exv4w1



 





Execution Copy




 





Pentair, Inc.




$300,000,000 5.87% Senior Notes, Series D,

due May 17, 2017




$105,000,000 Floating Rate Senior Notes, Series E,

due May 17, 2012




 






Note Purchase Agreement




 






Dated May 17, 2007




 





 









 





Table of Contents




(Not a part of the Agreement)




	 	 	 	 	 	 	 
	Section	 	Heading	 	Page	 
	Section 1.
	 	Authorization of Notes	 	 	1	 
	 
	 	 	 	 	 	 
	Section 2.
	 	Sale and Purchase of Notes	 	 	2	 
	 
	 	 	 	 	 	 
	Section 3.
	 	Closing	 	 	2	 
	 
	 	 	 	 	 	 
	Section 4.
	 	Conditions to Closing	 	 	3	 
	 
	 	 	 	 	 	 
	Section 4.1.
	 	Representations and Warranties	 	 	3	 
	Section 4.2.
	 	Performance; No Default	 	 	3	 
	Section 4.3.
	 	Compliance Certificates	 	 	3	 
	Section 4.4.
	 	Opinions of Counsel	 	 	3	 
	Section 4.5.
	 	Purchase Permitted by Applicable Law, etc	 	 	3	 
	Section 4.6.
	 	Sale of Other Notes	 	 	4	 
	Section 4.7.
	 	Payment of Special Counsel Fees	 	 	4	 
	Section 4.8.
	 	Private Placement Number	 	 	4	 
	Section 4.9.
	 	Changes in Corporate Structure	 	 	4	 
	Section 4.10.
	 	2007 Note Purchase Subsidiary Guaranty	 	 	4	 
	Section 4.11.
	 	Funding Instructions	 	 	4	 
	Section 4.12.
	 	Proceedings and Documents	 	 	4	 
	 
	 	 	 	 	 	 
	Section 5.
	 	Representations and Warranties of the Company	 	 	5	 
	 
	 	 	 	 	 	 
	Section 5.1.
	 	Organization; Power and Authority	 	 	5	 
	Section 5.2.
	 	Authorization, etc	 	 	5	 
	Section 5.3.
	 	Disclosure	 	 	5	 
	Section 5.4.
	 	Organization and Ownership of Shares of Subsidiaries; Affiliates	 	 	6	 
	Section 5.5.
	 	Financial Statements	 	 	6	 
	Section 5.6.
	 	Compliance with Laws, Other Instruments, etc	 	 	7	 
	Section 5.7.
	 	Governmental Authorizations, etc	 	 	7	 
	Section 5.8.
	 	Litigation; Observance of Agreements, Statutes and Orders	 	 	7	 
	Section 5.9.
	 	Taxes	 	 	7	 
	Section 5.10.
	 	Title to Property; Leases	 	 	8	 
	Section 5.11.
	 	Licenses, Permits, etc	 	 	8	 
	Section 5.12.
	 	Compliance with ERISA	 	 	8	 
	Section 5.13.
	 	Private Offering by the Company	 	 	9	 
	Section 5.14.
	 	Use of Proceeds; Margin Regulations	 	 	9	 
	Section 5.15.
	 	Existing Indebtedness; Future Liens	 	 	10	 
	Section 5.16.
	 	Foreign Assets Control Regulations, etc	 	 	10	 






-i-









 






	 	 	 	 	 	 	 
	Section	 	Heading	 	Page	 
	Section 5.17.
	 	Status under Certain Statutes	 	 	10	 
	Section 5.18.
	 	Environmental Matters	 	 	11	 
	 
	 	 	 	 	 	 
	Section 6.
	 	Representations of the Purchaser	 	 	11	 
	 
	 	 	 	 	 	 
	Section 6.1.
	 	Purchase for Investment	 	 	11	 
	Section 6.2.
	 	Source of Funds	 	 	11	 
	 
	 	 	 	 	 	 
	Section 7.
	 	Information as to Company	 	 	13	 
	 
	 	 	 	 	 	 
	Section 7.1.
	 	Financial and Business Information	 	 	13	 
	Section 7.2.
	 	Officer’s Certificate	 	 	16	 
	Section 7.3.
	 	Inspection	 	 	16	 
	 
	 	 	 	 	 	 
	Section 8.
	 	Prepayment of the Notes	 	 	17	 
	 
	 	 	 	 	 	 
	Section 8.1.
	 	No Scheduled Required Prepayments	 	 	17	 
	Section 8.2.
	 	Optional Prepayments with Make-Whole Amount	 	 	17	 
	Section 8.3.
	 	Allocation of Partial Prepayments	 	 	17	 
	Section 8.4.
	 	Maturity; Surrender, etc	 	 	17	 
	Section 8.5.
	 	Purchase of Notes	 	 	18	 
	Section 8.6.
	 	Make-Whole Amount	 	 	18	 
	Section 8.7.
	 	Change in Control	 	 	19	 
	 
	 	 	 	 	 	 
	Section 9.
	 	Affirmative Covenants	 	 	21	 
	Section 9.1.
	 	Compliance with Laws	 	 	21	 
	Section 9.2.
	 	Insurance	 	 	21	 
	Section 9.3.
	 	Maintenance of Properties	 	 	21	 
	Section 9.4.
	 	Payment of Taxes and Claims	 	 	21	 
	Section 9.5.
	 	Corporate Existence, etc	 	 	22	 
	Section 9.6.
	 	2007 Note Purchase Subsidiary Guaranty	 	 	22	 
	Section 9.7.
	 	Unrestricted Subsidiary	 	 	22	 
	 
	 	 	 	 	 	 
	Section 10.
	 	Negative Covenants	 	 	23	 
	 
	 	 	 	 	 	 
	Section 10.1.
	 	Transactions with Affiliates	 	 	23	 
	Section 10.2.
	 	Mergers, Consolidations and Sales of Assets	 	 	23	 
	Section 10.3.
	 	Liens	 	 	24	 
	Section 10.4.
	 	Certain Indebtedness Ratios	 	 	27	 
	Section 10.5.
	 	Maximum Priority Debt	 	 	27	 
	Section 10.6.
	 	Securitization	 	 	27	 
	 
	 	 	 	 	 	 
	Section 11.
	 	Events of Default	 	 	27	 
	 
	 	 	 	 	 	 
	Section 12.
	 	Remedies on Default, etc	 	 	30	 
	 
	 	 	 	 	 	 
	Section 12.1.
	 	Acceleration	 	 	30	 
	Section 12.2.
	 	Other Remedies	 	 	31	 






-ii-









 






	 	 	 	 	 	 	 
	Section	 	Heading	 	Page	 
	Section 12.3.
	 	Rescission	 	 	31	 
	Section 12.4.
	 	No Waivers or Election of Remedies, Expenses, etc	 	 	31	 
	 
	 	 	 	 	 	 
	Section 13.
	 	Registration; Exchange; Substitution of Notes	 	 	32	 
	 
	 	 	 	 	 	 
	Section 13.1.
	 	Registration of Notes	 	 	32	 
	Section 13.2.
	 	Transfer and Exchange of Notes	 	 	32	 
	Section 13.3.
	 	Replacement of Notes	 	 	32	 
	 
	 	 	 	 	 	 
	Section 14.
	 	Payments on Notes	 	 	33	 
	 
	 	 	 	 	 	 
	Section 14.1.
	 	Place of Payment	 	 	33	 
	Section 14.2.
	 	Home Office Payment	 	 	33	 
	 
	 	 	 	 	 	 
	Section 15.
	 	Expenses, etc	 	 	33	 
	 
	 	 	 	 	 	 
	Section 15.1.
	 	Transaction Expenses	 	 	33	 
	Section 15.2.
	 	Survival	 	 	34	 
	 
	 	 	 	 	 	 
	Section 16.
	 	Survival of Representations and Warranties; Entire Agreement	 	 	34	 
	 
	 	 	 	 	 	 
	Section 17.
	 	Amendment and Waiver	 	 	34	 
	 
	 	 	 	 	 	 
	Section 17.1.
	 	Requirements	 	 	34	 
	Section 17.2.
	 	Solicitation of Holders of Notes	 	 	35	 
	Section 17.3.
	 	Binding Effect, etc	 	 	35	 
	Section 17.4.
	 	Notes Held by Company, etc	 	 	35	 
	 
	 	 	 	 	 	 
	Section 18.
	 	Notices	 	 	36	 
	 
	 	 	 	 	 	 
	Section 19.
	 	Reproduction of Documents	 	 	36	 
	 
	 	 	 	 	 	 
	Section 20.
	 	Confidential Information	 	 	37	 
	 
	 	 	 	 	 	 
	Section 21.
	 	Substitution of Purchaser	 	 	37	 
	 
	 	 	 	 	 	 
	Section 22.
	 	Miscellaneous	 	 	38	 
	 
	 	 	 	 	 	 
	Section 22.1.
	 	Successors and Assigns	 	 	38	 
	Section 22.2.
	 	Payments Due on Non-Business Days	 	 	38	 
	Section 22.3.
	 	Severability	 	 	38	 
	Section 22.4.
	 	Construction	 	 	38	 
	Section 22.5.
	 	Counterparts	 	 	38	 
	Section 22.6.
	 	Governing Law	 	 	39	 
	 
	 	 	 	 	 	 
	Signature
	 	 	 	 	40	 






-iii-









 





	 	 	 	 	 
	Schedule A
	 	—	 	Information Relating to Purchasers
	 
	 	 	 	 
	Schedule B
	 	—	 	Defined Terms
	 
	 	 	 	 
	Schedule 4.9
	 	—	 	Changes in Corporate Structure
	 
	 	 	 	 
	Schedule 5.4
	 	—	 	Restricted Subsidiaries
	 
	 	 	 	 
	Schedule 5.5
	 	—	 	Financial Statements
	 
	 	 	 	 
	Schedule 5.8
	 	—	 	Certain Litigation
	 
	 	 	 	 
	Schedule 5.11
	 	—	 	Licenses, Permits, etc.
	 
	 	 	 	 
	Schedule 5.15
	 	—	 	Existing Indebtedness
	 
	 	 	 	 
	Exhibit 1-A
	 	—	 	Form of 5.87% Senior Note, Series D, due May 17, 2017
	 
	 	 	 	 
	Exhibit 1-B
	 	—	 	Form of Floating Rate Senior Note, Series E, due May 17, 2012
	 
	 	 	 	 
	Exhibit 2
	 	—	 	Form of 2007 Note Purchase Subsidiary Guaranty
	 
	 	 	 	 
	Exhibit 4.4(a)
	 	—	 	Form of Opinion of Special Counsel for the Company
	 
	 	 	 	 
	Exhibit 4.4(b)
	 	—	 	Form of Opinion of Special Counsel for the Purchasers






-iv-









 





Pentair, Inc.

5500 Wayzata Boulevard, Suite 800

Golden Valley, Minnesota 55416-1259




$300,000,000 5.87% Senior Notes, Series D,

due May 17, 2017




$105,000,000 Floating Rate Senior Notes, Series E,

due May 17, 2012




Dated as of

May 17, 2007




To each of the Purchasers listed in

  the attached Schedule A:




Ladies and Gentlemen:




          Pentair, Inc., a Minnesota corporation (the “Company”), agrees with you as follows:



Section 1. Authorization of Notes.




          The Company will authorize the issue and sale of: (i) $300,000,000 aggregate principal amount
of its 5.87% Senior Notes, Series D, due May 17, 2017 (the “Series D Notes”); and (ii) $105,000,000
aggregate principal amount of its Floating Rate Senior Notes, Series E, due May 17, 2012 (the
“Series E Notes”, and, together with the Series D Notes, the “Notes”, such term to include any such
notes issued in substitution therefor pursuant to Section 13 of this Agreement or the Other
Agreements (as hereinafter defined)). The Series D Notes and the Series E Notes shall be
substantially in the forms set out in Exhibits 1-A and 1-B, respectively, with such changes
therefrom, if any, as may be approved by you and the Company. Certain capitalized terms used in
this Agreement are defined in Schedule B; references to a “Schedule” or an “Exhibit” are, unless
otherwise specified, to a Schedule or an Exhibit attached to this Agreement.




          The Series E Notes shall bear interest from the date of issue at a floating rate equal to the
Adjusted LIBOR Rate from time to time, payable quarterly on the 17th day of each February, May,
August and November in each year (commencing August 17, 2007) and at maturity (each such date being
referred to as an “Interest Payment Date”) and to bear interest on overdue principal (including any
overdue required or optional prepayment of principal) and LIBOR Breakage Amount, if any, and (to
the extent legally enforceable) on any overdue installment of interest at the Default Rate, whether
by acceleration or otherwise, until paid.




 









 





			
	Pentair, Inc.
	 	Note Purchase Agreement






          Interest on the Series E Notes shall be computed for the actual number of days elapsed on the
basis of a year consisting of 360 days.




          The Adjusted LIBOR Rate shall be determined by the Company, and notice thereof shall be given
to the holders of the Series E Notes, together with such information as the holders of the Series E
notes may reasonably request for verification (including in all events, a facsimile transmission of
the relevant screen and calculations), on the second Business Day preceding each Interest Period.
In the event that the Series E Required Holders do not concur with such determination by the
Company, as evidenced by notice to the Company by such Series E Required Holders within ten (10)
Business Days after receipt by such holders of the notice delivered by the Company pursuant to the
previous sentence, the determination of Adjusted LIBOR Rate shall be made by the Series E Required
Holders, in accordance with the provisions of this Agreement and shall be conclusive and binding
absent manifest error.




Section 2. Sale and Purchase of Notes.




          Subject to the terms and conditions of this Agreement, the Company will issue and sell to you
and you will purchase from the Company, at the Closing provided for in Section 3, Notes of the
series and in the principal amount specified opposite your name in Schedule A at the purchase price
of 100% of the principal amount thereof. Contemporaneously with entering into this Agreement, the
Company is entering into separate Note Purchase Agreements (the “Other Agreements”) identical with
this Agreement with each of the other purchasers named in Schedule A (the “Other Purchasers”),
providing for the sale at the Closing to each of the Other Purchasers of Notes of the series and in
the principal amount specified opposite its name in Schedule A. Your obligation hereunder, and the
obligations of the Other Purchasers under the Other Agreements, are several and not joint
obligations, and you shall have no obligation under any Other Agreement and no liability to any
Person for the performance or nonperformance by any Other Purchaser thereunder. The Series D Notes
and Series E Notes are each herein sometimes referred to as Notes of a “series.”




Section 3. Closing.




          The sale and purchase of the Notes to be purchased by you and the Other Purchasers shall occur
at the offices of Chapman and Cutler, 111 West Monroe Street, Chicago, Illinois 60603, at 10:00
a.m. Chicago time, at a closing (the “Closing”) on May 17, 2007 or on such other Business
Day thereafter as may be agreed upon by the Company and you and the Other Purchasers. At the
Closing the Company will deliver to you the Notes of the series to be purchased by you in the form
of a single Note (or such greater number of Notes of the appropriate series in denominations of at
least $500,000 as you may request) dated the date of the Closing and registered in your name (or in
the name of your nominee), against delivery by you to the Company or its order of immediately
available funds in the amount of the purchase price therefor by wire transfer of immediately
available funds for the account of the Company to the bank and account number set forth in the
funding instructions provided to you by the Company pursuant to Section 4.11. If at the Closing
the Company shall fail to tender such Notes to you as provided above in this Section 3, or any of
the conditions specified in Section 4 shall not have been fulfilled to your satisfaction, you
shall, at your election, be relieved of all further




-2-









 





			
	Pentair, Inc.
	 	Note Purchase Agreement





obligations
under this Agreement, without thereby waiving any rights you may have by reason of such
failure or such nonfulfillment.




Section 4. Conditions to Closing.




          Your obligation to purchase and pay for the Notes to be sold to you at the Closing is subject
to the fulfillment to your satisfaction, prior to or at the Closing, of the following conditions:




     Section 4.1. Representations and Warranties. The representations and warranties of the
Company in this Agreement shall be correct when made and at the time of the Closing.



     Section 4.2. Performance; No Default. The Company shall have performed and complied with all
agreements and conditions contained in this Agreement required to be performed or complied with by
it prior to or at the Closing, and after giving effect to the issue and sale of the Notes (and the
application of the proceeds thereof as contemplated by Section 5.14), no Default or Event of
Default shall have occurred and be continuing. Neither the Company nor any Subsidiary shall have
entered into any transaction since the date of the Memorandum that would have been prohibited by
Section 10 hereof had such Section applied since such date.



     Section 4.3. Compliance Certificates.



          (a) Officer’s Certificate. The Company shall have delivered to you an Officer’s Certificate,
dated the date of the Closing, certifying that the conditions specified in Sections 4.1, 4.2 and
4.9 have been fulfilled.




          (b) Secretary’s Certificate. The Company shall have delivered to you a certificate certifying
as to the resolutions attached thereto and other corporate proceedings relating to the
authorization, execution and delivery of the Financing Agreements. Each Subsidiary Guarantor shall
have delivered to you a certificate certifying as to the resolutions attached thereto and other
corporate proceedings relating to the authorization, execution and delivery of the 2007 Note
Purchase Subsidiary Guaranty.




     Section 4.4. Opinions of Counsel. You shall have received opinions in form and substance
satisfactory to you, dated the date of the Closing (a) from Louis L. Ainsworth, Senior Vice
President and General Counsel of the Company, covering the matters set forth in Exhibit 4.4(a) and
covering such other matters incident to the transactions contemplated hereby as you or your counsel
may reasonably request (and the Company hereby instructs such counsel to deliver such opinion to
you) and (b) from Chapman and Cutler, your special counsel in connection with such transactions,
substantially in the form set forth in Exhibit 4.4(b) and covering such other matters incident to
such transactions as you may reasonably request.



     Section 4.5. Purchase Permitted by Applicable Law, etc. On the date of the Closing your
purchase of Notes shall (i) be permitted by the laws and regulations of each jurisdiction to which
you are subject, without recourse to provisions (such as Section 1405(a)(8) of the New



-3-









 





			
	Pentair, Inc.
	 	Note Purchase Agreement





York Insurance Law) permitting limited investments by insurance companies without restriction as to
the character of the particular investment, (ii) not violate any applicable law or regulation
(including, without limitation, Regulation T, U or X of the Board of Governors of the Federal
Reserve System) and (iii) not subject you to any tax, penalty or liability under or pursuant to any
applicable law or regulation, which law or regulation was not in effect on the date hereof. If
requested by you, you shall have received an Officer’s Certificate certifying as to such matters of
fact as you may reasonably specify to enable you to determine whether such purchase is so
permitted.




     Section 4.6. Sale of Other Notes. Contemporaneously with the Closing, the Company shall sell
to the Other Purchasers, and the Other Purchasers shall purchase, the Notes to be purchased by them
at the Closing as specified in Schedule A.



     Section 4.7. Payment of Special Counsel Fees. Without limiting the provisions of Section
15.1, the Company shall have paid on or before the Closing the fees, charges and disbursements of
your special counsel referred to in Section 4.4 to the extent reflected in a statement of such
counsel rendered to the Company at least one Business Day prior to the Closing.



     Section 4.8. Private Placement Number. A Private Placement Number issued by Standard & Poor’s
CUSIP Service Bureau (in cooperation with the Securities Valuation Office of the National
Association of Insurance Commissioners) shall have been obtained for each series of Notes.



     Section 4.9. Changes in Corporate Structure. Except as specified in Schedule 4.9, the Company
shall not have changed its jurisdiction of incorporation or been a party to any merger or
consolidation and shall not have succeeded to all or any substantial part of the liabilities of any
other entity, at any time following the date of the most recent financial statements referred to in
Schedule 5.5.



     Section 4.10. 2007 Note Purchase Subsidiary Guaranty. The 2007 Note Purchase Subsidiary
Guaranty shall have been executed and delivered by each of the Subsidiary Guarantors and the Other
Creditor Supplement in the form of Exhibit A to the Intercreditor Agreement shall have been
executed and delivered by the Company, you and each Other Purchaser.



