administrative Agent for the account of the EMU Lender an amount in the Applicable Currency and in Same Day Funds equal to its Pro Rata Share of all outstanding EMU Loans (it being understood that no Committed Lender which is an Affiliate of the EMU Lender shall be obligated to make any amount available to the EMU Lender unless otherwise required by the EMU Lender). If any Committed Lender so notified fails to make available to the Administrative Agent for the account of the EMU Lender the full amount of such Committed Lender's participations in all EMU Loans by the date which is four Business Days after its receipt of such notice from the Administrative Agent, then interest shall accrue on such Committed Lender's obligations to fund such participations, from such date to the date such Committed Lender pays such obligations in full, at a rate per annum equal to the Foreign Overnight Rate in effect from time to time during such period. (c) From and after the date on which the EMU Lender has delivered to the Administrative Agent an EMU Participation Funding Notice, all funds received by the EMU Lender in payment of the EMU Loans, interest accrued thereon after the third Business Day following delivery of such notice and other amounts payable in respect thereof shall be delivered -29- by the EMU Lender to the Administrative Agent, in the same funds as those received by the EMU Lender, to be distributed to all Committed Lenders in accordance with their Pro Rata Shares (i.e., giving effect to the funding of participations pursuant to this Section 5.06), except that the Pro Rata Share of such funds of any Committed Lender that has not funded its participations as provided herein (and of any Committed Lender which is an Affiliate of the EMU Lender) shall be retained by the EMU Lender. (d) If the Administrative Agent or the EMU Lender is required at any time to return to any EMU Borrower, or to a trustee, receiver, liquidator or custodian, or any official in any bankruptcy or insolvency proceeding, any portion of any payment made by any EMU Borrower to the Administrative Agent or the EMU Lender in respect of any EMU Loan or any interest or fee thereon, each Committed Lender shall, on demand of the Administrative Agent, forthwith return to the Administrative Agent for the account of the EMU Lender the amount of its Pro Rata Share of the amount so returned by the Administrative Agent or the EMU Lender plus interest thereon from the date such demand is made to the date such amount is returned by such Committed Lender to the Administrative Agent, at a rate per annum equal to the Foreign Overnight Rate from time to time in effect. (e) The Required Lenders, the EMU Lender and the Administrative Agent may agree on any other reasonable method (such as making assignments of EMU Loans) for sharing the risks of EMU Loans ratably among all Committed Lenders according to their Pro Rata Shares so long as such method does not materially disadvantage any Committed Lender. ARTICLE VI THE SWING LINE SUBFACILITY 6.01 Swing Line Commitment. Subject to the terms and conditions of this Agreement, the Swing Line Lender agrees to make Loans to the Company (each a "Swing Line Loan" and collectively the "Swing Line Loans") in US Dollars from time to time on any Business Day during the period from the Closing Date to the Termination Date in an aggregate principal amount at any time outstanding not to exceed US$50,000,000; provided that the Total Outstandings shall not at any time exceed the Total Commitment. Subject to the terms and conditions hereof, the Company may borrow under this Section 6.01, prepay under Section 6.04 and reborrow under this Section 6.01 from time to time. 6.02 Procedure for Swing Line Borrowings. (a) Each Swing Line Loan shall be made upon irrevocable written notice from the Company to the Swing Line Lender and the Administrative Agent, which notice must be received not later than 12:00 noon (Minneapolis time) on the requested Borrowing Date (or such later time as the Swing Line Lender may approve in its sole discretion). Each such notice shall specify (i) the amount of such Swing Line Loan, which shall be an integral multiple of US$100,000 and (ii) the requested Borrowing Date, which shall be a Business Day. (b) Unless the Swing Line Lender has received (i) written notice from the Administrative Agent prior to 8:00 A.M. (Minneapolis time) on the proposed Borrowing Date of -30- any Swing Line Loan directing the Swing Line Lender not to make such Swing Line Loan because such Swing Line Loan is not permitted under Section 6.01 or (ii) written notice of the type and by the time described in subsection 9.10(b) from any Committed Lender, the Swing Line Lender may make any requested Swing Line Loan on the proposed Borrowing Date. 6.03 Interest on Swing Line Loans. The Company shall pay interest on the unpaid principal amount of each Swing Line Loan, from the date such Swing Line Loan is made to the date such Swing Line Loan is paid in full, at a rate per annum equal to the Swing Line Rate from time to time in effect plus the Applicable Margin for Eurocurrency Loans; provided that (a) at any time that the Committed Lenders have funded their participations in Swing Line Loans, the interest rate applicable to Swing Line Loans shall not be less than the US Base Rate; and (b) upon the request of the Swing Line Lender (or, if the Committed Lenders have funded their participations in Swing Line Loans) at any time (and for so long as) an Event of Default exists, the interest rate applicable to each Swing Line Loan shall be increased by 2%. 6.04 Prepayments of Swing Line Loans. The Company may from time to time prepay Swing Line Loans in whole or in part, in a principal amount equal to US$100,000 or a higher integral multiple of US$100,000. The Company will deliver a notice of prepayment to be received by the Swing Line Lender and the Administrative Agent not later than noon (Minneapolis time) on the Business Days of such prepayment, specifying the Swing Line Loans to be prepaid and the date and amount of such prepayment. 6.05 Participations in Swing Line Loans. Each Committed Lender agrees that it shall at all times have a participation in, and acknowledges that it is irrevocably and unconditionally obligated, as more fully set forth in Section 6.07, to fund its participation in, each outstanding Swing Line Loan in an amount equal to its Pro Rata Share of the amount of such Swing Line Loan. 6.06 Refunding of Swing Line Loans. The Swing Line Lender may, at any time in its sole and absolute discretion, on behalf of the Company (which hereby irrevocably directs the Swing Line Lender to act on its behalf), request each Committed Lender through the Administrative Agent to make a Committed Loan in an amount equal to such Committed Lender's Pro Rata Share of the principal amount of all Swing Line Loans outstanding on the date such notice is given. Unless any of the events described in subsection 14.01(f) or 14.01(g) shall have occurred and be continuing (in which event the procedures of Section 6.07 shall apply), and regardless of whether the conditions precedent set forth in this Agreement to the making of a Committed Loan are then satisfied or the aggregate amount of Swing Line Loans is not in the minimum or integral amount otherwise required hereunder, each Committed Lender shall make the proceeds of its Committed Loan available to the Administrative Agent for the account of the Swing Line Lender at its Payment Office, as directed by the Swing Line Lender, prior to noon (Minneapolis time) in Same Day Funds on the Business Day next succeeding the date such notice is given. The proceeds of such Committed Loans shall be immediately applied to repay the outstanding Swing Line Loans. All Committed Loans made pursuant to this Section 6.06 shall be US Base Rate Loans (but, subject to the other provisions of this Agreement, may be converted to US Dollar Eurocurrency Loans). -31- 6.07 Funding Participations in Swing Line Loans. (a) If an event described in subsection 14.01(f) or (g) exists (or for any reason the Committed Lenders may not make Committed Loans pursuant to Article II), each Committed Lender will, upon notice from the Administrative Agent, purchase from the Swing Line Lender (and the Swing Line Lender will sell to each Committed Lender) an undivided participation interest in all outstanding Swing Line Loans in an amount equal to its Pro Rata Share of the outstanding principal amount of the Swing Line Loans (and each Committed Lender will immediately transfer to the Administrative Agent, for the account of the Swing Line Lender, in immediately available funds, the amount of its participation). (b) If the Administrative Agent or the Swing Line Lender is required at any time to return to the Company, or to a trustee, receiver, liquidator or custodian, or any official in any bankruptcy or insolvency proceeding, any portion of any payment made by the Company to the Administrative Agent or the Swing Line Lender in respect of any Swing Line Loan or any interest or fee thereon, each Committed Lender shall, on demand of the Administrative Agent, forthwith return to the Administrative Agent for the account of the Swing Line Lender the amount of its Pro Rata Share of the amount so returned by the Administrative Agent or the Swing Line Lender plus interest thereon from the date such demand is made to the date such amount is returned by such Committed Lender to the Administrative Agent, at a rate per annum equal to the Federal Funds Rate from time to time in effect. ARTICLE VII THE LETTER OF CREDIT SUBFACILITY 7.01 Letters of Credit. (a) On the terms and conditions set forth herein, (i) the Issuing Bank agrees, (A) from time to time on any Business Day during the period from the Closing Date to the Termination Date to issue Letters of Credit for the account of the Company, and to amend or renew Letters of Credit previously issued by it, in accordance with Section 7.02, and (B) to honor properly drawn drafts under Letters of Credit; and (ii) each Committed Lender severally agrees to participate in Letters of Credit Issued for the account of the Company; provided that the Issuing Bank shall not be obligated to Issue, and no Committed Lender shall be obligated to participate in, any Letter of Credit if as of the date of Issuance of such Letter of Credit (the "Issuance Date"): (i) the Total Outstandings would exceed the Total Commitment; or (ii) all L/C Obligations would exceed $100,000,000. Within the foregoing limits, and subject to the other terms and conditions hereof, the Company's ability to obtain Letters of Credit shall be fully revolving, and, accordingly, the Company may, during the foregoing period, obtain Letters of Credit to replace Letters of Credit which have expired or which have been drawn upon and reimbursed. By their execution of this Agreement, the parties hereto agree that on the Closing Date (without any further action by any Person), each Existing Letter of Credit shall be deemed to have been issued under this Agreement and the rights and obligations of the issuer and account party thereunder shall be subject to the terms -32- hereof. The Administrative Agent will determine the Dollar Equivalent amount of the L/C Obligations with respect to any Letter of Credit when issued, when drawn upon and as of the first Business Day of each month. (b) The Issuing Bank shall be under no obligation to Issue any Letter of Credit if: (i) any order, judgment or decree of any Governmental Authority or arbitrator shall by its terms purport to enjoin or restrain the Issuing Bank from Issuing such Letter of Credit, or any Requirement of Law applicable to the Issuing Bank or any request or directive (whether or not having the force of law) from any Governmental Authority with jurisdiction over the Issuing Bank shall prohibit, or request that the Issuing Bank refrain from, the Issuance of letters of credit generally or such Letter of Credit in particular or shall impose upon the Issuing Bank with respect to such Letter of Credit any restriction, reserve or capital requirement (for which the Issuing Bank is not otherwise compensated hereunder) not in effect on the Closing Date, or shall impose upon the Issuing Bank any unreimbursed loss, cost or expense which was not applicable on the Closing Date and which the Issuing Bank in good faith deems material to it; (ii) the Issuing Bank has received written notice from any Committed Lender, the Administrative Agent or any Borrower, on or prior to the Business Day prior to the requested date of Issuance of such Letter of Credit, that one or more of the applicable conditions contained in Article XI is not then satisfied; (iii) the expiry date of any requested Letter of Credit is (A) more than 366 days after the date of such Issuance, unless the Required Lenders have approved such expiry date in writing, or (B) after the scheduled Termination Date, unless all Committed Lenders have approved such expiry date in writing; (iv) any requested Letter of Credit does not provide for drafts, or is not otherwise in form and substance acceptable to the Issuing Bank, or the Issuance of a Letter of Credit shall violate any applicable policies of the Issuing Bank; or (v) such Letter of Credit is denominated in a currency other than US Dollars or an Available Currency. 7.02 Issuance, Amendment and Renewal of Letters of Credit. (a) Each Letter of Credit shall be Issued upon the irrevocable written request of the Company received by the Issuing Bank (with a copy sent by the Company to the Administrative Agent) at least three Business Days (or such shorter time as the Issuing Bank may agree in a particular instance in its sole discretion) prior to the proposed date of Issuance. Each such request for Issuance of a Letter of Credit shall be by facsimile, confirmed immediately in an original writing, in the form of an L/C Application, and shall specify in form and detail reasonably satisfactory to the Issuing Bank: (i) the proposed date of Issuance of the Letter of Credit (which shall be a Business Day); (ii) the face amount of the Letter of Credit; (iii) the expiry date of the Letter of Credit; (iv) the name and address of the beneficiary thereof; (v) the documents to be presented by the beneficiary of the Letter of Credit in case of any drawing -33- thereunder; (vi) the full text of any certificate to be presented by the beneficiary in case of any drawing thereunder; and (vii) such other matters as the Issuing Bank may require. (b) At least two Business Days prior to the Issuance of any Letter of Credit, the Issuing Bank will confirm with the Administrative Agent (by telephone or in writing) that the Administrative Agent has received a copy of the L/C Application or L/C Amendment Application from the Company and, if not, the Issuing Bank will provide the Administrative Agent with a copy thereof. Unless the Issuing Bank has received, on or before the Business Day immediately preceding the date the Issuing Bank is to issue a requested Letter of Credit, (A) notice from the Administrative Agent directing the Issuing Bank not to issue such Letter of Credit because such issuance is not then permitted hereunder or (B) a notice described in Section 9.10(b), then, subject to the terms and conditions of this Agreement, the Issuing Bank shall, on the requested date, issue a Letter of Credit for the account of the Company in accordance with the Issuing Bank's usual and customary business practices. (c) From time to time while a Letter of Credit is outstanding and prior to the Termination Date, the Issuing Bank will, upon the written request of the Company received by the Issuing Bank (with a copy sent by the applicable Borrower to the Administrative Agent) at least three Business Days (or such shorter time as the Issuing Bank may agree in a particular instance in its sole discretion) prior to the proposed date of amendment, amend any Letter of Credit issued by it. Each such request for amendment of a Letter of Credit shall be made by facsimile, confirmed immediately in an original writing, made in the form of an L/C Amendment Application and shall specify in form and detail reasonably satisfactory to the Issuing Bank: (i) the Letter of Credit to be amended; (ii) the proposed date of amendment of the Letter of Credit (which shall be a Business Day); (iii) the nature of the proposed amendment; and (iv) such other matters as the Issuing Bank may reasonably require. The Issuing Bank shall be under no obligation to amend any Letter of Credit if: (A) the Issuing Bank would have no obligation at such time to issue such Letter of Credit in its amended form under the terms of this Agreement; or (B) the beneficiary of such Letter of Credit does not accept the proposed amendment to such Letter of Credit. The Administrative Agent will promptly notify the Committed Lenders of the receipt by it of any L/C Application or L/C Amendment Application. (d) The Issuing Bank and the Committed Lenders agree that, while a Letter of Credit is outstanding and prior to the Termination Date, at the option of the Company and upon the written request of the Company received by the Issuing Bank (with a copy sent by the Company to the Administrative Agent) at least three Business Days (or such shorter time as the Issuing Bank may agree in a particular instance in its sole discretion) prior to the proposed date of notification of renewal, the Issuing Bank shall be entitled to authorize the renewal of any Letter of Credit issued by it. Each such request for renewal of a Letter of Credit shall be made by facsimile, confirmed immediately in an original writing, in the form of an L/C Amendment Application, and shall specify in form and detail reasonably satisfactory to the Issuing Bank: (i) the Letter of Credit to be renewed; (ii) the proposed date of notification of renewal of the Letter of Credit (which shall be a Business Day); (iii) the revised expiry date of the Letter of Credit; and (iv) such other matters as the Issuing Bank may reasonably require. The Issuing Bank shall be under no obligation to renew any Letter of Credit if: (A) the Issuing Bank would have no obligation at such time to issue or amend such Letter of Credit in its renewed form under the terms of this Agreement; or (B) the beneficiary of such Letter of Credit does not accept the -34- proposed renewal of such Letter of Credit. If any outstanding Letter of Credit shall provide that it shall be automatically renewed unless the beneficiary thereof receives notice from the Issuing Bank that such Letter of Credit shall not be renewed, and if at the time of renewal the Issuing Bank would be entitled to authorize the automatic renewal of such Letter of Credit in accordance with this Section 7.02 upon the request of the Company but the Issuing Bank shall not have received any L/C Amendment Application from the Company with respect to such renewal or other written direction by the Company with respect thereto, the Issuing Bank shall nonetheless be permitted to allow such Letter of Credit to renew, and the Company, the Committed Lenders and the Administrative Agent hereby authorize such renewal, and, accordingly, the Issuing Bank shall be deemed to have received an L/C Amendment Application from the Company requesting such renewal. (e) The Issuing Bank may, at its election (or as required by the Administrative Agent at the direction of the Required Lenders), deliver any notice of termination or other communication to any Letter of Credit beneficiary or transferee, and take any other action as necessary or appropriate, at any time and from time to time, in order to cause the expiry date of such Letter of Credit to be a date not later than the scheduled Termination Date. (f) This Agreement shall control in the event of any conflict with any L/C-Related Document (other than any Letter of Credit). (g) The Issuing Bank will deliver to the Administrative Agent, concurrently or promptly following its delivery of a Letter of Credit, or an amendment to or renewal of a Letter of Credit, to an advising bank or a beneficiary, a true and complete copy of such Letter of Credit or such amendment or renewal. 7.03 Participations, Drawings and Reimbursements. (a) Immediately upon the Issuance of each Letter of Credit, each Committed Lender shall be deemed to, and hereby irrevocably and unconditionally agrees to, purchase from the Issuing Bank a participation in such Letter of Credit and each drawing thereunder in an amount equal to the product of (i) such Committed Lender's Pro Rata Share times (ii) the maximum amount available to be drawn under such Letter of Credit and the amount of such drawing, respectively. (b) In the event of any request for a drawing under a Letter of Credit by the beneficiary or a transferee thereof, the Issuing Bank will promptly notify the Company. The Company shall reimburse the Issuing Bank prior to 10:00 A.M. (Chicago time), on each date that any amount is paid by the Issuing Bank under any Letter of Credit (each such date, an "Honor Date"), in an amount equal to the amount so paid by the Issuing Bank. If the Company fails to reimburse the Issuing Bank for the full amount of any drawing under any Letter of Credit by 10:00 A.M. (Chicago time) on the Honor Date, the Issuing Bank will promptly notify the Administrative Agent and the Administrative Agent will promptly notify each Committed Lender thereof, and the Company shall be deemed to have requested that US Base Rate Loans be made by the Committed Lenders to be disbursed on the Honor Date under such Letter of Credit, subject to the amount of the unutilized portion of the Commitments and subject to the conditions set forth in subsections 11.02(b) and (c). Any notice given by the Issuing Bank or the -35- Administrative Agent pursuant to this subsection 7.03(b) may be oral if immediately confirmed in writing (including by facsimile); provided that the lack of such an immediate confirmation shall not affect the conclusiveness or binding effect of such notice. (c) Each Committed Lender shall upon any notice pursuant to subsection 7.03(b) make available to the Administrative Agent for the account of the Issuing Bank an amount in US Dollars and in Same Day Funds equal to its Pro Rata Share of the Dollar Equivalent amount of the applicable drawing (as determined by the Administrative Agent), whereupon such Committed Lender shall be deemed to have made a US Base Rate Loan to the Company in such amount. If any Committed Lender so notified fails to make available to the Administrative Agent for the account of the Issuing Bank the amount of such Committed Lender's Pro Rata Share of the amount of the drawing by no later than noon (Chicago Time) on the Honor Date, then interest shall accrue on such Committed Lender's obligation to make such payment, from the Honor Date to the date such Committed Lender makes such payment, at a rate per annum equal to the Federal Funds Rate in effect from time to time during such period. The Administrative Agent will promptly give notice of the occurrence of the Honor Date, but failure of the Administrative Agent to give any such notice on the Honor Date or in sufficient time to enable any Committed Lender to effect such payment on such date shall not relieve such Committed Lender of its obligations under this subsection 7.03(c). (d) With respect to any unreimbursed drawing that is not converted into Committed Loans in whole or in part, because of the Company's failure to satisfy any of the conditions set forth in subsections 11.02(b) and (c) or for any other reason, the Company shall be deemed to have incurred from the Issuing Bank an L/C Borrowing in the amount of such drawing, which L/C Borrowing shall be due and payable on demand (together with interest) and shall bear interest at a rate per annum equal to the US Base Rate plus 2%, and each Committed Lender's payment to the Issuing Bank pursuant to subsection 7.03(c) shall be deemed payment in respect of its participation in such L/C Borrowing and shall constitute an L/C Advance from such Committed Lender in satisfaction of its participation obligation in respect of the applicable Letter of Credit. (e) Each Committed Lender's obligation in accordance with this Agreement to make US Base Rate Loans or L/C Advances, as contemplated by this Section 7.03, as a result of a drawing under a Letter of Credit, shall be absolute and unconditional and without recourse to the Issuing Bank and shall not be affected by any circumstance, including (i) any set-off, counterclaim, recoupment, defense or other right which such Committed Lender may have against the Issuing Bank, the Company or any other Person for any reason whatsoever; (ii) the occurrence or continuance of an Event of Default, an Unmatured Event of Default or a Material Adverse Effect; or (iii) any other circumstance, happening or event whatsoever, whether or not similar to any of the foregoing; provided that each Committed Lender's obligation to make US Base Rate Loans under this Section 7.03 is subject to the conditions set forth in subsections 11.02(b) and (c). 7.04 Repayment of Participations. (a) Upon (and only upon) receipt by the Administrative Agent for the account of the Issuing Bank of Same Day Funds from the Company (i) in reimbursement of any payment made -36- by the Issuing Bank under a Letter of Credit with respect to which any Committed Lender has paid the Administrative Agent for the account of the Issuing Bank for such Committed Lender's participation in such Letter of Credit pursuant to Section 7.03 or (ii) in payment of interest thereon, the Administrative Agent will pay to each Committed Lender, in the same funds as those received by the Administrative Agent for the account of the Issuing Bank, the amount of such Committed Lender's Pro Rata Share of such funds, and the Issuing Bank shall receive the amount of the pro rata share of such funds of any Committed Lender that did not so pay the Administrative Agent for the account of the Issuing Bank. (b) If the Administrative Agent or the Issuing Bank is required at any time to return to the Company, or to a trustee, receiver, liquidator or custodian, or any official in any insolvency proceeding, any portion of any payment made by the Company to the Administrative Agent for the account of the Issuing Bank pursuant to subsection (a) above in reimbursement of a payment made under any Letter of Credit or interest or fee thereon, each Committed Lender shall, on demand of the Administrative Agent, forthwith return to the Administrative Agent or the Issuing Bank the amount of its pro rata share of any amount so returned by the Administrative Agent or the Issuing Bank plus interest thereon from the date such demand is made to the date such amount is returned by such Committed Lender to the Administrative Agent or the Issuing Bank, at a rate per annum equal to the Federal Funds Rate (in the case of amounts in US Dollars) or the Foreign Overnight Rate (in the case of other amounts), in each case as in effect from time to time. 7.05 Role of the Issuing Bank. (a) The Lenders and the Company agree that, in paying any drawing under a Letter of Credit, the Issuing Bank shall not have any responsibility to obtain any document (other than any sight draft and certificates or other documents expressly required by such Letter of Credit) or to ascertain or inquire as to the validity or accuracy of any such document or the authority of the Person executing or delivering any such document. (b) Neither the Issuing Bank nor any of its correspondents, participants or assignees shall be liable to any Lender for: (i) any action taken or omitted in connection herewith at the request or with the approval of the Committed Lenders (including the Required Lenders), as applicable); (ii) any action taken or omitted in the absence of gross negligence or willful misconduct; or (iii) the due execution, effectiveness, validity or enforceability of any L/C-Related Document. (c) The Company hereby assumes all risks of the acts or omissions of any beneficiary or transferee with respect to its use of any Letter of Credit; provided that this assumption is not intended to, and shall not, preclude the Company's pursuing such rights and remedies as it may have against the beneficiary or transferee of any Letter of Credit at law or under any other agreement. In furtherance and not in limitation of the foregoing: (i) the Issuing Bank may accept documents that appear on their face to be in order, without responsibility for further investigation, regardless of any notice or information to the contrary; and (ii) the Issuing Bank shall not be responsible for the validity or sufficiency of any instrument transferring or assigning or purporting to transfer or assign a Letter of Credit or the rights or benefits thereunder or -37- proceeds thereof, in whole or in part, which may prove to be invalid or ineffective for any reason. 7.06 Obligations Absolute. The obligations of the Company under this Agreement and any L/C-Related Document to reimburse the Issuing Bank for a drawing under a Letter of Credit, and to repay any L/C Borrowing of such Borrower and any drawing under a Letter of Credit converted into US Base Rate Loans, shall be unconditional and irrevocable, and shall be paid strictly in accordance with the terms of this Agreement and each such L/C-Related Document under all circumstances, including any of the following: (a) any lack of validity or enforceability of this Agreement or any L/C-Related Document; (b) the existence of any claim, set-off, defense or other right that the Company may have at any time against any beneficiary or any transferee of any Letter of Credit (or any Person for whom any such beneficiary or any such transferee may be acting), the Issuing Bank or any other Person, whether in connection with this Agreement, the transactions contemplated hereby or by the L/C-Related Documents or any unrelated transaction; (c) any draft, demand, certificate or other document presented under any Letter of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect; or any loss or delay in the transmission or otherwise of any document required in order to make a drawing under any Letter of Credit; (d) any payment by the Issuing Bank under any Letter of Credit against presentation of a draft or certificate that does not strictly comply with the terms of any Letter of Credit; or any payment made by the Issuing Bank under any Letter of Credit to any Person purporting to be a trustee in bankruptcy, debtor-in-possession, assignee for the benefit of creditors, liquidator, receiver or other representative of or successor to any beneficiary or any transferee of any Letter of Credit; (e) any exchange, release or non-perfection of any collateral, or any release or amendment or waiver of or consent to departure from any guarantee, for all or any of the obligations of the Company or any other Person in respect of any Letter of Credit; or (f) any other circumstance or happening whatsoever, whether or not similar to any of the foregoing, including any other circumstance that might otherwise constitute a defense available to, or a discharge of, a guarantor; provided that after paying in full its reimbursement obligation hereunder, nothing herein shall adversely affect the right of the Company to commence any proceeding against the Issuing Bank for any wrongful disbursement made by the Issuing Bank under a Letter of Credit as a result of any act or omission constituting gross negligence or willful misconduct on the part of the Issuing Bank. -38- 7.07 Letter of Credit Fees. (a) The Company shall pay to the Administrative Agent for the account of the Committed Lenders a letter of credit fee with respect to the Letters of Credit at a rate per annum equal to the L/C Fee Rate (as in effect from time to time) on the daily maximum Dollar Equivalent amount available to be drawn under the outstanding Letters of Credit, computed on the last Business Day of each calendar quarter and on the Termination Date (or such later date on which all Letters of Credit have been terminated) based upon Letters of Credit outstanding for the applicable period as calculated by the Administrative Agent. (b) The Company shall pay to the Issuing Bank a letter of credit fronting fee for each Letter of Credit Issued by the Issuing Bank at the rate per annum separately agreed to by the Company and the Issuing Bank on the daily maximum Dollar Equivalent amount available to be drawn under the outstanding Letters of Credit, computed on the last Business Day of each calendar quarter and on the Termination Date (or such later date on which all Letters of Credit have been terminated) based upon the Letters of Credit outstanding for the applicable period as calculated by the Issuing Bank. (c) The letter of credit fees payable under subsection (a) and the fronting fees payable under subsection (b) shall be payable quarterly in arrears on the last Business Day of each calendar quarter during which Letters of Credit are outstanding and on the Termination Date (or such later date upon which all outstanding Letters of Credit shall have been terminated). (d) The Company shall pay to the Issuing Bank from time to time on demand the normal issuance, presentation, amendment and other processing fees, and other standard costs and charges, of the Issuing Bank relating to letters of credit as from time to time in effect. 7.08 Uniform Customs and Practice. The International Standby Practices as published by the Institute for International Banking Law & Practice, Inc. most recently at the time of issuance of any Letter of Credit shall (unless otherwise expressly provided in such Letter of Credit) apply to such Letter of Credit. 7.09 Letters of Credit for the Account of Subsidiaries. The Company and the applicable Subsidiary shall be jointly and severally liable for any Letter of Credit which is issued jointly for the account of the Company and any Subsidiary. ARTICLE VIII COMPETITIVE BID FACILITY 8.01 Competitive Bid Loans. Each Lender agrees that the Company may from time to time prior to the Termination Date request the Committed Lenders to submit offers to make Bid Loans to the Company in an aggregate principal amount at any time outstanding not to exceed US$100,000,000. Each Committed Lender may, but shall have no obligation to, submit such offers and the Company may, but shall have no obligation to, accept any such offers; provided that at no time shall the Total Outstandings exceed the Total Commitments. -39- 8.02 Procedures for Bid Borrowings. (a) The Company may request the Committed Lenders to submit offers to make Bid Loans by sending the Administrative Agent by facsimile a written notice substantially in the form of Exhibit D (a "Competitive Bid Request") so as to be received no later than 10:00 A.M. (Chicago time) one Business Day prior to the date of a proposed Bid Borrowing, specifying: (i) the date of the proposed Bid Borrowing, which shall be a Business Day; (ii) the aggregate amount of such Bid Borrowing, which shall be a minimum amount of US$5,000,000 or a higher integral multiple of US$1,000,000; and (iii) the duration of the Interest Period applicable thereto The Company may not request the Administrative Agent to solicit offers for Competitive Bids for more than three Interest Periods in a single Competitive Bid Request and may not request Competitive Bids more than once in any period of five Business Days. (b) Upon receipt of a Competitive Bid Request, the Administrative Agent will promptly send to the Committed Lenders by facsimile transmission an Invitation for Competitive Bids, which shall constitute an invitation by the Company to each Committed Lender to submit Competitive Bids offering to make the Bid Loans to which such Competitive Bid Request relates in accordance with this Section 8.02. (c) (i) Each Committed Lender may in its discretion submit a Competitive Bid containing an offer or offers to make Bid Loans in response to any Invitation for Competitive Bids. Each Competitive Bid must comply with the requirements of this subsection 8.02(c) and must be submitted to the Administrative Agent by facsimile transmission at its office specified pursuant to Section 16.01 not later than 8:45 A.M. (Chicago time) on the proposed Borrowing Date; provided that Competitive Bids submitted by the Administrative Agent (in its individual capacity) or any Affiliate thereof may only be submitted if such entity notifies the Company of the terms of the offer or offers contained therein not later than 8:30 A.M. (Chicago time) on the proposed Borrowing Date. (ii) Each Competitive Bid shall be in substantially the form of Exhibit F, specifying therein: (A) the proposed Borrowing Date; (B) the principal amount of each Bid Loan for which such Competitive Bid is being made, which principal amount (x) may be equal to, greater than or less than the Commitment of the quoting Committed Lender, (y) must be $5,000,000 or a higher integral multiple of $1,000,000 and (z) may not exceed the principal amount of Bid Loans for which Competitive Bids were requested; (C) the rate of interest per annum expressed in multiples of 1/100th of one basis point (the "Absolute Rate") offered for each such Bid Loan and the Interest Period applicable thereto; and -40- (D) the identity of the quoting Committed Lender. A Competitive Bid may contain up to three separate offers by the quoting Committed Lender with respect to each Interest Period specified in the related Invitation for Competitive Bids. (iii) Any Competitive Bid shall be disregarded if it: (A) is not substantially in conformity with Exhibit F or does not specify all of the information required by subsection 8.02(c)(ii); (B) contains qualifying, conditional or similar language; (C) proposes terms other than or in addition to those set forth in the applicable Invitation for Competitive Bids; or (D) arrives after the time set forth in subsection 8.02(c)(i). (d) Promptly on receipt and not later than 9:00 A.M. (Chicago time) on the proposed Borrowing Date, the Administrative Agent will notify the Company of the terms (i) of any Competitive Bid submitted by a Committed Lender that is in accordance with subsection 8.02(c) and (ii) of any Competitive Bid that amends, modifies or is otherwise inconsistent with a previous Competitive Bid submitted by such Committed Lender with respect to the same Competitive Bid Request. Any such subsequent Competitive Bid shall be disregarded by the Administrative Agent unless such subsequent Competitive Bid is submitted solely to correct a manifest error in such former Competitive Bid and only if received within the times set forth in subsection 8.02(c). The Administrative Agent's notice to the Company shall specify (1) the aggregate principal amount of Bid Loans for which offers have been received for each Interest Period specified in the related Competitive Bid Request; (2) the respective principal amounts and Absolute Rates offered for each Interest Period and (3) any other information regarding such Competitive Bid reasonably requested by the Company. Subject only to the provisions of Article XI and the provisions of this subsection (d), any Competitive Bid shall be irrevocable except with the written consent of the Administrative Agent given on the written instructions of the Company. (e) Not later than 9:15 A.M. on the proposed Borrowing Date, the Company shall notify the Administrative Agent, in writing and in a form reasonably acceptable to the Administrative Agent, of its acceptance or non-acceptance of the offers notified to it pursuant to subsection 8.02(d). The Company shall be under no obligation to accept any offer and may choose to accept or reject some or all of such offers. In the case of acceptance, such notice shall specify the aggregate principal amount of offers for each Interest Period that is accepted. The Company may accept any Competitive Bid in whole or in part; provided that: (i) the aggregate principal amount of each Bid Borrowing may not exceed the applicable amount set forth in the related Competitive Bid Request; (ii) the principal amount of each Bid Borrowing must be US$5,000,000 or a higher integral multiple of US$1,000,000; -41- (iii) acceptance of offers may only be made on the basis of ascending Absolute Rates within each Interest Period; and (iv) the Company may not accept any offer that is described in subsection 8.02(c)(iii) or that otherwise fails to comply with the requirements of this Agreement. (f) If offers are made by two or more Committed Lenders with the same Absolute Rates for a greater aggregate principal amount than the amount in respect of which such offers are accepted for the related Interest Period, the principal amount of Bid Loans in respect of which such offers are accepted shall be allocated by the Administrative Agent among such Committed Lenders (in such multiples, not less than US$1,000,000, as the Administrative Agent may deem appropriate) as nearly as practicable in proportion to the aggregate principal amounts of such offers. Determination by the Administrative Agent of the amounts of Bid Loans shall be conclusive in the absence of demonstrable error. (g) (i) The Administrative Agent will promptly notify each Committed Lender having submitted a Competitive Bid if its offer has been accepted and, if its offer has been accepted, of the amount of the Bid Loan or Bid Loans to be made by it on the date of the Bid Borrowing. (ii) Each Committed Lender which has received notice pursuant to subsection 8.02(g)(i) that its Competitive Bid has been accepted with respect to any Bid Loan shall make the amount of such Bid Loan available to the Administrative Agent in Same Day Funds for the account of the Company at the Administrative Agent's Payment Office, by noon (Chicago time) on the applicable Borrowing Date. (iii) Promptly following each Bid Borrowing, the Administrative Agent shall notify each Committed Lender of the range of bids submitted and the highest and lowest bids accepted for each Interest Period requested by the Company and the aggregate amount borrowed pursuant to such Bid Borrowing. ARTICLE IX GENERAL CREDIT TERMS 9.01 Repayment. All Loans and all other obligations of the Borrowers hereunder shall be due and payable in full on July 25, 2006 (or such earlier date as shall be required pursuant hereto). 9.02 Payment of Interest. Interest on each Loan shall be paid in arrears on each applicable Interest Payment Date; provided that any interest on UK Loans which, absent this proviso, would be payable prior to the UK Deferral Date shall be payable on the UK Deferral Date. Interest shall also be paid on the date of any prepayment of Loans (other than US Base Rate Loans and Prime Rate Loans) for the portion of the Loans so prepaid. In addition, during the existence of any Event of Default, interest on all Loans shall be paid on demand of the Administrative Agent at the request or with the consent of the Required Lenders. -42- 9.03 Payments. (a) All payments by the Borrowers hereunder in respect of UK Loans, Canadian Loans, EMU Loans and Swing Line Loans shall be made to the UK Lender, the Canadian Lender, the EMU Lender or the Swing Line Lender, as the case may be, at its Payment Office. All payments by the Borrowers hereunder in respect of any amount payable under Article X shall be made directly to the Lender entitled to receive such payment. All other payments by the Borrowers hereunder shall be made to the Administrative Agent at its Payment Office. All such payments shall be made prior to noon (local time at the place of payment) on the date due, and funds received after that time shall be deemed received on the following Business Day. All such payments shall be made in the currency required herein and without setoff or counterclaim. (b) If any payment hereunder falls due on a day which is not a Business Day, then such due date shall be extended to the immediately following Business Day (unless, in the case of a Eurocurrency Loan, such immediately following Business Day is the first Business Day of a calendar month, in which case such due date shall be the immediately preceding Business Day). 9.04 Adjustment of Sublimits. So long as no Event of Default or Unmatured Event of Default exists, the Company may from time to time change the amount of each of the UK Sublimit, the Canadian Sublimit, the EMU German Sublimit and the EMU Lux Sublimit by giving notice of such change to the Administrative Agent and the respective UK Lender, Canadian Lender and EMU Lender (which notice shall specify the effective date of such change, which shall not be less than three Business Days after such notice is received); provided that (a) the aggregate amount available under all such Sublimits shall not exceed the lesser of US$250,000,000 or the Total Commitment; (b) the Canadian Sublimit shall not exceed the lesser of US$50,000,000 or the Total Commitment; and (c) the UK Lender, the Canadian Lender or the EMU Lender, respectively, must consent to any increase in the UK Sublimit, the Canadian Sublimit, the EMU German Sublimit or the EMU Lux Sublimit, as the case may be. 9.05 Loan Accounts. The Loans and the L/C Obligations shall be evidenced by one or more accounts or records maintained by the Administrative Agent, each Committed Lender, the UK Lender, the Canadian Lender, the EMU Lender, the Issuing Bank or the Swing Line Lender, as the case may be, in the ordinary course of business. The accounts or records so maintained shall be rebuttable presumptive evidence of the amount of the Loans and the L/C Obligations outstanding by each applicable Lender to each applicable Borrower. Any failure to record or any error in recording any such amount shall, not, however, limit or otherwise affect the obligation of the applicable Borrower hereunder to pay any amount owing with respect to any Loan or any other obligation hereunder, including the L/C Obligations. 9.06 Notes. Upon the request of any Lender made through the Administrative Agent, the Loans made by such Lender to any Borrower may be evidenced by one or more Notes issued by such Borrower, instead of loan accounts. Each such Lender may endorse on the schedule annexed to the applicable Note the date, amount and maturity of each applicable Loan made by it and the amount of each payment of principal made by the applicable Borrower with respect thereto. Each such Lender is irrevocably authorized by each Borrower to endorse the applicable Note and each such Lender's record shall be rebuttable presumptive evidence of the amount of the Loans made by such Lender to such Borrower; provided that the failure of a Lender to make, -43- or an error in making, a notation on any Note with respect to any Loan shall not limit or otherwise affect the obligations of the applicable Borrower hereunder or under such Note. 9.07 Fees. In addition to certain fees described in Section 7.07: (a) Arrangement, Agency Fees. The Company shall pay arrangement fees to the Lead Arranger for the Lead Arranger's own account, and shall pay agency and other fees to the Administrative Agent for the Administrative Agent's own account, as mutually agreed to in writing from time to time by the Company, the Lead Arranger and the Administrative Agent. (b) Facility Fees. The Company shall pay to the Administrative Agent for the account of each Committed Lender a facility fee computed at a rate per annum equal to the Facility Fee Rate on the amount such Lender's Commitment, regardless of usage. Such facility fee shall accrue from the date of this Agreement to the Termination Date, and shall be due and payable quarterly in arrears on the last Business Day of each calendar quarter and on the Termination Date. (c) Usage Fee. Each UK Borrower and EMU Borrower shall pay to the Administrative Agent for the account of each Committed Lender a usage fee computed at a rate per annum equal to the Usage Fee Rate (plus, upon request of the Required Lenders at any time an Event of Default exists, 2%) on the principal amount of each UK Loan or EMU Loan, as the case may be, outstanding from time to time. Such usage fee shall be payable with respect to each UK Loan and EMU Loan on each date on which interest is payable on such Loan. 9.08 Computation of Fees and Interest. (a) All computations of interest for US Base Rate Loans when the interest rate is determined by the "reference rate" of Bank of America and for Prime Rate Loans shall be made on the basis of a year of 365 or 366 days, as the case may be, and actual days elapsed. All computations of interest on UK Loans shall be made on the basis of a year of 365 days and actual days elapsed. All other computations of interest and fees shall be made on the basis of a 360-day year and actual days elapsed (which results in more interest and fees being paid than if computed on the basis of a 365-day year). Interest and fees shall accrue during each period during which interest or fees are computed from the first day thereof to the last day thereof. (b) Each determination of an interest rate or a Dollar Equivalent amount by the Administrative Agent, the UK Lender, the Canadian Lender, the EMU Lender or the Swing Line Lender, as the case may be, shall be conclusive and binding on the Borrowers and the Lenders in the absence of manifest error. The Administrative Agent (or, if applicable, the UK Lender, the Canadian Lender, the EMU Lender or the Swing Line Lender) will, at the request of the applicable Borrower or any Committed Lender, deliver to such Borrower or such Committed Lender, as the case may be, a statement showing the quotations used by the Administrative Agent (or such Lender) in determining any interest rate or Dollar Equivalent amount. 9.09 Currency Exchange Fluctuations. If on any Computation Date the Administrative Agent shall have determined that the then outstanding Dollar Equivalent principal amount of the -44- Total Outstanding exceeds the Total Commitment due to a change in applicable rates of exchange between US Dollars, on the one hand, and any Applicable Currency, on the other hand, then the Administrative Agent shall give notice to the Company that a prepayment is required under this Section, and the Borrowers agree thereupon to make prepayments of Loans such that, after giving effect to such prepayment, the Total Outstandings will not exceed the Total Commitment. 9.10 Participation Obligations Unconditional. (a) Each Committed Lender's obligation to make Loans pursuant to Section 6.06 to refund Swing Line Loans and/or to purchase participation interests in UK Loans, Canadian Loans, EMU Loans and/or Swing Line Loans pursuant to Section 3.06, 4.06, 5.06 and/or 6.07, as applicable, shall be absolute and unconditional and shall not be affected by any circumstance whatsoever, including (a) any set-off, counterclaim, recoupment, defense or other right which such Committed Lender may have against any other Lender, any Borrower or any other Person for any reason whatsoever; (b) the occurrence or continuance of an Event of Default, an Unmatured Event of Default or a Material Adverse Effect; (c) any breach of this Agreement by any Borrower or any other Lender; (d) any inability of any Borrower to satisfy the conditions precedent to borrowing set forth in this Agreement on the date upon which any Swing Line Loan is to be refunded or any participation interest in any Loan is to be purchased; or (e) any other circumstance, happening or event whatsoever, whether or not similar to any of the foregoing. (b) Notwithstanding the provisions of subsection (a) above, no Committed Lender shall be required to make any Loan to a Borrower to refund a Swing Line Loan pursuant to Section 6.06 or to purchase a participation interest in a UK Loan, Canadian Loan, EMU Loan and/or Swing Line Loan pursuant to Section 3.06, 4.06, 5.06 or 6.07, as applicable, if, at least two Business Days prior to the making of such UK Loan, Canadian Loan, EMU Loan and/or Swing Line Loan, the Administrative Agent and the UK Lender, the Canadian Lender, the EMU Lender or the Swing Line Lender, as the case may be, received written notice from such Committed Lender specifying that such Committed Lender believed in good faith that one or more of the conditions precedent to the making of such Loan were not satisfied (and detailing its basis for such good faith belief) and, in fact, such conditions precedent to the making of such Loan were not satisfied at the time of the making of such Loan; provided that the obligation of such Committed Lender to make such Loan and/or to purchase such participation interest shall be reinstated upon the earlier of (i) the date on which such Committed Lender notifies the Swing Line Lender that its prior notice has been withdrawn or (ii) the date on which all conditions precedent to the making of such UK Loan, Canadian Loan, EMU Loan and/or Swing Line Loan have been satisfied (or waived by the Required Lenders or all Committed Lenders, as applicable). 