Exhibit 10.26
TERM LOAN AGREEMENT
dated as of August 8, 2002
by and between
PENTAIR, INC.
and
CREDIT LYONNAIS NEW YORK BRANCH
TERM LOAN AGREEMENT
PENTAIR, INC., a Minnesota corporation (the "Borrower") and CREDIT
LYONNAIS NEW YORK BRANCH, a branch, duly licensed under the laws of the State of
New York, of Credit Lyonnais, a banking corporation organized and existing under
the laws of the Republic of France (the "Bank"), agree as follows:
WHEREAS, the Bank is willing to make available a committed term loan of
up to US$20,000,000 to the Borrower subject to the terms and conditions set
forth herein;
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
Definitions and Terms
1.01 Definitions. For the purposes of this Agreement, in addition to
the definitions set forth above, the following terms shall have the respective
meanings set forth below:
Acquisition means any transaction or series of related transactions for
the purpose of or resulting, directly or indirectly, in (a) the acquisition of
all or substantially all of the assets of a Person, or of all or substantially
all of any business or division of a Person, (b) the acquisition of in excess of
50% of the capital stock, partnership interests, membership interests or equity
of any Person, or otherwise causing any Person to become a Subsidiary, or (c) a
merger or consolidation or any other combination with another Person (other than
a Person that is a Subsidiary) provided that the Borrower or the Subsidiary is
the surviving entity.
Adjusted Eurorate" means with respect to each day during each Interest
Period to which the Eurorate applies, a rate per annum determined for such day
by dividing the Eurorate by the difference between (a) 1.00 and (b) the Reserve
Requirement (rounded upwards, if necessary, to the nearest 1/100 of 1%).
"Eurorate" shall mean the rate per annum determined by the Bank as (i) the rate
which appears on Telerate 3750 or the other appropriate Telerate Page (or any
successor page) as the London interbank offered rate for deposits in U.S.
dollars at approximately 11:00 A.M. (London, England time) two Business Days
prior to the first day of such Interest Period for a term comparable to such
Interest Period; or (ii) if for any reason the rate described in clause (i) is
not available, the rate per annum which appears on the Reuters Screen LIBO Page
as the London interbank offered rate for deposits in U.S. dollars at
approximately 11:00 A.M. (London, England time) two Business Days prior to the
first day of such Interest Period for a term comparable to such Interest Period;
provided, that if more than one applicable rate is specified on the Reuters
Screen LIBO Page, the rate shall be the arithmetic mean of all such rates
(carried to five decimal places).
Advance - see Section 2.01.
Affiliate means, as to any Person, any other Person which, directly or
indirectly, is in control of, is controlled by, or is under common control with
such Person. A Person shall be deemed to control another Person if the
controlling Person possesses, directly or indirectly, the power to direct or
cause the direction of the management and policies of such other Person, whether
through the ownership of voting securities or membership interests, by contract
or otherwise.
Applicable Lending Office means the office or offices of the Bank (or
of an Affiliate of the Bank) which shall be making or maintaining the Advance
hereunder as specified from time to time by the Bank to the Borrower.
Applicable Margin means a rate per annum determined in accordance with
Schedule 2.02.
Base Rate means the Federal Funds Rate plus 3% per annum.
Business Day means any day other than a Saturday or Sunday or a day on
which commercial banking institutions located in New York, New York are
authorized or required by law or other governmental action to close.
Closing Date means the date on which the Term Loan Credit Documents
have been executed by the parties hereto and on which the conditions set forth
in Section 5.01 have been satisfied.
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Code means the Internal Revenue Code of 1986, as amended, and any
regulations promulgated thereunder.
Consolidated Shareholders' Equity means, at any date, the consolidated
shareholders' equity of the Borrower and its Consolidated Subsidiaries.
Consolidated Subsidiary means, as of any date, any Subsidiary or other
entity the accounts of which would be consolidated with those of the Borrower in
its consolidated financial statements as of such date.
Conversion/Continuation Date means the date on which the Advance is
converted from one Type to the other or is continued at the Adjusted Eurorate
for a new Interest Period.
Credit Agreement Guaranty means the Guaranty dated May 1, 2001 issued
by certain Subsidiaries of the Borrower whereby such Subsidiaries guaranty all
of the obligations of the Borrower under the Credit Agreements.
Credit Agreements means the Long Term Credit Agreement dated as of
September 2, 1999 among the Borrower, Pentair UK Limited, Pentair Canada Inc.,
EuroPentair GMBH, various financial institutions and Bank of America, N.A., as
administrative agent, as amended, restated or otherwise modified from time to
time ("Long Term Credit Agreement") and the 364-Day Credit Agreement dated as of
September 2, 1999 among the Borrower, various financial institutions and Bank of
America, N.A., as administrative agent, as amended, restated or otherwise
modified from time to time ("364-Day Credit Agreement").
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 aggregate outstanding
investment or claim held by purchasers, assignees or transferees of (or of
interests in) receivables of such Person in connection with any Securitization
Transaction, (vii) all non-contingent reimbursement obligations of such Person
under letters of credit, and (viii) all Debt (as defined above) of others
Guaranteed by such Person.
EBITDA means, for any period, the sum of the consolidated net income of
the Borrower for such period excluding the effect of any extraordinary or
non-recurring gains and any extraordinary or non-recurring non-cash losses in
such period plus, to the extent deducted in determining such consolidated net
income, Interest Expense, income tax expense, depreciation and amortization for
such period, provided that the financial results of the Borrower's equipment
segment which was classified as a "discontinued operation" effective December
31, 2000, shall be excluded in calculating EBITDA, except to the extent that the
negative contribution to EBITDA for such equipment segment for the period
beginning January 1, 2001 and ending on any date of determination of EBITDA
would exceed $25,000,000.
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.
ERISA means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any successor statute and all rules and
regulations promulgated thereunder.
ERISA Affiliate, as applied to the Borrower, means any Person or trade
or business which is a member of a group which is under common control with the
Borrower, who, together with the Borrower, is treated as a single employer
within the meaning of Section 414(b) or (c) of the Code or, for purposes of
Section 412 of the Code, Section 414(m) or (o) of the Code.
Event of Default means any event described in Section 8.01.
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FRB means the Board of Governors of the Federal Reserve System (or any
successor).
Federal Funds Rate means, for any day, the rate per annum equal to the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers on such
day, as published by the Federal Reserve Bank of New York on the Business Day
next succeeding such day; provided that (a) if such day is not a Business Day,
the Federal Funds Rate for such day shall be such rate on such transactions on
the next preceding Business Day as so published on the next succeeding Business
Day, and (b) if no such rate is so published on such next succeeding Business
Day, the Federal Funds Rate for such day shall be the average rate charged to
the Bank on such day on such transactions as determined by the Bank.
Foreign Subsidiary means any Subsidiary (i) organized under the laws of
a jurisdiction other than the United States or a state thereof, and (ii) which
conducts substantially all of its business and operations in a jurisdiction
other than the United States.
Funding Date means August 12, 2002 or such later date on which the
Advance is made by the Bank to the Borrower.
GAAP means generally accepted accounting principles set forth in
pronouncements of the Financial Accounting Standards Board, the Accounting
Principles Board or the American Institute of Certified Public Accountants or
which have other substantial authoritative support and are applicable in the
circumstances as of the date of a report, as such principles are from time to
time supplemented and amended.
Governmental Authority means any federal, state, municipal, national or
other governmental department, commission, board, bureau, court, agency or
instrumentality or political subdivision thereof or any entity or officer
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to any government or any court, in each case whether
associated with a state of the United States, the United States, or a foreign
entity or government.
Guarantee by any Person means any obligation, contingent or otherwise,
of such Person directly or indirectly guaranteeing any Debt of any other Person
or in any manner providing for the payment of any Debt of any other Person or
otherwise protecting the holder of such Debt against loss (whether by agreement
to keep-well, to purchase assets, goods, securities, services, or to take-or-pay
or otherwise); provided that the term Guarantee shall not include endorsements
for collection or deposit in the ordinary course of business. The term
"Guarantee" used as a verb has a correlative meaning.
Indemnified Liabilities - see subsection 9.03(b).
Indemnified Person - see subsection 9.03(b).
