CREDIT AGREEMENT
Dated as of November 15, 1996
Between
PENTAIR, INC.
and
FIRST BANK NATIONAL ASSOCIATION
CREDIT AGREEMENT
THIS CREDIT AGREEMENT, dated as of
November 15, 1996, is by and between PENTAIR,
INC., a Minnesota corporation (the "Borrower"),
and FIRST BANK NATIONAL ASSOCIATION, a
national banking association (the "Bank").
ARTICLE I
DEFINITIONS
Section 1.1 Definitions. The following terms,
as used herein, have the following meanings:
"Adjusted CD Rate" applicable to any Interest
Period means a rate per annum determined
pursuant to the following formula:
ACDR = [CDBR* ] plus AR
[1.0 - RP]
ACDR = Adjusted CD Rate
CDBR = CD Base Rate
RP = CD Reserve Percentage
AR = Assessment Rate
* The amount in brackets being rounded
upwards, if necessary, to the next higher 1/100 of
1%.
"Adjusted Debt to Total Capital Ratio" means
the ratio obtained by dividing (i) Consolidated Debt,
excluding any Debt arising pursuant to a Sale of
Receivables, by (ii) an amount equal to the sum of
Consolidated Debt, excluding any Debt arising
pursuant to a Sale of Receivables, and Consolidated
Shareholders' Equity.
"Assessment Rate" means for any Interest
Period the net annual assessment rate (rounded
upwards, if necessary, to the next higher 1/100 of
1%) actually assessed to the Bank by the Federal
Deposit Insurance Corporation (or any successor)
for such Corporation's (or such successor's)
insuring time deposits at offices of the Bank during
the most recent period for which such rate has
been determined prior to the commencement of
such Interest Period.
"Assessment Rate" means, for any day of any
Interest Period for a CD Loan, the rate (rounded
upwards, if necessary, to the next higher 1/100 of
1%) determined by the Bank as equal to the annual
assessment rate in effect on such day payable to
the Federal Deposit Insurance Corporation (the
"FDIC") by a member of the Bank Insurance Fund
that is classified as adequately capitalized and
within supervisory subgroup "A" (or a comparable
successor assessment risk classification with the
meaning of 12 C.F.R. section 327.3) for insuring time
deposits at offices of such member in the United
States; or, if the FDIC shall at any time cease to
assess time deposits based upon such
classifications or successor classifications, equal to
the maximum annual assessment rate in effect on
such day that is payable to the FDIC by commercial
banks (whether or not applicable to the Bank) for
insuring time deposits at offices of such banks in
the United States.
"Agreement" means this Credit Agreement
dated as of November 15_, 1996, as amended or
otherwise modified from time to time.
"Borrowing" means a borrowing of funds under
Section 2.1, consisting of one or more Loans of the
same type made at the same time.
"Business Day": Any day (other than a
Saturday, Sunday or legal holiday in the State of
Minnesota) on which national banks are permitted
to be open in Minneapolis, Minnesota and, with
respect to Eurodollar Loans and Daily Pricing Loans,
a day on which dealings in Dollars may be carried
on by the Bank in the interbank eurodollar market.
"CD Base Rate" applicable to any Interest
Period means the rate of interest determined by the
Bank for the relevant Interest Period to be the average
(rounded upward, if necessary, to the nearest
1/100th of 1%) of the rates quoted to the Bank at
approximately 8:00 a.m., Minneapolis time (or as
soon thereafter as practicable), or at the option of the
Bank at approximately the time of the request for a
CD Loan if such request is made later than 8:00 a.m.,
Minneapolis time, in each case on the first day of the
applicable Interest Period by certificate of deposit
dealers selected by the Bank, in its sole discretion, for
the purchase from the Bank, at face value, of
certificates of deposit issued by the Bank in an
amount and maturity comparable to the amount and
maturity of the requested CD Loan, or at the option of
the Bank determined for such amount and maturity
based on published composite quotations of
certificate of deposit rates.
"CD Loan" means an amount loaned to the
Borrower under this Agreement bearing interest at
the Fixed CD Rate for the applicable Interest Period
pursuant to the applicable Notice of Borrowing.
Borrowings of CD Loans shall be in an aggregate
principal amount of $1,000,000 or any larger
integral multiple of $100,000.
"CD Margin" means a percentage determined in
accordance with the table below:
Adjusted
Debt to Total
Capital Ratio CD Margin:
.40 or less .325 of 1%
over .40 but not over .55 .400 of 1%
over .55 .525 of 1%
"CD Reserve Percentage" means for any day the
maximum reserve percentage (expressed as a
decimal, rounded upwards, if necessary, to the
next higher 1/100th of 1%), as determined by the
Bank, in effect on such day (including any ordinary,
marginal, emergency, supplemental, special and
other reserve percentages) as prescribed by the
Federal Reserve Board (or any successor) for
determining the maximum reserves to be
maintained by member banks of the Federal
Reserve System with deposits exceeding
$1,000,000,000 for new non-personal time
deposits for a period comparable to the applicable
Interest Period and in an amount of $100,000 or
more. The Fixed CD Rate shall be adjusted
automatically on and as of the effective date of any
change in the CD Reserve Percentage.
"Code" means the Internal Revenue Code of
1986, as amended.
"Commitment" means $25,000,000, as such
amount may be reduced from time to time pursuant
to Section 2.7.
"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 for 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 Shareholder's 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
business (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.
"Daily Pricing Loan" means an amount loaned to
the Borrower under this Agreement bearing interest
at the applicable Daily Pricing Rate pursuant to the
applicable Notice of Borrowing.
"Daily Pricing Rate" means for any day a rate
per annum (rounded upwards, if necessary, to the
nearest 1/16 of 1%) determined pursuant to the
following formula, which rate shall continue in
effect until the next succeeding Business Day:
Daily Pricing Rate = Eurodollar Interbank
Rateplus 0.50%
1.00 - Eurodollar
Reserve Percentage
"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) all Debt (as defined above) of others
Guaranteed by such Person.