     Section 4.11. Funding Instructions. At least three Business Days prior to the date of the
Closing, you shall have received written instructions executed by a Responsible Officer directing
the manner of the payment of funds and setting forth (i) the name and address of the transferee
bank, (ii) such transferee bank’s ABA number, (iii) the account name and number into which the
purchase price for the Notes is to be deposited, and (iv) the name and telephone number of the
account representative responsible for verifying receipt of such funds.



     Section 4.12. Proceedings and Documents. All corporate and other proceedings in connection
with the transactions contemplated by this Agreement and all documents and instruments incident to
such transactions shall be satisfactory to you and your special counsel,



-4-









 





			
	Pentair, Inc.
	 	Note Purchase Agreement





and you and your special counsel shall have received all such counterpart originals or certified or
other copies of such documents as you or they may reasonably request.




Section 5. Representations and Warranties of the Company.




          The Company represents and warrants to you that:




     Section 5.1. Organization; Power and Authority. The Company is a corporation duly organized,
validly existing and in good standing under the laws of its jurisdiction of incorporation, and is
duly qualified as a foreign corporation and is in good standing in each jurisdiction in which such
qualification is required by law, other than those jurisdictions as to which the failure to be so
qualified or in good standing could not, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect. The Company has the corporate power and authority to own or
hold under lease the properties it purports to own or hold under lease, to transact the business it
transacts and proposes to transact, to execute and deliver this Agreement and the Other Agreements
and the Notes and to perform the provisions hereof and thereof.



     Section 5.2. Authorization, etc. The Financing Agreements have been duly authorized by all
necessary corporate action on the part of the Company. This Agreement constitutes, and upon
execution and delivery thereof each Note will constitute, a legal, valid and binding obligation of
the Company enforceable against the Company in accordance with its terms, except as such
enforceability may be limited by (i) applicable bankruptcy, insolvency, reorganization, moratorium
or other similar laws affecting the enforcement of creditors’ rights generally and (ii) general
principles of equity (regardless of whether such enforceability is considered in a proceeding in
equity or at law).



          Upon execution and delivery thereof, the 2007 Note Purchase Subsidiary Guaranty will have been
duly authorized by all necessary corporate action on the part of each Subsidiary Guarantor party
thereto. Upon execution and delivery thereof, the 2007 Note Purchase Subsidiary Guaranty will
constitute a legal, valid and binding obligation of each of the Subsidiary Guarantors enforceable
against each of the Subsidiary Guarantors in accordance with its terms, except as such
enforceability may be limited by (i) applicable bankruptcy, insolvency, reorganization, moratorium
or other similar laws affecting the enforcement of creditors’ rights generally and (ii) general
principles of equity (regardless of whether such enforceability is considered in a proceeding in
equity or at law).




     Section 5.3. Disclosure. The Company, through its agents, J.P. Morgan Securities Inc. and Banc
of America Securities LLC has delivered to you and each Other Purchaser a copy of a Private
Placement Memorandum, dated April, 2007 (the “Memorandum”), relating to the transactions
contemplated hereby. The Memorandum fairly describes, in all material respects, the general nature
of the business and principal properties of the Company and its Subsidiaries. This Agreement, the
Memorandum, and the financial statements listed in Schedule 5.5, taken as a whole, do not contain
any untrue statement of a material fact or omit to state any material fact necessary to make the
statements therein not misleading in light of the circumstances under which they were made. Except
as disclosed in the Memorandum or in one of the documents,



-5-









 





			
	Pentair, Inc.
	 	Note Purchase Agreement





certificates or other writings identified therein, since December 31, 2006, there has been no
change in the financial condition, operations, business, properties or prospects of the Company or
any Subsidiary except changes that individually or in the aggregate could not reasonably be
expected to have a Material Adverse Effect. There is no fact known to the Company (and peculiar to
the Company and its Subsidiaries) that could reasonably be expected to have a Material Adverse
Effect that has not been set forth or identified herein or in the Memorandum or in the other
documents, certificates and other writings delivered to you by or on behalf of the Company
specifically for use in connection with the transactions contemplated hereby.




     Section 5.4. Organization and Ownership of Shares of Subsidiaries; Affiliates. (a) Schedule
5.4 contains (except as noted therein) complete and correct lists (i) of the Company’s Restricted
Subsidiaries, showing, as to each Restricted Subsidiary, the correct name thereof, the jurisdiction
of its organization, and the percentage of shares of each class of its capital stock or similar
equity interests outstanding owned by the Company or another Subsidiary.



          (b) All of the outstanding shares of capital stock or similar equity interests of each
Restricted Subsidiary shown in Schedule 5.4 as being owned by the Company and its Subsidiaries have
been validly issued, are fully paid and nonassessable and are owned by the Company or another
Subsidiary free and clear of any Lien (except as otherwise disclosed in Schedule 5.4).




          (c) Each Subsidiary identified in Schedule 5.4 is a corporation or other legal entity duly
organized, validly existing and in good standing under the laws of its jurisdiction of
organization, and is duly qualified as a foreign corporation or other legal entity and is in good
standing in each jurisdiction in which such qualification is required by law, other than those
jurisdictions as to which the failure to be so qualified or in good standing could not,
individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. Each
such Subsidiary has the corporate or other power and authority to own or hold under lease the
properties it purports to own or hold under lease and to transact the business it transacts and
proposes to transact.




          (d) No Subsidiary is a party to, or otherwise subject to, any legal restriction or any
agreement (other than this Agreement, the agreements listed on Schedule 5.4 and customary
limitations imposed by corporate law statutes) restricting the ability of such Subsidiary to pay
dividends out of profits or make any other similar distributions of profits to the Company or any
of its Subsidiaries that owns outstanding shares of capital stock or similar equity interests of
such Subsidiary.




     Section 5.5. Financial Statements. The Company has delivered to each Purchaser copies of the
financial statements of the Company and its Subsidiaries listed on Schedule 5.5. All of said
financial statements (including in each case the related schedules and notes) fairly present in all
material respects the consolidated financial position of the Company and its Subsidiaries as of the
respective dates specified in such Schedule and the consolidated results of their operations and
cash flows for the respective periods so specified and have been prepared in accordance with GAAP
consistently applied throughout the periods involved except as set forth in the notes thereto
(subject, in the case of any interim financial statements, to normal year-end adjustments).



-6-









 





			
	Pentair, Inc.
	 	Note Purchase Agreement






     Section 5.6. Compliance with Laws, Other Instruments, etc. The execution, delivery and
performance by the Company of the Note Purchase Agreement and the Notes and the Subsidiary
Guarantors of the 2007 Note Purchase Subsidiary Guaranty will not (i) contravene, result in any
breach of, or constitute a default under, or result in the creation of any Lien in respect of any
property of the Company or any Restricted Subsidiary under, any Material indenture, mortgage, deed
of trust, loan, purchase or credit agreement, lease, corporate charter or by-laws, or any other
Material agreement or instrument to which the Company or any Restricted Subsidiary is bound or by
which the Company or any Restricted Subsidiary or any of their respective properties may be bound
or affected, (ii) conflict with or result in a breach of any of the terms, conditions or provisions
of any order, judgment, decree, or ruling of any court, arbitrator or Governmental Authority
applicable to the Company or any Restricted Subsidiary or (iii) violate any provision of any
statute or other rule or regulation of any Governmental Authority applicable to the Company or any
Restricted Subsidiary.



     Section 5.7. Governmental Authorizations, etc. No consent, approval or authorization of, or
registration, filing or declaration with, any Governmental Authority is required in connection with
the execution, delivery or performance by the Company of this Agreement or the Notes. No consent,
approval or authorization of, or registration, filing or declaration with, any Governmental
Authority is required in connection with the execution, delivery or performance by the Subsidiary
Guarantors of the 2007 Note Purchase Subsidiary Guaranty.



     Section 5.8. Litigation; Observance of Agreements, Statutes and Orders. (a) Except as
disclosed in Schedule 5.8, there are no actions, suits or proceedings pending or, to the knowledge
of the Company, threatened against or affecting the Company or any Restricted Subsidiary or any
property of the Company or any Restricted Subsidiary in any court or before any arbitrator of any
kind or before or by any Governmental Authority that, individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect.



          (b) Neither the Company nor any Restricted Subsidiary is in default under any term of any
agreement or instrument to which it is a party or by which it is bound, or any order, judgment,
decree or ruling of any court, arbitrator or Governmental Authority or is in violation of any
applicable law, ordinance, rule or regulation (including without limitation Environmental Laws) of
any Governmental Authority, which default or violation, individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect.




     Section 5.9. Taxes. The Company and its Subsidiaries have filed all tax returns that are
required to have been filed in any jurisdiction, and have paid all taxes shown to be due and
payable on such returns and all other taxes and assessments levied upon them or their properties,
assets, income or franchises, to the extent such taxes and assessments have become due and payable
and before they have become delinquent, except for any returns, taxes and assessments (i) the
amount of which is not individually or in the aggregate Material or (ii) the amount, applicability
or validity of which is currently being contested in good faith by appropriate proceedings and with
respect to which the Company or a Subsidiary, as the case may be, has established adequate reserves
in accordance with GAAP. The Company knows of no basis for any other tax or assessment that could
reasonably be expected to have a Material Adverse Effect. The charges, accruals and reserves on
the books of the Company and its Subsidiaries as of



-7-









 





			
	Pentair, Inc.
	 	Note Purchase Agreement





December 31, 2006 and for the fiscal period then ended in respect of Federal, state or other taxes
for all fiscal periods are adequate. The Federal income tax liabilities of the Company and its
Subsidiaries have been examined by the Internal Revenue Service (or the Internal Revenue Service
has expressly informed the Company that no such examination is anticipated) and paid for all fiscal
years ending on or before December 31, 2004.




     Section 5.10. Title to Property; Leases. The Company and its Restricted Subsidiaries have
good and sufficient title to their respective properties that individually or in the aggregate are
Material, including all such properties reflected in the most recent audited balance sheet referred
to in Section 5.5 or purported to have been acquired by the Company or any Restricted Subsidiary
after said date (except as sold or otherwise disposed of in the ordinary course of business), in
each case free and clear of Liens prohibited by this Agreement. All leases that individually or in
the aggregate are Material are valid and subsisting and are in full force and effect in all
material respects.



     Section 5.11. Licenses, Permits, etc. Except as disclosed in Schedule 5.11,



          (a) the Company and its Restricted Subsidiaries own or possess all licenses, permits,
franchises, authorizations, patents, copyrights, service marks, trademarks and trade names, or
rights thereto, that individually or in the aggregate are Material, without known conflict with the
rights of others;




          (b) to the best knowledge of the Company, no product of the Company infringes in any Material
respect any license, permit, franchise, authorization, patent, copyright, service mark, trademark,
trade name or other right owned by any other Person; and




          (c) to the best knowledge of the Company, there is no Material violation by any Person of any
right of the Company or any of its Subsidiaries with respect to any patent, copyright, service
mark, trademark, trade name or other right owned or used by the Company or any of its Subsidiaries.




     Section 5.12. Compliance with ERISA. (a) The Company and each ERISA Affiliate have operated
and administered each Plan in compliance with all applicable laws except for such instances of
non-compliance as have not resulted in and could not reasonably be expected to result in a Material
Adverse Effect. Neither the Company nor any ERISA Affiliate has incurred any liability pursuant to
Title I or IV of ERISA or the penalty or excise tax provisions of the Code relating to employee
benefit plans (as defined in section 3 of ERISA), and no event, transaction or condition has
occurred or exists that could reasonably be expected to result in the incurrence of any such
liability by the Company or any ERISA Affiliate, or in the imposition of any Lien on any of the
rights, properties or assets of the Company or any ERISA Affiliate, in either case pursuant to
Title I or IV of ERISA or to such penalty or excise tax provisions or to section 401(a)(29) or 412
of the Code or section 4068 of ERISA, other than such liabilities or Liens as would not be
individually or in the aggregate Material.



          (b) The present value of the aggregate benefit liabilities under each of the Plans (other than
Multiemployer Plans) subject to Title IV of ERISA determined on the basis of the actuarial




-8-









 





			
	Pentair, Inc.
	 	Note Purchase Agreement





assumptions specified for funding purposes in such Plan’s actuarial valuation report dated January
1, 2006, did not exceed the aggregate current value of the assets of such Plan allocable to such
benefit liabilities by more than $25,000,000 in the case of any single such Plan and by more than
$50,000,000 in the aggregate for all such Plans. The term “benefit liabilities” has the meaning
specified in section 4001 of ERISA and the terms “current value” and “present value” have the
meaning specified in section 3 of ERISA.




          (c) The Company and its ERISA Affiliates have not incurred withdrawal liabilities (and are not
subject to contingent withdrawal liabilities) under section 4201 or 4204 of ERISA in respect of
Multiemployer Plans that individually or in the aggregate are Material.




          (d) The expected postretirement benefit obligation (determined as of the last day of the
Company’s most recently ended fiscal year in accordance with Financial Accounting Standards Board
Statement No. 106, without regard to liabilities attributable to continuation coverage mandated by
section 4980B of the Code) of the Company and its Subsidiaries is disclosed in Note 11 to the
consolidated financial statements of the Company and its Subsidiaries for the fiscal year ended
December 31, 2006 referred to in Schedule 5.5.




          (e) The execution and delivery of this Agreement and the issuance and sale of the Notes
hereunder will not involve any transaction that is subject to the prohibitions of section 406 of
ERISA or in connection with which a tax could be imposed pursuant to section 4975(c)(1)(A)-(D) of
the Code. The representation by the Company to each Purchaser in the first sentence of this
Section 5.12(e) is made in reliance upon and subject to the accuracy of such Purchaser’s
representation in Section 6.2 as to the sources of the funds used to pay the purchase price of the
Notes to be purchased by such Purchaser.




     Section 5.13. Private Offering by the Company. Neither the Company nor anyone acting on its
behalf has offered the Notes or the Subsidiary Guaranty or any similar securities for sale to, or
solicited any offer to buy any of the same from, or otherwise approached or negotiated in respect
thereof with, any Person other than you, the Other Purchasers and not more than 50 other
Institutional Investors, each of which has been offered the Notes and the Subsidiary Guaranty at a
private sale for investment. Neither the Company nor anyone acting on its behalf has taken, or
will take, any action that would subject the issuance or sale of the Notes or the Subsidiary
Guaranty to the registration requirements of Section 5 of the Securities Act.



     Section 5.14. Use of Proceeds; Margin Regulations. The Company will apply the proceeds of the
sale of the Notes to refinance existing indebtedness and for general corporate purposes. No part of
the proceeds from the sale of the Notes hereunder will be used, directly or indirectly, for the
purpose of buying or carrying any margin stock within the meaning of Regulation U of the Board of
Governors of the Federal Reserve System (12 CFR 221), or for the purpose of buying or carrying or
trading in any securities under such circumstances as to involve the Company in a violation of
Regulation X of said Board (12 CFR 224) or to involve any broker or dealer in a violation of
Regulation T of said Board (12 CFR 220). Margin stock does not constitute more than 5.00% of the
value of the consolidated assets of the Company and its Subsidiaries and the Company does not have
any present intention that margin stock will constitute more than 5.00% of the value of such
assets. As used in this Section, the terms



-9-









 





			
	Pentair, Inc.
	 	Note Purchase Agreement





“margin stock” and “purpose of buying or carrying” shall have the meanings assigned to them in said
Regulation U.




     Section 5.15. Existing Indebtedness; Future Liens. (a) Schedule 5.15 sets forth a complete
and correct list of all outstanding Indebtedness of the Company and its Subsidiaries as of March
31, 2007, since which date, except as disclosed on Schedule 5.15, there has been no Material change
in the amounts, interest rates, sinking funds, installment payments or maturities of the
Indebtedness of the Company or its Restricted Subsidiaries. Neither the Company nor any Restricted
Subsidiary is in default and no waiver of default is currently in effect, in the payment of any
principal or interest on any Indebtedness of the Company or such Restricted Subsidiary and no event
or condition exists with respect to any Indebtedness of the Company or any Restricted Subsidiary
that would permit (or that with notice or the lapse of time, or both, would permit) one or more
Persons to cause such Indebtedness to become due and payable before its stated maturity or before
its regularly scheduled dates of payment.



          (b) Except as disclosed in Schedule 5.15, neither the Company nor any Restricted Subsidiary
has agreed or consented to cause or permit in the future (upon the happening of a contingency or
otherwise) any of its property, whether now owned or hereafter acquired, to be subject to a Lien
not permitted by Section 10.3.




     Section 5.16. Foreign Assets Control Regulations, etc. Neither the sale of the Notes by the
Company hereunder nor its use of the proceeds thereof will violate the Trading with the Enemy Act,
as amended, or any of the foreign assets control regulations of the United States Treasury
Department (31 CFR, Subtitle B, Chapter V, as amended) or any enabling legislation or executive
order relating thereto. Without limiting the foregoing, neither the Company nor any Subsidiary
Guarantor (a) is a person whose property or interests in property are blocked pursuant to Section 1
of Executive Order 13224 of September 23, 2001 Blocking Property and Prohibiting Transactions With
Persons Who Commit, Threaten to Commit, or Support Terrorism (66 Fed. Reg. 49079 (2001)) or (b) to
the best of the Company’s knowledge, engages in any dealings or transactions, or be otherwise
associated, with any such person.



          The Company and its Subsidiaries are in compliance in all material respects with the Uniting
and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct
Terrorism (USA Patriot Act of 2001). No part of the proceeds from the sale of the Notes hereunder
will be used, directly or indirectly, for any payment to any governmental official or employee,
political party, official of a political party, candidate for political office or anyone else
acting in an official capacity, in order to obtain, retain or direct business, in violation of the
United States Foreign Corrupt Practices Act of 1977, as amended.




     Section 5.17. Status under Certain Statutes. Neither the Company nor any Restricted
Subsidiary is an “investment company” registered or required to be registered under the Investment
Company Act of 1940, as amended, or is subject to regulation under the Public Utility Holding
Company Act of 1935, as amended, the ICC Termination Act of 1995, as amended, or the Federal Power
Act, as amended.



-10-









 





			
	Pentair, Inc.
	 	Note Purchase Agreement






     Section 5.18. Environmental Matters. Neither the Company nor any Subsidiary has knowledge of
any Material claim or has received any notice of any Material claim, and no proceeding has been
instituted raising any Material claim against the Company or any of its Subsidiaries or any of
their respective real properties now or formerly owned, leased or operated by any of them or other
assets, alleging any damage to the environment or violation of any Environmental Laws, except, in
each case, such as could not reasonably be expected to result in a Material Adverse Effect. Except
as otherwise disclosed to you in writing:




          (a) neither the Company nor any Subsidiary has knowledge of any facts which would give
rise to any Material claim, public or private, of violation of Environmental Laws or damage
to the environment emanating from, occurring on or in any way related to real properties now
or formerly owned, leased or operated by any of them or to other assets or their use,
except, in each case, such as could not reasonably be expected to result in a Material
Adverse Effect;




          (b) neither the Company nor any of its Subsidiaries has stored any Hazardous Materials
on real properties now or formerly owned, leased or operated by any of them or has disposed
of any Hazardous Materials in a manner contrary to any Environmental Laws in each case in
any manner that could reasonably be expected to result in a Material Adverse Effect; and




          (c) all buildings on all real properties now owned, leased or operated by the Company
or any of its Subsidiaries are in compliance with applicable Environmental Laws, except
where failure to comply could not reasonably be expected to result in a Material Adverse
Effect.



Section 6. Representations of the Purchaser.




     Section 6.1. Purchase for Investment. You represent that you are purchasing the Notes for
your own account or for one or more separate accounts maintained by you or for the account of one
or more pension or trust funds and not with a view to the distribution thereof, provided that the
disposition of your or their property shall at all times be within your or their control. You
understand that the Notes have not been registered under the Securities Act and may be resold only
if registered pursuant to the provisions of the Securities Act or if an exemption from registration
is available, except under circumstances where neither such registration nor such an exemption is
required by law, and that the Obligors are not required to register the Notes .