Intercreditor Agreement means the Intercreditor Agreement dated as of
May 1, 1999, among Bank of America, N.A., as agent for various financial
institutions and certain other creditors of the Borrower (as amended, restated
or otherwise modified from time to time).
Interest Coverage Ratio means, for any period, the ratio of (i) EBITDA
plus rent expense for such period (excluding, for any calculation after the
divestiture or liquidation of Lincoln Industrial Corporation, Lincoln Automotive
Company or Century Mfg. Co. or a business unit of any of the foregoing, any
portion thereof attributable to the entity or assets divested or liquidated) to
(ii) Interest Expense plus rent expense of the Borrower and its Subsidiaries for
such period (excluding, for any calculation after the divestiture or liquidation
of Lincoln Industrial Corporation, Lincoln Automotive Company or Century Mfg.
Co. or a business unit of any of the foregoing, any portion thereof attributable
to the entity or assets divested or liquidated).
Interest Expense means the sum, without duplication, of consolidated
interest expense (including the interest component of capital leases, the
interest component of Synthetic Lease Obligations, facility, commitment and
usage fees, and fees for standby letters of credit) plus consolidated yield or
discount accrued on the aggregate outstanding investment or claim held by
purchasers, assignees or other transferees of (or of interests in) receivables
of the Borrower and its Subsidiaries in connection with any Securitization
Transaction (regardless of the accounting treatment of such Securitization
Transaction).
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Interest Payment Date means (a) with respect to the Base Rate, the last
Business Day of each calendar quarter; and (b) as to the Eurorate, the last day
of each Interest Period and, in the case of any Interest Period which exceeds
three months, the three-month anniversary of the first day of such Interest
Period.
Interest Period means a period commencing on the date the Advance is
made and each subsequent period commencing on the last day of the immediately
preceding Interest Period and ending, at the Borrower's option in accordance
with the terms hereof, on the date one, two, three or six months thereafter;
provided that:
(i) if an Interest Period would end on a day which is not a
Business Day, such Interest Period shall be extended to the next
Business Day (unless such extension would cause such Interest Period to
end in the succeeding calendar month, in which case such Interest
Period shall end on the next preceding Business Day); and
(ii) no Interest Period shall extend past the scheduled
Termination Date.
IRS means the Internal Revenue Service of the United States.
Leverage Ratio means, as of any date, the ratio of (a) the sum (without
duplication) of (i) all Debt of the Borrower and its Consolidated Subsidiaries
plus (ii) all Synthetic Lease Obligations of the Borrower and its Consolidated
Subsidiaries, all determined on a consolidated basis, to (b) EBITDA for the
period of four consecutive fiscal quarters most recently ended on or before such
date for which financial statements have been delivered pursuant to Section
7.01(a) or (b); provided that for purposes of calculating EBITDA pursuant to
this clause (b), the consolidated net income of any Person or business unit
acquired (or divested or liquidated, if the sales revenue generated by such
Person or business unit in the 12 months prior to such divestiture or
liquidation was $25,000,000 or more) by the Borrower or any Subsidiary during
such period (plus, to the extent deducted in determining such consolidated net
income, Interest Expense, income tax expense, depreciation and amortization of
such Person or business unit) shall be included (or, in the case of a
divestiture or liquidation, excluded) on a pro forma basis for such period
(assuming the consummation of each such acquisition and the incurrence or
assumption of any Debt in connection therewith (or the consummation of such
divestiture or liquidation) occurred on the first day of such period) in
accordance with Article 11 of Regulation S-X of the Securities and Exchange
Commission.
Lien means any interest in property securing any obligation owed to, or
a claim by, a Person other than the owner of the property, whether such interest
is based on the common law, statute or contract, and including but not limited
to the lien or security interest arising from a mortgage, encumbrance, pledge,
security agreement, conditional sale or trust receipt or a lease, consignment or
bailment for security purposes.
Material Adverse Effect means a material adverse effect on (i) the
business, assets, operations or condition (financial or otherwise) of the
Borrower and its Subsidiaries taken as a whole or (ii) the ability of the
Borrower to perform its obligations hereunder.
Material Financial Obligations means Debt or Synthetic Lease
Obligations of the Borrower or any Subsidiary in an aggregate amount (for all
applicable Debt and Synthetic Lease Obligations, but without duplication) equal
to or greater than the lesser of (i) $25,000,000 or (ii) at any time the
Borrower or any Subsidiary has Debt outstanding, obtained through one or more
public or private placements thereof to institutional investors, in a principal
amount of $25,000,000 or more outstanding, which has a threshold for
cross-default (similar to subsection 14.01(e)) lower than $25,000,000, the
lowest threshold amount under any such financing.
Material Subsidiary means each Subsidiary of the Borrower 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).
Moody's means ▇▇▇▇▇'▇ Investors Service, Inc.
Note means a promissory note issued by Borrower to Lender substantially
in the form of Exhibit A, with appropriate insertions, evidencing the Advance by
the Bank to such Borrower hereunder.
Notice of Conversion/Continuation means a notice substantially in the
form of Exhibit D of a continuation or conversion of the Advance pursuant to
subsection 2.02(b).
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Other Taxes means any present or future stamp, court or documentary
taxes or any other excise or property taxes, charges or similar levies which
arise from any payment made hereunder or from the execution, delivery,
performance, enforcement or registration of, or otherwise with respect to, the
Term Loan Credit Documents.
PBGC means the Pension Benefit Guaranty Corporation and any successor
thereto.
Permitted Acquisition means any Acquisition by the Borrower or a
Subsidiary which satisfies each of the following requirements: (i) no Event of
Default or Unmatured Event of Default has occurred and is continuing at the time
of, or will result from, such Acquisition; (ii) if the aggregate consideration
to be paid by the Borrower and its Subsidiaries in connection with such
Acquisition (including Debt assumed, but excluding capital stock of the
Borrower) exceeds US$10,000,000, the Borrower shall have delivered to the Bank a
certificate demonstrating that, after giving effect to such Acquisition, the
Borrower will be in pro forma compliance with Sections 7.02 and 7.03; and (iii)
in the case of the Acquisition of any Person, the Board of Directors (or
equivalent governing body) of the Person being acquired shall have approved such
Acquisition.
Person means an individual, limited liability company, partnership,
corporation, trust, unincorporated organization, association, joint venture or
other entity or a government or agency or political subdivision thereof.
Plan means at any time an employee pension benefit plan which is
covered by Title IV of ERISA or subject to the minimum funding standards under
Section 412 of the Code and is either (i) maintained by the Borrower or any
ERISA Affiliate for employees of the Borrower or such ERISA Affiliate or (ii)
maintained pursuant to a collective bargaining agreement or any other
arrangement under which more than one employer makes contributions and to which
the Borrower or any ERISA Affiliate is then making or accruing an obligation to
make contributions or has within the preceding five plan years made
contributions.
Requirement of Law means, as to any Person, any law (statutory or
common), treaty, rule or regulation or determination of an arbitrator or of a
Governmental Authority, in each case applicable to or binding upon the Person or
any of its property or to which the Person or any of its property is subject.
Reserve Requirement means, for any day for any Eurocurrency Loan to the
Borrower, the maximum reserve percentage (expressed as a decimal, rounded
upward, if necessary, to an integral multiple of 1/100th of 1%) in effect on
such day (whether or not applicable to any Lender) under regulations issued from
time to time by the FRB for determining the maximum reserve requirement
(including any emergency, special, supplemental or other marginal reserve
requirement) with respect to Eurocurrency funding (currently referred to as
"Eurocurrency liabilities" in Regulation D of the FRB).
Securitization Transaction means any sale, assignment or other transfer
by the Borrower or any Subsidiary of accounts receivable, lease receivables or
other payment obligations owing to the Borrower or such Subsidiary or any
interest in any of the foregoing (other than sales of defaulted receivables,
foreign receivables or similar items in the ordinary course of business
consistent with past practice), together in each case with any collections and
other proceeds thereof, any collection or deposit accounts related thereto, and
any collateral, guaranties or other property or claims in favor of the Borrower
or such Subsidiary supporting or securing payment by the obligor thereon of, or
otherwise related to, any such receivables.
S&P means Standard & Poor's Ratings Group, a division of ▇▇▇▇▇▇-▇▇▇▇
Companies, Inc.