"Debt to Total Capital Ratio" means the ratio
obtained by dividing (i) Consolidated Debt by (ii) an
amount equal to the sum of Consolidated Debt and
Consolidated Shareholders' Equity.
"Default" means any condition or event which
constitutes an Event of Default or which with the
giving of notice or lapse of time or both would,
unless cured or waived, become an Event of
Default.
"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, or any
successor statute.
"Eurodollar Interbank Rate" means the
average offered rate for deposits in United States
Dollars (rounded upwards, if necessary, to the
nearest 1/16 of 1%):
(a) for each Eurodollar Loan, for delivery of
such deposits on the first day of an Interest
Period of a Eurodollar Loan, for the number
of days comprised therein, which appears
on the Reuters Screen LIBO Page as of
11:00 a.m., London time (or such other
time as of which such rate appears) on the
day that is two Business Days preceding the
first day of the Interest Period; or
(b) for each Daily Pricing Loan, for delivery
of such deposits on such day, for an
interest period of one month, which appears
on the Reuters Screen LIBO Page as of the
time selected by the Bank on such day;
or in either case, the rate for such deposits
determined by the Bank at such times and for such
interest periods based on such other published
service of general application as shall be selected
by the Bank for such purpose; provided, that in lieu
of determining the rate in the foregoing manner,
the Bank may determine the rate based on rates
offered to the Bank for deposits in United States
Dollars (rounded upwards, if necessary, to the
nearest 1/16 of 1%) in the interbank eurodollar
market at such time for delivery on the first day of
the Interest Period for the number of days
comprised therein. "Reuters Screen LIBO Page"
means the display designated as page "LIBO" on
the Reuter Monitor Money Rates Service (or such
other page as may replace the LIBO Page on that
service for the purpose of displaying London
interbank offered rates of major banks for United
States Dollar deposits).
"Eurodollar Margin" means a percentage
determined in accordance with the table below:
Adjusted
Debt to Total Eurodollar
Capital Ratio Margin
.40 or less .200 of 1%
over .40 but not over .55 .275 of 1%
over .55 .400 of 1%
"Eurodollar Reserve Percentage" means a
percentage equal to the daily average during the
relevant Interest Period (for Eurodollar Loans) or on
any Business Day (for Daily Pricing Loans) of the
aggregate maximum reserve requirements
(including all basic, supplemental, marginal and
other reserves), as specified under Regulation D of
the Federal Reserve Board, or any other applicable
regulation that prescribes reserve requirements
applicable to Eurocurrency liabilities (as presently
defined in Regulation D) or applicable to extensions
of credit by the Bank, the rate of interest on which
is determined with regard to rates applicable to
Eurocurrency liabilities. Without limiting the
generality of the foregoing, the Eurodollar Reserve
Requirement shall reflect any reserves required to
be maintained by the Bank against (i) any category
of liabilities that includes deposits by reference to
which the Eurodollar Interbank Rate is to be
determined, or (ii) any category of extensions of
credit or other assets that includes Eurodollar
Loans.
"Eurodollar Loan" means an amount loaned to
the Borrower under this Agreement bearing interest
at the Fixed Eurodollar Rate for the applicable
Interest Period pursuant to the applicable Notice of
Borrowing. Borrowings of Eurodollar Loans shall be
in an aggregate principal amount of $2,000,000 or
any larger integral multiple of $100,000.
"Event of Default" has the meaning set forth in
Section 7.1.
"Expense Ratio" has the meaning set forth in
Section 6.4.
"Facility Fee" has the meaning set forth in
Section 2.6.
"Fixed CD Rate" means, for any CD Loan, a rate
per annum equal to the sum of the applicable
Adjusted CD Rate plus the CD Margin. The
Adjusted CD Rate and, therefore, the Fixed CD Rate
shall be adjusted automatically on and as of the
effective date of any change in the CD Reserve
Percentage or the CD Margin.
The following example will illustrate the
calculation of a Fixed CD Rate. Assuming a CD
Base Rate for a 30-day Interest Period of 5.27%,
a CD Reserve Percentage of 0%, an Assessment
Rate of 0%, and a CD Margin of .325 of 1%, the
Fixed CD Rate would equal:
.0527
---------- + 0 + .00325 = .00595 = 5.60%
1.00 - 0
"Fixed Eurodollar Rate" means, for any
Eurodollar Loan, a rate per annum equal to the sum
of (a) the quotient obtained (rounded upwards, if
necessary, to the next higher 1/100 of 1%) by
dividing (i) the applicable Eurodollar Interbank Rate
by (ii) 1.00 minus the Eurodollar Reserve
Percentage, plus (b) the Eurodollar Margin. The
Fixed Eurodollar Rate shall be adjusted
automatically on and as of the effective date of any
change in the Eurodollar Reserve Percentage or the
Eurodollar Margin.
The following example will illustrate the
calculation of a Fixed Eurodollar Rate. Assuming
an Interbank Offered Rate for a one month Interest
Period of 5.375%, a Eurodollar Reserve Percentage
of 0%, and a Eurodollar Margin of .200 of 1%, the
Fixed Eurodollar Rate would equal:
.05375
---------- + .00200 = .005575 = 5.58%
1.00 - 0
"Fixed Rate Loans" means CD Loans and
Eurodollar Loans.
"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 Company,
or Flambeau Paper Corp., a former subsidiary of the
Company. The term "Guarantee" used as a verb
has a correlative meaning.
"Interest Expense" means, for any period, the
sum, without duplication, of the consolidated
interest expense of the Borrower and its
Consolidated Subsidiaries for such period.
"Interest Period" means:
(i) with respect to each Reference Loan or
Daily Pricing Loan: a period commencing on the
date of such Loan and ending on the Termination
Date, provided that any Interest Period which
would otherwise end on a day which is not a
Business Day shall be extended to the next
succeeding Business Day.