9.11 Order and Proration of Payments. (a) If any payment received by the Administrative Agent by or on behalf of the Company hereunder is insufficient to pay in full the amounts then due and payable by the Company hereunder and the Administrative Agent has not received a Payment Sharing Notice, such payment shall be distributed to the Lenders (and for purposes of this Agreement shall be deemed to have been applied by the Lenders, notwithstanding the fact that any Lender may have -45- made a different application in its books and records) in the following order: first, to the payment of the principal amount of the Committed Loans, Bid Loans and Swing Line Loans which are then due and payable and to the reimbursement obligations of the Company then due in respect of any Letter of Credit, ratably among the Lenders in accordance with the aggregate principal amount of such Loans and reimbursement obligations owed to each Lender; second, to the payment of interest then due and payable on the Committed Loans, Bid Loans and Swing Line Loans and on the reimbursement obligations of the Company in respect of Letters of Credit, ratably among the Lenders in accordance with the aggregate amount of interest owed to each Lender; third, to the payment of the fees then due and payable by the Company hereunder, ratably among the Lenders in accordance with the aggregate amount of such fees owed to each Lender; and fourth, to the payment of any other amounts payable by the Company under this Agreement, ratably among the Lenders in accordance with the aggregate amount of such payments owed to each Lender. (b) After the Administrative Agent has received a Payment Sharing Notice, all payments received by the Administrative Agent by or on behalf of the Company to be distributed to Lenders shall be distributed to the Lenders (and for purposes of this Agreement shall be deemed to have been applied by the Lenders, notwithstanding the fact that any Lender may have made a different application in its books and records) in the following order: first, to the payment of amounts payable by the Company under Section 16.03, ratably among the Administrative Agent and the Lenders in accordance with the aggregate amount of such payments owed to the Administrative Agent and each Lender; second, to the payment of fees payable by the Company under Sections 7.07 and 9.07, ratably among the Lenders in accordance with the aggregate amount of such fees owed to each Lender; third, to the payment of the principal amount of and interest accrued on the Loans to the Company, the reimbursement obligations of the Company in respect of Letters of Credit (including contingent obligations in respect of undrawn Letters of Credit) and the obligations of the Company under Article XVII, regardless of whether any such amount is then due and payable, ratably among the Lenders in accordance with the aggregate amount of such Loans and other obligations owed to such Lenders; and fourth, to the payment of any other amount payable by the Company under this Agreement, ratably among the Lenders in accordance with the amount owed to each Lender. Any amount to be distributed pursuant to clause third of the first sentence of this subsection (b) for application to contingent obligations in respect of undrawn Letters of Credit shall be held by the Administrative Agent as cash collateral hereunder. If any Letter of Credit is thereafter drawn upon, the Administrative Agent shall distribute to the Issuing Bank an amount equal to the lesser of the Dollar Equivalent amount of such draw and the amount of the cash collateral held by the Administrative Agent pursuant to the preceding sentence. If any Letter of Credit expires or terminates or the amount available for drawing thereunder is reduced and, after giving effect to such expiration, termination or reduction, the amount of cash collateral held by the Administrative Agent pursuant to the second preceding sentence exceeds the aggregate undrawn Dollar Equivalent amount of all then-outstanding Letters of Credit, such excess shall promptly be applied by the Administrative Agent in the manner and priority set forth in clauses first, second, third and fourth of the first sentence of this subsection (b). (c) If, other than as expressly provided elsewhere herein, any Committed Lender shall obtain any payment or other recovery (whether voluntary, involuntary, by application of offset, enforcement of security or otherwise) on account of principal of or interest on any Loan -46- (including any Bid Loan) or any participation therein, any participation in any Letter of Credit or any fees in excess of the share of payments and other recoveries (exclusive of payments or recoveries under Article X) such Committed Lender would have received if such payment or recovery had been distributed pursuant to the provisions of subsection 9.11(a) or (b) (whichever is applicable at the time of such payment or other recovery), such Committed Lender shall purchase from the other Committed Lenders, in a manner to be reasonably specified by the Administrative Agent, such participations in the Loans held by them (and, if applicable, such sub-participations in the participations in Loans and L/C Obligations held by them) as shall be necessary to cause such purchasing Committed Lender to share the excess payment or other recovery ratably with each of them in accordance with the order of payments set forth in subsection 9.11(a) or (b), as applicable; provided that if all or any portion of the excess payment or other recovery is thereafter recovered from such purchasing Committed Lender, the purchase shall be rescinded and the purchase price restored to the extent of such recovery, but without interest. (d) The Dollar Equivalent amount of the principal of and accrued and unpaid interest on each obligation of the Company denominated in a currency other than US Dollars shall be determined by the Administrative Agent as of (i) in the case of any distribution pursuant to subsection 9.11(a) or (b), the date of such distribution, and (ii) in the case of receipt by any Committed Lender of any payment or other recovery which may be subject to subsection 9.11(c) (or any disgorgement by any Committed Lender pursuant to the proviso to such subsection), as of the date of such receipt (or such disgorgement). 9.12 Judgment Currency. If for the purposes of obtaining judgment in any court it is necessary to convert a sum due from a Borrower hereunder in the currency expressed to be payable herein (the "specified currency") into another currency, the parties hereto agree, to the fullest extent that they may effectively do so, that the rate of exchange used shall be that at which in accordance with normal banking procedures the Administrative Agent (or, in the case of any amount relating to a UK Loan, a Canadian Loan or an EMU Loan, the UK Lender, the Canadian Lender or the EMU Lender, respectively) could purchase the specified currency with such other currency at the Administrative Agent's (or such Lender's) Payment Office on the Business Day preceding that on which final judgment is given. The obligation of any Borrower in respect of any sum due to any Lender or the Administrative Agent hereunder shall, notwithstanding any judgment in a currency other than the specified currency, be discharged only to the extent that on the Business Day following receipt by such Lender or the Administrative Agent, as the case may be, of any sum adjudged to be so due in such other currency, such Lender or the Administrative Agent, as the case may be, may in accordance with normal banking procedures purchase the specified currency with such other currency. If the amount of the specified currency so purchased is less than the sum originally due to such Lender or the Administrative Agent, as the case may be, in the specified currency, the applicable Borrower shall, to the fullest extent that it may effectively do so, as a separate obligation and notwithstanding any such judgment, indemnify such Lender or the Administrative Agent, as the case may be, against such loss, and if the amount of the specified currency so purchased exceeds the total of (a) the sum originally due to such Lender or the Administrative Agent, as the case may be, in the specified currency and (b) any amount shared with other Lenders as a result of allocations of such excess as a disproportionate payment to such Lender under subsection 9.11(c), such Lender or the -47- Administrative Agent, as the case may be, agrees to remit such excess to the applicable Borrower. ARTICLE X CHANGE IN CIRCUMSTANCES 10.01 Increased Cost and Reduced Return. (a) If, after the date hereof, any change in, the adoption of any new applicable law, rule or regulation, or any change in the interpretation or administration thereof by any Governmental Authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by any Lender (or its Applicable Lending Office) with any request or directive (whether or not having the force of law) of any such Governmental Authority, central bank or comparable agency: (i) shall subject such Lender (or its Applicable Lending Office) to any tax, duty or other charge with respect to any Loans, any Note or its obligation to make or to participate in Loans, or shall change the basis of taxation of any amount payable to such Lender (or its Applicable Lending Office) under this Agreement or any Note in respect of any Loans (other than taxes imposed on the overall net income of such Lender by the jurisdiction in which such Lender has its principal office or such Applicable Lending Office); (ii) shall impose, modify, or deem applicable any reserve, special deposit, assessment, compulsory advance, or similar requirement (other than the Reserve Requirement utilized in the determination of the Adjusted Eurocurrency Rate or the Mandatory Cost) relating to any extensions of credit or other assets of, or any deposits with or other liabilities or commitments of, such Lender (or its Applicable Lending Office) hereunder; or (iii) shall impose on such Lender (or its Applicable Lending Office) or the applicable offshore interbank market any other condition affecting this Agreement or any Loan; and the result of any of the foregoing is to increase the cost to such Lender (or its Applicable Lending Office) of making, converting into, continuing or maintaining or participating in any Loan or to reduce any sum received or receivable by such Lender (or its Applicable Lending Office) under this Agreement or any Note with respect to any Loan, then the applicable Borrower shall pay to such Lender on demand such amount or amounts as will compensate such Lender for such increased cost or reduction. (b) If, after the date hereof, any Lender shall have determined that any change in, the adoption of any new, applicable law, rule or regulation regarding capital adequacy, or in the interpretation or administration thereof by any Governmental Authority, central bank or comparable agency charged with the interpretation or administration thereof, or any request or directive regarding capital adequacy (whether or not having the force of law) of any such Governmental Authority, central bank or comparable agency, has or would have the effect of -48- reducing the rate of return on the capital of such Lender or any corporation controlling such Lender as a consequence of such Lender's obligations hereunder to a level below that which such Lender or such corporation could have achieved but for such adoption, change, request, or directive (taking into consideration its policies with respect to capital adequacy), then from time to time upon demand the Company shall pay to such Lender such additional amount or amounts as will compensate such Lender for such reduction. (c) Any Lender claiming compensation under this Section 10.01 shall furnish to the Company and the Administrative Agent a statement setting forth the basis for, and a calculation in reasonable detail of, the additional amount or amounts to be paid to it hereunder which shall be conclusive in the absence of manifest error. In determining such amount, any Lender may use any reasonable averaging and attribution methods. 10.02 Limitation on Types of Loan. If on or prior to the first day of any Interest Period for any Eurocurrency Loan: (a) the Administrative Agent (in the case of a Committed Loan) or the applicable Lender (in the case of any other Eurocurrency Loan) determines (which determination shall be conclusive) that by reason of circumstances affecting the relevant market, adequate and reasonable means do not exist for ascertaining the Eurocurrency Rate in the Applicable Currency, or (b) the Required Lenders (in the case of Committed Loans) notify the Administrative Agent that they have determined, or the applicable Lender (in the case of any other Eurocurrency Loan) determines (which determination shall, in each case, be conclusive), that the applicable Eurocurrency Rate (or, in the case of Committed Loans, the Adjusted Eurocurrency Rate) will not adequately and fairly reflect the cost to such Lenders or Lender of funding such Loans or Loan in the applicable currency for such Interest Period; then the Administrative Agent or the applicable Lender, as the case may be, shall give the applicable Borrower (and, if such notice is given by a Lender, the Administrative Agent) prompt notice thereof, and so long as such condition remains in effect, (i) the Committed Lenders or the applicable Lender, as the case may be, shall be under no obligation to make Eurocurrency Loans in the Applicable Currency and (ii) on the last day of the then current Interest Period for each outstanding Eurocurrency Loan in the Applicable Currency to such Borrower, such Borrower shall repay such Loans or, in the case of the Company or a Canadian Borrower, convert such Loans into the other Type of Loan available to such Borrower in accordance with the terms of this Agreement. 10.03 Changes in Law Rendering Eurocurrency Loans Unlawful. If any change in any, or the adoption of any new, applicable law, rule or regulation, or any change in the interpretation or administration thereof by any Governmental Authority, central bank or comparable agency or other regulatory body charged with the administration or interpretation thereof, should make it (or in the good faith judgment of any Lender cause a substantial question as to whether it is) unlawful for any Lender to make, maintain or fund any Eurocurrency Loan in any Applicable Currency, then such Lender shall promptly notify the applicable Borrower and the -49- Administrative Agent and, so long as such circumstances shall continue, (a) such Lender shall have no obligation to make or convert into any Eurocurrency Loan in the Applicable Currency (but, in the case of a Committed Lender, shall make a US Base Rate Loan concurrently with the making of or conversion into Eurocurrency Loans in the Applicable Currency by the Lenders which are not so affected, in each case in a Dollar Equivalent amount equal to such Lender's Pro Rata Share of the applicable Committed Borrowing) and (b) on the last day of the current Interest Period for each Eurocurrency Loan of such Lender in the Applicable Currency (or, in any event, on such earlier date as may be required by the relevant law, regulation or interpretation), such Eurocurrency Loan shall be paid in full (or, in the case of a Committed Loan (unless the Committed Borrowing of which such Committed Loan is a part is paid in full), shall automatically convert to a US Base Rate Loan in US Dollars in an amount equal to the Dollar Equivalent amount of such Eurocurrency Loan). Each US Base Rate Loan made by a Committed Lender which, but for the circumstances described in the foregoing sentence, would be a Eurocurrency Loan (an "Affected Loan") shall remain outstanding for the same period as the Borrowing of Eurocurrency Loans of which such Affected Loan would be a part absent such circumstances. 10.04 Funding Losses. The applicable Borrower shall reimburse each Lender and hold each Lender harmless from any loss or expense which such Lender may sustain or incur as a consequence of: (a) the failure of such Borrower to borrow, continue or convert a Loan into a Eurocurrency Loan after such Borrower has given (or is deemed to have given) a notice of such borrowing, continuation or conversions; (b) the failure of such Borrower to make any prepayment of any Loan in accordance with any notice delivered pursuant hereto; (c) the prepayment (including pursuant to Section 10.03) or other payment (including after acceleration thereof) of the principal of any Loan by such Borrower on a day that is not the last day of an Interest Period; or (d) the automatic conversion under subsection 2.03(a) or 4.03(a) of any Eurocurrency Loan on a day that is not the last day of an Interest Period; including any such loss or expense arising from the liquidation or reemployment of funds obtained by such Lender to maintain the applicable Loan or from fees payable to terminate the deposits from which such funds were obtained. For purposes of calculating amounts payable by a Borrower to any Lender under this Section, (i) each Eurocurrency Loan made by a Lender (and each related reserve, special deposit or similar requirement) shall be conclusively deemed to have been funded at the Eurocurrency Rate used in determining the interest rate for the applicable (including any proposed) Interest Period by a matching deposit or other borrowing in the interbank eurocurrency market for a comparable amount and for a comparable period and in the same Applicable Currency, whether or not such Eurocurrency Loan is in fact so funded. -50- 10.05 Taxes. (a) Any and all payments by any Borrower to any Lender or the Administrative Agent under this Agreement shall be made free and clear of, and without deduction or withholding for, any Taxes. In addition, each Borrower shall pay all Other Taxes. (b) If any Borrower shall be required by law to deduct or withhold any Taxes or Other Taxes from or in respect of any sum payable hereunder to any Lender or the Administrative Agent, then: (i) the sum payable shall be increased as necessary so that, after making all required deductions and withholdings (including deductions and withholdings applicable to additional sums payable under this Section 10.05), such Lender or Administrative Agent, as the case may be, receives and retains an amount equal to the sum it would have received and retained had no such deductions or withholdings been made; (ii) such Borrower shall make such deductions and withholdings; and (iii) such Borrower shall pay the full amount deducted or withheld to the relevant taxing authority or other authority in accordance with applicable law. (c) Each Borrower agrees to indemnify and hold harmless each Lender and the Administrative Agent for the full amount of Taxes or Other Taxes in the amount that such Lender or the Administrative Agent specifies is necessary to preserve the after-tax yield such Lender or the Administrative Agent would have received if such Taxes or Other Taxes had not been imposed, and any liability (including penalties, interest, additions to tax and expenses) arising therefrom or with respect thereto, whether or not such Taxes or Other Taxes were correctly or legally asserted. Payment under this indemnification shall be made within 30 days after the date the applicable Lender or the Administrative Agent makes written demand therefor. (d) Within 30 days after the date of any payment by the applicable Borrower of Taxes or Other Taxes, such Borrower shall furnish to the applicable Lender and the Administrative Agent the original or a certified copy of a receipt evidencing payment thereof, or other evidence of payment satisfactory to such Lender or Administrative Agent. (e) Each Committed Lender organized under the laws of a jurisdiction outside the United States, on or prior to the date of its execution and delivery of this Agreement in the case of each Committed Lender listed on the signature pages hereof and on or prior to the date on which it becomes a Committed Lender in the case of any other such Committed Lender, and from time to time thereafter if requested in writing by the Company (but only so long as such Committed Lender remains lawfully able to do so), shall provide the Company and the Administrative Agent with (i) IRS Form W-8BEN or W-8ECI, as appropriate, or any successor form prescribed by the IRS, certifying that such Committed Lender is entitled to benefits under an income tax treaty to which the United States is a party which reduces the rate of withholding tax on payments of interest or certifying that the income receivable pursuant to this Agreement is effectively connected with the conduct of a trade or business in the United States, (ii) IRS Form W-8 or W-9, as appropriate, or any successor form prescribed by the IRS, and (iii) any other form or certificate required by any taxing authority (including any certificate required by -51- Sections 871(h) and 881(c) of the Internal Revenue Code), certifying that such Lender is entitled to an exemption from or a reduced rate of tax on payments pursuant to this Agreement. (f) Each Committed Lender that will not be funding its participation in UK Loans out of, or will not be booking its portion of usage fees payable by UK Borrowers in, an office in the United Kingdom (or another jurisdiction having an exemption from United Kingdom income tax by treaty) shall submit a duly completed Form FD13 double tax treaty form to the IRS (or the comparable form for its jurisdiction to its jurisdiction's tax authorities) no later than January 24, 2004, seeking exemption from United Kingdom income tax on interest and fees payable under this Agreement by UK Borrowers. (g) If any Lender or the Administrative Agent determines in its reasonable discretion that it has received a refund or credit of Taxes or Other Taxes (or of any liability, including penalties, interest, additions to tax and expenses, arising therefrom or with respect thereto) paid by any Borrower or with respect to which any Borrower has made any indemnity payment pursuant to this Section 10.05, or any other tax benefit as a result of any payment by any Borrower pursuant to this Section 10.05, then such Lender or the Administrative Agent shall promptly repay the applicable Borrower to the extent of such refund, credit or benefit; provided that if, due to any adjustment of such Taxes or Other Taxes (or of any liability, including penalties, interest, additions to tax and expenses, arising therefrom or with respect thereto), or of such other tax benefit, such Lender or the Administrative Agent loses the benefit of all or any portion of such refund, credit or benefit, the applicable Borrower will indemnify and hold harmless such Lender or the Administrative Agent in accordance with this Section 10.05. Nothing in this subsection (g) shall require the Administrative Agent or any Lender to utilize any such credits ahead of other credits that may be available to the Administrative Agent or such Lender from other sources. Moreover, nothing shall require the Administrative Agent or any Lender to make its books and records available for inspection by any Borrower. (h) Without prejudice to the survival of any other agreement of any Borrower hereunder, the agreements and obligations of each Borrower contained in this Section 10.05 shall survive the termination of the Commitments and the payment in full of all obligations of the Borrowers hereunder. 10.06 Right of Lenders to Fund through Other Offices. Each Lender may, if it so elects, fulfill its commitment as to any Eurocurrency Loan by causing a foreign branch or affiliate of such Lender to make such Loan, provided that in such event for the purposes of this Agreement such Loan shall be deemed to have been made by such Lender and the obligation of the applicable Borrower to repay such Loan shall nevertheless be to such Lender and shall be deemed held by it, to the extent of such Loan, for the account of such branch or affiliate. 10.07 Discretion of Lenders as to Manner of Funding. Notwithstanding any provision of this Agreement to the contrary, each Lender shall be entitled to fund and maintain its funding of all or any part of its Loans in any manner it sees fit, it being understood, however, that for the purposes of this Agreement all determinations hereunder shall be made as if such Lender had actually funded and maintained each Eurocurrency Loan during each Interest Period for such Loan through the purchase of deposits having a maturity corresponding to such Interest Period and bearing an interest rate equal to the Eurocurrency Rate for such Interest Period. -52- 10.08 Mitigation of Circumstances; Replacement of Affected Lender. (a) Each Lender shall promptly notify the applicable Borrower and the Administrative Agent of any event of which it has knowledge which will result in, and will use reasonable commercial efforts available to it (and not, in such Lender's good faith judgment, otherwise disadvantageous to such Lender) to mitigate or avoid, (i) any obligation of a Borrower to pay any amount pursuant to Section 10.01 or 10.05 or (ii) the occurrence of any circumstances of the nature described in Section 10.02 or 10.03, and, if any Lender has given notice of any such event described in clause (i) or (ii) above and thereafter such event ceases to exist, such Lender shall promptly so notify the applicable Borrower and the Administrative Agent. Without limiting the foregoing, each Lender will designate a different Applicable Lending Office if such designation will avoid (or reduce the cost to the applicable Borrower of) any event described in clause (i) or (ii) of the preceding sentence and such designation will not, in such Lender's sole judgment, be otherwise disadvantageous to such Lender. (b) At any time any Committed Lender is an Affected Lender, the Company may replace such Affected Lender as a party to this Agreement with one or more other bank(s) or financial institution(s) reasonably satisfactory to the Administrative Agent, the UK Lender, the Canadian Lender, the EMU Lender, the Swing Line Lender and the Issuing Bank (and upon notice from the Company such Affected Lender shall assign pursuant to an Assignment Agreement, and without recourse or warranty, its Commitment, its Loans and all of its other rights and obligations hereunder to such replacement bank(s) or other financial institution(s) for a purchase price equal to the sum of the principal amount of the Loans so assigned, all accrued and unpaid interest thereon, its ratable share of all accrued and unpaid facility fees, usage fees and Letter of Credit fees, any amounts payable under Section 10.04 as a result of such Lender receiving payment of any Eurocurrency Loan prior to the end of an Interest Period therefor and all other obligations owed to such Affected Lender hereunder). 10.09 Economic and Monetary Union in the European Community. (a) Without prejudice and in addition to any method of conversion or rounding prescribed by the EMU Legislation and without prejudice to the liabilities for indebtedness of the Borrowers to the Lenders under or pursuant to this Agreement, each reference in this Agreement to a fixed amount or fixed amounts (or an integral multiple thereof) in a national currency of a Subsequent Participant to be paid to or by the Administrative Agent shall be replaced by a reference to such reasonably comparable and convenient fixed amount or fixed amounts (or an integral multiple thereof) in Euro as the Administrative Agent may from time to time specify. (b) Without prejudice to the respective liabilities of the Borrowers to the Lenders and the Lenders to the Borrowers under or pursuant to this Agreement each provision of this Agreement shall be subject to such reasonable changes of construction as the Administrative Agent in consultation with the Company may from time to time specify to be necessary or appropriate to reflect the introduction of or changeover to the Euro in Participating Member States. 10.10 Conclusiveness of Statements; Survival of Provisions. Determinations and statements of any Lender pursuant to Section 10.01, 10.02, 10.03, 10.04 or 10.05 shall be -53- conclusive absent demonstrable error. Lenders may use reasonable averaging and attribution methods in determining compensation under Sections 10.01, 10.04 and 10.05, and the provisions of such Sections shall survive repayment of the Loans and any termination of this Agreement. ARTICLE XI CONDITIONS TO CREDIT EXTENSIONS The obligation of each Lender to make any Credit Extension is subject to the satisfaction of the following conditions precedent: 11.01 Initial Credit Extension. The obligation of the Lenders to make the initial Credit Extension is subject to the conditions precedent that the Administrative Agent shall have received (a) all amounts which are then due and payable pursuant to Section 9.07 and (to the extent billed) Section 16.03, (b) evidence, reasonably satisfactory to the Administrative Agent that all obligations (other than contingent indemnity obligations) of the Company, Pentair Canada, Pentair UK and EuroPentair under the Existing Agreement have been (or concurrently will be) paid in full, and (c) all of the following, each duly executed and dated the Closing Date (or such earlier date as shall be satisfactory to the Administrative Agent), in form and substance satisfactory to the Administrative Agent, and each (except for the Notes, of which only the originals shall be signed) in sufficient number of signed counterparts to provide one for each Lender: (a) Notes. Any Notes. (b) Resolutions. Certified copies of resolutions of the Board of Directors (or other appropriate body) each Borrower authorizing or ratifying the execution, delivery and performance by such Borrower of this Agreement and any Note to be issued by such Borrower. (c) Incumbency and Signature Certificates. A certificate of the Secretary or an Assistant Secretary (or other appropriate official) of each Borrower certifying the names of the officer or officers of such entity authorized to sign this Agreement and any Note to be issued by such entity, together with a sample of the true signature of each such officer. (d) Opinions of Counsel. The opinions of (a) Louis L. Ainsworth, Senior Vice President and General Counsel of the Company, and (b) Mayer, Brown & Platt, special Illinois counsel to the Administrative Agent. (e) Closing Certificate. A certificate of a Senior Financial Officer of the Company to the effect that, except as disclosed in the Company's Form 10-Q filed on May 12, 2003, since December 31, 2002, no material adverse change has occurred in the business, assets, liabilities (actual or contingent), operations, condition (financial or otherwise) or prospects of the Company and its Subsidiaries taken as a whole. (f) Confirmation of Subsidiary Guaranty. A confirmation in the form of Exhibit K hereto executed by each Subsidiary that is a party to the Subsidiary Guaranty. -54- (g) Other. Such other documents as the Administrative Agent or any Lender may reasonably request. The certificate and opinions referred to in subsections (c) and (d) above shall be dated no more than ten Business Days before the date of the first Borrowing or the issuance of the first Letter of Credit, whichever is earlier. 11.02 All Credit Extensions. The obligation of the applicable Lender to make each Credit Extension (including the initial Credit Extension) is subject to the conditions precedent that: (a) the applicable Borrower shall have delivered timely notice of such Credit Extension in accordance with the terms hereof; (b) no Event of Default or Unmatured Event of Default shall have occurred and be continuing or would result from such Credit Extension; (c) the representations and warranties of the Company contained in this Agreement shall be true on and as of the date of such Credit Extension; and (d) after giving effect to such Credit Extension, (i) the Total Outstandings will not exceed the Total Commitment and (ii) no applicable Sublimit or other limitation on Credit Extension hereunder will be exceeded. Each request for a Credit Extension shall be deemed to be a representation and warranty by the Company (and, if applicable, the Borrower requesting such Credit Extension) that the conditions precedent specified in clauses (b), (c) and (d) above have been satisfied. 11.03 Certain Credit Extensions. The obligation of: (a) the UK Lender to make any UK Loan to any UK Borrower is subject to the condition precedent that the Administrative Agent shall have received (with sufficient copies for each Lender) an opinion of Faegre Benson Hobson Audley LLP (or other UK counsel to Pentair UK reasonably satisfactory to the Administrative Agent) as to the matters set forth on Schedule 11.03 with respect to the applicable UK Borrower; (b) the Canadian Lender to make any Canadian Loan to any Canadian Borrower is subject to the condition precedent that the Administrative Agent shall have received (with sufficient copies for each Lender) an opinion of Gowling, Strathy & Henderson (or other Canadian counsel to Pentair Canada reasonably satisfactory to the Administrative Agent) as to the matters set forth on Schedule 11.03 with respect to the applicable Canadian Borrower; (c) the EMU Lender to make any EMU Loan to any EMU Borrower organized under the laws of Germany is subject to the condition precedent that the Administrative Agent shall have received (with sufficient copies for each Lender) an opinion of Faegre Benson Brendel (or other German counsel to EuroPentair reasonably -55- satisfactory to the Administrative Agent) as to the matters set forth on Schedule 11.03 with respect to the applicable EMU Borrower; and (d) the EMU Lender to make any EMU Loan to any Borrower organized under the laws of Luxembourg is subject to the condition precedent that the Administrative Agent shall have received (with sufficient copies for each Lender) an opinion of Luxembourg counsel to Pentair Global reasonably satisfactory to the Administrative Agent) as to the matters set forth on Schedule 11.03 with respect to the applicable EMU Borrower. ARTICLE XII REPRESENTATIONS AND WARRANTIES The Borrowers represent and warrant that: 12.01 Corporate Existence and Power. (a) The Company is a corporation duly incorporated, validly existing and in good standing under the laws of Minnesota and has all corporate powers and all material governmental licenses, authorizations, consents and approvals required to carry on its business as now conducted. (b) EuroPentair GmbH, for so long as it is a Borrower hereunder, is a limited liability company duly organized and validly existing under the laws of Germany, with its seat in Straubenhardt, Germany and registered in the Handelsregister in the Amtsgericht Pforzheim under file number HRB-3548, and has all organizational powers and all material governmental licenses, authorizations, consents and approvals required to carry on its business as now conducted; and each other EMU Borrower organized under the laws of Germany, if any, is a limited liability company or other entity duly organized and validly existing under the laws of Germany, and has all organizational powers and all material governmental licenses, authorizations, consents and approvals required to carry on its business as now conducted. (c) Pentair Global, for so long as it is a Borrower hereunder, is a limited liability company duly organized and validly existing under the laws of Luxembourg and has all organizational powers and all material governmental licenses, authorizations, consents and approvals required to carry on its business as now conducted; and each other EMU Borrower organized under the laws of Luxembourg, if any, is a limited liability company or other entity duly organized and validly existing under the laws of Luxembourg and has all organizational powers and all material governmental licenses, authorizations, consents and approvals required to carry on its business as now conducted. (d) Pentair Canada, Inc., for so long as it is a Borrower hereunder, is a corporation duly incorporated, validly existing and in good standing under the laws of Ontario, Canada and has all corporate powers and all material governmental licenses, authorizations, consents and approvals required to carry on its business as now conducted; and each other Canadian Borrower, if any, is a corporation or other entity duly organized, validly existing and in good standing under the laws of a province of Canada and has all organizational powers and all -56- material governmental licenses, authorizations, consents and approvals required to carry on its business as now conducted. (e) Pentair UK, for so long as it is a Borrower hereunder, is a limited company duly incorporated under the laws of England and Wales, has been in continuous and unbroken existence since the date of its incorporation, and no action is currently being taken by the Registrar of Companies for striking Pentair UK off the register and dissolving it as defunct, and Pentair UK has all corporate powers and all material governmental licenses, authorizations, consents and approvals required to carry on its business as now conducted; and each other UK Borrower, if any, is a limited company or other entity duly organized under the laws of England and Wales, has been in continuous and unbroken existence since the date of its organization, and no action is currently being taken by the Registrar of Companies for striking such UK Borrower off the register and dissolving it as defunct, and each such UK Borrower has all organizational powers and all material governmental licenses, authorizations, consents and approvals required to carry on its business as now conducted. 12.02 Corporate and Governmental Authorization; Contravention. The execution, delivery and performance by the Borrowers of this Agreement and the Notes are within their respective corporate powers, have been duly authorized by all necessary corporate action, require no action by or in respect of, or filing with, any governmental body, agency or official and do not contravene, or constitute a default under, any provision of applicable law or regulation or of the certificate of incorporation or by-laws or other organizational documents of any Borrower or of any agreement, judgment, injunction, order, decree or other instrument binding upon any Borrower or result in the creation or imposition of any Lien on any asset of the Company or any of its Subsidiaries (including any Borrower). 12.03 Binding Effect. This Agreement constitutes a valid and binding agreement of each of the Borrowers, and the Notes, when executed and delivered in accordance with this Agreement, will constitute valid and binding obligations of the respective Borrowers. 12.04 Financial Information. (a) The audited consolidated balance sheet of the Company and its Consolidated Subsidiaries at December 31, 2002, and the related consolidated statements of income and cash flows for the fiscal year then ended, reported on by Deloitte & Touche LLP and set forth in the Company's annual report for the year ended December 31, 2002, as filed with the Securities and Exchange Commission on Form 10-K, a copy of which has been delivered to each Lender, fairly present, in conformity with GAAP, the consolidated financial position of the Company and its Consolidated Subsidiaries at such date and their consolidated results of operations and cash flows for such fiscal year. (b) The unaudited consolidated balance sheet of the Company and its Consolidated Subsidiaries at March 29, 2003 and the related unaudited consolidated statements of income and cash flows for the three months then ended, set forth in the Company's quarterly report for the fiscal quarter ended March 29, 2003 as filed with the Securities and Exchange Commission on Form 10-Q, a copy of which has been delivered to each Lender, fairly present, in conformity with GAAP applied on a basis consistent with the financial statements referred to in paragraph -57- (a) of this Section, the consolidated financial position of the Company and its Consolidated Subsidiaries at such date and their consolidated results of operations and cash flows for such three-month period (subject to normal year-end adjustments and the absence of footnotes). (c) Except as disclosed in the Company's Form 10-Q filed on May 12, 2003, since December 31, 2002, there has been no material adverse change in the business, financial position, results of operations or prospects of the Company and its Consolidated Subsidiaries, considered as a whole. 12.05 Litigation. Except as disclosed on Schedule 12.05, there is no action, suit or proceeding pending, or to the knowledge of any of the Borrowers threatened, against or affecting any of the Borrowers or any of their respective Subsidiaries before any court or arbitrator or any governmental body, agency or official in which there is a reasonable possibility of an adverse decision which could materially adversely affect the business, consolidated financial position or consolidated results of operations of the Company and its Consolidated Subsidiaries, taken as a whole, or which in any manner questions the validity of this Agreement or the Notes. 12.06 Compliance with ERISA. Each of the Company and each ERISA Affiliate has fulfilled its obligations under the minimum funding standards of ERISA and the Code with respect to each applicable Plan and is in compliance in all material respects with the presently applicable provisions of ERISA and the Code, and has not incurred any material liability to the PBGC or a Plan under Title IV of ERISA (other than premiums which have been timely paid or for which an extension of the time for payment has been granted). 12.07 Taxes. The Borrowers and their respective Subsidiaries have filed all foreign, United States federal, state and local income, excise and other tax returns which are required to be filed by them and have paid or made provision for the payment of all taxes which have become due pursuant to such returns or pursuant to any assessment in respect thereof received by any Borrower or any of its Subsidiaries, except such taxes, if any, as are being contested in good faith and for which adequate reserves have been provided. The federal income tax liability, if any, of the Borrowers and their respective Subsidiaries has been examined by the IRS and paid for all years prior to and including the fiscal year ended December 31, 1996. 12.08 Subsidiaries. Each of the Borrowers' respective Subsidiaries is a corporation duly incorporated, validly existing and in good standing under the laws of its jurisdiction of incorporation and has all corporate powers and all material governmental licenses, authorizations, consents and approvals required to carry on its business as now conducted. 12.09 Not an Investment Company. None of the Borrowers is an "investment company" within the meaning of the Investment Company Act of 1940, as amended. 12.10 Environmental Matters. The Company conducts in the ordinary course of business a review of the effect of existing Environmental Laws and existing Environmental Claims on business, operations and properties of the Company and its Subsidiaries, and as a result thereof the Company has reasonably concluded that such Environmental Laws and Environmental Claims could not, individually or in the aggregate, reasonably be expected to -58- have a material adverse effect on the business, consolidated financial position or consolidated results of operations of the Company and its Subsidiaries taken as a whole. 12.11 Tax Shelter Regulations. The Borrowers do not intend to treat the Loans and/or Letters of Credit and related transactions as being a "reportable transaction" (within the meaning of Treasury Regulation Section 1.6011-4). In the event any Borrower determines to take any action inconsistent with such intention, it will promptly notify the Administrative Agent thereof. If the Borrower so notifies the Administrative Agent, the Borrower acknowledges that one or more of the Lenders may treat its Committed Loans, Bid Loans and/or its interest in Swing Line Loans and/or Letters of Credit as part of a transaction that is subject to Treasury Regulation Section 301.6112-1, and such Lender or Lenders, as applicable, will maintain the lists and other records required by such Treasury Regulation. 12.12 Insurance. The properties of the Company and its Subsidiaries are insured with financially sound and reputable insurance companies (and/or pursuant to a self-insurance program) in such amounts, with such deductibles and covering such risks as are customarily carried by companies engaged in similar businesses and owning similar properties in localities where the Company or the applicable Subsidiary operates. 12.13 Default. No Event of Default or Unmatured Event of Default has occurred and is continuing. 12.14 Use of Proceeds. The Borrowers will use the proceeds of the Credit Extensions solely for the purposes described in Section 13.07. ARTICLE XIII COVENANTS The Borrowers agree that so long as any Lender has any Commitment hereunder or any amount payable by any Borrower hereunder remains unpaid: 13.01 Information. The Company will deliver to the Administrative Agent and each of the Lenders: (a) as soon as available and in any event within 90 days after the end of each fiscal year of the Company, commencing with the fiscal year ending December 31, 2003, a consolidated balance sheet of the Company and its Consolidated Subsidiaries at the end of such fiscal year and the related consolidated statements of income and cash flows for such fiscal year, setting forth in each case in comparative form the figures for the previous fiscal year, all reported on in accordance with the rules and regulations of the Securities and Exchange Commission and audited by Deloitte & Touche LLP or other independent public accountants of nationally recognized standing; (b) as soon as available and in any event within 45 days after the end of each of the first three quarters of each fiscal year of the Company, commencing with the fiscal quarter ending June 30, 2003, a consolidated balance sheet of the Company and its Consolidated Subsidiaries at the end of such quarter and the related consolidated -59- statements of income and cash flows for such quarter and for the portion of the Company's fiscal year ended at the end of such quarter, setting forth in each case in comparative form the figures for the corresponding quarter and the corresponding portion of the Company's previous fiscal year, all certified (subject to normal year-end adjustments and the absence of footnotes) as to fairness of presentation, GAAP and consistency by a Senior Financial Officer; (c) simultaneously with the delivery of each set of financial statements referred to in subsections (a) and (b) above, a certificate of a Senior Financial Officer (i) setting forth in reasonable detail the calculations required to establish whether the Company was in compliance with the requirements of Sections 13.02 and 13.03 on the date of such financial statements and (ii) stating whether there exists on the date of such certificate any Event of Default or Unmatured Event of Default and, if any such event then exists, setting forth the details thereof and the action which the Company is taking or proposes to take with respect thereto; (d) forthwith upon the occurrence of any Event of Default or Unmatured Event of Default, a certificate of the chief financial officer, the chief accounting officer or the vice president-treasurer of the Company setting forth the details thereof and the action which the Company is taking or proposes to take with respect thereto; (e) promptly upon the mailing thereof to the shareholders of the Company generally, copies of all financial statements, reports and proxy statements so mailed; (f) promptly upon the filing thereof, copies of all registration statements (other than the exhibits thereto and any registration statements on Form S-8 or its equivalent) and annual, quarterly or monthly reports which the Company shall have filed with the Securities and Exchange Commission; (g) if and when the Company or ERISA Affiliate or is required to give notice to the PBGC of any "reportable event" (as defined in Section 4043 of ERISA) with respect to any Plan which might constitute grounds for a termination of such Plan under Title IV of ERISA, or knows that the plan administrator of any Plan has given or is required to give notice of any such reportable event, a copy of the notice of such reportable event given or required to be given to the PBGC; (h) promptly upon obtaining knowledge thereof, the commencement of, or any material development in, any material litigation or governmental proceeding affecting the Company or any Subsidiary, including pursuant to any applicable Environmental Law; (i) promptly upon the occurrence thereof, notice of any change in the Company's credit rating by Moody's or S& P; (j) promptly after any Borrower has notified the Administrative Agent of any intention by such Borrower to treat the Loans and/or Letters of Credit and related transactions as being a "reportable transaction" (within the meaning of Treasury -60- Regulation Section 1.6011-4), a duly completed copy of IRS Form 8886 or any successor form; (k) from time to time such additional information regarding the financial position or business of the Borrowers as the Administrative Agent, at the request of any Lender, may reasonably request; and (l) documents required to be delivered pursuant to Section 13.01(a), (b) or (f) (to the extent any such documents are included in materials otherwise filed with the SEC) may be delivered electronically and if so delivered, shall be deemed to have been delivered on the date (i) on which the Company posts such documents, or provides a link thereto, on the Company's website on the Internet at the website address listed on Schedule 16.01; or (ii) on which such documents are posted on the Company's behalf on IntraLinks/IntraAgency or another relevant website, if any, to which each Lender and the Administrative Agent have access (whether a commercial, third-party website or whether sponsored by the Administrative Agent); provided that: (i) the Company shall deliver paper copies of such documents to the Administrative Agent or any Lender that requests the Company to deliver such paper copies until a written request to cease delivering paper copies is given by the Administrative Agent or such Lender and (ii) the Company shall notify (which may be by facsimile or electronic mail) the Administrative Agent and each Lender of the posting of any such documents and provide to the Administrative Agent by electronic mail electronic versions (i.e., soft copies) of such documents. Notwithstanding anything contained herein, in every instance the Company shall be required to provide paper copies of the certificates required by Section 13.01(c) to the Administrative Agent and each of the Lenders. Except for such certificates, the Administrative Agent shall have no obligation to request the delivery or to maintain copies of the documents referred to above, and in any event shall have no responsibility to monitor compliance by the Company with any such request for delivery, and each Lender shall be solely responsible for requesting delivery to it or maintaining its copies of such documents. 13.02 Maximum Leverage Ratio. The Company shall not at any time permit the Leverage Ratio to exceed 3.00 to 1.00. 13.03 Minimum Interest Coverage Ratio. The Company shall not permit the Interest Coverage Ratio for any period of four consecutive fiscal quarters of the Company ending on the last day of a fiscal quarter of the Company to be less than 3.00 to 1.00. 