Subsidiary means any Person in which more than 50% of its outstanding
voting stock or rights or more than 50% of all equity interest is owned directly
or indirectly by the Borrower.
Subsidiary Guarantor means, on any day, each Subsidiary that has
executed a counterpart of the Subsidiary Guaranty on or prior to that day (and
has not been released from its obligations thereunder in accordance with the
terms hereof).
Subsidiary Guaranty shall have the meaning set forth in the
Intercreditor Agreement.
Synthetic Lease Obligations means obligations under operating leases
(as determined pursuant to Statement of Financial Accounting Standards No. 13)
of properties which are reported for United States income tax purposes
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as owned by the Borrower or a Consolidated Subsidiary. The amount of Synthetic
Lease Obligations under any such lease shall be determined in accordance with
GAAP as if such operating lease were a capital lease.
Taxes means any and all present or future taxes, levies, assessments,
imposts, duties, deductions, fees, withholdings or similar charges, and all
liabilities with respect thereto, excluding, in the case of the Bank, taxes
imposed on or measured by its net income by the jurisdiction (or any political
subdivision thereof) under the laws of which the Bank is organized or maintains
a lending office.
Term Loan Credit Documents means this Agreement, the Note, the
Subsidiary Guaranty and any other documents or instruments contemplated under
this Agreement.
Term Loan Subsidiary Guaranty means a Guaranty issued by various
Subsidiaries of the Borrower which shall be substantially in the form of Exhibit
B hereto.
Termination Date means August 8, 2004 or such earlier date as the
Advance shall mature, whether by reason of acceleration or otherwise.
Termination Fee means a fee to be charged in the event any portion of
the Advance is repaid, determined as follows:
$75,000 if any portion of the Facility is repaid
within 12 months of the Closing Date
$50,000 if any portion of the Facility is repaid after
12 months but before 18 months after the
Closing Date
$25,000 if any portion of the Facility is repaid after
18 months of the Closing Date
Type of Loan or Borrowing refers to the interest rate basis for a loan
or borrowing. The "Types" of borrowings are Base Rate borrowings and Eurorate
borrowings.
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 Bank or any ERISA Affiliate to the PBGC
or such Plan under Title IV of ERISA.
Unmatured Event of Default means any event which if it continues
uncured will, with lapse of time or notice or both, constitute an Event of
Default.
1.02 Rules of Interpretation.
(a) All accounting terms not specifically defined herein shall have
the meanings assigned to such terms and shall be interpreted in accordance with
GAAP applied on a consistent basis; provided that if the Borrower notifies the
Bank that the Borrower desires to amend any covenant in Article VII (or any
related definition) to eliminate the effect of any change in GAAP on the
operation of such covenant (or such definition), or the Bank notifies the
Borrower it desires 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 GAAP as in effect
immediately before such change became effective, until either such notice is
withdrawn or such covenant (or such definition) is amended in a manner
satisfactory to the Borrower and the Bank.
(b) The headings, subheadings and table of contents herein are
solely for convenience of reference and shall not affect the meaning,
construction or effect of any provision hereof.
(c) Except as otherwise expressly provided, references herein to
articles, sections, paragraphs, clauses, annexes, exhibits and schedules are
references to articles, sections, paragraphs, clauses, annexes, exhibits and
schedules in or to this Agreement.
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(d) All definitions set forth herein shall apply to the singular as
well as the plural form of the applicable defined term, and all references to
the masculine gender shall include reference to the feminine or neuter gender,
and vice versa, as the context may require.
(e) References to "including" means including without limiting the
generality of any description preceding such term.
(f) All references to any agreement or document as amended, modified
or supplemented, or words of similar effect, shall mean such agreement or
document as amended, modified or supplemented from time to time.
ARTICLE II
Amount and Terms of Advance
2.01 The Advance. Subject to the terms and conditions of this
Agreement, the Bank agrees to make an Advance to the Borrower on the Funding
Date in an amount equal to $20,000,000. Not later than 11:00 A.M. (New York
time) on the date of the Advance and upon fulfillment of the conditions set
forth in Section 5.01, the Bank will make the Advance available to the Borrower.
Amounts borrowed hereunder and repaid or prepaid may not be reborrowed. The
indebtedness resulting from the Advance shall be evidenced by the Note.
2.02 Conversion and Continuation Elections for Advances
(a) The Borrower may, upon irrevocable written notice to the Bank in
accordance with subsection 2.02(b):
(i) elect, as of any Business Day, for Advances funded at the
Base Rate, or as of the last day of the applicable Interest
Period, for Advances funded at the Adjusted Eurorate, to convert
any such Advance into an Advance of the other Type; or
(ii) elect, as of the last day of the applicable Interest
Period for Advances funded at the Adjusted Eurorate, to continue
the Advance with a new Interest Period.
(b) The Borrower shall deliver a Notice of Conversion/Continuation to
be received by the Bank not later than (i) 11:00 A.M. (New York time) three
Business Days prior to the Conversion/Continuation Date, if the Advance is to be
continued at the Adjusted Eurorate for a new Interest Period or the Advance is
to be converted from the Base Rate to the Adjusted Eurorate; and (ii) 11:00 A.M.
(New York time) on the Conversion/Continuation Date, if the Advance is to be
converted from the Adjusted Eurorate to the Base Rate. Each such notice shall
specify:
(i) the proposed Conversion/Continuation Date;
(ii) the Type of rate resulting from the proposed conversion
or continuation;
(iii) the aggregate amount of the Advance so converted or
continued; and
(iv) other than in the case of conversions to the Base Rate,
the duration of the requested Interest Period.
(c) If upon the expiration of any Interest Period applicable to
Advances funded at the Adjusted Eurorate, the Borrower has failed to timely
select a new Interest Period to be applicable to such Advances, the Borrower
shall be deemed to have elected to convert such Advances from the Adjusted
Eurorate to the Base Rate effective as of the expiration date of such Interest
Period.
2.03 Interest. The Borrower shall pay interest on the unpaid principal
amount of the Advance from the Funding Date until such principal amount is paid
in full, at a rate per annum equal to the Adjusted Eurorate plus the Applicable
Margin or the Base Rate, as applicable; provided that, at any time (and for so
long as) an Event of Default exists, the interest rate applicable to the Advance
shall be increased by 2%.
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2.04 Repayment. The principal amount of the Advance shall be payable in
full on the Termination Date.
2.05 Prepayments. The Borrower may, upon at least five Business Days'
notice to the Bank stating the proposed date and principal amount of the
prepayment, and if such notice is given, the Borrower shall prepay the
outstanding principal amount of the Advance in whole or in part, together with
accrued interest to the date of such prepayment on the principal amount prepaid
and the Termination Fee applicable to such prepayment. Any prepayment shall
include accrued interest on the principal amount prepaid and, unless made on the
last day of an Interest Period therefor, shall be subject to the provisions of
Section 4.04.
ARTICLE III
General Credit Terms
3.01 Repayment. The Advance and all other obligations of the Borrowers
hereunder shall be due and payable in full on August 8, 2004 (or such earlier
date as shall be required pursuant hereto).
3.02 Payment of Interest. Interest on the Advance shall be paid in
arrears on each applicable Interest Payment Date. Interest shall also be paid on
the date of any prepayment of all or any portion of the Advance for the portion
of the Advance so prepaid. In addition, during the existence of any Event of
Default, interest on the Advance shall be paid on demand.
3.03 Payment of Termination Fee. The applicable Termination Fee shall
be paid on the date of any prepayment of the Advance.
3.04 Payments. (a) All payments by the Borrower hereunder shall be made
prior to noon (New York time) on the date due, and funds received after that
time shall be deemed received on the following Business Day. All payments shall
be made without deduction, setoff or counterclaim.
(b) If any payment hereunder falls due on a day which is not a Business
Day, then such due date shall be extended to the immediately following Business
Day (unless, such immediately following Business Day is the first Business Day
of a calendar month, in which case such due date shall be the immediately
preceding Business Day).
3.05 Note. The Advance hereunder shall be evidenced by a Note. The Bank
may endorse on the schedule annexed to the Note the date and amount of each
payment of principal made by the Borrower with respect thereto. The Bank is
irrevocably authorized by the Borrower to endorse the Note and the Bank's record
shall be rebuttable presumptive evidence of the amount of the Advance made by
the Bank to such Borrower; provided that the failure of the Bank to make, or an
error in making, a notation on the Note with respect to the Advance shall not
limit or otherwise affect the obligations of the Borrower hereunder or under the
Note.
