[EXECUTION COPY]
$400,000,000
BRIDGE LOAN AGREEMENT
dated as of
August 2, 1999
among
Pentair, Inc.,
The Banks From Time to Time Parties Hereto
and
Xxxxxx Guaranty Trust Company of New York,
as ADMINISTRATIVE AGENT
____________________________________
X.X. Xxxxxx Securities Inc.,
ARRANGER
TABLE OF CONTENTS
PAGE
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ARTICLE 1---DEFINITIONS
SECTION 1.01. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.02. ACCOUNTING TERMS AND DETERMINATIONS . . . . . . . . . . . . . . . . 13
ARTICLE 2---THE LOANS
SECTION 2.01. COMMITMENT TO LEND. . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 2.02. NOTICE OF BORROWINGS. . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 2.03. REGISTRY; NOTES . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 2.04. MATURITY OF LOANS . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 2.05. INTEREST RATES. . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 2.06. COMMITMENT FEE. . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 2.07. OPTIONAL TERMINATION OR REDUCTION OF COMMITMENTS. . . . . . . . . . 18
SECTION 2.08. MANDATORY TERMINATION OR REDUCTION OF COMMITMENTS . . . . . . . . . 18
SECTION 2.09. PREPAYMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 2.10. GENERAL PROVISIONS AS TO PAYMENTS . . . . . . . . . . . . . . . . . 20
SECTION 2.11. FUNDING LOSSES. . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 2.12. COMPUTATION OF INTEREST AND FEES. . . . . . . . . . . . . . . . . . 21
SECTION 2.13. REGULATION D COMPENSATION . . . . . . . . . . . . . . . . . . . . . 21
SECTION 2.14. METHOD OF ELECTING INTEREST RATES . . . . . . . . . . . . . . . . . 22
ARTICLE 3---CONDITIONS
SECTION 3.01. EFFECTIVENESS . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 3.02. BORROWINGS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
ARTICLE 4---REPRESENTATIONS AND WARRANTIES
SECTION 4.01. CORPORATE EXISTENCE AND POWER . . . . . . . . . . . . . . . . . . . 25
SECTION 4.02. CORPORATE AND GOVERNMENTAL AUTHORIZATION, CONTRAVENTION . . . . . . 26
SECTION 4.03. BINDING EFFECT. . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 4.04. FINANCIAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 4.05. LITIGATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 4.06. COMPLIANCE WITH ERISA . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 4.07. TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 4.08. SUBSIDIARIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 4.09. NOT AN INVESTMENT COMPANY . . . . . . . . . . . . . . . . . . . . . 28
SECTION 4.10. ENVIRONMENTAL MATTERS . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 4.11. YEAR 2000 COMPLIANCE. . . . . . . . . . . . . . . . . . . . . . . . 28
ARTICLE 5---COVENANTS
SECTION 5.01. INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 5.02. LEVERAGE RATIO. . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 5.03. MINIMUM CONSOLIDATED SHAREHOLDERS' EQUITY . . . . . . . . . . . . . 30
SECTION 5.04. COVERAGE RATIO. . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 5.05. NEGATIVE PLEDGE . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 5.06. CONSOLIDATIONS, MERGERS AND SALES OF ASSETS . . . . . . . . . . . . 32
SECTION 5.07. SUBSIDIARY DEBT . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 5.08. USE OF PROCEEDS . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 5.09. ENVIRONMENTAL LAWS. . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 5.10. SALES OF RECEIVABLES. . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 5.11. BUSINESS ACQUISITIONS . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 5.12. MOST FAVORED LENDER . . . . . . . . . . . . . . . . . . . . . . . . 33
ARTICLE 6---DEFAULTS
SECTION 6.01. EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 6.02. NOTICE OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . 36
ARTICLE 7---THE ADMINISTRATIVE AGENT
SECTION 7.01. APPOINTMENT AND AUTHORIZATION . . . . . . . . . . . . . . . . . . . 36
SECTION 7.02. ADMINISTRATIVE AGENT AND AFFILIATES . . . . . . . . . . . . . . . . 36
SECTION 7.03. ACTION BY ADMINISTRATIVE AGENT. . . . . . . . . . . . . . . . . . . 37
SECTION 7.04. CONSULTATION WITH EXPERTS . . . . . . . . . . . . . . . . . . . . . 37
SECTION 7.05. LIABILITY OF ADMINISTRATIVE AGENT . . . . . . . . . . . . . . . . . 37
SECTION 7.06. INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 7.07. CREDIT DECISION . . . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 7.08. SUCCESSOR ADMINISTRATIVE AGENT. . . . . . . . . . . . . . . . . . . 38
ARTICLE 8---CHANGE IN CIRCUMSTANCES
SECTION 8.01. BASIS FOR DETERMINING INTEREST RATE INADEQUATE OR UNFAIR. . . . . . 38
SECTION 8.02. ILLEGALITY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 8.03. INCREASED COST AND REDUCED RETURN . . . . . . . . . . . . . . . . . 40
SECTION 8.04. TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 8.05. BASE RATE LOANS SUBSTITUTED FOR AFFECTED FIXED RATE LOANS . . . . . 43
SECTION 8.06. SUBSTITUTION OF BANK. . . . . . . . . . . . . . . . . . . . . . . . 43
ARTICLE 9---MISCELLANEOUS
SECTION 9.01. NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 9.02. NO WAIVERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 9.03. EXPENSES; INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . 44
SECTION 9.04. SHARING OF SET-OFFS . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 9.05. AMENDMENTS AND WAIVERS. . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 9.06. SUCCESSORS AND ASSIGNS. . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 9.07. COLLATERAL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 9.08. GOVERNING LAW; SUBMISSION TO JURISDICTION . . . . . . . . . . . . . 47
SECTION 9.09. COUNTERPARTS; INTEGRATION . . . . . . . . . . . . . . . . . . . . . 47
SECTION 9.10. WAIVER OF JURY TRIAL. . . . . . . . . . . . . . . . . . . . . . . . 48
PAGE
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Exhibit A - Note
Exhibit B - Opinion of Counsel for the Borrower
Exhibit C - Opinion of Special Counsel for the Administrative Agent
iv
BRIDGE LOAN AGREEMENT
AGREEMENT dated as of August 2, 1999 among PENTAIR, INC., the BANKS from
time to time parties hereto and XXXXXX GUARANTY TRUST COMPANY OF NEW YORK, as
Administrative Agent.
The parties hereto hereby agree as follows:
ARTICLE 1
DEFINITIONS
SECTION 1.1. DEFINITIONS. The following terms, as used herein, have
the following meanings:
"ADJUSTED CD RATE" has the meaning set forth in Section 2.05(b).
"ADMINISTRATIVE AGENT" means Xxxxxx in its capacity as administrative
agent for the Banks hereunder, and its successors in such capacity.
"ADMINISTRATIVE QUESTIONNAIRE" means, with respect to each Bank, an
administrative questionnaire in the form prepared by the Administrative Agent
and submitted to the Administrative Agent (with a copy to the Borrower) duly
completed by such Bank.
"APPLICABLE LENDING OFFICE" means, with respect to any Bank, (i) in the
case of its Domestic Loans, its Domestic Lending Office and (ii) in the case
of its Euro-Dollar Loans, its Euro-Dollar Lending Office.
"ASSESSMENT RATE" has the meaning set forth in Section 2.05(b).
"ASSET SALE" means any sale, lease or other disposition (including any
such transaction effected by way of merger or consolidation) (each, a
"DISPOSITION") by the Borrower or any of its Subsidiaries of any asset,
including without limitation any sale-leaseback transaction, whether or not
involving a capital lease, but excluding (i) any disposition in the ordinary
course of business, (ii) any disposition to the Borrower or any of its
Subsidiaries, (iii) any Sale of Receivables and (iv) any disposition (or
series of related dispositions) the Net Cash Proceeds of which do not exceed
$5,000,000 on an individual basis.
"ASSIGNEE" has the meaning set forth in Section 9.06(c).
"AVAILABILITY PERIOD" means the period from and including the Effective
Date to but excluding the Commitment Termination Date.
"BANK" means Xxxxxx, each Assignee which becomes a Bank pursuant to
Section 9.06(c), and their respective successors.
"BASE RATE" means, for any day, a rate per annum equal to the higher of
(i) the Prime Rate for such day or (ii) the sum of 1/2 of 1% plus the Federal
Funds Rate for such day.
"BASE RATE LOAN" means a Loan which bears interest at the Base Rate
pursuant to the applicable Notice of Borrowing or Notice of Interest Rate
Election or the provisions of Section 2.14(a) or Article 8.
"BORROWER" means Pentair, Inc., a Minnesota corporation, and its
successors.
"BORROWING" means the borrowing of a Loan hereunder. Borrowings are
classified for purposes of this Agreement by reference to the pricing of the
Loan comprising such Borrowing (E.G., a "Base Rate Borrowing" is a Borrowing
of a Base Rate Loan).
"CD BASE RATE" has the meaning set forth in Section 2.05(b).
"CD LOAN" means a Loan which bears interest at a CD Rate pursuant to the
applicable Notice of Borrowing or Notice of Interest Rate Election.
"CD MARGIN" has the meaning set forth in Section 2.05(b).
"CD RATE" means a rate of interest determined pursuant to Section
2.05(b) on the basis of an Adjusted CD Rate.
"CD REFERENCE BANKS" means Xxxxxx and such other bank or banks as the
Borrower and the Administrative Agent may from time to time mutually
designate.
"COMMITMENT" means an amount equal to $400,000,000, as such amount may
be reduced from time to time pursuant to Section 2.07 or 2.08; provided that,
if the context so requires, the term "COMMITMENT" means the obligation of
Xxxxxx to extend credit up to such amount to the Borrower hereunder.
"CODE" means the Internal Revenue Code of 1986, as amended.
2
"COMMITMENT SCHEDULE" means the Commitment Schedule attached hereto.
"COMMITMENT TERMINATION DATE" means the date on which the Commitment is
terminated pursuant to Section 2.07, 2.08 or 6.01.
"CONSOLIDATED CUMULATIVE NET INCOME" means the sum of the net income of
the Borrower and its Consolidated Subsidiaries for (i) the period from July
1, 1996 through December 31, 1996; and (ii) each fiscal year of the Borrower
thereafter; PROVIDED that (x) net income from any period shall be added to
Consolidated Cumulative Net Income only when such period is completed and (y)
if net income for any period is not positive, such period shall be excluded
in calculating Consolidated Cumulative Net Income.
"CONSOLIDATED DEBT" means, at any date, the Debt of the Borrower and its
Consolidated Subsidiaries, determined on a consolidated basis as of such date.
"CONSOLIDATED EBITDA" means, for any period, the Consolidated Net Income
of the Borrower and its Consolidated Subsidiaries for such period before
cumulative effect of accounting changes, provision for income tax, interest
expense and depreciation and amortization expense; PROVIDED that Consolidated
EBITDA shall be adjusted to exclude the effect of (i) the $38,000,000 special
restructuring charge taken in the first fiscal quarter of 1999 and any
similar special restructuring charges and (ii) any extraordinary or
non-recurring gains and any extraordinary or non-recurring non-cash losses in
such period.
"CONSOLIDATED EBITDAR" means, for any period, the sum of Consolidated
EBITDA plus Consolidated Rental Expense for such period.
"CONSOLIDATED FINANCE LIABILITIES" means, at any date, the sum (without
duplication) of (i) Debt, (ii) obligations under operating leases of
properties which are reported for United States federal income tax purposes
as owned by the Borrower or a Consolidated Subsidiary, capitalized as if such
operating leases were capital leases under generally accepted accounting
principles, and (iii) the outstanding investment in all receivables sold
pursuant to Sales of Receivables, determined in each case as of such date on
a consolidated basis for the Borrower and its Consolidated Subsidiaries.
"CONSOLIDATED INTEREST EXPENSE" means, for any period, the sum (without
duplication) of (i) interest costs, whether paid or accrued and whether or
not capitalized, including the interest component of rentals under capital
leases, (ii) commitment fees and fees for standby letters of credit, (iii)
discount and other fees and charges incurred in connection with Sales of
Receivables and (iv) any
3
other expense treated as interest expense under generally accepted accounting
principles, determined in each case on a consolidated basis for the Borrower
and its Consolidated Subsidiaries for such period.
"CONSOLIDATED NET INCOME" means, for any period, the net income of the
Borrower and its Consolidated Subsidiaries determined on a consolidated basis
for such period.
"CONSOLIDATED RENTAL EXPENSE" means, for any period, the rental expense
of the Borrower and its Consolidated Subsidiaries determined on a
consolidated basis for such period.
"CONSOLIDATED SHAREHOLDERS' EQUITY" means, at any date, the consolidated
shareholders' equity of the Borrower and its Consolidated Subsidiaries.
"CONSOLIDATED SUBSIDIARY" means, at any date, any Subsidiary or other
entity the accounts of which would be consolidated with those of the Borrower
in its consolidated financial statements as of such date.
"CONTROLLED GROUP" means all members of a controlled group of
corporations and all trades or businesses (whether or not incorporated) under
common control which, together with the Borrower, are treated as a single
employer under Sections 414(b) or 414(c) of the Code.
"COVENANT" means, with respect to any agreement or instrument
representing or governing Debt, any covenant (whether expressed as a covenant
or an event of default) contained therein.
"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 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 amount
of any proceeds of a Sale of Receivables less amounts collected on the
receivables sold in such Sale of Receivables, (vii) all non-contingent
reimbursement obligations of such Person under letters of credit, and (viii)
and all Debt (as defined above) of others Guaranteed by such Person.
