Prepared by MERRILL CORPORATION









Exhibit

10.32




 




RETIREMENT AGREEMENT AND

RELEASE




 




THIS RETIREMENT AGREEMENT

AND RELEASE (“Agreement”) is made and entered into by and between Joseph R.

Collins (“Collins”) and Pentair, Inc. (“Pentair”).




 




1.             Consideration. 

In consideration for the mutual promises and the payments to Collins set

forth herein, Collins acknowledges the full, complete, and final settlement of

any and all claims, actions, causes of action or costs, including attorneys’

fees, against  Pentair and the members

of the controlled group of companies which includes Pentair (collectively, the

“Group”).




 




2.             Separation from Service.  Collins has retired as an employee and

officer of Pentair and each other Group member, as listed on Schedule A,

effective January 15, 2001 (the “Separation Date”).  Effective April 25, 2001, Collins shall retire as a member of the

Board of Directors of Pentair and each other Group member, also as listed on

Schedule A.  Effective as of the

Separation Date, Collins shall cease to be a committee member or to serve in

any capacity with respect to each Pentair benefit plan listed on Schedule B.




 




3.             Transition Payments.  Beginning January 16, 2001 and ending August 31, 2001, Pentair

shall pay to Collins $18,750 on each regularly scheduled payroll date which

falls during such period.  These

payments shall be made in accordance with the usual payroll practices of

Pentair and shall be reduced by all applicable state and federal withholding

taxes and any other deductions which have been authorized by Collins or which

Pentair may be required by law to make. 

Collins understands and agrees that these payments are more than Pentair

is required to make under its normal policies and practices, are in lieu of

compensation and fees for services through April 25, 2001 as a director of

Pentair or any other Group member, and are in excess of the amount that would

be otherwise due to him as compensation for such transition services as he has

provided or may be asked to provide through August 31, 2001.




 




4.             Stock and Equity Awards.  Outstanding awards made to Collins under the

Pentair Omnibus Stock Incentive Plan (the “Omnibus Plan”) and other equity

awards shall be paid as described below. 

Collins understands and agrees that the payment of these awards as

described herein is discretionary and not required under the normal policies

and procedures of Pentair, and that he would not be entitled to these benefits

without this Agreement.




 




a.             Restricted Stock.  All shares of restricted stock awarded to

Collins through January 15, 2001 under the Ownership Incentive Plan, together

with any shares of restricted stock awarded to Collins under the Omnibus Plan

or any other bonus program shall, to the extent not currently vested, be vested

as of such date in April, 2001 as the Incentive Compensation Units discussed in

paragraph 4(b) are paid.




 











 




b.             Incentive Compensation Units

(“ICUs”).  All ICUs awarded to

Collins as of the Separation Date under the Omnibus Plan shall be deemed to be

fully earned as of the Separation Date without regard to the relevant period

stated at the time of grant.  The value

of said awards shall be calculated and paid to Collins in April, 2001.




 




c.             Stock Options.  All outstanding stock options granted to

Collins under the Omnibus Plan shall remain outstanding and exercisable by him

through the earlier of their original maturity date and five (5) years from the

Separation Date; provided, however, the date any such option, or part thereof,

is first exercisable shall not be accelerated. 

To the extent options designated as incentive stock options are

exercised within thirty (30) days of the Separation Date, they shall retain

their status as such; options exercised after this thirty (30) day period shall

be treated as nonqualified options.




 




In the event

Collins shall sell any Pentair common stock acquired pursuant to the exercise

of an incentive stock option in a disqualifying disposition, Collins shall

immediately notify Pentair of such disqualifying disposition and supply all

information with respect to such sale as is reasonably requested by

Pentair.  This notification obligation

shall apply regardless of whether such options were exercised before or after

the Separation Date.




 




In the event

Collins should die before all such options have been exercised or otherwise

lapse, the beneficiary designated by Collins shall have six (6) months from the

date of Collins’s death to exercise any options then outstanding.  Any options not so exercised shall lapse at

the end of said six (6) month period.




 




d.             Continuing Securities

Obligations.  At the direction of

Pentair, Henson & Efron, P.A. will inform Collins in writing of its

understanding of his continuing obligations under applicable securities laws

for purposes of any transactions in Pentair common stock.