13.04 Negative Pledge. Neither the Company nor any Subsidiary will create, assume or suffer to exist any Lien on any asset now owned or hereafter acquired by any of them, except: (a) any Lien existing on the date of this Agreement and disclosed in the financial statements referred to in Section 12.04 or set forth in Schedule 13.04, and any extension, renewal or replacement of any such Lien so long as the principal amount secured thereby is not increased and the scope of the property subject to such Lien is not extended; -61- (b) Liens imposed by law for taxes, assessments or charges of any Governmental Authority for claims not yet due, or to the extent that such Lien is being contested in good faith by appropriate proceedings and adequate reserves in accordance with GAAP are being maintained therefor, provided that no notice of Lien has been filed or recorded under the Code; (c) statutory Liens of landlords and Liens of carriers, warehousemen, mechanics, materialmen and other Liens imposed by law or created in the ordinary course of business which are not delinquent or remain payable without penalty or which are being contested in good faith by appropriate proceedings, which proceedings have the effect of preventing the forfeiture or sale of the property subject thereto; (d) Liens (other than any Lien imposed by ERISA) consisting of pledges or deposits required in the ordinary course of business in connection with workers' compensation, unemployment insurance and other social security legislation; (e) Liens on property of the Company or any Subsidiary securing (i) the non-delinquent performance of bids, trade contracts (other than for borrowed money), leases or statutory obligations, (ii) surety bonds (excluding appeal bonds and other bonds posted in connection with court proceedings or judgments) and (iii) other non-delinquent obligations of a like nature in each case incurred in the ordinary course of business; (f) Liens consisting of judgment or judicial attachment liens and Liens securing contingent obligations on appeal bonds and other bonds posted in connection with court proceedings or judgments, provided that (i) in the case of judgment and judicial attachment liens, the enforcement of such Liens is effectively stayed, and (ii) all such Liens in the aggregate at any time outstanding for the Company and its Subsidiaries do not exceed US$10,000,000; (g) easements, rights-of-way, restrictions and other similar encumbrances incurred in the ordinary course of business which, individually or in the aggregate, do not materially detract from the value of the property subject thereto or materially interfere with the ordinary conduct of the businesses of the Company and its Subsidiaries; (h) Liens securing obligations in respect of capital leases on assets subject to such leases, provided that such capital leases are otherwise permitted hereunder; (i) Liens arising solely by virtue of any statutory or common law provision relating to banker's liens, rights of set-off or similar rights and remedies as to deposit accounts or other funds maintained with a creditor depository institution; provided that (i) such deposit account is not a dedicated cash collateral account and is not subject to restrictions against access by the Company or the applicable Subsidiary in excess of those set forth by regulations promulgated by the FRB and (ii) such deposit account is not intended by the Company or any Subsidiary to provide collateral to the depository institution; (j) Liens arising in connection with Securitization Transactions; provided that the aggregate investment or claim held at any time by all purchasers, assignees or other -62- transferees of (or of interests in) receivables and other rights to payment in all Securitization Transactions shall not at any time exceed in the aggregate US$150,000,000; and (k) in addition to Liens permitted by subsections (a) through (j) above, other Liens securing Debt in a Dollar Equivalent amount not exceeding 12.5% of Consolidated Shareholders' Equity. 13.05 Consolidations, Mergers and Sales of Assets; Acquisitions. (a) No Borrower will merge or consolidate with any other non-affiliated Person or sell, lease, transfer or otherwise dispose of substantially all of its assets as an entirety to any other Person unless: (i) the Person surviving the merger or consolidation is the applicable Borrower; and (ii) immediately after giving effect to any such action, no Event of Default or Unmatured Event of Default shall have occurred and be continuing. (b) The Company will not, and will not permit any Subsidiary to, make any Acquisition other than Permitted Acquisitions. 13.06 Subsidiary Debt. The Company will not at any time permit the aggregate amount of all outstanding Debt of its Subsidiaries, excluding: (a) Debt arising under Securitization Transactions in an aggregate amount not exceeding US$150,000,000; (b) Debt under this Agreement; (c) Debt of Subsidiaries existing as of the Closing Date and identified on Schedule 13.06; (d) Debt under the Subsidiary Guaranty; and (e) so long as the Subsidiary Guaranty is in effect, Debt arising under unsecured guaranties of other Senior Debt of the Company; to exceed fifteen percent (15%) of Consolidated Shareholders' Equity. 13.07 Use of Proceeds. The proceeds of the Loans will be used by the Borrowers to refinance indebtedness, for commercial paper back-up, for working capital and for all other general corporate purposes (including Acquisitions permitted hereunder). None of such proceeds will be used, directly or indirectly, for the purpose, whether immediate, incidental or ultimate, of purchasing or carrying any "margin stock" in violation of Regulation U of the FRB. -63- 13.08 Compliance with Contractual Obligations and Law. The Company shall, and shall cause each Subsidiary to, comply with all material contractual obligations of each such entity and all Requirements of Law of any Governmental Authority having jurisdiction over it or its business the non-compliance with which might have a Material Adverse Effect. Without limiting the foregoing, the Company shall, and shall cause each of its Subsidiaries to, conduct its operations in compliance with all Environmental Laws, except for such noncompliance which individually or in the aggregate would not be reasonably expected to result in material liability to the Company and its Subsidiaries taken as a whole. 13.09 Securitization Transactions. The Company shall not, and shall not permit any Subsidiary to, permit the aggregate outstanding investment or claim held by purchasers, assignees or transferees of (or of interests in) receivables of the Company and its Subsidiaries in connection with Securitization Transactions to exceed a Dollar Equivalent amount of US$150,000,000. 13.10 Insurance. The Company shall, and shall cause each Subsidiary to, maintain, with financially sound and reputable insurers (and/or pursuant to a self-insurance program), insurance with respect to its properties and business against loss or damage of the kinds customarily insured against by Persons engaged in the same or similar businesses, of such types and in such amounts as are customarily carried under similar circumstances by such other Persons. 13.11 Ownership of Borrowers. The Company shall at all times own and control, directly or indirectly, all of the equity interests (other than directors' qualifying shares) of each of the other Borrowers (unless, in the case of any such Borrower, such Borrower has paid all of its obligations hereunder and notified the Administrative Agent that it shall no longer be a "Borrower" hereunder and shall cease to be a party hereto). 13.12 Subsidiary Guaranty. The Company will take, and will cause its Subsidiaries to take, such actions as are reasonably necessary or as the Administrative Agent may reasonably request (including delivery of authorization documents and customary opinions of counsel) so that (subject to the proviso below) all of the Company's obligations hereunder are guaranteed by Subsidiaries (other than Foreign Subsidiaries) that, in the aggregate together with the Company, own 90% or more of the consolidated assets of the Company and its Subsidiaries (excluding Foreign Subsidiaries) and earned 90% or more of the consolidated revenue of the Company and its Subsidiaries (excluding Foreign Subsidiaries) during the most recent period of four consecutive fiscal quarters (excluding the revenues of any Subsidiary or business unit which has been divested or liquidated on or prior to any date of determination), in each case pursuant to the Subsidiary Guaranty; provided that the provisions of this Section 13.12 shall cease to be effective (and thereafter no Subsidiary shall be obligated to guarantee the Company's obligations hereunder) on the first date after the date hereof on which the Company's long term senior unsecured non-credit-enhanced public Debt is rated BBB or better by S&P and Baa2 or better by Moody's. -64- ARTICLE XIV EVENT OF DEFAULT 14.01 Events of Default. If one or more of the following events shall have occurred and be continuing: (a) any of the Borrowers shall fail to pay within two Business Days of the date due any principal of any Loan; or any of the Borrowers shall fail to pay within five days of the date due any interest on any Loan, any fee or any other amount payable hereunder; (b) any of the Borrowers shall fail to observe or perform any covenant contained in Sections 13.02 to 13.07, inclusive, or Section 13.09; (c) any of the Borrowers shall fail to observe or perform any other covenant or agreement contained in this Agreement for 30 days after the earlier of (i) the date on which written notice thereof has been given to the Company by the Administrative Agent at the request of any Lender or (ii) if the Company fails to promptly notify the Administrative Agent and the Lenders of such failure as required by Section 13.01(d), the date on which the chief executive officer, the chief financial officer, the chief accounting officer or the vice president-treasurer of the Company had actual knowledge of such failure; (d) any representation, warranty, certification or statement made by any of the Borrowers in this Agreement or in any certificate, financial statement or other document delivered pursuant to this Agreement shall prove to have been incorrect in any material respect when made; (e) the Company or any Subsidiary (i) fails to make any payment of Material Financial Obligations when due (whether by scheduled maturity, required prepayment, acceleration, demand or otherwise, but after giving effect to any applicable grace or cure period); or (ii) fails to perform or observe any other condition or covenant, or any other event shall occur or condition exist, under one or more agreements or instruments relating to Material Financial Obligations, if the effect of such failure, event or condition is to cause (or require), or to permit the holder or holders of such Material Financial Obligations (or the beneficiary or beneficiaries of such Material Financial Obligations (or a trustee or agent on behalf of such holder or holders or beneficiary or beneficiaries)) to cause (or require), such Material Financial Obligations to become due and payable (or to be purchased, repurchased, defeased or cash collateralized) prior to the stated maturity thereof; (f) the Company or any Material Subsidiary shall commence a voluntary case or other proceeding seeking liquidation, reorganization or other relief with respect to itself or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect or seeking the appointment of a trustee, receiver, liquidator, custodian or other similar official of it or any substantial part of its property or shall consent to any such -65- relief or to the appointment of or taking possession by any such official in an involuntary case or other proceeding commenced against it or shall make a general assignment for the benefit of creditors or shall commence or consent to a proceeding for approval of a plan of arrangement with respect to its debts or shall fail generally to pay its debts as they become due or shall take any corporate action to authorize any of the foregoing; (g) an involuntary case or other proceeding shall be commenced against the Company or any Material Subsidiary seeking liquidation, reorganization or other relief with respect to it or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect or seeking the appointment of a trustee, receiver, liquidator, custodian or other similar official of it or any substantial part of its property and such involuntary case or other proceeding shall remain undismissed and unstayed for a period of 60 days; or an order for relief shall be entered against the Company or any Material Subsidiary under the federal bankruptcy laws or similar bankruptcy or insolvency laws of any other applicable jurisdiction as now or hereafter in effect; (h) the Company or any ERISA Affiliate shall fail to pay when due an amount or amounts aggregating in excess of US$15,000,000 which it shall have become liable to pay to the PBGC or to a Plan under Title IV of ERISA; or the Company or ERISA Affiliate shall file a distress termination notice with the PBGC and the amount of the Unfunded Vested Liabilities under that filing exceeds US$10,000,000; or the PBGC shall institute judicial proceedings under Title IV of ERISA to terminate or to cause a trustee to be appointed to administer any such Plan or Plans which have Unfunded Vested Liabilities in an aggregate amount exceeding US$10,000,000; or a judicial proceeding shall be instituted by a fiduciary of any such Plan or Plans to enforce Section 515 of ERISA, the aggregate amount of delinquent contributions claimed to be owed pursuant to such Section 515 in such proceeding shall exceed US$10,000,000, and such proceeding shall not have been dismissed within 30 days; (i) a judgment or order for the payment of money in excess of a Dollar Equivalent amount of US $30,000,000 shall be rendered against any Borrower or any of its respective Subsidiaries (net of insurance proceeds in the event a solvent insurer with an investment grade long term bond rating has acknowledged in writing its obligation to satisfy such judgment) and such judgment or order shall continue unsatisfied and unstayed for a period of 60 days; (j) any Person or two or more Persons acting in concert shall have acquired beneficial ownership (within the meaning of Rule 13d-3 of the Securities and Exchange Commission under the Securities Exchange Act of 1934) of 30% or more of the outstanding shares of voting stock of the Company; (k) within a period of twelve consecutive months, three-fourths of the directors of the board of directors of the Company shall have changed; (l) this Agreement, the Notes or any other document executed in connection herewith, at any time after its execution and delivery and for any reason other than as expressly permitted hereunder or satisfaction in full of all the obligations hereunder, -66- ceases to be in full force and effect; or any Borrower or any other Person contests in any manner the validity or enforceability of any such document; or any Borrower or any other Person denies that it has any or further liability or obligation under any such document, or purports to revoke, terminate or rescind any such document; or (m) at any time during which the Subsidiary Guaranty is required to be in effect pursuant to Section 13.12, the Subsidiary Guaranty shall cease to be in full force and effect with respect to any Subsidiary Guarantor (other than as a result of such Subsidiary Guarantor ceasing to be a Subsidiary pursuant to a transaction permitted hereunder), any Subsidiary Guarantor shall fail (subject to any applicable grace period) to comply with or to perform any applicable provision of the Subsidiary Guaranty, or any Subsidiary Guarantor (or any Person by, through or on behalf of such Subsidiary Guarantor) shall contest in any manner the validity, binding nature or enforceability of the Subsidiary Guaranty with respect to such Subsidiary Guarantor. then, and in any such event, (1) in the case of any Event of Default specified in subsection (f) or (g) above, without any notice to the Borrowers or any other act by the Administrative Agent or any Lender, the Commitments shall immediately terminate and the Loans and all other obligations of the Borrowers hereunder shall become immediately due and payable without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Borrowers; and (2) in the case of any other Event of Default, the Administrative Agent shall (i) if requested by the Required Lenders, by notice to the Borrowers (with a copy to all Lenders), terminate the Commitments, which shall thereupon immediately terminate, and/or (ii) if requested by the Required Lenders, by notice to the Borrowers (with a copy to all Lenders), declare the Loans and all other obligations of the Borrowers hereunder to be, and the Loans and such obligations shall thereupon become, immediately due and payable, in each case without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Borrowers. 14.02 Notice of Default. The Administrative Agent shall give notice to the Borrowers under subsection 14.01(c) promptly upon being requested to do so by any Lender and shall thereupon notify all the Lenders thereof. 14.03 Cash Collateral for Letters of Credit. In addition to the remedies specified above, if any Event of Default described in subsection 14.01(f) or (g) shall have occurred, or if any other Event of Default described in Section 14.01 shall have occurred and be continuing and the Administrative Agent shall (at the request of the Required Lenders) have demanded that the Borrowers provide cash collateral for the L/C Obligations, the Company shall pay to the Issuing Bank an amount equal to the then outstanding L/C Obligations. Such payment shall be in Same Day Funds which shall be held by such Administrative Agent in a cash collateral account until all outstanding Letters of Credit are terminated without payment or are paid. In the event the Company defaults in the payment of any L/C Obligations, the proceeds of the cash collateral -67- account shall be applied to the payment thereof. The Company acknowledges and agrees that the Lenders would not have an adequate remedy at law for failure by the Company to pay immediately to the Administrative Agent the amount provided under this Section, and that the Administrative Agent and the Lenders shall have the right to require the Company to perform specifically such undertaking whether or not any of the L/C Obligations are due and payable. ARTICLE XV THE ADMINISTRATIVE AGENT 15.01 Appointment and Authorization. (a) Each Lender hereby irrevocably (subject to Section 15.09) appoints, designates and authorizes the Administrative Agent to take such action on its behalf under the provisions of this Agreement and to exercise such powers and perform such duties as are expressly delegated to it by the terms of this Agreement, together with such powers as are reasonably incidental thereto. Notwithstanding any provision to the contrary contained elsewhere in this Agreement, the Administrative Agent shall not have any duties or responsibilities, except those expressly set forth herein, nor shall the Administrative Agent have or be deemed to have any fiduciary relationship with any Lender, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or otherwise exist against the Administrative Agent. Without limiting the generality of the foregoing sentence, the use of the term "agent" in this Agreement with reference to the Administrative Agent is not intended to connote any fiduciary or other implied (or express) obligations arising under agency doctrine of any applicable law. Instead, such term is used merely as a matter of market custom, and is intended to create or reflect only an administrative relationship between independent contracting parties. (b) The Issuing Bank shall act on behalf of the Lenders with respect to any Letters of Credit Issued by it and the documents associated therewith until such time and except for so long as the Administrative Agent may agree at the request of the Required Lenders to act for the Issuing Bank with respect thereto; provided that the Issuing Bank shall have all of the benefits and immunities (i) provided to the Administrative Agent in this Article XV with respect to any acts taken or omissions suffered by the Issuing Bank in connection with Letters of Credit Issued by it or proposed to be Issued by it and the L/C Related Documents as fully as if the term "Administrative Agent", as used in this Article XV, included the Issuing Bank with respect to such acts or omissions and (ii) as additionally provided in this Agreement with respect to the Issuing Bank. (c) Each of the UK Lender, the Canadian Lender, the EMU Lender and the Swing Line Lender shall have all of the benefits and immunities (i) provided to the Administrative Agent in this Article XV with respect to any acts taken or omissions suffered by such Person in connection with UK Loans, Canadian Loans, EMU Loans and Swing Line Loans, as the case may be, made or proposed to be made by it as fully as if the term "Administrative Agent," as used in this Article XV, included the UK Lender, the Canadian Lender, the EMU Lender and the Swing Line Lender, as the case may be, with respect to such acts or omissions and (ii) as additionally provided in this Agreement with respect to the UK Lender, the Canadian Lender, the EMU Lender and the Swing Line Lender. -68- 15.02 Delegation of Duties. The Administrative Agent may execute any of its duties under this Agreement by or through agents, employees or attorneys-in-fact and shall be entitled to advice of counsel concerning all matters pertaining to such duties. The Administrative Agent shall not be responsible for the negligence or misconduct of any agent or attorney-in-fact that it selects with reasonable care. 15.03 Liability of Administrative Agent. None of the Agent-Related Persons shall (i) be liable for any action taken or omitted to be taken by any of them under or in connection with this Agreement or the transactions contemplated hereby (except for its own gross negligence or willful misconduct) or (ii) be responsible in any manner to any of the Lenders for any recital, statement, representation or warranty made by the Company or any Subsidiary or Affiliate of the Company, or any officer thereof, contained in this Agreement, or in any certificate, report, statement or other document referred to or provided for in, or received by the Administrative Agent under or in connection with, this Agreement, or the validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement or any Note, or for any failure of the Company, any other Borrower or any other Person to perform its obligations hereunder. No Agent-Related Person shall be under any obligation to any Lender to ascertain or to inquire as to the observance or performance of any of the agreements contained in, or conditions of, this Agreement or to inspect the properties, books or records of the Company or any of its Subsidiaries or Affiliates. 15.04 Reliance by Administrative Agent. (i) The Administrative Agent shall be entitled to rely, and shall be fully protected in relying, upon any writing, resolution, notice, consent, certificate, affidavit, letter, telegram, facsimile, telex or telephone message, statement or other document or conversation believed by it to be genuine and correct and to have been signed, sent or made by the proper Person or Persons, and upon advice and statements of legal counsel (including counsel to the Company), independent accountants and other experts selected by the Administrative Agent. The Administrative Agent shall be fully justified in failing or refusing to take any action under this Agreement unless it shall first receive such advice or concurrence of the Required Lenders as it deems appropriate and, if it so requests, it shall first be indemnified to its satisfaction by the Lenders against any and all liability and expense which may be incurred by it by reason of taking or continuing to take any such action. The Administrative Agent shall in all cases be fully protected in acting, or in refraining from acting, under this Agreement in accordance with a request or consent of the Required Lenders, and such request and any action taken or failure to act pursuant thereto shall be binding upon all of the Lenders. (ii) For purposes of determining compliance with the conditions specified in Article XI, each Lender that has executed this Agreement and funded its initial Loans on the Closing Date shall be deemed to have consented to, approved or accepted, or to be satisfied with, each document or other matter either sent by the Administrative Agent to such Lender for consent, approval, acceptance or satisfaction, or required hereunder to be consented to or approved by or acceptable or satisfactory to such Lender. 15.05 Notice of Default. The Administrative Agent shall not be deemed to have knowledge or notice of the occurrence of any Event of Default or Unmatured Event of Default, -69- except with respect to defaults in the payment of principal, interest and fees required to be paid to the Administrative Agent for the account of the Lenders, unless the Administrative Agent shall have received written notice from a Lender or a Borrower referring to this Agreement, describing such Event of Default or Unmatured Event of Default and stating that such notice is a "notice of default". If the Administrative Agent receives such a notice, the Administrative Agent will promptly notify the Lenders of its receipt thereof. The Administrative Agent shall take such action with respect to such Event of Default or Unmatured Event of Default as may be requested by the Required Lenders in accordance with Article XIV; provided that unless and until the Administrative Agent has received any such request, the Administrative Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Event of Default or Unmatured Event of Default as it shall deem advisable or in the best interest of the Lenders. 15.06 Credit Decision. Each Lender acknowledges that none of the Agent-Related Persons has made any representation or warranty to it, and that no act by the Administrative Agent hereafter taken, including any review of the affairs of Company and its Subsidiaries, shall be deemed to constitute any representation or warranty by any Agent-Related Person to any Lender. Each Lender represents to the Administrative Agent that it has, independently and without reliance upon any Agent-Related Person and based on such documents and information as it has deemed appropriate, made its own appraisal of and investigation into the business, prospects, operations, property, financial and other condition and creditworthiness of Company and its Subsidiaries, and all applicable bank regulatory laws relating to the transactions contemplated hereby, and made its own decision to enter into this Agreement and to extend credit to the Borrowers hereunder. Each Lender also represents that it will, independently and without reliance upon any Agent-Related Person and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit analysis, appraisals and decisions in taking or not taking action under this Agreement, and to make such investigations as it deems necessary to inform itself as to the business, prospects, operations, property, financial and other condition and creditworthiness of the Borrowers. Except for notices, reports and other documents expressly herein required to be furnished to the Lenders by the Administrative Agent, the Administrative Agent shall have no duty or responsibility to provide any Lender with any credit or other information concerning the business, prospects, operations, property, financial and other condition or creditworthiness of the Borrowers which may come into the possession of any of the Agent-Related Persons. 15.07 Indemnification of Administrative Agent. Whether or not the transactions contemplated hereby are consummated, the Committed Lenders shall indemnify upon demand the Agent-Related Persons (to the extent not reimbursed by or on behalf of the Borrowers and without limiting the obligation of the Borrowers to do so), in accordance with their Pro Rata Shares, from and against any and all Indemnified Liabilities; provided that no Committed Lender shall be liable for the payment to any Agent-Related Person of any portion of the Indemnified Liabilities to the extent resulting from such Person's gross negligence or willful misconduct. Without limitation of the foregoing, each Committed Lender shall reimburse the Administrative Agent upon demand for its Pro Rata Share of any costs or out-of-pocket expenses (including the reasonable fees and changes of counsel for the Administrative Agent) incurred by the Administrative Agent in connection with the preparation, execution, delivery, administration, modification, amendment or enforcement (whether through negotiations, legal proceedings or -70- otherwise) of, or legal advice in respect of rights or responsibilities under, this Agreement or any document contemplated by or referred to herein, to the extent that the Administrative Agent is not reimbursed for such expenses by or on behalf of the Borrowers. The undertakings in this Section shall survive the termination hereof and the resignation or replacement of the Administrative Agent. 15.08 Administrative Agent in Individual Capacity. Bank of America and its Affiliates may make loans to, issue letters of credit for the account of, accept deposits from, acquire equity interests in and generally engage in any kind of banking, trust, financial advisory, underwriting or other business with the Company and its Subsidiaries and Affiliates as though Bank of America were not the Administrative Agent and the Issuing Bank, in each case without notice to or consent of the Lenders. The Lenders acknowledge that, pursuant to such activities, Bank of America or its Affiliates may receive information regarding the Company or its Affiliates (including information that may be subject to confidentiality obligations in favor of the Company or an Affiliate) and acknowledge that Bank of America and its Affiliates shall be under no obligation to provide such information to them. With respect to its Loans, Bank of America (and any of its Affiliates which is or may become a Lender) shall have the same rights and powers under this Agreement as any other Lender and may exercise the same as though it were not the Administrative Agent, the EMU Lender or the Issuing Bank. 15.09 Successor Administrative Agent. The Administrative Agent may, and at the request of the Required Lenders shall, resign as the Administrative Agent upon 30 days' notice to the Lenders; provided that any such resignation by Bank of America shall also constitute its resignation as Issuing Bank. If the Administrative Agent resigns under this Agreement, the Required Lenders shall appoint from among the Committed Lenders a successor Administrative Agent, which successor agent shall, so long as no Event of Default exists, be subject to the approval of the Company (which approval shall not be unreasonably withheld or delayed). If no successor agent is appointed prior to the effective date of the resignation of the Administrative Agent, the Administrative Agent may appoint, after consulting with the Lenders and the Company, a successor Administrative Agent from among the Committed Lenders and the Company. Upon the acceptance of its appointment as successor agent hereunder, such successor agent shall succeed to all the rights, powers and duties of the applicable retiring Administrative Agent and the term "Administrative Agent" shall mean such successor agent and the retiring Agent's appointment, powers and duties as Administrative Agent shall be terminated. After any retiring Administrative Agent's resignation hereunder as Administrative Agent, the provisions of this Article XV and Section 16.03 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was the Administrative Agent under this Agreement. If no successor agent has accepted appointment as the Administrative Agent by the date which is 30 days following a retiring Administrative Agent's notice of resignation, such retiring Administrative Agent's resignation shall nevertheless thereupon become effective and the Lenders shall perform all of the duties of the Administrative Agent hereunder until such time, if any, as the Required Lenders appoint a successor agent as provided for above. Notwithstanding the foregoing, however, Bank of America may not be removed as the Agent at the request of the Required Lenders unless Bank of America or any Affiliate of Bank of America shall also simultaneously be replaced as EMU Lender and as Issuing Bank pursuant to documentation in form and substance reasonably satisfactory to Bank of America and, if applicable, such Affiliate. -71- 15.10 Withholding Tax. (a) If any Committed Lender claims exemption from, or reduction of, withholding tax under a United States tax treaty by providing IRS Form W-8BEN (or any applicable successor form) to the Administrative Agent and such Committed Lender sells, assigns, grants a participation in or otherwise transfers all or part of the obligations of the Company to such Committed Lender, such Committed Lender agrees to notify the Administrative Agent of the percentage amount in which it is no longer the beneficial owner of the obligations of the Company to such Committed Lender. To the extent of such percentage amount, the Administrative Agent will treat such Committed Lender's IRS Form W-8BEN (or such successor form) as no longer valid, and such Committed Lender agrees to undertake sole responsibility for complying with the withholding tax requirements imposed by Sections 1441 and 1442 of the Code. (b) If any Committed Lender claiming exemption from United States withholding tax by filing IRS Form W-8ECI (or any applicable successor form) with the Administrative Agent sells, assigns, grants a participation in or otherwise transfers all or part of the obligations of the Company to such Committed Lender, such Committed Lender agrees to undertake sole responsibility for complying with the withholding tax requirements imposed by Sections 1441 and 1442 of the Code. (c) If any Committed Lender is entitled to a reduction in the applicable withholding tax, the Administrative Agent may withhold from any interest payment to such Committed Lender an amount equivalent to the applicable withholding tax after taking into account such reduction. If any forms or other documentation required by subsection 10.05(e) are not delivered to the Administrative Agent by any Committed Lender, then the Administrative Agent may withhold from any interest payment to such Committed Lender an amount equivalent to the applicable withholding tax. 15.11 Funding Reliance. (a) Unless the Administrative Agent receives notice from a Committed Lender by noon, Chicago time, on the day of a proposed Committed Borrowing that such Committed Lender will not make available to the Administrative Agent an amount equal to its Pro Rata Share of such Committed Borrowing, the Administrative Agent may assume that such Committed Lender has made such amount available to the Administrative Agent and, in reliance upon such assumption, make a corresponding amount available to the Company. If and to the extent such Committed Lender has not made such amount available to the Administrative Agent, such Committed Lender and the Company jointly and severally agree to repay such amount to the Administrative Agent forthwith on demand, together with interest thereon at the interest rate applicable to Loans included in such Committed Borrowing or, in the case of any Committed Lender which repays such amount within three Business Days, (i) in the case of a Loan in US Dollars, the Federal Funds Rate, or (ii) in the case of a Loan in any Available Currency, the Foreign Overnight Rate (together with, in each case, such other compensatory amounts as may be required to be paid by such Committed Lender to the Administrative Agent pursuant to the Rules for Interbank Compensation of the Council on International Banking or the Clearinghouse Compensation Committee, as applicable, as in effect from time to time). Nothing set forth in this clause (a) shall relieve any Committed Lender of any obligation it may have to make any Loan hereunder. -72- (b) Unless the Administrative Agent receives notice from any Borrower prior to the due date for any payment hereunder payable by such Borrower to the Administrative Agent for the account of the Committed Lenders that such Borrower does not intend to make such payment, the Administrative Agent may assume that such Borrower has made such payment and, in reliance upon such assumption, make available to each Committed Lender its share of such payment. If and to the extent that such Borrower has not made any such payment to the Administrative Agent, each Committed Lender which received a share of such payment shall repay such share (or the relevant portion thereof) to the Administrative Agent forthwith on demand, together with interest thereon at (i) in the case of any amount denominated in US Dollars, the Federal Funds Rate, or (ii) in the case of any amount denominated in any Available Currency, the Foreign Overnight Rate. Nothing set forth in this clause (b) shall relieve any Borrower of any obligation it may have to make any payment hereunder. 15.12 Other Agents. No Person identified herein as a "Co-Documentation Agent" or a "Syndication Agent" shall have any right, power, obligation, liability, responsibility or duty under this Agreement other than those applicable to all Persons as such. Without limiting the foregoing, no Person so identified as a "Co-Documentation Agent" or a "Syndication Agent" shall have or be deemed to have any fiduciary relationship with any Person. Each Person acknowledges that it has not relied, and will not rely, on any Person so identified in deciding to enter into this Agreement or in taking or not taking action hereunder. 15.13 Subsidiary Guaranty. (a) Subject to the proviso contained in clause (b) below, the Administrative Agent shall, and the Lenders irrevocably authorize the Administrative Agent to, release any Person which is a Subsidiary Guarantor from its obligations under the Subsidiary Guaranty, if such Person ceases to be a Subsidiary Guarantor pursuant to a transaction that does not result in a default of any provision hereof (including Section 13.12). Upon request by the Administrative Agent at any time, the Required Lenders will confirm in writing the Administrative Agent's authority to release any Subsidiary from its obligations under the Subsidiary Guaranty pursuant to this Section 15.13. (b) The Administrative Agent agrees to promptly execute and deliver to the Company all documents reasonably required to evidence any release permitted under this Agreement; provided that the Company certifies that such release also is permitted under any other agreement governing indebtedness for borrowed money of the Company which is entitled to the benefits of the Subsidiary Guaranty. Administrative Agent may file Proofs of Claim. In case of the pendency of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or other judicial proceeding relative to any Borrower or Subsidiary Guarantor, the Administrative Agent (irrespective of whether the principal of any Loan or L/C Obligation shall then be due and payable as herein expressed or by declaration or otherwise and irrespective of whether the Administrative Agent shall have made any demand on any Borrower) shall be entitled and empowered, by intervention in such proceeding or otherwise: (c) to file and prove a claim for the whole amount of the principal and interest owing and unpaid in respect of the Loans, L/C Obligations and all other obligations hereunder that are owing and unpaid and to file such other documents as may be necessary or advisable in order to -73- have the claims of the Lenders and the Administrative Agent (including any claim for the reasonable compensation, expenses, disbursements and advances of the Lenders and the Administrative Agent and their respective agents and counsel and all other amounts due the Lenders and the Administrative Agent hereunder, including under Sections 7.07, 9.07 and 15.07) allowed in such judicial proceeding; and (d) to collect and receive any monies or other property payable or deliverable on any such claims and to distribute the same; and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Lender to make such payments to the Administrative Agent and, in the event that the Administrative Agent shall consent to the making of such payments directly to the Lenders, to pay to the Administrative Agent any amount due for the reasonable compensation, expenses, disbursements and advances of the Administrative Agent and its agents and counsel, and any other amounts due the Administrative Agent under Sections 9.07 and 15.07. Nothing contained herein shall be deemed to authorize the Administrative Agent to authorize or consent to or accept or adopt on behalf of any Lender any plan of reorganization, arrangement, adjustment or composition affecting the obligations hereunder or the rights of any Lender or to authorize the Administrative Agent to vote in respect of the claim of any Lender in any such proceeding. ARTICLE XVI MISCELLANEOUS 16.01 Notices. All notices, requests and other communications to any party hereunder shall be in writing (including facsimile transmission or similar writing), except where specifically permitted to be given orally, and shall be given to such party at its address or facsimile number set forth on Schedule 16.01 or such other address or facsimile number as such party may hereafter specify for the purpose by notice to (i) in the case of any Borrower, the Administrative Agent and the Lenders, and (ii) in the case of any Lender, the Administrative Agent and (iii) in the case of the Administrative Agent, the other parties hereto. Each such notice, request or other communication shall be effective (i) if given by facsimile, when such facsimile is transmitted to the facsimile number specified in this Section and the appropriate confirmation is received, (ii) if given by mail, four Business Days after such communication is deposited in the mails with first class postage prepaid, addressed as aforesaid or (iii) if given by any other means, when delivered at the address specified in this Section; provided that notices to Administrative Agent, the UK Lender, the Canadian Lender, the EMU Lender, the Swing Line Lender and the Issuing Bank shall not be effective until received. Any agreement of the Administrative Agent and the Lenders herein to receive certain notices by telephone or facsimile is solely for the convenience and at the request of the Borrowers. The Administrative Agent and the Lenders shall be entitled to rely on the authority of any Person purporting to be a Person authorized by the applicable Borrower to give such notice, and the Administrative Agent and the Lenders shall not have any liability to such Borrower or any other Person on account of any action taken or not taken by the Administrative Agent or any Lender in reliance upon such telephonic or facsimile notice. The obligation of the Borrowers to repay the Loans and L/C -74- Obligations shall not be affected in any way or to any extent by any failure by the Administrative Agent or any Lender to receive written confirmation of any telephonic or facsimile notice or the receipt by the Administrative Agent or any Lender of a confirmation which is at variance with the terms understood by the Administrative Agent or such Lender to be contained in any telephonic or facsimile notice. 16.02 No Waiver. No failure or delay by the Administrative Agent or any Lender in exercising any respective right, power or privilege hereunder or under any Note shall operate as a waiver thereof, nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by law. 16.03 Expenses; Documentary Taxes; Indemnification. (a) The Borrowers shall pay upon demand (i) all reasonable expenses of the Administrative Agent and the Lead Arranger, including the reasonable fees and charges of a single joint counsel for the Administrative Agent and the Lead Arranger, in connection with the preparation, execution and delivery of this Agreement, any waiver or consent hereunder or any amendment hereof and any Event of Default or Unmatured Event of Default by any Borrower hereunder and (ii) if an Event of Default occurs, all reasonable out-of-pocket expenses incurred by the Administrative Agent and each Lender, including fees and disbursements of counsel for the Administrative Agent and each Lender (who may be employees of the Administrative Agent or such Lender), in connection with such Event of Default or Unmatured Event of Default and collection and other enforcement proceedings resulting therefrom. The respective Borrower shall indemnify each Lender against any transfer taxes, documentary taxes, assessments or charges made by any governmental authority by reason of the execution and delivery of this Agreement or any Note. (b) Whether or not the transactions contemplated hereby are consummated, the Company agrees to indemnify and hold the Agent-Related Persons and each Lender and their respective officers, directors, employees, counsel, agents and attorneys-in-fact (each an "Indemnified Person") harmless from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, charges, expenses and disbursements (including reasonable attorney's fees and charges) of any kind or nature whatsoever which may at any time (including at any time following repayment of the Loans and the resignation or replacement of the Administrative Agent or the replacement of any Lender) arise out of or result from an action, suit, proceeding (including any insolvency or appellate proceeding) or claim asserted against any such Indemnified Person directly relating to this Agreement or any document contemplated by or referred to herein, the transactions contemplated hereby or the use of the proceeds of any Credit Extension, whether or not any Indemnified Person is a party thereto (all the foregoing, collectively, the "Indemnified Liabilities"); provided that the Company shall not be liable to any Indemnified Person for any portion of such Indemnified Liabilities resulting from such Indemnified Person's gross negligence or willful misconduct. In the event this indemnity is unenforceable as a matter of law as to a particular matter or consequence referred to herein, it shall be enforceable to the full extent permitted by law. The agreements in this Section shall survive termination of this Agreement and payment of all other obligations of the Borrowers hereunder. -75- 16.04 Amendments and Waivers. Any provision of this Agreement or any Note may be amended, modified or waived if, but only if, such amendment, modification or waiver is in writing and is signed by the Company and the Required Lenders and acknowledged by the Administrative Agent; provided that no such amendment, modification or waiver shall, unless signed by all Committed Lenders and delivered to the Administrative Agent: (a) increase the Commitment of any Lender (except pursuant to Section 2.07) or subject any Lender to any additional obligations; (b) reduce the principal of or rate of interest on any Loan or any fee hereunder; (c) postpone the date fixed for any payment of principal of or interest on any Loan or any fee hereunder; (d) change the definition of "Required Lenders" or the percentage of the Commitments or of the aggregate unpaid principal amount of the Loans which shall be required for the Lenders or any of them to take any action under this Agreement; (e) release the guaranty set forth in Article XVII; (f) release any Subsidiary Guarantor from its obligations under the Subsidiary Guaranty (other than with respect to a Person which ceases to be a Subsidiary Guarantor pursuant to a transaction that does not result in a default of any provision hereof (including Section 13.12)); or (g) amend this Section 16.04; and provided, further, that no provision hereof affecting the rights or obligations of the Administrative Agent, the UK Lender, the Canadian Lender, the EMU Lender, the Swing Line Lender or the Issuing Bank, in its capacity as such, may be amended, modified or waived without the written consent of such Person. 16.05 Collateral. Each of the Lenders represents that it in good faith is not relying upon any "margin stock" (as defined in Regulation U of the FRB) as collateral in the extension or maintenance of the credit provided for in this Agreement. 16.06 Successors and Assigns. (a) The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns, except that the Borrowers may not assign or otherwise transfer any of their respective rights under this Agreement. (b) Any Lender may, with the written consent of the Company, the Administrative Agent, the UK Lender, the Canadian Lender, the EMU Lender, the Swing Line Lender and the Issuing Bank which consents shall not be unreasonably withheld or delayed (and provided that (i) no written consent of the Company shall be required if an Event of Default or Unmatured Event of Default then exists and (ii) no such written consents shall be required in connection -76- with any assignment and delegation by a Lender to a bank or other financial institution that is an Affiliate of such Lender or to another Lender (so long as such assignment will not result in any increased costs to any Borrower)), at any time assign and delegate to one or more banks or other financial institutions (each an "Assignee") all or any ratable part of all of the Committed Loans, its Commitment and the other rights and obligations of such Lender hereunder; provided, however, that (i) except in the case of an assignment by a Committed Lender of all of its Committed Loans, its Commitment and the other rights and obligations of such Committed Lender hereunder, the sum of the amount of the Commitment so assigned shall not be less than US$5,000,000 (or such lesser amount as may be agreed to by the Company and the Administrative Agent in their sole discretion); (ii) the other parties hereto may continue to deal solely and directly with such Lender in connection with the interest so assigned to an Assignee until (x) written notice of such assignment, together with payment instructions, addresses and related information with respect to the Assignee, shall have been given to the Borrowers and the Administrative Agent by such Lender and the Assignee; (y) such Lender and its Assignee shall have delivered to the Borrowers and the Administrative Agent an Assignment and Acceptance together with any Note subject to such assignment and (z) the assignor Lender or Assignee shall have paid to the Administrative Agent a processing fee in the amount of US$3,500; and (iii) none of the UK Lender, the Canadian Lender, the EMU Lender, the Swing Line Lender or the Issuing Bank may assign its rights and obligations hereunder in such capacity unless arrangements satisfactory to the Company and the Administrative Agent have been made for another Lender or an affiliate of a Lender to act as UK Lender, Canadian Lender, EMU Lender, Swing Line Lender or Issuing Bank, as the case may be. (c) From and after the date that the Administrative Agent notifies the assignor Lender that it has received (and, to the extent required, provided its consent and received the consents of the Company, the UK Lender, the Canadian Lender, the EMU Lender, the Swing Line Lender and the Issuing Bank with respect to) an executed Assignment and Acceptance and payment of the above-referenced processing fee, (i) the Assignee thereunder shall be a party hereto and, to the extent that rights hereunder have been assigned to it and obligations hereunder have been assumed by it pursuant to such Assignment and Acceptance, shall have the rights and obligations of a Lender hereunder and (ii) the assignor Lender shall, to the extent that rights and obligations hereunder have been assigned by it pursuant to such Assignment and Acceptance, relinquish its rights and be released from its obligations under this Agreement. (d) Within five Business Days after the Administrative Agent notifies the Company that it has received (and to the extent required, provided its consent and any other consents with respect to) an executed Assignment and Acceptance and payment of the above-referenced processing fee, the applicable Borrower shall, if requested by the Assignee and/or the assignor Lender, as applicable, execute and deliver to the Administrative Agent a new Note evidencing such Assignee's assigned Loans and, if the assignor Lender has retained a portion of its Loans and its Commitment, a replacement Note evidencing the Loans retained by the assignor Lender (such Note to be in exchange for, but not in payment of, the Note held by such assignor Lender). The Company designates the Administrative Agent as its agent for maintaining a book entry record of ownership identifying the Lenders, their respective addresses and the amount of the respective Loans and Notes which they own. The foregoing provisions are intended to comply with the registration requirements in Treasury Regulation Section 5f.103-1 so that the Loans and Notes are considered to be in "registered form" pursuant to such regulation. The entries in such -77- book entry record shall be conclusive and binding, absent manifest error, regarding ownership of the Loans and Notes. (e) Any Lender may at any time sell to one or more commercial banks or other Persons not Affiliates of the Company (a "Participant") participating interests in any Loan, the Commitment of such Lender and the other interests of such Lender (the "originating Lender") hereunder; provided, however, that (i) the originating Lender's obligations under this Agreement shall remain unchanged, (ii) the originating Lender shall remain solely responsible for the performance of such obligations, (iii) the Administrative Agent and the other parties hereto shall continue to deal solely and directly with the originating Lender in connection with the originating Lender's rights and obligations under this Agreement, and (iv) no Lender shall transfer or grant any participating interest under which the Participant has rights to approve any amendment to, or any consent or waiver with respect to, this Agreement, except to the extent such amendment, consent or waiver would require unanimous consent of the Lenders. In the case of any such participation, the Participant shall be entitled to the benefit of Article X, as though it were also a Lender hereunder (provided that no Borrower shall be obligated to pay any amount under Article X to any Participant which is greater than such Borrower would have been required to pay to the originating Lender if no such participation had been sold), and if amounts outstanding under this Agreement are due and unpaid, or shall have been declared or shall have become due and payable upon the occurrence of an Event of Default, the Participant shall be deemed to have the right of set-off in respect of its participating interest in amounts owing under this Agreement to the same extent as if the amount of its participating interest were owing directly to it as a Lender under this Agreement. Each Lender that sells a participation will maintain a book entry record of ownership identifying each of its Participants and the amount of the participation owned by each such Participant. Such book entry record of ownership shall be maintained by the Lender as agent for the Company and the Administrative Agent. This provision is intended to comply with the registration requirements in Treasury Regulation Section 5f.103-1 so that the Loans and Notes are considered to be in "registered form" pursuant to such regulation. The entries in such book entry record shall be conclusive and binding, absent manifest error, regarding ownership of such participations. (f) Any Committed Lender (a "Granting Lender") may grant to a special purpose funding vehicle (an "SPC"), identified as such in writing from time to time by such Granting Lender to the Administrative Agent and the Company, the option to provide all or any part of any Committed Loan that such Granting Lender would otherwise be obligated to make to the Company pursuant to this Agreement; provided that (i) nothing herein shall constitute a commitment by any SPC to make any Committed Loan and (ii) if an SPC elects not to exercise such option or otherwise fails to provide all or any part of any Committed Loan, the Granting Lender shall be obligated to make such Committed Loan pursuant to the terms hereof. The making of a Committed Loan by an SPC hereunder shall utilize the Commitment of the Granting Lender to the same extent, and as if, such Committed Loan were made by such Granting Lender. Each party hereto hereby agrees that no SPC shall be liable for any indemnity or similar payment obligation under this Agreement (all liability for which shall remain with the Granting Lender). In furtherance of the foregoing, each party hereto hereby agrees (which agreement shall survive the termination of this Agreement) that, prior to the date that is one year and one day after the payment in full of all outstanding commercial paper or other senior indebtedness of any SPC, it will not institute, or join any other Person in instituting, against such SPC any bankruptcy, -78- reorganization, arrangement, insolvency or liquidation proceeding under the laws of the United States or any State thereof with respect to any claim arising out of this Agreement. In addition, notwithstanding anything to the contrary contained in this subsection 16.06(f), any SPC may (i) with notice to, but without the prior written consent of, the Company and the Administrative Agent and without paying any processing fee therefor, assign all or a portion of its interests in any Committed Loans to the Granting Lender or to any financial institution providing liquidity and/or credit support to or for the account of such SPC to support the funding or maintenance of Committed Loans and (ii) disclose on a confidential basis any non-public information relating to its Committed Loans to any rating agency, commercial paper dealer or provider of any surety, guarantee or credit or liquidity enhancement to such SPC. (g) Notwithstanding any other provision in this Agreement, (i) any Lender may at any time create a security interest in, or pledge, all or any portion of its rights under and interest in this Agreement and any Note held by it in favor of any Federal Reserve Bank in accordance with Regulation A of the FRB or U.S. Treasury Regulation 31 CFR (S) 203.14, and such Federal Reserve Bank may enforce such pledge or security interest in any manner permitted under applicable law; provided that any foreclosure or similar action by such holders, trustee or representative shall be subject to the provisions of this Section concerning assignments. 