3.06 Computation of Fees and Interest. All computations of interest for
Advances funded at the Adjusted Eurorate shall be made on the basis of a 360-day
year and actual days elapsed (which results in more interest and fees being paid
than if computed on the basis of a 365-day year). All computations of interest
for Advances funded at the Base Rate shall be made on the basis of 365 or 366
days, as the case may be, and actual days elapsed. Interest shall accrue during
each period during which interest is computed from the first day thereof to the
last day thereof.
ARTICLE IV
Change in Circumstances
4.01 Increased Cost and Reduced Return.
(a) If, after the date hereof, any change in, the adoption of any
new applicable law, rule or regulation, or any change in the interpretation or
administration thereof by any Governmental Authority, central bank or comparable
agency charged with the interpretation or administration thereof, or compliance
by the Bank (or
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its Applicable Lending Office) with any request or directive (whether or not
having the force of law) of any such Governmental Authority, central bank or
comparable agency:
(i) shall subject the Bank (or its Applicable Lending
Office) to any tax, duty or other charge with respect to the
Advance, the Note or its obligation to make the Advance, or shall
change the basis of taxation of any amount payable to the Bank
(or its Applicable Lending Office) under the Term Loan Credit
Documents in respect of the Advance (other than taxes imposed on
the overall net income of the Bank by the jurisdiction in which
the Bank has its principal office or such Applicable Lending
Office);
(ii) shall impose, modify, or deem applicable any
reserve, special deposit, assessment, compulsory advance, or
similar requirement (other than the Reserve Requirement utilized
in the determination of the Adjusted Eurorate or the Associated
Costs Rate) relating to any extensions of credit or other assets
of, or any deposits with or other liabilities or commitments of,
the Bank (or its Applicable Lending Office) hereunder; or
(iii) shall impose on the Bank (or its Applicable Lending
Office) or the applicable offshore interbank market any other
condition affecting the Term Loan Credit Documents or the
Advance;
and the result of any of the foregoing is to increase the cost to the Bank (or
its Applicable Lending Office) of making, converting into, continuing or
maintaining the Advance or to reduce any sum received or receivable by the Bank
(or its Applicable Lending Office) under this Agreement or any Note with respect
to the Advance, then the Borrower shall pay to the Bank on demand such amount or
amounts as will compensate the Bank for such increased cost or reduction.
(b) If, after the date hereof, the Bank shall have determined
that any change in, the adoption of any new, applicable law, rule or regulation
regarding capital adequacy, or in the interpretation or administration thereof
by any Governmental Authority, central bank or comparable agency charged with
the interpretation or administration thereof, or any request or directive
regarding capital adequacy (whether or not having the force of law) of any such
Governmental Authority, central bank or comparable agency, has or would have the
effect of reducing the rate of return on the capital of the Bank or any
corporation controlling the Bank as a consequence of the Bank's obligations
hereunder to a level below that which the Bank or such corporation could have
achieved but for such adoption, change, request, or directive (taking into
consideration its policies with respect to capital adequacy), then from time to
time upon demand the Borrower shall pay to the Bank such additional amount or
amounts as will compensate the Bank for such reduction.
(c) If the Bank claims compensation under this Section 4.01 it shall
furnish to the Borrower a statement setting forth the basis for, and a
calculation in reasonable detail of, the additional amount or amounts to be paid
to it hereunder which shall be conclusive in the absence of manifest error. In
determining such amount, the Bank may use any reasonable averaging and
attribution methods.
4.02 Limitation on Types of Loan. If at any time:
(a) the Bank determines (which determination shall be
conclusive) that by reason of circumstances affecting the relevant
market, adequate and reasonable means do not exist for ascertaining the
Adjusted Eurorate, or
(b) the Bank determines (which determination shall, in each
case, be conclusive), that the applicable Adjusted Eurorate will not
adequately and fairly reflect the cost to the Bank of funding the
Advance for such Interest Period;
then the Bank shall give the Borrower prompt notice thereof, and so long as such
condition remains in effect, the Bank shall be under no obligation to make the
Advance at the Adjusted Eurorate.
4.03 Changes in Law Rendering Eurocurrency Loans Unlawful. If any
change in any, or the adoption of any new, applicable law, rule or regulation,
or any change in the interpretation or administration thereof by any
Governmental Authority, central bank or comparable agency or other regulatory
body charged with the
10
administration or interpretation thereof, should make it (or in the good faith
judgment of the Bank cause a substantial question as to whether it is) unlawful
for the Bank to make, maintain or fund the Advance at the Adjusted Eurorate,
then the Bank shall promptly notify the Borrower and, so long as such
circumstances shall continue, (a) the Bank shall have no obligation to make the
Advance at the Adjusted Eurorate (but shall make the Advance at the Base Rate)
and (b) on the last day of the current Interest Period (or, in any event, on
such earlier date as may be required by the relevant law, regulation or
interpretation), the interest rate on the Advance shall automatically convert to
the Base Rate. Each Base Rate Loan made by the Bank which, but for the
circumstances described in the foregoing sentence, would be made at the Adjusted
Eurorate (an "Affected Loan") shall remain outstanding for the same period as
the borrowing at the Adjusted Eurorate.
4.04 Funding Losses. The Borrower shall reimburse the Bank and hold
it harmless from any loss or expense which the Bank may sustain or incur as a
consequence of:
(a) the failure of such Borrower to make any prepayment in
accordance with any notice delivered pursuant hereto; or
(b) the prepayment (including pursuant to Section 4.03) or
other payment (including after acceleration thereof) of principal by
the Borrower on a day that is not the last day of an Interest Period;
including any such loss or expense arising from the liquidation or reemployment
of funds obtained by the Bank to maintain the Advance or from fees payable to
terminate the deposits from which such funds were obtained. For purposes of
calculating amounts payable by the Borrower to the Bank under this Section, (i)
each Adjusted Eurorate borrowing made by the Bank (and each related reserve,
special deposit or similar requirement) shall be conclusively deemed to have
been funded at the Adjusted Eurorate used in determining the interest rate for
the applicable (including any proposed) Interest Period by a matching deposit or
other borrowing in the interbank eurocurrency market for a comparable amount and
for a comparable period, whether or not such Eurocurrency loan is in fact so
funded.
4.05 Taxes.
(a) Any and all payments by the Borrower to the Bank under
this Agreement shall be made free and clear of, and without deduction
or withholding for, any Taxes. In addition, Borrower shall pay all
Other Taxes.
(b) If the Borrower shall be required by law to deduct or
withhold any Taxes or Other Taxes from or in respect of any sum payable
hereunder to the Bank, then:
(i) the sum payable shall be increased as necessary so
that, after making all required deductions and withholdings
(including deductions and withholdings applicable to additional
sums payable under this Section 4.05), the Bank receives and
retains an amount equal to the sum it would have received and
retained had no such deductions or withholdings been made;
(ii) the Borrower shall make such deductions and
withholdings; and
(iii) the Borrower shall pay the full amount deducted or
withheld to the relevant taxing authority or other authority in
accordance with applicable law.
(c) The Borrower agrees to indemnify and hold harmless the
Bank for the full amount of Taxes or Other Taxes in the amount that the
Bank specifies is necessary to preserve the after-tax yield the Bank
would have received if such Taxes or Other Taxes had not been imposed,
and any liability (including penalties, interest, additions to tax and
expenses) arising therefrom or with respect thereto, whether or not
such Taxes or Other Taxes were correctly or legally asserted. Payment
under this indemnification shall be made within 30 days after the date
the Bank makes written demand therefor.
(d) Within 30 days after the date of any payment by the
Borrower of Taxes or Other Taxes, the Borrower shall furnish to the
Bank the original or a certified copy of a receipt evidencing payment
thereof, or other evidence of payment satisfactory to the Bank.