4
"DEBT INCURRENCE" means an issuance by the Borrower or a Subsidiary of
long-term debt securities in the public or private capital markets or a
borrowing by the Borrower or a Subsidiary under a bank credit facility, other
than borrowings under this Agreement or an Excluded Credit Facility and other
than borrowings by foreign Subsidiaries under uncommitted local lines of
credit. For purposes of this definition (i) borrowings and repayments under a
revolving credit facility shall be netted and (ii) the issuance of commercial
paper supported by a committed bank credit facility shall be treated as a
borrowing under such facility.
"DOMESTIC BUSINESS DAY" means any day except a Saturday, Sunday or other
day on which commercial banks in New York City are authorized or required by
law to close.
"DOMESTIC LENDING OFFICE" means, as to each Bank, its office located at
its address set forth in its Administrative Questionnaire (or identified in
its Administrative Questionnaire as its Domestic Lending Office) or such
other office as such Bank may hereafter designate as its Domestic Lending
Office by notice to the Borrower and the Administrative Agent; PROVIDED that
any Bank may so designate separate Domestic Lending Offices for its Base Rate
Loans, on the one hand, and its CD Loans, on the other hand, in which case
all references herein to the Domestic Lending Office of such Bank shall be
deemed to refer to either or both of such offices, as the context may require.
"DOMESTIC LOANS" means CD Loans or Base Rate Loans or both.
"DOMESTIC RESERVE PERCENTAGE" has the meaning set forth in Section
2.05(b).
"EFFECTIVE DATE" means the date this Agreement becomes effective in
accordance with Section 3.01.
"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, 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.
5
"EQUITY ISSUANCE" means the issuance of any equity securities
(including, common or preferred stock and so-called equity equivalent
securities) by the Borrower or any of its Subsidiaries (other than equity
securities issued (i) to the Borrower or any of its Subsidiaries or (ii) in
the ordinary course of business pursuant to executive compensation or
employee benefit plans).
"ERISA" means the Employee Retirement Income Act of 1974, as amended, or
any successor statute.
"ESSEF" means Essef Corporation, an Ohio corporation.
"ESSEF ACQUISITION" means the acquisition of Essef by the Borrower
pursuant to the Essef Agreement.
"ESSEF AGREEMENT" means the Agreement and Plan of Merger dated as of
April 30, 1999 among the Borrower, Northstar Acquisition Company, a
wholly-owned Subsidiary, and Essef.
"ESSEF ESCROW" means the escrow arrangement established in connection
with the Essef Acquisition for the cash portion of the acquisition cost
thereof.
"EURO-DOLLAR BUSINESS DAY" means any Domestic Business Day on which
commercial banks are open for international business (including dealings in
dollar deposits) in London.
"EURO-DOLLAR LENDING OFFICE" means, as to each Bank, its office, branch
or affiliate located at its address set forth in its Administrative
Questionnaire (or identified in its Administrative Questionnaire as its
Euro-Dollar Lending Office) or such other office, branch or affiliate of such
Bank as it may hereafter designate as its Euro-Dollar Lending Office by
notice to the Borrower and the Administrative Agent.
"EURO-DOLLAR LOAN" means a Committed Loan which bears interest at a
Euro-Dollar Rate pursuant to the applicable Notice of Committed Borrowing or
Notice of Interest Rate Election.
"EURO-DOLLAR MARGIN" has the meaning set forth in Section 2.05(c).
"EURO-DOLLAR RATE" means a rate of interest determined pursuant to
Section 2.05(c) on the basis of a London Interbank Offered Rate.
"EURO-DOLLAR REFERENCE BANKS" means the principal London offices of
Xxxxxx and such other bank or banks as the Borrower and the Administrative
Agent may from time to time mutually designate.
6
"EURO-DOLLAR RESERVE PERCENTAGE" means for any day that percentage
(expressed as a decimal) which is in effect on such day, as prescribed by the
Board of Governors of the Federal Reserve System (or any successor) for
determining the maximum reserve requirement for a member bank of the Federal
Reserve System in New York City with deposits exceeding five billion dollars
in respect of "EUROCURRENCY LIABILITIES" (or in respect of any other category
of liabilities which includes deposits by reference to which the interest
rate on Euro-Dollar Loans is determined or any category of extensions of
credit or other assets which includes loans by a non-United States office of
any Bank to United States residents).
"EVENT OF DEFAULT" has the meaning set forth in Section 6.01.
"EXCLUDED CREDIT FACILITY" means any of (i) the $390,000,000
Multi-Facility Credit Agreement dated as of November 15, 1996, as amended,
among the Borrower and the other borrowers, banks and agents parties thereto,
(ii) the existing $25,000,000 swingline credit facility provided to the
Borrower by U.S. Bank National Association, (iii) the $400,000,000 bridge
credit facility proposed to be extended to the Borrower by Bank of America,
N.A. in August 1999, (iv) the $750,000,000 syndicated bank revolving credit
facility proposed to be arranged by Bank of America Securities LLC and
proposed to be entered into in August 1999 and (v) the $100,000,000 bridge
revolving credit facility proposed to be extended to the Borrower by U.S.
Bank National Association.
"FEDERAL FUNDS RATE" means, for any day (the "ACCRUAL DATE"), the rate
per annum (rounded upward, if necessary, to the nearest 1/100th of 1%) 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 the accrual date, as published by the Federal Reserve Bank of New York on
the Domestic Business Day next succeeding such day, PROVIDED that (i) if the
accrual date is not a Domestic Business Day, the Federal Funds Rate for the
accrual date shall be such rate on such transactions on the next preceding
Domestic Business Day as so published on the next succeeding Domestic
Business Day, and (ii) if no such rate is so published on such next
succeeding Domestic Business Day, the Federal Funds Rate for the accrual date
shall be the average rate quoted to Xxxxxx on the accrual date (or next
preceding Domestic Business Day) on such transactions as determined by the
Administrative Agent.
"FEE LETTER" means the letter agreement of even date among the Borrower,
Xxxxxx and X.X. Xxxxxx Securities Inc. relating to this Agreement.
"FIXED RATE LOANS" means CD Loans or Euro-Dollar Loans or both.
7
"GROUP OF LOANS" means, at any time, a group of Loans consisting of (i)
all Loans which are Base Rate Loans at such time, (ii) all Euro-Dollar Loans
having the same Interest Period at such time or (iii) all CD Loans having the
same Interest Period at such time, PROVIDED that, if a Loan of any particular
Bank is converted to or made as a Base Rate Loan pursuant to Article 8, such
Loan shall be included in the same Group or Groups of Loans from time to time
as it would have been in if it had not been so converted or made.
"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 or amounts due contingently or otherwise with respect to obligations
of Lake Superior Paper Industries, a former joint venture of the Borrower, or
Flambeau Paper Corp., a former subsidiary of the Borrower. The term
"GUARANTEE" used as a verb has a correlative meaning.
"INDEMNITEE" has the meaning set forth in Section 9.03(b).
"INTEREST PERIOD" means:
(1) with respect to each Euro-Dollar Loan, the period commencing on the
date of borrowing specified in the applicable Notice of Borrowing or on the
date specified in an applicable Notice of Interest Rate Election and ending
one, two, three or six months thereafter, as the Borrower may elect in the
applicable Notice of Borrowing; PROVIDED that:
(a) any Interest Period which would otherwise end on a day which
is not a Euro-Dollar Business Day shall be extended to the next
succeeding Euro-Dollar Business Day unless such Euro-Dollar Business Day
falls in another calendar month, in which case such Interest Period
shall end on the next preceding Euro-Dollar Business Day;
(b) any Interest Period which begins on the last Euro-Dollar
Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of such
Interest Period) shall, subject to clause (c) below, end on the last
Euro-Dollar Business Day of a calendar month; and
8
(c) any Interest Period which would otherwise end after the
Maturity Date shall end on the Maturity Date;
(2) with respect to each CD Loan, the period commencing on the date of
borrowing specified in the applicable Notice of Borrowing or on the date
specified in an applicable Notice of Interest Rate Election and ending 30,
60, 90 or 180 days thereafter, as the Borrower may elect in the applicable
Notice of Borrowing; PROVIDED that:
(a) any Interest Period (other than an Interest Period determined
pursuant to clause (b) below) which would otherwise end on a day which
is not a Euro-Dollar Business Day shall be extended to the next
succeeding Euro-Dollar Business Day; and
(b) any Interest Period which would otherwise end after the
Maturity Date shall end on the Maturity Date;
"LEVERAGE RATIO" means, at any date, the ratio of Consolidated Finance
Liabilities at such date to Consolidated EBITDA for the period of four
consecutive fiscal quarters most recently ended on or prior to such date;
PROVIDED that if there shall have been an acquisition or disposition of
operations during such period, Consolidated EBITDA shall be calculated on a
pro forma basis giving effect thereto as if such acquisition or disposition
had occurred on the first day of such period.
"LIEN" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such
asset. For the purposes of this Agreement, the Borrower or any Subsidiary
shall be deemed to own subject to a Lien any asset which it has acquired or
holds subject to the interest of a vendor or lessor under any conditional
sale agreement, capital lease or other title retention agreement relating to
such asset.
"LOAN" means the portion of a loan made pursuant to Section 2.01 held by
an individual Bank; PROVIDED that, if any such loan or loans (or portions
thereof) are combined or subdivided pursuant to a Notice of Interest Rate
Election, the term "LOAN" shall refer to the combined principal amount
resulting from such combination or to each of the separate principal amounts
resulting from such subdivision, as the case may be, held by an individual
Bank.
"LONDON INTERBANK OFFERED RATE" has the meaning set forth in Section
2.05(c).
9
"MATERIAL BUSINESS ACQUISITION" means (i) an investment by the Borrower
or any of its Subsidiaries in any other Person (including an investment by
way of acquisition of securities of any other Person) pursuant to which such
Person shall become a Subsidiary or shall be merged into or consolidated with
the Borrower or any of its Subsidiaries or (ii) an acquisition by the
Borrower or any of its Subsidiaries of the property and assets of any Person
(other than the Borrower or any of its Subsidiaries) that constitute
substantially all the assets of such Person or any division or other business
unit of such Person, in each case in an amount exceeding $25,000,000.
"MATERIAL SUBSIDIARY" means each Subsidiary 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).
"MATURITY DATE" means March 30, 2000 or, if such day is not a
Euro-Dollar Business Day, the next preceding Euro-Dollar Business Day.
"MOODY'S" means Xxxxx'x Investors Service, Inc., and its successors.
"XXXXXX" means Xxxxxx Guaranty Trust Company of New York, a New York
trust company, and its successors.
"NET CASH PROCEEDS" means, with respect to any Asset Sale (determined
for the purpose of this definition without regard to clause (iii) of the
definition thereof), Debt Incurrence, Equity Issuance or Sale of Receivables,
an amount equal to the cash proceeds received by the Borrower and/or its
Subsidiaries from or in respect of such event (including any cash proceeds
received as income or other proceeds of any noncash proceeds of any Asset
Sale or Sale of Receivables), less (x) any expenses reasonably incurred by
such Person in respect of such event and (y) in the case of any Asset Sale or
Sale of Receivables, (i) the amount of any Debt secured by a Lien on any
asset disposed of in such Asset Sale or Sale of Receivables and discharged
from the proceeds thereof, (ii) any taxes actually paid or to be payable by
such Person (as reasonably estimated by a senior financial or accounting
officer of the Borrower, giving effect to the overall tax position of the
Borrower and its Subsidiaries) in respect of such Asset Sale or Sale of
Receivables and (iii) any holdback or reserve for indemnities or purchase
price adjustments (as reasonably estimated by a senior financial officer of
the Borrower) reasonably likely to be paid within the next 180 days after the
closing thereof, PROVIDED that to the extent that such holdback or reserve is
not actually so used, or a claim for such use not made, before the end of
such 180 day period, such amount shall be deemed to be Net Cash Proceeds on
such 180th day.
10
"NOTES" means promissory notes of the Borrower, substantially in the
form of Exhibit A hereto, evidencing the obligation of the Borrower to repay
the Loans, and "NOTE" means any one of such promissory notes issued hereunder.
"NOTICE OF BORROWING" has the meaning set forth in Section 2.02.
"NOTICE OF INTEREST RATE ELECTION" has the meaning set forth in Section
2.14.
"PARENT" means, with respect to any Bank, any Person controlling such
Bank.
"PARTICIPANT" has the meaning set forth in Section 9.06(b).
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"PENTAIR CANADA" means Pentair Canada, Inc., an Ontario, Canada
corporation.
"PERSON" means an individual, a corporation, a partnership, an
association, a trust or any other entity or organization, including a
government or political subdivision or an agency or instrumentality 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 Borrower or
any member of the Controlled Group for employees of the Borrower or any
member of the Controlled Group 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 Borrower or any member of the
Controlled Group is then making or accruing an obligation to make
contributions or has within the preceding five plan years made contributions.
"PRICING SCHEDULE" means the Schedule attached hereto identified as such.
"PRIME RATE" means the rate of interest publicly announced by Xxxxxx in
New York City from time to time as its Prime Rate.
"QUARTERLY PAYMENT DATES" means each March 31, June 30, September 30 and
December 31.
11
"REDUCTION EVENT" means (i) any Asset Sale, (ii) any Debt Incurrence or
(iii) any Equity Issuance, (iv) any Sale of Receivables or (v) a receipt of
funds by the Borrower or a Subsidiary from the Essef Escrow.
"REDUCTION PERCENTAGE" means (i) with respect to any Sale of
Receivables, 50% and (ii) with respect to any other Reduction Event, 100%.