16.07 Governing Law. This Agreement and each Note shall be construed in accordance with and governed by the substantive laws of the State of Illinois without regard to the choice of law provisions thereof. 16.08 Counterparts; Effectiveness. This Agreement may be signed in any number of counterparts, each of which shall be an original, and all of which taken together shall constitute a single agreement, with the same effect as if the signatures thereto and hereto were upon the same instrument. This Agreement shall become effective when the Administrative Agent shall have received counterparts hereof signed by all of the parties hereto, and the Administrative Agent shall promptly notify the other parties hereto of such effectiveness. 16.09 Borrowers' Agent. Each Borrower hereby irrevocably appoints and authorizes the Company to take such action and deliver and receive notices hereunder as agent on its behalf and to exercise such powers under this Agreement as delegated to it by the terms hereof, together with all such powers as are reasonably incidental thereto. In furtherance of and not in limitation of the foregoing, for administrative convenience of the parties hereto, the Administrative Agent and the Lenders shall send all notices and communications to be sent to any Borrower solely to the Company and may rely solely upon the Company to receive all such notices and other communications for and on behalf of each Borrower. Neither the Company nor any of its respective directors, officers, agents or employees shall be liable to any other Borrower for any action taken or not taken by it in connection herewith (ii) with the consent or at the request of such Borrower or (ii) in the absence of its own gross negligence or willful misconduct. No Person other than the Company (and its authorized officers and employees) may act as agent for the Borrowers hereunder without the written consent of the Administrative Agent. 16.10 Confidentiality. Each Lender agrees to take, and to cause its Affiliates to take, normal and reasonable precautions and exercise due care to maintain the confidentiality of all non-public information provided to it by the Company or any Subsidiary, or by the -79- Administrative Agent on the Company's or such Subsidiary's behalf, under this Agreement, and neither such Lender nor any of its Affiliates shall use any such information other than in connection with or in enforcement of this Agreement or in connection with other business now or hereafter existing or contemplated with the Company or any Subsidiary; except to the extent such information (i) was or becomes generally available to the public other than as a result of disclosure by such Lender or (ii) was or becomes available on a non-confidential basis from a source other than the Company and its Subsidiaries, provided that such source is not bound by a confidentiality agreement with the Company or any Subsidiary known to such Lender; provided, however, that any Lender may disclose such information (A) at the request or pursuant to any requirement of any Governmental Authority to which such Lender is subject or in connection with an examination of such Lender by any such authority; (B) pursuant to subpoena or other court process; (C) when required to do so in accordance with the provisions of any applicable Requirement of Law; (D) to the extent reasonably required in connection with any litigation or proceeding to which the Administrative Agent or any Lender or any of their respective Affiliates may be party; (E) to the extent reasonably required in connection with the exercise of any remedy hereunder; (F) to such Lender's independent auditors and other professional advisors; (G) to any Participant or Assignee, actual or potential (or their respective professional advisors), or to any counterparty (or its professional advisors) to any swap, securitization or derivative transaction referencing or involving any of its rights or obligations as a Lender under this Agreement, actual or potential, provided that such Person agrees in writing to keep such information confidential to the same extent required of the Lenders hereunder; (H) as expressly permitted under the terms of any other document or agreement to which the Company or any Subsidiary is party with such Lender or such Affiliate; and (I) to its Affiliates. Notwithstanding anything herein to the contrary, the information referred to above shall not include, and the Administrative Agent and each Lender may disclose without limitation of any kind, any information with respect to the "tax treatment" and "tax structure" (in each case, within the meaning of Treasury Regulation Section 1.6011-4) of the transactions contemplated hereby and all materials of any kind (including opinions or other tax analyses) that are provided to the Administrative Agent or such Lender relating to such tax treatment and tax structure; provided that with respect to any document or similar item that in either case contains information concerning the tax treatment or tax structure of the transaction as well as other information, this sentence shall only apply to such portions of the document or similar item that relate to the tax treatment or tax structure of the Loans, Letters of Credit and transactions contemplated hereby. 16.11 Waiver of Jury Trial. EACH BORROWER, THE ADMINISTRATIVE AGENT AND EACH LENDER HEREBY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS AGREEMENT, ANY NOTE AND ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH OR ARISING FROM ANY BANKING RELATIONSHIP EXISTING IN CONNECTION WITH ANY OF THE FOREGOING, AND AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY. 16.12 Consent to Jurisdiction. EACH BORROWER HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE COURTS OF THE STATE OF ILLINOIS AND OF THE UNITED STATES DISTRICT COURT FOR THE NORTHERN -80- DISTRICT OF ILLINOIS FOR THE PURPOSE OF ANY LITIGATION ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT. EACH BORROWER FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS IN ANY SUCH LITIGATION BY REGISTERED MAIL, POSTAGE PREPAID, OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE STATE OF ILLINOIS. TO THE EXTENT THAT ANY BORROWER HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM JURISDICTION OF ANY COURT OR FROM ANY LEGAL PROCESS (WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION OR OTHERWISE) WITH RESPECT TO ITSELF OR ITS PROPERTY, SUCH BORROWER HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER THIS AGREEMENT. ARTICLE XVII GUARANTY 17.01 Guaranty. The Company hereby unconditionally and irrevocably guarantees the full and punctual payment (whether at stated maturity, upon acceleration or otherwise) of the principal of and interest on each Loan made to each other Borrower pursuant to this Agreement, and the full and punctual payment of all other amounts payable by each other Borrower hereunder. Upon failure by any such Borrower to pay punctually any such amount, the Company shall forthwith on demand pay the amount not so paid at the place and in the manner specified in this Agreement. 17.02 Guaranty Unconditional. The obligations of the Company under this Article XVII shall be irrevocable, unconditional and absolute and, without limiting the generality of the foregoing, shall not be released, discharged or otherwise affected by: (a) any extension, renewal, settlement, compromise, waiver or release in respect of any obligation of any Borrower (other than the Company) under this Agreement or any Note, by operation of law or otherwise; (b) any modification or amendment of or supplement to this Agreement or any Note; (c) any release, impairment, non-perfection or invalidity of any direct or indirect security for any obligation of any Borrower (other than the Company) under this Agreement or any Note; (d) any change in the corporate existence, structure or ownership of any Borrower, or any insolvency, bankruptcy, reorganization or other similar proceeding affecting any Borrower or such Borrower's assets or any resulting release or discharge of any obligation of any Borrower (other than the Company) contained in this Agreement or any Note; (e) the existence of any claim, set-off or other rights which the Company may have at any time against any other Borrower, the Administrative Agent, any Lender or any other Person, whether in connection herewith or any unrelated transaction, provided -81- that nothing herein shall prevent the assertion of any such claim by separate suit or compulsory counterclaim; (f) any invalidity or unenforceability relating to or against any Borrower (other than the Company) for any reason of this Agreement or any Note, or any provision of applicable law or regulation purporting to prohibit the payment by any Borrower (other than the Company) of the principal of or interest on any Loan or any other amount payable by any other Borrower under this Agreement; or (g) any other act or omission to act or delay of any kind by any other Borrower, the Administrative Agent, any Lender or any other Person or any other circumstance whatsoever which might, but for the provisions of this paragraph, constitute a legal or equitable discharge of the Company's obligations as guarantor hereunder. 17.03 Discharge only upon Payment in Full; Reinstatement in Certain Circumstances. The Company's obligations as guarantor hereunder shall remain in full force and effect until the Commitments shall have terminated and the principal of and interest on the Loans and all other amounts payable by the Borrowers under this Agreement shall have been paid in full. If at any time any payment of the principal of or interest on any Loan or any other amount payable by any Borrower (other than the Company) under this Agreement is rescinded or must be otherwise restored or returned upon the insolvency, bankruptcy or reorganization of such Borrower or otherwise, the Company's obligations hereunder with respect to such payment shall be reinstated as though such payment had been due but not made at such time. 17.04 Waiver by Company. The Company irrevocably waives acceptance hereof, presentment, demand, protest and any notice not provided for herein, as well as any requirement that at any time any action be taken by any Person against any Borrower or any other Person. 17.05 Subrogation. Notwithstanding any payment made by or for the account of any other Borrower pursuant to this Article XVII, the Company shall not be subrogated to any right of the Administrative Agent or any Lender until such time as the Administrative Agent and the Lenders shall have received final payment in cash of the full amount of all principal of and interest on the Loans, all fees, all L/C Obligations and all other amounts payable hereunder. 17.06 Stay of Acceleration. If acceleration of the time for payment of any amount payable by any Borrower (other than the Company) under this Agreement or any Note is stayed upon the insolvency, bankruptcy or reorganization of such Borrower, all such amounts otherwise subject to acceleration under the terms of this Agreement shall nonetheless be payable by the Company hereunder forthwith on demand by the Administrative Agent made at the request of the Required Lenders. ARTICLE XVIII AMENDMENT AND RESTATEMENT; EXISTING AGREEMENTS 18.01 Amendment and Restatement. This Agreement amends, restates and replaces in its entirety the Existing Agreement. All rights, benefits, indebtedness, interest, liabilities and obligations of the parties to the Existing Agreement are hereby amended, restated, replaced and -82- superseded in their entirety according to the terms and provisions set forth herein (except that any provision of the Existing Agreement that by its terms survives termination of the Existing Agreement shall continue in full force and effect for the benefit of the applicable parties to the Existing Agreement). All indebtedness, liabilities and obligations under the Existing Agreement, including all promissory notes, if any, executed by the Borrowers pursuant thereto, are hereby renewed by this Agreement, the Notes and the other documents executed by the Borrowers pursuant to this Agreement and shall, from and after the Closing Date, be governed by this Agreement and such other documents. The Borrowers represent and warrant that as of the date hereof there are no claims or offsets against, or defenses or counterclaims to, its obligations under this Agreement, the Existing Agreement or any of the other agreements, documents or instruments executed in connection herewith or therewith. To induce the Administrative Agent and the Lenders to enter into this Agreement, the Borrowers waive any and all such claims, offsets, defenses and counterclaims, whether known or unknown, arising prior to the Closing Date and relating to the Existing Agreement or this Agreement. 18.02 Existing Agreement. Lenders which are parties to the Existing Agreement (and which constitute "Required Lenders" under and as defined in the Existing Agreement) hereby waive the three business days' notice requirement set forth in Section 2.06 of the Existing Agreement for terminating the commitments under the Existing Agreement, and such Lenders and the Company agree that, subject to the Company's payment of all amounts then payable under the Existing Agreement (whether or not then due), the commitments under the Existing Agreement shall be terminated on the Closing Date and replaced by the Commitments hereunder. 18.03 Existing 364-Day Agreement. Lenders which are parties to the Existing 364-Day Agreement (and which constitute "Required Lenders" under and as defined in the Existing 364-Day Agreement) hereby waive the three business days' notice requirement set forth in Section 2.06 of the Existing 364-Day Agreement for terminating the commitments under the Existing 364-Day Agreement, and such Lenders and the Company agree that, subject to the Company's payment of all amounts then payable under the Existing 364-Day Agreement (whether or not then due), the Existing 364-Day Agreement and the commitments thereunder shall be terminated on the Closing Date (except that any provision of the Existing 364-Day Agreement that by its terms survives termination of the Existing 364-Day Agreement shall continue in full force and effect for the benefit of the applicable parties to the Existing 364-Day Agreement). -83- IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above written. PENTAIR, INC. By -------------------------------------- Name ------------------------------------ Title ----------------------------------- PENTAIR UK GROUP LIMITED By -------------------------------------- Name ------------------------------------ Title ----------------------------------- PENTAIR CANADA INC. By -------------------------------------- Name ------------------------------------ Title ----------------------------------- EUROPENTAIR GMBH By -------------------------------------- Name ------------------------------------ Title ----------------------------------- PENTAIR GLOBAL SARL By -------------------------------------- Name ------------------------------------ Title ----------------------------------- S-1 BANK OF AMERICA, N.A., as Administrative Agent By -------------------------------------- Name ------------------------------------ Title ----------------------------------- BANK OF AMERICA, NA., as Issuing Bank and as a Committed Lender By -------------------------------------- Name ------------------------------------ Title ----------------------------------- BANK OF AMERICA, N.A., as EMU Lender By -------------------------------------- Name ------------------------------------ Title ----------------------------------- S-2 BANK ONE, NA (Main Office Chicago) By -------------------------------------- Name ------------------------------------ Title ----------------------------------- BANK ONE, NA, LONDON BRANCH, as UK Lender By -------------------------------------- Name ------------------------------------ Title ----------------------------------- BANK ONE, NA, CANADA BRANCH as Canadian Lender By -------------------------------------- Name ------------------------------------ Title ----------------------------------- S-3 U.S. BANK NATIONAL ASSOCIATION, as Swing Line Lender and as a Committed Lender By -------------------------------------- Name ------------------------------------ Title ----------------------------------- THE BANK OF TOKYO-MITSUBISHI, LTD., CHICAGO BRANCH By -------------------------------------- Name ------------------------------------ Title ----------------------------------- SUNTRUST BANK By -------------------------------------- Name ------------------------------------ Title ----------------------------------- MIZUHO CORPORATE BANK, LTD. By -------------------------------------- Name Bertram Tang Title Vice President and Team Leader BANK OF CHINA, LOS ANGELES BRANCH By -------------------------------------- Name ------------------------------------ Title ----------------------------------- S-4 THE GOVERNOR AND COMPANY OF THE BANK OF IRELAND By -------------------------------------- Name ------------------------------------ Title ----------------------------------- By -------------------------------------- Name ------------------------------------ Title ----------------------------------- BNP PARIBAS By -------------------------------------- Name ------------------------------------ Title ----------------------------------- By -------------------------------------- Name ------------------------------------ Title ----------------------------------- DEUTSCHE BANK AG NEW YORK BRANCH By -------------------------------------- Name ------------------------------------ Title ----------------------------------- By -------------------------------------- Name ------------------------------------ Title ----------------------------------- FLEET NATIONAL BANK By -------------------------------------- Name ------------------------------------ Title ----------------------------------- S-5 KBC BANK N.V. By -------------------------------------- Name ------------------------------------ Title ----------------------------------- PNC BANK, NATIONAL ASSOCIATION By -------------------------------------- Name ------------------------------------ Title ----------------------------------- WELLS FARGO BANK, NATIONAL ASSOCIATION By -------------------------------------- Name ------------------------------------ Title ----------------------------------- By -------------------------------------- Name ------------------------------------ Title ----------------------------------- BANCA DI ROMA - CHICAGO BRANCH By -------------------------------------- Name ------------------------------------ Title ----------------------------------- By -------------------------------------- Name ------------------------------------ Title ----------------------------------- S-6 MELLON BANK, N.A. By -------------------------------------- Name ------------------------------------ Title ----------------------------------- NATIONAL CITY BANK By -------------------------------------- Name ------------------------------------ Title ----------------------------------- BANK HAPOALIM B.M. By -------------------------------------- Name ------------------------------------ Title ----------------------------------- By -------------------------------------- Name ------------------------------------ Title ----------------------------------- S-7 SCHEDULE 1.01 PRICING SCHEDULE The Applicable Margin for Eurocurrency Loans, the Applicable Margin for US Base Rate Loans and Prime Rate Loans, the Facility Fee Rate, the L/C Fee Rate, the Usage Fee Rate and the Fronting Margin shall be determined as follows: 1. The Applicable Margin, the Facility Fee Rate, the L/C Fee Rate, the Usage Fee Rate and the Fronting Margin shall each be as set forth in the table below and shall be calculated based on (a) the credit ratings assigned by Moody's and S&P to the Company's debt obligations under this Agreement (each a "Bank Debt Rating"), if Moody's and S&P have issued such ratings, or (b) if either Moody's or S&P has not issued a Bank Debt Rating, the general corporate rating assigned by Moody's and S&P to the Company (each a "Corporate Rating"), or (c) if either Moody's or S&P has issued neither a Bank Debt Rating nor a Corporate Rating, the credit ratings assigned by Moody's and S&P to the Company's long term senior unsecured non-credit-enhanced public Debt (each a "Senior Debt Rating"). 2. The Applicable Margin, the Facility Fee Rate, the L/C Fee Rate, the Usage Fee Rate and the Fronting Margin are collectively referred to herein as the "Pricing." 3. If one Bank Debt Rating, Corporate Rating or Senior Debt Rating is higher than the other (i.e., the Moody's rating is higher than the S&P rating, or vice versa), the higher of such ratings shall determine the Pricing. If at any time either Moody's or S&P does not have in effect a Bank Debt Rating, a Corporate Rating or a Senior Debt Rating (including any time when neither Moody's nor S&P has in effect any such rating), the Pricing shall be Level VI. 4. The Pricing shall be adjusted two Business Days after any applicable change in the Bank Debt Rating, Corporate Rating or Senior Debt Rating by either Moody's or S&P. Sch. 1.01 - 1
Level I Level II Level III Level IV Level V Level VI - ----------------------------------------------------------------------------------- Bank Debt Ratings, Corporate Ratings or Senior Debt A-/A3 or BB/Ba2 Ratings Higher BBB+/Baal BBB/Baa2 BBB-/Baa3 BB+/Bal or Lower - ----------------------------------------------------------------------------------- Applicable Margin for Eurocurrency Loans (bps) 72.5 82.5 92.5 102.5 125.0 145.0 - ----------------------------------------------------------------------------------- Facility Fee (bps) 15.0 17.5 20.0 22.5 25.0 30.0 - ----------------------------------------------------------------------------------- Applicable Margin for US Base Rate Loans and Prime Rate Loans (bps) 0 0 0 25.0 50.0 75.0 - ----------------------------------------------------------------------------------- L/C Fee Rate (bps) 72.5 82.5 92.5 102.5 125.0 145.0 - ----------------------------------------------------------------------------------- Usage Fee Rate (bps) 72.5 82.5 92.5 102.5 125.0 145.0 - ----------------------------------------------------------------------------------- Fronting Margin (bps) 10.0 10.0 11.0 13.25 20.0 24.0 - -----------------------------------------------------------------------------------
Sch. 1.01 - 2 SCHEDULE 1.02 Mandatory Cost Formulae 1. The Mandatory Cost is an addition to the interest rate to compensate Lenders for the cost of compliance with (a) the requirements of the Bank of England and/or the Financial Services Authority (or, in either case, any other authority which replaces all or any of its functions) or (b) the requirements of the European Central Bank. 2. On the first day of each Interest Period (or as soon as possible thereafter), the Administrative Agent shall calculate, as a percentage rate, a rate (the "Additional Cost Rate") for each Lender, in accordance with the paragraphs set out below. The Mandatory Cost will be calculated by the Administrative Agent as a weighted average of the Lenders' Additional Cost Rates (weighted in proportion to the percentage participation of each Lender in the relevant Loan) and will be expressed as a percentage rate per annum. 3. The Additional Cost Rate for any Lender lending from an Applicable Lending Office in a Participating Member State will be the percentage notified by that Lender to the Administrative Agent. This percentage will be certified by that Lender in its notice to the Administrative Agent to be its reasonable determination of the cost (expressed as a percentage of that Lender's participation in all Loan made from that Applicable Lending Office) of complying with the minimum reserve requirements of the European Central Bank in respect of Loans made from that Applicable Lending Office. 4. The Additional Cost Rate for any Lender lending from an Applicable Lending Office in the United Kingdom will be calculated by the Administrative Agent as follows: (a) in relation to a Loan in British Pounds Sterling: AB + C(B-D) + E X 0.01 per cent. per annum ---------------------- 100 - ( A + C) (b) in relation to a Loan in any currency other than Sterling: E x 0.01 per cent. per annum -------- 300 Where: A is the percentage of Eligible Liabilities (assuming these to be in excess of any stated minimum) which that Lender is from time to time required to maintain as an interest free cash ratio deposit with the Bank of England to comply with cash ratio requirements. Sch. 1.02 - 1 B is the percentage rate of interest (excluding the Applicable Margin and the Mandatory Cost and, if the Advance is an unpaid sum, the additional rate of interest specified in Section 2.4) payable for the relevant Interest Period of such Loan. C is the percentage (if any) of Eligible Liabilities which that Lender is required from time to time to maintain as interest bearing Special Deposits with the Bank of England. D is the percentage rate per annum payable by the Bank of England to the Administrative Agent on interest bearing Special Deposits. E is designed to compensate Lenders for amounts payable under the Fees Rules and is calculated by the Administrative Agent as being the average of the most recent rates of charge supplied by the Reference Banks (or those of the Reference Banks as supply a rate to the Administrative Agent) to the Administrative Agent pursuant to paragraph 7 below and expressed in pounds per (pound)1,000,000. 5. For the purposes of this Schedule: (a) "Eligible Liabilities" and "Special Deposits" have the meanings given to them from time to time under or pursuant to the Bank of England Act 1998 or (as may be appropriate) by the Bank of England; (b) "Fees Rules" means the rules on periodic fees contained in the FSA Supervision Manual or such other law or regulation as may be in force from time to time in respect of the payment of fees for the acceptance of deposits; (c) "Fee Tariffs" means the fee tariffs specified in the Fees Rules under the activity group A.1 Deposit acceptors (but ignoring any minimum fee or zero rated fee required pursuant to the Fees Rules but taking into account any applicable discount rate); (d) "Reference Banks" means (i) with respect to any UK Loan, the UK Lender and (ii) with respect to any EMU Loan, the EMU Lender; and (e) "Tariff Base" has the meaning given to it, and will be calculated in accordance with, the Fees Rules. 6. In application of the above formulae, A, B, C and D will be included in the formulae as percentages (i.e. 5 per cent. will be included in the formula as 5 and not as 0.05). A negative result obtained by subtracting D from B shall be taken as zero. The resulting figures shall be rounded to five decimal places. 7. Each Reference Bank shall, as soon as practicable after publication by the Financial Services Authority, supply to the Administrative Agent in writing, the rate of charge payable by that Reference Bank to the Financial Services Authority pursuant to the Fees Rules in respect of the relevant financial year of the Financial Services Authority (calculated for this purpose by that Reference Bank as being the average of the Fee Tariffs applicable to that Reference Bank for that financial year) and expressed in pounds per (pound)1,000,000 of the Tariff Base of that Reference Bank. Sch. 1.02 - 2 Each Reference Bank shall promptly notify the Administrative Agent in writing of any change to the information provided by it pursuant to this paragraph. 8. Each Lender shall supply any information required by the Administrative Agent for the purpose of calculating its Additional Cost Rate. In particular, but without limitation, each Lender shall supply the following information in writing on or prior to the date on which it becomes a Lender: (a) its jurisdiction of incorporation and the jurisdiction of its Applicable Lending Office; and (b) any other information that the Administrative Agent may reasonably require for such purpose. Each Lender shall promptly notify the Administrative Agent in writing of any change to the information provided by it pursuant to this paragraph. 9. The percentages of each Lender for the purposes of A and C above and the rates of charge of each Reference Bank for the purpose of E above shall be determined by the Administrative Agent based upon the information supplied to it pursuant to paragraphs 7 and 8 above and on the assumption that, unless a Lender or Reference Bank notifies the Administrative Agent to the contrary, each Lender's and Reference Bank's obligations in relation to cash ratio deposits and Special Deposits are the same as those of a typical bank from its jurisdiction of incorporation with an Applicable Lending Office in the same jurisdiction as its Applicable Lending Office. 10. The Administrative Agent shall have no liability to any person if such determination results in an Additional Cost Rate which over or under compensates any Lender and shall be entitled to assume that the information provided by any Lender or Reference Bank pursuant to paragraphs 3, 7 and 8 above is true and correct in all respects. 11. The Administrative Agent shall distribute the additional amounts received as a result of the Mandatory Cost to the Lenders on the basis of the Additional Cost Rate for each Lender based on the information provided by each Lender and each Reference Bank pursuant to paragraphs 3, 7 and 8 above. 12. Any determination by the Administrative Agent pursuant to this Schedule in relation to a formula, the Mandatory Cost, an Additional Cost Rate or any amount payable to a Lender shall, in the absence of manifest error, be conclusive and binding on all parties hereto. 13. The Administrative Agent may from time to time, after consultation with the Company and the Lenders, determine and notify to all parties any amendments which are required to be made to this Schedule in order to comply with any change in law, regulation or any requirements from time to time imposed by the Bank of England, the Financial Services Authority or the European Central Bank (or, in any case, any other authority which replaces all or any of its functions) and any such determination shall, in the absence of manifest error, be conclusive and binding on all parties hereto. Sch. 1.02 - 3 Sch. 1.02 - 4 SCHEDULE 2.01 COMMITMENTS AND PRO RATA SHARES Pro Rata Lender Commitment Share - -------------------------------------- ------------ -------- Bank of America, N.A. $ 45,000,000 9.0% Bank One, NA $ 45,000,000 9.0% US Bank, National Association $ 45,000,000 9.0% The Bank of Tokyo-Mitsubishi, Ltd., Chicago Branch $ 45,000,000 9.0% SunTrust Bank $ 30,000,000 6.0% Mizuho Corporate Bank, Ltd. $ 28,000,000 5.6% Bank of China, Los Angeles Branch $ 24,000,000 4.8% The Governor and Company of the Bank of Ireland $ 24,000,000 4.8% BNP Paribas $ 24,000,000 4.8% Deutsche Bank AG, New York Branch $ 24,000,000 4.8% Fleet National Bank $ 24,000,000 4.8% KBC Bank, N.V. $ 24,000,000 4.8% PNC Bank, National Association $ 24,000,000 4.8% Wells Fargo Bank, National Association $ 24,000,000 4.8% Banca di Roma $ 20,000,000 4.0% Mellon Bank, N.A $ 20,000,000 4.0% National City Bank $ 20,000,000 4.0% Bank Hapoalim B.M. $ 10,000,000 2.0% TOTAL $500,000,000 100.0% SCHEDULE 7.01 EXISTING LETTERS OF CREDIT SCHEDULE 11.03 MATTERS TO BE INCLUDED IN OPINIONS OF FOREIGN LEGAL COUNSEL TO BORROWERS 1. [Pentair UK Group Limited][Pentair Canada Inc.][EuroPentair Gmbh] [Pentair Global Sarl] (the "Borrower") has been duly incorporated and is validly existing as a [limited liability company][corporation] under the laws of [England and Wales][The Federal Republic of Germany][Canada][Luxembourg]. The [Borrower has been in continuous and unbroken existence since the date of its incorporation and no action is currently being taken by the Registrar of Companies for striking the Borrower off the register and dissolving it as defunct and the] Borrower has all corporate power and all material governmental licenses, authorizations, consents and approvals required to carry on its business as now conducted. 2. The Borrower has the corporate power and corporate authority to execute, deliver and perform all of its obligations under the Credit Agreement, the Notes and the other documents executed in connection therewith (the "Transaction Documents"). The execution and delivery of the Transaction Documents by the Borrower and the consummation of the transactions contemplated thereby have been duly authorized by all necessary action of the Borrower. 3. The execution, delivery and performance by the Borrower of the Transaction Documents will not contravene, result in a violation of, or constitute an event of default under, (a) its articles of incorporation or other constituting documents (if any), (b) any [English][German][Canadian][Lux] Requirement of Law, or (c) to our knowledge, any agreement, judgement, injunction, order, decree, or other instrument binding upon the Borrower. 4. No approval, consent, exemption or authorization or other action by, or notice to, or filing with, any Government Authority is necessary or required in connection with the execution, delivery or performance by, or enforcement against, the Borrower of the Transaction Documents (except in the case of enforcement involving litigation or similar proceedings, filings of complaints and other pleadings with courts). 5. No withholding tax, stamp taxes or other taxes are payable in connection with the implementation and enforcement of the Transaction Documents. 6. Such other matters as may be reasonably requested by the Administrative Agent and which are customary to be given by borrower's counsel in the country from which the opinion is being given. All opinions should be addressed to each financial institution and each agent party to the Amended and Restated Credit Agreement dated as of July 25, 2003. Customary qualifications, assumptions and limitations will be permitted. SCHEDULE 12.05 LITIGATION SCHEDULE 13.04 LIENS SCHEDULE 16.01 WEBSITE; NOTICE ADDRESSES Website Website for purposed of section 13.01(l): pentair.com Borrowers Pentair, Inc. 5500 Wayzata Boulevard, Suite 800 Golden Valley, Minnesota 55416-1259 Attention: Michael G. Meyer Telephone: 763-656-5295 Facsimile: 763-656-5407 With a copy to Pentair, Inc. 5500 Wayzata Boulevard, Suite 800 Golden Valley, Minnesota 55416-1259 Attention: Louis L. Ainsworth Telephone: 763-656-5228 Facsimile: 763-656-5403 Pentair UK Group Limited c/o Pentair, Inc. 5500 Wayzata Boulevard, Suite 800 Golden Valley, Minnesota 55416-1259 Attention: Michael G. Meyer Telephone: 763-656-5295 Facsimile: 763-656-5407 With a copy to Pentair, Inc. 5500 Wayzata Boulevard, Suite 800 Golden Valley, Minnesota 55416-1259 Attention: Louis L. Ainsworth Telephone: 763-656-5228 Facsimile: 763-656-5403 Sch. 16.01 - 1 Pentair Canada Inc. c/o Pentair, Inc. 5500 Wayzata Boulevard, Suite 800 Golden Valley, Minnesota 55416-1259 Attention: Michael G. Meyer Telephone: 763-656-5295 Facsimile: 763-656-5407 With a copy to Pentair, Inc. 5500 Wayzata Boulevard, Suite 800 Golden Valley, Minnesota 55416-1259 Attention: Louis L. Ainsworth Telephone: 763-656-5228 Facsimile: 763-656-5403 EuroPentair Gmbh c/o Pentair, Inc. 5500 Wayzata Boulevard, Suite 800 Golden Valley, Minnesota 55416-1259 Attention: Michael G. Meyer Telephone: 763-656-5295 Facsimile: 763-656-5407 With a copy to Pentair, Inc. 5500 Wayzata Boulevard, Suite 800 Golden Valley, Minnesota 55416-1259 Attention: Louis L. Ainsworth Telephone: 763-656-5228 Facsimile: 763-656-5403 Pentair Global Sarl c/o Pentair, Inc. 5500 Wayzata Boulevard, Suite 800 Golden Valley, Minnesota 55416-1259 Attention: Michael G. Meyer Telephone: 763-656-5295 Facsimile: 763-656-5407 With a copy to Sch. 16.01 - 2 Pentair, Inc. 5500 Wayzata Boulevard, Suite 800 Golden Valley, Minnesota 55416-1259 Attention: Louis L. Ainsworth Telephone: 763-656-5228 Facsimile: 763-656-5403 Bank of America, N.A., as Administrative Agent For administrative notices regarding borrowings, payments, conversions, continuations, letters of credit, fees, interest and similar notices: Agency Administrative Services 5596 Mail Code CA4-706-05-09 1850 GATEWAY BLVD CONCORD CA 94520-3282 Attn: Myrna Lara Phone: 925-675-8391 Fax: 888-969-2638 For notices regarding amendments, waivers, financial statements, assignments and all other notices: Mailcode CA5-701-05-19 1455 Market Street San Francisco, Ca 94103-1399 Attn: Cassandra McCain 415.436.3400 (fax) 415.503.5133 cassandra.g.mccain@bankofamerica.com Bank of America, N.A., as Issuing Bank Mail Code CA4-706-05-09 1850 GATEWAY BLVD CONCORD CA 94520-3282 Attn: Myrna Lara Phone: 925-675-8391 Fax: 888-969-2638 Bank of America, N.A., as EMU Lender with respect to any Borrower organized under the laws of Germany [__________] [__________] Attention: [__________] Telephone: [__________] Facsimile: [__________] Sch. 16.01 - 3 Bank of America, N.A., as EMU Lender with respect to any Borrower organized under the laws of Luxembourg [__________] [__________] Attention: [__________] Telephone: [__________] Facsimile: [__________] Bank One, NA, London Branch, as UK Lender 1 Triton Square London NW1 3FN U.K. Attention: Loans Agency Section Telephone: 44 20 7903 4464/4502 Facsimile: 44 20 7903 4148/4607 Bank One, NA, Canada Branch, as Canadian Lender Credit Contact: 161 Bay Street, Suite 4240, BCE Place, P.O. Box 613 Toronto, Ontario, M5J 2S1 Attention: Michael N. Tam Telephone: 416-365-5261 Facsimile: 416-363-7574 E-Mail Address: michael_n_tm@bankone.com Administrative/ Operations and Bid Loan Contact: Bank One, NA, Canada Branch 161 Bay Street, Suite 4240, BCE Place, P.O. Box 613 Toronto, Ontario, M5J 2S1 Attention: Lehong Zhang Telephone: 416-365-8262 Facsimile: 416-363-7574 E-Mail Address: lehong_zhang@bankone.com L/C Contact: Bank One, NA, Canada Branch 161 Bay Street, Suite 4240, BCE Place, P.O. Box 613 Toronto, Ontario, M5J 2S1 Attention: Michael N. Tam Telephone: 416-365-5261 Facsimile: 416-363-7574 E-Mail Address: michael_n_tm@bankone.com Sch. 16.01 - 4 Committed Lenders Bank of America, N.A., as a Committed Lender Credit Contact: Bank of America, N.A. 231 South LaSalle Street- 9th Floor Chicago, IL 60697 Attention: Chas McDonell Telephone: 312-828-6225 Facsimile: 312-974-8811 Administrative/Operations and Bid Loan Contact: Bank of America, N.A. Mail Code CA4-706-05-09 1850 GATEWAY BLVD CONCORD CA 94520-3282 Attention: Myrna Lara Telephone: 925-675-8391 Facsimile: 888-969-2638 L/C Contact: Bank of America, N.A. Mail Code CA4-706-05-09 1850 GATEWAY BLVD CONCORD CA 94520-3282 Attention: Myrna Lara Telephone: 925-675-8391 Facsimile: 888-969-2638 Bank One, NA, as a Committed Lender Credit Contact: 111 East Wisconsin Avenue Mail Code WI1-2042 Milwaukee, Wisconsin 53202 Attention: Jack West Telephone: 414-765-2613 Facsimile: 414-765-2625 E-Mail Address: jack_west@bankone.com Administrative/Operations and Bid Loan Contact: Bank One, NA 1 Bank One Plaza Mail Code IL1-0088 Chicago, Illinois 60670 Sch. 16.01 - 5 Attention: Saul Gierstikas Telephone: 312-732-1794 Facsimile: 312-732-4303 E-Mail Address: saul_gierstikas@bankone.com L/C Contact: Bank One, NA 300 S. Riverside Plaza Mail Code IL1-0236 Chicago, Illinois 60606 Attention: Marnetta Harris Telephone: 312-954-1948 Facsimile: 312-954-6207 E-Mail Address: marnetta_harris@bankone.com US Bank National Association, as a Committed Lender Credit Contact: [__________] [__________] [__________] Attention: [__________] Telephone: [__________] Facsimile: [__________] Administrative/Operations and Bid Loan Contact: [__________] [__________] [__________] Attention: [__________] Telephone: [__________] Facsimile: [__________] L/C Contact: [__________] [__________] [__________] Attention: [__________] Telephone: [__________] Facsimile: [__________] Sch. 16.01 - 6 The Bank of Tokyo-Mitsubishi, Ltd., Chicago Branch, as a Committed Lender Credit Contact: [__________] [__________] [__________] Attention: [__________] Telephone: [__________] Facsimile: [__________] Administrative/Operations and Bid Loan Contact: [__________] [__________] [__________] Attention: [__________] Telephone: [__________] Facsimile: [__________] L/C Contact: [__________] [__________] [__________] Attention: [__________] Telephone: [__________] Facsimile: [__________] SunTrust Bank, as a Committed Lender Credit Contact: 401 North Michigan Avenue, Suite 1200 Chicago, Illinois 60611 Attention: Molly Drennan Telephone: 312-840-7982 Facsimile: 312-840-7983 E-Mail Address: Molly.Drennan@suntrust.com with a copy to: Sun Trust Bank 303 Peachtree Street NE, 10th Floor Mail Code 1928 Atlanta, Georgia 30308 Attention: Margaret Dempster Telephone: 404-532-0469 Facsimile: 404-588-8505 E-Mail Address: Margaret.Dempster@suntrust.com Sch. 16.01 - 7 Administrative/ Operations and Bid Loan Contact: Sun Trust Bank 303 Peachtree Street NE, 10th Floor Mail Code 1941 Atlanta, Georgia 30303 Attention: Patrice Ransom Telephone: 404-724-3891 Facsimile: 404-230-1940 E-Mail Address: Patrice.Ransom@suntrust.com L/C Contact: Sun Trust Bank 303 Peachtree Street NE, 10th Floor Mail Code 1941 Atlanta, Georgia 30303 Attention: Patrice Ransom Telephone: 404-724-3891 Facsimile: 404-230-1940 E-Mail Address: Patrice.Ransom@suntrust.com Mizuho Corporate Bank, Ltd., as a Committed Lender Credit Contact: [__________] [__________] [__________] Attention: [__________] Telephone: [__________] Facsimile: [__________] Administrative/Operations and Bid Loan Contact: [__________] [__________] [__________] Attention: [__________] Telephone: [__________] Facsimile: [__________] L/C Contact: [__________] [__________] [__________] Attention: [__________] Telephone: [__________] Facsimile: [__________] Sch. 16.01 - 8 Bank of China, Los Angeles Branch, as a Committed Lender Credit Contact: 444 S. Flower Street Los Angeles, California 90071 Attention: Jason Fu Telephone: 213-688-8700 Ext. 235 Facsimile: 213-688-1015 E-Mail Address: Jfu@bocuss.com Administrative/Operations: Bank of China 444 S. Flower Street Los Angeles, California 90071 Attention: Catherine Liang Telephone: 213-688-8700 Ext. 284 Facsimile: 213-688-1015 E-Mail Address: Cliang@bocuss.com Bid Loan Contact: Bank of China 444 S. Flower Street Los Angeles, California 90071 Attention: Au-Yeung, Hung (Holly) Telephone: 213-688-8700 Ex. 232 Facsimile: 213-688-1015 E-Mail Address: Hauyeung@bocuss.com L/C Contact: Bank of China 444 S. Flower Street Los Angeles, California 90071 Attention: Au-Yeung, Hung Telephone: 213-688-8700 Ex. 232 Facsimile: 213-688-1015 E-Mail Address: Hauyeung@bocuss.com Bank of Ireland, as a Committed Lender Credit Contact: La Touche House, IFSC, Custom House Docks, Dublin 1, Ireland Attention: Conor Linehan Telephone: 353 1 611 5365 Facsimile: 353 1 829 0129 Sch. 16.01 - 9 Administrative/ Operations and Bid Loan Contact: Bank of Ireland Hume House, Ballsbridge, Dublin 4, Ireland Attention: Stephen Donnelly Telephone: 353 1 618 7404 Facsimile: 353 1 618 7490 L/C Contact: Bank of Ireland Hume House, Ballsbridge, Dublin 4, Ireland Attention: Stephen Donnelly Telephone: 353 1 618 7404 Facsimile: 353 1 618 7490 Fleet National Bank, as a Committed Lender Credit Contact: Fleet National Bank 100 Federal Street Mailstop: MADE10010A Boston, Massachusetts 02110 Attention: Michael Kim Telephone: 617-434-5046 Facsimile: 617-434-0601 E-Mail Address: Michael_S_Kim@fleet.com Administrative/Operations and Bid Loan Contact: Fleet National Bank 100 Federal Street Mailstop: MADE10010A Boston, Massachusetts 02110 Attention: Jeffrey Seabron Telephone: 617-434-4796 Facsimile: 617-434-0800 E-Mail Address: Jeffrey_M_Seabron@fleet.com L/C Contact: Fleet National Bank 100 Federal Street Mailstop: MADE10010A Boston, Massachusetts 02110 Attention: Jeffrey Seabron Telephone: 617-434-4796 Facsimile: 617-434-0800 E-Mail Address: Jeffrey_M_Seabron@fleet.com Sch. 16.01 - 10 BNP Paribas, as a Committed Lender Credit Contact: BNP Paribas 209 South LaSalle, Suite 500 Chicago, Illinois 60604 Attention: Stephen Christie Telephone: [__________] Facsimile: [__________] Administrative/Operations and Bid Loan Contact: BNP Paribas 209 South LaSalle, Suite 500 Chicago, Illinois 60604 Attention: Stephen Christie Telephone: [__________] Facsimile: [__________] L/C Contact: BNP Paribas 209 South LaSalle, Suite 500 Chicago, Illinois 60604 Attention: Stephen Christie Telephone: [__________] Facsimile: [__________] KBC Bank N.V., as a Committed Lender Credit Contact: KBC Bank N.V. 125 W. 55th Street, 10th Floor New York, New York 10019 Attention: Stefano Snozzi Telephone: 212-258-9494 Facsimile: 212-541-0793 E-Mail Address: stefanoennco.snozzi@kbc.bc Administrative/Operations and Bid Loan Contact: KBC Bank N.V. 125 W. 55th Street, 10th Floor New York, New York 10019 Attention: Rose Pagan Telephone: 212-541-0657 Facsimile: 212-956-5581 E-Mail Address: rose.pagan@kbc.bc Sch. 16.01 - 11 L/C Contact: KBC Bank N.V. 125 W. 55th Street, 10th Floor New York, New York 10019 Attention: Jahel Romero Telephone: 212-541-0660 Facsimile: 212-956-5581 E-Mail Address: jahel.romero@kbc.bc PNC Bank, NA, as a Committed Lender Credit Contact: PNC Bank, NA One PNC Plaza 249 Fifth Avenue Pittsburgh, Pennsylvania 15222 Attention: Deborah Breslof Telephone: 412-762-4661 Facsimile: 412-768-9259 E-Mail Address: Deborah.breslof@pncbank.com Administrative/Operations and Bid Loan Contact: PNC Bank, NA PNC Firstside Center 500 First Avenue Pittsburgh, Pennsylvania 15219 Attention: April Atwater Telephone: 412-768-6214 Facsimile: 412-768-4586 E-Mail Address: april.atwater@pncbank.com L/C Contact: PNC Bank, NA PNC Firstside Center 500 First Avenue Pittsburgh, Pennsylvania 15219 Attention: Christina Cormas Telephone: 412-762-2541 Facsimile: 412-762-6118 E-Mail Address: Christina.cormas@pncbank.com Sch. 16.01 - 12 Wells Fargo Bank, National Association, as a Committed Lender Credit Contact: Wells Fargo Bank, National Association Sixth & Marquette MAC-N9305-031 Minneapolis, Minnesota 55479 Attention: Edward B. Hanson Telephone: 612-667-9787 Facsimile: 612-667-2276 Administrative/Operations and Bid Loan Contact: Wells Fargo Bank, National Association Sixth & Marquette MAC N9305-031 Minneapolis, Minnesota 55479 Attention: Deb Anderson Telephone: 612-667-5196 Facsimile: 612-667-4145 L/C Contact: Wells Fargo Bank, National Association 201 Third Street MAC A0187-081 San Francisco, California 94103 Attention: Ginnie Padgett Telephone: 415-477-5374 Facsimile: 415-979-0679 - Primary 415-979-0675 - Secondary Banca di Roma - Chicago Branch, as a Committed Lender Credit Contact: Banca di Roma - Chicago Branch 225 West Washington, Suite 1200 Chicago, Illinois 60606 Attention: Joyce Montgomery Telephone: 312-704-2648 Facsimile: 312-726-3058 E-Mail Address: Bdrchjm@Ameritech.net Administrative/Operations and L/C Contact: Banca di Roma - Chicago Branch 34 East 51st Street New York, New York 10022 Attention: Lino Caldera Telephone: 212-407-1613 Facsimile: 212-407-1684 Sch. 16.01 - 13 with a copy to: Banca di Roma - Chicago Branch 225 West Washington, Suite 1200 Chicago, Illinois 60606 Attention: Joyce Montgomery Telephone: 312-704-2648 Facsimile: 312-726-3058 E-Mail Address: Bdrchjm@Ameritech.net Bid Loan Contact: Banca di Roma - Chicago Branch 225 West Washington, Suite 1200 Chicago, Illinois 60606 Attention: Joyce Montgomery Telephone: 312-704-2648 Facsimile: 312-726-3058 E-Mail Address: Bdrchjm@Ameritech.net Mellon Bank, N.A., as a Committed Lender Credit Contact: Mellon Bank, N.A. 1 Mellon Center, Room 4530 Pittsburgh, Pennsylvania 15258-0001 Attention: Daniel J. Lenckos Telephone: 412-234-0733 Facsimile: 412-236-1914 E-Mail Address: lenckos.dj@mellon.com Administrative/Operations and Bid Loan Contact: Mellon Bank, N.A. 525 William Penn Place, Room 1203 Pittsburgh, Pennsylvania 15259-0003 Attention: Paula Zawicki Telephone: 412-234-3932 Facsimile: 412-209-6141 Sch. 16.01 - 14 L/C Contact: Mellon Bank, N.A. 500 Ross Street Pittsburgh, Pennsylvania 15262-0001 Attention: Rick Alberts Telephone: 412-234-4368 Facsimile: 412-234-2733 National City Bank, as a Committed Lender Credit Contact: National City Bank One North Franklin, Suite 360000 Chicago, Illinois 60606 Attention: Jon R. Hinard Telephone: 312-384-4624 Facsimile: 312-240-0301 E-Mail Address: jon.hinard@nationalcity.com Administrative/Operations and Bid Loan Contact: National City Bank 23000 Millcreek Blvd. Loc #7520 Highland Hills, Ohio 44122 Attention: Dave Gregory Telephone: 216-488-7087 Facsimile: 216-488-7110 E-Mail Address: david.gregory@nationalcity.com L/C Contact: National City Bank 23000 Millcreek Blvd. Loc #7520 Highland Hills, Ohio 44122 Attention: Dave Gregory Telephone: 216-488-7087 Facsimile: 216-488-7110 E-Mail Address: david.gregory@nationalcity.com Sch. 16.01 - 15 Bank Hapoalim B.M., as a Committed Lender Credit Contact: Bank Hapoalim B.M. 225 N. Michigan Avenue, Suite 900 Chicago, Illinois 60601 Attention: Michael J. Byrne Telephone: 312-228-6410 Facsimile: 312-228-6490 E-Mail Address: mbyrne@hapoalimusa.com Administrative/Operations and Bid Loan Contact: Bank Hapoalim B.M. 1177 Avenue of the Americas New York, New York 10036 Attention: Dwight Ghans Telephone: 212-782-2226 Facsimile: 212-782-2187 E-Mail Address: dghans@hapoalimusa.com L/C Contact: Bank Hapoalim B.M. 1177 Avenue of the Americas New York, New York 10036 Attention: Dwight Ghans Telephone: 212-782-2226 Facsimile: 212-782-2187 E-Mail Address: dghans@hapoalimusa.com Deutsche Bank AG New York Branch, as a Committed Lender Credit Contact: 31 West 52nd Street New York, New York 10019 Attention: Yvonne Preil Telephone: 212-469-5931 Facsimile: 212-469-2930 E-Mail Address: yvonne.preil@db.com Administrative/Operations and Bid Loan Contact: Deutsche Bank AG New York Branch 90 Hudson Street - MS JCY05-0511 Jersey City, New Jersey 07302 Attention: Claudia Zou Telephone: 201-593-2226 Facsimile: 201-593-2313 E-Mail Address: claudia.zoe@db.com Sch. 16.01 - 16 L/C Contact: Deutsche Bank AG New York Branch 90 Hudson Street - MS JCY05-0511 Jersey City, New Jersey 07302 Attention: Claudia Zou Telephone: 201-593-2226 Facsimile: 201-593-2313 E-Mail Address: claudia.zoe@db.com Sch. 16.01 - 17 EX-10.22 4 dex1022.txt NOTE PURCHASE AGREEMENT Exhibit 10.22 ================================================================================ Pentair, Inc. $50,000,000 4.93% Senior Notes, Series A, due July 25, 2013 $100,000,000 Floating Rate Senior Notes, Series B, due July 25, 2013 $50,000,000 5.03% Senior Notes, Series C, due October 15, 2013 ---------- Note Purchase Agreement ---------- Dated July 25, 2003 ================================================================================ Table of Contents (Not a part of the Agreement) Section Heading Page Section 1. Authorization of Notes .................................... 