11
(e) If the Bank determines in its reasonable discretion that
it has received a refund or credit of Taxes or Other Taxes (or of any
liability, including penalties, interest, additions to tax and
expenses, arising therefrom or with respect thereto) paid by the
Borrower or with respect to which the Borrower has made any indemnity
payment pursuant to this Section 4.05, or any other tax benefit as a
result of any payment by any Borrower pursuant to this Section 4.05,
then the Bank shall promptly repay the Borrower to the extent of such
refund, credit or benefit; provided that if, due to any adjustment of
such Taxes or Other Taxes (or of any liability, including penalties,
interest, additions to tax and expenses, arising therefrom or with
respect thereto), or of such other tax benefit, the Bank loses the
benefit of all or any portion of such refund, credit or benefit, the
Borrower will indemnify and hold harmless the Bank in accordance with
this Section 4.05. Nothing in this subsection (e) shall require the
Bank to utilize any such credits ahead of other credits that may be
available to the Bank from other sources. Moreover, nothing shall
require the Bank to make its books and records available for inspection
by the Borrower.
(f) Without prejudice to the survival of any other agreement
of the Borrower hereunder, the agreements and obligations of the
Borrower contained in this Section 4.05 shall survive the payment in
full of all obligations of the Borrower hereunder.
4.06 Discretion of Bank as to Manner of Funding. Notwithstanding any
provision of this Agreement to the contrary, the Bank shall be entitled to fund
and maintain its funding of all or any part of the Advance in any manner it sees
fit, it being understood, however, that for the purposes of this Agreement all
determinations hereunder shall be made as if the Bank had actually funded and
maintained the Advance during each Interest Period through the purchase of
deposits having a maturity corresponding to such Interest Period and bearing an
interest rate equal to the Eurorate for such Interest Period.
4.07 Mitigation of Circumstances. The Bank shall promptly notify the
Borrower of any event of which it has knowledge which will result, and will use
reasonable commercial efforts available to it (and not, in the Bank's good faith
judgment, otherwise disadvantageous to the Bank) to mitigate or avoid, (i) any
obligation of the Borrower to pay any amount pursuant to Section 4.01 or 4.05 or
(ii) the occurrence of any circumstances of the nature described in Section 4.02
or 4.03, and, if the Bank has given notice of any such event described in
clauses (i) or (ii) above and thereafter such event ceases to exist, the Bank
shall promptly so notify the Borrower
4.08 Conclusiveness of Statements; Survival of Provisions.
Determinations and statements of the Bank pursuant to Section 4.01, 4.02, 4.03,
4.04 or 4.05 shall be conclusive absent demonstrable error. The Bank may use
reasonable averaging and attribution methods in determining compensation under
Sections 4.01, 4.04 and 4.05, and the provisions of such Sections shall survive
repayment of the Advance and any termination of this Agreement.
ARTICLE V
Conditions To Credit Extensions
The obligation of the Bank to make the Advance is subject to the
satisfaction of the following conditions precedent:
5.01 Advance. The obligation of the Bank to make the Advance is subject
to the conditions precedent that the Bank shall have received (a) all amounts
which are then due and payable pursuant to Section 9.03, and (b) all of the
following, each duly executed and dated the Closing Date, in form and substance
satisfactory to the Bank:
(a) Note. The Note in the form attached hereto as Exhibit A.
(b) Subsidiary Guaranty. The Subsidiary Guaranty in the form
attached hereto as Exhibit B.
(c) Other Creditor Supplement. In the form attached hereto as
Exhibit C.
12
(d) Resolutions. Certified copies of resolutions of the Board of
Directors (or other appropriate body) of the Borrower authorizing or
ratifying the execution, delivery and performance by the Borrower of
this Agreement and the Note to be issued by the Borrower.
(e) Incumbency and Signature Certificates. A certificate of the
Secretary or an Assistant Secretary (or other appropriate official) of
the Borrower certifying the names of the officer or officers of such
entity authorized to sign this Agreement and the Note to be issued by
the Borrower, together with a sample of the true signature of each such
officer.
(f) Opinions of Counsel. The opinion of ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇,
Senior Vice President and General Counsel of the Borrower.
(g) Closing Certificate. A certificate of the chief executive
officer, the chief financial officer, the vice president finance
-controller or the treasurer of the Borrower to the effect that, except
as disclosed in the Borrower's Form 10-Q filed on May 9, 2002, since
December 31, 2001 no material adverse change has occurred in the
business, assets, liabilities (actual or contingent), operations,
condition (financial or otherwise) or prospects of the Borrower and its
Subsidiaries taken as a whole.
(h) Other. Such other documents as the Bank may reasonably
request.
The certificate and opinions referred to in subsections (c) and (d) above shall
be dated no more than ten Business Days before the Funding Date.
ARTICLE VI
Representations and Warranties
The Borrower represents and warrants that:
6.01 Corporate Existence and Power. 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.
6.02 Corporate and Governmental Authorization; Contravention. The
execution, delivery and performance by the Borrower of this Agreement and the
Note 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 or other organizational documents 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.
6.03 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.
6.04 Financial Information.
(a) The audited consolidated balance sheet of the Borrower and
its Consolidated Subsidiaries at December 31, 2001 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, 2001 as filed
with the Securities and Exchange Commission on Form 10-K, a copy of
which has been delivered to the Bank, fairly present, in conformity
with GAAP, 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 March 30, 2002 and the related
unaudited consolidated statements of income and cash flows for the
fiscal quarter then ended, set forth in the Borrower's quarterly report
for the fiscal quarter ended
13
March 30, 2002 as filed with the Securities and Exchange Commission on
Form 10-Q, a copy of which has been delivered to the Bank, fairly
present, in conformity with GAAP 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 three-month period (subject to normal year-end
adjustments and the absence of footnotes).
(c) Except as disclosed in the Borrower's Form 10-Q filed on May
9, 2002, since December 31, 2001 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.
6.05 Litigation. Except as disclosed on Schedule 6.05, 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 Note.
6.06 Compliance with ERISA. The Borrower and each ERISA Affiliate has
fulfilled its obligations under the minimum funding standards of ERISA and the
Code with respect to each applicable Plan and is in compliance in all material
respects with the presently applicable provisions of ERISA and the Code, and has
not incurred any liability to the PBGC or a Plan under Title IV of ERISA (other
than premiums which have been timely paid or for which an extension of the time
for payment has been granted).
6.07 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 IRS and paid for all years prior to and including the fiscal year ended
December 31, 1997.
6.08 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.
6.09 Not an Investment Company. The Borrower is not an "investment
company" within the meaning of the Investment Company Act of 1940, as amended.
6.10 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 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.
6.11 Insurance. The properties of the Borrower and its Subsidiaries are
insured with financially sound and reputable insurance companies (and/or
pursuant to a self-insurance program) in such amounts, with such deductibles and
covering such risks as are customarily carried by companies engaged in similar
businesses and owning similar properties in localities where the Borrower or the
applicable Subsidiary operates.
6.12 Default. No Event of Default or Unmatured Event of Default has
occurred and is continuing.
6.13 Use of Proceeds. The Borrower will use the proceeds of the Advance
solely for the purposes set forth in Section 7.07 herein.
14
ARTICLE VII
Covenants
The Borrower agrees that so long as any amount payable hereunder
remains unpaid:
7.01 Information. The Borrower will deliver to the Bank:
(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 and the absence of footnotes) as to fairness of
presentation, GAAP and consistency by the chief financial officer, the
vice president finance - controller or the treasurer of the Borrower;
(c) simultaneously with the delivery of each set of financial
statements referred to in subsections (a) and (b) above, a certificate
of the chief financial officer, the vice president finance - controller
or the treasurer 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 7.02 and 7.03 on the date
of such financial statements and (ii) stating whether there exists on
the date of such certificate any Event of Default or Unmatured Event of
Default and, if any such event then exists, setting forth the details
thereof and the action which the Borrower is taking or proposes to take
with respect thereto;
(d) forthwith upon the occurrence of any Event of Default or
Unmatured Event of Default, a certificate of the chief financial
officer, the vice president finance - controller or the treasurer of
the Borrower setting forth the details thereof and the action which the
Borrower is taking or proposes to take with respect thereto;
(e) promptly upon the mailing thereof to the shareholders of
the Borrower generally, copies of all financial statements, reports
and proxy statements so mailed;
(f) promptly upon the filing thereof, copies of all
registration statements (other than the exhibits thereto and any
registration statements on Form S-8 or its equivalent) and annual,
quarterly or monthly reports which the Borrower shall have filed with
the Securities and Exchange Commission;
(g) if and when the Borrower or ERISA Affiliate or is required
to give notice to the PBGC of any "reportable event" (as defined in
Section 4043 of ERISA) with respect to any Plan which might constitute
grounds for a termination of such Plan under Title IV of ERISA, or
knows that the plan administrator of any Plan has given or is required
to give notice of any such reportable event, a copy of the notice of
such reportable event given or required to be given to the PBGC;
(h) promptly upon obtaining knowledge thereof, the
commencement of, or any material development in, any material
litigation or governmental proceeding affecting the Borrower or any
Subsidiary, including pursuant to any applicable Environmental Law;
(i) promptly upon the occurrence thereof, notice of any
change in the Borrower's credit rating by ▇▇▇▇▇'▇ or S&P: and
15
(j) from time to time such additional information regarding
the financial position or business of the Borrower as the Bank may
reasonably request.