     Section 6.2. Source of Funds. You represent that at least one of the following statements is
an accurate representation as to each source of funds (a “Source”) to be used by you to pay the
purchase price of the Notes to be purchased by you hereunder:




          (a) the Source is an “insurance company general account” (as the term is defined in the
United States Department of Labor’s Prohibited Transaction Exemption (“PTE”) 95-60) in
respect of which the reserves and liabilities (as defined by the annual statement for life
insurance companies approved by the National Association of Insurance Commissioners (the
“NAIC Annual Statement”)) for the general account



-11-









 





			
	Pentair, Inc.
	 	Note Purchase Agreement







contract(s) held by or on behalf of any employee benefit plan together with the amount of
the reserves and liabilities for the general account contract(s) held by or on behalf of any
other employee benefit plans maintained by the same employer (or affiliate thereof as
defined in PTE 95-60) or by the same employee organization in the general account do not
exceed 10% of the total reserves and liabilities of the general account (exclusive of
separate account liabilities) plus surplus as set forth in the NAIC Annual Statement filed
with such Purchaser’s state of domicile; or




          (b) the Source is a separate account that is maintained solely in connection with your
fixed contractual obligations under which the amounts payable, or credited, to any employee
benefit plan (or its related trust) that has any interest in such separate account (or to
any participant or beneficiary of such plan (including any annuitant)) are not affected in
any manner by the investment performance of the separate account; or




          (c) the Source is either (i) an insurance company pooled separate account, within the
meaning of PTE 90-1 or (ii) a bank collective investment fund, within the meaning of the PTE
91-38 and, except as disclosed by you to the Company in writing pursuant to this clause (c),
no employee benefit plan or group of plans maintained by the same employer or employee
organization beneficially owns more than 10% of all assets allocated to such pooled separate
account or collective investment fund; or




          (d) the Source constitutes assets of an “investment fund” (within the meaning of Part V
of PTE 84-14 (the “QPAM Exemption”)) managed by a “qualified professional asset manager” or
“QPAM” (within the meaning of Part V of the QPAM Exemption), no employee benefit plan’s
assets that are included in such investment fund, when combined with the assets of all other
employee benefit plans established or maintained by the same employer or by an affiliate
(within the meaning of Section V(c)(1) of the QPAM Exemption) of such employer or by the
same employee organization and managed by such QPAM, exceed 20% of the total client assets
managed by such QPAM, the conditions of Part I(c) and (g) of the QPAM Exemption are
satisfied, neither the QPAM nor a person controlling or controlled by the QPAM (applying the
definition of “control” in Section V(e) of the QPAM Exemption) owns a 5% or more interest in
the Company and (i) the identity of such QPAM and (ii) the names of all employee benefit
plans whose assets are included in such investment fund have been disclosed to the Company
in writing pursuant to this clause (d); or




          (e) the Source constitutes assets of a “plan(s)” (within the meaning of Section IV of
PTE 96-23 (the “INHAM Exemption”)) managed by an “in-house asset manager” or “INHAM” (within
the meaning of Part IV of the INHAM Exemption), the conditions of Part I(a), (g) and (h) of
the INHAM Exemption are satisfied, neither the INHAM nor a person controlling or controlled
by the INHAM (applying the definition of “control” in Section IV(d) of the INHAM Exemption)
owns a 5% or more interest in the Company and (i) the identity of such INHAM and (ii) the
name(s) of the employee benefit plan(s) whose assets constitute the Source have been
disclosed to the Company in writing pursuant to this clause (e); or



-12-









 





			
	Pentair, Inc.
	 	Note Purchase Agreement







          (f) the Source is a governmental plan; or




          (g) the Source is one or more employee benefit plans, or a separate account or trust
fund comprised of one or more employee benefit plans, each of which has been identified to
the Company in writing pursuant to this clause (g); or




          (h) the Source does not include assets of any employee benefit plan, other than a plan
exempt from the coverage of ERISA.


As used in this Section 6.2, the terms “employee benefit plan,” “governmental plan,” and “separate
account” shall have the respective meanings assigned to such terms in section 3 of ERISA.




Section 7. Information as to Company.




          The Company agrees that so long as any amount payable hereunder remains unpaid;




     Section 7.1. Financial and Business Information. The Company shall deliver to each holder of
Notes that is an Institutional Investor:




          (a) Quarterly Statements — within 60 days after the end of each quarterly fiscal period
in each fiscal year of the Company (other than the last quarterly fiscal period of each such
fiscal year), duplicate copies of:




          (i) a consolidated balance sheet of the Company and its Subsidiaries as at the
end of such quarter, and




          (ii) consolidated statements of income, changes in shareholders’ equity and
cash flows of the Company and its Subsidiaries for such quarter and (in the case of
the second and third quarters) for the portion of the fiscal year ending with such
quarter,




setting forth in each case in comparative form the figures for the corresponding periods in
the previous fiscal year, all in reasonable detail, prepared in accordance with GAAP
applicable to quarterly financial statements generally, and certified by a Senior Financial
Officer as fairly presenting, in all material respects, the financial position of the
companies being reported on and their results of operations and cash flows, subject to
changes resulting from year-end adjustments, provided that delivery within the time period
specified above of copies of the Company’s Quarterly Report on Form 10-Q prepared in
compliance with the requirements therefore and filed with the Securities and Exchange
Commission will be deemed to satisfy the requirements of this Section 7.1(a), provided,
further, that the Company shall be deemed to have made such delivery on such Form 10-Q if it
shall have timely made such Form 10-Q available on “EDGAR” and shall have given each
Purchaser a prior notice of such availability on EDGAR in connection with each delivery
(such availability and notice thereof being referred to as (“Electronic Delivery”);



-13-









 





			
	Pentair, Inc.
	 	Note Purchase Agreement







          (b) Annual Statements — within 120 days after the end of each fiscal year of the
Company, duplicate copies of:




          (i) a consolidated balance sheet of the Company and its Subsidiaries, as at the
end of such year, and




          (ii) consolidated statements of income, changes in shareholders’ equity and
cash flows of the Company and its Subsidiaries, for such year,




setting forth in each case in comparative form the figures for the previous fiscal year, all
in reasonable detail, prepared in accordance with GAAP, and accompanied by an opinion
thereon of independent certified public accountants of recognized national standing, which
opinion shall state that such financial statements present fairly, in all material respects,
the financial position of the companies being reported upon and their results of operations
and cash flows and have been prepared in conformity with GAAP, and that the examination of
such accountants in connection with such financial statements has been made in accordance
with generally accepted auditing standards, and that such audit provides a reasonable basis
for such opinion in the circumstances, provided that the delivery within the time period
specified above of the Company’s Annual Report on Form 10-K for such fiscal year (together
with the Company’s annual report to shareholders, if any, prepared pursuant to Rule 14a-3
under the Exchange Act) prepared in accordance with the requirements therefor and filed with
the Securities and Exchange Commission shall be deemed to satisfy the requirements of this
Section 7.1(b), provided, further, that the Company shall be deemed to have made such
delivery of such Form 10-K if it shall have timely made Electronic Delivery thereof.




Notwithstanding the foregoing, in the event that one or more Unrestricted Subsidiaries shall
own, individually or in the aggregate, more than 10% of the Consolidated Total Assets of the
Company and its Subsidiaries, determined at the end of the respective periods set forth in
Section 7.1(a) and this Section 7.1 (b), then the Company shall deliver to each holder of
the Notes that is an Institutional Investor, financial statements of the character and for
the dates and periods as in said Section 7.1(a) and this Section 7.1(b) covering the group
of Unrestricted Subsidiaries (on a consolidated basis), together with a consolidated
statement reflecting eliminations or adjustments required to reconcile the financial
statements of such group of Unrestricted Subsidiaries to the financial statements delivered
pursuant to Section 7.1(a) and this Section 7.1(b);




          (c) SEC and Other Reports — except for filings referred to in Section 7.1(a) and (b)
above, promptly upon their becoming available, one copy of (i) each financial statement,
report, management letter, notice or proxy statement sent by the Company or any Subsidiary
to public securities holders generally, and (ii) each regular or periodic report, each
registration statement (without exhibits except as expressly requested by such holder), and
each prospectus and all amendments thereto filed by the Company or any Subsidiary with the
Securities and Exchange Commission and of all press releases and other statements made
available generally by the Company or any Subsidiary to the public concerning developments
that are Material, provided, that the Company shall be



-14-









 





			
	Pentair, Inc.
	 	Note Purchase Agreement







deemed to have made such delivery of any such documents if it shall have timely made
Electronic Delivery thereof;




          (d) Notice of Default or Event of Default — promptly, and in any event within five
Business Days after a Responsible Officer becoming aware of the existence of any Default or
Event of Default or that any Person has given any notice or taken any action with respect to
a claimed default hereunder or that any Person has given any notice or taken any action with
respect to a claimed default of the type referred to in Section 11(f), a written notice
specifying the nature and period of existence thereof and what action the Company is taking
or proposes to take with respect thereto;




          (e) ERISA Matters — promptly, and in any event within five Business Days after a
Responsible Officer becoming aware of any of the following, a written notice setting forth
the nature thereof and the action, if any, that the Company or an ERISA Affiliate proposes
to take with respect thereto:




          (i) with respect to any Plan, any reportable event, as defined in section
4043(c) of ERISA and the regulations thereunder, for which notice thereof has not
been waived pursuant to such regulations as in effect on the date hereof; or




          (ii) the taking by the PBGC of steps to institute, or the threatening by the
PBGC of the institution of, proceedings under section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any Plan, or the
receipt by the Company or any ERISA Affiliate of a notice from a Multiemployer Plan
that such action has been taken by the PBGC with respect to such Multiemployer Plan;
or




          (iii) any event, transaction or condition that could result in the incurrence
of any liability by the Company or any ERISA Affiliate pursuant to Title I or IV of
ERISA or the penalty or excise tax provisions of the Code relating to employee
benefit plans, or in the imposition of any Lien on any of the rights, properties or
assets of the Company or any ERISA Affiliate pursuant to Title I or IV of ERISA or
such penalty or excise tax provisions, if such liability or Lien, taken together
with any other such liabilities or Liens then existing, could reasonably be expected
to have a Material Adverse Effect;




          (f) Notices from Governmental Authority — promptly, and in any event within 30 days of
receipt thereof, copies of any notice to the Company or any Subsidiary from any Federal or
state Governmental Authority relating to any order, ruling, statute or other law or
regulation that could reasonably be expected to have a Material Adverse Effect; and




          (g) Requested Information — with reasonable promptness, such other data and information
relating to the business, operations, affairs, financial condition, assets or properties of
the Company or any of its Subsidiaries or relating to the ability of the



-15-









 





			
	Pentair, Inc.
	 	Note Purchase Agreement







Company to perform its obligations hereunder and under the Notes as from time to time may be
reasonably requested by any such holder of Notes.



     Section 7.2. Officer’s Certificate. Each set of financial statements delivered to a holder of
Notes pursuant to Section 7.1(a) or Section 7.1(b) hereof shall be accompanied by a certificate of
a Senior Financial Officer setting forth:




          (a) Covenant Compliance — the information (including detailed calculations) required in
order to establish whether the Company was in compliance with the requirements of Section
10.2 through Section 10.6 hereof, inclusive, during the quarterly or annual period covered
by the statements then being furnished (including with respect to each such Section, where
applicable, the calculations of the maximum or minimum amount, ratio or percentage, as the
case may be, permissible under the terms of such Sections, and the calculation of the
amount, ratio or percentage then in existence), provided that such certificate shall include
information describing in reasonable detail any difference in the calculation of the
Company’s calculation of Consolidated Net Worth pursuant to the terms of this Agreement and
the calculation of consolidated net worth of the Company determined in accordance with GAAP;
and




          (b) Event of Default — a statement that such officer has reviewed the relevant terms
hereof and has made, or caused to be made, under his or her supervision, a review of the
transactions and conditions of the Company and its Subsidiaries from the beginning of the
quarterly or annual period covered by the statements then being furnished to the date of the
certificate and that such review shall not have disclosed the existence during such period
of any condition or event that constitutes a Default or an Event of Default or, if any such
condition or event existed or exists, specifying the nature and period of existence thereof
and what action the Company shall have taken or proposes to take with respect thereto.



     Section 7.3. Inspection. The Company shall permit the representatives of each holder of Notes
that is an Institutional Investor:




          (a) No Default — if no Default or Event of Default then exists, at the expense of such
holder and upon reasonable prior notice to the Company, to visit the principal executive
office of the Company, to discuss the affairs, finances and accounts of the Company and its
Subsidiaries with the Company’s officers, and (with the consent of the Company, which
consent will not be unreasonably withheld) to visit the other offices and properties of the
Company and each Subsidiary, all at such reasonable times (which shall be normal business
hours) and as often as may be reasonably requested in writing; and




          (b) Default — if a Default or Event of Default then exists, at the expense of the
Company, to visit and inspect any of the offices or properties of the Company or any
Subsidiary, to examine all their respective books of account, records, reports and other
papers, to make copies and extracts therefrom, and to discuss their respective affairs,
finances and accounts with their respective officers and independent public accountants (and
by this provision the Company authorizes said accountants to discuss the affairs,



-16-









 





			
	Pentair, Inc.
	 	Note Purchase Agreement







finances and accounts of the Company and its Subsidiaries), all at such times and as often
as may be requested.



Section 8. Prepayment of the Notes.




     Section 8.1. No Scheduled Required Prepayments. Subject to the provisions of Section 12, the
Notes are not subject to scheduled required prepayments of principal.



     Section 8.2. Optional Prepayments with Make-Whole Amount. (a) The Company may, at its option,
upon notice as provided below, prepay at any time all, or from time to time any part of, the Series
D Notes, in an amount not less than 10% of the aggregate principal amount of the Series D Notes
then outstanding in the case of a partial prepayment, at 100% of the principal amount so prepaid,
together with interest accrued thereon to the date of such prepayment, plus the Make-Whole Amount
determined for the prepayment date with respect to such principal amount. The Company will give
each holder of Series D Notes written notice of each optional prepayment under this Section 8.2(a)
not less than 30 days and not more than 60 days prior to the date fixed for such prepayment. Each
such notice shall specify such date, the aggregate principal amount of the Series D Notes to be
prepaid on such date, the principal amount of each Series D Note held by such holder to be prepaid
(determined in accordance with Section 8.3), and the interest to be paid on the prepayment date
with respect to such principal amount being prepaid, and shall be accompanied by a certificate of a
Senior Financial Officer as to the estimated Make-Whole Amount due in connection with such
prepayment (calculated as if the date of such notice were the date of the prepayment), setting
forth the details of such computation. Two Business Days prior to such prepayment, the Company
shall deliver to each holder of Series D Notes a certificate of a Senior Financial Officer
specifying the calculation of such Make-Whole Amount as of the specified prepayment date.



          (b) The Company may, at its option, upon notice as provided below, prepay on any Interest
Payment Date on or after, but not prior to, May 17, 2008, all, or any part of, the Series E Notes,
in an amount not less than 10% of the aggregate principal amount of the Series E Notes then
outstanding in the case of a partial prepayment, at 100% of the principal amount so prepaid,
together with interest accrued thereon to the date of such prepayment. The Company will give each
holder of Series E Notes written notice of each optional prepayment under this Section 8.2(b) not
less than 30 days and not more than 60 days prior to the Interest Payment Date fixed for such
prepayment. Each such notice shall specify such date, the aggregate principal amount of the Series
E Notes to be prepaid on such date, the principal amount of each Series E Note held by such holder
to be prepaid (determined in accordance with Section 8.3), and the interest to be paid on the
prepayment date with respect to such principal amount being prepaid.




     Section 8.3. Allocation of Partial Prepayments. In the case of each partial prepayment of the
Notes of a series, the principal amount of the Notes of such series to be prepaid shall be
allocated among all of the Notes of that series at the time outstanding in proportion, as nearly as
practicable, to the respective unpaid principal amounts thereof.



     Section 8.4. Maturity; Surrender, etc. In the case of each prepayment of Notes pursuant to
this Section 8, the principal amount of each Note to be prepaid shall mature and become due



-17-









 





			
	Pentair, Inc.
	 	Note Purchase Agreement





and payable on the date fixed for such prepayment, together with interest on such principal amount
accrued to such date and, in the case of the Series D Notes, the applicable Make-Whole Amount, if
any. From and after such date, unless the Company shall fail to pay such principal amount when so
due and payable, together with the interest and, in the case of the Series D Notes, Make-Whole
Amount, if any, as aforesaid, interest on such principal amount shall cease to accrue. Any Note
paid or prepaid in full shall be surrendered to the Company and cancelled and shall not be
reissued, and no Note shall be issued in lieu of any prepaid principal amount of any Note.




     Section 8.5. Purchase of Notes. The Company will not and will not permit any Affiliate to
purchase, redeem, prepay or otherwise acquire, directly or indirectly, any of the outstanding Notes
except upon the payment or prepayment of the Notes in accordance with the terms of this Agreement
and the Notes. The Company will promptly cancel all Notes acquired by it or any Affiliate pursuant
to any payment, prepayment or purchase of Notes pursuant to any provision of this Agreement and no
Notes may be issued in substitution or exchange for any such Notes.



     Section 8.6. Make-Whole Amount. The term “Make-Whole Amount” means, with respect to any
Series D Note, an amount equal to the excess, if any, of the Discounted Value of the Remaining
Scheduled Payments with respect to the Called Principal of such Series D Note over the amount of
such Called Principal, provided that the Make-Whole Amount may in no event be less than zero. For
the purposes of determining the Make-Whole Amount, the following terms have the following meanings:




          “Called Principal” means, with respect to any Series D Note, the principal of such Note
that is to be prepaid pursuant to Section 8.2 or has become or is declared to be immediately
due and payable pursuant to Section 12.1, as the context requires.




          “Discounted Value” means, with respect to the Called Principal of any Series D Note,
the amount obtained by discounting all Remaining Scheduled Payments with respect to such
Called Principal from their respective scheduled due dates to the Settlement Date with
respect to such Called Principal, in accordance with accepted financial practice and at a
discount factor (applied on the same periodic basis as that on which interest on the Series
D Notes is payable) equal to the Reinvestment Yield with respect to such Called Principal.




          “Reinvestment Yield” means, with respect to the Called Principal of any Series D Note,
0.50% over the yield to maturity implied by (i) the yields reported, as of 10:00 A.M. (New
York City time) on the second Business Day preceding the Settlement Date with respect to
such Called Principal, on the display designated as “Screen PX1” on the Bloomberg Financial
Markets Screen, or, if not available, any other nationally recognized trading screen
reporting on-line intraday trading in the U.S. Treasury securities (or such other display as
may replace Screen PX1 on the Bloomberg Financial Markets Screen, or, if not available, any
other nationally recognized trading screen reporting on-line intraday trading in the U.S.
Treasury securities) for actively traded U.S. Treasury securities having a constant maturity
equal to the Remaining Average Life of such Called Principal as of such Settlement Date.
Such implied yield will be determined,



-18-









 





			
	Pentair, Inc.
	 	Note Purchase Agreement







if necessary, by (a) converting U.S. Treasury bill quotations to bond-equivalent yields
in accordance with accepted financial practice and (b) interpolating linearly between (1)
the actively traded U.S. Treasury security with the maturity closest to and greater than the
Remaining Average Life and (2) the actively traded U.S. Treasury security with the maturity
closest to and less than the Remaining Average Life.




          “Remaining Average Life” means, with respect to any Called Principal, the number of
years (calculated to the nearest one-twelfth year) obtained by dividing (i) such Called
Principal into (ii) the sum of the products obtained by multiplying (a) the principal
component of each Remaining Scheduled Payment with respect to such Called Principal by (b)
the number of years (calculated to the nearest one-twelfth year) that will elapse between
the Settlement Date with respect to such Called Principal and the scheduled due date of such
Remaining Scheduled Payment.




          “Remaining Scheduled Payments” means, with respect to the Called Principal of any
Series D Note, all payments of such Called Principal and interest thereon that would be due
after the Settlement Date with respect to such Called Principal if no payment of such Called
Principal were made prior to its scheduled due date, provided that if such Settlement Date
is not a date on which interest payments are due to be made under the terms of the Series D
Notes then the amount of the next succeeding scheduled interest payment will be reduced by
the amount of interest accrued to such Settlement Date and required to be paid on such
Settlement Date pursuant to Section 8.2(a) or 12.1.




          “Settlement Date” means, with respect to the Called Principal of any Series D Note, the
date on which such Called Principal is to be prepaid pursuant to Section 8.2(a) or has
become or is declared to be immediately due and payable pursuant to Section 12.1, as the
context requires.



