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EXHIBIT 10.27
SECOND AMENDMENT
THIS SECOND AMENDMENT, dated as of February 16, 2001 (this
"Amendment"), amends the 364-Day Credit Agreement dated as of September 2, 1999
(as previously amended, the "Credit Agreement"), among PENTAIR, INC., various
financial institutions, and BANK OF AMERICA, N.A., as Administrative Agent.
Terms defined in the Credit Agreement are, unless otherwise defined herein or
the context otherwise requires, used herein as defined therein.
WHEREAS, the Company, the Lenders and the Administrative Agent have
entered into the Credit Agreement; and
WHEREAS, the parties hereto desire to reduce the Total Commitment and
amend the Credit Agreement in certain respects as more fully set forth below;
NOW, THEREFORE, the parties hereto agree as follows:
SECTION 1 Amendments. Subject to the satisfaction of the conditions
precedent set forth in Section 3, the Credit Agreement shall be amended as set
forth below:
(1) Addition of Definitions. The following new definitions are added to
Section 1.01 in appropriate alphabetical sequence:
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.
Subsidiary Guarantor means, on any day, each Subsidiary that
has executed a counterpart of the Subsidiary Guaranty on or prior to
that day (and has not been released from its obligations thereunder in
accordance with the terms hereof).
Subsidiary Guaranty means a Subsidiary Guaranty issued by
various Subsidiaries of the Company, substantially in the form of
Exhibit I.
(2) Amendment to Section 1.01. Section 1.01 is amended by deleting the
definitions of "EBITDA," "Interest Coverage Ratio" and "Leverage Ratio" in their
entirety and substituting the following therefor, respectively:
EBITDA means, for any period, the sum of the consolidated net
income of the Company for such period excluding the effect of any
extraordinary or non-recurring gains and any extraordinary or
non-recurring non-cash losses in such period plus, to the extent
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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 Company'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.
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 Company 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).
Leverage Ratio means, as of any date, the ratio of (a) the sum
(without duplication) of (i) all Debt of the Company and its
Consolidated Subsidiaries plus (ii) all Synthetic Lease Obligations of
the Company and its Consolidated Subsidiaries, all determined on a
consolidated basis, to (b) EBITDA for the period of four consecutive
fiscal quarters most recently ended on or before such date for which
financial statements have been delivered pursuant to subsection 8.01(a)
or (b); provided that for purposes of calculating EBITDA pursuant to
this clause (b), the consolidated net income of any Person or business
unit acquired (or divested or liquidated, if the sales revenue
generated by such Person or business unit in the 12 months prior to
such divestiture or liquidation was $25,000,000 or more) by the Company
or any Subsidiary during such period (plus, to the extent deducted in
determining such consolidated net income, Interest Expense, income tax
expense, depreciation and amortization of such Person or business unit)
shall be included (or, in the case of a divestiture or liquidation,
excluded) on a pro forma basis for such period (assuming the
consummation of each such acquisition and the incurrence or assumption
of any Debt in connection therewith (or the consummation of such
divestiture or liquidation) occurred on the first day of such period)
in accordance with Article 11 of Regulation S-X of the Securities and
Exchange Commission.
(3) Amendment to Section 8.02. Section 8.02 is amended in its entirety
to read as follows:
8.02 Maximum Leverage Ratio. The Company shall not at any time
permit the Leverage Ratio to exceed the applicable ratio set forth
below during any period set forth below:
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FISCAL QUARTER ENDING: LEVERAGE RATIO
Prior to 6/30/01 4.25 to 1.0
6/30/01 4.00 to 1.0
9/29/01 3.50 to 1.0
12/31/01 and thereafter 3.00 to 1.0.
(4) Amendment to Section 8.03. Section 8.03 is amended in its entirety
to read as follows:
8.03 Minimum Interest Coverage Ratio. The Company shall not at
any time permit the Interest Coverage Ratio to be less than the
applicable ratio set forth below during any period set forth below:
COMPUTATION PERIOD ENDING: INTEREST COVERAGE RATIO
On or prior to 6/30/01 2.25 to 1.0
9/29/01 2.50 to 1.0
12/31/01 and thereafter 3.00 to 1.0.
For purposes of the foregoing, a "Computation Period" is any period of
four consecutive fiscal quarters of the Company ending on the last day
of a fiscal quarter.