7.02 Maximum Leverage Ratio. The Borrower shall not at any time
permit the Leverage Ratio to exceed 3.00 to 1.0.
7.03 Minimum Interest Coverage Ratio. The Borrower shall not at any
time permit the Interest Coverage Ratio for any Computation Period to be less
than 3.00 to 1.0. A "Computation Period" is any period of four consecutive
fiscal quarters of the Borrower ending on the last day of a fiscal quarter.
7.04 Negative Pledge. Neither the Borrower nor any Subsidiary will
create, assume or suffer to exist any Lien on any asset now owned or hereafter
acquired by any of them, except:
(a) any Lien existing on the date of this Agreement and
disclosed in the financial statements referred to in Section 6.04 or
set forth in Schedule 7.04, and any extension, renewal or replacement
of any such Lien so long as the principal amount secured thereby is not
increased and the scope of the property subject to such Lien is not
extended;
(b) Liens imposed by law for taxes, assessments or charges of
any Governmental Authority for claims not yet due, or to the extent
that such Lien is being contested in good faith by appropriate
proceedings and adequate reserves in accordance with GAAP are being
maintained therefor, provided that no notice of Lien has been filed or
recorded under the Code;
(c) statutory Liens of landlords and Liens of carriers,
warehousemen, mechanics, materialmen and other Liens imposed by law or
created in the ordinary course of business which are not delinquent or
remain payable without penalty or which are being contested in good
faith by appropriate proceedings, which proceedings have the effect of
preventing the forfeiture or sale of the property subject thereto;
(d) Liens (other than any Lien imposed by ERISA) consisting of
pledges or deposits required in the ordinary course of business in
connection with workers' compensation, unemployment insurance and other
social security legislation;
(e) Liens on property of the Borrower or any Subsidiary
securing (i) the non-delinquent performance of bids, trade contracts
(other than for borrowed money), leases or statutory obligations, (ii)
surety bonds (excluding appeal bonds and other bonds posted in
connection with court proceedings or judgments) and (iii) other
non-delinquent obligations of a like nature in each case incurred in
the ordinary course of business;
(f) Liens consisting of judgment or judicial attachment liens
and Liens securing contingent obligations on appeal bonds and other
bonds posted in connection with court proceedings or judgments,
provided that (i) in the case of judgment and judicial attachment
liens, the enforcement of such Liens is effectively stayed, and (ii)
all such Liens in the aggregate at any time outstanding for the
Borrower and its Subsidiaries do not exceed US$10,000,000;
(g) easements, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business which,
individually or in the aggregate, do not materially detract from the
value of the property subject thereto or materially interfere with the
ordinary conduct of the businesses of the Borrower and its
Subsidiaries;
(h) Liens securing obligations in respect of capital leases on
assets subject to such leases, provided that such capital leases are
otherwise permitted hereunder;
(i) Liens arising solely by virtue of any statutory or common
law provision relating to banker's liens, rights of set-off or similar
rights and remedies as to deposit accounts or other funds maintained
with a creditor depository institution; provided that (i) such deposit
account is not a dedicated cash collateral account and is not subject
to restrictions against access by the Borrower or the applicable
16
Subsidiary in excess of those set forth by regulationsb promulgated by
the FRB and (ii) such deposit account is not intended by the Borrower
or any Subsidiary to provide collateral to the depository institution;
(j) Liens arising in connection with Securitization
Transactions; provided that the aggregate investment or claim held at
any time by all purchasers, assignees or other transferees of (or of
interests in) receivables and other rights to payment in all
Securitization Transactions shall not at any time exceed in the
aggregate US$150,000,000; and
(k) in addition to Liens permitted by subsections (a)
through (j) above, other Liens securing Debt in a Dollar Equivalent
amount not exceeding 12.5% of Consolidated Shareholders' Equity.
7.05 Consolidations, Mergers and Sales of Assets; Acquisitions.
(a) 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:
(i) the Person surviving the merger or consolidation is
the Borrower; and
(ii) immediately after giving effect to any such action,
no Event of Default or Unmatured Event of Default shall have
occurred and be continuing.
(b) The Borrower will not, and will not permit any
Subsidiary to, make any Acquisition other than Permitted Acquisitions.
7.06 Subsidiary Debt. The Borrower will not at any time permit the
aggregate amount of all outstanding Debt of its Subsidiaries, excluding:
(a) Debt arising under Securitization Transactions in an
aggregate amount not exceeding US$150,000,000;
(b) Debt of Pentair UK Limited, Pentair Canada and
EuroPentair GMBH arising under the Long Term Credit
Agreement;
(c) Debt of Pentair UK Limited under the existing 6.7%
Senior Notes due May 21, 2004 issued pursuant to a Note
Purchase Agreement dated as of May 1, 1999;
(d) Debt of Pentair Nova Scotia Co. under the existing 6.68%
Senior Notes due October 1, 2003 issued pursuant to a
Note Purchase Agreement dated as of October 1, 1997;
(e) Debt under the Subsidiary Guaranty; and
(f) So long as the Subsidiary Guaranty is in effect, Debt
arising under unsecured guaranties of other Senior Debt
of the Borrower;
to exceed fifteen percent (15%) of Consolidated Shareholders' Equity.
7.07 Use of Proceeds. The proceeds of the Advance will be used by
the Borrower to refinance indebtedness, for commercial paper back-up, for
working capital and for other general corporate purposes (including Acquisitions
permitted hereunder). None of such proceeds will be used, directly or
indirectly, for the purpose, whether immediate, incidental or ultimate, of
purchasing or carrying any "margin stock" in violation of Regulation U of the
FRB.
7.08 Compliance with Law. The Borrower shall, and shall cause each
Subsidiary to, comply with all Requirements of Law of any Governmental Authority
having jurisdiction over it or its business the non-compliance with which might
have a Material Adverse Effect. Without limiting the foregoing, the Borrower
shall, and shall cause each of its Subsidiaries to, conduct its operations in
compliance with all Environmental Laws, except for such noncompliance which
individually or in the aggregate would not be reasonably expected to result in
material liability to the Borrower and its Subsidiaries taken as a whole.
17
7.09 Securitization Transactions. The Borrower shall not, and shall not
permit any Subsidiary to, permit the aggregate outstanding investment or claim
held by purchasers, assignees or transferees of (or of interests in) receivables
of the Borrower and its Subsidiaries in connection with Securitization
Transactions to exceed a Dollar Equivalent amount of US$150,000,000.
7.10 Insurance. The Borrower shall, and shall cause each Subsidiary to,
maintain, with financially sound and reputable insurers (and/or pursuant to a
self-insurance program), insurance with respect to its properties and business
against loss or damage of the kinds customarily insured against by Persons
engaged in the same or similar businesses, of such types and in such amounts as
are customarily carried under similar circumstances by such other Persons.