1 Section 2. Sale and Purchase of Notes ................................ 2 Section 3. Closing ................................................... 2 Section 4. Conditions to Closing ..................................... 3 Section 4.1. Representations and Warranties ............................ 3 Section 4.2. Performance; No Default ................................... 3 Section 4.3. Compliance Certificates ................................... 3 Section 4.4. Opinions of Counsel ....................................... 3 Section 4.5. Purchase Permitted by Applicable Law, etc ................. 4 Section 4.6. Sale of Other Notes ....................................... 4 Section 4.7. Payment of Special Counsel Fees. .......................... 4 Section 4.8. Private Placement Number .................................. 4 Section 4.9. Changes in Corporate Structure ............................ 4 Section 4.10. 2003 Note Purchase Subsidiary Guaranty .................... 4 Section 4.11. Funding Instructions ...................................... 5 Section 4.12. Proceedings and Documents ................................. 5 Section 5. Representations and Warranties of the Company ............. 5 Section 5.1. Organization; Power and Authority ......................... 5 Section 5.2. Authorization, etc ........................................ 5 Section 5.3. Disclosure ................................................ 6 Section 5.4. Organization and Ownership of Shares of Subsidiaries; Affiliates ................................................ 6 Section 5.5. Financial Statements ...................................... 7 Section 5.6. Compliance with Laws, Other Instruments, etc .............. 7 Section 5.7. Governmental Authorizations, etc .......................... 7 Section 5.8. Litigation; Observance of Agreements, Statutes and Orders . 7 Section 5.9. Taxes ..................................................... 7 Section 5.10. Title to Property; Leases ................................. 8 Section 5.11. Licenses, Permits, etc .................................... 8 Section 5.12. Compliance with ERISA ..................................... 8 Section 5.13. Private Offering by the Company ........................... 9 Section 5.14. Use of Proceeds; Margin Regulations ....................... 9 Section 5.15. Existing Indebtedness; Future Liens ....................... 10 Section 5.16. Foreign Assets Control Regulations, etc ................... 10 -i- Section 5.17. Status under Certain Statutes ............................. 11 Section 5.18. Environmental Matters ..................................... 11 Section 6. Representations of the Purchaser .......................... 11 Section 6.1. Purchase for Investment ................................... 11 Section 6.2. Source of Funds ........................................... 11 Section 7. Information as to Company ................................. 13 Section 7.1. Financial and Business Information ........................ 13 Section 7.2. Officer's Certificate ..................................... 15 Section 7.3. Inspection ................................................ 16 Section 8. Prepayment of the Notes ................................... 16 Section 8.1. No Scheduled Required Prepayments ......................... 16 Section 8.2. Optional Prepayments with Make-Whole Amount ............... 16 Section 8.3. Allocation of Partial Prepayments ......................... 17 Section 8.4. Maturity; Surrender, etc .................................. 17 Section 8.5. Purchase of Notes ......................................... 18 Section 8.6. Make-Whole Amount ......................................... 18 Section 9. Affirmative Covenants ..................................... 19 Section 9.1. Compliance with Laws ...................................... 19 Section 9.2. Insurance ................................................. 19 Section 9.3. Maintenance of Properties ................................. 20 Section 9.4. Payment of Taxes and Claims ............................... 20 Section 9.5. Corporate Existence, etc .................................. 20 Section 9.6. 2003 Note Purchase Subsidiary Guaranty .................... 20 Section 9.7. Unrestricted Subsidiary ................................... 21 Section 10. Negative Covenants ........................................ 21 Section 10.1. Transactions with Affiliates .............................. 21 Section 10.2. Mergers, Consolidations and Sales of Assets ............... 22 Section 10.3. Liens ..................................................... 23 Section 10.4. Certain Indebtedness Ratios ............................... 25 Section 10.5. Maximum Priority Debt ..................................... 26 Section 10.6. Securitization ............................................ 26 Section 11. Events of Default ......................................... 26 Section 12. Remedies On Default, Etc .................................. 29 Section 12.1. Acceleration .............................................. 29 Section 12.2. Other Remedies ............................................ 29 Section 12.3. Rescission ................................................ 29 -ii- Section 12.4. No Waivers or Election of Remedies, Expenses, etc ......... 30 Section 13. Registration; Exchange; Substitution of Notes ............. 30 Section 13.1. Registration of Notes ..................................... 30 Section 13.2. Transfer and Exchange of Notes ............................ 30 Section 13.3. Replacement of Notes ...................................... 31 Section 14. Payments on Notes ......................................... 31 Section 14.1. Place of Payment .......................................... 31 Section 14.2. Home Office Payment ....................................... 31 Section 15. Expenses, etc ............................................. 32 Section 15.1. Transaction Expenses ...................................... 32 Section 15.2. Survival .................................................. 32 Section 16. Survival of Representations and Warranties; Entire Agreement ................................................. 32 Section 17. Amendment and Waiver ...................................... 33 Section 17.1. Requirements .............................................. 33 Section 17.2. Solicitation of Holders of Notes .......................... 33 Section 17.3. Binding Effect, etc ....................................... 33 Section 17.4. Notes Held by Company, etc ................................ 34 Section 17.5. Calculation of Outstanding Notes .......................... 34 Section 18. Notices ................................................... 34 Section 19. Reproduction of Documents ................................. 35 Section 20. Confidential Information .................................. 35 Section 21. Substitution of Purchaser ................................. 36 Section 22. Miscellaneous ............................................. 36 Section 22.1. Successors and Assigns .................................... 36 Section 22.2. Payments Due on Non-Business Days ......................... 36 Section 22.3. Severability .............................................. 36 Section 22.4. Construction .............................................. 37 Section 22.5. Counterparts .............................................. 37 Section 22.6. Governing Law ............................................. 37 Signature ................................................................... 38 -iii- SCHEDULE A -- Information Relating to Purchasers SCHEDULE B -- Defined Terms SCHEDULE 4.9 -- Changes in Corporate Structure SCHEDULE 5.4 -- Restricted Subsidiaries SCHEDULE 5.5 -- Financial Statements SCHEDULE 5.8 -- Certain Litigation SCHEDULE 5.11 -- Licenses, Permits, etc. SCHEDULE 5.15 -- Existing Indebtedness EXHIBIT 1-A -- Form of 4.93% Senior Note, Series A, due July 25, 2013 EXHIBIT 1-B -- Form of Floating Rate Senior Note, Series B, due July 25, 2013 EXHIBIT 1-C -- Form of 5.03% Senior Note, Series C, due October 15, 2013 EXHIBIT 2 -- Form of 2003 Note Purchase Subsidiary Guaranty EXHIBIT 4.4(a)-- Form of Opinion of Special Counsel for the Company EXHIBIT 4.4(b)-- Form of Opinion of Special Counsel for the Purchasers -iv- Pentair, Inc. 5500 Wayzata Boulevard, Suite 800 Golden Valley, Minnesota 55416-1259 4.93% Senior Notes, Series A, due July 25, 2013 Floating Rate Senior Notes, Series B, due July 25, 2013 5.03% Senior Notes, Series C, due October 15, 2013 Dated as of July 25, 2003 To each of the Purchasers listed in the attached Schedule A: Ladies and Gentlemen: Pentair, Inc., a Minnesota corporation (the "Company"), agrees with you as follows: Section 1. Authorization of Notes. The Company will authorize the issue and sale of: (i) $50,000,000 aggregate principal amount of its 4.93% Senior Notes, Series A, due July 25, 2013 (the "Series A Notes"); (ii) $100,000,000 aggregate principal amount of its Floating Rate Senior Notes, Series B, due July 25, 2013 (the "Series B Notes"); and (iii) $50,000,000 aggregate principal amount of its 5.03% Senior Notes, Series C, due October 15, 2013 (the "Series C Notes" and, together with the Series A Notes and the Series B Notes, the "Notes", such term to include any such notes issued in substitution therefor pursuant to Section 13 of this Agreement or the Other Agreements (as hereinafter defined)). The Series A Notes, Series B Notes and the Series C Notes shall be substantially in the forms set out in Exhibits 1-A, 1-B and 1-C, respectively, with such changes therefrom, if any, as may be approved by you and the Company. Certain capitalized terms used in this Agreement are defined in Schedule B; references to a "Schedule" or an "Exhibit" are, unless otherwise specified, to a Schedule or an Exhibit attached to this Agreement. The Series B Notes shall bear interest from the date of issue at a floating rate equal to the Adjusted LIBOR Rate from time to time, payable quarterly on the twenty-fifth day of each January, April, July and October in each year (commencing October 25, 2003) and at maturity (each such date being referred to as an "Interest Payment Date") and to bear interest on overdue principal (including any overdue required or optional prepayment of principal) and LIBOR Breakage Amount, if any, and (to the extent legally enforceable) on any overdue installment of interest at the Default Rate, whether by acceleration or otherwise, until paid. Pentair, Inc. Note Purchase Agreement Interest on the Series B Notes shall be computed for the actual number of days elapsed on the basis of a year consisting of 360 days. The Adjusted LIBOR Rate shall be determined by the Company, and notice thereof shall be given to the holders of the Series B Notes, together with such information as the holders of the Series B notes may reasonably request for verification (including in all events, a facsimile transmission of the relevant screen and calculations), on the second Business Day preceding each Interest Period. In the event that the holders of more than 50% in aggregate principal amount of the outstanding Series B Notes do not concur with such determination by the Company, as evidenced by notice to the Company by such holders within ten (10) Business Days after receipt by such holders of the notice delivered by the Company pursuant to the previous sentence, the determination of Adjusted LIBOR Rate shall be made by the holders of the Series B Notes, in accordance with the provisions of this Agreement and shall be conclusive and binding absent manifest error. Section 2. Sale and Purchase of Notes. Subject to the terms and conditions of this Agreement, the Company will issue and sell to you and you will purchase from the Company, at the Closing provided for in Section 3, Notes of the series and in the principal amount specified opposite your name in Schedule A at the purchase price of 100% of the principal amount thereof. Contemporaneously with entering into this Agreement, the Company is entering into separate Note Purchase Agreements (the "Other Agreements") identical with this Agreement with each of the other purchasers named in Schedule A (the "Other Purchasers"), providing for the sale at such Closing to each of the Other Purchasers of Notes of the series and in the principal amount specified opposite its name in Schedule A. Your obligation hereunder, and the obligations of the Other Purchasers under the Other Agreements, are several and not joint obligations, and you shall have no obligation under any Other Agreement and no liability to any Person for the performance or nonperformance by any Other Purchaser thereunder. The Series A Notes, Series B Notes and Series C Notes are each herein sometimes referred to as Notes of a "series." Section 3. Closing. The sale and purchase of the Series A Notes and the Series B Notes to be purchased by you and the Other Purchasers shall occur at the offices of Chapman and Cutler, 111 West Monroe Street, Chicago, Illinois 60603, at 10:00 A.M. Chicago time, at a closing (the "First Closing") on July 25, 2003 or on such other Business Day thereafter as may be agreed upon by the Company and you and the Other Purchasers. The sale and purchase of the Series C Notes to be purchased by you and the Other Purchasers shall occur at the aforementioned offices of Chapman and Cutler at 10:00 a.m. Chicago time, at a closing (the "Second Closing") on October 15, 2003 or on such other Business Day thereafter as may be agreed upon by the Company and you and the Other Purchasers (the First Closing and the Second Closing hereinafter each being referred to, individually, as a "Closing"). At each Closing the Company will deliver to you the Notes of the series to be purchased by you in the form of a single Note (or such greater number of Notes of the appropriate series in denominations of at least $100,000 as you may request) dated the date of the Closing and registered in your name (or in the name of -2- Pentair, Inc. Note Purchase Agreement your nominee), against delivery by you to the Company or its order of immediately available funds in the amount of the purchase price therefor by wire transfer of immediately available funds for the account of the Company to the bank and account number set forth in the funding instructions provided to you by the Company pursuant to Section 4.11. If at the relevant Closing the Company shall fail to tender such Notes to you as provided above in this Section 3, or any of the conditions specified in Section 4 shall not have been fulfilled to your satisfaction, you shall, at your election, be relieved of all further obligations under this Agreement, without thereby waiving any rights you may have by reason of such failure or such nonfulfillment. Section 4. Conditions to Closing. Your obligation to purchase and pay for the Notes to be sold to you at each respective Closing is subject to the fulfillment to your satisfaction, prior to or at such Closing, of the following conditions: Section 4.1. Representations and Warranties. The representations and warranties of the Company in this Agreement shall be correct when made and at the time of the Closing. Section 4.2. Performance; No Default. The Company shall have performed and complied with all agreements and conditions contained in this Agreement required to be performed or complied with by it prior to or at the Closing, and after giving effect to the issue and sale of the Notes (and the application of the proceeds thereof as contemplated by Section 5.14), no Default or Event of Default shall have occurred and be continuing. Neither the Company nor any Subsidiary shall have entered into any transaction since the date of the Memorandum that would have been prohibited by Section 10 hereof had such Section applied since such date. Section 4.3. Compliance Certificates. (a) Officer's Certificate. The Company shall have delivered to you an Officer's Certificate, dated the date of the Closing, certifying that the conditions specified in Sections 4.1, 4.2 and 4.9 have been fulfilled. (b) Secretary's Certificate. The Company shall have delivered to you a certificate certifying as to the resolutions attached thereto and other corporate proceedings relating to the authorization, execution and delivery of the Financing Agreements. Each Subsidiary Guarantor shall have delivered to you a certificate certifying as to the resolutions attached thereto and other corporate proceedings relating to the authorization, execution and delivery of the 2003 Note Purchase Subsidiary Guaranty. Section 4.4. Opinions of Counsel. You shall have received opinions in form and substance satisfactory to you, dated the date of the Closing (a) from Louis L. Ainsworth, Senior Vice President and General Counsel of the Company, covering the matters set forth in Exhibit 4.4(a) and covering such other matters incident to the transactions contemplated hereby as you or your counsel may reasonably request (and the Company hereby instructs such counsel to deliver such opinion to you) and (b) from Chapman and Cutler, your special counsel in -3- Pentair, Inc. Note Purchase Agreement connection with such transactions, substantially in the form set forth in Exhibit 4.4(b) and covering such other matters incident to such transactions as you may reasonably request. Section 4.5. Purchase Permitted by Applicable Law, etc. On the date of the Closing your purchase of Notes shall (i) be permitted by the laws and regulations of each jurisdiction to which you are subject, without recourse to provisions (such as Section 1405(a)(8) of the New York Insurance Law) permitting limited investments by insurance companies without restriction as to the character of the particular investment, (ii) not violate any applicable law or regulation (including, without limitation, Regulation T, U or X of the Board of Governors of the Federal Reserve System) and (iii) not subject you to any tax, penalty or liability under or pursuant to any applicable law or regulation, which law or regulation was not in effect on the date hereof. If requested by you, you shall have received an Officer's Certificate certifying as to such matters of fact as you may reasonably specify to enable you to determine whether such purchase is so permitted. Section 4.6. Sale of Other Notes. (a) Contemporaneously with each Closing, the Company shall sell to the Other Purchasers, and the Other Purchasers shall purchase, the Notes to be purchased by them at such Closing as specified in Schedule A. (b) As a condition to the Second Closing, the Company shall have issued and sold 100% of the Series A Notes and the Series B Notes on the date of the First Closing in accordance with the terms and provisions hereof. Section 4.7. Payment of Special Counsel Fees. Without limiting the provisions of Section 15.1, the Company shall have paid on or before each Closing the fees, charges and disbursements of your special counsel referred to in Section 4.4 to the extent reflected in a statement of such counsel rendered to the Company at least one Business Day prior to the Closing. Section 4.8. Private Placement Number. A Private Placement Number issued by Standard & Poor's CUSIP Service Bureau (in cooperation with the Securities Valuation Office of the National Association of Insurance Commissioners) shall have been obtained for each series of Notes. Section 4.9. Changes in Corporate Structure. Except as specified in Schedule 4.9, the Company shall not have changed its jurisdiction of incorporation or been a party to any merger or consolidation and shall not have succeeded to all or any substantial part of the liabilities of any other entity, at any time following the date of the most recent financial statements referred to in Schedule 5.5. Section 4.10. 2003 Note Purchase Subsidiary Guaranty. The 2003 Note Purchase Subsidiary Guaranty shall have been executed and delivered by each of the Subsidiary Guarantors and the Other Creditor Supplement in the form of Exhibit A to the Intercreditor Agreement shall have been executed and delivered by the Company, you and each Other Purchaser. -4- Pentair, Inc. Note Purchase Agreement Section 4.11. Funding Instructions. At least three Business Days prior to the date of each Closing, you shall have received written instructions executed by a Responsible Officer directing the manner of the payment of funds and setting forth (i) the name and address of the transferee bank, (ii) such transferee bank's ABA number, (iii) the account name and number into which the purchase price for the Notes is to be deposited, and (iv) the name and telephone number of the account representative responsible for verifying receipt of such funds. Section 4.12. Proceedings and Documents. All corporate and other proceedings in connection with the transactions contemplated by this Agreement and all documents and instruments incident to such transactions shall be satisfactory to you and your special counsel, and you and your special counsel shall have received all such counterpart originals or certified or other copies of such documents as you or they may reasonably request. Section 5. Representations and Warranties of the Company. The Company represents and warrants to you that: Section 5.1. Organization; Power and Authority. The Company is a corporation duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation, and is duly qualified as a foreign corporation and is in good standing in each jurisdiction in which such qualification is required by law, other than those jurisdictions as to which the failure to be so qualified or in good standing could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. The Company has the corporate power and authority to own or hold under lease the properties it purports to own or hold under lease, to transact the business it transacts and proposes to transact, to execute and deliver this Agreement and the Other Agreements and the Notes and to perform the provisions hereof and thereof. Section 5.2. Authorization, etc. The Financing Agreements have been duly authorized by all necessary corporate action on the part of the Company. This Agreement constitutes, and upon execution and delivery thereof each Note will constitute, a legal, valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except as such enforceability may be limited by (i) applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the enforcement of creditors' rights generally and (ii) general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law). Upon execution and delivery thereof, the 2003 Note Purchase Subsidiary Guaranty will have been duly authorized by all necessary corporate action on the part of each Subsidiary Guarantor party thereto. Upon execution and delivery thereof, the 2003 Note Purchase Subsidiary Guaranty will constitute a legal, valid and binding obligation of each of the Subsidiary Guarantors enforceable against each of the Subsidiary Guarantors in accordance with its terms, except as such enforceability may be limited by (i) applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the enforcement of creditors' rights generally and (ii) general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law). -5- Pentair, Inc. Note Purchase Agreement Section 5.3. Disclosure. The Company, through its agent, Banc One Capital Markets, Inc., has delivered to you and each Other Purchaser a copy of a Private Placement Memorandum, dated June, 2003 (the "Memorandum"), relating to the transactions contemplated hereby. The Memorandum fairly describes, in all material respects, the general nature of the business and principal properties of the Company and its Subsidiaries. This Agreement, the Memorandum, and the financial statements listed in Schedule 5.5, taken as a whole, do not contain any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein not misleading in light of the circumstances under which they were made. Except as disclosed in the Memorandum or in one of the documents, certificates or other writings identified therein, since December 31, 2002, there has been no change in the financial condition, operations, business, properties or prospects of the Company or any Subsidiary except changes that individually or in the aggregate could not reasonably be expected to have a Material Adverse Effect. There is no fact known to the Company (and peculiar to the Company and its Subsidiaries) that could reasonably be expected to have a Material Adverse Effect that has not been set forth or identified herein or in the Memorandum or in the other documents, certificates and other writings delivered to you by or on behalf of the Company specifically for use in connection with the transactions contemplated hereby. Section 5.4. Organization and Ownership of Shares of Subsidiaries; Affiliates. (a) Schedule 5.4 contains (except as noted therein) complete and correct lists (i) of the Company's Restricted Subsidiaries, showing, as to each Restricted Subsidiary, the correct name thereof, the jurisdiction of its organization, and the percentage of shares of each class of its capital stock or similar equity interests outstanding owned by the Company or another Subsidiary. (b) All of the outstanding shares of capital stock or similar equity interests of each Restricted Subsidiary shown in Schedule 5.4 as being owned by the Company and its Subsidiaries have been validly issued, are fully paid and nonassessable and are owned by the Company or another Subsidiary free and clear of any Lien (except as otherwise disclosed in Schedule 5.4). (c) Each Subsidiary identified in Schedule 5.4 is a corporation or other legal entity duly organized, validly existing and in good standing under the laws of its jurisdiction of organization, and is duly qualified as a foreign corporation or other legal entity and is in good standing in each jurisdiction in which such qualification is required by law, other than those jurisdictions as to which the failure to be so qualified or in good standing could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. Each such Subsidiary has the corporate or other power and authority to own or hold under lease the properties it purports to own or hold under lease and to transact the business it transacts and proposes to transact. (d) No Subsidiary is a party to, or otherwise subject to, any legal restriction or any agreement (other than this Agreement, the agreements listed on Schedule 5.4 and customary limitations imposed by corporate law statutes) restricting the ability of such Subsidiary to pay dividends out of profits or make any other similar distributions of profits to the Company or any of its Subsidiaries that owns outstanding shares of capital stock or similar equity interests of such Subsidiary. -6- Pentair, Inc. Note Purchase Agreement Section 5.5. Financial Statements. The Company has delivered to each Purchaser copies of the financial statements of the Company and its Subsidiaries listed on Schedule 5.5. All of said financial statements (including in each case the related schedules and notes) fairly present in all material respects the consolidated financial position of the Company and its Subsidiaries as of the respective dates specified in such Schedule and the consolidated results of their operations and cash flows for the respective periods so specified and have been prepared in accordance with GAAP consistently applied throughout the periods involved except as set forth in the notes thereto (subject, in the case of any interim financial statements, to normal year-end adjustments). Section 5.6. Compliance with Laws, Other Instruments, etc. The execution, delivery and performance by the Company of the Note Purchase Agreement and the Notes and the Subsidiary Guarantors of the 2003 Note Purchase Subsidiary Guaranty will not (i) contravene, result in any breach of, or constitute a default under, or result in the creation of any Lien in respect of any property of the Company or any Restricted Subsidiary under, any Material indenture, mortgage, deed of trust, loan, purchase or credit agreement, lease, corporate charter or by-laws, or any other Material agreement or instrument to which the Company or any Restricted Subsidiary is bound or by which the Company or any Restricted Subsidiary or any of their respective properties may be bound or affected, (ii) conflict with or result in a breach of any of the terms, conditions or provisions of any order, judgment, decree, or ruling of any court, arbitrator or Governmental Authority applicable to the Company or any Restricted Subsidiary or (iii) violate any provision of any statute or other rule or regulation of any Governmental Authority applicable to the Company or any Restricted Subsidiary. Section 5.7. Governmental Authorizations, etc. No consent, approval or authorization of, or registration, filing or declaration with, any Governmental Authority is required in connection with the execution, delivery or performance by the Company of this Agreement or the Notes. No consent, approval or authorization of, or registration, filing or declaration with, any Governmental Authority is required in connection with the execution, delivery or performance by the Subsidiary Guarantors of the 2003 Note Purchase Subsidiary Guaranty. Section 5.8. Litigation; Observance of Agreements, Statutes and Orders. (a) Except as disclosed in Schedule 5.8, there are no actions, suits or proceedings pending or, to the knowledge of the Company, threatened against or affecting the Company or any Restricted Subsidiary or any property of the Company or any Restricted Subsidiary in any court or before any arbitrator of any kind or before or by any Governmental Authority that, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect. (b) Neither the Company nor any Restricted Subsidiary is in default under any term of any agreement or instrument to which it is a party or by which it is bound, or any order, judgment, decree or ruling of any court, arbitrator or Governmental Authority or is in violation of any applicable law, ordinance, rule or regulation (including without limitation Environmental Laws) of any Governmental Authority, which default or violation, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect. Section 5.9. Taxes. The Company and its Subsidiaries have filed all tax returns that are required to have been filed in any jurisdiction, and have paid all taxes shown to be due and -7- Pentair, Inc. Note Purchase Agreement payable on such returns and all other taxes and assessments levied upon them or their properties, assets, income or franchises, to the extent such taxes and assessments have become due and payable and before they have become delinquent, except for any returns, taxes and assessments (i) the amount of which is not individually or in the aggregate Material or (ii) the amount, applicability or validity of which is currently being contested in good faith by appropriate proceedings and with respect to which the Company or a Subsidiary, as the case may be, has established adequate reserves in accordance with GAAP. The Company knows of no basis for any other tax or assessment that could reasonably be expected to have a Material Adverse Effect. The charges, accruals and reserves on the books of the Company and its Subsidiaries as of December 31, 2002 and for the fiscal period then ended in respect of Federal, state or other taxes for all fiscal periods are adequate. The Federal income tax liabilities of the Company and its Subsidiaries have been examined by the Internal Revenue Service and paid for all fiscal years ending on or before September 30, 1997. Section 5.10. Title to Property; Leases. The Company and its Restricted Subsidiaries have good and sufficient title to their respective properties that individually or in the aggregate are Material, including all such properties reflected in the most recent audited balance sheet referred to in Section 5.5 or purported to have been acquired by the Company or any Restricted Subsidiary after said date (except as sold or otherwise disposed of in the ordinary course of business), in each case free and clear of Liens prohibited by this Agreement. All leases that individually or in the aggregate are Material are valid and subsisting and are in full force and effect in all material respects. Section 5.11. Licenses, Permits, etc. Except as disclosed in Schedule 5.11, (a) the Company and its Restricted Subsidiaries own or possess all licenses, permits, franchises, authorizations, patents, copyrights, service marks, trademarks and trade names, or rights thereto, that individually or in the aggregate are Material, without known conflict with the rights of others; (b) to the best knowledge of the Company, no product of the Company infringes in any Material respect any license, permit, franchise, authorization, patent, copyright, service mark, trademark, trade name or other right owned by any other Person; and (c) to the best knowledge of the Company, there is no Material violation by any Person of any right of the Company or any of its Subsidiaries with respect to any patent, copyright, service mark, trademark, trade name or other right owned or used by the Company or any of its Subsidiaries. Section 5.12. Compliance with ERISA. (a) The Company and each ERISA Affiliate have operated and administered each Plan in compliance with all applicable laws except for such instances of noncompliance as have not resulted in and could not reasonably be expected to result in a Material Adverse Effect. Neither the Company nor any ERISA Affiliate has incurred any liability pursuant to Title I or IV of ERISA or the penalty or excise tax provisions of the Code relating to employee benefit plans (as defined in section 3 of ERISA), and no event, transaction or condition has occurred or exists that could reasonably be expected to result in the -8- Pentair, Inc. Note Purchase Agreement incurrence of any such liability by the Company or any ERISA Affiliate, or in the imposition of any Lien on any of the rights, properties or assets of the Company or any ERISA Affiliate, in either case pursuant to Title I or IV of ERISA or to such penalty or excise tax provisions or to section 401(a)(29) or 412 of the Code, other than such liabilities or Liens as would not be individually or in the aggregate Material. (b) The present value of the accumulated benefit liabilities under each of the Plans (other than Multiemployer Plans) subject to Title IV of ERISA determined as of January 1, 2002 and on the basis of the actuarial assumptions specified for funding purposes in such Plan's most recent actuarial valuation report, did not exceed the aggregate current value of the assets of such Plan allocable to such benefit liabilities. The term "benefit liabilities" has the meaning specified in section 4001 of ERISA and the terms "current value" and "present value" have the meanings specified in section 3 of ERISA. (c) The Company and its ERISA Affiliates have not incurred withdrawal liabilities (and are not subject to contingent withdrawal liabilities) under section 4201 or 4204 of ERISA in respect of Multiemployer Plans that individually or in the aggregate are Material. (d) The accumulated post-retirement benefit obligation (determined as of December 31, 2002 in accordance with Financial Accounting Standards Board Statement No. 106, without regard to liabilities attributable to continuation coverage mandated by section 4980B of the Code) of the Company and its Subsidiaries is disclosed in Note 12 to the consolidated financial statements of the Company and its Subsidiaries for its fiscal year ended December 31, 2002 referred to in Schedule 5.5. (e) The execution and delivery of the Financing Agreements and the issuance and sale of the Notes hereunder will not involve any transaction that is subject to the prohibitions of section 406(a)(1) of ERISA or in connection with which a tax could be imposed pursuant to section 4975(c)(1)(A)-(D) of the Code that, in either event, could reasonably be expected to have a Material Adverse Effect. The representation by the Company in the first sentence of this Section 5.12(e) is made in reliance upon and subject to the accuracy of your representation in Section 6.2 as to the sources of the funds used to pay the purchase price of the Notes to be purchased by you. Section 5.13. Private Offering by the Company. Neither the Company nor anyone acting on its behalf has offered the Notes or the Subsidiary Guaranty or any similar securities for sale to, or solicited any offer to buy any of the same from, or otherwise approached or negotiated in respect thereof with, any Person other than you, the Other Purchasers and not more than 42 other Institutional Investors, each of which has been offered the Notes and the Subsidiary Guaranty at a private sale for investment. Neither the Company nor anyone acting on its behalf has taken, or will take, any action that would subject the issuance or sale of the Notes or the Subsidiary Guaranty to the registration requirements of Section 5 of the Securities Act. Section 5.14. Use of Proceeds; Margin Regulations. The Company will apply the proceeds of the sale of the Notes to refinance existing indebtedness and for general corporate purposes. No part of the proceeds from the sale of the Notes hereunder will be used, directly or -9- Pentair, Inc. Note Purchase Agreement indirectly, for the purpose of buying or carrying any margin stock within the meaning of Regulation U of the Board of Governors of the Federal Reserve System (12 CFR 207), or for the purpose of buying or carrying or trading in any securities under such circumstances as to involve the Company in a violation of Regulation X of said Board (12 CFR 224) or to involve any broker or dealer in a violation of Regulation T of said Board (12 CFR 220). Margin stock does not constitute more than 5.00% of the value of the consolidated assets of the Company and its Subsidiaries and the Company does not have any present intention that margin stock will constitute more than 5.00% of the value of such assets. As used in this Section, the terms "margin stock" and "purpose of buying or carrying" shall have the meanings assigned to them in said Regulation U. Section 5.15. Existing Indebtedness; Future Liens. (a) Schedule 5.15 sets forth a complete and correct list of all outstanding Indebtedness of the Company and its Subsidiaries as of March 29, 2003, since which date there has been no Material change in the amounts, interest rates, sinking funds, installment payments or maturities of the Indebtedness of the Company or its Restricted Subsidiaries. Neither the Company nor any Restricted Subsidiary is in default and no waiver of default is currently in effect, in the payment of any principal or interest on any Indebtedness of the Company or such Restricted Subsidiary and no event or condition exists with respect to any Indebtedness of the Company or any Restricted Subsidiary that would permit (or that with notice or the lapse of time, or both, would permit) one or more Persons to cause such Indebtedness to become due and payable before its stated maturity or before its regularly scheduled dates of payment. (b) Except as disclosed in Schedule 5.15, neither the Company nor any Restricted Subsidiary has agreed or consented to cause or permit in the future (upon the happening of a contingency or otherwise) any of its property, whether now owned or hereafter acquired, to be subject to a Lien not permitted by Section 10.3. Section 5.16. Foreign Assets Control Regulations, etc. Neither the sale of the Notes by the Company hereunder nor its use of the proceeds thereof will violate the Trading with the Enemy Act, as amended, or any of the foreign assets control regulations of the United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) or any enabling legislation or executive order relating thereto. Without limiting the foregoing, neither the Company nor any Subsidiary Guarantor (a) is a person whose property or interests in property are blocked pursuant to Section 1 of Executive Order 13224 of September 23, 2001 Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism (66 Fed. Reg. 49079 (2001)) or (b) to the best of the Company's knowledge, engages in any dealings or transactions, or be otherwise associated, with any such person. The Company and its Subsidiaries are in compliance in all material respects with the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA Patriot Act of 2001). No part of the proceeds from the sale of the Notes hereunder will be used, directly or indirectly, for any payment to any governmental official or employee, political party, official of a political party, candidate for political office or anyone else acting in an official capacity, in order to obtain, retain or direct business, in violation of the United States Foreign Corrupt Practices Act of 1977, as amended. -10- Pentair, Inc. Note Purchase Agreement Section 5.17. Status under Certain Statutes. Neither the Company nor any Restricted Subsidiary is an "investment company" registered or required to be registered under the Investment Company Act of 1940, as amended, or is subject to regulation under the Public Utility Holding Company Act of 1935, as amended, the ICC Termination Act of 1995, as amended, or the Federal Power Act, as amended. Section 5.18. Environmental Matters. Neither the Company nor any Subsidiary has knowledge of any Material claim or has received any notice of any Material claim, and no proceeding has been instituted raising any Material claim against the Company or any of its Subsidiaries or any of their respective real properties now or formerly owned, leased or operated by any of them or other assets, alleging any damage to the environment or violation of any Environmental Laws, except, in each case, such as could not reasonably be expected to result in a Material Adverse Effect. Except as otherwise disclosed to you in writing: (a) neither the Company nor any Subsidiary has knowledge of any facts which would give rise to any Material claim, public or private, of violation of Environmental Laws or damage to the environment emanating from, occurring on or in any way related to real properties now or formerly owned, leased or operated by any of them or to other assets or their use, except, in each case, such as could not reasonably be expected to result in a Material Adverse Effect; (b) neither the Company nor any of its Subsidiaries has stored any Hazardous Materials on real properties now or formerly owned, leased or operated by any of them or has disposed of any Hazardous Materials in a manner contrary to any Environmental Laws in each case in any manner that could reasonably be expected to result in a Material Adverse Effect; and (c) all buildings on all real properties now owned, leased or operated by the Company or any of its Subsidiaries are in compliance with applicable Environmental Laws, except where failure to comply could not reasonably be expected to result in a Material Adverse Effect. Section 6. Representations of the Purchaser. Section 6.1. Purchase for Investment. You represent that you are purchasing the Notes for your own account or for one or more separate accounts maintained by you or for the account of one or more pension or trust funds and not with a view to the distribution thereof, provided that the disposition of your or their property shall at all times be within your or their control. You understand that the Notes have not been registered under the Securities Act and may be resold only if registered pursuant to the provisions of the Securities Act or if an exemption from registration is available, except under circumstances where neither such registration nor such an exemption is required by law, and that the Obligors are not required to register the Notes . Section 6.2. Source of Funds. You represent that at least one of the following statements is an accurate representation as to each source of funds (a "Source") to be used by you to pay the purchase price of the Notes to be purchased by you hereunder: -11- Pentair, Inc. Note Purchase Agreement (a) the Source is an "insurance company general account" within the meaning of Department of Labor Prohibited Transaction Exemption ("PTE") 95-60 (issued July 12, 1995) and there is no employee benefit plan, treating as a single plan, all plans maintained by the same employer or employee organization, with respect to which the amount of the general account reserves and liabilities for all contracts held by or on behalf of such plan, exceed ten percent (10%) of the total reserves and liabilities of such general account (exclusive of separate account liabilities) plus surplus, as set forth in the NAIC Annual Statement filed with your state of domicile; or (b) the Source is either (i) an insurance company pooled separate account, within the meaning of PTE 90-1 (issued January 29, 1990), or (ii) a bank collective investment fund, within the meaning of the PTE 91-38 (issued July 12, 1991) and, except as you have disclosed to the Company in writing pursuant to this paragraph (b), no employee benefit plan or group of plans maintained by the same employer or employee organization beneficially owns more than 10% of all assets allocated to such pooled separate account or collective investment fund; or (c) the Source constitutes assets of an "investment fund" (within the meaning of Part V of the QPAM Exemption) managed by a "qualified professional asset manager" or "QPAM" (within the meaning of Part V of the QPAM Exemption), no employee benefit plan's assets that are included in such investment fund, when combined with the assets of all other employee benefit plans established or maintained by the same employer or by an affiliate (within the meaning of Section V(c)(1) of the QPAM Exemption) of such employer or by the same employee organization and managed by such QPAM, exceed 20% of the total client assets managed by such QPAM, the conditions of Part I(c) and (g) of the QPAM Exemption are satisfied, neither the QPAM nor a person controlling or controlled by the QPAM (applying the definition of "control" in Section V(e) of the QPAM Exemption) owns a 5% or more interest in the Company and (i) the identity of such QPAM and (ii) the names of all employee benefit plans whose assets are included in such investment fund have been disclosed to the Company in writing pursuant to this paragraph (c); or (d) the Source is a governmental plan; or (e) the Source is one or more employee benefit plans, or a separate account or trust fund comprised of one or more employee benefit plans, each of which has been identified to the Company in writing pursuant to this paragraph (e); or (f) the Source does not include assets of any employee benefit plan, other than a plan exempt from the coverage of ERISA. -12- Pentair, Inc. Note Purchase Agreement Section 7. Information as to Company. The Company agrees that so long as any amount payable hereunder remains unpaid; Section 7.1. Financial and Business Information. The Company shall deliver to each holder of Notes that is an Institutional Investor: (a) Quarterly Statements -- within 60 days after the end of each quarterly fiscal period in each fiscal year of the Company (other than the last quarterly fiscal period of each such fiscal year), duplicate copies of: (i) a consolidated balance sheet of the Company and its Subsidiaries as at the end of such quarter, and (ii) consolidated statements of income, changes in shareholders' equity and cash flows of the Company and its Subsidiaries for such quarter and (in the case of the second and third quarters) for the portion of the fiscal year ending with such quarter, setting forth in each case in comparative form the figures for the corresponding periods in the previous fiscal year, all in reasonable detail, prepared in accordance with GAAP applicable to quarterly financial statements generally, and certified by a Senior Financial Officer as fairly presenting, in all material respects, the financial position of the companies being reported on and their results of operations and cash flows, subject to changes resulting from year-end adjustments, provided that delivery within the time period specified above of copies of the Company's Quarterly Report on Form 10-Q prepared in compliance with the requirements therefore and filed with the Securities and Exchange Commission will be deemed to satisfy the requirements of this Section 7.1(a); (b) Annual Statements -- within 120 days after the end of each fiscal year of the Company, duplicate copies of: (i) a consolidated balance sheet of the Company and its Subsidiaries, as at the end of such year, and (ii) consolidated statements of income, changes in shareholders' equity and cash flows of the Company and its Subsidiaries, for such year, setting forth in each case in comparative form the figures for the previous fiscal year, all in reasonable detail, prepared in accordance with GAAP, and accompanied by an opinion thereon of independent certified public accountants of recognized national standing, which opinion shall state that such financial statements present fairly, in all material respects, the financial position of the companies being reported upon and their results of operations and cash flows and have been prepared in conformity with GAAP, and that the examination of such accountants in connection with such financial statements has been made in accordance with generally accepted auditing standards, and that such audit -13- Pentair, Inc. Note Purchase Agreement provides a reasonable basis for such opinion in the circumstances, provided that the delivery within the time period specified above of the Company's Annual Report on Form 10-K for such fiscal year (together with the Company's annual report to shareholders, if any, prepared pursuant to Rule 14a-3 under the Exchange Act) prepared in accordance with the requirements therefor and filed with the Securities and Exchange Commission, together with the accountant's certificate described above shall be deemed to satisfy the requirements of this Section 7.1(b); Notwithstanding the foregoing, in the event that one or more Unrestricted Subsidiaries shall own, individually or in the aggregate, more than 10% of the Consolidated Total Assets of the Company and its Subsidiaries, determined at the end of the respective periods set forth in Section 7.1(a) and this Section 7.1 (b), then the Company shall deliver to each holder of the Notes that is an Institutional Investor, financial statements of the character and for the dates and periods as in said Section 7.1(a) and this Section 7.1(b) covering the group of Unrestricted Subsidiaries (on a consolidated basis), together with a consolidated statement reflecting eliminations or adjustments required to reconcile the financial statements of such group of Unrestricted Subsidiaries to the financial statements delivered pursuant to Section 7.1(a) and this Section 7.1(b). (c) SEC and Other Reports -- promptly upon their becoming available, one copy of (i) each financial statement, report, management letter, notice or proxy statement sent by the Company or any Subsidiary to public securities holders generally, and (ii) each regular or periodic report, each registration statement (without exhibits except as expressly requested by such holder), and each prospectus and all amendments thereto filed by the Company or any Subsidiary with the Securities and Exchange Commission and of all press releases and other statements made available generally by the Company or any Subsidiary to the public