"REFERENCE BANKS" means the CD Reference Banks or the Euro-Dollar
Reference Banks, as the context may require, and "REFERENCE BANK" means any
one of such Reference Banks.
"REGULATION T, U OR X" means Regulation T, U or X of the Board of
Governors of the Federal Reserve System, as in effect from time to time.
"REQUIRED BANKS" means at any time Banks having at least 66 2/3% of the
aggregate amount of the Commitments or, if the Commitments shall have been
terminated, holding at least 66 2/3% of the aggregate unpaid principal amount
of the Loans.
"SALE OF RECEIVABLES" means a sale by the Borrower or a Consolidated
Subsidiary, with or without recourse or discount, of an interest in trade
receivables of the Borrower or a Consolidated Subsidiary, pursuant to a
receivables purchase program or a loan secured by such receivables.
"S&P" means Standard & Poor's Ratings Group, and its successors.
"SUBSIDIARY" means any corporation or other entity of which securities
or other ownership interests having ordinary voting power to elect a majority
of the board of directors or other persons performing similar functions are
at the time directly or indirectly owned by the Borrower.
"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 Borrower or any member of the
Controlled Group to the PBGC or the Plan under Title IV of ERISA.
"UNITED STATES" means the United States of America, including the States
and the District of Columbia, but excluding its territories and possessions.
12
SECTION 1.2. ACCOUNTING TERMS AND DETERMINATIONS. Unless otherwise
specified herein, all accounting terms used herein shall be interpreted, all
accounting determinations hereunder shall be made, and all financial
statements required to be delivered hereunder shall be prepared in accordance
with generally accepted accounting principles as in effect for U.S. domiciled
companies from time to time, applied on a basis consistent (except for
changes approved by the Borrower's independent public accountants) with the
most recent audited consolidated financial statements of the Borrower and its
Consolidated Subsidiaries delivered to the Banks; PROVIDED that if the
Borrower notifies the Administrative Agent that the Borrower desires to amend
any covenant in Article 5 (or any related definition) to eliminate the effect
of any change in generally accepted accounting principles on the operation of
such covenant (or such definition), or the Administrative Agent notifies the
Borrower that the Required Banks wish to amend any such covenant (or any such
definition) for such purpose, then the Borrower's compliance with such
covenant shall be determined (or such definition shall be interpreted) on the
basis of generally accepted accounting principles 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
Borrower and the Required Banks.
ARTICLE 2
THE LOANS
SECTION 2.1. COMMITMENT TO LEND. During the Availability Period Xxxxxx
agrees, on the terms and conditions set forth in this Agreement, to make
loans to the Borrower pursuant to this Section from time to time in an
aggregate amount not to exceed the amount of the Commitment. Each Borrowing
under this Section shall be in a principal amount of $25,000,000 or any
larger multiple of $5,000,000 (except that any such Borrowing may be in the
then amount of the Commitment). The Commitment is not revolving in nature,
and amounts prepaid may not be reborrowed.
SECTION 2.2. NOTICE OF BORROWINGS. The Borrower shall give Xxxxxx
notice (a "NOTICE OF BORROWING") not later than 10:30 A.M. (New York City
time) on (x) the date of each Base Rate Borrowing, (y) the second Domestic
Business Day before each CD Borrowing and (z) the third Euro-Dollar Business
Day before each Euro-Dollar Borrowing, specifying:
13
(a) the date of such Borrowing, which shall be a Domestic Business
Day in the case of a Domestic Borrowing or a Euro-Dollar Business Day in
the case of a Euro-Dollar Borrowing,
(b) the aggregate amount of such Borrowing,
(c) whether the Loan comprising such Borrowing is to bear interest
initially at the Base Rate, a CD Rate or a Euro-Dollar Rate, and
(d) in the case of a Fixed Rate Borrowing, the duration of the
initial Interest Period applicable thereto, subject to the provisions of
the definition of Interest Period.
Not later than 12:00 Noon (New York City time) on the date of each
Borrowing, Xxxxxx shall make available to the Borrower the amount of such
Borrowing, in Federal or other funds immediately available in New York City,
unless Xxxxxx determines that any applicable condition specified in Article 3
has not been satisfied.
SECTION 2.3. REGISTRY; NOTES. (a) The Administrative Agent shall
maintain a register (the "REGISTER") on which it will record each Loan and
each repayment of any Loan. Any such recordation by the Administrative Agent
on the Register shall be presumptively correct, absent manifest error.
Failure to make any such recordation, or any error in such recordation, shall
not affect the Borrower's obligations hereunder.
(b) The Borrower hereby agrees that, promptly upon the request of any
Bank at any time, the Borrower shall deliver to such Bank a duly executed
Note, in substantially the form of Exhibit A hereto, payable to the order of
such Bank and representing the obligation of the Borrower to pay the unpaid
principal amount of the Loans held by such Bank, with interest as provided
herein on the unpaid principal amount from time to time outstanding.
(c) Each Bank shall record the date, amount and maturity of each Loan
held by it and the date and amount of each payment of principal made by the
Borrower with respect thereto, and each Bank receiving a Note pursuant to
this Section, if such Bank so elects in connection with any transfer or
enforcement of any Note, may endorse on the schedule forming a part thereof
appropriate notations to evidence the foregoing information with respect to
each such Loan then outstanding; PROVIDED that the failure of such Bank to
make any such recordation or endorsement shall not affect the obligations of
the Borrower hereunder or under the Notes. Such Bank is hereby irrevocably
authorized by the
14
Borrower so to endorse any Note and to attach to and make a part of any Note
a continuation of any such schedule as and when required.
(d) Each Bank may, by notice to the Borrower and the Administrative
Agent, request that its Loans of a particular type be evidenced by a separate
Note in an amount equal to the aggregate unpaid principal amount of such
Loans. Each such Note shall contain appropriate modifications to reflect the
fact that it evidences solely Loans of the relevant type. Each reference in
this Agreement to the "Note" of such Bank shall be deemed to refer to and
include any or all of such Notes, as the context may require.
SECTION 2.4. MATURITY OF LOANS. Each Loan shall mature, and the
principal amount thereof shall be due and payable (together with interest
accrued thereon), on the Maturity Date.
SECTION 2.5. INTEREST RATES. (a) Each Base Rate Loan shall bear
interest on the outstanding principal amount thereof, for each day from the
date such Loan is made until it becomes due, at a rate per annum equal to the
Base Rate for such day. Such interest shall be payable quarterly in arrears
on each Quarterly Payment Date and at maturity. Any overdue principal of or
interest on any Base Rate Loan shall bear interest, payable on demand, for
each day until paid at a rate per annum equal to the sum of 2% plus the rate
otherwise applicable to Base Rate Loans for such day.
(b) Each CD Loan shall bear interest on the outstanding principal
amount thereof, for each day during each Interest Period applicable thereto,
at a rate per annum equal to the sum of the CD Margin for such day plus the
Adjusted CD Rate applicable to such Interest Period; PROVIDED that if any CD
Loan shall, as a result of clause (2)(b) of the definition of Interest
Period, have an Interest Period of less than 30 days, such CD Loan shall bear
interest during such Interest Period at the rate applicable to Base Rate
Loans during such period. Such interest shall be payable for each Interest
Period on the last day thereof and, if such Interest Period is longer than 90
days, at intervals of 90 days after the first day thereof. Any overdue
principal of or interest on any CD Loan shall bear interest, payable on
demand, for each day until paid at a rate per annum equal to the sum of 2%
plus the higher of (i) the sum of the CD Margin for such day plus the
Adjusted CD Rate applicable to such Loan on the day before such payment was
due and (ii) the rate applicable to Base Rate Loans for such day.
"CD MARGIN" means, at any date, the sum of the Euro-Dollar Margin at
such date plus 0.125%.
15
The "ADJUSTED CD RATE" applicable to any Interest Period means a rate
per annum determined pursuant to the following formula:
_ _
| CDBR |*
ACDR = |_ 1.00 - DRP _| + AR
ACDR = Adjusted CD Rate
CDBR = CD Base Rate
DRP = Domestic Reserve Percentage
AR = Assessment Rate
The "CD BASE RATE" applicable to any Interest Period is the rate of
interest determined by the Administrative Agent to be the average (rounded
upward, if necessary, to the next higher 1/100 of 1%) of the prevailing rates
per annum bid at 10:00 A.M. (New York City time) (or as soon thereafter as
practicable) on the first day of such Interest Period by two or more New York
certificate of deposit dealers of recognized standing for the purchase at
face value from each CD Reference Bank of its certificates of deposit in an
amount comparable to the principal amount of the CD Loan of such CD Reference
Bank to which such Interest Period applies and having a maturity comparable
to such Interest Period.
"DOMESTIC RESERVE PERCENTAGE" means for any day that percentage
(expressed as a decimal) which is in effect on such day, as prescribed by the
Board of Governors of the Federal Reserve System (or any successor) for
determining the maximum reserve requirement (including without limitation any
basic, supplemental or emergency reserves) for a member bank of the Federal
Reserve System in New York City with deposits exceeding five billion dollars
in respect of new non-personal time deposits in dollars in New York City
having a maturity comparable to the related Interest Period and in an amount
of $100,000 or more. The Adjusted CD Rate shall be adjusted automatically on
and as of the effective date of any change in the Domestic Reserve Percentage.
---------------------------------------
The amount in brackets being rounded upward, if necessary, to the next
higher 1/100 of 1%
16
"ASSESSMENT RATE" means for any day the annual assessment rate in effect
on such day which is payable by a member of the Bank Insurance Fund
classified as adequately capitalized and within supervisory subgroup "A" (or
a comparable successor assessment risk classification) within the meaning of
12 C.F.R. Section 327.4(a) (or any successor provision) to the Federal
Deposit Insurance Corporation (or any successor) for such Corporation's (or
such successor's) insuring time deposits at offices of such institution in
the United States. The Adjusted CD Rate shall be adjusted automatically on
and as of the effective date of any change in the Assessment Rate.
(c) Each Euro-Dollar Loan shall bear interest on the outstanding
principal amount thereof, for each day during each Interest Period applicable
thereto, at a rate per annum equal to the sum of the Euro-Dollar Margin for
such day plus the London Interbank Offered Rate applicable to such Interest
Period. Such interest shall be payable for each Interest Period on the last
day thereof and, if such Interest Period is longer than three months, at
intervals of three months after the first day thereof.
"EURO-DOLLAR MARGIN" means, at any date, the higher of:
(i) the sum of (A) 1.25% PLUS (B) for any date on or after October 1,
1999 (x) 0.25%, if on October 1, 1999 the aggregate outstanding principal
amount of the Loans was $200,000,000 or less or (y) 0.50%, if on October 1,
1999 the aggregate outstanding principal amount of the Loans was more than
$200,000,000 PLUS (C) for any date on or after December 1, 1999, 1.00%; and
(ii) the highest margin over the London interbank offered rate (or
similar base rate) which is or would be applicable to a committed loan
outstanding on such date under the credit facility identified in clause (iii)
of the definition of Excluded Credit Facility (or any credit facility entered
into in lieu thereof or in substitution therefor).
The "LONDON INTERBANK OFFERED RATE" applicable to any Interest Period
means the average (rounded upward, if necessary, to the next higher 1/16 of
1%) of the respective rates per annum at which deposits in dollars are
offered to each of the Euro-Dollar Reference Banks in the London interbank
market at approximately 11:00 A.M. (London time) two Euro-Dollar Business
Days before the first day of such Interest Period in an amount approximately
equal to the principal amount of the Euro-Dollar Loan of such Euro-Dollar
Reference Bank to which such Interest Period is to apply and for a period of
time comparable to such Interest Period.
17
(d) Any overdue principal of or interest on any Euro-Dollar Loan shall
bear interest, payable on demand, for each day from and including the date
payment thereof was due to but excluding the date of actual payment, at a
rate per annum equal to the sum of 2% plus the higher of (i) the sum of the
Euro-Dollar Margin for such day plus the London Interbank Offered Rate
applicable to such Loan on the day before such payment was due and (ii) the
Euro-Dollar Margin for such day plus the quotient obtained (rounded upward,
if necessary, to the next higher 1/100 of 1%) by dividing (x) the average
(rounded upward, if necessary, to the next higher 1/16 of 1%) of the
respective rates per annum at which one day (or, if such amount due remains
unpaid more than three Euro-Dollar Business Days, then for such other period
of time not longer than three months as the Administrative Agent may select)
deposits in dollars in an amount approximately equal to such overdue payment
due to each of the Euro-Dollar Reference Banks are offered to such
Euro-Dollar Reference Bank in the London interbank market for the applicable
period determined as provided above by (y) 1.00 minus the Euro-Dollar Reserve
Percentage (or, if the circumstances described in clause (a) or (b) of
Section 8.01 shall exist, at a rate per annum equal to the sum of 2% plus the
rate applicable to Base Rate Loans for such day).
(e) The Administrative Agent shall determine each interest rate
applicable to the Loans hereunder. The Administrative Agent shall give
prompt notice to the Borrower and the Banks of each rate of interest so
determined, and its determination thereof shall be conclusive in the absence
of manifest error.
(f) Each Reference Bank agrees to use its best efforts to furnish
quotations to the Administrative Agent as contemplated by this Section 2.05.
If any Reference Bank does not furnish a timely quotation, the Administrative
Agent shall determine the relevant interest rate on the basis of the
quotation or quotations furnished by the remaining Reference Bank or Banks
or, if none of such quotations is available on a timely basis, the provisions
of Section 8.01 shall apply.