(ii) with respect to each CD Loan: the
period commencing on the date of such Loan and
ending 30, 60, 90 or 180 days thereafter, as the
Borrower may elect in the applicable Notice of
Borrowing, provided that any Interest Period which
would otherwise end on a day which is not a
Business Day shall be extended to the next
succeeding Business Day.
(iii) with respect to each Eurodollar Loan:
the period commencing on the date of such Loan
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 Business
Day shall be extended to the next succeeding
Business Day unless such Business Day falls in
another calendar month, in which case such
Interest Period shall end on the next preceding
Business Day; and
(B) any Interest Period which begins on the
last 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 end on the last Business Day
of a calendar month.
"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 thereof 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" or "Loans" means one or more Loans to
be made by the Bank pursuant to Article II (which
may be Reference Loans, CD Loans, Daily Pricing
Loans, or Eurodollar Loans).
"Material Subsidiary" means (a) each "Borrower"
under the Multi-Facility Credit Agreement other
than the Borrower hereunder, and (b) each other
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).
"Multi-Facility Credit Agreement" means that
certain Multi-Facility Credit Agreement, dated as of
November 15, 1996, among the Borrower, certain
Subsidiaries of the Borrower, the Agents, and the
Banks (as defined therein), as the same shall
thereafter be amended, modified, renewed, or
replaced from time to time.
"Note" means the promissory Note of the
Borrower in the form of Exhibit A, evidencing Loans
hereunder.
"Notice of Borrowing" means a notice
complying with the requirements of Section 3.1.
"PBGC" means the Pension Benefit Guaranty
Corporation or any entity succeeding to any or all
of its functions under ERISA.
"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.
"Reference Loan" means an amount loaned to
the Borrower under this Agreement bearing interest
at the applicable Reference Rate. Borrowings of
Reference Loans shall be in an aggregate principal
amount of the lesser of (ii) $1,000,000 or any
larger integral multiple of $100,000 or (ii) the
unused amount of the Commitment.
"Reference Rate": The rate of interest from
time to time publicly announced by the Bank as its
"reference rate." The Bank may lend to its
customers at rates that are at, above or below the
Reference Rate. For purposes of determining any
interest rate which is based on the Reference Rate,
such interest rate shall change on the effective
date of any change in the Reference Rate.
"Refinancing Loan" means a Loan made by the
Bank with respect to which, after giving effect to
such Loan and the application of the proceeds
thereof, no increase results in the aggregate
outstanding principal amount of all Loans made by
the Bank.
"Regulatory Change" means, after the date
hereof, the adoption of any applicable law, rule or
regulation, or any change therein, 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
with any request or directive (whether or not
having the force of law) of any such authority,
central bank or comparable agency.
"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.
"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
"Taxes" has the meaning set forth in Section
2.16.
"Termination Date" means June 30, 2001 (or if
such date is not a Business Day, the next
succeeding day which is a Business Day), as the
same may be extended pursuant to Section 2.3, or
such earlier date on which the Commitments are
terminated pursuant to Section 7.2.
"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.
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 Bank; provided that if
the Borrower notifies the Bank that the Borrower
desires to amend any covenant in Article VI (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 Bank notifies the Borrower that
the Bank wishes 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 Bank.
ARTICLE II
LOANS AND ADMINISTRATION
SECTION 2.1 Commitment to Lend. During the
term hereof until the Termination Date, the Bank
agrees, on the terms and conditions set forth in
this Agreement, to make Loans to the Borrower
from time to time in amounts not to exceed in the
aggregate at any one time outstanding the amount
of its Commitment. Within the foregoing limits, the
Borrower may borrow under this Section 2.2, repay
Loans under Section 2.4, and reborrow at any time
during the term hereof.
SECTION 2.2 Extension of Termination Date.
On or not more than 30 days before May 1, 1998,
and on or not more than 30 days before May 1 of
every second year thereafter, the Borrower may, by
written notice to the Bank, request that the
Termination Date be extended for an additional two
years, effective as of the following June 30;
provided, however, that no such request will be
considered if the Termination Date was not
extended upon any previous request. The Bank will
indicate its acceptance or rejection of any
requested extension, which it may do at its sole
discretion. If the Bank notifies the Borrower in
writing within 30 days after receipt of notice of a
requested extension of its acceptance of the
requested extension, the extension shall be deemed
to have been granted.
SECTION 2.3 Maturity. Each Loan shall be
paid in full by the applicable Borrower on the earlier
of (i) the last day of the Interest Period applicable
thereto or (ii) the Termination Date.
SECTION 2.4 Note.
(a) The Loans of the Bank shall be evidenced by
a Note executed by the Borrower and payable to
the order of the Bank.
(b) The Bank may record, and prior to any
transfer of its Note may endorse, on the schedules
forming a part of its Note appropriate notations to
evidence the date and amount of each Loan made
by it and the date and amount of each payment of
principal made by the Borrower with respect
thereto and. The Bank is hereby irrevocably
authorized by the Borrower so to record and
endorse and to attach to and make a part of its
Note a continuation of any such schedule as and
when required, but failure to so record or endorse
any notation shall not affect the Borrower's
obligations hereunder or under the Note.
SECTION 2.5 Facility Fees.
(a) During the term of this Agreement, the
Borrower shall pay to the Bank a Facility Fee on the
Commitment at a rate per annum determined as
follows:
Adjusted
Debt to Total Capital Ratio
Over .40
.40 but not over Over
or less .55 .55
Facility Fee
.100 of 1% .125 of 1% .150 of 1%
(b) The Borrower shall make each payment of
Facility Fees hereunder not later than 11:00 a.m.
(Minneapolis time) on the date when due, in federal
or other funds immediately available to the Bank.
Such Facility Fees shall accrue from and including
the date of this Agreement to but excluding the
Termination Date and shall be payable quarterly in
arrears on the last day of each calendar quarter
during the term hereof. Facility 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.
SECTION 2.6 Duration of Interest Periods. The
duration of each Interest Period shall be as
specified in the applicable Notice of Borrowing.
SECTION 2.7 Termination or Reduction of
Commitment.