concerning developments that are Material; (d) Notice of Default or Event of Default -- promptly, and in any event within five days after a Responsible Officer becoming aware of the existence of any Default or Event of Default or that any Person has given any notice or taken any action with respect to a claimed default hereunder or that any Person has given any notice or taken any action with respect to a claimed default of the type referred to in Section 11(f), a written notice specifying the nature and period of existence thereof and what action the Company is taking or proposes to take with respect thereto; (e) ERISA Matters -- promptly, and in any event within five days after a Responsible Officer becoming aware of any of the following, a written notice setting forth the nature thereof and the action, if any, that the Company or an ERISA Affiliate proposes to take with respect thereto: (i) with respect to any Plan, any reportable event, as defined in section 4043(c) of ERISA and the regulations thereunder, for which notice thereof has not been waived pursuant to such regulations as in effect on the date hereof; or -14- Pentair, Inc. Note Purchase Agreement (ii) the taking by the PBGC of steps to institute, or the threatening by the PBGC of the institution of, proceedings under section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Plan, or the receipt by the Company or any ERISA Affiliate of a notice from a Multiemployer Plan that such action has been taken by the PBGC with respect to such Multiemployer Plan; or (iii) any event, transaction or condition that could result in the incurrence of any liability by the Company or any ERISA Affiliate pursuant to Title I or IV of ERISA or the penalty or excise tax provisions of the Code relating to employee benefit plans, or in the imposition of any Lien on any of the rights, properties or assets of the Company or any ERISA Affiliate pursuant to Title I or IV of ERISA or such penalty or excise tax provisions, if such liability or Lien, taken together with any other such liabilities or Liens then existing, could reasonably be expected to have a Material Adverse Effect; (f) Notices from Governmental Authority -- promptly, and in any event within 30 days of receipt thereof, copies of any notice to the Company or any Subsidiary from any Federal or state Governmental Authority relating to any order, ruling, statute or other law or regulation that could reasonably be expected to have a Material Adverse Effect; and (g) Requested Information -- with reasonable promptness, such other data and information relating to the business, operations, affairs, financial condition, assets or properties of the Company or any of its Subsidiaries or relating to the ability of the Company to perform its obligations hereunder and under the Notes as from time to time may be reasonably requested by any such holder of Notes. Section 7.2. Officer's Certificate. Each set of financial statements delivered to a holder of Notes pursuant to Section 7.1(a) or Section 7.1(b) hereof shall be accompanied by a certificate of a Senior Financial Officer setting forth: (a) Covenant Compliance -- the information (including detailed calculations) required in order to establish whether the Company was in compliance with the requirements of Section 10.2 through Section 10.6 hereof, inclusive, during the quarterly or annual period covered by the statements then being furnished (including with respect to each such Section, where applicable, the calculations of the maximum or minimum amount, ratio or percentage, as the case may be, permissible under the terms of such Sections, and the calculation of the amount, ratio or percentage then in existence), provided that such certificate shall include information describing in reasonable detail any difference in the calculation of the Company's calculation of Consolidated Net Worth pursuant to the terms of this Agreement and the calculation of consolidated net worth of the Company determined in accordance with GAAP; and (b) Event of Default -- a statement that such officer has reviewed the relevant terms hereof and has made, or caused to be made, under his or her supervision, a review -15- Pentair, Inc. Note Purchase Agreement of the transactions and conditions of the Company and its Subsidiaries from the beginning of the quarterly or annual period covered by the statements then being furnished to the date of the certificate and that such review shall not have disclosed the existence during such period of any condition or event that constitutes a Default or an Event of Default or, if any such condition or event existed or exists, specifying the nature and period of existence thereof and what action the Company shall have taken or proposes to take with respect thereto. Section 7.3. Inspection. The Company shall permit the representatives of each holder of Notes that is an Institutional Investor: (a) No Default -- if no Default or Event of Default then exists, at the expense of such holder and upon reasonable prior notice to the Company, to visit the principal executive office of the Company, to discuss the affairs, finances and accounts of the Company and its Subsidiaries with the Company's officers, and (with the consent of the Company, which consent will not be unreasonably withheld) its independent public accountants, and (with the consent of the Company, which consent will not be unreasonably withheld) to visit the other offices and properties of the Company and each Subsidiary, all at such reasonable times (which shall be normal business hours) and as often as may be reasonably requested in writing; and (b) Default -- if a Default or Event of Default then exists, at the expense of the Company, to visit and inspect any of the offices or properties of the Company or any Subsidiary, to examine all their respective books of account, records, reports and other papers, to make copies and extracts therefrom, and to discuss their respective affairs, finances and accounts with their respective officers and independent public accountants (and by this provision the Company authorizes said accountants to discuss the affairs, finances and accounts of the Company and its Subsidiaries), all at such times and as often as may be requested. Section 8. Prepayment of the Notes. Section 8.1. No Scheduled Required Prepayments. Subject to the provisions of Section 12, the Notes are not subject to scheduled required prepayments of principal. Section 8.2. Optional Prepayments with Make-Whole Amount. (a) The Company may, at its option, upon notice as provided below, prepay at any time all, or from time to time any part of, the Series A Notes, in an amount not less than 10% of the aggregate principal amount of the Series A Notes then outstanding in the case of a partial prepayment, at 100% of the principal amount so prepaid, together with interest accrued thereon to the date of such prepayment, plus the Make-Whole Amount determined for the prepayment date with respect to such principal amount. The Company will give each holder of Series A Notes written notice of each optional prepayment under this Section 8.2(a) not less than 30 days and not more than 60 days prior to the date fixed for such prepayment. Each such notice shall specify such date, the aggregate principal amount of the Series A Notes to be prepaid on such date, the principal amount of each Series A Note held by such holder to be prepaid (determined in accordance with Section 8.3), and the -16- Pentair, Inc. Note Purchase Agreement interest to be paid on the prepayment date with respect to such principal amount being prepaid, and shall be accompanied by a certificate of a Senior Financial Officer as to the estimated Make-Whole Amount due in connection with such prepayment (calculated as if the date of such notice were the date of the prepayment), setting forth the details of such computation. Two Business Days prior to such prepayment, the Company shall deliver to each holder of Series A Notes a certificate of a Senior Financial Officer specifying the calculation of such Make-Whole Amount as of the specified prepayment date. (b) The Company may, at its option, upon notice as provided below, prepay on any Interest Payment Date on or after, but not prior to, July 25, 2005, all, or any part of, the Series B Notes, in an amount not less than 10% of the aggregate principal amount of the Series B Notes then outstanding in the case of a partial prepayment, at 100% of the principal amount so prepaid, together with interest accrued thereon to the date of such prepayment. The Company will give each holder of Series B Notes written notice of each optional prepayment under this Section 8.2(b) not less than 30 days and not more than 60 days prior to the Interest Payment Date fixed for such prepayment. Each such notice shall specify such date, the aggregate principal amount of the Series B Notes to be prepaid on such date, the principal amount of each Series B Note held by such holder to be prepaid (determined in accordance with Section 8.3), and the interest to be paid on the prepayment date with respect to such principal amount being prepaid. (c) The Company may, at its option, upon notice as provided below, prepay at any time all, or from time to time any part of, the Series C Notes, in an amount not less than 10% of the aggregate principal amount of the Series C Notes then outstanding in the case of a partial prepayment, at 100% of the principal amount so prepaid, together with interest accrued thereon to the date of such prepayment, plus the Make-Whole Amount determined for the prepayment date with respect to such principal amount. The Company will give each holder of Series C Notes written notice of each optional prepayment under this Section 8.2(c) not less than 30 days and not more than 60 days prior to the date fixed for such prepayment. Each such notice shall specify such date, the aggregate principal amount of the Series C Notes to be prepaid on such date, the principal amount of each Series C Note held by such holder to be prepaid (determined in accordance with Section 8.3), and the interest to be paid on the prepayment date with respect to such principal amount being prepaid, and shall be accompanied by a certificate of a Senior Financial Officer as to the estimated Make-Whole Amount due in connection with such prepayment (calculated as if the date of such notice were the date of the prepayment), setting forth the details of such computation. Two Business Days prior to such prepayment, the Company shall deliver to each holder of Series C Notes a certificate of a Senior Financial Officer specifying the calculation of such Make-Whole Amount as of the specified prepayment date. Section 8.3. Allocation of Partial Prepayments. In the case of each partial prepayment of the Notes of a series, the principal amount of the Notes of such series to be prepaid shall be allocated among all of the Notes of that series at the time outstanding in proportion, as nearly as practicable, to the respective unpaid principal amounts thereof. Section 8.4. Maturity; Surrender, etc. In the case of each prepayment of Notes pursuant to this Section 8, the principal amount of each Note to be prepaid shall mature and become due and payable on the date fixed for such prepayment, together with interest on such principal -17- Pentair, Inc. Note Purchase Agreement amount accrued to such date and, in the case of the Series A Notes or the Series C Notes, the applicable Make-Whole Amount, if any. From and after such date, unless the Company shall fail to pay such principal amount when so due and payable, together with the interest and, in the case of the Series A Notes or the Series C Notes, Make-Whole Amount, if any, as aforesaid, interest on such principal amount shall cease to accrue. Any Note paid or prepaid in full shall be surrendered to the Company and cancelled and shall not be reissued, and no Note shall be issued in lieu of any prepaid principal amount of any Note. Section 8.5. Purchase of Notes. The Company will not and will not permit any Affiliate to purchase, redeem, prepay or otherwise acquire, directly or indirectly, any of the outstanding Notes except upon the payment or prepayment of the Notes in accordance with the terms of this Agreement and the Notes. The Company will promptly cancel all Notes acquired by it or any Affiliate pursuant to any payment, prepayment or purchase of Notes pursuant to any provision of this Agreement and no Notes may be issued in substitution or exchange for any such Notes. Section 8.6. Make-Whole Amount. The term "Make-Whole Amount" means, with respect to any Series A Note or Series C Note, an amount equal to the excess, if any, of the Discounted Value of the Remaining Scheduled Payments with respect to the Called Principal of such Series A Note or Series C Note over the amount of such Called Principal, provided that the Make-Whole Amount may in no event be less than zero. For the purposes of determining the Make-Whole Amount, the following terms have the following meanings: "Called Principal" means, with respect to any Series A Note or Series C Note, the principal of such Note that is to be prepaid pursuant to Section 8.2 or has become or is declared to be immediately due and payable pursuant to Section 12.1, as the context requires. "Discounted Value" means, with respect to the Called Principal of any Series A Note or Series C Note, the amount obtained by discounting all Remaining Scheduled Payments with respect to such Called Principal from their respective scheduled due dates to the Settlement Date with respect to such Called Principal, in accordance with accepted financial practice and at a discount factor (applied on the same periodic basis as that on which interest on the Series A Notes or Series C Notes, as the case may be, is payable) equal to the Reinvestment Yield with respect to such Called Principal. "Reinvestment Yield" means, with respect to the Called Principal of any Series A Note or Series C Note, 0.50% over the yield to maturity implied by (i) the yields reported, as of 10:00 A.M. (New York City time) on the second Business Day preceding the Settlement Date with respect to such Called Principal, on the display designated as "Screen PX1" on the Bloomberg Financial Markets Screen, or, if not available, any other nationally recognized trading screen reporting on-line intraday trading in the U.S. Treasury securities (or such other display as may replace Screen PX1 on the Bloomberg Financial Markets Screen, or, if not available, any other nationally recognized trading screen reporting on-line intraday trading in the U.S. Treasury securities) for actively traded U.S. Treasury securities having a constant maturity equal to the Remaining Average Life of such Called Principal as of such Settlement Date. Such implied yield -18- Pentair, Inc. Note Purchase Agreement will be determined, if necessary, by (a) converting U.S. Treasury bill quotations to bond-equivalent yields in accordance with accepted financial practice and (b) interpolating linearly between (1) the actively traded U.S. Treasury security with the maturity closest to and greater than the Remaining Average Life and (2) the actively traded U.S. Treasury security with the maturity closest to and less than the Remaining Average Life. "Remaining Average Life" means, with respect to any Called Principal, the number of years (calculated to the nearest one-twelfth year) obtained by dividing (i) such Called Principal into (ii) the sum of the products obtained by multiplying (a) the principal component of each Remaining Scheduled Payment with respect to such Called Principal by (b) the number of years (calculated to the nearest one-twelfth year) that will elapse between the Settlement Date with respect to such Called Principal and the scheduled due date of such Remaining Scheduled Payment. "Remaining Scheduled Payments" means, with respect to the Called Principal of any Series A Note or Series C Note, all payments of such Called Principal and interest thereon that would be due after the Settlement Date with respect to such Called Principal if no payment of such Called Principal were made prior to its scheduled due date, provided that if such Settlement Date is not a date on which interest payments are due to be made under the terms of the Series A Notes or Series C Notes, as the case may be, then the amount of the next succeeding scheduled interest payment will be reduced by the amount of interest accrued to such Settlement Date and required to be paid on such Settlement Date pursuant to Section 8.2(a) or 12.1. "Settlement Date" means, with respect to the Called Principal of any Series A Note or Series C Note, the date on which such Called Principal is to be prepaid pursuant to Section 8.2(a) or has become or is declared to be immediately due and payable pursuant to Section 12.1, as the context requires. Section 9. Affirmative Covenants. The Company agrees that so long as any amount payable hereunder remains unpaid: Section 9.1. Compliance with Laws. The Company shall, and shall cause each Subsidiary to, comply with all Requirements of Law of any Governmental Authority having jurisdiction over it or its business the non-compliance with which could reasonably be expected to have a Material Adverse Effect. Without limiting the foregoing, the Company shall, and shall cause each of its Subsidiaries to, conduct its operations in compliance with all Environmental Laws, except for such noncompliance which individually or in the aggregate would not be reasonably expected to result in Material liability to the Company and its Subsidiaries taken as a whole. Section 9.2. Insurance. The Company shall, and shall cause each Subsidiary to, maintain (either in the name of the Company or in such Subsidiary's own name), with financially sound and reputable insurers, insurance with respect to its properties and business against loss or damage of the kinds customarily insured against by Persons engaged in the same or similar -19- Pentair, Inc. Note Purchase Agreement businesses, of such types and in such amounts as are customarily carried under similar circumstances by such other Persons; provided, however, that in lieu of any such insurance, the Company and any of its Subsidiaries may maintain with its Affiliates a system or systems of self-insurance (or captive insurance) which will accord with sound practices of similarly situated corporations maintaining such systems. Section 9.3. Maintenance of Properties. The Company will, and will cause each of its Restricted Subsidiaries to, maintain and keep, or cause to be maintained and kept, their respective properties in good repair, working order and condition (other than ordinary wear and tear), so that the business carried on in connection therewith may be properly conducted at all times, provided that this Section shall not prevent the Company or any Restricted Subsidiary from discontinuing the operation and the maintenance of any of its properties if such discontinuance is desirable in the conduct of its business and the Company has concluded that such discontinuance could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. Section 9.4. Payment of Taxes and Claims. The Company will, and will cause each of its Subsidiaries to, file all tax returns required to be filed in any jurisdiction and to pay and discharge all taxes shown to be due and payable on such returns and all other taxes, assessments, governmental charges, or levies imposed on them or any of their properties, assets, income or franchises, to the extent such taxes and assessments have become due and payable and before they have become delinquent and all claims for which sums have become due and payable that have or might become a Lien on properties or assets of the Company or any Subsidiary, provided that neither the Company nor any Subsidiary need pay any such tax or assessment or claims if (i) the amount, applicability or validity thereof is contested by the Company or such Subsidiary on a timely basis in good faith and in appropriate proceedings, and the Company or a Subsidiary has established adequate reserves therefor in accordance with GAAP on the books of the Company or such Subsidiary or (ii) the nonpayment of all such taxes and assessments in the aggregate could not reasonably be expected to have a Material Adverse Effect. Section 9.5. Corporate Existence, etc. Subject to Section 10.2, the Company will at all times preserve and keep in full force and effect its corporate existence. Except as permitted by Section 10.2, the Company will at all times preserve and keep in full force and effect the corporate existence of each of its Restricted Subsidiaries and all rights and franchises of the Company and its Restricted Subsidiaries unless, in the good faith judgment of the Company, the termination of or failure to preserve and keep in full force and effect such corporate existence, right or franchise could not, individually or in the aggregate, have a Material Adverse Effect. Section 9.6. 2003 Note Purchase Subsidiary Guaranty. The Company will take, and will cause its Subsidiaries to take, such actions as are reasonably necessary (including delivery of authorization documents and customary opinions of counsel) so that as of the Closing Date, and at all times thereafter (subject to the proviso below), all of the Company's obligations hereunder and under the Notes are guaranteed by Subsidiaries (other than Foreign Subsidiaries) that, in the aggregate together with the Company, own 90% or more of the consolidated assets of the Company and its Subsidiaries (excluding Foreign Subsidiaries) and earned 90% or more of the consolidated revenues of the Company and its Subsidiaries (excluding Foreign Subsidiaries) -20- Pentair, Inc. Note Purchase Agreement during the most recent period of four consecutive fiscal quarters (excluding the revenues of any Subsidiary or business unit which has been divested or liquidated on or prior to any date of determination), in each case pursuant to the 2003 Note Purchase Subsidiary Guaranty. The 2003 Note Purchase Subsidiary Guaranty shall cease to be effective upon the payment in full of the principal and interest on the Notes and all other payments due under this Agreement and the Other Agreements. In addition, the 2003 Note Purchase Subsidiary Guaranty shall, without any further action of the holders of the Notes, cease to be effective on the first date on which the Credit Agreement Guaranty (or any replacement thereof) ceases to be effective (a "Credit Agreement Guaranty Termination"); provided, however, that the foregoing release shall be effective only if (i) at the time of such release and after giving effect thereto, no Default or Event of Default shall exist and (ii) each Subsidiary Guaranty ceases to be effective by its terms upon a Credit Agreement Guaranty Termination. In addition, if at any time any Person which is a Subsidiary Guarantor is released from its obligations under the Credit Agreement Guaranty (or any replacement thereof) then such Person shall, without any further action of the Company or the holder of the Note, be released from the 2003 Note Purchase Subsidiary Guaranty; provided however, that the foregoing release shall be effective only if (i) at the time of such release and after giving effect thereto, no Default or Event of Default shall exist and (ii) such Person is concurrently released from its obligations under the terms of each Subsidiary Guaranty upon such Credit Agreement Guaranty (or any replacement thereof) release. In the event that the obligations of any Subsidiary Guarantor are released in accordance with the foregoing and other Indebtedness of the Company is thereafter supported by a Guaranty from such Subsidiary, the Company will cause such Subsidiary to execute and deliver to each holder of Notes a new Guaranty substantially in the form of the 2003 Note Purchase Subsidiary Guaranty. Section 9.7. Unrestricted Subsidiary. The Company may from time to time cause any Subsidiary to be designated as an Unrestricted Subsidiary or an Unrestricted Subsidiary to be designated as a Restricted Subsidiary, provided, however, no Subsidiary may be designated an Unrestricted Subsidiary unless, at the time of such designation and after giving effect thereto, no Default or Event of Default shall exist, provided, further, that once a Restricted Subsidiary has been designated an Unrestricted Subsidiary it shall not be redesignated as a Restricted Subsidiary on more than one occasion. Within ten days following any designation described above, the Company will deliver to you a notice of such designation accompanied by a certificate signed by a Senior Financial Officer of the Company certifying compliance with the requirements of this Section 9.7 and setting forth information necessary to establish such compliance. Section 10. Negative Covenants. The Company covenants that so long as any of the Notes is outstanding: Section 10.1. Transactions with Affiliates. The Company will not and will not permit any Restricted Subsidiary to enter into directly or indirectly any Material transaction or Material group of related transactions (including without limitation the purchase, lease, sale or exchange of properties of any kind or the rendering of any service) with any Affiliate (excluding the Company or any Restricted Subsidiary), except pursuant to the reasonable requirements of the Company's or such Restricted Subsidiary's business and upon fair and reasonable terms no less -21- Pentair, Inc. Note Purchase Agreement favorable to the Company or such Restricted Subsidiary than would be obtainable in a comparable arm's-length transaction with a Person not an Affiliate. Section 10.2. Mergers, Consolidations and Sales of Assets. (a) Neither the Company nor any Restricted Subsidiary will consolidate with or be a party to a merger with any other corporation, partnership or limited liability company; provided, however, that: (i) any Restricted Subsidiary may merge or consolidate with or into the Company or any other Restricted Subsidiary so long as in any transaction involving the Company, the Company shall be the surviving or continuing corporation; and (ii) any Restricted Subsidiary may merge or consolidate with any corporation, partnership or limited liability company other than the Company or any other Restricted Subsidiary so long as the Company complies with the provisions of subparagraph (b) hereof with respect to any such transaction as if such transaction were undertaken in the form of a sale of assets; and (iii) the Company may merge or consolidate with or into any other corporation, partnership or limited liability company if at the time of such merger or consolidation and after giving effect thereto no Default or Event of Default shall have occurred and be continuing and the Company shall be the surviving corporation or, if not, (x) the surviving corporation, partnership or limited liability company shall continue to be organized under the laws of one of the States of the United States of America and (y) the surviving corporation, partnership or limited liability company expressly agrees in writing to assume all liabilities under and to be bound by the Notes and this Agreement. (b) Other than in the ordinary course of their businesses, the Company and its Restricted Subsidiaries taken as a whole will not, in any fiscal year, sell, lease, transfer or otherwise dispose of more than 20% of Consolidated Total Assets (determined as of the date of the most recently ended fiscal quarter of the Company for which financial statements are available prior to each such sale, lease, transfer or other disposition) (excluding sales of receivables pursuant to a Securitization Transaction); provided, however, that the Company and its Restricted Subsidiaries taken as a whole may dispose of more than 20% of Consolidated Total Assets if, in connection with any such disposal, the Company and its Restricted Subsidiaries (including any Restricted Subsidiary created for the purpose of acquiring operating assets) applies the Net Proceeds of the sale of the assets within twelve months from the date of such sale either (i) to the acquisition of operating assets of the Company and its Restricted Subsidiaries; or (ii) to the retirement of Senior Debt (other than Senior Debt in respect of any revolving credit or similar credit facility providing the Company or any of its Restricted Subsidiaries with the right to obtain loans or other extensions of credit from time to time, except to the extent that in connection with such payment of Senior Debt the availability of credit under such credit facility is permanently reduced by an amount not less than the amount of such proceeds applied to the payment of such Senior Debt); provided, that in the course of making such application the Company shall offer to prepay each outstanding Note in accordance with Section 8.2 hereof (except that no Make-Whole Amount will be required) in a principal amount which equals the Ratable Portion for such Note. A failure by a holder of Notes to respond in writing not later than -22- Pentair, Inc. Note Purchase Agreement ten days prior to the proposed prepayment date to any offer to prepay pursuant to this Section 10.2(b) shall be deemed to constitute a rejection of such offer by such holder. To the extent any holder of a Note fails to accept such offer of prepayment, then the Net Proceeds that would have been paid to such holder shall be offered pro rata to the other holders of the Notes that have accepted the offer. To the extent that any holder of a Note rejects such offer of prepayment, the Company nevertheless will be deemed to have offered to prepay to such holder an amount equal to the Ratable Portion for such Note. "Ratable Portion" for any Note means an amount equal to the product of (x) the Net Proceeds being so applied to the payment of Senior Debt multiplied by (y) a fraction the numerator of which is the outstanding principal amount of such Note and the denominator of which is the aggregate principal amount of Senior Debt of the Company and its Restricted Subsidiaries. For purposes of any determination under this Section 10.2(b), any Unrestricted Subsidiary which had been a Restricted Subsidiary at any time within the period commencing 12 months prior to the date of such determination shall be treated as a Restricted Subsidiary. Section 10.3 Liens. The Company will not, and will not permit any Restricted Subsidiary to, directly or indirectly create, incur, assume or permit to exist (upon the happening of a contingency or otherwise) any Lien on or with respect to any property or asset (including without limitation, any document or instrument in respect of goods or accounts receivable) of the Company or any such Restricted Subsidiary, whether now owned or held or hereafter acquired, or upon any income or profits therefrom, or assigns or otherwise convey any right to receive income or profits(unless it makes or causes to be made, effective provisions whereby the Notes will be equally and ratably secured with any and all other obligations thereby secured, such security to be pursuant to an agreement reasonably satisfactory to the Required Holders), except: (a) Liens for taxes, assessments or other governmental charges which are not yet due and payable or are being contested in good faith by appropriate proceedings and adequate reserves in accordance with GAAP are being maintained therefore, provided no notice of Lien has been filed or recorded under the Code; (b) any attachment or judgment Lien, unless the judgment it secures shall not, within 60 days after the entry thereof, have been discharged or execution thereof stayed pending appeal, or shall not have been discharged within 60 days after the expiration of any such stay; (c) statutory Liens of landlords and Liens of carriers, warehousemen, mechanics, materialmen and other similar Liens, in each case, incurred in the ordinary course of business for sums not yet due and payable or which are being contested in good faith by appropriate proceedings, which proceedings have the effect of preventing the forfeiture or sale of the property subject thereto; (d) Liens (other than any Lien imposed by ERISA) incurred or deposits made in the ordinary course of business (i) in connection with workers' compensation, unemployment insurance and other types of social security or retirement benefits, or (ii) to secure (or to obtain letters of credit that secure) the performance of tenders, statutory obligations, surety bonds, appeal bonds, bids, leases (other than Capital Leases), -23- Pentair, Inc. Note Purchase Agreement performance bonds, purchase, construction or sales contracts and other similar obligations or (iii) given in connection with usual and customary commercial transactions, in each case not incurred or made in connection with the borrowing of money, the obtaining of advances or credit or the payment of the deferred purchase price of Property; (e) leases or subleases granted to others, easements, rights-of-way, restrictions and other similar charges or encumbrances, in each case incidental to, and not interfering with in a Material way, the ordinary conduct of the business of the Company and its Restricted Subsidiaries, provided that such Liens do not, in the aggregate, detract from the value of such property in any Material way; (f) Liens on property or assets of the Company or any of its Restricted Subsidiaries securing Indebtedness owing to the Company or any of its Wholly-Owned Restricted Subsidiaries; (g) Liens existing on the date of this Agreement and securing the Indebtedness of the Company and its Restricted Subsidiaries and disclosed in the financial statements referred to in Section 5.5 or set forth in Schedule 5.15; (h) any Lien created to secure all or any part of the purchase price, or to secure Indebtedness incurred or assumed to pay all or any part of the purchase price or cost of construction, of property, or any improvement thereon, acquired or constructed by the Company or a Restricted Subsidiary after the date of this Agreement (including, but not limited to, Liens in respect of Capital Leases), provided that (i) any such Lien shall extend solely to the item or items of such property (or improvement thereon) so acquired or constructed and, if required by the terms of the instrument originally creating such Lien, other property (or improvement thereon) which is an improvement to or is acquired for specific use in connection with such acquired or constructed property (or improvement thereon) or which is real property being improved by such acquired or constructed property (or improvement thereon), (ii) the principal amount of the Indebtedness secured by any such Lien shall at no time exceed an amount equal to the lesser of (A) the cost to the Company or such Restricted Subsidiary of the property (or improvement thereon) so acquired or constructed and (B) the Fair Market Value (as determined in good faith by the board of directors of the Company) of such property (or improvement thereon) at the time of such acquisition or construction, and (iii) any such Lien shall be created within 180 days of the acquisition or completion of construction of such property; (i) any Lien (including, but not limited to, Liens in respect of Capital Leases) existing on property of a Person immediately prior to such Person being consolidated -24- Pentair, Inc. Note Purchase Agreement with or merged into the Company or a Restricted Subsidiary or such Person becoming a Restricted Subsidiary, or any Lien existing on any property acquired by the Company or any Restricted Subsidiary at the time such property is so acquired (whether or not the Indebtedness secured thereby shall have been assumed), provided that (i) no such Lien shall have been created or assumed in contemplation of such consolidation or merger or such Person's becoming a Restricted Subsidiary or such acquisition of property, and (ii) each such Lien shall extend solely to the item or items of property so acquired and, if required by the terms of the instrument originally creating such Lien, other property which is an improvement to or is acquired for specific use in connection with such acquired property; (j) any Lien renewing, extending or refunding any Lien permitted by paragraphs (g), (h) or (i) of this Section 10.3, provided that (i) the principal amount of Indebtedness secured by such Lien immediately prior to such extension, renewal or refunding is not increased or the maturity thereof reduced, (ii) such Lien is not extended to any other Property, (iii) immediately after such extension, renewal or refunding no Default or Event of Default would exist; (k) Liens arising solely by virtue of any statutory or common law provision relating to banker's liens, rights of set-off or similar rights and remedies as to deposit accounts or other funds maintained with a creditor depository institution; provided that (i) such deposit account is not a dedicated cash collateral account and is not subject to restrictions against access by the Company or the applicable Subsidiary in excess of those set forth by regulations promulgated by the FRB and (ii) such deposit account is not intended by the Company or any Subsidiary to provide collateral to the depository institution; (l) Liens on assets of a Subsidiary issuing Indebtedness in connection with Securitization Transactions; provided that the aggregate investment or claim held at any time by all purchasers, assignees or other transferees of (or of interests in) receivables and other rights to payment in all Securitization Transactions shall not at any time exceed in the aggregate $150,000,000; and (m) additional Liens securing Indebtedness of the Company or any Restricted Subsidiary, provided that no Default or Event of Default exists including under Section 10.5. Section 10.4. Certain Indebtedness Ratios. (a) The Company will not and will not permit any Restricted Subsidiary to incur additional Funded Indebtedness unless, after giving effect thereto and to the application of the proceeds thereof, total Funded Indebtedness does not exceed 65% of Total Capitalization. (b) The Company will not and will not permit any Restricted Subsidiary to have any Current Indebtedness outstanding unless during the immediately preceding twelve month period there shall have been period of at least 30 consecutive days during which the amount of the Consolidated Current Indebtedness, when added to outstanding Funded Indebtedness, equals a -25- Pentair, Inc. Note Purchase Agreement sum that is less than the maximum amounts of Funded Indebtedness permitted by the limitation set forth in paragraph (a) of this Section 10.4. For the purposes of this Section 10.4, any Person becoming a Restricted Subsidiary after the date hereof shall be deemed, at the time it becomes a Restricted Subsidiary, to have incurred all of its then outstanding Indebtedness, and any Person extending, renewing or refunding any Indebtedness shall be deemed to have incurred such Indebtedness at the time of such extension, renewal or refunding. Section 10.5. Maximum Priority Debt. The Company will not at any time permit Priority Debt to exceed 20% of Consolidated Net Worth. Section 10.6. Securitization. The Company shall not, and shall not permit any Restricted Subsidiary to, permit the aggregate outstanding investment or claim held by purchasers, assignees or transferees of (or of interests in) receivables of the Company and its Restricted Subsidiaries in connection with Securitization Transactions to exceed $150,000,000. Section 11. Events of Default. An "Event of Default" shall exist if any of the following conditions or events shall occur and be continuing: (a) the Company defaults in the payment of any principal or Make-Whole Amount, (if any), or LIBOR Breakage Amount (if any) on any Note when the same becomes due and payable, whether at maturity or at a date fixed for prepayment or by declaration or otherwise; or (b) the Company defaults in the payment of any interest on any Note for more than five Business Days after the same becomes due and payable; or (c) the Company defaults in the performance of or compliance with any term contained in Sections 10.2 through 10.6; or (d) the Company defaults in the performance of or compliance with any term contained herein (other than those referred to in paragraphs (a), (b) and (c) of this Section 11) and such default is not remedied within 30 days after the earlier of (i) a Responsible Officer obtaining actual knowledge of such default and (ii) the Company receiving written notice of such default from any holder of a Note (any such written notice to be identified as a "notice of default" and to refer specifically to this paragraph (d) of Section 11); or (e) any representation or warranty made in writing by or on behalf of an Obligor or by any officer of an Obligor in any Financing Agreement or in any writing furnished in connection with the transactions contemplated hereby proves to have been false or incorrect in any material respect on the date as of which made; or -26- Pentair, Inc. Note Purchase Agreement (f) (i) the Company or any Subsidiary is in default (as principal or as guarantor or other surety) in the payment of any principal of or premium or make-whole amount (including any LIBOR Breakage Amount) or interest on any Indebtedness that is outstanding in an aggregate principal amount of at least $25,000,000 beyond any period of grace provided with respect thereto (a "Payment Default"), (ii) the Company or any Subsidiary is in default in the performance of or compliance with any term of any evidence of any Indebtedness in an aggregate outstanding principal amount of at least $25,000,000 or of any mortgage, indenture or other agreement relating thereto or any other condition exists, and as a consequence of such default or condition such Indebtedness has become, or has been declared, due and payable before its stated maturity or before its regularly scheduled dates of payment, or (iii) as a consequence of the occurrence or continuation of any event or condition (other than the passage of time or the right of the holder of Indebtedness to convert such Indebtedness into equity interests), (x) the Company or any Subsidiary has become obligated to purchase or repay Indebtedness before its regular maturity or before its regularly scheduled dates of payment in an aggregate outstanding principal amount of at least $25,000,000, or (y) in the case of any such event or condition consisting of a Payment Default, one or more Persons have the right to require the Company or any Subsidiary to purchase or repay such Indebtedness; or (g) the Company or any Significant Subsidiary (i) is generally not paying, or admits in writing its inability to pay, its debts as they become due, (ii) files, or consents by answer or otherwise to the filing against it of, a petition for relief or reorganization or arrangement or any other petition in bankruptcy, for liquidation or to take advantage of any bankruptcy, insolvency, reorganization, moratorium or other similar law of any jurisdiction, (iii) makes an assignment for the benefit of its creditors, (iv) consents to the appointment of a custodian, receiver, trustee or other officer with similar powers with respect to it or with respect to any substantial part of its property, (v) is adjudicated as insolvent or to be liquidated, or (vi) takes corporate action for the purpose of any of the foregoing; or (h) a court or governmental authority of competent jurisdiction enters an order appointing, without consent by the Company or any Significant Subsidiaries, a custodian, receiver, trustee or other officer with similar powers with respect to it or with respect to any substantial part of its property, or constituting an order for relief or approving a petition for relief or reorganization or any other petition in bankruptcy or for liquidation or to take advantage of any bankruptcy or insolvency law of any jurisdiction, or ordering the dissolution, winding-up or liquidation of the Company or any Significant Subsidiaries, or any such petition shall be filed against the Company or any Significant Subsidiaries and such petition shall not be dismissed within 60 days; or (i) a final judgment or judgments for the payment of money aggregating in excess of $25,000,000 are rendered against one or more of the Company and its Subsidiaries (net of insurance proceeds whereunder a solvent insurer with an investment grade long term bond rating has acknowledged in writing its obligation to satisfy such judgment) and which judgments are not, within 60 days after entry thereof, bonded, -27- Pentair, Inc. Note Purchase Agreement discharged or stayed pending appeal and which could reasonably be expected to have a Material Adverse Effect on the Company and its Subsidiaries taken as a whole; or (j) at any time during which the 2003 Note Purchase Subsidiary Guaranty is required to be in effect pursuant to Section 9.6, (i) the 2003 Note Purchase Subsidiary Guaranty shall cease to be in full force and effect with respect to any Subsidiary Guarantor (other than as a result of such Subsidiary Guarantor ceasing to be a Subsidiary pursuant to a transaction permitted hereunder), (ii) any Subsidiary Guarantor shall fail (subject to any applicable grace period) to comply with or to perform any applicable provision of the 2003 Note Purchase Subsidiary Guaranty, or (iii) any Subsidiary Guarantor (or any Person by, through or on behalf of such Subsidiary Guarantor) shall contest in any manner the validity, binding nature or enforceability of the 2003 Note Purchase Subsidiary Guaranty with respect to such 2003 Note Purchase Subsidiary Guarantor; or (k) the failure of the Company to issue the Series C Notes on the date of the Second Closing as a result of the failure of the Company to satisfy the conditions set forth in Section 4 in respect of the Second Closing; or (l) if (i) any Plan shall fail to satisfy the minimum funding standards of ERISA or the Code for any plan year or part thereof or a waiver of such standards or extension of any amortization period is sought or granted under section 412 of the Code, (ii) a notice of intent to terminate any Plan shall have been or is reasonably expected to be filed with the PBGC or the PBGC shall have instituted proceedings under ERISA section 4042 to terminate or appoint a trustee to administer any Plan or the PBGC shall have notified the Company or any ERISA Affiliate that a Plan may become a subject of any such proceedings, (iii) the present value of the accumulated benefit liabilities under all Plans (other than Multiemployer Plans) subject to Title IV of ERISA, determined on the basis of the actuarial assumptions specified for funding purposes in such Plan's most recent actuarial valuation report, do not exceed the aggregate current value of the assets of all such Plans allocable to such benefit liabilities by more than $50,000,000, (iv) the Company or any ERISA Affiliate shall have incurred or is reasonably expected to incur any liability pursuant to Title I or IV of ERISA or the penalty or excise tax provisions of the Code relating to employee benefit plans, (v) the Company or any ERISA Affiliate withdraws from any Multiemployer Plan and the withdrawal liability finally determined with respect to that withdrawal exceeds $5,000,000, or (vi) the Company or any Subsidiary establishes or amends any employee welfare benefit plan that provides post-employment welfare benefits in a manner that would increase the liability of the Company or any Subsidiary thereunder; and any such event or events described in clauses (i) through (vi) above, either individually or together with any other such event or events, could reasonably be expected to have a Material Adverse Effect. As used in Section 11(l), the terms "current value," "employee benefit plan," "employee welfare benefit plan" and "present value" shall have the respective meanings assigned to such terms in section 3 of ERISA, and the term "benefit liabilities" has the meaning assigned to such term in section 4001 of ERISA. -28- Pentair, Inc. Note Purchase Agreement Section 12. Remedies on Default, etc. Section 12.1. Acceleration. (a) If an Event of Default with respect to the Company described in paragraph (g) or (h) of Section 11 (other than an Event of Default described in clause (i) of paragraph (g) or described in clause (vi) of paragraph (g) by virtue of the fact that such clause encompasses clause (i) of paragraph (g)) has occurred, all the Notes then outstanding shall automatically become immediately due and payable. (b) If any other Event of Default has occurred and is continuing, the Required Holders may at any time at its or their option, by notice or notices to the Company, declare all the Notes then outstanding to be immediately due and payable. (c) If any Event of Default described in paragraph (a) or (b) of Section 11 has occurred and is continuing, any holder of Notes at the time outstanding affected by such Event of Default may at any time, at its option, by notice or notices to the Company, declare all the Notes held by it to be immediately due and payable. Upon any Note's becoming due and payable under this Section 12.1, whether automatically or by declaration, such Note will forthwith mature and the entire unpaid principal amount of such Note, plus (i) all accrued and unpaid interest thereon and (ii) the Make-Whole Amount determined in respect of such principal amount or LIBOR Breakage Amount determined in respect of such principal amount, as the case may be, (to the full extent permitted by applicable law), shall all be immediately due and payable, in each and every case without presentment, demand, protest or further notice, all of which are hereby waived. The Company acknowledges, and the parties hereto agree, that each holder of a Note has the right to maintain its investment in the Notes free from repayment by the Company (except as herein specifically provided for), and that the provision for payment of a Make-Whole Amount or LIBOR Breakage Amount, as the case may be, by the Company in the event that the Notes are prepaid or are accelerated as a result of an Event of Default, is intended to provide compensation for the deprivation of such right under such circumstances. Section 12.2. Other Remedies. If any Default or Event of Default has occurred and is continuing, and irrespective of whether any Notes have become or have been declared immediately due and payable under Section 12.1, the holder of any Note at the time outstanding may proceed to protect and enforce the rights of such holder by an action at law, suit in equity or other appropriate proceeding, whether for the specific performance of any agreement contained herein or in any Note, or for an injunction against a violation of any of the terms hereof or thereof, or in aid of the exercise of any power granted hereby or thereby or by law or otherwise. In addition to, and not in limitation of, the foregoing, each holder of Notes shall have all rights and remedies available at law or in equity under or pursuant to any or all of the other Financing Agreements. Section 12.3. Rescission. At any time after any Notes have been declared due and payable pursuant to clause (b) or (c) of Section 12.1, the Required Holders, by written notice to the Company, may rescind and annul any such declaration and its consequences if (a) the Company has paid all overdue interest on the Notes, all principal of and Make-Whole Amount or -29- Pentair, Inc. Note Purchase Agreement LIBOR Breakage Amount, if any, on any Notes that are due and payable and are unpaid other than by reason of such declaration, and all interest on such overdue principal and Make-Whole Amount or LIBOR Breakage Amount, if any, and (to the extent permitted by applicable law) any overdue interest in respect of the Notes, at the Default Rate, (b) all Events of Default and Defaults, other than non-payment of amounts that have become due solely by reason of such declaration, have been cured or have been waived pursuant to Section 17, and (c) no judgment or decree has been entered for the payment of any monies due pursuant hereto or to the Notes. No rescission and annulment under this Section 12.3 will extend to or affect any subsequent Event of Default or Default or impair any right consequent thereon. Section 12.4. No Waivers or Election of Remedies, Expenses, etc. No course of dealing and no delay on the part of any holder of any Note in exercising any right, power or remedy shall operate as a waiver thereof or otherwise prejudice such holder's rights, powers or remedies. No right, power or remedy conferred by any Financing Agreement or by any Note upon any holder thereof shall be exclusive of any other right, power or remedy referred to herein or therein or now or hereafter available at law, in equity, by statute or otherwise. Without limiting the obligations of the Company under Section 15, the Company will pay to the holder of each Note on demand such further amount as shall be sufficient to cover all costs and expenses of such holder incurred in any enforcement or collection under this Section 12, including, without limitation, reasonable