     Section 8.7. Change in Control.



          (a) Notice of Change in Control and Change in Control Event. The Company will, within five
Business Days after any Responsible Officer has knowledge of the occurrence of any Change in
Control, give written notice of such Change in Control to each holder of Notes. If within 90 days
after such Change in Control, the Company does not, for any reason, have an Investment Grade
Rating, a “Change in Control Event” shall be deemed to have occurred. If a Change in Control Event
has occurred, the Company shall give immediate written notice thereof to the holders, and such
notice shall contain and constitute an offer to prepay Notes as described in subparagraph (b) of
this Section 8.7 and shall be accompanied by the certificate described in subparagraph (e) of this
Section 8.7.




          (b) Offer to Prepay Notes. The offer to prepay the Notes contemplated by subparagraph (a) of
this Section 8.7 shall be an offer to prepay, in accordance with and subject to this Section 8.7,
all, but not less than all, the Notes held by each holder (in this case only, “holder” in respect
of any Note registered in the name of a nominee for a disclosed beneficial owner shall mean such
beneficial owner) on a date specified in such offer (the “Proposed




-19-









 





			
	Pentair, Inc.
	 	Note Purchase Agreement





Prepayment Date”). Such date shall be not less than 30 days and not more than 60 days after the
date of such offer.




          (c) Acceptance. A holder of Notes may accept the offer to prepay made pursuant to this
Section 8.7 by causing a notice of such acceptance to be delivered to the Company not later than 15
days prior to the Proposed Prepayment Date. A failure by a holder of Notes to respond to the offer
to prepay made pursuant to this Section 8.7 shall be deemed to constitute a rejection of such offer
by such holder.




          (d) Prepayment. Prepayment of the Notes to be prepaid pursuant to this Section 8.7 shall be
at 100% of the principal amount of such Notes, together with interest on such Notes accrued to the
date of prepayment and without any Make-Whole Amount (but shall include any LIBOR Breakage Amount
with respect to any Series E Notes being prepaid and not paid on an Interest Payment Date). The
prepayment shall be made on the Proposed Prepayment Date.




          (e) Officer’s Certificate. Each offer to prepay the Notes pursuant to this Section 8.7 shall
be accompanied by a certificate, executed by a Senior Financial Officer of the Company and dated
the date of such offer, specifying: (i) the Proposed Prepayment Date; (ii) that such offer is made
pursuant to this Section 8.7; (iii) the interest that would be due on each Note offered to be
prepaid, accrued to the Proposed Prepayment Date; (iv) that the conditions of this Section have
been fulfilled; (v) in reasonable detail, the nature of the Change in Control Event; and (vi) any
written response from the relevant rating agency.




          (f) Certain Definitions. “Change in Control” shall be deemed to have occurred if any person
(as such term is used in Section 13(d) and Section 14(d)(2) of the Exchange Act as in effect on the
date of the Closing) or related persons constituting a group (as such term is used in Rule 13d-5
under the Exchange Act) become the “beneficial owners” (as such term is used in Rule 13d-3 under
the Exchange Act as in effect on the date of the Closing), directly or indirectly, of more than 50%
of the total voting power of all classes then outstanding of the voting stock of the Company.




          “Investment Grade Rating” in respect of any Person means, at the time of determination, at
least two of the following ratings of its senior, unsecured long-term indebtedness for borrowed
money: (i) by Standard & Poor’s Rating Services, a division of The McGraw-Hill Companies, or any
successor thereof, “BBB-” or better, (ii) by Moody’s Investors Service, Inc., or any successor
thereof, “Baa3” or better, or (iii) by any other nationally recognized statistical rating agency,
an equivalent or better rating.




          (g) All calculations contemplated in this Section 8.7 involving the capital stock or other
equity interest of any Person shall be made with the assumption that all convertible Securities of
such Person then outstanding and all convertible Securities issuable upon the exercise of any
warrants, options and other rights outstanding at such time were converted at such time and that
all options, warrants and similar rights to acquire shares of capital stock or other equity
interest of such Person were exercised at such time.




-20-









 





			
	Pentair, Inc.
	 	Note Purchase Agreement






Section 9. Affirmative Covenants.




          The Company agrees that so long as any amount payable hereunder remains unpaid:




     Section 9.1. Compliance with Laws. The Company shall, and shall cause each Subsidiary to,
comply with all Requirements of Law of any Governmental Authority having jurisdiction over it or
its business the non-compliance with which could reasonably be expected to have a Material Adverse
Effect. Without limiting the foregoing, the Company 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 Company and its Subsidiaries taken as a whole.



     Section 9.2. Insurance. The Company shall, and shall cause each Subsidiary to, maintain
(either in the name of the Company or in such Subsidiary’s own name), with financially sound and
reputable insurers, insurance with respect to its properties and business against loss or damage of
the kinds customarily insured against by Persons engaged in the same or similar businesses, of such
types and in such amounts as are customarily carried under similar circumstances by such other
Persons; provided, however, that in lieu of any such insurance, the Company and any of its
Subsidiaries may maintain with its Affiliates a system or systems of self-insurance (or captive
insurance) which will accord with sound practices of similarly situated corporations maintaining
such systems.



     Section 9.3. Maintenance of Properties. The Company will, and will cause each of its
Restricted Subsidiaries to, maintain and keep, or cause to be maintained and kept, their respective
properties in good repair, working order and condition (other than ordinary wear and tear), so that
the business carried on in connection therewith may be properly conducted at all times, provided
that this Section shall not prevent the Company or any Restricted Subsidiary from discontinuing the
operation and the maintenance of any of its properties if such discontinuance is desirable in the
conduct of its business and the Company has concluded that such discontinuance could not,
individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.



     Section 9.4. Payment of Taxes and Claims. The Company will, and will cause each of its
Subsidiaries to, file all tax returns required to be filed in any jurisdiction and to pay and
discharge all taxes shown to be due and payable on such returns and all other taxes, assessments,
governmental charges, or levies imposed on them or any of their properties, assets, income or
franchises, to the extent such taxes and assessments have become due and payable and before they
have become delinquent and all claims for which sums have become due and payable that have or might
become a Lien on properties or assets of the Company or any Subsidiary, provided that neither the
Company nor any Subsidiary need pay any such tax or assessment or claims if (i) the amount,
applicability or validity thereof is contested by the Company or such Subsidiary on a timely basis
in good faith and in appropriate proceedings, and the Company or a Subsidiary has established
adequate reserves therefor in accordance with GAAP on the books of the Company or such Subsidiary
or (ii) the nonpayment of all such taxes and assessments in the aggregate could not reasonably be
expected to have a Material Adverse Effect.



-21-









 





			
	Pentair, Inc.
	 	Note Purchase Agreement






     Section 9.5. Corporate Existence, etc. Subject to Section 10.2, the Company will at all times
preserve and keep in full force and effect its corporate existence. Except as permitted by Section
10.2, the Company will at all times preserve and keep in full force and effect the corporate
existence of each of its Restricted Subsidiaries and all rights and franchises of the Company and
its Restricted Subsidiaries unless, in the good faith judgment of the Company, the termination of
or failure to preserve and keep in full force and effect such corporate existence, right or
franchise could not, individually or in the aggregate, have a Material Adverse Effect.



     Section 9.6. 2007 Note Purchase Subsidiary Guaranty. The Company will take, and will cause
its Subsidiaries to take, such actions as are reasonably necessary (including delivery of
authorization documents and customary opinions of counsel) so that as of the Closing, and at all
times thereafter (subject to the proviso below), all of the Company’s obligations hereunder and
under the Notes are guaranteed by 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
revenues 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 2007 Note Purchase Subsidiary Guaranty.



          The 2007 Note Purchase Subsidiary Guaranty shall cease to be effective upon the payment in
full of the principal and interest on the Notes and all other payments due under this Agreement and
the Other Agreements. In addition, the 2007 Note Purchase Subsidiary Guaranty shall, without any
further action of the holders of the Notes, cease to be effective on the first date on which the
Credit Agreement Guaranty (or any replacement thereof) ceases to be effective (a “Credit Agreement
Guaranty Termination"); provided, however, that the foregoing release shall be effective only if
(i) at the time of such release and after giving effect thereto, no Default or Event of Default
shall exist and (ii) each Subsidiary Guaranty ceases to be effective by its terms upon a Credit
Agreement Guaranty Termination. In addition, if at any time any Person which is a Subsidiary
Guarantor is released from its obligations under the Credit Agreement Guaranty (or any replacement
thereof) then such Person shall, without any further action of the Company or the holder of the
Note, be released from the 2007 Note Purchase Subsidiary Guaranty; provided however, that the
foregoing release shall be effective only if (i) at the time of such release and after giving
effect thereto, no Default or Event of Default shall exist and (ii) such Person is concurrently
released from its obligations under the terms of each Subsidiary Guaranty upon such Credit
Agreement Guaranty (or any replacement thereof) release. In the event that the obligations of any
Subsidiary Guarantor are released in accordance with the foregoing and other Indebtedness of the
Company is thereafter supported by a Guaranty from such Subsidiary, the Company will cause such
Subsidiary to execute and deliver to each holder of Notes a new Guaranty substantially in the form
of the 2007 Note Purchase Subsidiary Guaranty.




     Section 9.7. Unrestricted Subsidiary. The Company may from time to time cause any Subsidiary
to be designated as an Unrestricted Subsidiary or an Unrestricted Subsidiary to be designated as a
Restricted Subsidiary, provided, however, no Subsidiary may be designated an Unrestricted
Subsidiary unless, at the time of such designation and after giving effect thereto, no Default or
Event of Default shall exist, provided, further, that once a Restricted Subsidiary has



-22-









 





			
	Pentair, Inc.
	 	Note Purchase Agreement





been designated an Unrestricted Subsidiary it shall not be redesignated as a Restricted Subsidiary
on more than one occasion. Within ten days following any designation described above, the Company
will deliver to you a notice of such designation accompanied by a certificate signed by a Senior
Financial Officer of the Company certifying compliance with the requirements of this Section 9.7
and setting forth information necessary to establish such compliance.




Section 10. Negative Covenants.




          The Company covenants that so long as any of the Notes is outstanding:




     Section 10.1. Transactions with Affiliates. The Company will not and will not permit any
Restricted Subsidiary to enter into directly or indirectly any Material transaction or Material
group of related transactions (including without limitation the purchase, lease, sale or exchange
of properties of any kind or the rendering of any service) with any Affiliate (excluding the
Company or any Restricted Subsidiary), except pursuant to the reasonable requirements of the
Company’s or such Restricted Subsidiary’s business and upon fair and reasonable terms no less
favorable to the Company or such Restricted Subsidiary than would be obtainable in a comparable
arm’s-length transaction with a Person not an Affiliate.



     Section 10.2. Mergers, Consolidations and Sales of Assets. (a) Neither the Company nor any
Restricted Subsidiary will consolidate with or be a party to a merger with any other corporation,
partnership or limited liability company; provided, however, that:




          (i) any Restricted Subsidiary may merge or consolidate with or into the Company or any
other Restricted Subsidiary so long as in any transaction involving the Company, the Company
shall be the surviving or continuing corporation; and




          (ii) any Restricted Subsidiary may merge or consolidate with any corporation,
partnership or limited liability company other than the Company or any other Restricted
Subsidiary so long as the Company complies with the provisions of subparagraph (b) hereof
with respect to any such transaction as if such transaction were undertaken in the form of a
sale of assets; and




          (iii) the Company may merge or consolidate with or into any other corporation,
partnership or limited liability company if at the time of such merger or consolidation and
after giving effect thereto no Default or Event of Default shall have occurred and be
continuing and the Company shall be the surviving corporation or, if not, (x) the surviving
corporation, partnership or limited liability company shall continue to be organized under
the laws of one of the States of the United States of America and (y) the surviving
corporation, partnership or limited liability company expressly agrees in writing to assume
all liabilities under and to be bound by the Notes and this Agreement.



          (b) Other than in the ordinary course of their businesses, the Company and its Restricted
Subsidiaries taken as a whole will not, in any fiscal year, sell, lease, transfer or otherwise
dispose of more than 20% of Consolidated Total Assets (determined as of the date of the most
recently ended fiscal quarter of the Company for which financial statements are




-23-









 





			
	Pentair, Inc.
	 	Note Purchase Agreement





available prior to each such sale, lease, transfer or other disposition) (excluding sales of
receivables pursuant to a Securitization Transaction); provided, however, that the Company and its
Restricted Subsidiaries taken as a whole may dispose of more than 20% of Consolidated Total Assets
in such fiscal year if, in connection with any such disposal, the Company and its Restricted
Subsidiaries (including any Restricted Subsidiary created for the purpose of acquiring operating
assets) applies the Net Proceeds of the sale of the assets within twelve months from the date of
such sale either (i) to the acquisition of operating assets of the Company and its Restricted
Subsidiaries or the retirement of Senior Debt incurred in connection with such an acquisition,
provided such acquisition was completed within twelve months prior to or following the date of the
applicable sale; or (ii) to the retirement of Senior Debt (other than Senior Debt in respect of any
revolving credit or similar credit facility providing the Company or any of its Restricted
Subsidiaries with the right to obtain loans or other extensions of credit from time to time, except
to the extent that in connection with such payment of Senior Debt the availability of credit under
such credit facility is permanently reduced by an amount not less than the amount of such proceeds
applied to the payment of such Senior Debt); provided, that in the course of making such
application the Company shall offer to prepay each outstanding Note in accordance with Section 8.2
hereof (except that no Make-Whole Amount will be required) in a principal amount which equals the
Ratable Portion for such Note. A failure by a holder of Notes to respond in writing not later than
ten days prior to the proposed prepayment date to any offer to prepay pursuant to this Section
10.2(b) shall be deemed to constitute a rejection of such offer by such holder. To the extent any
holder of a Note fails to accept such offer of prepayment, then the Net Proceeds that would have
been paid to such holder shall be offered pro rata to the other holders of the Notes that have
accepted the offer. To the extent that any holder of a Note rejects such offer of prepayment, the
Company nevertheless will be deemed to have offered to prepay to such holder an amount equal to the
Ratable Portion for such Note. “Ratable Portion” for any Note means an amount equal to the product
of (x) the Net Proceeds being so applied to the payment of Senior Debt multiplied by (y) a fraction
the numerator of which is the outstanding principal amount of such Note and the denominator of
which is the aggregate principal amount of Senior Debt of the Company and its Restricted
Subsidiaries. For purposes of any determination under this Section 10.2(b), any Unrestricted
Subsidiary which had been a Restricted Subsidiary at any time within the period commencing 12
months prior to the date of such determination shall be treated as a Restricted Subsidiary.




     Section 10.3 Liens. The Company will not, and will not permit any Restricted Subsidiary to,
directly or indirectly create, incur, assume or permit to exist (upon the happening of a
contingency or otherwise) any Lien on or with respect to any property or asset (including without
limitation, any document or instrument in respect of goods or accounts receivable) of the Company
or any such Restricted Subsidiary, whether now owned or held or hereafter acquired, or upon any
income or profits therefrom, or assigns or otherwise convey any right to receive income or
profits(unless it makes or causes to be made, effective provisions whereby the Notes will be
equally and ratably secured with any and all other obligations thereby secured, such security to be
pursuant to an agreement reasonably satisfactory to the Required Holders), except:




          (a) Liens for taxes, assessments or other governmental charges which are not yet due
and payable or are being contested in good faith by appropriate proceedings and



-24-









 





			
	Pentair, Inc.
	 	Note Purchase Agreement







adequate reserves in accordance with GAAP are being maintained therefore, provided no notice
of Lien has been filed or recorded under the Code;




          (b) any attachment or judgment Lien, unless the judgment it secures shall not, within
60 days after the entry thereof, have been discharged or execution thereof stayed pending
appeal, or shall not have been discharged within 60 days after the expiration of any such
stay;




          (c) statutory Liens of landlords and Liens of carriers, warehousemen, mechanics,
materialmen and other similar Liens, in each case, incurred in the ordinary course of
business for sums not yet due and payable or which are being contested in good faith by
appropriate proceedings, which proceedings have the effect of preventing the forfeiture or
sale of the property subject thereto;




          (d) Liens (other than any Lien imposed by ERISA) incurred or deposits made in the
ordinary course of business (i) in connection with workers’ compensation, unemployment
insurance and other types of social security or retirement benefits, or (ii) to secure (or
to obtain letters of credit that secure) the performance of tenders, statutory obligations,
surety bonds, appeal bonds, bids, leases (other than Capital Leases), performance bonds,
purchase, construction or sales contracts and other similar obligations or (iii) given in
connection with usual and customary commercial transactions, in each case not incurred or
made in connection with the borrowing of money, the obtaining of advances or credit or the
payment of the deferred purchase price of Property;




          (e) leases or subleases granted to others, easements, rights-of-way, restrictions and
other similar charges or encumbrances, in each case incidental to, and not interfering with
in a Material way, the ordinary conduct of the business of the Company and its Restricted
Subsidiaries, provided that such Liens do not, in the aggregate, detract from the value of
such property in any Material way;




          (f) Liens on property or assets of the Company or any of its Restricted Subsidiaries
securing Indebtedness owing to the Company or any of its Wholly-Owned Restricted
Subsidiaries;




          (g) Liens existing on the date of this Agreement and securing the Indebtedness of the
Company and its Restricted Subsidiaries and disclosed in the financial statements referred
to in Section 5.5 or set forth in Schedule 5.15;




          (h) any Lien created to secure all or any part of the purchase price, or to secure
Indebtedness incurred or assumed to pay all or any part of the purchase price or cost of
construction, of property, or any improvement thereon, acquired or constructed by the
Company or a Restricted Subsidiary after the date of this Agreement (including, but not
limited to, Liens in respect of Capital Leases), provided that



-25-









 





			
	Pentair, Inc.
	 	Note Purchase Agreement







          (i) any such Lien shall extend solely to the item or items of such property (or
improvement thereon) so acquired or constructed and, if required by the terms of the
instrument originally creating such Lien, other property (or improvement thereon)
which is an improvement to or is acquired for specific use in connection with such
acquired or constructed property (or improvement thereon) or which is real property
being improved by such acquired or constructed property (or improvement thereon),




          (ii) the principal amount of the Indebtedness secured by any such Lien shall at
no time exceed an amount equal to the lesser of (A) the cost to the Company or such
Restricted Subsidiary of the property (or improvement thereon) so acquired or
constructed and (B) the Fair Market Value (as determined in good faith by the board
of directors of the Company) of such property (or improvement thereon) at the time
of such acquisition or construction, and




          (iii) any such Lien shall be created within 180 days of the acquisition or
completion of construction of such property;




          (i) any Lien (including, but not limited to, Liens in respect of Capital Leases)
existing on property of a Person immediately prior to such Person being consolidated with or
merged into the Company or a Restricted Subsidiary or such Person becoming a Restricted
Subsidiary, or any Lien existing on any property acquired by the Company or any Restricted
Subsidiary at the time such property is so acquired (whether or not the Indebtedness secured
thereby shall have been assumed), provided that (i) no such Lien shall have been created or
assumed in contemplation of such consolidation or merger or such Person’s becoming a
Restricted Subsidiary or such acquisition of property, and (ii) each such Lien shall extend
solely to the item or items of property so acquired and, if required by the terms of the
instrument originally creating such Lien, other property which is an improvement to or is
acquired for specific use in connection with such acquired property;




          (j) any Lien renewing, extending or refunding any Lien permitted by paragraphs (g), (h)
or (i) of this Section 10.3, provided that (i) the principal amount of Indebtedness secured
by such Lien immediately prior to such extension, renewal or refunding is not increased or
the maturity thereof reduced, (ii) such Lien is not extended to any other Property, (iii)
immediately after such extension, renewal or refunding no Default or Event of Default would
exist;




          (k) Liens arising solely by virtue of any statutory or common law provision relating to
banker’s liens, rights of set-off or similar rights and remedies as to deposit accounts or
other funds maintained with a creditor depository institution; provided that (i) such
deposit account is not a dedicated cash collateral account and is not subject to
restrictions against access by the Company or the applicable Subsidiary in excess of those
set forth by regulations promulgated by the FRB and (ii) such deposit account is not
intended by the Company or any Subsidiary to provide collateral to the depository
institution;



-26-









 





			
	Pentair, Inc.
	 	Note Purchase Agreement







          (l) Liens on assets of a Subsidiary issuing Indebtedness in connection with
Securitization Transactions; provided that the aggregate investment or claim held at any
time by all purchasers, assignees or other transferees of (or of interests in) receivables
and other rights to payment in all Securitization Transactions shall not at any time exceed
in the aggregate 20% of Consolidated Net Worth; and




          (m) additional Liens securing Indebtedness of the Company or any Restricted Subsidiary,
provided that no Default or Event of Default exists including under Section 10.5.