(a) The Borrower may, upon at least three
Business Days' notice to the Bank, terminate
entirely at any time, or reduce from time to time by
an aggregate amount of $5,000,000 or any larger
multiple of $1,000,000, the amount of the
Commitment in excess of the sum of the principal
amount of all outstanding Loans.
(b) If the Commitment is terminated in its
entirety, all accrued Facility Fees shall be payable
on the effective date of such termination. After
the Commitment has been reduced or terminated,
it may not be reinstated.
SECTION 2.8 Funding Losses. If the Borrower
makes any payment of principal with respect to
any Loan, for any reason on any day other than the
last day of an Interest Period applicable thereto, or
if the Borrower fails to borrow any Fixed Rate
Loan, after a Notice of Borrowing has been given
to the Bank in accordance with Section 3.1, the
Borrower shall reimburse the Bank on demand for
any resulting loss or expense incurred by it,
including without limitation any loss incurred in
obtaining, liquidating or employing deposits from
third parties, but excluding loss of margin for the
period after any such payment; provided that the
Bank shall have delivered to the Borrower a
certificate as to the amount of such loss or
expense, which certificate shall be conclusive in
the absence of manifest error.
SECTION 2.9 Computation of Interest. Interest
on Reference Loans 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 and
including the first day but excluding the last day
thereof. Interest on Fixed Rate Loans and Daily
Pricing Loans shall be computed on the basis of a
year of 360 days and paid for the actual number of
days elapsed, calculated as to each Interest Period
from and including the first day thereof to but
excluding the last day thereof.
SECTION 2.10 Lending Unlawful. In the event
that any Regulatory Change shall make it unlawful
or impossible for the Bank to make, maintain or
fund any Loan as a Eurodollar Loan or Daily Pricing
Loan, the obligation of the Bank under Section 2.2
to make or maintain any Loan as a Eurodollar Loan
or Daily Pricing Loan, shall upon the happening of
such Regulatory Change, forthwith terminate and
the Bank shall, by telephonic notice confirmed in
writing to the applicable Borrower, declare that
such obligation has so terminated. Upon receipt of
such notice, the applicable Borrower shall
immediately prepay in full the then outstanding
principal amount of each such Eurodollar Loan or
Daily Pricing Loan, together with accrued interest.
The Bank shall in the case of a Borrowing of
Eurodollar Loans or Daily Pricing Loan, make a
Reference Loan in an amount equal to such
Borrowing. If circumstances subsequently change
so that the Bank shall no longer be so affected, it
shall so notify the Borrower, whereupon the
obligation of the Bank under Section 2.2 to make
or maintain Eurodollar Loans and Daily Pricing
Loans shall be reinstated.
SECTION 2.11 Funds Unavailable.
Notwithstanding any other provision of this
Agreement, if, prior to the first day of the Interest
Period for a Fixed Rate Loan or Daily Pricing Loan,
the Bank shall determine for any reason
whatsoever (which determination shall be
conclusive and binding on the applicable Borrower),
that:
(a) deposits in the relevant amount and for the
relevant Interest Period are not available to the
Bank in the relevant market, or
(b) by reason of circumstances affecting the
relevant market, adequate means do not exist for
ascertaining the interest rate applicable hereunder
to such Fixed Rate Loan or Daily Pricing Loan,
then the Bank shall promptly give notice to the
Borrower of such determination, and the obligation
of the Bank under Section 2.2 to make or maintain
any Loan as a Fixed Rate Loan or Daily Pricing Loan
shall, upon such notification, forthwith terminate.
So long as the circumstances described in clause
(a) above shall continue, concurrently with any
Borrowing of Fixed Rate Loans or Daily Pricing
Loans, the Bank shall make a Reference Loan in an
amount equal to such Borrowing. If circumstances
subsequently change so that the Bank shall no
longer be so affected, the Bank shall so notify the
Borrower, whereupon the obligation of the Bank
under Section 2.2 to make or maintain Fixed Rate
Loans or Daily Pricing Loans shall be reinstated.
SECTION 2.12 Increased Costs and Reduced
Returns.
(a) If, after the date hereof, the adoption of any
applicable law, rule or regulation, or any change
therein, or any change in the interpretation or
administration thereof by any governmental
authority, control bank or comparable agency
charged with the interpretation or administration
thereof or compliance by the Bank with any
request or directive (whether or not having the
force of law) of any such authority, central bank or
comparable agency:
(i) shall subject the Bank to any tax, duty
or other charge with respect to (1) its obligation to
make Fixed Rate Loans or Daily Pricing Loans, (2)
such Loans, or (3) the Note, or shall change the
basis of taxation of payments to the Bank of the
principal of or interest on the Fixed Rate Loans or
the Daily Pricing Loans or in respect of any other
amount due under this Agreement in respect of
such Loans or its obligation to make Fixed Rate
Loans or Daily Pricing Loans (except for changes in
the taxation of the overall net income of the Bank);
or
(ii) shall impose, modify or deem applicable
any reserve (including, without limitation, any
imposed by the Board of Governors of the Federal
Reserve System, but excluding any included in the
Eurodollar Reserve Percentage), special deposit or
similar requirement against assets of, or deposits
with or for the account of, or credit extended by,
the Bank or shall impose on the Bank or the
interbank eurodollar market any other condition
affecting (1) its obligation to make Fixed Rate
Loans or Daily Pricing Loans, (2) its Loans or (3) its
Note;
and the result of any of the foregoing is to increase
the cost to the Bank of making or maintaining any
such Loan, or to reduce the amount of any sum
received or receivable by the Bank under this
Agreement or under the Note with respect any
such Loan, by an amount deemed by the Bank to
be material, then, within 15 days after demand by
the Bank, the Borrower agrees to pay to the Bank
such additional amount or amounts as will
compensate it for such increased cost or reduction.