7.11 Other Indebtedness. In the event the Borrower, Pentair UK Limited,
Pentair Canada, Inc. or EuroPentair GMBH or any Subsidiary shall execute, make
or otherwise enter into any instrument, documents or agreement relating to the
termination of the Long Term Credit Agreement and the replacement of the
indebtedness represented thereby, or any amendment, waiver, restatement,
re-evidencing or other modification of any documentation relating to the Long
Term Credit Agreement (collectively, "Other Loan Documents"), the effect of
which is to implement or subject the Borrower or such Subsidiary to any
affirmative, negative, financial or other covenants, or to any events of default
(collectively, "Restrictive Covenants"), which Restrictive Covenants are in any
respect materially different from the Restrictive Covenants set forth in this
Agreement, the Borrower shall promptly so advise the Bank. Thereafter, the
Borrower shall provide the Bank such information, in such reasonable detail, as
the Bank may reasonably request in respect of the applicable Restrictive
Covenants and the Other Loan Documents. The Bank shall have the right, at any
time, in its sole discretion, to elect to amend this Agreement and the Note to
incorporate any such Restrictive Covenant. If the Bank shall elect to
incorporate any such Restrictive Covenant applicable to the Borrower herein, it
shall so notify the Borrower in a written notice and, upon the giving of such
notice, this Agreement shall be deemed amended to incorporate such Restrictive
Covenant. Any amendment effected in accordance with the terms of this Section
7.11 shall remain in effect during the entire term of this Agreement,
notwithstanding the subsequent termination, rescission, avoidance, waiver,
release, amendment or other modification of all or any term or provision of the
Other Loan Document from which a Restrictive Covenant shall have originated
(including, without limitation, any modification to such Restrictive Covenant in
such Other Loan Document), unless the Bank and the Borrower shall otherwise
agree in accordance with the procedure set forth in Section 9.04 hereof.
7.12 Subsidiary Guaranty. The Borrower will take, and will cause its
Subsidiaries to take, such actions as are reasonably necessary or as the Bank
may reasonably request (including delivery of authorization documents and
customary opinions of counsel) so that as of the Closing Date, and at all times
thereafter (subject to the proviso below), all of the Borrower's obligations
hereunder are guaranteed by Subsidiaries (other than Foreign Subsidiaries) that,
in the aggregate together with the Borrower, own 90% or more of the consolidated
assets of the Borrower and its Subsidiaries (excluding Foreign Subsidiaries) and
earned 90% or more of the consolidated revenues of the Borrower and its
Subsidiaries (excluding Foreign Subsidiaries) during the most recent period of
four consecutive fiscal quarters (excluding the revenues of any Subsidiary or
business unit which has been divested or liquidated on or prior to any date of
determination), in each case pursuant to the Subsidiary Guaranty.
The Term Loan Subsidiary Guaranty shall cease to be effective upon the
payment in full of the principal and interest on the Note and all other payments
due under this Term Loan Agreement. In addition, the Term Loan Subsidiary
Guaranty shall, without any further action of the Bank or any holder of the
Note, cease to be effective on the first date on which the Credit Agreement
Guaranty (or any replacement thereof) ceases to be effective (a "Credit
Agreement Guaranty Termination") provided, however, that the foregoing release
shall be effective only if each Subsidiary Guaranty ceases to be effective by
its terms upon a Credit Agreement Guaranty Termination. In addition, if at any
time any person which is a Subsidiary Guarantor is released from its obligations
under the Credit Agreement Guaranty (or any replacement thereof) then such
person shall, without any further action of the Bank or the holder of the Note,
be released from the Term Loan Subsidiary Guaranty; provided however, that the
foregoing release shall be effective only if such person is concurrently
released from its obligations under the terms of each Subsidiary Guaranty upon
such Credit Agreement Guaranty release.
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ARTICLE VIII
Event of Default
8.01 Events of Default. If one or more of the following events
shall have occurred and be continuing:
(a) the Borrower shall fail to pay (i) within five days of the
date due any interest, any fee or any other amount payable hereunder or
(ii) any principal amount when the same becomes due and payable;
(b) the Borrower shall fail to observe or perform any covenant
contained in Sections 7.02 to 7.07, inclusive, Section 7.09 or Section
7.11;
(c) the Borrower shall fail to observe or perform any other
covenant or agreement contained in this Agreement for 30 days after the
earlier of (i) the date on which written notice thereof has been given
to the Borrower by the Bank or (ii) if the Borrower fails to promptly
notify the Bank of such failure as required by Section 7.01(d), the
date on which the chief executive officer, the chief financial officer,
the vice president finance - controller or the treasurer of the
Borrower had actual knowledge of such failure;
(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) the Borrower or any Subsidiary (i) fails to make any
payment of Material Financial Obligations when due (whether by
scheduled maturity, required prepayment, acceleration, demand or
otherwise, but after giving effect to any applicable grace or cure
period); or (ii) fails to perform or observe any other condition or
covenant, or any other event shall occur or condition exist, under one
or more agreements or instruments relating to Material Financial
Obligations, if the effect of such failure, event or condition is to
cause (or require), or to permit the holder or holders of such Material
Financial Obligations (or the beneficiary or beneficiaries of such
Material Financial Obligations (or a trustee or agent on behalf of such
holder or holders or beneficiary or beneficiaries)) to cause (or
require), such Material Financial Obligations to become due and payable
(or to be purchased, repurchased, defeased or cash collateralized)
prior to the stated maturity thereof;
(f) the Borrower or any Material Subsidiary shall commence a
voluntary case or other proceeding seeking liquidation, reorganization
or other relief with respect to itself or its debts under any
bankruptcy, insolvency or other similar law now or hereafter in effect
or seeking the appointment of a trustee, receiver, liquidator,
custodian or other similar official of it or any substantial part of
its property or shall consent to any such 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 Material Subsidiary seeking liquidation,
reorganization or other relief with respect to it or its debts under
any bankruptcy, insolvency or other similar law now or hereafter in
effect or seeking the appointment of a trustee, receiver, liquidator,
custodian or other similar official of it or any substantial part of
its property and such involuntary case or other proceeding shall remain
undismissed and unstayed for a period of 60 days; or an order for
relief shall be entered against the Borrower or any Material Subsidiary
under the federal bankruptcy laws or similar bankruptcy or insolvency
laws of any other applicable jurisdiction as now or hereafter in
effect;
(h) the Borrower or any ERISA Affiliate shall fail to pay when
due an amount or amounts aggregating in excess of US$10,000,000 which
it shall have become liable to pay to the PBGC or to a Plan under Title
IV of ERISA; or the Borrower or ERISA Affiliate shall file a distress
termination notice with the PBGC and the amount of the Unfunded Vested
Liabilities under that filing exceeds US$5,000,000; or the PBGC shall
institute judicial proceedings under Title IV of ERISA to terminate or
to cause a trustee to be appointed to administer any such Plan or Plans
which have Unfunded Vested Liabilities in an aggregate amount exceeding
US$5,000,000; or a judicial proceeding shall be instituted by a
fiduciary of any such Plan or Plans to enforce Section 515 of ERISA,
the aggregate amount of delinquent contributions claimed
19
to be owed pursuant to such Section 515 in such proceeding shall exceed
US$5,000,000, and such proceeding shall not have been dismissed within
30 days;
(i) a judgment or order for the payment of money in excess of
US $25,000,000 shall be rendered against the Borrower or any of its
respective 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 30% or more of the outstanding shares of voting stock
of the Borrower;
(k) within a period of twelve consecutive months,
three-fourths of the directors of the board of directors of the
Borrower shall have changed; or
(l) at any time during which the Subsidiary Guaranty is
required to be in effect pursuant to Section 7.12, the Subsidiary
Guaranty shall cease to be in full force and effect with respect to any
Subsidiary Guarantor (other than as a result of such Subsidiary
Guarantor ceasing to be a Subsidiary pursuant to a transaction
permitted hereunder), any Subsidiary Guarantor shall fail (subject to
any applicable grace period) to comply with or to perform any
applicable provision of the Subsidiary Guaranty, or any Subsidiary
Guarantor (or any Person by, through or on behalf of such Subsidiary
Guarantor) shall contest in any manner the validity, binding nature or
enforceability of the Subsidiary Guaranty with respect to such
Subsidiary Guarantor.
then, and in any such event,
(1) in the case of any Event of Default specified in
subsection (f) or (g) above, without any notice to the Borrower or any
other act by the Bank, the Advance and all other obligations of the
Borrower hereunder shall become immediately due and payable without
presentment, demand, protest or other notice of any kind, all of which
are hereby waived by the Borrower; and
(2) in the case of any other Event of Default, the Bank may
declare the Advance and all other obligations of the Borrowers
hereunder to be, and the Advance and such obligations shall thereupon
become, immediately due and payable, in each case without presentment,
demand, protest or other notice of any kind, all of which are hereby
waived by the Borrower.