     Section 10.4. Certain Indebtedness Ratios. (a) The Company will not and will not permit any
Restricted Subsidiary to incur additional Funded Indebtedness unless, after giving effect thereto
and to the application of the proceeds thereof, total Funded Indebtedness does not exceed 65% of
Total Capitalization.



          (b) The Company will not and will not permit any Restricted Subsidiary to have any Current
Indebtedness outstanding unless during the immediately preceding twelve month period there shall
have been period of at least 30 consecutive days during which the amount of the Consolidated
Current Indebtedness, when added to outstanding Funded Indebtedness, equals a sum that is less than
the maximum amounts of Funded Indebtedness permitted by the limitation set forth in paragraph (a)
of this Section 10.4.




          For the purposes of this Section 10.4, any Person becoming a Restricted Subsidiary after the
date hereof shall be deemed, at the time it becomes a Restricted Subsidiary, to have incurred all
of its then outstanding Indebtedness, and any Person extending, renewing or refunding any
Indebtedness shall be deemed to have incurred such Indebtedness at the time of such extension,
renewal or refunding.




     Section 10.5. Maximum Priority Debt. The Company will not at any time permit Priority Debt to
exceed 20% of Consolidated Net Worth.



     Section 10.6. Securitization. The Company shall not, and shall not permit any Restricted
Subsidiary to, permit the aggregate outstanding investment or claim held by purchasers, assignees
or transferees of (or of interests in) receivables of the Company and its Restricted Subsidiaries
in connection with Securitization Transactions to exceed 20% of Consolidated Net Worth.



Section 11. Events of Default.




          An “Event of Default” shall exist if any of the following conditions or events shall occur and
be continuing:





          (a) the Company defaults in the payment of any principal or Make-Whole Amount, (if
any), or LIBOR Breakage Amount (if any) on any Note when the same becomes due and payable,
whether at maturity or at a date fixed for prepayment or by declaration or otherwise; or



-27-









 





			
	Pentair, Inc.
	 	Note Purchase Agreement







          (b) the Company defaults in the payment of any interest on any Note for more than five
Business Days after the same becomes due and payable; or




          (c) the Company defaults in the performance of or compliance with any term contained in
Sections 10.2 through 10.6; or




          (d) the Company defaults in the performance of or compliance with any term contained
herein (other than those referred to in paragraphs (a), (b) and (c) of this Section 11) and
such default is not remedied within 30 days after the earlier of (i) a Responsible Officer
obtaining actual knowledge of such default and (ii) the Company receiving written notice of
such default from any holder of a Note (any such written notice to be identified as a
“notice of default” and to refer specifically to this paragraph (d) of Section 11); or




          (e) any representation or warranty made in writing by or on behalf of an Obligor or by
any officer of an Obligor in any Financing Agreement or in any writing furnished in
connection with the transactions contemplated hereby proves to have been false or incorrect
in any material respect on the date as of which made; or




          (f) (i) the Company or any Subsidiary is in default (as principal or as guarantor or
other surety) in the payment of any principal of or premium or make-whole amount (including
any LIBOR Breakage Amount) or interest on any Indebtedness that is outstanding in an
aggregate principal amount of at least $50,000,000 beyond any period of grace provided with
respect thereto (a “Payment Default”), (ii) the Company or any Subsidiary is in default in
the performance of or compliance with any term of any evidence of any Indebtedness in an
aggregate outstanding principal amount of at least $50,000,000 or of any mortgage, indenture
or other agreement relating thereto or any other condition exists, and as a consequence of
such default or condition such Indebtedness has become, or has been declared, due and
payable before its stated maturity or before its regularly scheduled dates of payment, or
(iii) as a consequence of the occurrence or continuation of any event or condition (other
than the passage of time or the right of the holder of Indebtedness to convert such
Indebtedness into equity interests), (x) the Company or any Subsidiary has become obligated
to purchase or repay Indebtedness before its regular maturity or before its regularly
scheduled dates of payment in an aggregate outstanding principal amount of at least
$50,000,000, or (y) in the case of any such event or condition consisting of a Payment
Default, one or more Persons have the right to require the Company or any Subsidiary to
purchase or repay such Indebtedness; or




          (g) the Company or any Significant Subsidiary (i) is generally not paying, or admits in
writing its inability to pay, its debts as they become due, (ii) files, or consents by
answer or otherwise to the filing against it of, a petition for relief or reorganization or
arrangement or any other petition in bankruptcy, for liquidation or to take advantage of any
bankruptcy, insolvency, reorganization, moratorium or other similar law of any jurisdiction,
(iii) makes an assignment for the benefit of its creditors, (iv) consents to the appointment
of a custodian, receiver, trustee or other officer with similar powers with



-28-









 





			
	Pentair, Inc.
	 	Note Purchase Agreement







respect to it or with respect to any substantial part of its property, (v) is adjudicated as
insolvent or to be liquidated, or (vi) takes corporate action for the purpose of any of the
foregoing; or




          (h) a court or governmental authority of competent jurisdiction enters an order
appointing, without consent by the Company or any Significant Subsidiaries, a custodian,
receiver, trustee or other officer with similar powers with respect to it or with respect to
any substantial part of its property, or constituting an order for relief or approving a
petition for relief or reorganization or any other petition in bankruptcy or for liquidation
or to take advantage of any bankruptcy or insolvency law of any jurisdiction, or ordering
the dissolution, winding-up or liquidation of the Company or any Significant Subsidiaries,
or any such petition shall be filed against the Company or any Significant Subsidiaries and
such petition shall not be dismissed within 60 days; or




          (i) excluding any matters disclosed on Schedule 5.8, a final judgment or judgments for
the payment of money aggregating in excess of $50,000,000 are rendered against one or more
of the Company and its Subsidiaries (net of insurance proceeds whereunder a solvent insurer
with an investment grade long term bond rating has acknowledged in writing its obligation to
satisfy such judgment) and which judgments are not, within 60 days after entry thereof,
bonded, discharged or stayed pending appeal and which could reasonably be expected to have a
Material Adverse Effect on the Company and its Subsidiaries taken as a whole; or




          (j) at any time during which the 2007 Note Purchase Subsidiary Guaranty is required to
be in effect pursuant to Section 9.6, (i) the 2007 Note Purchase 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), (ii) any Subsidiary Guarantor shall fail (subject to any applicable
grace period) to comply with or to perform any applicable provision of the 2007 Note
Purchase Subsidiary Guaranty, or (iii) 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 2007 Note Purchase Subsidiary Guaranty with respect to such
2007 Note Purchase Subsidiary Guarantor; or




          (k) if (i) any Plan shall fail to satisfy the minimum funding standards of ERISA or the
Code for any plan year or part thereof or a waiver of such standards or extension of any
amortization period is sought or granted under section 412 of the Code, (ii) a notice of
intent to terminate any Plan shall have been or is reasonably expected to be filed with the
PBGC or the PBGC shall have instituted proceedings under ERISA section 4042 to terminate or
appoint a trustee to administer any Plan or the PBGC shall have notified the Company or any
ERISA Affiliate that a Plan may become a subject of any such proceedings, (iii) the present
value of the accumulated benefit liabilities under all Plans (other than Multiemployer
Plans) subject to Title IV of ERISA, determined on the basis of the actuarial assumptions
specified for funding purposes in such Plan’s most recent actuarial valuation report, do not
exceed the aggregate current value of the assets



-29-









 





			
	Pentair, Inc.
	 	Note Purchase Agreement







of all such Plans allocable to such benefit liabilities by more than $50,000,000, (iv) the
Company or any ERISA Affiliate shall have incurred or is reasonably expected to incur any
liability pursuant to Title I or IV of ERISA or the penalty or excise tax provisions of the
Code relating to employee benefit plans, (v) the Company or any ERISA Affiliate withdraws
from any Multiemployer Plan and the withdrawal liability finally determined with respect to
that withdrawal exceeds $50,000,000, or (vi) the Company or any Subsidiary establishes or
amends any employee welfare benefit plan that provides post-employment welfare benefits in a
manner that would increase the liability of the Company or any Subsidiary thereunder; and
any such event or events described in clauses (i) through (vi) above, either individually or
together with any other such event or events, could reasonably be expected to have a
Material Adverse Effect.


As used in Section 11(k), the terms “current value,” “employee benefit plan,” “employee welfare
benefit plan” and “present value” shall have the respective meanings assigned to such terms in
section 3 of ERISA, and the term “benefit liabilities” has the meaning assigned to such term in
section 4001 of ERISA.




Section 12. Remedies on Default, etc.




     Section 12.1. Acceleration. (a) If an Event of Default with respect to the Company described
in paragraph (g) or (h) of Section 11 (other than an Event of Default described in clause (i) of
paragraph (g) or described in clause (vi) of paragraph (g) by virtue of the fact that such clause
encompasses clause (i) of paragraph (g)) has occurred, all the Notes then outstanding shall
automatically become immediately due and payable.



          (b) If any other Event of Default has occurred and is continuing, the Required Holders may at
any time at its or their option, by notice or notices to the Company, declare all the Notes then
outstanding to be immediately due and payable.



          (c) If any Event of Default described in paragraph (a) or (b) of Section 11 has occurred and
is continuing, any holder of Notes at the time outstanding affected by such Event of Default may at
any time, at its option, by notice or notices to the Company, declare all the Notes held by it to
be immediately due and payable.



          Upon any Note’s becoming due and payable under this Section 12.1, whether automatically or by
declaration, such Note will forthwith mature and the entire unpaid principal amount of such Note,
plus (i) all accrued and unpaid interest thereon and (ii) the Make-Whole Amount determined in
respect of such principal amount or LIBOR Breakage Amount determined in respect of such principal
amount, as the case may be, (to the full extent permitted by applicable law), shall all be
immediately due and payable, in each and every case without presentment, demand, protest or further
notice, all of which are hereby waived. The Company acknowledges, and the parties hereto agree,
that each holder of a Note has the right to maintain its investment in the Notes free from
repayment by the Company (except as herein specifically provided for), and that the provision for
payment of a Make-Whole Amount or LIBOR Breakage Amount, as the case may be, by the Company in the
event that the Notes are prepaid or are




-30-









 





			
	Pentair, Inc.
	 	Note Purchase Agreement





accelerated as a result of an Event of Default, is intended to provide compensation for the
deprivation of such right under such circumstances.




          The parties hereto acknowledge and agree that the Make-Whole Amount is in the form offered
by the Company and accepted by the Purchasers in connection with the offering of the Notes by the
Company. The Company has agreed to pay such amount, if any, not as damages for any breach of the
terms of this Agreement, nor as a penalty, nor as liquidated damages, but as partial consideration
to the holders to enter into this Agreement and to lend to the Company the principal amount of the
Notes on terms the Company believes are the most favorable obtainable.




     Section 12.2. Other Remedies. If any Default or Event of Default has occurred and is
continuing, and irrespective of whether any Notes have become or have been declared immediately due
and payable under Section 12.1, the holder of any Note at the time outstanding may proceed to
protect and enforce the rights of such holder by an action at law, suit in equity or other
appropriate proceeding, whether for the specific performance of any agreement contained herein or
in any Note, or for an injunction against a violation of any of the terms hereof or thereof, or in
aid of the exercise of any power granted hereby or thereby or by law or otherwise. In addition to,
and not in limitation of, the foregoing, each holder of Notes shall have all rights and remedies
available at law or in equity under or pursuant to any or all of the other Financing Agreements.



     Section 12.3. Rescission. At any time after any Notes have been declared due and payable
pursuant to clause (b) or (c) of Section 12.1, the Required Holders, by written notice to the
Company, may rescind and annul any such declaration and its consequences if (a) the Company has
paid all overdue interest on the Notes, all principal of and Make-Whole Amount or LIBOR Breakage
Amount, if any, on any Notes that are due and payable and are unpaid other than by reason of such
declaration, and all interest on such overdue principal and Make-Whole Amount or LIBOR Breakage
Amount, if any, and (to the extent permitted by applicable law) any overdue interest in respect of
the Notes, at the Default Rate, (b) all Events of Default and Defaults, other than non-payment of
amounts that have become due solely by reason of such declaration, have been cured or have been
waived pursuant to Section 17, and (c) no judgment or decree has been entered for the payment of
any monies due pursuant hereto or to the Notes. No rescission and annulment under this Section
12.3 will extend to or affect any subsequent Event of Default or Default or impair any right
consequent thereon.



     Section 12.4. No Waivers or Election of Remedies, Expenses, etc. No course of dealing and no
delay on the part of any holder of any Note in exercising any right, power or remedy shall operate
as a waiver thereof or otherwise prejudice such holder’s rights, powers or remedies. No right,
power or remedy conferred by any Financing Agreement or by any Note upon any holder thereof shall
be exclusive of any other right, power or remedy referred to herein or
therein or now or hereafter available at law, in equity, by statute or otherwise. Without limiting
the obligations of the Company under Section 15, the Company will pay to the holder of each Note on
demand such further amount as shall be sufficient to cover all costs and expenses of such holder
incurred in any enforcement or collection under this Section 12, including, without limitation,
reasonable attorneys’ fees, expenses and disbursements.



-31-









 





			
	Pentair, Inc.
	 	Note Purchase Agreement






Section 13. Registration; Exchange; Substitution of Notes.




     Section 13.1. Registration of Notes. The Company shall keep at its principal executive office
a register for the registration and registration of transfers of Notes. The name and address of
each holder of one or more Notes, each transfer thereof and the name and address of each transferee
of one or more Notes shall be registered in such register. Prior to due presentment for
registration of transfer, the Person in whose name any Note shall be registered shall be deemed and
treated as the owner and holder thereof for all purposes hereof, and the Company shall not be
affected by any notice or knowledge to the contrary. The Company shall give to any holder of a
Note that is an Institutional Investor promptly upon request therefor, a complete and correct copy
of the names and addresses of all registered holders of Notes.



     Section 13.2. Transfer and Exchange of Notes. Upon surrender of any Note at the principal
executive office of the Company for registration of transfer or exchange (and in the case of a
surrender for registration of transfer, duly endorsed or accompanied by a written instrument of
transfer duly executed by the registered holder of such Note or its attorney duly authorized in
writing and accompanied by the address for notices of each transferee of such Note or part
thereof), the Company shall execute and deliver, at the Company’s expense (except as provided
below), one or more new Notes (as requested by the holder thereof) of the same series in exchange
therefor, in an aggregate principal amount equal to the unpaid principal amount of the surrendered
Note. Each such new Note shall be payable to such Person as such holder may request and shall be
substantially in the form of Exhibit 1-A, 1-B or 1-C, as applicable. Each such new Note shall be
dated and bear interest from the date to which interest shall have been paid on the surrendered
Note or dated the date of the surrendered Note if no interest shall have been paid thereon. The
Company may require payment of a sum sufficient to cover any stamp tax or governmental charge
imposed in respect of any such transfer of Notes. Notes shall not be transferred in denominations
of less than $500,000, provided that if necessary to enable the registration of transfer by a
holder of its entire holding of Notes, one Note may be in a denomination of less than $500,000.
Any transferee of a Note, or purchaser of a participation therein, shall, by its acceptance of such
Note be deemed to make the same representations to the Company regarding the Note or participation
as you and the Other Purchasers have made pursuant to Section 6.2, provided that such entity may
(in reliance upon information provided by the Company, which shall not be unreasonably withheld)
make a representation to the effect that the purchase by such entity of any Note will not
constitute a non-exempt prohibited transaction under section 406(a) of ERISA.



     Section 13.3. Replacement of Notes. Upon receipt by the Company of evidence reasonably
satisfactory to it of the ownership of and the loss, theft, destruction or mutilation of any Note
(which evidence shall be, in the case of an Institutional Investor, notice from such Institutional
Investor of such ownership and such loss, theft, destruction or mutilation), and




          (a) in the case of loss, theft or destruction, of indemnity reasonably satisfactory to
it (provided that if the holder of such Note is, or is a nominee for, an original Purchaser
or another holder of a Note with a minimum net worth of at least $50,000,000 or a Qualified
Institutional Buyer, such Person’s own unsecured agreement of indemnity shall be deemed to
be satisfactory), or



-32-









 





			
	Pentair, Inc.
	 	Note Purchase Agreement







          (b) in the case of mutilation, upon surrender and cancellation thereof,


the Company at its own expense shall execute and deliver, in lieu thereof, a new Note of the same
series, dated and bearing interest from the date to which interest shall have been paid on such
lost, stolen, destroyed or mutilated Note or dated the date of such lost, stolen, destroyed or
mutilated Note if no interest shall have been paid thereon.




Section 14. Payments on Notes.




     Section 14.1. Place of Payment. Subject to Section 14.2, payments of principal, Make-Whole
Amount or LIBOR Breakage Amount, if any, and interest becoming due and payable on the Notes shall
be made in Chicago, Illinois at the principal office of JPMorgan Chase Bank, N.A. in such
jurisdiction. The Company may at any time, by notice to each holder of a Note, change the place of
payment of the Notes so long as such place of payment shall be either the principal office of the
Company in such jurisdiction or the principal office of a bank or trust company in such
jurisdiction.



     Section 14.2. Home Office Payment. So long as you or your nominee shall be the holder of any
Note, and notwithstanding anything contained in Section 14.1 or in such Note to the contrary, the
Company will pay all sums becoming due on such Note for principal, Make-Whole Amount or LIBOR
Breakage Amount, if any, and interest by the method and at the address specified for such purpose
below your name in Schedule A, or by such other method or at such other address as you shall have
from time to time specified to the Company in writing for such purpose, without the presentation or
surrender of such Note or the making of any notation thereon, except that upon written request of
the Company made concurrently with or reasonably promptly after payment or prepayment in full of
any Note, you shall surrender such Note for cancellation, reasonably promptly after any such
request, to the Company at its principal executive office or at the place of payment most recently
designated by the Company pursuant to Section 14.1. Prior to any sale or other disposition of any
Note held by you or your nominee you will, at your election, either endorse thereon the amount of
principal paid thereon and the last date to which interest has been paid thereon or surrender such
Note to the Company in
exchange for a new Note or Notes pursuant to Section 13.2. The Company will afford the benefits of
this Section 14.2 to any Institutional Investor that is the direct or indirect transferee of any
Note purchased by you under this Agreement and that has made the same agreement relating to such
Note as you have made in this Section 14.2.



Section 15. Expenses, etc.




     Section 15.1. Transaction Expenses. Whether or not the transactions contemplated hereby are
consummated, the Company will pay all costs and expenses (including reasonable attorneys’ fees of a
special counsel and, if reasonably required, local or other counsel) incurred by you and each Other
Purchaser or holder of a Note in connection with such transactions and in connection with any
amendments, waivers or consents under or in respect of any Financing Agreement (whether or not such
amendment, waiver or consent becomes effective), including, without limitation: (a) the costs and
expenses incurred in enforcing or defending (or determining whether or how to enforce or defend)
any rights under any Financing Agreement or in



-33-









 





			
	Pentair, Inc.
	 	Note Purchase Agreement





responding to any subpoena or other legal process or
informal investigative demand issued in connection with any Financing Agreement, or by reason of
being a holder of any Note, (b) the costs and expenses, including financial advisors’ fees,
incurred in connection with the insolvency or bankruptcy of the Company or any Subsidiary or in
connection with any work-out or restructuring of the transactions contemplated hereby and by the
other Financing Agreements and (c) the reasonable cost and expenses incurred in connection with the
initial filing of this Agreement, all related documents and financial information, all subsequent
annual and interim filings of documents and financial information related hereto with the
Securities Valuation Office or any successor organization succeeding to the authority thereof. The
Company will pay, and will save you and each other holder of a Note harmless from, all claims in
respect of any fees, costs or expenses, if any, of brokers and finders (other than those retained
by you).