 




5.             Retirement Benefits.  Collins shall receive payment from the tax-qualified and non

qualified retirement plans maintained by Pentair as follows:




 




a.             Pentair Pension Plan.  The accrued benefit payable to Collins under

the Pentair Pension Plan shall be determined as of the Separation Date and Collins

shall be entitled to receive payment of such vested accrued benefit in

accordance with applicable provisions of that plan.




 




b.             Supplemental Retirement Payment.  As a supplemental retirement benefit,

Collins shall be paid $27,087.12 monthly beginning on September 1, 2001, said

benefit to be paid in the form of a Life Only option.  Optional forms of payment will be made available including Joint

& Survivor options.  This benefit is

calculated by applying the provisions of the 1988 Supplemental Executive

Retirement Plan (the “SERP”) which the Compensation Committee of the Board has

determined, in the exercise of the discretion granted it under said plan, shall

be extended to Collins even though he had not attained his Vesting and Accrual

Date under the SERP as of the Separation Date. 

For purposes of determining this SERP benefit, Collins shall be deemed

to have (i) reached his Vesting and Accrual Date, as that term is defined in

the SERP, (ii) elected an early retirement benefit calculated as if he had attained

age sixty-two (62) as of September 1, 2001, and (iii) for purposes of

calculating his final average compensation, received a MIP bonus payable in

2001 of $345,000, which is the average MIP bonus paid to Collins over the prior

three (3) years, regardless of the amount which may be paid to Collins under

the MIP in 2001.




 




Collins

understands and agrees that, absent the exercise of discretion of the

Compensation Committee of the Board and the execution of this Agreement, he

would not otherwise be entitled to payment of this supplemental retirement

benefit, and that Pentair is not required to pay this benefit to Collins under

its normal policies and procedures.




 











c.             Retirement Savings and Stock

Incentive Plan (“RSIP”).  Collins

shall be entitled to receive payment of his vested accrued benefit under RSIP

in accordance with applicable provisions of that plan.  Collins shall remain a participant in RSIP

until such time as he requests and receives payment of his vested accrued

benefit.  From and after the Separation

Date, Collins shall not be entitled to make contributions to RSIP, but shall be

entitled to share in allocations of contributions made by Pentair after such

date, including matching or employer discretionary contributions payable on

account of service completed, deferrals made or salary paid to Collins through

the Separation Date, to the extent required by the provisions of RSIP.  For this purpose, no transition payments

made to Collins under paragraph 3 of this Agreement shall be included as covered

compensation.




 




d.             Non-Qualified Deferred

Compensation Plan (“Sidekick”). 

Collins shall be entitled to receive payment of all amounts payable to

him under the terms and conditions of Sidekick in accordance with the payment

election made by him at the time he began participation in such plan.  From and after the Separation Date, Collins

shall not be entitled to make contributions to Sidekick, but shall be entitled

to share in allocations of contributions made by Pentair after such date,

including matching or employer discretionary contributions payable on account

of service completed, deferrals or salary paid to Collins through the

Separation Date, to the extent required by the provisions of said plan.  For this purpose, no transition payments

made to Collins under paragraph 3 of this Agreement shall be included as

covered compensation.




 




6.             Insurance Benefits.  Collins shall be eligible to elect to continue participation in

various medical, dental, life and disability insurance benefits offered by

Pentair as follows:




 




a.             Medical, Dental and Life

Insurance.  Collins may elect to

continue participation in such group medical, dental and life insurance

programs as are made available to employees of Pentair consistent with his

rights to continuation coverage under applicable state and federal law.  Said continuation period shall begin on

February 1, 2001 and shall end on the earlier of the date Collins is eligible

for such coverage with a subsequent employer or the expiration of eighteen (18)

months (i.e., July 31, 2002).  At such

time as the continuation period ends, Collins shall be offered such conversion

rights as are made available by the then insurer.  During the continuation period, Collins and Pentair shall share

the cost of such benefits on the same basis as if Collins remained an active

employee of Pentair.  Collins

understands and agrees that the sharing of premium payments with Pentair is a

benefit to which he would not be entitled without this Agreement.




 




b.             Supplemental Disability and

Supplemental Life Insurance. 