(5) Amendment to Section 8.06. Section 8.06 is amended by (i) deleting
the word "and" at the end of subsection (b) thereof, and (ii) adding the
following as new subsections (d) and (e) thereof:
(d) Debt under the Subsidiary Guaranty; and
(e) so long as the Subsidiary Guaranty is in effect, Debt
arising under unsecured guaranties of other Senior
Debt of the Company;
(6) Addition of new Section 8.11. The following new Section 8.11 is
added in proper numerical sequence:
8.11. Subsidiary Guaranty. The Company will take, and will
cause its Subsidiaries to take such actions as are reasonably necessary
or as the Administrative Agent may reasonably request (including
delivery of authorization documents and customary opinions of counsel)
so that as of May 1, 2001 and at all times thereafter all of the
Company's obligations hereunder are guaranteed by
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Subsidiaries (other than Foreign Subsidiaries) that, in the aggregate
together with the Company, own 90% or more of the consolidated assets
of the Company and its Subsidiaries (excluding Foreign Subsidiaries)
and earned 90% or more of the consolidated revenue of the Company and
its Subsidiaries (excluding Foreign Subsidiaries) during the most
recent period of four consecutive fiscal quarters (excluding the
revenues of any Subsidiary or business unit which has been divested or
liquidated on or prior to any date of determination), in each case
pursuant to the Subsidiary Guaranty.
(7) Amendment to Section 9.01. Section 9.01 is amended by (i) deleting
the word "or" at the end of subsection (j) thereof, (ii) inserting the word "or"
after subsection (k) thereof, and (iii) adding the following as a new subsection
(l) thereof:
(l) 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.
(8) Addition of New Section 10.13. The following new Section 10.13 is
added in proper numerical sequence:
10.13 Subsidiary Guaranty. (a) Subject to the proviso
contained in clause (b) below, the Administrative Agent shall, and the
Lenders irrevocably authorize the Administrative Agent to, release any
Person which is a Subsidiary Guarantor from its obligations under the
Subsidiary Guaranty, if such Person ceases to be a Subsidiary Guarantor
pursuant to a transaction that does not result in a default of any
provision hereof (including Section 8.11). Upon request by the
Administrative Agent at any time, the Required Lenders will confirm in
writing the Administrative Agent's authority to release any Subsidiary
from its obligations under the Subsidiary Guaranty pursuant to this
Section 10.13.
(b) The Administrative Agent agrees to promptly execute and
deliver to the Company all documents reasonably required to evidence
any release permitted under this Agreement; provided that such release
also is permitted under the Long Term Credit Agreement and the Company
certifies that such release also is permitted under any other agreement
governing indebtedness for borrowed money of the Company which is
entitled to the benefits of the Subsidiary Guaranty.
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(9) Amendment to Section 11.04. Section 11.04 is amended by (i)
deleting the word "or" at the end of clause (d) thereof, (ii) re-designating
clause "(e)" as clause "(f)" and (iii) inserting the following new clause (e):
(e) release any Subsidiary Guarantor from its obligations under
the Subsidiary Guaranty (other than with respect to a Person
which ceases to be a Subsidiary Guarantor pursuant to a
transaction that does not result in a default of any provision
hereof (including Section 8.11)); or
(10) Amendment of Pricing Schedule. Schedule 1.01 (Pricing Schedule) is
amended in its entirety by substituting the Schedule 1.01 attached hereto
therefor (and such Pricing Schedule shall become effective immediately upon the
effectiveness of this Amendment).
(11) Amendment of Commitment Schedule. Schedule 2.01 (Commitments and
Pro Rata Shares) is hereby amended in its entirety by substituting the Schedule
2.01 attached hereto therefor (and such Schedule 2.01 shall become effective
immediately upon the effectiveness of this Amendment).
(12) Addition of New Exhibit I. Exhibit I attached hereto is added in
the proper alphabetical sequence.
SECTION 2 Representations and Warranties. The Company represents and
warrants to the Lenders that (a) each of the representations and warranties of
the Company set forth in the Credit Agreement is true and correct as of the date
of the execution and delivery of this Amendment by the Company, with the same
effect as if made on such date, (b) the execution and delivery by the Company of
this Amendment and the performance by the Company of its obligations under the
Credit Agreement, as amended hereby (as so amended, the "Amended Credit
Agreement"), (i) are within the powers of the Company, (ii) have been duly
authorized by all necessary action on the part of the Company, (iii) have
received all necessary governmental approval and (iv) do not and will not
contravene or conflict with (A) any provision of law or the certificate of
incorporation or by-laws or other organizational documents of the Company or (B)
any agreement, judgment, injunction, order, decree or other instrument binding
upon the Company or any of its Subsidiaries and (c) the Amended Credit Agreement
is a legal, valid and binding obligation of the Company enforceable against the
Company in accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency or other similar laws of general application affecting
the enforcement of creditors' rights or by general principles of equity limiting
the availability of equitable remedies.