     Section 15.2. Survival. The obligations of the Company under this Section 15 will survive the
payment or transfer of any Note, the enforcement, amendment or waiver of any provision of any
Financing Agreement, and the termination of any Financing Agreement.



Section 16. Survival of Representations and Warranties; Entire Agreement.




          All representations and warranties contained herein shall survive the execution and delivery
of the Financing Agreements, the purchase or transfer by you of any Note or portion thereof or
interest therein and the payment of any Note, and may be relied upon by any subsequent holder of a
Note, regardless of any investigation made at any time by or on behalf of you or any other holder
of a Note. All statements contained in any certificate or other instrument delivered by or on
behalf of any Obligor pursuant to any Financing Agreement shall be deemed representations and
warranties of such Obligor under the Financing Agreements. Subject to the preceding sentence, the
Financing Agreements embody the
entire agreement and understanding between you and the Company and supersede all prior
agreements and understandings relating to the subject matter hereof.




Section 17. Amendment and Waiver.




     Section 17.1. Requirements. This Agreement and the Notes may be amended, and the observance
of any term hereof or of the Notes may be waived (either retroactively or prospectively), with (and
only with) the written consent of the Company and the Required Holders, except that (a) no
amendment or waiver of any of the provisions of Section 1, 2, 3, 4, 5, 6 or 21 hereof, or any
defined term (as it is used therein), will be effective as to you unless consented to by you in
writing, and (b) no such amendment or waiver may, without the written consent of the holder of each
Note at the time outstanding affected thereby, (i) subject to the provisions of Section 12 relating
to acceleration or rescission, change the amount or time of any prepayment or payment of principal
of, or reduce the rate or change the time of payment or method of computation of interest or of the
Make-Whole Amount or LIBOR Breakage Amount on the Notes, (ii) change the percentage of the
principal amount of the Notes the holders of which are required to consent to any such amendment or
waiver, or (iii) amend any of Sections 8, 11(a), 11(b), 12, 17 or 20. Notwithstanding the
foregoing, but subject to the provisions of Section 12 relating to acceleration or rescission, a
specific series of Notes (and the related provisions of this Agreement) may be amended by the
Company and the holders of 100%



-34-









 





			
	Pentair, Inc.
	 	Note Purchase Agreement





of the aggregate principal amount of such series of Notes if the
effect of such amendment is solely to change the amount or time of any prepayment or payment of
principal of, or reduce the rate or change the time of payment or method of computation of interest
or of the Make-Whole Amount or LIBOR Breakage Amount on the Notes of such series.




     Section 17.2. Solicitation of Holders of Notes.



          (a) Solicitation. The Company will provide each holder of the Notes (irrespective of the
amount or series of Notes then owned by it) with sufficient information, sufficiently far in
advance of the date a decision is required, to enable such holder to make an informed and
considered decision with respect to any proposed amendment, waiver or consent in respect of any of
the provisions hereof or of the Notes. The Company will deliver executed or true and correct
copies of each amendment, waiver or consent effected pursuant to the provisions of this Section 17
to each holder of outstanding Notes promptly following the date on which it is executed and
delivered by, or receives the consent or approval of, the requisite holders of Notes.




          (b) Payment. The Company will not directly or indirectly pay or cause to be paid any
remuneration, whether by way of supplemental or additional interest, fee or otherwise, or grant any
security, to any holder of Notes as consideration for or as an inducement to the entering into by
any holder of Notes of any waiver or amendment of any of the terms and provisions hereof or of the
Notes unless such remuneration is concurrently paid, or security is
concurrently granted, on the same terms, ratably to each holder of Notes then outstanding whether
or not such holder consented to such waiver or amendment.




     Section 17.3. Binding Effect, etc. Any amendment or waiver consented to as provided in this
Section 17 applies equally to all holders of Notes and is binding upon them and upon each future
holder of any Note and upon the Company without regard to whether such Note has been marked to
indicate such amendment or waiver. No such amendment or waiver will extend to or affect any
obligation, covenant, agreement, Default or Event of Default not expressly amended or waived or
impair any right consequent thereon. No course of dealing between the Company and the holder of
any Note of any series nor any delay in exercising any rights hereunder or under any Note of any
series shall operate as a waiver of any rights of any holder of such Note. As used herein, the
term “this Agreement” and references thereto shall mean this Agreement as it may from time to time
be amended or supplemented.



     Section 17.4. Notes Held by Company, etc. Solely for the purpose of determining whether the
holders of the requisite percentage of the aggregate principal amount of Notes then outstanding
approved or consented to any amendment, waiver or consent to be given under this Agreement or the
Notes, or have directed the taking of any action provided herein or in the Notes to be taken upon
the direction of the holders of a specified percentage of the aggregate principal amount of Notes
then outstanding, Notes directly or indirectly owned by the Company or any of its Affiliates shall
be deemed not to be outstanding.



-35-









 





			
	Pentair, Inc.
	 	Note Purchase Agreement






Section 18. Notices.




          All notices and communications provided for hereunder shall be in writing and sent (a) by
telefacsimile if the sender on the same day sends a confirming copy of such notice by a recognized
overnight delivery service (charges prepaid), or (b) by registered or certified mail with return
receipt requested (postage prepaid), or (c) by a recognized overnight delivery service (with
charges prepaid). Any such notice must be sent:





          (i) if to you or your nominee, to you or it at the address specified for such
communications in Schedule A, or at such other address as you or it shall have specified to
the Company in writing,




          (ii) if to any other holder of any Note, to such holder at such address as such other
holder shall have specified to the Company in writing,




          (iii) if to the Company, to the Company at its address set forth at the beginning
hereof to the attention of Louis L. Ainsworth, Esq., Senior Vice President, General Counsel
and Corporate Secretary, or at such other address as the Company shall have specified to the
holder of each Note in writing, or




          (iv) if to any Subsidiary Guarantor, to the Subsidiary Guarantor c/o the Company at the
Company’s address as set forth at the beginning hereof to the
attention of Louis L. Ainsworth, Esq., Senior Vice President, General Counsel and Corporate
Secretary.


Notices under this Section 18 will be deemed given only when actually received.



Section 19. Reproduction of Documents.




          The Financing Agreements and all documents relating thereto, including, without limitation,
(a) consents, waivers and modifications that may hereafter be executed, (b) documents received by
you at the Closing (except the Notes themselves), and (c) financial statements, certificates and
other information previously or hereafter furnished to you, may be reproduced by you by any
photographic, photostatic, microfilm, microcard, miniature photographic or other similar process
and you may destroy any original document so reproduced. The Company agrees and stipulates that,
to the extent permitted by applicable law, any such reproduction shall be admissible in evidence as
the original itself in any judicial or administrative proceeding (whether or not the original is in
existence and whether or not such reproduction was made by you in the regular course of business)
and any enlargement, facsimile or further reproduction of such reproduction shall likewise be
admissible in evidence. This Section 19 shall not prohibit the Company or any other holder of
Notes from contesting any such reproduction to the same extent that it could contest the original,
or from introducing evidence to demonstrate the inaccuracy of any such reproduction.




-36-









 








			
	Pentair, Inc.
	 	Note Purchase Agreement






Section 20. Confidential Information.




          For the purposes of this Section 20, “Confidential Information” means information delivered to
you by or on behalf of the Company or any Subsidiary in connection with the transactions
contemplated by or otherwise pursuant to this Agreement that is proprietary in nature and that was
clearly marked or labeled or otherwise adequately identified when received by you as being
confidential information of the Company or such Subsidiary, provided that such term does not
include information that (a) was publicly known or otherwise known to you prior to the time of such
disclosure, (b) subsequently becomes publicly known through no act or omission by you or any Person
acting on your behalf, (c) otherwise becomes known to you other than through disclosure by the
Company or any Subsidiary or (d) constitutes financial statements delivered to you under Section
7.1 that are otherwise publicly available. You will maintain the confidentiality of such
Confidential Information in accordance with procedures adopted by you in good faith to protect
confidential information of third parties delivered to you, provided that you may deliver or
disclose Confidential Information to (i) your directors, trustees, officers, employees, agents,
attorneys and affiliates (to the extent such disclosure reasonably relates to the administration of
the investment represented by your Notes), (ii) your financial advisors and other professional
advisors who agree to hold confidential the Confidential Information substantially in accordance
with the terms of this Section 20, (iii) any other holder of any Note, (iv) any Institutional
Investor to which you sell or offer to sell such Note or any part
thereof or any participation therein (if such Person has agreed in writing prior to its
receipt of such Confidential Information to be bound by the provisions of this Section 20), (v) any
Person from which you offer to purchase any security of the Company (if such Person has agreed in
writing prior to its receipt of such Confidential Information to be bound by the provisions of this
Section 20), (vi) any federal or state regulatory authority having jurisdiction over you, (vii) the
National Association of Insurance Commissioners or any similar organization, or any nationally
recognized rating agency that requires access to information about your investment portfolio, or
(viii) any other Person to which such delivery or disclosure may be necessary or appropriate (w) to
effect compliance with any law, rule, regulation or order applicable to you, (x) in response to any
subpoena or other legal process, (y) in connection with any litigation to which you are a party or
(z) if an Event of Default has occurred and is continuing, to the extent you may reasonably
determine such delivery and disclosure to be necessary or appropriate in the enforcement or for the
protection of the rights and remedies under your Notes and this Agreement. Each holder of a Note,
by its acceptance of a Note, will be deemed to have agreed to be bound by and to be entitled to the
benefits of this Section 20 as though it were a party to this Agreement. On reasonable request by
the Company in connection with the delivery to any holder of a Note of information required to be
delivered to such holder under this Agreement or requested by such holder (other than a holder that
is a party to this Agreement or its nominee or any other holder that shall have previously
delivered such a confirmation), such holder will confirm in writing that it is bound by the
provisions of this Section 20.




Section 21. Substitution of Purchaser.




          You shall have the right to substitute any one of your Affiliates as the purchaser of the
Notes that you have agreed to purchase hereunder, by written notice to the Company, which notice
shall be signed by both you and such Affiliate, shall contain such Affiliate’s agreement to




-37-









 








			
	Pentair, Inc.
	 	Note Purchase Agreement





be
bound by this Agreement and shall contain a confirmation by such Affiliate of the accuracy with
respect to it of the representations set forth in Section 6. Upon receipt of such notice, wherever
the word “you” is used in this Agreement (other than in this Section 21), such word shall be deemed
to refer to such Affiliate in lieu of you. In the event that such Affiliate is so substituted as a
purchaser hereunder and such Affiliate thereafter transfers to you all of the Notes then held by
such Affiliate, upon receipt by the Company of notice of such transfer, wherever the word “you” is
used in this Agreement (other than in this Section 21), such word shall no longer be deemed to
refer to such Affiliate, but shall refer to you, and you shall have all the rights of an original
holder of the Notes under this Agreement.




Section 22. Miscellaneous.




     Section 22.1. Successors and Assigns. All covenants and other agreements contained in this
Agreement by or on behalf of any of the parties hereto bind and inure to the benefit of their
respective successors and assigns (including, without limitation, any subsequent holder of a Note)
whether so expressed or not.



     Section 22.2. Payments Due on Non-Business Days. Anything in this Agreement or the Notes to
the contrary notwithstanding, any payment of principal of or Make-Whole Amount or LIBOR Breakage
Amount or interest on any Note that is due on a date other than a Business Day shall be made on the
next succeeding Business Day without including the additional days elapsed in the computation of
the interest payable on such next succeeding Business Day.



     Section 22.3. Severability. Any provision of this Agreement that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall (to the full extent permitted by
law) not invalidate or render unenforceable such provision in any other jurisdiction.



     Section 22.4. Construction. Each covenant contained herein shall be construed (absent express
provision to the contrary) as being independent of each other covenant contained herein, so that
compliance with any one covenant shall not (absent such an express contrary provision) be deemed to
excuse compliance with any other covenant. Where any provision herein refers to action to be taken
by any Person, or which such Person is prohibited from taking, such provision shall be applicable
whether such action is taken directly or indirectly by such Person.



     Section 22.5. Counterparts. This Agreement may be executed in any number of counterparts,
each of which shall be an original but all of which together shall constitute one instrument. Each
counterpart may consist of a number of copies hereof, each signed by fewer than all, but together
signed by all, of the parties hereto.



-38-









 





			
	Pentair, Inc.
	 	Note Purchase Agreement






     Section 22.6. Governing Law. This Agreement and the Notes shall be construed and enforced in
accordance with, and the rights of the parties shall be governed by, the law of the State of
Illinois excluding choice-of-law principles of the law of such State that would require the
application of the laws of a jurisdiction other than such State.



* * * * *




-39-









 









			
	Pentair, Inc.
	 	Note Purchase Agreement






     If you are in agreement with the foregoing, please sign the form of agreement on the
accompanying counterpart of this Agreement and return it to the Company, whereupon the foregoing
shall become a binding agreement between you and the Company.



	 	 	 	 	 
	 	Very truly yours,





Pentair, Inc.

 	 
	 	By:  	 	 
	 	 	Name:  	John L. Stauch 	 
	 	 	Title:  	Executive Vice President and
Chief Financial Officer 	 
	 




-40-









 





			
	Pentair, Inc.
	 	Note Purchase Agreement






	 	 	 
	The foregoing is hereby agreed
to as of the date thereof.

	 	[Purchasers]







-41-









 








Information Relating to Purchasers




	 	 	 	 	 	 	 	 	 
	 	 	Principal Amount 	 	Principal Amount 
	 	 	Of Series D Notes 	 	Of Series E Notes
	Name And Address Of Purchaser	 	To Be Purchased	 	To Be Purchased
	[To Come]

	 	 	$	 	 	 	$	 






Schedule A

(to Note Purchase Agreement)




 









 








Defined Terms




          Where the character or amount of any asset or liability or item of income or expense is
required to be determined or any consolidation or other accounting computation is required to be
made for the purposes of this Agreement, the same shall be done in accordance with GAAP, to the
extent applicable, except where such principles are inconsistent with the express requirements of
this Agreement.




          Where any provision in this Agreement refers to action to be taken by any Person, or which
such Person is prohibited from taking, such provision shall be applicable whether the action in
question is taken directly or indirectly by such Person.




          As used herein, the following terms have the respective meanings set forth below or set forth
in the Section hereof following such term:




          “2007 Note Purchase Subsidiary Guaranty” means a Guaranty issued by various Subsidiaries of
the Company which shall be substantially in the form of Exhibit 2 hereto.




          “Adjusted LIBOR Rate” shall mean, for any Interest Period, LIBOR plus 50 basis points.




          “Affiliate” means, at any time, and with respect to any Person, any other Person that at such
time directly or indirectly through one or more intermediaries Controls, or is Controlled by, or is
under common Control with, such first Person. As used in this definition, “Control” means the
possession, directly or indirectly, of the power to direct or cause the direction of the management
and policies of a Person, whether through the ownership of voting securities, by contract or
otherwise. Unless the context otherwise clearly requires, any reference to an “Affiliate” is a
reference to an Affiliate of the Company.




          “Business Day” means any day other than a Saturday, a Sunday or a day on which commercial
banks in New York City are required or authorized to be closed, and, if the applicable Business Day
relates to the determination of LIBOR, a day on which dealings are carried on in U.S. dollar
deposits in the London interbank market.




          “Capital Lease” means, at any time, a lease with respect to which the lessee is required
concurrently to recognize the acquisition of an asset and the incurrence of a liability in
accordance with GAAP.




          “Change in Control” is defined in Section 8.7(f).




          “Change in Control Event” is defined in Section 8.7(a).




          “Closing” is defined in Section 3.




          “Code” means the Internal Revenue Code of 1986, as amended from time to time, and the rules
and regulations promulgated thereunder from time to time.




Schedule B

(to Note Purchase Agreement)





 









 








          “Company” means Pentair, Inc., a Minnesota corporation.




          “Confidential Information” is defined in Section 20.




          “Consolidated Current Indebtedness” means, as of any date of determination, the total
principal amount of all Current Indebtedness of the Company and its Restricted Subsidiaries
determined on a consolidated basis.




          “Consolidated Funded Indebtedness” means, as of the date of any determination, Funded
Indebtedness of the Company and its Restricted Subsidiaries determined on a consolidated basis.




          “Consolidated Net Worth” means the value of stockholders’ equity of the Company and its
Restricted Subsidiaries determined on a consolidated basis in accordance with GAAP; provided,
however, that the Company may exclude from the calculation of Consolidated Net Worth any amounts
attributable to adjustments resulting from the application of (i) translation of currency (FAS 52),
(ii) benefit plan and pension adjustments (FAS 87 and FAS 158), (iii) market value of derivatives
(FAS 133), (iv) non-cash write-offs or write-downs of goodwill and other intangible assets and (v)
any other non-cash write-offs or write-downs resulting solely from changes in GAAP arising after
the date of Closing.




          “Consolidated Total Assets” means the total assets of the Company and its Restricted
Subsidiaries determined on a consolidated basis in accordance with GAAP.




          “Credit Agreement Guaranty” means the Guaranty dated May 1, 2001 issued by certain
Subsidiaries of the Company whereby such Subsidiaries guaranty all of the obligations of the
Borrower under the Credit Agreement.




          “Credit Agreement Guaranty Termination” is defined in Section 9.6.




          “Credit Agreement” means the Second Amended and Restated Credit Agreement dated as of March 4,
2005 among the Company, various subsidiaries of the Company and various financial institutions
therein and Bank of America, N.A., as Administrative Agent and Issuing Bank, as amended, restated
or otherwise modified from time to time.




          “Current Indebtedness” means, with respect to any Person, all Indebtedness of such Person
excluding Funded Indebtedness, it being agreed that (a) Indebtedness outstanding under a revolving
credit or similar agreement which obligates the lender or lenders to extend credit over a period of
one year or more and (b) Current Maturities of Funded Indebtedness, shall, in each case, constitute
Funded Indebtedness and not Current Indebtedness, even though such Indebtedness by its terms
matures on demand or within one year from such date.




          “Current Maturities of Funded Indebtedness” means, at any time and with respect to any item of
Funded Indebtedness, the portion of such Funded Indebtedness outstanding at such time which by the
terms of such Funded Indebtedness or the terms of any instrument or agreement relating thereto is
due on demand or within one year from such time (whether by sinking fund, other required prepayment
or final payment at maturity) and is not directly or indirectly





B-2









 







renewable, extendible or refundable
at the option of the obligor under an agreement or firm commitment in effect at such time to a date
one year or more from such time.




          “Default” means an event or condition the occurrence or existence of which would, with the
lapse of time or the giving of notice or both, become an Event of Default.




          “Default Rate” means (x) in the case of the Series D Notes and the Series D Notes, that rate
of interest that is the greater of (i) 2.00% per annum above the rate of interest stated in clause
(a) of the first paragraph of the Series D Notes or the Series D Notes, as the case may be, or (ii)
2.00% over the rate of interest publicly announced by JPMorgan Chase Bank, N.A. in Chicago,
Illinois as its “base” or “prime” rate and (y) in the case of the Series E Notes, that rate of
interest that is 2.00% per annum plus the Adjusted LIBOR Rate.




          “Environmental Laws” means any and all Federal, state, local, and foreign statutes, laws,
regulations, ordinances, rules, judgments, orders, decrees, permits, concessions, grants,
franchises, licenses, agreements or governmental restrictions relating to pollution and the
protection of the environment or the release of any materials into the environment, including but
not limited to those related to hazardous substances or wastes, air emissions and discharges to
waste or public systems.




          “ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to
time, and the rules and regulations promulgated thereunder from time to time in effect.




          “ERISA Affiliate” means any trade or business (whether or not incorporated) that is treated as
a single employer together with the Company under section 414 of the Code.




          “Event of Default” is defined in Section 11.




          “Exchange Act” means the Securities Exchange Act of 1934, as amended.




          “Financing Agreements” means (i) this Agreement, (ii) the Other Agreements, (iii) the Notes
and (iv) the 2007 Note Purchase Subsidiary Guaranty, in each case as amended or modified from time
to time.




          “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.