Collins shall be covered through the Separation Date under the Pentair

short-term disability and the voluntary supplemental long-term disability (the

“Pentair Income Protection Plan” or “PIPP”) and supplemental life insurance

plans as are made available to Pentair employees.  After the Separation Date, Collins shall be offered the

opportunity to retain coverage under PIPP and to retain his supplemental life

insurance policies at his sole cost and expense.




 




c.             Flexible Benefit Plan.  Collins shall be offered the opportunity to

continue participation in the Pentair Flexible Benefit Plan consistent with the

terms and provisions of said plan.




 




d.             Retiree Flex Plan.  Collins may elect, on or prior to August 31,

2001, to begin participation in the Retiree Flex Plan consistent with the terms

and provisions of said plan.  Said

election shall be effective as of the end of the continuation period described

in the preceding paragraph (a), unless Collins shall elect to earlier waive his

continuation rights and immediately begin to receive benefits under the Retiree

Flex Plan in lieu of said continuation coverage.




 




7.             Other Benefits or Payments.  Collins shall be entitled to receive other

payments and benefits as described below. 

Collins understands and agrees that without this Agreement, he would not

be entitled to such benefits.




 




a.             Flexible Perquisite Account.  For the period beginning January 15, 2001

and ending August 31, 2001, Pentair shall pay to Collins under its Flexible

Perquisite Plan an amount not to exceed $13,334.00, less any vehicle lease

payments made by Pentair during 2001. 

No such payments shall be made to Collins, however, unless and until he

submits proper documentation of expenses eligible for payment under said

plan.  Any amounts not paid to Collins

pursuant to this paragraph as of August 31, 2001 shall be retained by Pentair.











 




b.             Business Expenses.  Pentair will reimburse Collins for all

reasonable business expenses incurred by him, if any, in the active performance

of work on behalf of and expressly requested by Pentair through August 31,

2001, provided Collins submits proper documentation for such expenses.




 




8.             Confidential Information Acquired During Employment.  Collins agrees that he will continue to

treat, as private and privileged, any information, data, figures, projections,

estimates, marketing plans, customer lists, lists of contract workers, tax

records, personnel records, accounting procedures, formulas, contracts,

business partners, alliances, ventures and all other confidential information

which Collins acquired or created as an employee of the Group.  Further, Collins agrees that he will not

release any such information to any person, firm, corporation or other entity

at any time, except as may be required by law, or as specifically agreed to in

writing by Pentair prior to any such disclosure.  Collins acknowledges that any violation of this non-disclosure

provision shall entitle Pentair to appropriate injunctive relief and to any

damages which it may sustain due to the improper disclosure.




 




9.             Non-Solicitation/Non-Competition Agreement.  Collins acknowledges that during his

employment with the Group, he became familiar with trade secrets, know-how,

executive personnel, business strategies, product development and other confidential

and proprietary information concerning the businesses of the Group.  In consideration for the compensation and

benefits paid to Collins under this Agreement, Collins agrees that he shall not

at any time, either directly or indirectly, and without the prior written

consent of Pentair:




 




a.             own, manage, control, participate

in, consult with or render services of any kind for any concern which engages

in a business which is competitive with any business being conducted, or

contemplated being conducted, by Pentair or any other Group member as of the

Separation Date;




 




b.             become an employee or agent of any

publicly traded corporation or other entity, or any division or subsidiary of

such a corporation or entity, where more than five percent (5%) of such organization’s

business is in competition with any business being conducted, or contemplated

being conducted, by Pentair or any other Group member as of the Separation

Date;




 




c.             participate in any plan or attempt

to acquire the business, assets or control of the voting stock of Pentair or

any other Group member, or in any manner interfere with the control of Pentair

or any other Group member, whether by friendly or unfriendly means;




 




d.                             induce or attempt

to induce any individual to leave the employ of Pentair or any other Group

member or hire any such individual who approaches him for employment; or




 




e.                             engage

in or sponsor the solicitation of customers of Pentair or any other Group

member to do business with any competitor of Pentair or any other Group member.