SECTION 2.6. COMMITMENT FEE. The Borrower shall pay to the
Administrative Agent for the account of Xxxxxx a commitment fee at the rate
of 0.125% per annum on the amount from time to time of the Commitment. Such
commitment fee shall accrue from and including the Effective Date to but
excluding the Commitment Termination Date and shall be payable upon the
Commitment Termination Date.
SECTION 2.7. OPTIONAL TERMINATION OR REDUCTION OF COMMITMENTS. The
Borrower may, upon at least three Domestic Business Days' notice to the
Administrative Agent, terminate the Commitment at any time or reduce from
time
18
to time by an aggregate amount of $25,000,000 or any larger multiple thereof,
the amount of the Commitment.
SECTION 2.8. MANDATORY TERMINATION OR REDUCTION OF COMMITMENTS. (a)
Unless earlier terminated pursuant to the other provisions of this Agreement,
the Commitment shall terminate on August 16, 1999.
(b) The Commitment shall be reduced on the date of each Borrowing by the
amount of such Borrowing.
(c) The Commitment shall be reduced automatically in the event that the
Borrower or any of its Subsidiaries shall at any time, or from time to time,
after the date hereof receive any Net Cash Proceeds of any Reduction Event,
by an amount equal to the largest multiple of $5,000,000 which does not
exceed the greater of (i) the Reduction Percentage of such Net Cash Proceeds
and (ii) the amount of the Commitment. The reductions in the Commitment
required by this subsection shall be effective on the fifth Euro-Dollar
Business Day following receipt by the Borrower or any of its Subsidiaries, as
the case may be, of such Net Cash Proceeds.
(d) The Borrower shall notify the Administrative Agent within two
Euro-Dollar Business Days of receipt by it or a Subsidiary of Net Cash
Proceeds of a Reduction Event, specifying the date and amount thereof.
SECTION 2.9. PREPAYMENTS. (a) OPTIONAL. The Borrower may (i) upon at
least one Domestic Business Day's notice to the Administrative Agent, prepay
any Group of Base Rate Loans, (ii) upon at least three Domestic Business
Days' notice to the Administrative Agent, subject to Section 2.11, prepay any
Group of CD Loans and (iii) upon at least three Euro-Dollar Business Days'
notice to the Administrative Agent, subject to Section 2.11, prepay any Group
of Euro-Dollar Loans, in whole at any time, or from time to time in part in
amounts aggregating $25,000,000 or any larger multiple of $5,000,000, by
paying the principal amount to be prepaid together with accrued interest
thereon to the date of prepayment. Each such optional prepayment shall be
applied to prepay ratably the Loans of the several Banks included in such
Group.
(b) MANDATORY. In the event that the Borrower or any of its
Subsidiaries shall at any time, or from time to time, after the date hereof
receive any Net Cash Proceeds of any Reduction Event, the Borrower shall, not
later than the fifth Euro-Dollar Business Day following receipt by the
Borrower or any of its Subsidiaries, as the case may be, of such Net Cash
Proceeds, prepay the Loans in an amount equal to the largest multiple of
$5,000,000 which does not exceed (i) the Reduction Percentage of such Net
Cash Proceeds minus (ii) the amount, if any, by
19
which the Commitment is reduced pursuant to Section 2.08 on account of the
receipt of such Net Cash Proceeds; PROVIDED that if this subsection (b) would
otherwise require Fixed Rate Loans to be prepaid prior to the last day of
their current Interest Period, such prepayment shall be deferred to such last
day unless the Administrative Agent otherwise notifies the Borrower on
instruction of the Required Banks. The Borrower shall notify the
Administrative Agent not less than three Euro-Dollar Business Days prior to
the date of each required prepayment pursuant to this subsection (d),
specifying the date and amount thereof and the outstanding Groups of Loans to
be prepaid.
(c) NOTICE TO BANKS. Upon receipt of a notice of prepayment pursuant
to this Section, the Administrative Agent shall promptly notify each Bank of
the contents thereof and of such Bank's ratable share of such prepayment and
such notice shall not thereafter be revocable by the Borrower.
SECTION 2.10. GENERAL PROVISIONS AS TO PAYMENTS. (a) The Borrower
shall make each payment of principal of, and interest on, the Loans and of
fees hereunder, not later than 12:00 Noon (New York City time) on the date
when due, in Federal or other funds immediately available in New York City,
to the Administrative Agent at its address referred to in Section 9.01. The
Administrative Agent will promptly distribute to each Bank its ratable share
of each such payment received by the Administrative Agent for the account of
the Banks. Whenever any payment of principal of, or interest on, the
Domestic Loans or of fees shall be due on a day which is not a Domestic
Business Day, the date for payment thereof shall be extended to the next
succeeding Domestic Business Day. Whenever any payment of principal of, or
interest on, the Euro-Dollar Loans shall be due on a day which is not a
Euro-Dollar Business Day, the date for payment thereof shall be extended to
the next succeeding Euro-Dollar Business Day unless such Euro-Dollar Business
Day falls in another calendar month, in which case the date for payment
thereof shall be the next preceding Euro-Dollar Business Day. If the date
for any payment of principal is extended by operation of law or otherwise,
interest thereon shall be payable for such extended time.
(b) Unless the Administrative Agent shall have received notice from the
Borrower prior to the date on which any payment is due to the Banks hereunder
that the Borrower will not make such payment in full, the Administrative
Agent may assume that the Borrower has made such payment in full to the
Administrative Agent on such date and the Administrative Agent may, in
reliance upon such assumption, cause to be distributed to each Bank on such
due date an amount equal to the amount then due such Bank. If and to the
extent that the Borrower shall not have so made such payment, each Bank shall
repay to the Administrative Agent forthwith on demand such amount distributed
to such Bank
20
together with interest thereon, for each day from the date such amount is
distributed to such Bank until the date such Bank repays such amount to the
Administrative Agent, at the Federal Funds Rate.
SECTION 2.11. FUNDING LOSSES. If the Borrower makes any payment of
principal with respect to any Fixed Rate Loan or any Fixed Rate Loan is
converted to a different type of Loan (whether such payment or conversion is
pursuant to Article 2, 6 or 8 or otherwise) on any day other than the last
day of an Interest Period applicable thereto, or the last day of an
applicable period fixed pursuant to Section 2.05(d), or if the Borrower fails
to borrow, prepay, convert or continue any Fixed Rate Loan after notice has
been given to any Bank in accordance with Section 2.02, 2.09(c) or 2.14(c),
the Borrower shall reimburse each Bank within 15 days after demand for any
resulting loss or expense incurred by it (or by an existing or prospective
Participant in the related Loan), including (without limitation) any loss
incurred in obtaining, liquidating or employing deposits from third parties,
but excluding loss of margin for the period after such payment or conversion
or failure to borrow, prepay, convert or continue; PROVIDED that such Bank
shall have delivered to the Borrower a certificate as to the amount of such
loss or expense, setting forth the basis of calculation thereof, which
certificate shall be conclusive in the absence of manifest error.
SECTION 2.12. COMPUTATION OF INTEREST AND FEES. Interest based on the
Prime Rate hereunder and commitment fees shall be computed on the basis of a
year of 365 days (or 366 days in a leap year) and paid for the actual number
of days elapsed (including the first day but excluding the last day). All
other interest shall be computed on the basis of a year of 360 days and paid
for the actual number of days elapsed (including the first day but excluding
the last day).
SECTION 2.13. REGULATION D COMPENSATION. For so long as any Bank is
required to maintain reserves against "EUROCURRENCY LIABILITIES" (or any
other category of liabilities which includes deposits by reference to which
the interest rate on Euro-Dollar Loans is determined or any category of
extensions of credit or other assets which includes loans by a non-United
States office of such Bank to United States residents), and as a result the
cost to such Bank (or its Euro-Dollar Lending Office) of making or
maintaining its Euro-Dollar Loans is increased, then such Bank may require
the Borrower to pay, contemporaneously (or at such other time or times as the
Borrower and such Bank may mutually agree) with each payment of interest on
the Euro-Dollar Loans, additional interest on the related Euro-Dollar Loan of
such Bank at a rate per annum up to but not exceeding the excess of (i) (A)
the applicable London Interbank Offered Rate divided by (B) one MINUS the
Euro-Dollar Reserve Percentage over (ii) the applicable London Interbank
Offered Rate. Any Bank wishing to require payment of such additional
21
interest (x) shall so notify the Borrower and the Administrative Agent, in
which case such additional interest on the Euro-Dollar Loans of such Bank
shall be payable to such Bank at the place indicated in such notice with
respect to each Interest Period commencing at least three Euro-Dollar
Business Days after the giving of such notice and (y) shall notify the
Borrower at least five Euro-Dollar Business Days prior to each date on which
interest is payable on the Euro-Dollar Loans (or at such other time or times
as the Borrower and such Bank may mutually agree) of the amount to which such
Bank is then entitled under this Section 2.13.
SECTION 2.14. METHOD OF ELECTING INTEREST RATES. (a ) The Loan
included in each Borrowing shall bear interest initially at the type of rate
specified by the Borrower in the applicable Notice of Borrowing. Thereafter,
the Borrower may from time to time elect to change or continue the type of
interest rate borne by each Group of Loans (subject to Section 2.14(d) and
the provisions of Article 8), as follows:
(i) if such Loans are Base Rate Loans, the Borrower may elect to
convert such Loans to CD Loans as of any Domestic Business Day or to
Euro-Dollar Loans as of any Euro-Dollar Business Day;
(ii) if such Loans are CD Loans, the Borrower may elect to convert
such Loans to Base Rate Loans as of any Domestic Business Day or convert
such Loans to Euro-Dollar Loans as of any Euro-Dollar Business Day or
continue such Loans as CD Loans for an additional Interest Period,
subject to Section 2.11 if any such conversion is effective on any day
other than the last day of an Interest Period applicable to such Loans;
and
(iii) if such Loans are Euro-Dollar Loans, the Borrower may elect
to convert such Loans to Base Rate Loans as of any Domestic Business Day
or convert such Loans to CD Loans as of any Euro-Dollar Business Day or
elect to continue such Loans as Euro-Dollar Loans for an additional
Interest Period, subject to Section 2.11 if any such conversion is
effective on any day other than the last day of an Interest Period
applicable to such Loan
Each such election shall be made by delivering a notice (a "NOTICE
OF INTEREST RATE ELECTION") to the Administrative Agent not later than
10:30 A.M. (New York City time) on the third Euro-Dollar Business Day
before the conversion or continuation selected in such notice is to be
effective (unless the relevant Loans are to be converted from Domestic
Loans of one type to Domestic Loans of the other type or are CD Loans to
be continued
22
as CD Loans for an additional Interest Period, in which case such notice
shall be delivered to the Administrative Agent not later than 10:30 A.M.
(New York City time) on the second Domestic Business Day before such
conversion or continuation is to be effective). A Notice of Interest
Rate Election may, if it so specifies, apply to only a portion of the
aggregate principal amount of the relevant Group of Loans; PROVIDED that
(i) such portion is allocated ratably among the Loans comprising such
Group and (ii) the portion to which such Notice applies, and the
remaining portion to which it does not apply, are each at least
$25,000,000 (unless such portion is comprised of Base Rate Loans). If
no such notice is timely received before the end of an Interest Period
for any Group of CD Loans or Euro-Dollar Loans, the Borrower shall be
deemed to have elected that such Group of Loans be converted to Base
Rate Loans at the end of such Interest Period.
(b) Each Notice of Interest Rate Election shall specify:
(i) the Group of Loans (or portion thereof) to which such notice
applies;
(ii) the date on which the conversion or continuation selected in
such notice is to be effective, which shall comply with the applicable
clause of Section 2.14(a) above;
(iii) if the Loans comprising such Group are to be converted, the
new type of Loans and, if the Loans resulting from such conversion are
to be CD Loans or Euro-Dollar Loans, the duration of the next succeeding
Interest Period applicable thereto; and
(iv) if such Loans are to be continued as CD Loans or Euro-Dollar
Loans for an additional Interest Period, the duration of such additional
Interest Period.
Each Interest Period specified in a Notice of Interest Rate
Election shall comply with the provisions of the definition of
Interest Period.
(c) Promptly after receiving a Notice of Interest Rate Election from
the Borrower pursuant to Section 2.14(a) above, the Administrative Agent
shall notify each Bank of the contents thereof and such notice shall not
thereafter be revocable by the Borrower.
23
(c) The Borrower shall not be entitled to elect to convert any
Committed Loans to, or continue any Committed Loans for an additional
Interest Period as, CD Loans or Euro-Dollar Loans if (i) the aggregate
principal amount of any Group of CD Loans or Euro-Dollar Loans created or
continued as a result of such election would be less than $25,000,000 or (ii)
a Default shall have occurred and be continuing when the Borrower delivers
notice of such election to the Administrative Agent.
(d) If any Committed Loan is converted to a different type of Loan, the
Borrower shall pay, on the date of such conversion, the interest accrued to
such date on the principal amount being converted.