          “Funded Indebtedness” means, as of the date of any determination, Indebtedness of the Company
and its Restricted Subsidiaries having a final maturity of more than one year from the date of
determination thereof, (including all Current Maturities of such Funded Indebtedness), and the
lowest average principal amount outstanding for all revolving credit facilities during any 30
consecutive day period within the prior twelve months, provided that liabilities of the Company or
any Restricted Subsidiary outstanding under any synthetic lease transaction shall not be included
as Indebtedness for purposes of calculating Consolidated Funded Indebtedness.





B-3









 








          “GAAP” means generally accepted accounting principles as in effect from time to time in the
United States of America.




          “Governmental Authority” means




               (a) the government of



                    (i) the United States of America or any State or other political subdivision
thereof, or



                    (ii) any jurisdiction in which the Company or any Subsidiary conducts all or
any part of its business, or which asserts jurisdiction over any properties of the
Company or any Subsidiary, or



               (b) any entity exercising executive, legislative, judicial, regulatory or
administrative functions of, or pertaining to, any such government.



          “Guaranty” means, with respect to any Person, any obligation (except the endorsement in the
ordinary course of business of negotiable instruments for deposit or collection) of such Person
guaranteeing or in effect guaranteeing any Indebtedness, dividend or other obligation of any other
Person in any manner, whether directly or indirectly, including (without limitation) obligations
incurred through an agreement, contingent or otherwise, by such Person:




               (a) to purchase such Indebtedness or obligation or any property constituting security
therefor;



               (b) to advance or supply funds (i) for the purchase or payment of such Indebtedness or
obligation, or (ii) to maintain any working capital or other balance sheet condition or any
income statement condition of any other Person or otherwise to advance or make available
funds for the purchase or payment of such Indebtedness or obligation;



               (c) to lease properties or to purchase properties or services primarily for the purpose
of assuring the owner of such Indebtedness or obligation of the ability of any other Person
to make payment of the Indebtedness or obligation; or



               (d) otherwise to assure the owner of such Indebtedness or obligation against loss in
respect thereof.


In any computation of the Indebtedness or other liabilities of the obligor under any Guaranty, the
Indebtedness or other obligations that are the subject of such Guaranty shall be assumed to be
direct obligations of such obligor.




          “Hazardous Material” means any and all pollutants, toxic or hazardous wastes or any other
substances that might pose a hazard to health or safety, the removal of which may be required or
the generation, manufacture, refining, production, processing, treatment, storage, handling,
transportation, transfer, use, disposal, release, discharge, spillage, seepage, or filtration




B-4









 







of
which is or shall be restricted, prohibited or penalized by any applicable law (including, without
limitation, asbestos, urea formaldehyde foam insulation and polychlorinated biphenyls).




          “Holder” means, with respect to any Note, the Person in whose name such Note is registered in
the register maintained by the Company pursuant to Section 13.1.




          “Indebtedness” with respect to any Person means, at any time, without duplication,





          (a) its liabilities for borrowed money and its redemption obligations in respect of
mandatorily redeemable Preferred Stock;




          (b) its liabilities for the deferred purchase price of property acquired by such Person
(excluding accounts payable arising in the ordinary course of business but including all
liabilities created or arising under any conditional sale or other title retention agreement
with respect to any such property);




          (c) all liabilities appearing on its balance sheet in accordance with GAAP in respect
of Capital Leases;




          (d) all liabilities for borrowed money secured by any Lien with respect to any property
owned by such Person (whether or not it has assumed or otherwise become liable for such
liabilities);




          (e) all its non-contingent liabilities in respect of reimbursement agreements or
similar agreements in respect of letters of credit or instruments serving a similar function
issued or accepted for its account by banks and other financial institutions (whether or not
representing obligations for borrowed money);




          (f) Swaps of such Person; and




          (g) any Guaranty of such Person with respect to liabilities of a type described in any
of clauses (a) through (f) hereof.


Indebtedness of any Person shall include all obligations of such Person of the character described
in clauses (a) through (g) to the extent such Person remains legally liable in respect thereof
notwithstanding that any such obligation is deemed to be extinguished under GAAP.




          “Institutional Investor” means (a) any original purchaser of a Note, (b) any holder of a Note
holding more than 5.00% of the aggregate principal amount of any series of the Notes then
outstanding, and (c) any bank, trust company, savings and loan association or other financial
institution, any pension plan, any investment company, any insurance company, any broker or dealer,
or any other similar financial institution or entity, regardless of legal form.




          “Intercreditor Agreement” means the Intercreditor Agreement dated as of May 1, 1999, among
Bank of America, N.A., as agent for various financial institutions and certain other creditors of
the Company (as amended, restated or otherwise modified from time to time).




B-5









 








          “Interest Payment Dates” shall have the meaning set forth in Section 1, provided that if an
Interest Payment Date shall fall on a day which is not a Business Day, the related interest payment
shall be made in accordance with Section 22.2 hereof.




          “Interest Period” shall mean each period commencing on the date of the Closing, thereafter,
commencing on an Interest Payment Date and continuing up to, but not including, the next Interest
Payment Date.




          “LIBOR” shall mean, for any Interest Period, the rate per annum (rounded upwards, if
necessary, to the next higher one hundred-thousandth of a percentage point) for deposits in U.S.
Dollars for a 90-day period which appears on the Bloomberg Financial Markets Service Page BBAM-1
(or if such page is not available, the Reuters Screen LIBO Page) as of 11:00 a.m. (London, England
time) on the date two Business Days before the commencement of such Interest Period (or three
Business Days prior to the beginning of the first Interest Period). “Reuters Screen LIBO Page”
means the display designated as the “LIBO” page on the Reuters Monitory Money Rates Service (or
such other page as may replace the LIBO page on that service or such other service as may be
nominated by the British Bankers’ Association as the information vendor for the purpose of
displaying British Banker’s Association Interest Settlement Rates for U.S. Dollar deposits).




          “LIBOR Breakage Amount” shall mean any loss, cost or expense reasonably incurred by any holder
of a Series E Note as a result of any payment or prepayment of any Series E Note on a day other
than a regularly scheduled Interest Payment Date for such Series E Note or at the scheduled
maturity (whether voluntary, mandatory, automatic, by reason of acceleration or otherwise), and any
loss or expense arising from the liquidation or reemployment of funds obtained by it or from fees
payable to terminate the deposits from which such funds were obtained. Each holder shall determine
the LIBOR Breakage Amount with respect to the principal amount of its Series E Notes then being
paid or prepaid (or required to be paid or prepaid) by written notice to the Company setting forth
such determination in reasonable detail not less than two (2) Business Days prior to the date of
such prepayment. Each such determination shall be conclusive absent manifest error.




          “Lien” means, with respect to any Person, any mortgage, lien, pledge, charge, security
interest or other encumbrance, or any interest or title of any vendor, lessor, lender or other
secured party to or of such Person under any conditional sale or other title retention agreement or
Capital Lease, upon or with respect to any property or asset of such Person (including in the case
of stock, stockholder agreements, voting trust agreements and all similar arrangements).




          “Make-Whole Amount” is defined in Section 8.6.




          “Material” means material in relation to the business, operations, affairs, financial
condition, assets, properties, or prospects of the Company and its Subsidiaries taken as a whole.




          “Material Adverse Effect” means a material adverse effect on (a) the business, operations,
affairs, financial condition, assets or properties of the Company and its Subsidiaries




B-6









 







taken as a
whole, or (b) the ability of an Obligor to perform its obligations under the Financing Agreements,
or (c) the validity or enforceability of any Financing Agreement.




          “Memorandum” is defined in Section 5.3.




          “Multiemployer Plan” means any Plan that is a “multiemployer plan” (as such term is defined in
section 4001(a)(3) of ERISA).




          “Net Proceeds” as of the date of any asset sale disposition shall mean the sum of the net
proceeds received by the Company and its Restricted Subsidiaries from all sales or other
dispositions of assets during the fiscal year which exceeds an amount equal to 20% of Consolidated
Total Assets measured as of the prior fiscal year end minus an amount equal to the net proceeds
arising on account of prior asset dispositions during such fiscal year which have been reinvested
in the ordinary course of business or which are then held by the Company or a Restricted Subsidiary
for such reinvestment purpose.




          “Notes” is defined in Section 1.




          “Obligor” or “Obligors” means and includes the Company and each Subsidiary Guarantor.




          “Officer’s Certificate” means a certificate of a Senior Financial Officer or of any other
officer of the Company (or other Obligor as the context may require) whose responsibilities extend
to the subject matter of such certificate.




          “Other Agreements” is defined in Section 2.




          “Other Purchasers” is defined in Section 2.




          “PBGC” means the Pension Benefit Guaranty Corporation referred to and defined in ERISA or any
successor thereto.




          “Person” means an individual, partnership, corporation, limited liability company,
association, trust, unincorporated organization, or a government or agency or political subdivision
thereof.




          “Plan” means an “employee benefit plan” (as defined in section 3(3) of ERISA) that is or,
within the preceding five years, has been established or maintained, or to which contributions are
or, within the preceding five years, have been made or required to be made, by the Company or any
ERISA Affiliate or with respect to which the Company or any ERISA Affiliate may have any liability.




          “Preferred Stock” means any class of capital stock of a corporation that is preferred over any
other class of capital stock of such corporation as to the payment of dividends or the payment of
any amount upon liquidation or dissolution of such corporation.




B-7









 








          “Priority Debt” means the sum, without duplication, of (i) Indebtedness of the Company secured
by Liens not otherwise permitted by clauses (a) through (l) of Section 10.3 and (ii) all
Indebtedness of Restricted Subsidiaries excluding:





          (a) Indebtedness of a Restricted Subsidiary outstanding on the date of Closing;




          (b) Indebtedness of a Restricted Subsidiary owed to the Company or a Restricted
Subsidiary;




          (c) Indebtedness incurred by a Restricted Subsidiary domiciled in a country other than
the United States or Canada with respect to its operations in a country outside the United
States or Canada;




          (d) Indebtedness of a Restricted Subsidiary outstanding at the time such Restricted
Subsidiary becomes a Subsidiary;




          (e) Indebtedness under the 2007 Note Purchase Subsidiary Guaranty or any new Guaranty
guaranteeing the Notes substantially in the form of the 2007 Note Purchase Subsidiary
Guaranty;




          (f) so long as the 2007 Note Purchase Subsidiary Guaranty or any new Guaranty
guaranteeing the Notes substantially in the form of the 2007 Note Purchase Subsidiary
Guaranty is in effect, Indebtedness of the respective Subsidiary Guarantor thereunder
arising under unsecured guaranties of such Subsidiary Guarantor of other Senior Debt; and




          (g) Indebtedness under Securitization Transactions in an aggregate amount not exceeding
20% of Consolidated Net Worth.



          “Property” or “properties” means, unless otherwise specifically limited, real or personal
property of any kind, tangible or intangible, choate or inchoate.




          “QPAM Exemption” means Prohibited Transaction Class Exemption 84-14 issued by the United
States Department of Labor.




          “Qualified Institutional Buyer” means any Person who is a “qualified institutional buyer”
within the meaning of such term as set forth in Rule 144A(a)(1) under the Securities Act.




          “Required Holders” means, at any time, the holders of at least 51% in principal amount of the
Notes at the time outstanding (exclusive of Notes then owned by the Company or any of its
Affiliates).




          “Requirement of Law” means, as to any Person, any law (statutory or common), treaty, rule or
regulation or determination of an arbitrator or of a Governmental Authority, in each case




B-8









 







applicable to or binding on the Person or any of its property or to which the Person or any of its
property are subject.




          “Responsible Officer” means any Senior Financial Officer and any other officer of the Company
with responsibility for the administration of the relevant portion of this Agreement.




          “Restricted Subsidiary” shall mean any Subsidiary of the Company which is designated as a
Restricted Subsidiary pursuant to Section 9.7.




          “Securities Act” means the Securities Act of 1933, as amended from time to time.




          “Securities Valuation Office” shall mean the Securities Valuation Office of the National
Association of Insurance Commissioners.




          “Securitization Transaction” means any sale, assignment or other transfer, which in each case
shall constitute a true sale transaction, by the Company or any Subsidiary of accounts receivable,
lease receivables or other payment obligations owing to the Company or such Subsidiary or any
interest in any of the foregoing (other than sales of defaulted receivables, foreign receivables or
similar items in the ordinary course of business consistent with past practice), together in each
case with any collections and other proceeds thereof, any collection or deposit accounts related
thereto, and any collateral, guaranties or other property or claims in favor of the Company or such
Subsidiary supporting or securing payment by the obligor thereon of, or otherwise related to, any
such receivables, provided that (i) Indebtedness incurred pursuant to any Securitization
Transaction shall be Indebtedness of a Subsidiary and not the Company and shall be recourse only to
the receivables or obligations transferred pursuant thereto, and (ii) at the time of any such
Securitization Transaction and immediately after giving effect thereto, no Default or Event of
Default would exist.




          “Senior Debt” means Indebtedness of the Company or any Restricted Subsidiary which is not
junior or subordinate to any other Indebtedness of the Company or any Restricted Subsidiary.




          “Senior Financial Officer” means the chief financial officer, principal accounting officer,
treasurer or controller of the Company.




          “Series D Notes” is defined in Section 1.




          “Series E Notes” is defined in Section 1.




          “Series E Required Holders” means, at any time, the holders of at least 51% in principal
amount of the Series E Notes at the time outstanding (exclusive of Series E Notes then owned by the
Company or any of its Affiliates).




          “Significant Subsidiary” means at any time any Subsidiary that would at such time constitute 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 Closing).




B-9









 








          “Subsidiary” means, as to any Person, any corporation, association or other business entity in
which such Person or one or more of its Subsidiaries or such Person and one or more of its
Subsidiaries owns sufficient equity or voting interests to enable it or them (as a group)
ordinarily, in the absence of contingencies, to elect a majority of the directors (or Persons
performing similar functions) of such entity, and any partnership or joint venture if more than a
50% interest in the profits or capital thereof is owned by such Person or one or more of its
Subsidiaries or such Person and one or more of its Subsidiaries (unless such partnership can and
does ordinarily take major business actions without the prior approval of such Person or one or
more of its Subsidiaries). Unless the context otherwise clearly requires, any reference to a
“Subsidiary” is a reference to a Subsidiary of the Company.




          “Subsidiary Guarantor” means, on any day, each Subsidiary that has executed a counterpart of
the 2007 Note Purchase Subsidiary Guaranty on or prior to that day (and has not been released from
its obligations hereunder in accordance with the terms hereof).




          “Subsidiary Guaranty” shall have the meaning set forth in the Intercreditor Agreement.




          “Swaps” means, with respect to any Person, payment obligations with respect to interest rate
swaps, currency swaps and similar obligations obligating such Person to make payments, whether
periodically or upon the happening of a contingency. For the purposes of this Agreement, the
amount of the obligation under any Swap shall be the amount determined in respect thereof as of the
end of the then most recently ended fiscal quarter of such Person, based on the assumption that
such Swap had terminated at the end of such fiscal quarter, and in making such determination, if
any agreement relating to such Swap provides for the netting of amounts payable by and to such
Person thereunder or if any such agreement provides for the simultaneous payment of amounts by and
to such Person, then in each such case, the amount of such obligation shall be the net amount so
determined.




          “Total Capitalization” means, as of any date, the sum of (a) the Consolidated Net Worth at
such date plus (b) Consolidated Funded Indebtedness at such date.




          “Transfer” means, with respect to any Person, any transaction in which such Person sells,
conveys, transfers or leases (as lessor) any of its property, including, without limitation, stock
of a Subsidiary.




          “Unrestricted Subsidiary” means any Subsidiary that is not a Restricted Subsidiary.




          “Wholly-Owned Restricted Subsidiary” means, at any time, any Restricted Subsidiary one hundred
percent (100%) of all of the equity interests (except directors’ qualifying shares) and voting
interests of which are owned by any one or more of the Company and the Company’s other Wholly-Owned
Restricted Subsidiaries at such time.




          In connection with any determination of Consolidated Current Indebtedness, Consolidated Funded
Indebtedness, Consolidated Net Worth, Consolidated Total Assets, Priority Debt and Total
Capitalization, the assets, liabilities, gains and losses of Unrestricted Subsidiaries shall be
excluded.





B-10









 








Changes in Corporate Structure



None.




Schedule 4.9

(to Note Purchase Agreement)





 









 








Pentair, Inc. Restricted Subsidiaries




	 	 	 	 	 
	 	 	Jurisdiction of 	 	 
	Entity	 	Incorporation	 	Ownership
	Alberta Electronic Company Limited

	 	Hong Kong
	 	100% by Pentair Pacific Rim Ltd.
	Aplex Industries, Inc.*

	 	Texas
	 	100% by Pentair Pump Group, Inc.
	Apno, S. A. de C. V.*

	 	Mexico
	 	100% by Lincoln Automotive Company
	Aspen Motion Technologies, Inc.

	 	North Carolina
	 	100% by Pentair Enclosures Group, Inc.
	Axholme Resources Limited

	 	United Kingdom
	 	100% by Pentair Water Filtration UK Limited
	Beijing Pentair Water Jieming Co., Ltd.

	 	PRC
	 	70% by Pentair Pacific Rim (Water) Limited
	Century Mfg. Co.*

	 	Minnesota
	 	100% by PFAM, Inc.
	Davies Pumps & Co., Limited

	 	New Zealand
	 	100% by Onga (NZ) Limited
	Dongguan Jieming Tianyuan Water Purifying
Equipment Co., Ltd.

	 	PRC
	 	100% by Beijing Pentair Water Jieming Co., Ltd.
	Electronic Enclosures, Inc.

	 	Delaware
	 	100% by Pentair Enclosures Group, Inc.
	Epps Limited

	 	Mauritius
	 	100% by Pentair Water Treatment (OH) Company.
	EuroPentair GmbH

	 	Germany
	 	100% by Pentair Germany GmbH
	Everpure LLC

	 	Delaware
	 	100% by Fleck Controls, Inc.
	Everpure Japan KK

	 	Japan
	 	100% by Everpure LLC
	Everpure (UK) Ltd.

	 	United Kingdom
	 	100% by Pentair Water Belgium BVBA
	Fiberdyne LLC

	 	Delaware
	 	100% Pentair Filtration, Inc.
	Fleck Controls, Inc.

	 	Wisconsin
	 	100% by Pentair Water Treatment Company
	Hoffman Enclosures (Mex.), LLC

	 	Minnesota
	 	100% by Hoffman Enclosures Inc.
	Hoffman Enclosures Inc.

	 	Minnesota
	 	100% by Pentair Enclosures Group, Inc.
	Hoffman Engineering S. de R.L. de C.V.

	 	Mexico
	 	99.99% by Hoffman Enclosures Inc.

0.01% by Hoffman Enclosures (Mex.), LLC
	Hoffman-Schroff PTE Ltd.

	 	Singapore
	 	100% by Pentair Asia PTE Ltd.
	Hypro EU Limited

	 	United Kingdom
	 	100% by Hypro LLC
	Hypro LLC

	 	Delaware
	 	100% by Pentair Water Group, Inc.
	Inversiones Sta-Rite de Chile Limitada

	 	Chile
	 	99.9% by Sta-Rite Industries LLC

0.1% by Webster Electric Company LLC
	Jieming Shine Trading Co., Ltd.

	 	PRC
	 	100% by Beijing Pentair Water Jieming Co., Ltd.
	Jung Pumpen CZ

	 	Czech Republic
	 	100% by Jung Pumpen GmbH
	Jung Pumpen France SARL

	 	France
	 	100% by Jung Pumpen GmbH
	Jung Pumpen GmbH

	 	Germany
	 	100% by Pentair Germany GmbH (Common)

100% by Pentair Verwaltungs GmbH & Co. KG
(Preferred)
	Jung Pumpen Handelsgesellschaft mbH

	 	Germany
	 	100% by Jung Pumpen GmbH
	Jung Pumpen Hungary Kft.

	 	Hungary
	 	100% by Jung Pumpen GmbH
	Jung Pumpen Polska Sp. z. o. o.

	 	Poland
	 	100% by Jung Pumpen GmbH
	Jung Pumpen s. r. o.