 




In the event Collins

breaches or threatens to breach any obligation under this paragraph 9, Pentair

may apply to any court of competent jurisdiction for specific performance

and/or injunctive relief or other relief to enforce the obligations of Collins

under this paragraph 9 or to prevent any violations of said paragraph.  Pentair may also pursue any other remedies

available to it on account of a breach or threatened breach of this paragraph

9, including the costs and reasonable attorneys’ fees incurred by it in

enforcing its rights under this paragraph 9. 

In addition to the other remedies herein provided, Collins and any

person claiming benefits hereunder through Collins shall forfeit any right to

future payments under paragraphs 3 and 5(b) of this Agreement.




 




10.           Discharge of Claims.  Collins, on behalf of himself, his agents,

representatives, attorneys, assignees, heirs, executors and administrators,

hereby releases and forever discharges Pentair and all other Group members, and

the past and present employees, agents, insurers, officials, officers,

directors, divisions, parents, subsidiaries and successors of any of them from

any and all claims and causes of action of any type arising, or which may have

arisen, out of or in connection with his employment or termination of

employment with Pentair and the other members of the Group, including, but not

limited to claims, demands or actions arising under the Federal Fair Labor

Standards Act, the Age Discrimination in Employment Act of 1967, 29 U.S.C. §

626, as amended by Public Law 101.433 (1990) (the “Older Workers Benefit

Protection Act”), Title VII of the Civil Rights Act of 1964,

42 U.S.C. § 2000e, et seq., the Americans with

Disabilities Act, 29 U.S.C. § 2101, et seq., the Family

Medical Leave Act, the Minnesota Human Rights Act, Minn. Stat. § 363.01, et

seq., any other federal, state or local statute, ordinance, regulation

or order regarding employment, compensation for employment, termination of

employment, or discrimination in employment, and the common law of any state.











 




Collins further

understands that this discharge of claims extends to, but is not limited to,

all claims which he may have as of the date of this Agreement against Pentair

or any other Group member, based upon statutory or common law claims for

defamation, libel, slander, assault, battery, negligent or intentional

infliction of emotional distress, negligent hiring or retention, breach of

contract, promissory estoppel, fraud, wrongful discharge, or any other theory,

whether legal or equitable, including all claims for items of compensation and

benefits except as prohibited by law.




 




Collins represents that

no claim or cause of action covered by this Agreement has been assigned or

otherwise transferred or given to anyone.




 




11.           Cooperation.  Collins agrees that until August 31, 2001,

he will be available by telephone to respond to such reasonable requests for

information as Pentair may make.  In

addition, Collins further agrees that at the request of Pentair, he will, at

any time, cooperate with and assist Pentair (including cooperation and

assistance in any matters involving claims or lawsuits against Pentair or any

other Group member) where Collins has or may have knowledge of the facts

involved.  Collins also agrees that he

will, at the reasonable request of Pentair, execute, if necessary, any further

documents or instruments necessary or appropriate to evidence his separation

from service as an officer or director of Pentair or any Group member,

including but not necessarily limited to any forms as may be attached hereto as

Schedule C.  Collins further agrees that

he will not voluntarily aid, assist, or cooperate with anyone who has claims

against Pentair or any other Group member, or with their attorneys or agents in

any claims or lawsuits which such person may bring against Pentair or any other

Group member.  Nothing in this Agreement

prevents Collins from testifying at an administrative hearing, arbitration,

deposition, or in court, in response to a lawful and properly served subpoena.




 




12.           Future Employment.  Collins will not apply for or seek

employment or re-employment with Pentair or any other Group member at any time

after he signs this Agreement.




 




13.           Merger.  This Agreement supersedes and replaces all

prior oral and written agreements and understandings between Collins and

Pentair or any other Group member, including, but not limited to, any Key

Executive Employment and Separation Agreement which Collins may have

executed.  Collins understands and

agrees that all claims which he has or may have against Pentair or any other

Group member are fully released and discharged by this Agreement.  Except to the extent otherwise required by

law, the only claims which Collins may hereafter assert against Pentair or any

other Group member are limited to an alleged breach of this Agreement.




 




14.           Minnesota Law Applies.  This Agreement will be governed by the

substantive laws of the State of Minnesota, without regard to any choice of

laws provisions thereof, and it shall be construed and enforced thereunder.  All disputes arising out of or relating to

this Agreement shall be subject to the jurisdiction of the state court sitting

in the County of Hennepin, State of Minnesota, and both parties hereby

irrevocably submit to the jurisdiction of such court.