attorneys' fees, expenses and disbursements. Section 13. Registration; Exchange; Substitution of Notes. Section 13.1. Registration of Notes. The Company shall keep at its principal executive office a register for the registration and registration of transfers of Notes. The name and address of each holder of one or more Notes, each transfer thereof and the name and address of each transferee of one or more Notes shall be registered in such register. Prior to due presentment for registration of transfer, the Person in whose name any Note shall be registered shall be deemed and treated as the owner and holder thereof for all purposes hereof, and the Company shall not be affected by any notice or knowledge to the contrary. The Company shall give to any holder of a Note that is an Institutional Investor promptly upon request therefor, a complete and correct copy of the names and addresses of all registered holders of Notes. Section 13.2. Transfer and Exchange of Notes. Upon surrender of any Note at the principal executive office of the Company for registration of transfer or exchange (and in the case of a surrender for registration of transfer, duly endorsed or accompanied by a written instrument of transfer duly executed by the registered holder of such Note or its attorney duly authorized in writing and accompanied by the address for notices of each transferee of such Note or part thereof), the Company shall execute and deliver, at the Company's expense (except as provided below), one or more new Notes (as requested by the holder thereof) of the same series in exchange therefor, in an aggregate principal amount equal to the unpaid principal amount of the surrendered Note. Each such new Note shall be payable to such Person as such holder may request and shall be substantially in the form of Exhibit 1-A, 1-B or 1-C, as applicable. Each such new Note shall be dated and bear interest from the date to which interest shall have been paid on the surrendered Note or dated the date of the surrendered Note if no interest shall have been paid thereon. The Company may require payment of a sum sufficient to cover any stamp -30- Pentair, Inc. Note Purchase Agreement tax or governmental charge imposed in respect of any such transfer of Notes. Notes shall not be transferred in denominations of less than $500,000, provided that if necessary to enable the registration of transfer by a holder of its entire holding of Notes, one Note may be in a denomination of less than $500,000. Any transferee of a Note, or purchaser of a participation therein, shall, by its acceptance of such Note be deemed to make the same representations to the Company regarding the Note or participation as you and the Other Purchasers have made pursuant to Section 6.2, provided that such entity may (in reliance upon information provided by the Company, which shall not be unreasonably withheld) make a representation to the effect that the purchase by such entity of any Note will not constitute a non-exempt prohibited transaction under section 406(a) of ERISA. Section 13.3. Replacement of Notes. Upon receipt by the Company of evidence reasonably satisfactory to it of the ownership of and the loss, theft, destruction or mutilation of any Note (which evidence shall be, in the case of an Institutional Investor, notice from such Institutional Investor of such ownership and such loss, theft, destruction or mutilation), and (a) in the case of loss, theft or destruction, of indemnity reasonably satisfactory to it (provided that if the holder of such Note is, or is a nominee for, an original Purchaser or another holder of a Note with a minimum net worth of at least $25,000,000, such Person's own unsecured agreement of indemnity shall be deemed to be satisfactory), or (b) in the case of mutilation, upon surrender and cancellation thereof, the Company at its own expense shall execute and deliver, in lieu thereof, a new Note of the same series, dated and bearing interest from the date to which interest shall have been paid on such lost, stolen, destroyed or mutilated Note or dated the date of such lost, stolen, destroyed or mutilated Note if no interest shall have been paid thereon. Section 14. Payments on Notes. Section 14.1. Place of Payment. Subject to Section 14.2, payments of principal, Make-Whole Amount or LIBOR Breakage Amount, if any, and interest becoming due and payable on the Notes shall be made in Chicago, Illinois at the principal office of Bank One, N.A. in such jurisdiction. The Company may at any time, by notice to each holder of a Note, change the place of payment of the Notes so long as such place of payment shall be either the principal office of the Company in such jurisdiction or the principal office of a bank or trust company in such jurisdiction. Section 14.2. Home Office Payment. So long as you or your nominee shall be the holder of any Note, and notwithstanding anything contained in Section 14.1 or in such Note to the contrary, the Company will pay all sums becoming due on such Note for principal, Make-Whole Amount or LIBOR Breakage Amount, if any, and interest by the method and at the address specified for such purpose below your name in Schedule A, or by such other method or at such other address as you shall have from time to time specified to the Company in writing for such purpose, without the presentation or surrender of such Note or the making of any notation -31- Pentair, Inc. Note Purchase Agreement thereon, except that upon written request of the Company made concurrently with or reasonably promptly after payment or prepayment in full of any Note, you shall surrender such Note for cancellation, reasonably promptly after any such request, to the Company at its principal executive office or at the place of payment most recently designated by the Company pursuant to Section 14.1. Prior to any sale or other disposition of any Note held by you or your nominee you will, at your election, either endorse thereon the amount of principal paid thereon and the last date to which interest has been paid thereon or surrender such Note to the Company in exchange for a new Note or Notes pursuant to Section 13.2. The Company will afford the benefits of this Section 14.2 to any Institutional Investor that is the direct or indirect transferee of any Note purchased by you under this Agreement and that has made the same agreement relating to such Note as you have made in this Section 14.2. Section 15. Expenses, etc. Section 15.1. Transaction Expenses. Whether or not the transactions contemplated hereby are consummated, the Company will pay all costs and expenses (including reasonable attorneys' fees of a special counsel and, if reasonably required, local or other counsel) incurred by you and each Other Purchaser or holder of a Note in connection with such transactions and in connection with any amendments, waivers or consents under or in respect of any Financing Agreement (whether or not such amendment, waiver or consent becomes effective), including, without limitation: (a) the costs and expenses incurred in enforcing or defending (or determining whether or how to enforce or defend) any rights under any Financing Agreement or in responding to any subpoena or other legal process or informal investigative demand issued in connection with any Financing Agreement, or by reason of being a holder of any Note, (b) the costs and expenses, including financial advisors' fees, incurred in connection with the insolvency or bankruptcy of the Company or any Subsidiary or in connection with any work-out or restructuring of the transactions contemplated hereby and by the other Financing Agreements and (c) the reasonable cost and expenses incurred in connection with the initial filing of this Agreement, all related documents and financial information, all subsequent annual and interim filings of documents and financial information related hereto with the Securities Valuation Office or any successor organization succeeding to the authority thereof. The Company will pay, and will save you and each other holder of a Note harmless from, all claims in respect of any fees, costs or expenses, if any, of brokers and finders (other than those retained by you). Section 15.2. Survival. The obligations of the Company under this Section 15 will survive the payment or transfer of any Note, the enforcement, amendment or waiver of any provision of any Financing Agreement, and the termination of any Financing Agreement. Section 16. Survival of Representations and Warranties; Entire Agreement. All representations and warranties contained herein shall survive the execution and delivery of the Financing Agreements, the purchase or transfer by you of any Note or portion thereof or interest therein and the payment of any Note, and may be relied upon by any subsequent holder of a Note, regardless of any investigation made at any time by or on behalf of you or any other holder of a Note. All statements contained in any certificate or other instrument delivered by or on behalf of any Obligor pursuant to any Financing Agreement shall be deemed -32- Pentair, Inc. Note Purchase Agreement representations and warranties of such Obligor under the Financing Agreements. Subject to the preceding sentence, the Financing Agreements embody the entire agreement and understanding between you and the Company and supersede all prior agreements and understandings relating to the subject matter hereof. Section 17. Amendment and Waiver. Section 17.1. Requirements. This Agreement and the Notes may be amended, and the observance of any term hereof or of the Notes may be waived (either retroactively or prospectively), with (and only with) the written consent of the Company and the Required Holders, except that (a) no amendment or waiver of any of the provisions of Section 1, 2, 3, 4, 5, 6 or 21 hereof, or any defined term (as it is used therein), will be effective as to you unless consented to by you in writing, and (b) no such amendment or waiver may, without the written consent of the holder of each Note at the time outstanding affected thereby, (i) subject to the provisions of Section 12 relating to acceleration or rescission, change the amount or time of any prepayment or payment of principal of, or reduce the rate or change the time of payment or method of computation of interest or of the Make-Whole Amount or LIBOR Breakage Amount on the Notes, (ii) change the percentage of the principal amount of the Notes the holders of which are required to consent to any such amendment or waiver, or (iii) amend any of Sections 8, 11(a), 11(b), 12, 17 or 20. Section 17.2. Solicitation of Holders of Notes. (a) Solicitation. The Company will provide each holder of the Notes (irrespective of the amount or series of Notes then owned by it) with sufficient information, sufficiently far in advance of the date a decision is required, to enable such holder to make an informed and considered decision with respect to any proposed amendment, waiver or consent in respect of any of the provisions hereof or of the Notes. The Company will deliver executed or true and correct copies of each amendment, waiver or consent effected pursuant to the provisions of this Section 17 to each holder of outstanding Notes promptly following the date on which it is executed and delivered by, or receives the consent or approval of, the requisite holders of Notes. (b) Payment. The Company will not directly or indirectly pay or cause to be paid any remuneration, whether by way of supplemental or additional interest, fee or otherwise, or grant any security, to any holder of Notes as consideration for or as an inducement to the entering into by any holder of Notes of any waiver or amendment of any of the terms and provisions hereof or of the Notes unless such remuneration is concurrently paid, or security is concurrently granted, on the same terms, ratably to each holder of Notes then outstanding whether or not such holder consented to such waiver or amendment. Section 17.3. Binding Effect, etc. Any amendment or waiver consented to as provided in this Section 17 applies equally to all holders of Notes and is binding upon them and upon each future holder of any Note and upon the Company without regard to whether such Note has been marked to indicate such amendment or waiver. No such amendment or waiver will extend to or affect any obligation, covenant, agreement, Default or Event of Default not expressly amended or waived or impair any right consequent thereon. No course of dealing between the Company -33- Pentair, Inc. Note Purchase Agreement and the holder of any Note of any series nor any delay in exercising any rights hereunder or under any Note of any series shall operate as a waiver of any rights of any holder of such Note. As used herein, the term "this Agreement" and references thereto shall mean this Agreement as it may from time to time be amended or supplemented. Section 17.4. Notes Held by Company, etc. Solely for the purpose of determining whether the holders of the requisite percentage of the aggregate principal amount of Notes then outstanding approved or consented to any amendment, waiver or consent to be given under this Agreement or the Notes, or have directed the taking of any action provided herein or in the Notes to be taken upon the direction of the holders of a specified percentage of the aggregate principal amount of Notes then outstanding, Notes directly or indirectly owned by the Company or any of its Affiliates shall be deemed not to be outstanding. Section 17.5. Calculation of Outstanding Notes. For purposes of any determination under this Section 17 prior to the Second Closing, the Notes proposed to be issued and sold on the Second Closing shall be deemed to be outstanding and held by the proposed Purchaser designated in Schedule A. Section 18. Notices. All notices and communications provided for hereunder shall be in writing and sent (a) by telefacsimile if the sender on the same day sends a confirming copy of such notice by a recognized overnight delivery service (charges prepaid), or (b) by registered or certified mail with return receipt requested (postage prepaid), or (c) by a recognized overnight delivery service (with charges prepaid). Any such notice must be sent: (i) if to you or your nominee, to you or it at the address specified for such communications in Schedule A, or at such other address as you or it shall have specified to the Company in writing, (ii) if to any other holder of any Note, to such holder at such address as such other holder shall have specified to the Company in writing, (iii) if to the Company, to the Company at its address set forth at the beginning hereof to the attention of Louis L. Ainsworth, Esq., Senior Vice President, General Counsel and Corporate Secretary, or at such other address as the Company shall have specified to the holder of each Note in writing, or (iv) if to any Subsidiary Guarantor, to the Subsidiary Guarantor c/o the Company at the Company's address as set forth at the beginning hereof to the attention of Louis L. Ainsworth, Esq., Senior Vice President, General Counsel and Corporate Secretary. Notices under this Section 18 will be deemed given only when actually received. -34- Pentair, Inc. Note Purchase Agreement Section 19. Reproduction of Documents. The Financing Agreements and all documents relating thereto, including, without limitation, (a) consents, waivers and modifications that may hereafter be executed, (b) documents received by you at the Closing (except the Notes themselves), and (c) financial statements, certificates and other information previously or hereafter furnished to you, may be reproduced by you by any photographic, photostatic, microfilm, microcard, miniature photographic or other similar process and you may destroy any original document so reproduced. The Company agrees and stipulates that, to the extent permitted by applicable law, any such reproduction shall be admissible in evidence as the original itself in any judicial or administrative proceeding (whether or not the original is in existence and whether or not such reproduction was made by you in the regular course of business) and any enlargement, facsimile or further reproduction of such reproduction shall likewise be admissible in evidence. This Section 19 shall not prohibit the Company or any other holder of Notes from contesting any such reproduction to the same extent that it could contest the original, or from introducing evidence to demonstrate the inaccuracy of any such reproduction. Section 20. Confidential Information. For the purposes of this Section 20, "Confidential Information" means information delivered to you by or on behalf of the Company or any Subsidiary in connection with the transactions contemplated by or otherwise pursuant to this Agreement that is proprietary in nature and that was clearly marked or labeled or otherwise adequately identified when received by you as being confidential information of the Company or such Subsidiary, provided that such term does not include information that (a) was publicly known or otherwise known to you prior to the time of such disclosure, (b) subsequently becomes publicly known through no act or omission by you or any Person acting on your behalf, (c) otherwise becomes known to you other than through disclosure by the Company or any Subsidiary or (d) constitutes financial statements delivered to you under Section 7.1 that are otherwise publicly available. You will maintain the confidentiality of such Confidential Information in accordance with procedures adopted by you in good faith to protect confidential information of third parties delivered to you, provided that you may deliver or disclose Confidential Information to (i) your directors, trustees, officers, employees, agents, attorneys and affiliates (to the extent such disclosure reasonably relates to the administration of the investment represented by your Notes), (ii) your financial advisors and other professional advisors who agree to hold confidential the Confidential Information substantially in accordance with the terms of this Section 20, (iii) any other holder of any Note, (iv) any Institutional Investor to which you sell or offer to sell such Note or any part thereof or any participation therein (if such Person has agreed in writing prior to its receipt of such Confidential Information to be bound by the provisions of this Section 20), (v) any Person from which you offer to purchase any security of the Company (if such Person has agreed in writing prior to its receipt of such Confidential Information to be bound by the provisions of this Section 20), (vi) any federal or state regulatory authority having jurisdiction over you, (vii) the National Association of Insurance Commissioners or any similar organization, or any nationally recognized rating agency that requires access to information about your investment portfolio, or (viii) any other Person to which such delivery or disclosure may be necessary or appropriate (w) to effect compliance with any law, rule, regulation or order applicable to you, (x) in response -35- Pentair, Inc. Note Purchase Agreement to any subpoena or other legal process, (y) in connection with any litigation to which you are a party or (z) if an Event of Default has occurred and is continuing, to the extent you may reasonably determine such delivery and disclosure to be necessary or appropriate in the enforcement or for the protection of the rights and remedies under your Notes and this Agreement. Each holder of a Note, by its acceptance of a Note, will be deemed to have agreed to be bound by and to be entitled to the benefits of this Section 20 as though it were a party to this Agreement. On reasonable request by the Company in connection with the delivery to any holder of a Note of information required to be delivered to such holder under this Agreement or requested by such holder (other than a holder that is a party to this Agreement or its nominee or any other holder that shall have previously delivered such a confirmation), such holder will confirm in writing that it is bound by the provisions of this Section 20. Section 21. Substitution of Purchaser. You shall have the right to substitute any one of your Affiliates as the purchaser of the Notes that you have agreed to purchase hereunder, by written notice to the Company, which notice shall be signed by both you and such Affiliate, shall contain such Affiliate's agreement to be bound by this Agreement and shall contain a confirmation by such Affiliate of the accuracy with respect to it of the representations set forth in Section 6. Upon receipt of such notice, wherever the word "you" is used in this Agreement (other than in this Section 21), such word shall be deemed to refer to such Affiliate in lieu of you. In the event that such Affiliate is so substituted as a purchaser hereunder and such Affiliate thereafter transfers to you all of the Notes then held by such Affiliate, upon receipt by the Company of notice of such transfer, wherever the word "you" is used in this Agreement (other than in this Section 21), such word shall no longer be deemed to refer to such Affiliate, but shall refer to you, and you shall have all the rights of an original holder of the Notes under this Agreement. Section 22. Miscellaneous. Section 22.1. Successors and Assigns. All covenants and other agreements contained in this Agreement by or on behalf of any of the parties hereto bind and inure to the benefit of their respective successors and assigns (including, without limitation, any subsequent holder of a Note) whether so expressed or not. Section 22.2. Payments Due on Non-Business Days. Anything in this Agreement or the Notes to the contrary notwithstanding, any payment of principal of or Make-Whole Amount or LIBOR Breakage Amount or interest on any Note that is due on a date other than a Business Day shall be made on the next succeeding Business Day without including the additional days elapsed in the computation of the interest payable on such next succeeding Business Day. Section 22.3. Severability. Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall (to the full extent permitted by law) not invalidate or render unenforceable such provision in any other jurisdiction. -36- Pentair, Inc. Note Purchase Agreement Section 22.4. Construction. Each covenant contained herein shall be construed (absent express provision to the contrary) as being independent of each other covenant contained herein, so that compliance with any one covenant shall not (absent such an express contrary provision) be deemed to excuse compliance with any other covenant. Where any provision herein refers to action to be taken by any Person, or which such Person is prohibited from taking, such provision shall be applicable whether such action is taken directly or indirectly by such Person. Section 22.5. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be an original but all of which together shall constitute one instrument. Each counterpart may consist of a number of copies hereof, each signed by fewer than all, but together signed by all, of the parties hereto. Section 22.6. Governing Law. This Agreement shall be construed and enforced in accordance with, and the rights of the parties shall be governed by, the law of the State of Illinois excluding choice-of-law principles of the law of such State that would require the application of the laws of a jurisdiction other than such State. * * * * * -37- Pentair, Inc. Note Purchase Agreement If you are in agreement with the foregoing, please sign the form of agreement on the accompanying counterpart of this Agreement and return it to the Company, whereupon the foregoing shall become a binding agreement between you and the Company. Very truly yours, Pentair, Inc. By -------------------------------- Name: Title: -38- Pentair, Inc. Note Purchase Agreement The foregoing is hereby agreed to as of the date thereof. [Add Purchaser Signature Blocks] -39- Information Relating to Purchasers Principal Principal Principal Amount of Amount of Amount of Series A Notes Series B Notes Series C Notes to Be to Be to Be Name and Address of Purchaser Purchased Purchased Purchased - ----------------------------- -------------- -------------- -------------- [Name of Purchaser] $ (1) All payments by wire transfer of immediately available funds to: with sufficient information to identify the source and application of such funds. (2) All notices of payments and written confirmations of such wire transfers: (3) All other communications: Schedule A (to Note Purchase Agreement) Defined Terms Where the character or amount of any asset or liability or item of income or expense is required to be determined or any consolidation or other accounting computation is required to be made for the purposes of this Agreement, the same shall be done in accordance with GAAP, to the extent applicable, except where such principles are inconsistent with the express requirements of this Agreement. Where any provision in this Agreement refers to action to be taken by any Person, or which such Person is prohibited from taking, such provision shall be applicable whether the action in question is taken directly or indirectly by such Person. As used herein, the following terms have the respective meanings set forth below or set forth in the Section hereof following such term: "2003 Note Purchase Subsidiary Guaranty" means a Guaranty issued by various Subsidiaries of the Company which shall be substantially in the form of Exhibit 2 hereto. "Adjusted LIBOR Rate" shall mean, for any Interest Period, LIBOR plus 115 basis points. "Affiliate" means, at any time, and with respect to any Person, any other Person that at such time directly or indirectly through one or more intermediaries Controls, or is Controlled by, or is under common Control with, such first Person. As used in this definition, "Control" means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise. Unless the context otherwise clearly requires, any reference to an "Affiliate" is a reference to an Affiliate of the Company. "Business Day" means any day other than a Saturday, a Sunday or a day on which commercial banks in New York City are required or authorized to be closed, and, if the applicable Business Day relates to the determination of LIBOR, a day on which dealings are carried on in U.S. dollar deposits in the London interbank market. "Capital Lease" means, at any time, a lease with respect to which the lessee is required concurrently to recognize the acquisition of an asset and the incurrence of a liability in accordance with GAAP. "Closing" is defined in Section 3. "Code" means the Internal Revenue Code of 1986, as amended from time to time, and the rules and regulations promulgated thereunder from time to time. "Company" means Pentair, Inc., a Minnesota corporation. Schedule B (to Note Purchase Agreement) "Confidential Information" is defined in Section 20. "Consolidated Current Indebtedness" means, as of any date of determination, the total principal amount of all Current Indebtedness of the Company and its Restricted Subsidiaries determined on a consolidated basis. "Consolidated Funded Indebtedness" means, as of the date of any determination, Funded Indebtedness of the Company and its Restricted Subsidiaries determined on a consolidated basis. "Consolidated Net Worth" means the value of stockholders' equity of the Company and its Restricted Subsidiaries determined on a consolidated basis in accordance with GAAP; provided, however, that the Company may exclude from the calculation of Consolidated Net Worth any amounts attributable to adjustments resulting from the application of (i) translation of currency (FAS 52), (ii) pension adjustments (FAS 87), (iii) market value of derivatives (FAS 133) and (iv) any other non-cash write-offs or write-downs resulting solely from changes in GAAP arising after the date of Closing. "Consolidated Total Assets" means the total assets of the Company and its Restricted Subsidiaries determined on a consolidated basis in accordance with GAAP. "Credit Agreement Guaranty" means the Guaranty dated May 1, 2001 issued by certain Subsidiaries of the Company whereby such Subsidiaries guaranty all of the obligations of the Borrower under the Credit Agreements. "Credit Agreement Guaranty Termination" is defined in Section 9.6. "Credit Agreements" means the Long Term Credit Agreement dated as of September 2, 1999 among the Company, Pentair UK Limited, Pentair Canada Inc., EuroPentair GMBH, various financial institutions and Bank of America, N.A., as administrative agent, as amended, restated or otherwise modified from time to time ("Long Term Credit Agreement") and the 364-Day Credit Agreement dated as of September 2, 1999 among the Company, various financial institutions and Bank of America, N.A., as administrative agent, as amended, restated or otherwise modified from time to time ("364-Day Credit Agreement"). "Current Indebtedness" means, with respect to any Person, all Indebtedness of such Person excluding Funded Indebtedness, it being agreed that (a) Indebtedness outstanding under a revolving credit or similar agreement which obligates the lender or lenders to extend credit over a period of one year or more and (b) Current Maturities of Funded Indebtedness, shall, in each case, constitute Funded Indebtedness and not Current Indebtedness, even though such Indebtedness by its terms matures on demand or within one year from such date. "Current Maturities of Funded Indebtedness" means, at any time and with respect to any item of Funded Indebtedness, the portion of such Funded Indebtedness outstanding at such time which by the terms of such Funded Indebtedness or the terms of any instrument or agreement relating thereto is due on demand or within one year from such time (whether by sinking fund, other required prepayment or final payment at maturity) and is not directly or indirectly B-2 renewable, extendible or refundable at the option of the obligor under an agreement or firm commitment in effect at such time to a date one year or more from such time. "Default" means an event or condition the occurrence or existence of which would, with the lapse of time or the giving of notice or both, become an Event of Default. "Default Rate" means (x) in the case of the Series A Notes and the Series C Notes, that rate of interest that is the greater of (i) 2.00% per annum above the rate of interest stated in clause (a) of the first paragraph of the Series A Notes or the Series C Notes, as the case may be, or (ii) 2.00% over the rate of interest publicly announced by Bank One, N.A. in Chicago, Illinois as its "base" or "prime" rate and (y) in the case of the Series B Notes, that rate of interest that is 2.00% per annum plus the Adjusted LIBOR Rate. "Environmental Laws" means any and all Federal, state, local, and foreign statutes, laws, regulations, ordinances, rules, judgments, orders, decrees, permits, concessions, grants, franchises, licenses, agreements or governmental restrictions relating to pollution and the protection of the environment or the release of any materials into the environment, including but not limited to those related to hazardous substances or wastes, air emissions and discharges to waste or public systems. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended from time to time, and the rules and regulations promulgated thereunder from time to time in effect. "ERISA Affiliate" means any trade or business (whether or not incorporated) that is treated as a single employer together with the Company under section 414 of the Code. "Event of Default" is defined in Section 11. "Exchange Act" means the Securities Exchange Act of 1934, as amended. "Financing Agreements" means (i) this Agreement, (ii) the Other Agreements, (iii) the Notes and (iv) the 2003 Note Purchase Subsidiary Guaranty, in each case as amended or modified from time to time. "First Closing" is defined in Section 3. "Foreign Subsidiary" means any Subsidiary (i) organized under the laws of a jurisdiction other than the United States or a state thereof and (ii) which conducts substantially all of its business and operations in a jurisdiction other than the United States. "Funded Indebtedness" means, as of the date of any determination, Indebtedness of the Company and its Restricted Subsidiaries having a final maturity of more than one year from the date of determination thereof, (including all Current Maturities of such Funded Indebtedness), and the lowest average principal amount outstanding for all revolving credit facilities during any 30 consecutive day period within the prior twelve months, provided that liabilities of the B-3 Company or any Restricted Subsidiary outstanding under any synthetic lease transaction shall not be included as Indebtedness for purposes of calculating Consolidated Funded Indebtedness. "GAAP" means generally accepted accounting principles as in effect from time to time in the United States of America. "Governmental Authority" means (a) the government of (i) the United States of America or any State or other political subdivision thereof, or (ii) any jurisdiction in which the Company or any Subsidiary conducts all or any part of its business, or which asserts jurisdiction over any properties of the Company or any Subsidiary, or (b) any entity exercising executive, legislative, judicial, regulatory or administrative functions of, or pertaining to, any such government. "Guaranty" means, with respect to any Person, any obligation (except the endorsement in the ordinary course of business of negotiable instruments for deposit or collection) of such Person guaranteeing or in effect guaranteeing any Indebtedness, dividend or other obligation of any other Person in any manner, whether directly or indirectly, including (without limitation) obligations incurred through an agreement, contingent or otherwise, by such Person: (a) to purchase such Indebtedness or obligation or any property constituting security therefor; (b) to advance or supply funds (i) for the purchase or payment of such Indebtedness or obligation, or (ii) to maintain any working capital or other balance sheet condition or any income statement condition of any other Person or otherwise to advance or make available funds for the purchase or payment of such Indebtedness or obligation; (c) to lease properties or to purchase properties or services primarily for the purpose of assuring the owner of such Indebtedness or obligation of the ability of any other Person to make payment of the Indebtedness or obligation; or (d) otherwise to assure the owner of such Indebtedness or obligation against loss in respect thereof. In any computation of the Indebtedness or other liabilities of the obligor under any Guaranty, the Indebtedness or other obligations that are the subject of such Guaranty shall be assumed to be direct obligations of such obligor. B-4 "Hazardous Material" means any and all pollutants, toxic or hazardous wastes or any other substances that might pose a hazard to health or safety, the removal of which may be required or the generation, manufacture, refining, production, processing, treatment, storage, handling, transportation, transfer, use, disposal, release, discharge, spillage, seepage, or filtration of which is or shall be restricted, prohibited or penalized by any applicable law (including, without limitation, asbestos, urea formaldehyde foam insulation and polychlorinated biphenyls). "Holder" means, with respect to any Note, the Person in whose name such Note is registered in the register maintained by the Company pursuant to Section 13.1. "Indebtedness" with respect to any Person means, at any time, without duplication, (a) its liabilities for borrowed money and its redemption obligations in respect of mandatorily redeemable Preferred Stock; (b) its liabilities for the deferred purchase price of property acquired by such Person (excluding accounts payable arising in the ordinary course of business but including all liabilities created or arising under any conditional sale or other title retention agreement with respect to any such property); (c) all liabilities appearing on its balance sheet in accordance with GAAP in respect of Capital Leases; (d) all liabilities for borrowed money secured by any Lien with respect to any property owned by such Person (whether or not it has assumed or otherwise become liable for such liabilities); (e) all its non-contingent liabilities in respect of reimbursement agreements or similar agreements in respect of letters of credit or instruments serving a similar function issued or accepted for its account by banks and other financial institutions (whether or not representing obligations for borrowed money); (f) Swaps of such Person; and (g) any Guaranty of such Person with respect to liabilities of a type described in any of clauses (a) through (f) hereof. Indebtedness of any Person shall include all obligations of such Person of the character described in clauses (a) through (g) to the extent such Person remains legally liable in respect thereof notwithstanding that any such obligation is deemed to be extinguished under GAAP. "Institutional Investor" means (a) any original purchaser of a Note, (b) any holder of a Note holding more than 5.00% of the aggregate principal amount of any series of the Notes then outstanding, and (c) any bank, trust company, savings and loan association or other financial institution, any pension plan, any investment company, any insurance company, any broker or dealer, or any other similar financial institution or entity, regardless of legal form. B-5 "Intercreditor Agreement" means the Intercreditor Agreement dated as of May 1, 1999, among Bank of America, N.A., as agent for various financial institutions and certain other creditors of the Company (as amended, restated or otherwise modified from time to time). "Interest Payment Dates" shall have the meaning set forth in Section 1, provided that if an Interest Payment Date shall fall on a day which is not a Business Day, the related interest payment shall be made in accordance with Section 22.2 hereof. "Interest Period" shall mean each period commencing on the date of the First Closing, thereafter, commencing on an Interest Payment Date and continuing up to, but not including, the next Interest Payment Date. "LIBOR" shall mean, for any Interest Period, the rate per annum (rounded upwards, if necessary, to the next higher one hundred-thousandth of a percentage point) for deposits in U.S. Dollars for a 90-day period which appears on the Telerate Page 3750 published by the British Bankers Association or any successor page or source thereto, effective as of 11:00 a.m. (London, England time) two (2) Business days prior to the beginning of such Interest Period). "LIBOR Breakage Amount" shall mean any loss, cost or expense reasonably incurred by any holder of a Series B Note as a result of any payment or prepayment of any Series B Note on a day other than a regularly scheduled Interest Payment Date for such Series B Note or at the scheduled maturity (whether voluntary, mandatory, automatic, by reason of acceleration or otherwise), and any loss or expense arising from the liquidation or reemployment of funds obtained by it or from fees payable to terminate the deposits from which such funds were obtained. Each holder shall determine the LIBOR Breakage Amount with respect to the principal amount of its Series B Notes then being paid or prepaid (or required to be paid or prepaid) by written notice to the Company setting forth such determination in reasonable detail not less than two (2) Business Days prior to the date of such prepayment. Each such determination shall be conclusive absent manifest error. "Lien" means, with respect to any Person, any mortgage, lien, pledge, charge, security interest or other encumbrance, or any interest or title of any vendor, lessor, lender or other secured party to or of such Person under any conditional sale or other title retention agreement or Capital Lease, upon or with respect to any property or asset of such Person (including in the case of stock, stockholder agreements, voting trust agreements and all similar arrangements). "Make-Whole Amount" is defined in Section 8.6. "Material" means material in relation to the business, operations, affairs, financial condition, assets, properties, or prospects of the Company and its Subsidiaries taken as a whole. "Material Adverse Effect" means a material adverse effect on (a) the business, operations, affairs, financial condition, assets or properties of the Company and its Subsidiaries taken as a whole, or (b) the ability of an Obligor to perform its obligations under the Financing Agreements, or (c) the validity or enforceability of any Financing Agreement. B-6 "Memorandum" is defined in Section 5.3. "Multiemployer Plan" means any Plan that is a "multiemployer plan" (as such term is defined in section 4001(a)(3) of ERISA). "Net Proceeds" as of the date of any asset sale disposition shall mean the sum of the net proceeds received by the Company and its Restricted Subsidiaries from all sales or other dispositions of assets during the fiscal year which exceeds an amount equal to 20% of Consolidated Total Assets measured as of the prior fiscal year end minus an amount equal to the net proceeds arising on account of prior asset dispositions during such fiscal year which have been reinvested in the ordinary course of business or which are then held by the Company or a Restricted Subsidiary for such reinvestment purpose. "Notes" is defined in Section 1. "Obligor" or "Obligors" means and includes the Company and each Subsidiary Guarantor. "Officer's Certificate" means a certificate of a Senior Financial Officer or of any other officer of the Company (or other Obligor as the context may require) whose responsibilities extend to the subject matter of such certificate. "Other Agreements" is defined in Section 2. "Other Purchasers" is defined in Section 2. "PBGC" means the Pension Benefit Guaranty Corporation referred to and defined in ERISA or any successor thereto. "Person" means an individual, partnership, corporation, limited liability company, association, trust, unincorporated organization, or a government or agency or political subdivision thereof. "Plan" means an "employee benefit plan" (as defined in section 3(3) of ERISA) that is or, within the preceding five years, has been established or maintained, or to which contributions are or, within the preceding five years, have been made or required to be made, by the Company or any ERISA Affiliate or with respect to which the Company or any ERISA Affiliate may have any liability. "Preferred Stock" means any class of capital stock of a corporation that is preferred over any other class of capital stock of such corporation as to the payment of dividends or the payment of any amount upon liquidation or dissolution of such corporation. B-7 "Priority Debt" means the sum, without duplication, of (i) Indebtedness of the Company secured by Liens not otherwise permitted by clauses (a) through (l) of Section 10.3 and (ii) all Indebtedness of Restricted Subsidiaries excluding: (a) Indebtedness of a Restricted Subsidiary outstanding on the date of Closing; (b) Indebtedness of a Restricted Subsidiary owed to the Company or a Restricted Subsidiary; (c) Indebtedness incurred by a Restricted Subsidiary domiciled in a country other than the United States or Canada with respect to its operations in a country outside the United States or Canada; (d) Indebtedness of a Restricted Subsidiary outstanding at the time such Restricted Subsidiary becomes a Subsidiary; (e) Indebtedness under the 2003 Note Purchase Subsidiary Guaranty or any new Guaranty guaranteeing the Notes substantially in the form of the 2003 Note Purchase Subsidiary Guaranty; (f) so long as the 2003 Note Purchase Subsidiary Guaranty or any new Guaranty guaranteeing the Notes substantially in the form of the 2003 Note Purchase Subsidiary Guaranty is in effect, Indebtedness of the respective Subsidiary Guarantor thereunder arising under unsecured guaranties of such Subsidiary Guarantor of other Senior Debt; and (g) Indebtedness under Securitization Transactions in an aggregate amount not exceeding $150,000,000. "Property" or "properties" means, unless otherwise specifically limited, real or personal property of any kind, tangible or intangible, choate or inchoate. "QPAM Exemption" means Prohibited Transaction Class Exemption 84-14 issued by the United States Department of Labor. "Required Holders" means, at any time, the holders of at least 51% in principal amount of the Notes at the time outstanding (exclusive of Notes then owned by the Company or any of its Affiliates). "Requirement of Law" means, as to any Person, any law (statutory or common), treaty, rule or regulation or determination of an arbitrator or of a Governmental Authority, in each case applicable to or binding on the Person or any of its property or to which the Person or any of its property are subject. B-8 "Responsible Officer" means any Senior Financial Officer and any other officer of the Company with responsibility for the administration of the relevant portion of this Agreement. "Restricted Subsidiary" shall mean any Subsidiary of the Company which is designated as a Restricted Subsidiary pursuant to Section 9.7. "Second Closing" is defined in Section 3. "Securities Act" means the Securities Act of 1933, as amended from time to time. "Securities Valuation Office" shall mean the Securities Valuation Office of the National Association of Insurance Commissioners. "Securitization Transaction" means any sale, assignment or other transfer, which in each case shall constitute a true sale transaction, by the Company or any Subsidiary of accounts receivable, lease receivables or other payment obligations owing to the Company or such Subsidiary or any interest in any of the foregoing (other than sales of defaulted receivables, foreign receivables or similar items in the ordinary course of business consistent with past practice), together in each case with any collections and other proceeds thereof, any collection or deposit accounts related thereto, and any collateral, guaranties or other property or claims in favor of the Company or such Subsidiary supporting or securing payment by the obligor thereon of, or otherwise related to, any such receivables, provided that (i) Indebtedness incurred pursuant to any Securitization Transaction shall be Indebtedness of a Subsidiary and not the Company and shall be recourse only to the receivables or obligations transferred pursuant thereto, and (ii) at the time of any such Securitization Transaction and immediately after giving effect thereto, no Default or Event of Default would exist. "Senior Debt" means Indebtedness of the Company or any Restricted Subsidiary which is not junior or subordinate to any other Indebtedness of the Company or any Restricted Subsidiary. "Senior Financial Officer" means the chief financial officer, principal accounting officer, treasurer or controller of the Company. "Series A Notes" is defined in Section 1. "Series B Notes" is defined in Section 1. "Series C Notes" is defined in Section 1. "Significant Subsidiary" means at any time any Subsidiary that would at such time constitute a "significant subsidiary" (as such term is defined in Regulation S-X of the Securities and Exchange Commission as in effect on the date of Closing). "Subsidiary" means, as to any Person, any corporation, association or other business entity in which such Person or one or more of B-9 its Subsidiaries or such Person and one or more of its Subsidiaries owns sufficient equity or voting interests to enable it or them (as a group) ordinarily, in the absence of contingencies, to elect a majority of the directors (or Persons performing similar functions) of such entity, and any partnership or joint venture if more than a 50% interest in the profits or capital thereof is owned by such Person or one or more of its Subsidiaries or such Person and one or more of its Subsidiaries (unless such partnership can and does ordinarily take major business actions without the prior approval of such Person or one or more of its Subsidiaries). Unless the context otherwise clearly requires, any reference to a "Subsidiary" is a reference to a Subsidiary of the Company. "Subsidiary Guarantor" means, on any day, each Subsidiary that has executed a counterpart of the 2003 Note Purchase Subsidiary Guaranty on or prior to that day (and has not been released from its obligations hereunder in accordance with the terms hereof). "Subsidiary Guaranty" shall have the meaning set forth in the Intercreditor Agreement. "Swaps" means, with respect to any Person, payment obligations with respect to interest rate swaps, currency swaps and similar obligations obligating such Person to make payments, whether periodically or upon the happening of a contingency. For the purposes of this Agreement, the amount of the obligation under any Swap shall be the amount determined in respect thereof as of the end of the then most recently ended fiscal quarter of such Person, based on the assumption that such Swap had terminated at the end of such fiscal quarter, and in making such determination, if any agreement relating to such Swap provides for the netting of amounts payable by and to such Person thereunder or if any such agreement provides for the simultaneous payment of amounts by and to such Person, then in each such case, the amount of such obligation shall be the net amount so determined. "Total Capitalization" means, as of any date, the sum of (a) the Consolidated Net Worth at such date plus (b) Consolidated Funded Indebtedness at such date. "Transfer" means, with respect to any Person, any transaction in which such Person sells, conveys, transfers or leases (as lessor) any of its property, including, without limitation, stock of a Subsidiary. "Unrestricted Subsidiary" means any Subsidiary that is not a Restricted Subsidiary. "Wholly-Owned Restricted Subsidiary" means, at any time, any Restricted Subsidiary one hundred percent (100%) of all of the equity interests (except directors' qualifying shares) and voting interests of which are owned by any one or more of the Company and the Company's other Wholly-Owned Restricted Subsidiaries at such time. In connection with any determination of Consolidated Current Indebtedness, Consolidated Funded Indebtedness, Consolidated Net Worth, Consolidated Total Assets, Priority Debt and Total Capitalization, the assets, liabilities, gains and losses of Unrestricted Subsidiaries shall be excluded. B-10 Changes in Corporate Structure None. Schedule 4.9 (to Note Purchase Agreement) Pentair, Inc. Restricted Subsidiaries
Jurisdiction of Entity Incorporation Ownership - -------------------------------------- ------------------ ------------------------------------------- Aplex Industries, Inc. Texas 100% by Pentair Pump Group, Inc. Axholme Resources Limited United Kingdom 100% by Pentair Water Filtration UK Limited Biesemeyer Manufacturing Arizona 100% by Delta International Machinery Corp. Corporation Century Mfg. Co. Minnesota 100% by PFAM, Inc. Codeline Corporation Ohio 100% by Essef Corp. Delta International Machinery Corp. Minnesota 100% by Pentair Tools Group, Inc. DeVilbiss Air Power Company Delaware 100% by Pentair Tools Group, Inc. Distribuidora Porter Cable Limitada Chile 99.99% by Porter-Cable Corporation 0.01% by Pentair, Inc. Electronic Enclosures, Inc. Delaware 100% by Pentair Enclosures Group, Inc. Epps Limited Mauritius 100% by Essef Corp. Eraba Holdings Limited United Kingdom 100% by Schroff U.K. Limited Eraba Limited United Kingdom 100% by Eraba Holdings Limited Essef Corp. Ohio 100% by Pentair Water Group, Inc. EuroPentair GmbH Germany 100% by Pentair Global SARL Europentair Vermogensverwaltung Germany 100% by EuroPentair GmbH GmbH Pentair Water Filtration France SAS France 100% by FDD S.A. FDD S.A. France 100% by Plymouth Products Inc. Fleck Controls, Inc. Wisconsin 100% by Pentair Water Group, Inc. Fleck Europe SARL France 100% by Pentair International SARL FLEX Elektrowerkzeuge GmbH Germany 100% by EuroPentair GmbH Hoffman Enclosures (Mex.), LLC Minnesota 100% by Hoffman Enclosures Inc. Hoffman Enclosures Inc. Minnesota 100% by Pentair Enclosures Group, Inc. Hoffman Engineering S. de R.L. de Mexico 99.99% by Hoffman Enclosures Inc. C.V. 0.01% by Hoffman Enclosures (Mex.), LLC Hoffman Schroff PTE Ltd. Singapore 100% by Pentair Asia PTE Ltd. Kreepy Krauly Ltd. (PTY) South Africa 100% by Pentair Pool Products, Inc. Lincoln Automotive Company Minnesota 100% by PFAM, Inc. McNeil (Ohio) Corporation Minnesota 100% by Pentair, Inc. Metalurgica Taunus Ltda Brazil 99% by Pentair do Brasil Holdings Ltda 1% by Pentair Electronic Packaging Company National Pool Tile Group, Inc. California 100% by Pentair Pool Products, Inc. Oldham Saw Co., Inc. New York 100% by Surewood Acquisition Corporation Optima Enclosures Limited United Kingdom 100% by Schroff U.K. Limited Pentair Aquaculture SA Switzerland 100% by Pentair Pool Products, Inc. Pentair Asia Holdings S.a.r.l. Luxembourg 100% by Pentair Global SARL Pentair Asia PTE Ltd. Singapore 100% by Pentair, Inc.