(b) If, after the date hereof, the Bank shall have
determined that the adoption of any applicable law,
rule or regulation regarding capital adequacy, or
any change therein, or any change in the
interpretation or administration thereof by an'
governmental authority, central bank or comparable
agency charged with the interpretation or
administration on thereof, or compliance by the
Bank (or any corporation controlling the Bank) with
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 the Bank's (or such controlling
corporation's) capital as a consequence of its
obligations hereunder to a level below that which
the Bank (or such controlling corporation) could
have achieved but for such adoption, change or
compliance (taking into consideration the Bank's
(or such controlling corporation's) policies with
respect to capital adequacy) by an amount deemed
by the Bank to be material, then from time to time,
within 15 days after demand by the Bank, the
Borrower shall pay to the Bank such additional
amount or amounts as will compensate for such
reduction.
(c) The Bank will promptly notify the Borrower
of any event of which it has knowledge, occurring
after the date hereof, which will entitle the Bank to
compensation pursuant to this Section 2.12 and
will designate a different Lending Office if such
designation will avoid the need for, or reduce the
amount of, such compensation and will not, in the
sole judgment of the Bank, be otherwise
disadvantageous to the Bank. A certificate of the
Bank claiming compensation under this Section
2.13 and setting forth the additional amount or
amounts to be paid to it hereunder shall be
conclusive in the absence of manifest error. In
determining such amount, the Bank may use any
reasonable averaging and attribution methods.
SECTION 2.13 Adjustments to Margins and
Facility Fees. The CD Margin, the Eurodollar
Margin and the percentage applicable for
calculating Facility Fees shall (i) initially be based
upon the Adjusted Debt to Total Capital Ratio as of
June 30, 1996 and (ii) thereafter be adjusted, to
the extent applicable, 50 days (or, in the case of
the last fiscal quarter of any fiscal year, 95 days)
after the end of each fiscal quarter of the Borrower
based on the Adjusted Debt to Total Capital Ratio
as of the last day of such fiscal quarter; provided
that if the Borrower fails to deliver the financial
statements and compliance statement required by
Section 12.1(a) or (b) and Section 12.1(c) by the
50th (or, if applicable, the 95th) day after any
fiscal quarter, the Adjusted Debt to Total Capital
Ratio shall be deemed to be greater than 0.55 until
such statements and certificate are delivered.
ARTICLE III
PROCEDURES FOR BORROWING
SECTION 3.1 Method of Borrowing.
(a) The Borrower shall give the Bank a Notice of
Borrowing (which may be given orally, but if so,
shall be promptly confirmed by facsimile) no later
than 12:00 noon (Minneapolis time) on the day of
each Reference Borrowing and Daily Pricing Loan,
at least one Business Day before each CD
Borrowing and at least three Business Days before
each Eurodollar Borrowing specifying:
(i) the date of such Borrowing, which shall be a
Business Day,
(ii) the aggregate amount of such Borrowing,
(iii) whether the Loans comprising such
Borrowing are to be Reference Loans, CD Loans,
Daily Pricing Loans or Eurodollar Loans, and
(iv) if a Eurodollar Borrowing or CD Borrowing,
the duration of the Interest Period applicable to
such Borrowing.
In the event that the Borrower does not request a
new borrowing prior to the last day of any Interest
Period and does not otherwise provide funds to pay
loans maturing on such day, the Borrower shall be
deemed to have given the Bank a Notice of
Borrowing requesting Reference Loans on such day
in the principal amount of the Loans coming due on
such day.
(b) Not later than 5:00 p.m. (Minneapolis time)
on the date of each Borrowing of a Loan, unless
the Bank determines that any applicable condition
specified in Article IV has not been satisfied, the
Bank will make the funds available to the Borrower.
Notwithstanding the foregoing provisions of this
Section, to the extent that a Loan matures on the
date of a requested Loan, the Bank shall apply the
proceeds of the Loan it is then making to the
repayment of the maturing Loan.
SECTION 3.2 Rate and Payment of Interest.
(a) Reference Loans. Each Reference 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 Reference Rate for such day. Such
interest shall be payable on the last day of each
calendar quarter and on the Termination Date
(b) Daily Pricing Loans. Each Daily Pricing 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 Daily Pricing Rate for such day.
Such interest shall be payable on the last day of
each calendar quarter and on the Termination Date.
(b) CD Loans. Each CD Loan shall bear interest
on the outstanding principal amount thereof at a
rate per annum equal to the applicable Fixed CD
Rate. Such interest shall be payable on the last
day of the Interest Period therefor and, if such
Interest Period is longer than 90 days, at intervals
of 90 days after the first day thereof.
(d) Eurodollar Loans. Each Eurodollar Loan shall
bear interest on the outstanding principal amount
thereof at a rate per annum equal to the applicable
Fixed Eurodollar Rate. Such interest shall be
payable on the last day of the Interest Period
therefor and, if such Interest Period is longer than
three months, at intervals of three months after the
first day thereof.
(e) Interest After Maturity. . Any overdue
principal of and, to the extent permitted by law,
overdue interest on any Loan shall bear interest,
payable on demand, for each day until paid at a
rate per annum equal to the greater of (i) 1.00% in
excess of the rate applicable to the unpaid principal
amount immediately before it became due, or (ii)
1.00% in excess of the Reference Rate in effect
from time to time.
SECTION 3.3 Prepayment.
(a) The Borrower may, upon notice to the Bank
not later than (i) 4:00 p.m., Minneapolis time, on
the date of prepayment in the instance of Daily
Pricing Loans, or (ii) one Business Day prior to the
date of prepayment, in the instance of Loans of
any other type, prepay any Loans in whole at any
time, or from time to time in part in amounts
aggregating $1,000,000 or any larger multiple of
$100,000, by paying the principal amount to be
prepaid together with accrued interest thereon to
the date of prepayment.
(b) Any prepayment of a Eurodollar Loan or a
CD Loan prior to the last day of the Interest Period
therefor shall be subject to Section 2.9.