ARTICLE 3
CONDITIONS
SECTION 3.1. EFFECTIVENESS. This Agreement shall become effective on
the date that each of the following conditions shall have been satisfied (or
waived in accordance with Section 9.05):
(a) receipt by the Administrative Agent of counterparts hereof
signed by each of the parties hereto (or, in the case of any party as to
which an executed counterpart shall not have been received, receipt by
the Administrative Agent in form satisfactory to it of telegraphic,
telex or other written confirmation from such party of execution of a
counterpart hereof by such party);
(b) receipt by the Administrative Agent of an opinion of the
principal legal officer of the Borrower, substantially in the form of
Exhibit E hereto and covering such additional matters relating to the
transactions contemplated hereby as the Required Banks may reasonably
request;
(c) receipt by the Administrative Agent of an opinion of Xxxxx
Xxxx & Xxxxxxxx, special counsel for the Administrative Agent,
substantially in the form of Exhibit F hereto and covering such
additional matters relating to the transactions contemplated hereby as
the Required Banks may reasonably request;
(d) receipt by the Administrative Agent of all documents it may
reasonably request relating to the existence of the Borrower, the
corporate
24
authority for and the validity of this Agreement and the Notes, and any
other matters relevant hereto, all in form and substance satisfactory to
the Administrative Agent; and
(e) receipt by the Administrative Agent of counterparts of the Fee
Letter signed by each of the parties thereto, together with payment by
the Borrower of the fees payable thereunder on the Effective Date;
PROVIDED that this Agreement shall not become effective or binding on
any party hereto unless all of the foregoing conditions are satisfied
not later than August 3, 1999.
SECTION 3.2. BORROWINGS. The obligation of Xxxxxx to make a Loan on the
occasion of any Borrowing is subject to the satisfaction of the following
conditions:
(a) receipt of a Notice of Borrowing as required by Section 2.02;
(b) the fact that, immediately before and after such Borrowing, no
Default shall have occurred and be continuing;
(c) the fact that the representations and warranties of the
Borrower contained in this Agreement shall be true on and as of the date
of such Borrowing; and
(c) in the case of the first Borrowing, the fact that the Essef
Acquisition shall have been, or shall simultaneously therewith be,
consummated in accordance with the Essef Agreement ; PROVIDED that this
clause (d) shall not apply to a Borrowing the proceeds of which will be
deposited in their entirety in the Essef Escrow, but in that event (i)
the Borrower hereby undertakes that no funds will be released from the
Essef Escrow to any Person other than the Borrower or a wholly-owned
Subsidiary except subsequent to or substantially contemporaneously with
the consummation of the Essef Acquisition and (ii) this clause (d) shall
be applicable to the first Borrowing which occurs after any Borrowing to
which this clause (d) is not applicable by reason of this proviso.
Each Borrowing hereunder shall be deemed to be a representation and
warranty by the Borrower on the date of such Borrowing as to the facts
specified in clauses (b), (c) and, if applicable, (d) of this Section.
25
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants that:
SECTION 4.1. CORPORATE EXISTENCE AND POWER.
(a The Borrower 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 is a limited liability company duly incorporated
and validly existing under the laws of Germany, with its seat in
Straubenhardt, Germany and registered in the HandeIsregister in the
Arntsgericht Pforzheim under file number HRB-3548, and has all corporate
powers and all material governmental licenses, authorizations, consents and
approvals required to carry on its business as now conducted.
(c Pentair Canada 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.
SECTION 4.2. CORPORATE AND GOVERNMENTAL AUTHORIZATION, CONTRAVENTION.
The execution, delivery and performance by the Borrower of this Agreement and
the Notes are within its 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 of the Borrower or of any
agreement, judgment, injunction, order, decree or other instrument binding
upon the Borrower or result in the creation or imposition of any Lien on any
asset of the Borrower or any of its Subsidiaries.
SECTION 4.3. BINDING EFFECT. This Agreement constitutes a valid and
binding agreement of the Borrower, and the Notes, when executed and
delivered in accordance with this Agreement, will constitute valid and
binding obligations of the Borrower.
SECTION 4.4. FINANCIAL INFORMATION.
26
(a The consolidated balance sheet of the Borrower and its Consolidated
Subsidiaries at December 31, 1998 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 Borrower's annual report for the year ended
December 31, 1998 as filed with the Securities and Exchange Commission on
Form 10-K, a copy of which has been delivered to each Bank, fairly present,
in conformity with generally accepted accounting principles, the consolidated
financial position of the Borrower 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 Borrower and its
Consolidated Subsidiaries at June 26, 1999 and the related unaudited
consolidated statements of income and cash flows for the six months then
ended, set forth in the Borrower's quarterly report for the fiscal quarter
ended June 26, 1999 as filed with the Securities and Exchange Commission on
Form 10-Q, a copy of which has been delivered to each Bank, fairly present,
in conformity with generally accepted accounting principles applied on a
basis consistent with the financial statements referred to in paragraph (a)
of this Section, the consolidated financial position of the Borrower and its
Consolidated Subsidiaries at such date and their consolidated results of
operations and cash flows for such six-month period (subject to normal
year-end adjustments).
(c Since December 31, 1998 there has been no material adverse change
in the business, financial position, results of operations or prospects of
the Borrower and its Consolidated Subsidiaries, considered as a whole.
SECTION 4.5. LITIGATION. There is no action, suit or proceeding
pending, or to the knowledge of the Borrower threatened, against or
affecting the Borrower or any of its 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 Borrower and its Consolidated
Subsidiaries, taken as a whole, or which in any manner questions the validity
of this Agreement or the Notes.
SECTION 4.6. COMPLIANCE WITH ERISA. The Borrower and each member of
the Controlled Group have fulfilled their obligations under the minimum
funding standards of ERISA and the Code with respect to each Plan and are in
compliance in all material respects with the presently applicable provisions
of ERISA and the Code, and have not incurred any liability to the PBGC or a
Plan under Title IV of ERISA.
27
SECTION 4.7. TAXES. The Borrower and its 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 the
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 Borrower and its
Subsidiaries has been determined by the Internal Revenue Service and paid for
all years prior to and including the fiscal year ended December 31, 1996.
SECTION 4.8. SUBSIDIARIES. Each of the Borrower's 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
SECTION 4.9. NOT AN INVESTMENT COMPANY. The Borrower is not an
"investment company" within the meaning of the Investment Company Act of
1940, as amended.
SECTION 4.10. ENVIRONMENTAL MATTERS. The Borrower conducts in the
ordinary course of business a review of the effect of existing Environmental
Laws and existing Environmental Claims on the business, operations and
properties of the Borrower and its Subsidiaries, and as a result thereof the
Borrower has reasonably concluded that such Environmental Laws and
Environmental Claims could not, individually or in the aggregate, reasonably
be expected to have a material adverse effect on the business, consolidated
financial position or consolidated results of operations of the Borrower and
its Subsidiaries taken as a whole.
SECTION 4.11. YEAR 2000 COMPLIANCE. The Borrower is in the process of
reviewing its operations and those of its Material Subsidiaries and has
requested from third parties with which the Borrower or any of its Material
Subsidiaries has a material relationship a certification of compliance, in
order to evaluate the extent to which the business or operations of the
Borrower and its Material Subsidiaries will be affected by the "Year 2000
Problem" (that is, the risk that computer applications used by it or any of
its Material Subsidiaries (or their respective suppliers and vendors) may be
unable to recognize and perform properly date-sensitive functions involving
certain dates prior to and any date after December 31, 1999). As a result of
such review, the Borrower has no reason to believe and does not believe that
the Year 2000 Problem will have a material
28
adverse effect on the business, consolidated financial position or
consolidated results of operations of the Borrower and its Subsidiaries taken
as a whole.
ARTICLE 5
COVENANTS
The Borrower agrees that so long as any Bank has any Commitment
hereunder or any amount payable under any Note remains unpaid:
SECTION 5.1. INFORMATION. The Borrower will deliver to each of the
Banks:
(a as soon as available and in any event within 90 days after the end
of each fiscal year of the Borrower, a consolidated balance sheet of the
Borrower 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 Borrower, a
consolidated balance sheet of the Borrower and its Consolidated Subsidiaries
at the end of such quarter and the related consolidated statements of income
and cash flows for such quarter and for the portion of the Borrower'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 Borrower's previous fiscal year, all certified
(subject to normal year-end adjustments) as to fairness of presentation,
generally accepted accounting principles and consistency by the chief
financial officer, the chief accounting officer or the vice president -
treasurer of the Borrower;
(c simultaneously with the delivery of each set of financial
statements referred to in clauses (a) and (b) above, a certificate of the
chief financial officer or the chief accounting officer of the Borrower (i)
setting forth in reasonable detail the calculations required to establish
whether the Borrower was in compliance with the requirements of Sections 5.02
to 5.07, inclusive, on the date of such financial statements and (ii) stating
whether there exists on the date of such
29
certificate any Default and, if any Default then exists, setting forth the
details thereof and the action which the Borrower is taking or proposes to
take with respect thereto;
(d simultaneously with the delivery of each set of financial
statements referred to in clause (a) above, a statement of the firm of
independent public accountants which reported on such statements (i) whether
anything has come to their attention to cause them to believe that there
existed on the date of such statements any Default and (ii) confirming the
calculations set forth in the officer's certificate delivered simultaneously
therewith pursuant to clause (c) above;
(e forthwith upon the occurrence of any Default, a certificate of the
chief financial officer or the chief accounting officer of the Borrower
setting forth the details thereof and the action which the Borrower is taking
or proposes to take with respect thereto;
(f promptly upon the mailing thereof to the shareholders of the
Borrower generally, copies of all financial statements, reports and proxy
statements so mailed;
(g 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 Borrower shall have filed with the Securities and Exchange Commission;
(h if and when the Borrower or any member of the Controlled Group
gives 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;
(i from time to time such additional information regarding the
financial position or business of the Borrower as the Administrative Agent,
at the request of any Bank, may reasonably request; and
(j as soon as available and in any event (i) within 90 days after the
end of each fiscal year of the Borrower and (ii) within 45 days of the end of
each of the first three quarters of each fiscal year of the Borrower, a
consolidating balance sheet and the related consolidating statement of
income, with respect only to the
30
Borrower's operating businesses, for the relevant fiscal period (and, for
interim fiscal quarters, for the portion of the year ended at the end of such
quarter), certified as to fairness of presentation, generally accepted
accounting principles and consistency by the chief financial officer, the
chief accounting officer or the vice president -treasurer of the Borrower.
SECTION 5.2. LEVERAGE RATIO. The Leverage Ratio will at no time exceed
3.9: 1.0.
SECTION 5.3. MINIMUM CONSOLIDATED SHAREHOLDERS' EQUITY . Consolidated
Shareholders' Equity will at no time be less than the sum of (a) $425,000,000
plus (b) 50% of Consolidated Cumulative Net Income plus (c) 50% of the
proceeds of all classes of equity securities issued by the Borrower after
June 30, 1996.
SECTION 5.4. COVERAGE RATIO. As of the end of each quarter of each of
the Borrower's fiscal years, the ratio of
(a Consolidated EBITDAR to
(b the sum of Consolidated Interest Expense and Consolidated Rental
Expense,
calculated on a cumulative basis for the four most recent fiscal quarters
will not be less than 2.5: 1.0.
SECTION 5.5. NEGATIVE PLEDGE. Neither the Borrower nor any
Consolidated Subsidiary will create, assume or suffer to exist any Lien
securing Debt on any asset now owned or hereafter acquired by any of them,
except:
(a Liens existing on the date of this Agreement (it being understood
that each such Lien which secures Debt in an aggregate principal amount of
more than $1,000,000 is disclosed in the financial information referred to in
Section 4.04);
(b any Lien existing on any asset of any corporation at the time such
corporation becomes a Consolidated Subsidiary and not created in
contemplation of such event;
(c any Lien on any asset securing Debt incurred or assumed for the
purpose of financing all or any part of the cost of acquiring such asset,
provided that such Lien attaches to such asset concurrently with or within 90
days after the acquisition thereof;
31
(d any Lien on any asset of any corporation existing at the time such
corporation is merged into or consolidated with the Borrower or a
Consolidated Subsidiary and not created in contemplation of such event;
(e any Lien existing on any asset prior to the acquisition thereof by
the Borrower or a Consolidated Subsidiary and not created in contemplation of
such acquisition;
(f any Lien arising out of the refinancing, extension, renewal or
rebinding of any Debt secured by any Lien permitted by any of the foregoing
clauses of this Section, provided that such Debt is not increased and is not
secured by any additional assets;
(g any Lien arising pursuant to any order of attachment, distraint or
similar legal process arising in connection with court proceedings so long as
the execution or other enforcement thereof is effectively stayed and the
claims secured thereby are being contested in good faith by appropriate
proceedings;
(h any Lien on trade receivables arising out of a Sale of Receivables;
and
(i Liens not otherwise permitted by the foregoing clauses of this
Section securing Debt in an aggregate principal amount at any time
outstanding not exceeding 12.5% of Consolidated Shareholders' Equity.
SECTION 5.6. CONSOLIDATIONS, MERGERS AND SALES OF ASSETS. The Borrower
will not 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:
(a the Person surviving the merger or consolidation is the Borrower;
and
(b immediately after giving effect to any such action, no Default
shall have occurred and be continuing.
SECTION 5.7. SUBSIDIARY DEBT. The Borrower will not at any time permit
the aggregate amount of all outstanding Debt of its Subsidiaries, excluding:
(a obligations assumed in connection with acquisitions;
32
(b Debt incurred in respect of any Sale of Receivables; and
(c Debt in the aggregate principal amount of $50,000,000 outstanding
on the date of this Agreement under certain privately placed debt securities;
to exceed 15% of Consolidated Shareholders' Equity.
SECTION 5.8. USE OF PROCEEDS. The proceeds of the Loans made under
this Agreement will be used by the Borrower to finance the acquisition of
Essef and otherwise for general corporate purposes. 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" within
the meaning of Regulation U of the Board of Governors of the Federal Reserve
System.
SECTION 5.9. ENVIRONMENTAL LAWS. The Borrower will, and will 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 Borrower and its Subsidiaries taken as a whole.