SECTION 3 Effectiveness. This Amendment shall become effective on the
date on which the Administrative Agent has received each of the following:
(1) counterparts (or facsimiles thereof) of signature pages to this
Amendment executed by the Company, the Required Lenders and the Administrative
Agent;
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(2) payment by the Company to the Administrative Agent of the fees
required by Section 4 hereof;
(3) a certificate of the secretary or an assistant secretary of the
Company as to:
(i) resolutions of the board of directors of the Company
authorizing the execution and delivery of this
Amendment and the performance by the Company of its
obligations under the Amended Credit Agreement; and
(ii) the incumbency and signatures of those of its
officers authorized to execute and deliver this
Amendment; and
(4) such other documents as the Administrative Agent or any Lender may
reasonably request.
SECTION 4 Consent Fee. The Company shall pay on or before the effective
date hereof and in immediately available funds to the Administrative Agent, for
the account of each Lender which has delivered to the Administrative Agent (by
facsimile or otherwise) (x) on or before 5:00 p.m. (Chicago time) on February
14, 2001, an executed letter consenting hereto and (y) on or before 5:00 p.m.
(Chicago time) on February 16, 2001, an executed counterpart of the applicable
signature page hereof, a consent fee equal to 0.125% of the amount of such
Lender's Commitment under the Credit Agreement.
SECTION 5 Miscellaneous.
(1) Continuing Effectiveness, etc. As herein amended, the Credit
Agreement shall remain in full force and effect and is hereby ratified and
confirmed in all respects. After the effective date hereof, all references in
the Credit Agreement and the Notes to "Credit Agreement", "Agreement" or similar
terms shall refer to the Amended Credit Agreement.
(2) Limited Waiver. The Required Lenders hereby waive any failure by
the Company to comply with Section 8.02 or Section 8.03 of the Credit Agreement
for the applicable calculation period ending on December 31, 2000. The
aforementioned waiver is limited to the matters specifically identified therein
and shall not be deemed to constitute a waiver or consent with respect to any
other matter whatsoever.
(3) Counterparts. This Amendment may be executed in any number of
counterparts and by the different parties on separate counterparts, and each
such counterpart shall be deemed to be an original but all such counterparts
shall together constitute one and the same Amendment.
(4) Expenses. The Company agrees to pay the reasonable costs and
expenses of the Administrative Agent (including attorney's fees and expenses) in
connection with the preparation, execution and delivery of this Amendment.
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(5) Governing Law. This Amendment shall be a contract made under and
governed by the internal laws of the State of Illinois applicable to contracts
made and to be performed entirely within such State.
(6) Successors and Assigns. This Amendment shall be binding upon the
Company, the Lenders and the Administrative Agent and their respective
successors and assigns, and shall inure to the benefit of the Company, the
Lenders and the Administrative Agent and the respective successors and assigns
of the Lenders and the Administrative Agent.
(7) Administrative Agent. The Required Lenders acknowledge that the
Administrative Agent will act as administrative agent for the Lenders for
purposes of the Subsidiary Guaranty. The Required Lenders authorize the
Administrative Agent to act in such capacity and to enter into a Subsidiary
Guaranty on behalf of the Lenders and to execute and deliver such documents as
may reasonably be required or appropriate in connection therewith.
[Signatures begin on the following page.]
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Delivered at Chicago, Illinois as of the day and year first above
written.
PENTAIR, INC.
By:
Title:
BANK OF AMERICA, N.A.,
individually and as Administrative
Agent
By:
Title:
BANK ONE, NA (Main Office Chicago)
(formerly known as The First
National Bank of Chicago)
By:
Title:
U.S. BANK NATIONAL ASSOCIATION
By:
Title:
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
By:
Title:
Second Amendment to
364-Day Credit Agreement
S-1
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THE BANK OF TOKYO-MITSUBISHI, LTD.,
CHICAGO BRANCH
By:
Title:
By:
Title:
BANCA NAZIONALE DEL LAVORO S.p.A.
NEW YORK BRANCH
By:
Title:
By:
Title:
BANCA ANTONVENETA NEW YORK BRANCH
By:
Title:
By:
Title:
BANK HAPOALIM B.M.
By:
Title:
By:
Title:
Second Amendment to
364-Day Credit Agreement
S-2
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FIRST UNION NATIONAL BANK
By:
Title:
THE INDUSTRIAL BANK OF JAPAN,
LIMITED
By:
Title:
FLEET NATIONAL BANK
By:
Title:
CREDIT LYONNAIS CHICAGO BRANCH
By:
Title:
By:
Title:
SUNTRUST BANK (formerly known as
SunTrust Bank, Central Florida,
N.A.)
By:
Title:
Second Amendment to
364-Day Credit Agreement
S-3
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WELLS FARGO BANK, NATIONAL
ASSOCIATION
By:
Title:
By:
Title:
THE DAI-ICHI KANGYO BANK, LTD.
By:
Title:
BANCA DI ROMA - CHICAGO BRANCH
By:
Title:
By:
Title:
FIRSTAR BANK, N.A. (formerly known
as Firstar Bank of Minnesota, N.A.)