ARTICLE IX
Miscellaneous
9.01 Notices. All notices, requests and other communications to any
party hereunder shall be in writing (including facsimile transmission or similar
writing), except where specifically permitted to be given orally, and shall be
given to such party at its address or facsimile number set forth on Schedule
9.01 or such other address or facsimile number as such party may hereafter
specify. Each such notice, request or other communication shall be effective (i)
if given by facsimile, when such facsimile is transmitted to the facsimile
number specified in this Section and the appropriate confirmation is received,
(ii) if given by mail, four Business Days after such communication is deposited
in the mails with first class postage prepaid, addressed as aforesaid or (iii)
if given by any other means, when delivered at the address specified in this
Section. Any agreement of the Bank to receive certain notices by telephone or
facsimile is solely for the convenience and at the request of the Borrower. The
Bank shall be entitled to rely on the authority of any Person purporting to be a
Person authorized by the Borrower to give such notice, and the Bank shall not
have any liability to the Borrower or any other Person on account of any action
taken or not taken by the Bank in reliance upon such telephonic or facsimile
notice. The obligation of the Borrower to repay the Advance shall not be
affected in any way or to any extent by any failure by the Bank to receive
written confirmation of any telephonic or facsimile notice or the receipt by the
Bank of a confirmation which is at variance with the terms understood by the
Bank to be contained in any telephonic or facsimile notice.
9.02 No Waiver. No failure or delay by the Bank in exercising any
respective right, power or privilege hereunder or under the Note shall operate
as a waiver thereof, nor shall any single or partial exercise thereof
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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.
9.03 Expenses; Documentary Taxes; Indemnification. (a) The Borrower
shall pay upon demand, if an Event of Default occurs, all reasonable
out-of-pocket expenses incurred by the Bank, including fees and disbursements of
counsel for the Bank (who may be employees of the Bank), in connection with such
Event of Default or Unmatured Event of Default and collection and other
enforcement proceedings resulting therefrom. The Borrower shall indemnify the
Bank against any transfer taxes, documentary taxes, assessments or charges made
by any governmental authority by reason of the execution and delivery of this
Agreement or the Note.
(b) Whether or not the transactions contemplated hereby are
consummated, the Borrower agrees to indemnify and hold the Bank and their
respective officers, directors, employees, counsel, agents and attorneys-in-fact
(each an "Indemnified Person") harmless from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, charges, expenses and disbursements (including reasonable attorney's fees
and charges) of any kind or nature whatsoever which may at any time (including
at any time following repayment of the Advance) arise out of or result from an
action, suit, proceeding (including any insolvency or appellate proceeding) or
claim asserted against any such Indemnified Person directly relating to this
Agreement or any document contemplated by or referred to herein, the
transactions contemplated hereby or the use of the proceeds of the Advance,
whether or not any Indemnified Person is a party thereto (all the foregoing,
collectively, the "Indemnified Liabilities"); provided that the Borrower shall
not be liable to any Indemnified Person for any portion of such Indemnified
Liabilities resulting from such Indemnified Person's gross negligence or willful
misconduct. In the event this indemnity is unenforceable as a matter of law as
to a particular matter or consequence referred to herein, it shall be
enforceable to the full extent permitted by law. The agreements in this Section
shall survive termination of this Agreement and payment of all other obligations
of the Borrower hereunder.
9.04 Amendments and Waivers. Any provision of this Agreement or the
Note may be amended, modified or waived if, but only if, such amendment,
modification or waiver is in writing and is signed by the Borrower and the Bank
9.05 Collateral. The Bank represents that it in good faith is not
relying upon any "margin stock" (as defined in Regulation U of the FRB) as
collateral in the extension or maintenance of the credit provided for in this
Agreement.
9.06 Successors and Assigns.
(a) The provisions of this Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and
assigns, except that the Borrower may not assign or otherwise transfer any of
their respective rights under this Agreement.
(a) The Bank may at any time assign and delegate to one or more banks
or other financial institutions (each an "Assignee") all or any part of the
Advance and the other rights and obligations hereunder.
(c) The Bank may at any time sell to one or more commercial banks or
other Persons not Affiliates of the Borrower (a "Participant") participating
interests in the Advance and the other interests of the Bank hereunder.
(d) Notwithstanding any other provision in this Agreement, the Bank
may at any time create a security interest in, or pledge, all or any portion of
its rights under and interest in this Agreement and the Note held by it in favor
of any Federal Reserve Bank in accordance with Regulation A of the FRB or U.S.
Treasury Regulation 31 CFR (S)203.14, and such Federal Reserve Bank may enforce
such pledge or security interest in any manner permitted under applicable law;
provided that any foreclosure or similar action by such holders, trustee or
representative shall be subject to the provisions of this Section concerning
assignments.
9.07 Governing Law. The Term Loan Credit Documents shall be construed
in accordance with and governed by the substantive laws of the State of New York
without regard to the choice of law provisions thereof.
9.08 Counterparts; Effectiveness. This Agreement may be signed in any
number of counterparts, each of which shall be an original, and all of which
taken together shall constitute a single agreement, with the same effect as if
the signatures thereto and hereto were upon the same instrument. This Agreement
shall become effective
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when the Bank shall have received counterparts hereof signed by the Borrower,
and the Bank shall promptly notify the Borrower of such effectiveness.
9.09 Confidentiality. The Bank agrees to take normal and reasonable
precautions and exercise due care to maintain the confidentiality of all
non-public information provided to it by the Borrower or any Subsidiary, under
this Agreement, and the Bank shall not use any such information other than in
connection with or in enforcement of this Agreement or in connection with other
business now or hereafter existing or contemplated with the Borrower or any
Subsidiary; except to the extent such information (i) was or becomes generally
available to the public other than as a result of disclosure by the Bank or (ii)
was or becomes available on a non-confidential basis from a source other than
the Borrower and its Subsidiaries, provided that such source is not known by the
Bank to be bound by a confidentiality agreement with the Borrower or any
Subsidiary; provided, however, that the Bank may disclose such information (A)
at the request or pursuant to any requirement of any Governmental Authority to
which the Bank is subject or in connection with an examination of the Bank by
any such authority; (B) pursuant to subpoena or other court process; (C) when
required to do so in accordance with the provisions of any applicable
Requirement of Law; (D) to the extent reasonably required in connection with any
litigation or proceeding to which the Bank or any of its Affiliates may be
party; (E) to the extent reasonably required in connection with the exercise of
any remedy hereunder; (F) to the Bank's independent auditors and other
professional advisors; (G) to any Participant or Assignee, actual or potential,
provided that such Person agrees in writing to keep such information
confidential to the same extent required of the Bank hereunder; (H) as expressly
permitted under the terms of any other document or agreement to which the
Borrower or any Subsidiary is party with the Bank; and (I) to its Affiliates.
9.10 Waiver of Jury Trial. THE BORROWER AND THE BANK HEREBY WAIVES ANY
RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY
RIGHTS UNDER THIS AGREEMENT, THE NOTE AND ANY AMENDMENT, INSTRUMENT, DOCUMENT OR
AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION
HEREWITH OR ARISING FROM ANY BANKING RELATIONSHIP EXISTING IN CONNECTION WITH
ANY OF THE FOREGOING, AND AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE
TRIED BEFORE A COURT AND NOT BEFORE A JURY.
9.11 Consent to Jurisdiction. THE BORROWER HEREBY EXPRESSLY AND
IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK
AND OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK
FOR THE PURPOSE OF ANY LITIGATION ARISING OUT OF OR IN CONNECTION WITH THIS
AGREEMENT. EACH BORROWER FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS
IN ANY SUCH LITIGATION BY REGISTERED MAIL, POSTAGE PREPAID, OR BY PERSONAL
SERVICE WITHIN OR WITHOUT THE STATE OF NEW YORK. TO THE EXTENT THAT THE BORROWER
HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM JURISDICTION OF ANY COURT OR FROM
ANY LEGAL PROCESS (WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO
JUDGMENT, ATTACHMENT IN AID OF EXECUTION OR OTHERWISE) WITH RESPECT TO ITSELF OR
ITS PROPERTY, THE BORROWER HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF
ITS OBLIGATIONS UNDER THIS AGREEMENT.
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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__________________________________
Title_______________________________
CREDIT LYONNAIS NEW YORK BRANCH
By__________________________________
Title_______________________________
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