SECTION 5.10. SALES OF RECEIVABLES. The Borrower will not, and will
not permit any Subsidiary to, engage in any Sale of Receivables if the
outstanding principal amount of loans secured in connection with all Sales of
Receivables plus (without duplication) the outstanding investment in all
receivables sold pursuant to Sales of Receivables would at any time exceed
$150,000,000.
SECTION 5.11. BUSINESS ACQUISITIONS. Other than the Essef Acquisition,
the Borrower will not, and will not permit any of its Subsidiaries to,
consummate any Material Business Acquisition without the prior written
consent of the Required Banks.
SECTION 5.12. MOST FAVORED LENDER. The Borrower will not and will not
permit any Subsidiary to (a) enter into any indenture, agreement or other
instrument under which any Debt of $100,000,000 or more for any such
indenture, agreement or instrument (or series of related agreements or
instruments) of the Borrower or of any Subsidiary may be issued (a
"RESTRICTED AGREEMENT"), or (b) agree to any amendment, waiver, consent,
modification, refunding, refinancing or replacement of any Restricted
Agreement, in either case, with terms the effect of which is to (i) include a
Covenant which imposes a restriction, limitation or obligation in favor of
another lender not imposed in favor of the Banks by this Agreement, or (ii)
revise or alter any Covenant contained therein the effect of which is to
impose a restriction, limitation or obligation in favor of another lender not
imposed in favor of the Banks by this Agreement,
33
unless the Borrower or such Subsidiary, as the case may be, concurrently (x)
notifies the Banks and the Administrative Agent thereof and (y) incorporates
herein such additional, altered or revised Covenant. If the Administrative
Agent at the time so elects by notice to the Borrower and the Banks, the
incorporation of each such additional Covenant shall be deemed to occur
automatically without any further action or the execution of any additional
document by any of the parties to this Agreement. If the Administrative
Agent does not elect to effect such an automatic incorporation, the
Administrative Agent shall promptly tender to the Borrower for execution by
it an amendment (executed by the Administrative Agent) incorporating such
additional Covenant and shall promptly deliver a copy of such amendment to
the Banks.
ARTICLE 6
DEFAULTS
SECTION 6.1. EVENTS OF DEFAULT. If one or more of the following events
("EVENTS OF DEFAULT") shall have occurred and be continuing:
(a) the Borrower shall fail to pay when due any principal of any Loan;
or the Borrower 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) the Borrower shall fail to observe or perform any covenant
contained in Sections 3.02(d) and 5.02 to 5.09, inclusive;
(c) the Borrower shall fail to observe or perform any other covenant or
agreement contained in this Agreement for 30 days after written notice
thereof has been given to the Borrower by the Administrative Agent at the
request of any Bank;
(d) any representation, warranty, certification or statement made by
the Borrower 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) any event or condition shall occur which results in the
acceleration of the maturity of any Debt (other than the Notes) of the
Borrower or any of its Subsidiaries equal to or exceeding $20,000,000 in the
aggregate for all such Debt or enables (or, with the giving of notice or
lapse of time or both, would enable)
34
the holder of any such Debt or any Person acting on such holder's behalf to
accelerate the maturity thereof or the Borrower or any its Subsidiaries shall
fail to pay when due (subject to any applicable grace period) Debt which in
the aggregate exceeds such amount; provided however that at any time the
Borrower has Debt outstanding, obtained through one or more public or private
placements thereof to institutional investors, with a principal amount of
$25,000,000 or more outstanding, which has a threshold for cross-default
similar to this subparagraph 6.01(e) lower than $20,000,000, the threshold
for the purposes of this subparagraph 6.01 (e) shall be the lowest threshold
amount under any such financing;
(f) the Borrower or any of its Material Subsidiaries 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 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 Borrower or any of its Material Subsidiaries 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
Borrower or any of its Material Subsidiaries under the federal bankruptcy
laws or similar bankruptcy or insolvency laws of any other applicable
jurisdiction as now or hereafter in effect;
(h) the Borrower or any member of the Controlled Group shall fail to
pay when due an amount or amounts aggregating in excess of $10,000,000 which
it shall have become liable to pay to the PBGC or to a Plan under Title IV of
ERISA or Pentair or any member of the Controlled Group shall file a distress
termination notice with the PBGC and the amount of the Unfunded Vested
Liabilities under that filing exceeds $5,000,000; or the PBGC shall institute
proceedings under Title IV of ERISA to terminate or to cause a trustee to be
appointed to administer any such Plan or Plans or a proceeding shall be
instituted
35
by a fiduciary of any such Plan or Plans to enforce Section 515 of ERISA and
such proceeding shall not have been dismissed within 30 days thereafter; or a
condition shall exist by reason of which the PBGC would be entitled to obtain
a decree adjudicating that any such Plan or Plans must be terminated;
(i) a judgment or order for the payment of money in excess of an amount
of $10,000,000 shall be rendered against the Borrower or any of its
Subsidiaries 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 50% or more of the outstanding shares of voting stock of the Borrower; or
(k) within a period of twelve consecutive months, three-fourths of the
directors of the board of directors of the Borrower shall have changed;
then, and in every such event,
(1) in the case of any of the Events of Default specified in paragraphs
(a) through (e), or (h) through (k) above, the Administrative Agent shall (i)
if requested by Banks having 50% or more in aggregate amount of the
Commitments, by notice to the Borrower (with a copy to all Banks), terminate
the Commitments and they shall thereupon terminate, and/or (ii) if requested
by Banks holding Notes evidencing 50% or more in aggregate principal amount
of the Loans, by notice to the Borrower (with a copy to all Banks) declare
the Notes (together with accrued interest thereon) to be, and the Notes shall
thereupon become, immediately due and payable without presentment, demand,
protest or other notice of any kind, all of which are hereby waived by the
Borrower; and
(2) in the case of any of the Events of Default specified in paragraph
(f) or (g) above, without any notice to the Borrower or any other act by the
Administrative Agent or the Banks, the Commitments shall thereupon terminate
and the Notes (together with accrued interest thereon) shall become
immediately due and payable without presentment, demand, protest or other
notice of any kind, all of which are hereby waived by the Borrower.
SECTION 6.2. NOTICE OF DEFAULT. The Administrative Agent shall give
notice to the Borrower under Section 6.01(c) promptly upon being requested to
do so by any Bank and shall thereupon notify all the Banks thereof.
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ARTICLE 7
THE ADMINISTRATIVE AGENT
SECTION 7.1. APPOINTMENT AND AUTHORIZATION. Each Bank irrevocably
appoints and authorizes the Administrative Agent to take such action as
Administrative Agent on its behalf and to exercise such powers under this
Agreement and the Notes as are delegated to the Administrative Agent by the
terms hereof or thereof, together with all such powers as are reasonably
incidental thereto.
SECTION 7.2. ADMINISTRATIVE AGENT AND AFFILIATES. Xxxxxx shall have
the same rights and powers under this Agreement as any other Bank and may
exercise or refrain from exercising the same as though it were not the
Administrative Agent, and Xxxxxx and its affiliates may accept deposits from,
lend money to, and generally engage in any kind of business with the Borrower
or any Subsidiary or Affiliate of the Borrower as if it were not the
Administrative Agent hereunder.
SECTION 7.3. ACTION BY ADMINISTRATIVE AGENT. The obligations of the
Administrative Agent hereunder are only those expressly set forth herein.
Without limiting the generality of the foregoing, the Administrative Agent
shall not be required to take any action with respect to any Default, except
as expressly provided in Article 6.
SECTION 7.4. CONSULTATION WITH EXPERTS. The Administrative Agent may
consult with legal counsel (who may be counsel for the Borrower), independent
public accountants and other experts selected by it and shall not be liable
for any action taken or omitted to be taken by it in good faith in accordance
with the advice of such counsel, accountants or experts.
SECTION 7.5. LIABILITY OF ADMINISTRATIVE AGENT. Neither the
Administrative Agent nor any of its affiliates nor any of the directors,
officers, agents or employees of the foregoing shall be liable for any action
taken or not taken by it or them in connection herewith (i) with the consent
or at the request of the Required Banks or (ii) in the absence of its or
their own gross negligence or willful misconduct. Neither the Administrative
Agent nor any of its affiliates nor any of the directors, officers, agents or
employees of the foregoing shall be responsible for or have any duty to
ascertain, inquire into or verify (i) any statement, warranty or
representation made in connection with this Agreement or any borrowing
hereunder; (ii) the performance or observance of any of the covenants or
agreements of the Borrower; (iii) the satisfaction of any condition
37
specified in Article 3, except receipt of items required to be delivered to
the Administrative Agent; or (iv) the validity, effectiveness or genuineness
of this Agreement, the Notes or any other instrument or writing furnished in
connection herewith. The Administrative Agent shall not incur any liability
by acting in reliance upon any notice, consent, certificate, statement, or
other writing (which may be a bank wire, telex or similar writing) believed
by it to be genuine or to be signed by the proper party or parties.
SECTION 7.6. INDEMNIFICATION. Each Bank shall, ratably in accordance
with its Commitment, indemnify the Administrative Agent, its affiliates and
their respective directors, officers, agents and employees (to the extent not
reimbursed by the Borrower) against any cost, expense (including counsel fees
and disbursements), claim, demand, action, loss or liability (except such as
result from such indemnitees' gross negligence or willful misconduct) that
such indemnitees may suffer or incur in connection with this Agreement or any
action taken or omitted by such indemnitees hereunder.
SECTION 7.7. CREDIT DECISION. Each Bank acknowledges that it has,
independently and without reliance upon the Administrative Agent or any other
Bank, and based on such documents and information as it has deemed
appropriate, made its own credit analysis and decision to enter into this
Agreement. Each Bank also acknowledges that it will, independently and
without reliance upon the Administrative Agent or any other Bank, and based
on such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking any action
under this Agreement.
SECTION 7.8. SUCCESSOR ADMINISTRATIVE AGENT. The Administrative Agent
may resign at any time by giving notice thereof to the Banks and the
Borrower. Upon any such resignation, the Required Banks shall have the right
to appoint a successor Administrative Agent, subject to the approval of the
Borrower. If no successor Administrative Agent shall have been so appointed
by the Required Banks, with the approval of the Borrower, and shall have
accepted such appointment, within 30 days after the retiring Administrative
Agent gives notice of resignation, then the retiring Administrative Agent
may, on behalf of the Banks, appoint a successor Administrative Agent, which
shall be a Bank, if any Bank is willing to accept such appointment, and in
any event shall be a commercial bank organized or licensed under the laws of
the United States of America or of any State thereof and having a combined
capital and surplus of at least $50,000,000. Upon the acceptance of its
appointment as Administrative Agent hereunder by a successor Administrative
Agent, such successor Administrative Agent shall thereupon succeed to and
become vested with all the rights and duties of the retiring
38
Administrative Agent, and the retiring Administrative Agent shall be
discharged from its duties and obligations hereunder. After any retiring
Administrative Agent's resignation hereunder as Administrative Agent, the
provisions of this Article shall inure to its benefit as to any actions taken
or omitted to be taken by it while it was Administrative Agent.
ARTICLE 8
CHANGE IN CIRCUMSTANCES
SECTION 8.1. BASIS FOR DETERMINING INTEREST RATE INADEQUATE OR UNFAIR .
If on or prior to the first day of any Interest Period for any CD Loans,
Euro-Dollar Loans or Money Market LIBOR Loan:
(a) the Administrative Agent is advised by the Reference Banks
that deposits in dollars (in the applicable amounts) are not being
offered to the Reference Banks in the relevant market for such Interest
Period, or
(b) in the case of CD Loans or Euro-Dollar Loans, Banks having 50%
or more of the aggregate amount of the Commitments advise the
Administrative Agent that the Adjusted CD Rate or the London Interbank
Offered Rate, as the case may be, as determined by the Administrative
Agent will not adequately and fairly reflect the cost to such Banks of
funding their CD Loans or Euro-Dollar Loans, as the case may be, for
such Interest Period,
the Administrative Agent shall forthwith give notice thereof to the Borrower
and the Banks, whereupon until the Administrative Agent notifies the Borrower
that the circumstances giving rise to such suspension no longer exist, (i)
the obligations of the Banks to make CD Loans or Euro-Dollar Loans, as the
case may be, or to continue or convert outstanding Loans as or into CD Loans
or Euro-Dollar Loans, as the case may be, shall be suspended and (ii) each
outstanding CD Loan or Euro-Dollar Loan, as the case may be, shall be
converted into a Base Rate Loan on the last day of the then current Interest
Period applicable thereto. Unless the Borrower notifies Xxxxxx at least two
Domestic Business Days before the date of any Fixed Rate Borrowing for which
a Notice of Borrowing has previously been given that it elects not to borrow
on such date, such Borrowing shall instead be made as a Base Rate Borrowing.
SECTION 8.2. ILLEGALITY. If, on or after the date of this Agreement,
the adoption of any applicable law, rule or regulation, or any change in any
applicable
39
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 Bank (or its Euro-Dollar Lending Office) with any
request or directive (whether or not having the force of law) of any such
authority, central bank or comparable agency shall make it unlawful or
impossible for any Bank (or its Euro-Dollar Lending Office) to make, maintain
or fund its Euro-Dollar Loans and such Bank shall so notify the
Administrative Agent, the Administrative Agent shall forthwith give notice
thereof to the other Banks and the Borrower, whereupon until such Bank
notifies the Borrower and the Administrative Agent that the circumstances
giving rise to such suspension no longer exist, the obligation of such Bank
to make Euro-Dollar Loans or to convert outstanding Loans into Euro-Dollar
Loans or continue outstanding Loans as Euro-Dollar Loans, shall be suspended.