 




15.           Invalidity.  If any one or more of the terms of this

Agreement are deemed to be invalid or unenforceable by a court of law, the

validity, enforceability, and legality of the remaining provisions of this

Agreement will not in any way be affected or impaired thereby.




 




16.           Amendment.  This Agreement may be modified only by a

subsequent written agreement signed by the parties hereto.




 




17.           Collins Understands the Terms of

this Agreement.  Collins warrants

that (a) other than as stated herein, no promise or inducement has been offered

for this Agreement; (b) this Agreement is executed without reliance upon

any statement or representation of Pentair or its representatives concerning

the nature and extent of any claims or liability therefor, if any; (c) Collins is

legally competent to execute this Agreement and accepts full responsibility

therefor; (d) Pentair, by this Agreement, has advised Collins to consult with

an attorney regarding the purpose and effect of this Agreement;

(e) Pentair has allowed Collins at least twenty-one (21) days beginning on

___________, 2001 within which to consider this Agreement, and at the

expiration of this period this Agreement shall be automatically withdrawn

without further notice to Collins or his attorney; and (f) Collins may choose

to sign this Agreement at any time prior to the end of this twenty-one (21) day

consideration period.











 




Collins understands that

he may nullify and rescind this Agreement as far as it extends to his release

of claims arising under Minn. Stat. § 363.01 et seq., the

Minnesota Human Rights Act, and under the Age Discrimination in Employment Act

of 1967, 29 U.S.C. § 626, as amended by Public Law 101.433 (1990) (the “Older

Workers Benefit Protection Act”) at any time within fifteen (15) days from the

date of his signature below and, in the event of such election, Collins shall

only be entitled to receive $1,000 which the parties acknowledge is

consideration for Collins’ release of all claims other than those arising under

Minn. Stat. § 363.01 et seq., the Minnesota Human Rights

Act, and under the Age Discrimination in Employment Act of 1967, 29 U.S.C. §

626, as amended by Public Law 101.433 (1990) (the “Older Workers Benefit

Protection Act”).  In the event Collins

elects to nullify and rescind portions of his release under this Agreement

pursuant to this paragraph, he must indicate his desire to do so in writing and

deliver that writing to Deb S. Knutson, Vice President, Human Resources,

Pentair, Inc., Waters Edge Plaza, 1500 County Road B2 West, St. Paul, MN

55113-3105, by hand or by certified mail. 

Collins further understands that if he exercises his rescission rights

hereunder, Pentair will not be bound by the terms of this Agreement (except the

obligation to pay Collins $1,000), and Collins will have to disgorge and repay

to Pentair in full any monies and benefits received pursuant to this Agreement

other than such $1,000 sum.




 




 




Dated:    ___________________________




Joseph Collins




 




 




Subscribed and sworn to

before me




this 6th day

of August, 2001.




 




 




________________________________




Notary Public




 




 




Dated:    __________________________                   PENTAIR, INC.




 




 




By

_________________________________




Its

_________________________________




 




 




Subscribed and sworn to

before me




this ____ day of

________, 2001.




 




 




_______________________________




Notary Public











 




SCHEDULE A




 




Positions Held by Joseph Collins




at Pentair




 




 




	

  Company


  	

   


  	

  Title


  
	

   


  	

   


  	

   


  
	

  Pentair, Inc.


  	

   


  	

  Vice Chairman of

  the Board, Director


  
	

  Pentair, Inc.


  	

   


  	

  Employee


  





 




 











SCHEDULE B




 




Other Positions Held by Joseph

Collins




at Pentair and Subsidiaries




 




 




	

  Committee/Plan


  	

   


  	

  Title


  
	

  Pentair, Inc.

  Investment Committee for all Bargaining and non-Bargaining Pension s Plans


  	

   


  	

  Member


  
	

  Pentair, Inc.

  Retirement Savings and Stock Incentive Plan Committee


  	

   


  	

  Member


  
	

  The Pentair Foundation


  	

   


  	

  President


  
	

  Pentair, Inc. Board

  Finance / Investment Policy Committee


  	

   


  	

  Member


  
	

  Pentair, Inc. Board

  Public Policy Committee


  	

   


  	

  Member