Schedule 5.4(a) (to Note Purchase Agreement)
Jurisdiction of Entity Incorporation Ownership - -------------------------------------- ------------------ ------------------------------------------- Pentair Canada, Inc. Canada 50% by Delta International Machinery Corp. 50% by Pentair Pump Group, Inc. Pentair do Brasil Holdings Ltda Brazil 100% by Pentair Global SARL Pentair Electronic Packaging Company Minnesota 100% by Pentair Enclosures Group, Inc. Pentair Electronic Packaging de Mexico 99.97% by Pentair Electronic Packaging Company Mexico, S. de R.L. de C.V. 0.03% by Hoffman Enclosures (Mex.), LLC Pentair Enclosures Inc. Minnesota 100% by Pentair Enclosures Group, Inc. Pentair Enclosures Group, Inc. Delaware 100% by Pentair, Inc. Pentair Enclosures Inc. de Chile Chile 90% by Pentair Enclosures Inc. Limitada 10% by Hoffman Enclosures Inc. Pentair Enclosures Limited United Kingdom 100% by Pentair UK Limited Pentair Enclosures, S. de R.L. de C.V. Mexico 90% by Pentair Enclosures Inc. 10% by Hoffman Enclosures Inc. Pentair Financial Services Ireland Ireland 100% by Pentair Canada, Inc. Pentair FSC Corporation Barbados 100% by Pentair, Inc. Pentair Global SARL Luxembourg 90% by Pentair International Sarl 10% by Pentair, Inc. Pentair Halifax, Incorporated Nova Scotia 100% by Pentair, Inc. Pentair Housing, Inc. Minnesota 100% by PFAM, Inc. Pentair Housing, LP Minnesota 99% by Pentair, Inc. 1% by Pentair Housing, Inc. Pentair International Sarl Luxembourg 100% by Pentair, Inc. Pentair Nova Scotia, Co. Nova Scotia 100% by Pentair, Inc. Pentair Pacific Rim (Water) Limited Hong Kong 100% by Pentair Global SARL Pentair Pacific Rim, Ltd. Hong Kong 100% by Pentair Global SARL Pentair Pool Products, Inc. Delaware 100% by Essef Corp. Pentair Pump Group, Inc. Delaware 100% by Pentair Water Group, Inc. Pentair Qingdao Enclosures Company People's Republic 100% by Pentair Pacific Rim, Ltd. of China Pentair Taiwan LLC Taiwan 100% by Porter-Cable Corporation Pentair Tool & Equipment Sales Minnesota 100% by Pentair Tools Group, Inc. Company Pentair Tools Group, Inc. Delaware 100% by Pentair, Inc. Pentair UK Group Limited United Kingdom 100% by Pentair, Inc. Pentair UK Limited United Kingdom 99.5% by Pentair, Inc. 0.05% by Hoffman Enclosures Inc. Pentair Water (Suzhou) Company Ltd. People's Republic 100% by Pentair Pacific Rim (Water) Limited of China Pentair Water Belgium BV Belgium 100% by Essef Corp. Pentair Water Europe S.r.l. Italy 100% by Pentair Global SARL Pentair Water Filtration UK Limited United Kingdom 100% by Pentair UK Group Limited Pentair Water France SAS France 100% by Fleck Europe SARL
5.4(a)-13
Jurisdiction of Entity Incorporation Ownership - -------------------------------------- ------------------ ------------------------------------------- Pentair Water Group, Inc. Delaware 100% by Pentair, Inc. Pentair Water India Private Limited India 78.04% by Essef Corp. 21.96% by Epps Limited Pentair Water Italy S.r.l. Italy 100% by Schroff S.r.l. Pentair Water Taiwan Co. Ltd. Taiwan 100% by Pentair Asia PTE Ltd. Pentair Water Technologies Ltd. British Virgin 100% by Pentair Water Taiwan Co. Ltd. Islands Pentair Water Treatment Company Minnesota 100% by Pentair Water Group, Inc. Pentair Water Treatment India Private India 100% by Pentair Water India Private Limited Ltd. Penwald Insurance Company Vermont 75% by Pentair, Inc. 25% by Pentair Canada, Inc. PFAM, Inc. Delaware 100% by Pentair, Inc. Plymouth Products Inc. Delaware 100% by Pentair Water Group, Inc. Porter Cable de Mexico, S.A. de C.V. Mexico 100% by Porter-Cable Corporation Porter-Cable Argentina, LLC Minnesota 100% by Pentair, Inc. Porter-Cable Corporation Delaware 100% by Pentair Tools Group, Inc. Porter-Cable de Argentina, S.R.L. Argentina 99% by Porter-Cable Corporation 1% by Porter-Cable Argentina, LLC PTG Accessories Corp. Minnesota 100% by PFAM, Inc. Rainbow Acquisition Corp. Ohio 100% by Pentair Pool Products, Inc. Sanford Technology Florida 100% by Essef Corp. Schroff GmbH Germany 100% by EuroPentair GmbH Schroff K.K. Japan 100% by Hoffman Enclosures Inc. Schroff S.r.l. Italy 100% by Pentair Global SARL Schroff SAS France 100% by Fleck Europe SARL Schroff Scandinavia AB Sweden 100% by Pentair Global SARL Schroff U.K. Limited United Kingdom 100% by Pentair Enclosures Limited Schroff, Inc. Rhode Island 100% by Hoffman Enclosures Inc. Structural Asia Pacific Corporation Ohio 100% by Essef Corp. Surewood Acquisition Corporation North Carolina 100% by Pentair Tools Group, Inc. The Woodworker's Choice, Inc. North Carolina 100% by Surewood Acquisition Corporation WEB Tool & Manufacturing, Inc. Illinois 100% by Pentair Electronic Packaging Company
5.4(a)-14 Financial Statements Consolidated Balance Sheets of Pentair, Inc. and subsidiaries as of December 31, 2002. Consolidated Statements of Income for the Years ended December 31, 2002. Consolidated Statements of Changes in Shareholders' Equity for the Years Ended December 31, 2002. Consolidated Statements of Cash Flows for the Years ended December 31, 2002. Unaudited Consolidated Balance Sheet as of March 29, 2003. Unaudited Consolidated Statement of Income for the quarter ended March 29, 2003. Unaudited Consolidated Statement of Changes in Shareholders' Equity for the quarter ended March 29, 2003. Unaudited Consolidated Statements of Cash Flows for the quarter ended March 29, 2003. Schedule 5.5 (to Note Purchase Agreement) Certain Litigation 1. See description of Horizon Litigation attached as Attachment 1. 2. See description of Asbestos Litigation attached as Attachment 2. 3. See description of Black & Decker Patent Litigation attached as Attachment 3. Schedule 5.8 (to Note Purchase Agreement) Horizon Litigation Twenty-eight separate lawsuits involving 29 primary plaintiff's, a class action, and claims for indemnity by Celebrity Cruise Lines, Inc. ("Celebrity") were brought against Essef Corporation ("Essef") and certain of its subsidiaries prior to our acquisition in August 1999. These lawsuits alleged exposure to Legionnaires bacteria by passengers aboard the cruise ship M/V Horizon, a ship operated by Celebrity. The lawsuits included a class action brought on behalf of all passengers aboard the ship during the relevant time period, individual "opt-out" passenger suits, and a suit by Celebrity. Celebrity alleges in its suit that it has sustained economic damages due to loss of use of the M/V Horizon while it was dry-docked. The claims against Essef and its involved subsidiaries are based upon the allegation that Essef designed, manufactured, and marketed two sand swimming pool filters that were installed as a part of the spa system on the Horizon, and allegations that the spa and filters contained bacteria that infected certain passengers on cruises from December 1993 through July 1994. Prior to our acquisition of Essef, a settlement was reached in the class action. With regard to the individual "opt-out" passenger suits, the claims of one plaintiff were tried under a stipulation among all remaining parties providing that the liability findings would be applicable to all plaintiffs and defendants. The claims of this plaintiff were unusual because he alleged that he developed complications that profoundly impaired his mental functioning. No other plaintiff asserted similar claims. The trial resulted in a jury verdict on June 13, 2000, finding liability on the part of the Essef defendants (70%) and Celebrity and its sister company, Fantasia (together 30%). Compensatory damages in the total amount of $2.7 million were awarded, each defendant being accountable for its proportionate share of liability. The Essef defendants' proportionate share is covered by insurance. Punitive damages were separately awarded against the Essef defendants in the total amount of $7 million, with 60% awarded to all remaining plaintiffs and 40% to Celebrity. The Essef defendant filed post-trial motions challenging the verdict which were denied in February 2002 and has subsequently filed an appeal to the United States Court of Appeal for the Second Circuit. This appeal was dismissed in June 2003. A petition for panel rehearing and rehearing en banc has been filed by Essef. All of the remaining individual cases have been resolved through either settlement or trial. The only remaining unresolved case is that brought by Celebrity for interruption of its business. That case has been placed on hold pending a resolution of post-trial motions. At the current time, we are optimistic that the remaining claim will be resolved within available insurance coverage. With regard to Celebrity's claim against Essef, Westchester, one of Essef's insurance carriers, has issued a notice of rights letter. We believe we have reserves sufficient to cover the amount of any uninsured awards or settlements. Attachment 1 Asbestos Litigation Exposure June 2003 Update Since 1987, Pentair's McNeil (Ohio) Company subsidiary ("McNeil") has been named as a codefendant in asbestos litigation involving claims by a total of approximately 9,000 tireworkers seeking damages for personal injuries allegedly caused by exposure to asbestos or talc in various tire plants. A former division of McNeil's predecessor supplied tire curing presses to tire makers for which asbestos may have been used as an insulating material. Of these claims, approximately 1,500 were dismissed without payment, approximately 5,000 have been settled for an average settlement of less than approximately $2,000, and approximately 2,500 claims remain outstanding. There is no indication that future settlements would be significantly higher than the historical average. Ninety percent of the cost of defending and settling these claims has been paid by insurance carriers of McNeil's predecessor, with the balance being paid by McNeil, pursuant to an agreement in force among the insurers and McNeil. In addition, over the past few years, Pentair or its subsidiaries have been named as codefendants in additional cases. The majority of the cases relate to products manufactured and sold by third parties, for which Pentair has indemnification agreements in place which were negotiated in connection with various acquisitions over the years, e.g. General Signal Pump and Plymouth Products. Other miscellaneous claims, which number fewer than 100, have also been made with respect to products of Pentair businesses or those for which Pentair has retained some liability. Pentair believes that, given the factual and legal defenses to the pending claims and the applicable insurance and indemnification coverage, these asbestos claims are unlikely to result in material liability to the Company. Attachment 2 Black & Decker Patent Litigation In December 2002, Black & Decker filed a patent infringement claim against Porter-Cable Corporation, two additional US power tool manufacturers and Regitar USA, an affiliate of a Taiwanese tool manufacturer, relating to hammerdrills supplied to Porter-Cable by Regitar. The case is in early stages and no formal discovery has commenced. Porter-Cable has several defenses with respect to these claims and intends to pursue its defense vigorously. The product was designed by Regitar and Porter-Cable has asserted its contractual indemnification rights against Regitar. The damages which may eventually be claimed by Black & Decker are unknown, but preliminary estimates of a reasonable royalty based on past sales amount to US$1 - 1.5 million. In addition, Porter-Cable is contemplating pursuing Black & Decker for infringement of certain of its patents as well. Based on the foregoing and the preliminary stage of the case, Pentair considers that this litigation would not likely have a Material Adverse Effect. Attachment 3 Licenses, Permits, Etc. The Company and its Restricted Subsidiaries have significant patent and trademark portfolios that are used in the conduct of their respective businesses. The Company does not believe that any single patent is Material. Several of the Company's Restricted Subsidiaries have been and are the subject, from time to time, of claims or legal proceedings alleging infringements on intellectual property rights of third parties. There is currently one lawsuit, to the best knowledge of the Company, pending against a Restricted Subsidiary described in Schedule 5.8, which alleges infringement of certain patent rights of Black & Decker. Additional claims of infringement exist against each of the Company's primary business segments. No infringement claim has been material in the past and the Company does not know of any reason why existing claims would have a Material Adverse Effect. The Company and its Restricted Subsidiaries in turn monitor their intellectual property rights and seek to prevent infringement by third parties. The Company believes that a number of persons do infringe their patent or trademark rights from time to time. No violation of these rights has been material in the past and the Company does not know of any reason why existing violations would have a Material Adverse Effect. Schedule 5.11 (to Note Purchase Agreement) Existing Indebtedness; Liens As of March 29, 2003 -------------------- Commercial Paper $109,274 Senior Revolving Credit Facilities/1/ 240,000 6.68% - 6.99% senior notes due 2003 through 2007/2/ 132,003 7.85% senior notes due 2009/3/ 250,000 Fair value interest rate swap 1,589 Interest rate swap monetization deferred income 7,580 Other 37,362 -------- Total debt $777,808 - ---------- /1/ The Company has committed revolving credit facilities totaling $652 million, of which $303 million was unused as of March 29, 2003 /2/ As of March 29, 2003, The Company had outstanding $132,003 million of senior unsecured notes due 2003 through 2007 with coupons ranging from 6.68% to 6.99% and maturing from June 2003 to May 2007. The notes were issued via the private placement market. The notes are currently rated "NAIC 2" and were most recently reconfirmed September 2002. /3/ On October 5, 1999, Pentair issued $265.0 million aggregate principal amount of 7.85% senior notes due 2009. Schedule 5.15 (to Note Purchase Agreement) Liens The Company discloses liens related to the following transactions: 1. Hoffman Enclosures Inc. financed the acquisition, construction, equipping and installation of its Mt. Sterling manufacturing facility through $29,500,000 of Taxable Industrial Building Revenue Bonds issued by The County of Montgomery, Kentucky. Under the Bond documents, the County of Montgomery, Kentucky is the owner of the manufacturing facility and the equipment installed therein, all of which is leased to Hoffman under a lease agreement for the term of the bonds. Upon payment of the sums due under the bonds, the property will be conveyed to Hoffman. All of the Taxable Industrial Building Revenue Bonds were purchased by Pentair. 2. In 1965, Porter Cable's manufacturing facility was financed by the Industrial Development Board of the City of Jackson (Jackson IDB) and leased to Porter- Cable for 20 years with the option to extend the lease (for a nominal amount) for up to 12 more 5-year periods. This was accounted for as a capital lease. The current annual cost is approximately $15,000. 3. In 1995, the Porter-Cable warehouse addition (to the manufacturing facility) was structured to be legally owned by the Jackson IDB for property tax purposes. This is treated as an owned facility (i.e., capitalized lease). Annual rents are $100. -2- [Form of Series a Note] Pentair, Inc. 4.93% Senior Note, Series A, due July 25, 2013 No. [_________] [Date] $[____________] PPN 709631 E# 8 For Value Received, the undersigned, Pentair, Inc. (herein called the "Company"), a corporation organized and existing under the laws of the State of Minnesota, hereby promises to pay to [________________], or registered assigns, the principal sum of [________________] DOLLARS on July 25, 2013, with interest (computed on the basis of a 360-day year of twelve 30-day months) (a) on the unpaid balance thereof at the rate of 4.93% per annum from the date hereof, payable semiannually, on the 25th day of each January and July in each year, commencing with the January 25 and July 25 next succeeding the date hereof, until the principal hereof shall have become due and payable, and (b) to the extent permitted by law on any overdue payment (including any overdue prepayment) of principal, any overdue payment of interest and any overdue payment of any Make-Whole Amount (as defined in the Note Purchase Agreements referred to below), payable semiannually as aforesaid (or, at the option of the registered holder hereof, on demand), at a rate per annum from time to time equal to the Default Rate. Payments of principal of, interest on and any Make-Whole Amount with respect to this Note are to be made in lawful money of the United States of America at Bank One, N.A. or at such other place as the Company shall have designated by written notice to the holder of this Note as provided in the Note Purchase Agreements referred to below. This Note is one of a series of Senior Notes (herein called the "Notes") issued pursuant to separate Note Purchase Agreements, dated as of July 25, 2003 (as from time to time amended, the "Note Purchase Agreements"), between the Company and the respective Purchasers named therein and is entitled to the benefits thereof. Each holder of this Note will be deemed, by its acceptance hereof, (i) to have agreed to the confidentiality provisions set forth in Section 20 of the Note Purchase Agreements and (ii) to have made the representation set forth in Section 6.2 of the Note Purchase Agreements, provided, that such holder may (in reliance upon information provided by the Company, which shall not be unreasonably withheld) make a representation to the effect that the purchase by such holder of any Note will not constitute a non-exempt prohibited transaction under section 406(a) of ERISA. This Note is a registered Note and, as provided in the Note Purchase Agreements, upon surrender of this Note for registration of transfer, duly endorsed, or accompanied by a written instrument of transfer duly executed, by the registered holder hereof or such holder's attorney duly authorized in writing, a new Note for a like principal amount will be issued to, and registered in the name of, the transferee. Prior to due presentment for registration of transfer, the Company may treat the person in whose name this Note is registered as the owner hereof for the Exhibit 1-A (to Note Purchase Agreement) purpose of receiving payment and for all other purposes, and the Company will not be affected by any notice to the contrary. This Note is subject to optional prepayment, in whole or from time to time in part, at the times and on the terms specified in the Note Purchase Agreements, but not otherwise. If an Event of Default, as defined in the Note Purchase Agreements, occurs and is continuing, the principal of this Note may be declared or otherwise become due and payable in the manner, at the price (including any applicable Make-Whole Amount) and with the effect provided in the Note Purchase Agreements. This Note shall be construed and enforced in accordance with the law of the State of Illinois excluding choice-of-law principles of the law of such State which would require the application of the laws of a jurisdiction other than such State. Pentair, Inc. By ---------------------------------- Name: Title: E-1-A-2 [Form of Series B Note] Pentair, Inc. Floating Rate Senior Note, Series B, due July 25, 2013 No. [_________] [Date] $[____________] PPN 709631 F* 1 For Value Received, the undersigned, Pentair, Inc. (herein called the "Company"), a corporation organized and existing under the laws of the State of Minnesota, hereby promises to pay to [________________], or registered assigns, the principal sum of [________________] Dollars on July 25, 2013, with interest (computed on the basis of a 360-day year and actual days elapsed) (a) on the unpaid balance thereof at a floating rate equal to the Adjusted LIBOR Rate from the date hereof, payable quarterly, on the 25th day of each January, April, July, and October in each year, commencing with the January 25, April 25, July 25 or October 25, next succeeding the date hereof, until the principal hereof shall have become due and payable, and (b) to the extent permitted by law on any overdue payment (including any overdue prepayment) of principal, any overdue payment of interest and any overdue payment of any LIBOR Breakage Amount (as defined in the Note Purchase Agreements referred to below), payable quarterly as aforesaid (or, at the option of the registered holder hereof, on demand), at a rate per annum from time to time equal to the Default Rate. Payments of principal of, interest on and any LIBOR Breakage Amount with respect to this Note are to be made in lawful money of the United States of America at Bank One, N.A. or at such other place as the Company shall have designated by written notice to the holder of this Note as provided in the Note Purchase Agreements referred to below. This Note is one of a series of Floating Rate Senior Notes (herein called the "Notes") issued pursuant to separate Note Purchase Agreements, dated as of July 25, 2003 (as from time to time amended, the "Note Purchase Agreements"), between the Company and the respective Purchasers named therein and is entitled to the benefits thereof. Each holder of this Note will be deemed, by its acceptance hereof, (i) to have agreed to the confidentiality provisions set forth in Section 20 of the Note Purchase Agreements and (ii) to have made the representation set forth in Section 6.2 of the Note Purchase Agreements, provided that such holder may (in reliance upon information provided by the Company, which shall not be unreasonably withheld) make a representation to the effect that the purchase by such holder of any Note will not constitute a non-exempt prohibited transaction under section 406(a) of ERISA. This Note is a registered Note and, as provided in the Note Purchase Agreements, upon surrender of this Note for registration of transfer, duly endorsed, or accompanied by a written instrument of transfer duly executed, by the registered holder hereof or such holder's attorney duly authorized in writing, a new Note for a like principal amount will be issued to, and registered in the name of, the transferee. Prior to due presentment for registration of transfer, the Exhibit 1-B (to Note Purchase Agreement) Company may treat the person in whose name this Note is registered as the owner hereof for the purpose of receiving payment and for all other purposes, and the Company will not be affected by any notice to the contrary. This Note is subject to optional prepayment, in whole or from time to time in part, at the times and on the terms specified in the Note Purchase Agreements, but not otherwise. If an Event of Default, as defined in the Note Purchase Agreements, occurs and is continuing, the principal of this Note may be declared or otherwise become due and payable in the manner, at the price (including any applicable LIBOR Breakage Amount) and with the effect provided in the Note Purchase Agreements. This Note shall be construed and enforced in accordance with the law of the State of Illinois excluding choice-of-law principles of the law of such State which would require the application of the laws of a jurisdiction other than such State. Pentair, Inc. By ---------------------------------- Name: Title: E-1-B-2 [Form of Series C Note] Pentair, Inc. 5.03% Senior Note, Series C, due October 15, 2013 No. [_________] [Date] $[____________] PPN 709631 F@ 9 FOR VALUE RECEIVED, the undersigned, PENTAIR, INC. (herein called the "Company"), a corporation organized and existing under the laws of the State of Minnesota, hereby promises to pay to [________________], or registered assigns, the principal sum of [________________] DOLLARS on October 15, 2013, with interest (computed on the basis of a 360-day year of twelve 30-day months) (a) on the unpaid balance thereof at the rate of 5.03% per annum from the date hereof, payable semiannually, on the 15th day of each April and October in each year, commencing with the April 15 or October 15 next succeeding the date hereof, until the principal hereof shall have become due and payable, and (b) to the extent permitted by law on any overdue payment (including any overdue prepayment) of principal, any overdue payment of interest and any overdue payment of any Make-Whole Amount (as defined in the Note Purchase Agreements referred to below), payable semiannually as aforesaid (or, at the option of the registered holder hereof, on demand), at a rate per annum from time to time equal to the Default Rate. Payments of principal of, interest on and any Make-Whole Amount with respect to this Note are to be made in lawful money of the United States of America at Bank One, N.A. or at such other place as the Company shall have designated by written notice to the holder of this Note as provided in the Note Purchase Agreements referred to below. This Note is one of a series of Senior Notes (herein called the "Notes") issued pursuant to separate Note Purchase Agreements, dated as of July 25, 2003 (as from time to time amended, the "Note Purchase Agreements"), between the Company and the respective Purchasers named therein and is entitled to the benefits thereof. Each holder of this Note will be deemed, by its acceptance hereof, (i) to have agreed to the confidentiality provisions set forth in Section 20 of the Note Purchase Agreements and (ii) to have made the representation set forth in Section 6.2 of the Note Purchase Agreements, provided, that such holder may (in reliance upon information provided by the Company, which shall not be unreasonably withheld) make a representation to the effect that the purchase by such holder of any Note will not constitute a non-exempt prohibited transaction under section 406(a) of ERISA. This Note is a registered Note and, as provided in the Note Purchase Agreements, upon surrender of this Note for registration of transfer, duly endorsed, or accompanied by a written instrument of transfer duly executed, by the registered holder hereof or such holder's attorney duly authorized in writing, a new Note for a like principal amount will be issued to, and registered in the name of, the transferee. Prior to due presentment for registration of transfer, the Company may treat the person in whose name this Note is registered as the owner hereof for the Exhibit 1-C (to Note Purchase Agreement) purpose of receiving payment and for all other purposes, and the Company will not be affected by any notice to the contrary. This Note is subject to optional prepayment, in whole or from time to time in part, at the times and on the terms specified in the Note Purchase Agreements, but not otherwise. If an Event of Default, as defined in the Note Purchase Agreements, occurs and is continuing, the principal of this Note may be declared or otherwise become due and payable in the manner, at the price (including any applicable Make-Whole Amount) and with the effect provided in the Note Purchase Agreements. This Note shall be construed and enforced in accordance with the law of the State of Illinois excluding choice-of-law principles of the law of such State which would require the application of the laws of a jurisdiction other than such State. Pentair, Inc. By ---------------------------------- Name: Title: E-1-C-2 Description of Opinion of Special Counsel to the Company The closing opinion of Louis L. Ainsworth, Senior Vice President and General Counsel for the Company, which is called for by Section 4.4(a) of the Note Purchase Agreements, shall be dated the date of the Closing and addressed to the Purchasers, shall be satisfactory in scope and form to the Purchasers and shall be to the effect that: 1. The Company is a corporation, duly incorporated, validly existing and in good standing under the laws of the State of Minnesota, has the corporate power and the corporate authority to execute and perform the Note Purchase Agreements and to issue the Notes and has the corporate power and the corporate authority to conduct the activities in which it is now engaged and is duly licensed or qualified and is in good standing as a foreign corporation in each jurisdiction in which the character of the properties owned or leased by it or the nature of the business transacted by it makes such licensing or qualification necessary, except in jurisdictions where the failure to be so qualified would not have a Material Adverse Effect. 2. Each Subsidiary of the Company which is organized under the laws of the United Sates or any state therein, is an entity duly organized, validly existing and in good standing under the laws of its jurisdiction of organization, and is duly licensed or qualified and is in good standing in each jurisdiction in which the character of the properties owned or leased by it or the nature of the business transacted by it makes such licensing or qualification necessary except in jurisdictions where the failure to be so qualified would not have a Material Adverse Effect. 3. Each of the Note Purchase Agreement and the Notes has been duly authorized by all necessary corporate action on the part of the Company has been duly executed and delivered by the Company party thereto and constitutes the legal, valid and binding contract of the Company enforceable in accordance with its terms, subject to bankruptcy, insolvency, fraudulent conveyance and similar laws affecting creditors' rights generally, and general principles of equity (regardless of whether the application of such principles is considered in a proceeding in equity or at law). 4. The 2003 Note Purchase Subsidiary Guaranty has been duly authorized by all necessary corporate action on the part of the each of the Subsidiary Guarantors has been duly executed and delivered by each Subsidiary Guarantor party thereto and constitutes the legal, valid and binding contract of each of the Subsidiary Guarantors enforceable in accordance with its terms, subject to bankruptcy, insolvency, fraudulent conveyance and similar laws affecting creditors' rights generally, and general principles of equity (regardless of whether the application of such principles is considered in a proceeding in equity or at law). 5. No approval, consent or withholding of objection on the part of, or filing, registration or qualification with, any governmental body, Federal or state, is necessary in connection with the execution and delivery of any of the Financing Agreements. Exhibit 4.4(a) (to Note Purchase Agreement) 6. The issuance and sale of the Notes and the execution, delivery and performance by the Company of the Note Purchase Agreement do not conflict with or result in any breach of any of the provisions of or constitute a default under or result in the creation or imposition of any lien upon any of the property of the Company pursuant to the provisions of the Articles of Incorporation or By-laws of the Company or any Material agreement or other instrument known to such counsel to which the Company is a party or by which it may be bound. [The execution, delivery and performance by each Subsidiary Guarantor of the 2003 Note Purchase Subsidiary Guaranty does not conflict with or result in any breach of any of the provisions of or constitute a default under or result in the creation or imposition of any lien upon any of the property of any such Subsidiary Guarantor pursuant to the provisions of the Articles of Incorporation or By-laws of each such Subsidiary Guarantor or any Material agreement or other instrument known to such counsel to which such Subsidiary Guarantor is a party or by which it may be bound]. 7. The issuance, sale and delivery of the Notes [and the 2003 Note Purchase Subsidiary Guaranty] under the circumstances contemplated by the Note Purchase Agreements do not, under existing law, require the registration of the Notes or the Subsidiary Guaranty under the Securities Act of 1933, as amended, or the qualification of an indenture under the Trust Indenture Act of 1939, as amended. 8. No violation of Regulation U, T or X of the Federal Reserve Board. With respect to matters of fact on which such opinion is based, such counsel shall be entitled to rely on appropriate certificates of public officials and officers of the Company. E-4.4(a)-2 Description of Opinion of Special Counsel to the Purchasers The closing opinion of Chapman and Cutler, special counsel to the Purchasers, called for by Section 4.4(b) of the Note Purchase Agreements, shall be dated the date of the Closing and addressed to the Purchasers, shall be satisfactory in form and substance to the Purchasers and shall be to the effect that: 1. The Company is a corporation, validly existing and in good standing under the laws of the State of Minnesota and has the corporate power and the corporate authority to execute and deliver the Note Purchase Agreements and to issue the Notes. 2. Each Note Purchase Agreement has been duly authorized by all necessary corporate action on the part of the Company, has been duly executed and delivered by the Company and constitutes the legal, valid and binding contract of the Company enforceable in accordance with its terms, subject to bankruptcy, insolvency, fraudulent conveyance and similar laws affecting creditors' rights generally, and general principles of equity (regardless of whether the application of such principles is considered in a proceeding in equity or at law). 3. The Notes have been duly authorized by all necessary corporate action on the part of the Company, and the Notes being delivered on the date hereof have been duly executed and delivered by the Company and constitute the legal, valid and binding obligations of the Company enforceable in accordance with their terms, subject to bankruptcy, insolvency, fraudulent conveyance and similar laws affecting creditors' rights generally, and general principles of equity (regardless of whether the application of such principles is considered in a proceeding in equity or at law). 4. The issuance, sale and delivery of the Notes under the circumstances contemplated by the Note Purchase Agreements do not, under existing law, require the registration of the Notes under the Securities Act of 1933, as amended, or the qualification of an indenture under the Trust Indenture Act of 1939, as amended. The opinion of Chapman and Cutler shall also state that the opinion of Louis L. Ainsworth, Senior Vice President and General Counsel for the Company, is satisfactory in scope and form to Chapman and Cutler and that, in their opinion, the Purchasers are justified in relying thereon. In rendering the opinion set forth in paragraph 1 above, Chapman and Cutler may rely solely upon an examination of the Articles of Incorporation certified by, and a certificate of good standing of the Company from, the Secretary of State of the State of Minnesota and the By-laws of the Company. The opinion of Chapman and Cutler is limited to the laws of the State of Illinois and the Federal laws of the United States. With respect to matters of fact upon which such opinion is based, Chapman and Cutler may rely on appropriate certificates of public officials and officers of the Company and upon Exhibit 4.4(b) (to Note Purchase Agreement) representations of the Company and the Purchasers delivered in connection with the issuance and sale of the Notes. E-4.4(b)-2 EX-99.1 5 dex991.htm PRESS RELEASE DATED JULY 25, 2003 Press release dated July 25, 2003
Exhibit 99.1

[Letterhead Appears Here]

[Logo of Pentair]

News Release

For immediate release

Contact: Mark Cain (763) 656-5278

Pentair Completes $700 Million Refinancing

Golden Valley, Minn. —July 25, 2003—Pentair (NYSE: PNR) today announced that it has completed two new financing arrangements totaling $700 million effective today. The new arrangements comprise a $200 million private placement of senior notes with a 10-year maturity, and a $500 million revolving credit facility with maturity in three years. The new financings replace two existing credit facilities totaling $632 million.

“These financing arrangements strengthen our financial position by lengthening the maturities of our long-term debt and downsizing our revolving credit facilities,” said David D. Harrison, Pentair executive vice president and chief financial officer. “These arrangements reinforce our investment-grade profile, and will be adequate to meet Pentair’s financing needs for the foreseeable future.”

Pentair (http://www.pentair.com) is a Minnesota-based manufacturer whose core businesses compete in tools, water technologies, and enclosures markets. The company employs 12,000 people in more than 50 locations around the world.

Any statements made about the company’s anticipated financial results are forward-looking statements subject to risks and uncertainties such as continued economic growth; foreign currency effects; retail and industrial demand; product introductions; and pricing and other competitive pressures. Forward-looking statements included herein are made as of the date hereof and the company undertakes no obligation to update publicly such statements to reflect subsequent events or circumstances. Actual results could differ materially from anticipated results.

— 30 —
~~-----END PRIVACY-ENHANCED MESSAGE-----~~