Before giving any notice to the Administrative Agent pursuant to this
Section 8.02, such Bank shall designate a different Euro-Dollar Lending
Office if such designation will avoid the need for giving such notice and
will not, in the judgment of such Bank, be otherwise disadvantageous to such
Bank. If such notice is given, each Euro-Dollar Loan of such Bank then
outstanding shall be converted to a Base Rate Loan either (i) on the last day
of the then current Interest Period applicable to such Euro-Dollar Loan if
such Bank may lawfully continue to maintain and fund such Loan as a
Euro-Dollar Loan to such day or (ii) immediately if such Bank shall determine
that it may not lawfully continue to maintain and fund such Loan as a
Euro-Dollar Loan to such day. Interest and principal on any such Base Rate
Loan shall be payable on the same dates as, and on a pro rata basis with, the
interest and principal payable on the related Euro-Dollar Loans of the other
Banks.
SECTION 8.3. INCREASED COST AND REDUCED RETURN. (a) If, on or after
the date of this Agreement, the adoption of any applicable law, rule or
regulation, or any change in any 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 Bank (or its Applicable
Lending Office) with any request or directive (whether or not having the
force of law) of any such authority, central bank or comparable agency
charged with the interpretation or administration thereof, or compliance by
any Bank (or its Applicable Lending Office) with any request or directive
(whether or not having the force of law) of any such authority, central bank
or comparable agency shall impose, modify or deem applicable any reserve
(including, without limitation, any such requirement imposed by the Board of
Governors of the Federal Reserve System, but excluding (i) with respect to
any CD Loan any such requirement included in an applicable Domestic Reserve
Percentage and (ii) with respect to any Euro-Dollar Loan any
40
such requirement with respect to which such Bank is entitled to compensation
during the relevant Interest Period under Section 2.13), special deposit,
insurance assessment (excluding, with respect to any CD Loan, any such
requirement reflected in an applicable Assessment Rate) or similar
requirement against assets of, deposits with or for the account of, or credit
extended by, any Bank (or its Applicable Lending Office) or shall impose on
any Bank (or its Applicable Lending Office) or on the United States market
for certificates of deposit or the London interbank market any other
condition affecting its Fixed Rate Loans, its Note or its obligation to make
Fixed Rate Loans and the result of any of the foregoing is to increase the
cost to such Bank (or its Applicable Lending Office) of making or maintaining
any Fixed Rate Loan, or to reduce the amount of any sum received or
receivable by such Bank (or its Applicabe Lending Office) under this
Agreement or under its Note with respect thereto, by an amount deemed by such
Bank to be material, then, within 15 days after demand by such Bank (with a
copy to the Administrative Agent), the Borrower shall pay to such Bank such
additional amount or amounts as will compensate such Bank for such increased
cost or reduction.
(b) If any Bank shall have determined that, after the date hereof, the
adoption of any applicable law, rule or regulation regarding capital
adequacy, or any change in any such 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 any request or directive regarding capital
adequacy (whether or not having the force of law) of any such authority,
central bank or comparable agency, has or would have the effect of reducing
the rate of return on capital of such Bank (or its Parent) as a consequence
of this Agreement to a level below that which such Bank (or its Parent) could
have achieved but for such adoption, change, request or directive (taking
into consideration its policies with respect to capital adequacy) by an
amount deemed by such Bank to be material, then from time to time, within 15
days after demand by such Bank (with a copy to the Administrative Agent), the
Borrower shall pay to such Bank such additional amount or amounts as will
compensate such Bank (or its Parent) for such reduction.
(c) Each Bank will promptly notify the Borrower and the Administrative
Agent of any event of which it has knowledge, occurring after the date
hereof, which will entitle such Bank to compensation pursuant to this Section
and will designate a different Applicable Lending Office if such designation
will avoid the need for, or reduce the amount of, such compensation and will
not, in the judgment of such Bank, be otherwise disadvantageous to such Bank.
A certificate of any Bank claiming compensation under this Section, setting
forth the additional amount or amounts to be paid to it hereunder and the
basis of calculation thereof,
41
shall be conclusive in the absence of manifest error. In determining such
amount, such Bank may use any reasonable averaging and attribution methods.
SECTION 8.4. TAXES. (a) Any and all payments by the Borrower to or for
the account of any Bank or the Administrative Agent hereunder or under any
Note shall be made free and clear of and without deduction for any and all
present or future taxes, duties, levies, imposts, deductions, charges and
withholdings, and all liabilities with respect thereto, EXCLUDING, in the
case of each Bank and the Administrative Agent, taxes imposed on its income,
and franchise taxes imposed on it, by the jurisdiction under the laws of
which such Bank or the Administrative Agent (as the case may be) is organized
or any political subdivision thereof and, in the case of each Bank, taxes
imposed on its income, and franchise or similar taxes imposed on it, by the
jurisdiction of such Bank's Applicable Lending Office or any political
subdivision thereof (all such non-excluded taxes, duties, levies, imposts,
deductions, charges, withholdings and liabilities being hereinafter referred
to as "TAXES"). If the Borrower shall be required by law to deduct any Taxes
from or in respect of any sum payable hereunder or under any Note to any Bank
or the Administrative Agent, (i) the sum payable shall be increased as
necessary so that after making all required deductions (including deductions
applicable to additional sums payable under this Section 8.04) such Bank or
the Administrative Agent (as the case may be) receives an amount equal to the
sum it would have received had no such deductions been made, (ii) the
Borrower shall make such deductions, (iii) the Borrower shall pay the full
amount deducted to the relevant taxation authority or other authority in
accordance with applicable law and (iv) the Borrower shall furnish to the
Administrative Agent, at its address referred to in Section 9.01, the
original or a certified copy of a receipt evidencing payment thereof.
(b) In addition, the Borrower agrees to pay any present or future stamp
or documentary taxes and any other excise or property taxes, or charges or
similar levies which arise from any payment made hereunder or under any Note
or from the execution or delivery of, or otherwise with respect to, this
Agreement or any Note (hereinafter referred to as "OTHER TAXES").
(c) The Borrower agrees to indemnify each Bank and the Administrative
Agent for the full amount of Taxes and Other Taxes (including, without
limitation, any Taxes and Other Taxes imposed or asserted by any jurisdiction
on amounts payable under this Section 8.04) paid by such Bank or the
Administrative Agent (as the case may be) and any liability (including
penalties, interest and expenses) arising therefrom or with respect thereto.
This indemnification shall be made within 15 days from the date such Bank or
the Administrative Agent (as the case may be) makes demand therefor.
42
(d) Each Bank organized under the laws of a jurisdiction outside the
United States, on or prior to the date on which it becomes a Bank, and from
time to time thereafter if requested in writing by the Borrower (but only so
long as such Bank remains lawfully able to do so), shall provide the Borrower
with Internal Revenue Service form 1001 or 4224, as appropriate, or any
successor form prescribed by the Internal Revenue Service, certifying that
such Bank 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. If the form provided by a Bank at the time
such Bank first becomes a party to this Agreement indicates a United States
interest withholding tax rate in excess of zero, withholding tax at such rate
shall be considered excluded from "TAXES" as defined in Section 8.04(a).
(e) For any period with respect to which a Bank has failed to provide
the Borrower with the form required pursuant to Section 8.04(d), if any
(unless such failure is due to a change in treaty, law or regulation
occurring subsequent to the date on which a form originally was required to
be provided), such Bank shall not be entitled to indemnification under
Section 8.04(a) with respect to Taxes imposed by the United States; PROVIDED,
HOWEVER, that should a Bank, which is otherwise exempt from or subject to a
reduced rate of withholding tax, become subject to Taxes because of its
failure to deliver a form required hereunder, the Borrower shall take such
steps as such Bank shall reasonably request to assist such Bank to recover
such Taxes.
(f) If the Borrower is required to pay additional amounts to or for the
account of any Bank pursuant to this Section 8.04, then such Bank will change
the jurisdiction of its Applicable Lending Office so as to eliminate or
reduce any such additional payment which may thereafter accrue if such
change, in the judgment of such Bank, is not otherwise disadvantageous to
such Bank.
SECTION 8.5. BASE RATE LOANS SUBSTITUTED FOR AFFECTED FIXED RATE LOANS.
If (i) the obligation of any Bank to make, or to continue or convert
outstanding Loans as or to, Euro-Dollar Loans has been suspended pursuant to
Section 8.02 or (ii) any Bank has demanded compensation under Section 8.03 or
8.04 with respect to its CD Loans or Euro-Dollar Loans, and in any such case
the Borrower shall, by at least five Euro-Dollar Business Days' prior notice
to such Bank through the Administrative Agent, have elected that the
provisions of this Section shall apply to such Bank, then, unless and until
such Bank notifies the Borrower that the circumstances giving rise to such
suspension or demand for compensation no
43
longer exist, all Loans which would otherwise be made by such Bank as (or
continued as or converted to) CD Loans or Euro-Dollar Loans, as the case may
be, shall instead be Base Rate Loans on which interest and principal shall be
payable contemporaneously with the related CD Loans or Euro-Dollar Loans of
the other Banks. If such Bank notifies the Borrower that the circumstances
giving rise to such suspension or demand for compensation no longer exist,
the principal amount of each such Base Rate Loan shall be converted into a CD
Loan or Euro-Dollar Loan, as the case may be, on the first day of the next
succeeding Interest Period applicable to the related CD Loans or Euro-Dollar
Loans of the other Banks.
SECTION 8.6. SUBSTITUTION OF BANK. If (i) the obligation of any Bank
to make or maintain Euro-Dollar Loans has been suspended pursuant to Section
8.02 or (ii) any Bank has demanded compensation under Section 8.03 or 8.04,
the Borrower shall have the right, with the assistance of the Administrative
Agent, to seek a mutually satisfactory substitute bank or banks (which may be
one or more of the Banks) to purchase the Loans and assume the Commitment of
such Bank.
ARTICLE 9
MISCELLANEOUS
SECTION 9.1. NOTICES. All notices, requests and other communications
to any party hereunder shall be in writing (including bank wire, telex,
facsimile transmission or similar writing) and shall be given to such party:
(x) in the case of the Borrower, Xxxxxx or the Administrative Agent, at its
address or facsimile or telex number set forth on the signature pages hereof,
(y) in the case of any other Bank, at its address or facsimile or telex
number set forth in its Administrative Questionnaire or (z) in the case of
any party, such other address or facsimile or telex number as such party may
hereafter specify for the purpose by notice to the Administrative Agent and
the Borrower. Each such notice, request or other communication shall be
effective (i) if given by telex, when such telex is transmitted to the telex
number specified in this Section and the appropriate answerback is received,
(ii) if given by mail, 72 hours 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 Xxxxxx or the Administrative Agent under
Article 2 or Article 8 shall not be effective until received.
44
SECTION 9.2. NO WAIVERS. No failure or delay by the Administrative
Agent or any Bank in exercising any 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.
SECTION 9.3. EXPENSES; INDEMNIFICATION. (a) The Borrower shall pay (i)
all out-of-pocket expenses of the Administrative Agent, including fees and
disbursements of special counsel for the Administrative Agent, in connection
with the preparation and administration of this Agreement, any waiver or
consent hereunder or any amendment hereof or any Default or alleged Default
hereunder and (ii) if an Event of Default occurs, all out-of-pocket expenses
incurred by the Administrative Agent or any Bank, including fees and
disbursements of outside counsel (or, in lieu thereof, the allocated cost of
in-house counsel), in connection with such Event of Default and collection,
bankruptcy, insolvency and other enforcement proceedings resulting therefrom.
(b) The Borrower agrees to indemnify the Administrative Agent and each
Bank, their respective affiliates and the respective directors, officers,
agents and employees of the foregoing (each an "INDEMNITEE") and hold each
Indemnitee harmless from and against any and all liabilities, losses,
damages, costs and expenses of any kind, including, without limitation, the
reasonable fees and disbursements of counsel, which may be incurred by such
Indemnitee in connection with any investigative, administrative or judicial
proceeding (whether or not such Indemnitee shall be designated a party
thereto) brought or threatened relating to or arising out of this Agreement
or any actual or proposed use of proceeds of Loans hereunder; PROVIDED that
no Indemnitee shall have the right to be indemnified hereunder for such
Indemnitee's own gross negligence or willful misconduct.
SECTION 9.4. SHARING OF SET-OFFS. Each Bank agrees that if it shall,
by exercising any right of set-off or counterclaim or otherwise, receive
payment of a proportion of the aggregate amount of principal and interest due
with respect to the Loans held by it which is greater than the proportion
received by any other Bank in respect of the aggregate amount of principal
and interest due with respect to the Loans held by such other Bank, the Bank
receiving such proportionately greater payment shall purchase such
participations in the Loans held by the other Banks, and such other
adjustments shall be made, as may be required so that all such payments of
principal and interest with respect to the Loans held by the Banks shall be
shared by the Banks pro rata; PROVIDED that nothing in this Section shall
impair the right of any Bank to exercise any right of set-off or counterclaim
45
it may have and to apply the amount subject to such exercise to the payment
of indebtedness of the Borrower other than its indebtedness under this
Agreement. The Borrower agrees, to the fullest extent it may effectively do
so under applicable law, that any holder of a participation in a Loan,
whether or not acquired pursuant to the foregoing arrangements, may exercise
rights of set-off or counterclaim and other rights with respect to such
participation as fully as if such holder of a participation were a direct
creditor of the Borrower in the amount of such participation.