SECTION 3.4 General Provisions as to
Payments. The Borrower shall make each payment
of principal of, and interest on, Loans hereunder
not later than 11:00 a.m. (Minneapolis time) on the
date when due, in federal or other funds
immediately available to the Bank at its main office
in Minneapolis, Minnesota. Whenever any payment
of Facility Fees or principal of, or interest on, any
Reference Loans, CD Loan or Daily Pricing Loans
shall be due on a day which is not a Business Day,
the date for payment thereof shall be extended to
the next succeeding Business Day. Whenever any
payment of principal of, or interest on, any
Eurodollar Loans shall be due on a day which is not
a Business Day, the date for payment thereof shall
be extended to the next succeeding Business Day
unless as a result thereof it would fall in the next
calendar month, in which case it shall be advanced
to the next preceding 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.
ARTICLE IV
CONDITIONS TO BORROWINGS
The obligation of the Bank to make a Loan on
the occasion of any Borrowing pursuant hereto is
subject to the satisfaction of the following
conditions:
SECTION 4.1 All Borrowings. In the case of
each Borrowing:
(a) receipt by the Bank of a Notice of Borrowing
as required by Section 3.1;
(b) the fact that, as of the time of and
immediately after such Borrowing, no Default (or,
in the case of a Borrowing of Refinancing Loans, no
Event of Default) shall have occurred and be
continuing;
(c) the fact that the representations and
warranties of the Borrower contained in this
Agreement (excluding, in the case of a Refinancing
Borrowing, the representations and warranties set
forth in Sections 5.4(c) and 5.5) shall be true on
and as of the date of such Borrowing; and
(d) the fact that, as of the time immediately
after such Borrowing, the aggregate principal all
Loans outstanding shall not exceed the
Commitment.
Each Notice of Borrowing and Borrowing hereunder
shall be deemed to be a representation and
warranty by the Borrower on such date as to the
facts specified in clauses (b), (c) and (d) of this
Section.
SECTION 4.2 First Borrowing. On or before
the date of the first Borrowing:
(a) receipt by the Bank of the duly executed
Note, dated on or before the date of such
Borrowing, complying with the provisions of
Section 2.4.
(b) receipt by the Bank of an opinion of counsel
for the Borrower, substantially in the form of
Exhibit B hereto;
(c) receipt by the Bank of a certificate signed by
an officer of the Borrower, to the effect set forth in
clauses (b), (c) and (d) of Section 4.1, and
containing the resolutions of the Borrower
authorizing the execution, delivery and performance
of this Agreement and the Note; and
(d) receipt by the Bank of an incumbency
certificate which shall identify by name and title
and bear the signatures of the officers of the
Borrower authorized to sign this Agreement and the
Note, upon which certificate the Banks shall be
entitled to rely until informed in writing by the
Borrower of any change.
(e) the Multi-Facility Credit Agreement shall
have been executed and delivered by all parties
thereto, and the Borrower shall be entitled to
borrow funds thereunder.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants that:
SECTION 5.1 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.
SECTION 5.2 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 Articles 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 the Borrower's Subsidiaries.
SECTION 5.3 Binding Effect. This Agreement
constitutes a valid and binding agreement of the
Borrower, and the Note, when executed and
delivered in accordance with this Agreement, will
constitute a valid and binding obligation of the
Borrower.
SECTION 5.4 Financial Information.
(a) The consolidated balance sheet of the
Borrower and its Consolidated Subsidiaries at
December 31, 1995 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, 1995 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
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
September 30, 1996 and the related unaudited
consolidated statements of income and cash flows
for the three months then ended, set forth in the
Borrower's quarterly report for the fiscal quarter
ended September 30, 1996 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 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 three-month period (subject to normal
year-end adjustments).
(c) Since December 31, 1995 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 5.5 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 Note.
SECTION 5.6 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.
SECTION 5.7 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, 1984.
SECTION 5.8 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 5.9 Not an Investment Company.
The Borrower is not an investment company within
the meaning of the Investment Company Act of
1940, as amended.
SECTION 5.10 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.
ARTICLE VI
COVENANTS
The Borrower agrees that so long as the Bank
has any Commitment hereunder or any amount
payable under any Note remains unpaid:
SECTION 6.1 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 6.2 to 6.7, inclusive, on the date of
such financial statements and (ii) stating whether
there exists on the date of such 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 Bank may reasonably request;
(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 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 6.2 Debt to Total Capital Ratio. The
Debt to Total Capital Ratio will at no time exceed
.60.
SECTION 6.3 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 6.4 Expense Ratio. At any time
when the Debt to Total Capital Ratio exceeds .50,
as of the end of each quarter of each of the
Borrower's fiscal years, the ratio of
(a) consolidated net income before taxes plus
(to the extent deducted in calculating net income
before taxes) Interest Expense and rent expense to
(b) Interest Expense and rent expense,
(the "Expense Ratio") calculated on a cumulative
basis for the four most recent fiscal quarters
(excluding in each case interest and rent expense
of any joint venture or other entity in which the
Borrower or a Consolidated Subsidiary has an
ownership interest but which is not a Subsidiary),
will not be less than 1.5:1.0.
SECTION 6.5 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 5.4);
(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
put 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;
(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 refunding 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 6.6 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 6.7 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;
(b) Debt under this Agreement; and
(c) Debt incurred in respect of any Sale of
Receivables;
to exceed twenty percent (20%) of Consolidated
Shareholders' Equity.
SECTION 6.8 Use of Proceeds. The proceeds
of the Loans made and the issued under this
Agreement will be used by the Borrower 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. The
Borrower will not engage principally, or as one of
its important activities, in the business of extending
credit for the purpose of purchasing or carrying any
such margin stock within the meaning of such
Regulation U.
SECTION 6.9 Environmental Laws. 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.
SECTION 6.10 Sales of Receivables. the
Borrower shall not, and shall not permit any
Subsidiary to, engage in any Sale of Receivables if
the outstanding principal of loans secured in
connection with all Sales of Receivables plus
(without duplication) the outstanding investment all
receivables sold pursuant to Sales of Receivables
would at any time exceed an amount of
$50,000,000.