By:
Title:
MELLON BANK, N.A.
By:
Title:
Second Amendment to
364-Day Credit Agreement
S-4
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SANWA BANK LIMITED
By:
Title:
By:
Title:
THE BANK OF NEW YORK
By:
Title:
BNP PARIBAS (formerly known as
Banque Nationale De Paris)
By:
Title:
By:
Title:
NATIONAL CITY BANK
By:
Title:
Second Amendment to
364-Day Credit Agreement
S-5
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SCHEDULE 1.01
PRICING SCHEDULE
The Applicable Margin and Facility Fee Rate shall be determined as
follows:
1. The Applicable Margin and the Facility Fee Rate shall be as set forth
in the table below and shall be calculated based on (a) the credit ratings
assigned by Moody's and S&P to the Company's debt obligations under this
Agreement and the Long Term Credit Agreement (each a "Bank Debt Rating"), if
Moody's and S&P have issued such ratings, or (b) if either Moody's or S&P has
not issued a Bank Debt Rating, the general corporate rating assigned by Moody's
and S&P to the Company (each a "Corporate Rating"), or (c) if either Moody's or
S&P has issued neither a Bank Debt Rating nor a Corporate Rating, the credit
ratings assigned by Moody's and S&P to the Company's long term senior unsecured
non-credit-enhanced public Debt (each a "Senior Debt Rating").
2. Prior to March 30, 2001, the Applicable Margin and the Facility Fee
Rate (collectively, the "Pricing") shall be Level IV (notwithstanding that
calculations made in accordance with the other provisions of this Schedule 1.01
would specify a lower level).
3. If one Bank Debt Rating, Corporate Rating or Senior Debt Rating is
higher than the other (i.e., the Moody's rating is higher than the S&P rating,
or vice versa), the lower of such ratings shall determine the Pricing. If at any
time either Moody's or S&P does not have in effect a Bank Debt Rating, a
Corporate Rating or a Senior Debt Rating (including any time when neither
Moody's nor S&P has in effect any such rating), the Pricing shall be Level V.
4. The Pricing shall be adjusted two Business Days after any applicable
change in the Bank Debt Rating, Corporate Rating or Senior Debt Rating by either
Moody's or S&P.
LEVEL I LEVEL II LEVEL III LEVEL IV LEVEL V
- --------------------------------------------------------------------------
BANK DEBT A-/A3 OR
RATINGS, HIGHER BBB+/Baa1 BBB/Baa2 BBB-/Baa3 BB+/Ba1
CORPORATE OR LOWER
RATINGS OR
SENIOR DEBT
RATINGS
- --------------------------------------------------------------------------
APPLICABLE
MARGIN
(bps) 65.0 75.0 85.0 107.5 130.0
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FACILITY FEE
(bps) 10.0 12.5 15.0 17.5 20.0
- --------------------------------------------------------------------------
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SCHEDULE 2.01
COMMITMENTS
AND PRO RATA SHARES
Pro
Rata
Lender Commitment Share
------ ---------- -----
Bank of America, N.A. $ 30,500,000 9.10447761%
Bank One, NA $ 30,450,000 9.08955224%
U.S. Bank National Association $ 30,450,000 9.08955224%
Morgan Guaranty Trust Company of New York $ 27,840,000 8.31044776%
The Bank of Tokyo - Mitsubishi, Ltd.,
Chicago Branch $ 21,750,000 6.49253731%
Banca Nazionale del Lavoro S.p.A.
New York Branch $ 17,400,000 5.19402985%
Banca Antonveneta New York Branch $ 17,400,000 5.19402985%
Bank Hapoalim B.M. $ 17,400,000 5.19402985%
First Union National Bank $ 17,400,000 5.19402985%
The Industrial Bank of Japan, Limited $ 15,660,000 4.67462687%
Fleet National Bank $ 15,660,000 4.67462687%
Credit Lyonnais Chicago Branch $ 9,570,000 2.85671642%
SunTrust Bank $ 9,570,000 2.85671642%
Wells Fargo Bank, National Association $ 9,570,000 2.85671642%
The Dai-Ichi Kangyo Bank, Ltd. $ 8,700,000 2.59701493%
Banca di Roma - Chicago Branch $ 8,700,000 2.59701493%
Firstar Bank, N.A. $ 8,700,000 2.59701493%
Mellon Bank, N.A. $ 7,830,000 2.33731343%
Sanwa Bank Limited $ 7,830,000 2.33731343%
The Bank of New York $ 7,830,000 2.33731343%
BNP Paribas $ 7,830,000 2.33731343%
National City Bank $ 6,960,000 2.07761194%
TOTAL $335,000,000 100%
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EXHIBIT I