SECTION 9.5. AMENDMENTS AND WAIVERS. Any provision of this Agreement
or the Notes may be amended or waived if, but only if, such amendment or
waiver is in writing and is signed by the Borrower and the Required Banks
(and, if the rights or duties of the Administrative Agent are affected
thereby, by the Administrative Agent); PROVIDED that no such amendment or
waiver shall unless signed by all the Banks, (i) increase or decrease the
Commitment of any Bank (except for a ratable decrease in the Commitments of
all the Banks) or subject any Bank to any additional obligation, (ii) reduce
the principal of or rate of interest on any Loan or any fees hereunder, (iii)
postpone the date fixed for any payment of principal of or interest on any
Loan or any fees hereunder or for the termination of any Commitment or (iv)
change the percentage of the Commitments or of the aggregate unpaid principal
amount of the Loans, or the number of Banks, which shall be required for the
Banks or any of them to take any action under this Section or any other
provision of this Agreement.
SECTION 9.6. 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 Borrower
may not assign or otherwise transfer any of its rights under this Agreement
without the prior written consent of all Banks.
(b) Any Bank may at any time grant to one or more banks or other
institutions (each a "PARTICIPANT") participating interests in its Commitment
or in any or all of its Loans. In the event of any such grant by a Bank of a
participating interest to a Participant, whether or not upon notice to the
Borrower and the Administrative Agent, such Bank shall remain responsible for
the performance of its obligations hereunder, and the Borrower and the
Administrative Agent shall continue to deal solely and directly with such
Bank in connection with such Bank's rights and obligations under this
Agreement. Any agreement pursuant to which any Bank may grant such a
participating interest shall provide that such Bank shall retain the sole
right and responsibility to enforce the obligations of the Borrower hereunder
including, without limitation, the right to approve any amendment,
modification or waiver of any provision of this Agreement; PROVIDED
46
that such participation agreement may provide that such Bank will not agree
to any modification, amendment or waiver of this Agreement described in
clause (i), (ii) or (iii) of Section 9.05 without the consent of the
Participant. The Borrower agrees that each Participant shall, to the extent
provided in its participation agreement, be entitled to the benefits of
Section 2.13 and Article 8 with respect to its participating interest. An
assignment or other transfer which is not permitted by subsection (c) or (d)
below shall be given effect for purposes of this Agreement only to the extent
of a participating interest granted in accordance with this subsection (b).
(c) Any Bank may at any time assign to one or more banks or other
institutions (each an "ASSIGNEE") all, or a proportionate part (equivalent to
a Commitment of not less than $5,000,000) of all, of its rights and
obligations under this Agreement and the Notes (if any), and such Assignee
shall assume such rights and obligations, with (and subject to) the written
consent of the Borrower and the Administrative Agent (which consents shall
not be unreasonably withheld); PROVIDED that if an Assignee is a Bank or an
affiliate of such transferor Bank, no such consents shall be required. Upon
execution and delivery of an instrument of assignment in form satisfactory to
the Administrative Agent and payment by such Assignee to such transferor Bank
of an amount equal to the purchase price agreed between such transferor Bank
and such Assignee, such Assignee shall be a Bank party to this Agreement and
shall have all the rights and obligations of a Bank with a Commitment as set
forth in such instrument of assumption, and the transferor Bank shall be
released from its obligations hereunder to a corresponding extent, and no
further consent or action by any party shall be required. Upon the
consummation of any assignment pursuant to this subsection (c), the
transferor Bank, the Administrative Agent and the Borrower shall make
appropriate arrangements so that, if required, a new Note is issued to the
Assignee. In connection with any such assignment, the transferor Bank shall
pay to the Administrative Agent an administrative fee for processing such
assignment in the amount of $3,000. If the Assignee is not incorporated
under the laws of the United States of America or a state thereof, it shall
deliver to the Borrower and the Administrative Agent certification as to
exemption from deduction or withholding of any United States federal income
taxes in accordance with Section 8.04.
(d) Any Bank may at any time assign all or any portion of its rights
under this Agreement and its Note (if any) to a Federal Reserve Bank. No
such assignment shall release the transferor Bank from its obligations
hereunder.
(e) No Assignee, Participant or other transferee of any Bank's rights
shall be entitled to receive any greater payment under Section 8.03 or 8.04
than such Bank would have been entitled to receive with respect to the rights
47
transferred, unless such transfer is made with the Borrower's prior written
consent or by reason of the provisions of Section 8.02, 8.03 or 8.04
requiring such Bank to designate a different Applicable Lending Office under
certain circumstances.
SECTION 9.7. COLLATERAL. Each of the Banks represents to the
Administrative Agent and each of the other Banks that it in good faith is not
relying upon any "MARGIN STOCK" (as defined in Regulation U) as collateral in
the extension or maintenance of the credit provided for in this Agreement.
SECTION 9.8. GOVERNING LAW; SUBMISSION TO JURISDICTION. This Agreement
and each Note shall be governed by and construed in accordance with the laws
of the State of New York. The Borrower hereby submits to the nonexclusive
jurisdiction of the United States District Court for the Southern District of
New York and of any New York State court sitting in New York City for
purposes of all legal proceedings arising out of or relating to this
Agreement, the Notes or the transactions contemplated hereby. The Borrower
irrevocably waives, to the fullest extent permitted by law, any objection
which it may now or hereafter have to the laying of the venue of any such
proceeding brought in such a court and any claim that any such proceeding
brought in such a court has been brought in an inconvenient forum.
SECTION 9.9. COUNTERPARTS; INTEGRATION. This Agreement may be signed
in any number of counterparts, each of which shall be an original, with the
same effect as if the signatures thereto and hereto were upon the same
instrument. This Agreement and the Fee Letter constitute the entire agreement
and understanding among the parties hereto and supersedes any and all prior
agreements and understandings, oral or written, relating to the subject
matter hereof.
SECTION 9.10. WAIVER OF JURY TRIAL. EACH OF THE BORROWER, THE
ADMINISTRATIVE AGENT AND THE BANKS HEREBY IRREVOCABLY WAIVES ANY AND ALL
RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO
THIS AGREEMENT, THE NOTES OR THE TRANSACTIONS CONTEMPLATED HEREBY.
48
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:
Address: 0000 Xxxxxxx Xxxx-X0 Xxxx
Xxxxx 000
Xx. Xxxx, XX 00000-0000
Telecopy:
XXXXXX GUARANTY
TRUST COMPANY OF NEW YORK
as Bank and as Administrative Agent
By:___________________________________
Name:
Title:
Address: 00 Xxxx Xxxxxx
Xxx Xxxx, XX 00000-0000
Attention: Xxxxxx Xxxxxxxxx
Telex number: 000-000-0000
EXHIBIT A
NOTE
New York, New York
[Date]
For value received, Pentair, Inc. a Delaware corporation (the
"BORROWER"), promises to pay to the order of (the "BANK"),
for the account of its Applicable Lending Office, the unpaid principal amount
of each Loan made by the Bank to the Borrower pursuant to the Bridge Loan
Agreement referred to below on March 30, 2000. The Borrower promises to pay
interest on the unpaid principal amount of each such Loan on the dates and at
the rate or rates provided for in the Bridge Loan Agreement. All such
payments of principal and interest shall be made in lawful money of the
United States in Federal or other immediately available funds at the office
of Xxxxxx Guaranty Trust Company of New York, 00 Xxxx Xxxxxx, Xxx Xxxx, Xxx
Xxxx.
All Loans made by the Bank, the respective types thereof and all
repayments of the principal thereof shall be recorded by the Bank and, if the
Bank so elects in connection with any transfer or enforcement hereof,
appropriate notations to evidence the foregoing information with respect to
each such Loan then outstanding may be endorsed by the Bank on the schedule
attached hereto, or on a continuation of such schedule attached to and made a
part hereof; PROVIDED that the failure of the Bank to make any such
recordation or endorsement shall not affect the obligations of the Borrower
hereunder or under the Bridge Loan Agreement.
This note is one of the Notes referred to in the Bridge Loan Agreement
dated as of August 2, 1999 among the Borrower, the banks from time to time
parties thereto and Xxxxxx Guaranty Trust Company of New York, as
Administrative Agent (as the same may be amended from time to time, the
"BRIDGE LOAN AGREEMENT"). Terms defined in the Bridge Loan Agreement are
used herein with the same meanings. Reference is made to the Bridge Loan
Agreement for provisions for the prepayment hereof and the acceleration of
the maturity hereof.
PENTAIR, INC.
By:___________________________________
Name:
Title:
Note (cont'd)
LOANS AND PAYMENTS OF PRINCIPAL
DATE AMOUNT OF TYPE AMOUNT OF NOTATION
LOAN OF LOAN PRINCIPAL MADE BY
REPAID
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2
EXHIBIT B
OPINION OF
COUNSEL FOR THE BORROWER
[Dated the Effective Date]
To the Banks and the Administrative Agent
Referred to Below
c/x Xxxxxx Guaranty Trust Company
of New York, as Administrative Agent
00 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Dear Sirs:
I am the chief legal officer of Pentair, Inc. (the "BORROWER") and have
acted in that capacity in connection with the Bridge Loan Agreement (the
"BRIDGE LOAN AGREEMENT") dated as of August 2, 1999 among the Borrower, the
banks from time to time parties thereto and Xxxxxx Guaranty Trust Company of
New York, as Administrative Agent. Terms defined in the Bridge Loan
Agreement are used herein as therein defined.
I, or a member of my department who reports to me, have examined
originals or copies, certified or otherwise identified to my or their
satisfaction, of such documents, corporate records, certificates of public
officials and other instruments and have conducted such other investigations
of facts and law as I or they have deemed necessary or advisable for purposes
of this opinion.
Upon the basis of the foregoing, I am of the opinion that:
1. The Borrower 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.
2. The execution, delivery and performance by the Borrower of the
Bridge Loan Agreement and the Notes are within the Borrower's 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 of the Borrower or of any agreement, judgment,
injunction, order, decree or other instrument binding upon the Borrower or
result in the creation or imposition of any Lien on any asset of the Borrower
or any of its Subsidiaries.
3. The Bridge Loan Agreement constitutes a valid and binding agreement
of the Borrower and each Note when issued will constitute a valid and binding
obligation of the Borrower, in each case enforceable in accordance with its
terms, except as the same may be limited by bankruptcy, insolvency or similar
laws affecting creditors' rights generally and by general principles of
equity.
4. To the best of my knowledge, there is no action, suit or proceeding
pending or threatened against or affecting the Borrower or any of its
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 Borrower and
its Consolidated Subsidiaries, taken as a whole, or which in any manner
questions the validity of the Bridge Loan Agreement or the Notes.
5. Each of the Borrower's Material 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.
6 The governing law provisions as set forth in the Bridge Loan
Agreement will be given effect by the courts of the State of Minnesota.
I am admitted to practice law in the State of Minnesota. My opinions
expressed above are limited to the law of the State of Minnesota and the
federal law of the United States of America. I call to your attention to the
fact that the Bridge Loan Agreement states that it is governed by New York
law. My opinion in paragraph 3 above is based upon the assumption, for
purposes of this opinion, that the internal law of the State of New York is
the same as the internal law of the State of Minnesota. I disclaim any
opinion as to any statute, rule, regulation, ordinance, order or other
promulgation of any regional or local governmental body.
The foregoing opinions are rendered as of the date hereof solely to you
in connection with the above matter. The foregoing opinions may not be
relied upon by you for any other purpose or relied upon by any other person,
without our prior written consent.
Very truly yours,
EXHIBIT C
OPINION OF
XXXXX XXXX & XXXXXXXX, SPECIAL COUNSEL
FOR THE ADMINISTRATIVE AGENT
[Dated the Effective Date]
To the Banks and the Administrative Agent
Referred to Below
c/x Xxxxxx Guaranty Trust Company
of New York, as Administrative Agent
00 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Dear Sirs:
We have participated in the preparation of the Bridge Loan Agreement
(the "BRIDGE LOAN AGREEMENT") dated as of August 2, 1999 among Pentair, Inc.,
a Minnesota corporation (the "BORROWER"), the banks from time to time parties
thereto (the "BANKS") and Xxxxxx Guaranty Trust Company of New York, as
Administrative Agent (the "ADMINISTRATIVE AGENT"), and have acted as special
counsel for the Administrative Agent for the purpose of rendering this
opinion pursuant to Section 3.01(c) of the Credit Agreement. Terms defined
in the Credit Agreement are used herein as therein defined.
We have examined originals or copies, certified or otherwise identified
to our satisfaction, of such documents, corporate records, certificates of
public officials and other instruments and have conducted such other
investigations of fact and law as we have deemed necessary or advisable for
purposes of this opinion.
Upon the basis of the foregoing, we are of the opinion that the Bridge
Loan Agreement constitutes a valid and binding agreement of the Borrower and
each Note when issued will constitute a valid and binding obligation of the
Borrower, in each case enforceable in accordance with its terms, except as
the same may be limited by bankruptcy, insolvency or similar laws affecting
creditors' rights generally and by general principles of equity.
We are members of the Bar of the State of New York and the foregoing
opinion is limited to the laws of the State of New York and the federal laws
of the United States of America. In giving the foregoing opinion, (i) we
express no opinion as to the effect (if any) of any law of any jurisdiction
(except the State of New York) in which any Bank is located which limits the
rate of interest that such Bank may charge or collect and (ii) we have
assumed that the execution,
delivery and performance by the Borrower of the Credit Agreement and the
Notes are within the Borrower's corporate powers and have been duly
authorized by all necessary corporate action.
This opinion is rendered solely to you in connection with the above
matter. This opinion may not be relied upon by you for any other purpose or
relied upon by any other person without our prior written consent.
Very truly yours,