ARTICLE VII
DEFAULTS
SECTION 7.1 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 within three
days of the date due any principal of any Loan; or
the Borrower shall fail to pay within five (5) 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 6.2 to 6.9,
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 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 Note) of the Borrower or any
of its Subsidiaries equal to or exceeding an amount
of $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) the holder of any such
Debt or any Person acting on such holder's behalf
to accelerate the maturity thereof; 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 7.1(e)
lower than $20,000,000, the threshold for the
purposes of this subparagraph 7.1(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 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 the Borrower 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 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 $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;
(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) any Event of Default shall occur under the
Multi-Facility Credit Agreement;
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 (l) above, the Bank may (i) by notice to the
Borrower, terminate the Commitment and they
shall thereupon terminate, and/or (ii) by notice to
the Borrower declare the Note (together with
accrued interest thereon) to be, and the Note 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
Bank, the Commitment shall thereupon terminate
and the Note (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.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.1 Notices. All notices, requests
and other communications to any party hereunder
shall be in writing (including bank wire, telex,
facsimile 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 the signature pages hereof or
such other address or telex number as such party
may hereafter specify for the purpose by notice to
the Bank and the Borrower. 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, 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 the Bank under Articles II and III shall not
be effective until received. Any agreement of the
Bank herein to receive certain notices by telephone
or facsimile is solely for the convenience of 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
applicable 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 Loans 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 the telephonic or facsimile notice.
SECTION 8.2 No Waiver. No failure or delay
by the Bank in exercising any right, power or
privilege hereunder or under the 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 8.3 Expenses; Documentary Taxes.
The Borrower shall pay upon demand (i) all
reasonable expenses of the Bank, including fees
and disbursements of counsel for the Bank, in
connection with the preparation of this Agreement,
any waiver or consent hereunder or any
amendment hereof or any Default or alleged Default
by the Borrower hereunder and (ii) if an Event of
Default occurs, all reasonable out-of-pocket
expenses incurred by the Bank, including fees and
disbursements of attorneys for the Bank (who may
be employees of the Bank), in connection with such
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.
SECTION 8.4 Amendments and Waivers. Any
provision of this Agreement or the Note may be
amended or waived if, but only if, such amendment
or waiver is in writing and is signed by the Bank.
SECTION 8.5 Collateral. The Bank represents
that it in good faith is not relying upon any "margin
stock" (as defined in Regulation U of the Board of
Governors of the Federal Reserve System) as
collateral in the extension or maintenance of the
credit provided for in this Agreement.
SECTION 8.6 Successors and Assigns. 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.
SECTION 8.7 Participations and
Information. The Bank may sell participation
interests in any or all of the Loans and in all or any
portion of the Commitment to any Person. The
Bank may furnish any information concerning the
Borrower in the possession of the Bank from time
to time to participants and prospective participants
and may furnish information in response to credit
inquiries consistent with general banking practice.
SECTION 8.8 Minnesota Law. This Agreement
and each Note shall be construed in accordance
with and governed by the substantive laws of the
State of Minnesota without regard to the choice of
law provisions thereof.
SECTION 8.9 Counterparts: Effectiveness.
This Agreement may be signed in any number of
counterparts, each of which shall be an original,
and all of which taken together shall constitute a
single agreement, with the same effect as if the
signatures thereto and hereto were upon the same
instrument. This Agreement shall become effective
when the Bank shall have received counterparts
hereof signed by all of the parties hereto.
SECTION 8.10 Consent to Jurisdiction. AT
THE OPTION OF THE BANK, THIS AGREEMENT
AND THE NOTE MAY BE ENFORCED IN ANY
FEDERAL COURT OR MINNESOTA STATE COURT
SITTING IN MINNEAPOLIS OR ST. XXXX,
MINNESOTA; AND THE BORROWER CONSENTS
TO THE JURISDICTION AND VENUE OF ANY SUCH
COURT AND WAIVES ANY ARGUMENT THAT
VENUE IN SUCH FORUMS IS NOT CONVENIENT.
IN THE EVENT THE BORROWER COMMENCES ANY
ACTION IN ANOTHER JURISDICTION OR VENUE
UNDER ANY TORT OR CONTRACT THEORY
ARISING DIRECTLY OR INDIRECTLY FROM THE
RELATIONSHIP CREATED BY THIS AGREEMENT,
THE BANK AT ITS OPTION SHALL BE ENTITLED TO
HAVE THE CASE TRANSFERRED TO ONE OF THE
JURISDICTIONS AND VENUES ABOVE-DESCRIBED,
OR IF SUCH TRANSFER CANNOT BE
ACCOMPLISHED UNDER APPLICABLE LAW, TO
HAVE SUCH CASE DISMISSED WITHOUT
PREJUDICE.
SECTION 8.11 Waiver of Jury Trial. THE
BORROWER WAIVES ANY RIGHT TO A TRIAL BY
JURY IN ANY ACTION OR PROCEEDING TO
ENFORCE OR DEFEND ANY RIGHTS (a) UNDER
THIS AGREEMENT OR UNDER ANY AMENDMENT,
INSTRUMENT, DOCUMENT OR AGREEMENT
DELIVERED OR WHICH MAY IN THE FUTURE BE
DELIVERED IN CONNECTION HEREWITH OR (b)
ARISING FROM ANY BANKING RELATIONSHIP
EXISTING IN CONNECTION WITH THIS
AGREEMENT, AND AGREES THAT ANY SUCH
ACTION OR PROCEEDING SHALL BE TRIED
BEFORE A COURT AND NOT BEFORE A JURY.
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:__________________________________
Waters Edge Plaza
0000 Xxxxxx Xxxx X0 Xxxx
Xx. Xxxx, Xxxxxxxxx 00000
Attention: Chief Financial Officer
Telecopy: (000) 000-0000
Telephone: (000) 000-0000
FIRST BANK NATIONAL ASSOCIATION
By:___________________________________
Title:__________________________________
000 0xx Xxx. X.
Xxxxxxxxxxx, XX 00000-0000
Attention: Xxxx X. Xxxxx
Telephone: (000) 000-0000
Fax: (000) 000-0000
EXHIBITS
Exhibit Contents
A Form of Note
B Form of Legal Opinion
EXHIBIT A
PROMISSORY NOTE
$25,000,000
Minneapolis, Minnesota: November 15, 1996
FOR VALUE RECEIVED, the undersigned
PENTAIR, INC., a Minnesota corporation (the
"Borrower"), promises to pay to the order of FIRST
BANK NATIONAL ASSOCIATION, a national
banking association (the "Bank"), on the due date
or dates determined under the Credit Agreement
hereinafter referred to, the principal sum of
TWENTY FIVE MILLION DOLLARS ($25,000,000),
or if less, the then aggregate unpaid principal
amount of the Loans (as such terms are defined in
the Credit Agreement) as may be borrowed by the
Borrower under the Credit Agreement. All Loans
and all payments of principal shall be recorded by
the holder in its records which records shall be
conclusive evidence of the subject matter thereof,
absent manifest error.
The Borrower further promises to pay to the
order of the Bank interest on the aggregate unpaid
principal amount hereof from time to time
outstanding from the date hereof until paid in full
at the rates per annum which shall be determined
in accordance with the provisions of the Credit
Agreement. Accrued interest shall be payable on
the dates specified in the Credit Agreement.
All payments of principal and interest under
this Note shall be made in lawful money of the
United States of America in immediately available
funds at the Bank's office at 000 0xx Xxx. X.,
Xxxxxxxxxxx, Xxxxxxxxx 00000-0000, or at such
other place as may be designated by the Bank to
the Borrower in writing.
This Note is the Note referred to in, and
evidences indebtedness incurred under, a Credit
Agreement dated as of November 15, 1996
(herein, as it may be amended, modified or
supplemented from time to time, called the "Credit
Agreement") between the Borrower and the Bank,
to which Credit Agreement reference is made for a
statement of the terms and provisions thereof,
including those under which the Borrower is
permitted and required to make prepayments and
repayments of principal of such indebtedness and
under which such indebtedness may be declared to
be immediately due and payable.
All parties hereto, whether as makers,
endorsers or otherwise, severally waive
presentment, demand, protest and notice of
dishonor in connection with this Note.
This Note is made under and governed by
the internal laws of the State of Minnesota.
PENTAIR, INC.
By:____________________________________
Title:__________________________________
EXHIBIT B
Opinion of Counsel
First Bank National Association
000 0xx Xxx. X.
Xxxxxxxxxxx, XX 00000-0000
Attention:
Ladies/Gentlemen:
We have acted as counsel for PENTAIR,
INC., (the "Borrower"), and we are delivering to
you this opinion of counsel upon which you may
rely, in connection with a Credit Agreement, dated
as of November 15, 1996, entered into between
the Borrower and your Bank (the "Credit
Agreement"), and the transactions and other
documents, including the Note, described therein
(the "Loan Documents"). Unless otherwise defined
herein, capitalized terms used herein shall have the
respective meanings assigned to such terms in the
Credit Agreement.
In so acting, we, as counsel for the
Borrower, have made such factual inquiries, and
have examined or caused to be examined such
questions of law, as we have considered necessary
or appropriate for the purposes of this opinion and,
upon the basis of such inquiries and examinations,
advise you that, in our opinion:
(1) The Borrower and each of its
Subsidiaries are corporations duly organized, validly
existing and in good standing under the laws of the
state of their respective incorporation, and each is
duly qualified and in good standing as a foreign
corporation in all other jurisdictions in which its
respective present operations or properties require
such qualification.
(2) The Borrower has full corporate power
and authority to own and operate its properties and
assets, carry on its business as presently
conducted, and enter into and perform its
obligations under the Loan Documents to which it
is a party.
(3) The execution and delivery of the Loan
Documents to which the Borrower is a party, the
performance by the Borrower of its obligations
thereunder, and the borrowing by the Borrower
under the Credit Agreement, have been duly
authorized by all necessary corporate action, and all
of said Loan Documents have been duly executed
and delivered on behalf of the Borrower and
constitute valid and binding obligations of the
Borrower, enforceable in accordance with their
respective terms.
(4) There is no provision in the Borrower's
Articles of Incorporation or By-Laws, nor any
provision in any indenture, mortgage, contract or
agreement to which the Borrower is a party or by
which it or its properties may be bound, nor any
law, statute, rule or regulation, nor any writ, order
or decision of any court or governmental
instrumentality binding on the Borrower which
would be contravened by the execution and
delivery of the Loan Documents to which the
Borrower is a party, nor do any of the foregoing
prohibit the Borrower's performance of any term,
provision, condition, covenant or any other
obligation of the Borrower contained therein.
(5) There are no actions, suits or
proceedings pending or, to the best of our
knowledge after due inquiry, threatened against or
affecting the Borrower before any court or
arbitrator or by or before any administrative agency
or government authority in which there is a
reasonable possibility of an adverse decision which
would materially adversely affect the business,
consolidated financial position or consolidated
results of operations of the Borrower and its
Subsidiaries taken as a whole.
(6) Neither the making nor performance of
the Loan Documents, nor the borrowing(s) under
the Credit Agreement, requires the consent or
approval of any governmental instrumentality.
(7) The Borrower is not a "holding
company", a "subsidiary company" of a "holding
company" or an "affiliate" of a "holding company",
within the meaning of the Public Utility Holding
Company Act of 1935, as amended.
(8) The Borrower is not an "investment
company" or a company "controlled" by an
"investment company", within the meaning of the
Investment Company Act of 1940, as amended.
(9) The Borrower is not engaged in the
business of extending credit for the purpose of
purchasing or carrying margin stock (within the
meaning of Regulation U of the Board of Governors
of the Federal Reserve System), and, to the best of
our knowledge after due inquiry, no part of the
proceeds of any loan under the Credit Agreement
will be used to purchase or carry any margin stock
or to extend credit to others for the purpose of
purchasing or carrying any margin stock.
Very truly yours,