	 	Slovakia
	 	100% by Jung Pumpen GmbH
	Lincoln Automotive Company*

	 	Minnesota
	 	100% by PFAM, Inc.
	McLean Midwest Corp.

	 	Minnesota
	 	100% by Pentair Enclosures Group, Inc.
	McNeil (Ohio) Corporation*

	 	Minnesota
	 	100% by Pentair, Inc.
	Moraine Properties LLC

	 	Ohio
	 	100% by PFAM, Inc.
	National Pool Tile Group, Inc.

	 	California
	 	100% by Pentair Water Pool and Spa, Inc.
	Nocchi Pompes Europe SARL

	 	France
	 	100% by Pentair Water Italy s.r.l
	Nocchi Pumps Moscow

	 	Russia
	 	100% by Pentair Water Italy s. r. l.
	Onga (NZ) Limited

	 	New Zealand
	 	100% by Pentair Water Group, Inc.
	Onga Pump Shop Pty, Ltd.

	 	Australia
	 	100% by WICOR Industries (Australia) Pty. Ltd.
	Optima Enclosures Limited

	 	United Kingdom
	 	100% by Pentair UK Group Limited





Schedule 5.4(a)

(to Note Purchase Agreement)




 









 






	 	 	 	 	 
	 	 	Jurisdiction of 	 	 
	Entity	 	Incorporation	 	Ownership
	Pentair Acu-Trol, LLC

	 	California
	 	100% by Pentair Pool Water and Spa, Inc.
	Pentair Asia Holdings S.a.r.l.

	 	Luxembourg
	 	100% by Pentair, Inc.
	Pentair Asia PTE Ltd.

	 	Singapore
	 	100% by Pentair, Inc.
	Pentair Beteiligungs GmbH

	 	Germany
	 	50% by Pentair, Inc.

50% by Pentair Germany GmbH
	Pentair Canada, Inc.

	 	Canada
	 	50% by Pentair Water Group, Inc.

50% by Pentair Pump Group, Inc.
	Pentair DMP Corp.*

	 	Minnesota
	 	100% by Pentair Enclosures, Inc.
	Pentair Electronic Packaging Company

	 	Minnesota
	 	100% by Pentair Enclosures Group, Inc.
	Pentair Electronic Packaging de Mexico, S. de

	 	 	 	99.97% by Pentair Electronic Packaging Company
	R.L. de C.V.

	 	Mexico
	 	0.03% by Hoffman Enclosures (Mex.), LLC
	Pentair Enclosures Inc.

	 	Minnesota
	 	100% by Pentair Enclosures Group, Inc.
	Pentair Enclosures Group, Inc.

	 	Delaware
	 	100% by Pentair, Inc.
	Pentair Enclosures Inc. de Chile S. r. L.

	 	Chile
	 	90% by Pentair Enclosures Inc.

10% by Hoffman Enclosures Inc.
	Pentair Enclosures, S. de R.L. de C.V.

	 	Mexico
	 	90% by Pentair Enclosures Inc.

10% by Hoffman Enclosures Inc.
	Pentair Filtration, Inc.

	 	Delaware
	 	100% by Pentair Water Group, Inc.
	Pentair France SARL

	 	France
	 	100% by Pentair International SARL
	Pentair Germany GmbH

	 	Germany
	 	100% by Pentair Holdings S. a. r. l.
	Pentair Global SARL

	 	Luxembourg
	 	~90% by Pentair International SARL

~10% by Pentair, Inc.
	Pentair Holdings SARL

	 	Luxembourg
	 	100% by Pentair Global SARL
	Pentair Housing, Inc.

	 	Minnesota
	 	100% by PFAM, Inc.
	Pentair Housing, LP

	 	Minnesota
	 	99% by Pentair, Inc.

1% by Pentair Housing, Inc.
	Pentair International Sarl

	 	Luxembourg
	 	100% by Pentair Janus Holdings
	Pentair International Sarl

	 	Switzerland
	 	100% by Pentair Holdings SARL
	Pentair Janus Holdings

	 	Bermuda
	 	~90% by Pentair, Inc.

~10% by Pentair Water Group, Inc.
	Pentair Manufacturing Belgium BVBA

	 	Belgium
	 	~99.99% by Pentair Holdings SARL

~0.01% by Pentair Global SARL
	Pentair Manufacturing France SAS

	 	France
	 	100% by Pentair Water France SAS
	Pentair Manufacturing Italy s. r. l.

	 	Italy
	 	100% by Pentair Water Italy s. r. l.
	Pentair Pacific Rim (Water) Limited

	 	Hong Kong
	 	100% by Pentair Global SARL
	Pentair Pacific Rim, Ltd.

	 	Hong Kong
	 	100% by Pentair Global SARL
	Pentair Poland Sp. z. o. o.

	 	Poland
	 	100% by Pentair Water Belgium BVBA/Schroff

GmbH (in process)
	Pentair Pump Group, Inc.

	 	Delaware
	 	100% by Pentair Water Group, Inc.
	Pentair Qingdao Enclosure Company Limited

	 	PRC
	 	100% by Pentair Pacific Rim, Ltd.
	Pentair Taunus Electrometalurgica Ltda

	 	Brazil
	 	99% by Hoffman Enclosures Inc.

1% by Pentair Electronic Packaging Company
	Pentair Thailand, Inc.

	 	Thailand
	 	100% by Pentair Water Group, Inc.
	Pentair Transport, Inc.

	 	Minnesota
	 	100% by PFAM, Inc.
	Pentair UK Group Limited

	 	United Kingdom
	 	100% by Pentair, Inc.
	Pentair Verwaltungs GmbH & Co KG

	 	Germany
	 	Pentair Beteiligungs GmbH (General Partner)

Pentair Germany GmbH (Limited Partner)
	Pentair Water (Suzhou) Company Ltd.

	 	PRC
	 	100% by Pentair Pacific Rim (Water) Limited
	Pentair Water Australia Pty Ltd.

	 	Australia
	 	100% by WICOR Industries (Australia) Pty, Ltd.
	Pentair Water Belgium BVBA

	 	Belgium
	 	~99.99% by Pentair Holdings SARL

~ 0.01% by Pentair Global SARL
	Pentair Water Europe s.r.l.

	 	Italy
	 	100% by Pentair Global SARL






5.4(a)-2









 






	 	 	 	 	 
	 	 	Jurisdiction of 	 	 
	Entity	 	Incorporation	 	Ownership
	Pentair Water Filtration France SAS

	 	France
	 	100% by Pentair Filtration, Inc.
	Pentair Water Filtration Indiana LLC

	 	Indiana
	 	100% by Pentair Filtration, Inc.
	Pentair Water Filtration UK Limited

	 	United Kingdom
	 	100% by Pentair UK Group Limited
	Pentair Water France SAS

	 	France
	 	100% by Pentair France SARL
	Pentair Water Germany GmbH

	 	Germany
	 	
100% by Pentair Germany GmbH (Common)
	 

	 	 
	 	100% by Pentair Verwaltungs GmbH & Co. KG
(Preferred)
	Pentair Water Group, Inc.

	 	Delaware
	 	100% by Pentair, Inc.
	Pentair Water India Private Limited

	 	India
	 	78.04% by Pentair Water Treatment (OH) Company

21.96% by Epps Limited
	Pentair Water Italy s.r.l.

	 	Italy
	 	100% by Schroff s.r.l.
	Pentair Water New Zealand Limited

	 	New Zealand
	 	100% by Pentair Water Group, Inc.
	Pentair Water Pool and Spa, Inc.

	 	Delaware
	 	100% by Pentair Water Group, Inc.
	Pentair Water South Africa (Proprietary) Limited

	 	South Africa
	 	100% by Pentair Water Pool and Spa, Inc.
	Pentair Water Spain

	 	Spain
	 	100% by Pentair Global SARL
	Pentair Water Taiwan Co., Ltd.*

	 	Taiwan
	 	100% by Pentair Asia PTE Ltd.
	Pentair Water Treatment (OH) Company

	 	Minnesota
	 	100% by Pentair Water Treatment Company
	Pentair Water Treatment Company

	 	Minnesota
	 	100% by Pentair Water Group, Inc.
	Pentair Water Treatment India Private Ltd.

	 	India
	 	100% by Pentair Water India Private Limited
	Pentair Water, LLC

	 	Minnesota
	 	100% by Pentair Water Group, Inc.
	 

	 	 	 	99% by Pentair Water Group, Inc.
	Pentair Water-Mexico S. de R. L. de C. V.

	 	Mexico
	 	1% by Pentair Water LLC
	Penwald Insurance Company

	 	Vermont
	 	75% by Pentair, Inc.

25% by Pentair Canada, Inc.
	PEP Central, Inc.

	 	Illinois
	 	100% by Pentair Electronic Packaging Company
	PEP East, Inc. f/k/a Schroff, Inc.

	 	Rhode Island
	 	100% by Hoffman Enclosures Inc.
	PEP West, Inc.

	 	Delaware
	 	100% by Pentair Enclosures Group, Inc.
	PFAM, Inc.*

	 	Delaware
	 	100% by Pentair, Inc.
	[PM Minnesota LLC]

	 	Minnesota
	 	100% by Pentair Water Group, Inc.
	Porous Media Corporation

	 	Minnesota
	 	100% by PM MN LLC (transitory acquisition sub)
	Porous Media Ltd.

	 	Texas
	 	99% by PrsMd Texas, LLC (Limited Partner)

1% by Porous Media Corporation (General

Partner)
	Porter Cable de Mexico, S.A. de C.V.*

	 	Mexico
	 	99.99% by Pentair Water Group, Inc.

0.1% by Pentair, Inc.
	PrsMd Texas, LLC

	 	Texas
	 	100% by Pentair Water Group, Inc.
	PTG Accessories Corp.*

	 	Minnesota
	 	100% by PFAM, Inc.
	Schroff GmbH

	 	Germany
	 	100% by EuroPentair GmbH (Common)

100% by Pentair Verwaltungs GmbH & Co. KG
(Preferred)
	Schroff K.K.

	 	Japan
	 	100% by Hoffman Enclosures Inc.
	Schroff S.r.l.

	 	Italy
	 	100% by Pentair Holdings SARL
	Schroff SAS

	 	France
	 	100% by Pentair France SARL
	Schroff Scandinavia AB

	 	Sweden
	 	100% by Pentair Global SARL
	Schroff U.K. Ltd.

	 	United Kingdom
	 	100% by Pentair UK Group Limited
	Seneca Enterprises Co.

	 	Delaware
	 	100% by Pentair Water Group, Inc.
	Shaanxi Jieming Environmental Protection
Equipment Co. Ltd.

	 	PRC
	 	100% by Beijing Pentair Water Jieming Co., Ltd.
	Shanghai Alberta Electronics Co., Ltd.

	 	PRC
	 	100% by Alberta Electronic Company Limited
	Shanghai Shangjie Environment Equipment Co.,
Ltd.

	 	PRC
	 	100% by Beijing Pentair Water Jieming Co., Ltd.






5.4(a)-3









 






	 	 	 	 	 
	 	 	Jurisdiction of 	 	 
	Entity	 	Incorporation	 	Ownership
	SHURflo International Limited

	 	United Kingdom
	 	100% by SHURflo, LLC
	SHURflo Limited

	 	United Kingdom
	 	100% by SHURflo, LLC
	SHURflo, LLC

	 	California
	 	100% by Pentair Water Group, Inc.
	Sta-Rite de Argentina, S. A.

	 	Argentina
	 	100% by Sta-Rite Industries LLC
	Sta-Rite de Mexico S. A. de C. V.

	 	Mexico
	 	80% by Sta-Rite Industries LLC
	Sta-Rite de Puerto Rico, Inc.

	 	Puerto Rico
	 	100% by Sta-Rite Industries LLC
	Sta-Rite Holdings BV

	 	Netherlands
	 	100% by Pentair Global SARL
	Sta-Rite Industries LLC

	 	Wisconsin
	 	100% by Pentair Water Group, Inc.
	Surewood Acquisition Corporation*

	 	North Carolina
	 	100% by PFAM, Inc.
	Tupelo Real Estate LLC*

	 	Delaware
	 	100% by PFAM, Inc.
	Webster Electric Company, LLC

	 	Delaware
	 	100% by Sta-Rite Industries LLC
	WICOR Canada Company

	 	Canada
	 	79% by WICOR Global Corp.

21% by WICOR Industries (Australia) PTY Ltd.
	WICOR Global Corp.

	 	Delaware
	 	100% by Sta-Rite Industries LLC
	WICOR Industries (Australia) PTY Ltd.

	 	Australia
	 	100% by Sta-Rite Industries LLC
	Yabaida Electronic (Shenzhen) Co., Ltd.

	 	PRC
	 	100% by Alberta Electronic Company Limited
	Yixing Jieming Shirun Environmental Protection
Equipment Co., Ltd.

	 	PRC
	 	100% by Beijing Pentair Water Jieming Co., Ltd.







5.4(a)-4









 








Financial Statements



Consolidated Balance Sheets as of December 31, 2006, 2005 and 2004.



Consolidated Statements of Income for the Years ended December 31, 2006, 2005 and 2004.



Consolidated Statements of Cash Flows for the Years ended December 31, 2006, 2005 and 2004.



Consolidated Statements of Changes in Shareholders’ Equity for the Years Ended December 31, 2006,
2005 and 2004.



Unaudited Consolidated Balance Sheet as of March 31, 2007.



Unaudited Consolidated Statement of Income for the quarter ended March 31, 2007.



Unaudited Consolidated Statement of Cash Flows for the quarter ended March 31, 2007.



Unaudited Consolidated Statements of Changes in Shareholders’ Equity for the quarter ended March
31, 2007.




Schedule 5.5

(to Note Purchase Agreement)




 









 








Certain Litigation




Horizon Litigation



Twenty-eight separate lawsuits involving 29 primary plaintiffs, a class action, and claims for
indemnity by Celebrity Cruise Lines, Inc. (“Celebrity”) were brought against Essef Corporation
(“Essef”) and certain of its subsidiaries prior to our acquisition of Essef in August 1999. The
claims against Essef and its involved subsidiaries were based upon the allegation that Essef
designed, manufactured, and marketed two sand swimming pool filters that were installed as a part
of the spa system on the Horizon cruise ship, and allegations that the spa and filters contained
Legionnaire’s disease bacteria that infected certain passengers on cruises from April 1994 through
July 1994.



The individual and class claims by passengers were tried and resulted in an adverse jury
verdict finding liability on the part of the Essef defendants (70%) and Celebrity and its sister
company, Fantasia (together 30%). After expiration of post-trial appeals, we paid all outstanding
punitive damage awards of $7.0 million in the Horizon cases, plus interest of approximately $1.6
million, in January 2004. All of the personal injury cases have now been resolved through either
settlement or judgment.



The only remaining unresolved claims in this case were those brought by Celebrity for damages
resulting from the outbreak. Celebrity filed an amended complaint seeking attorney fees and costs
for prior litigation as well as out-of-pocket losses, lost profits, and loss of business enterprise
value. On June 28, 2006, a jury returned a verdict against the Essef defendants in the total amount
of $193.0 million for its claims for out-of-pocket expenses ($10.4 million), lost profits ($47.6
million) and lost enterprise value ($135.0 million). The verdict was exclusive of pre-judgment
interest and attorneys’ fees.



On January 17, 2007, the Court ruled on our post-trial motions, granting judgment in our favor
as a matter of law with respect to Celebrity’s claim for lost enterprise value ($135.0 million).
The Court also granted a new trial with respect to lost profits ($47.6 million). In addition, the
Court denied without prejudice our claim for contribution to reduce Celebrity’s recovery by 30% to
account for its contributory negligence, with leave to renew the motion following retrial. The
trial of this matter has been scheduled for June 2007.



Celebrity’s claim for lost profits at trial amounted to approximately $60 million. We believe
that actual lost profits suffered, if any, are substantially less. In a new trial, there remain
questions of causation, contribution and proof of damages to be determined. We intend to vigorously
defend against Celebrity’s claims. We cannot predict whether Celebrity will appeal the ruling on
lost enterprise value, nor whether and to what extent Essef may eventually be found liable on
Celebrity’s claims.



Several issues have not been decided by the Court, including whether Celebrity is entitled to
recovery of its attorneys’ fees and related costs in the passenger claims phase of the case




Schedule 5.8

(to Note Purchase Agreement)




 









 




($4.1 million), and, with respect to pre-judgment interest, the length of the interest period and
the rate of interest on any eventual judgment. We have assessed the impact of the ruling on our
previously established reserves for this matter and, based on information available at this time,
have not changed our reserves following this ruling, except to take into account quarterly interest
accruals.



We believe that any judgment we pay in this matter would be tax-deductible in the year paid or
in subsequent years. In addition to the impact of any loss on this matter on our earnings per share
when recognized, we may need to borrow funds from our banks or other sources to pay any judgment
finally determined after exhaustion of all appeals. We expect that we would have available adequate
funds to allow us to do so, based on discussions with our lending sources and our estimates of the
results of our business operations over the foreseeable future.





5.8-2









 








Licenses, Permits, etc.




None.




Schedule 5.11

(to Note Purchase Agreement)



 









 








Existing Indebtedness; Liens




	 	 	 	 	 
	 	 	As of March 31, 2007	 
	 	 	(numbers in thousands)	 
	Commercial paper
	 	$	243,267	 
	Revolving credit facilities1
	 	 	325,673	 
	7.85% Senior Notes Due 2009
	 	 	250,000	 
	Fixed rate notes maturing 2007-2013
	 	 	135,000	2
	Floating rate notes maturing 2013
	 	 	100,000	 
	Other
	 	 	26,815	 
	 
	 	 	 
	 
	 	 	1,080,755	 






Additional indebtedness incurred:



On April 30, 2007, the Company borrowed $250 Million
pursuant to a Term Loan Agreement dated as of April 9, 2007 with
various financial institutions, Bank of America N.A., as
Administrative Agent and JPMorgan Chase Bank, N.A. as Syndication
Agent.






 




			
	1	 	The Company has a multi-currency revolving Credit
Facility of $800 million expiring on March 4, 2010.
	 
	2	 	Of this amount, $35,000,000 matures in May 2007.





Schedule 5.15

(to Note Purchase Agreement)



 









 








Liens



The Company discloses liens related to the following transactions:





	 	1.	 	Hoffman Enclosures Inc. financed the acquisition, construction,
equipping and installation of its Mt. Sterling manufacturing facility through
$29,500,000 of Taxable Industrial Building Revenue Bonds issued by The County of
Montgomery, Kentucky. Under the Bond documents, the County of Montgomery, Kentucky
is the owner of the manufacturing facility and the equipment installed therein,
all of which is leased to Hoffman under a lease agreement for the term of the
bonds. Upon payment of the sums due under the bonds, the property will be conveyed
to Hoffman. All of the Taxable Industrial Building Revenue Bonds were purchased by
Pentair.






5.15-2









 








[Form of Series D Note]




Pentair, Inc.




5.87% Senior Note, Series D, due May 17, 2017




			
	 	 	 
	No. [                    ]
	 	[Date]
	$[                              ]
	 	PPN [                    ]






          For Value Received, the undersigned, Pentair, Inc. (herein called the
“Company”), a corporation organized and existing under the laws of the State of Minnesota, hereby
promises to pay to [                                        ], or registered assigns, the principal sum of
[                                        ] Dollars on May 17, 2017, with interest (computed on the basis of a
360-day year of twelve 30-day months) (a) on the unpaid balance thereof at the rate of 5.87% per
annum from the date hereof, payable semiannually, on the 17th day of each May and November in each
year, commencing with the May 17 or November 17 next succeeding the date hereof, until the
principal hereof shall have become due and payable, and (b) to the extent permitted by law on any
overdue payment (including any overdue prepayment) of principal, any overdue payment of interest
and any overdue payment of any Make-Whole Amount (as defined in the Note Purchase Agreements
referred to below), payable semiannually as aforesaid (or, at the option of the registered holder
hereof, on demand), at a rate per annum from time to time equal to the Default Rate.




          Payments of principal of, interest on and any Make-Whole Amount with respect to this Note are
to be made in lawful money of the United States of America at JPMorgan Chase Bank, N.A. or at such
other place as the Company shall have designated by written notice to the holder of this Note as
provided in the Note Purchase Agreements referred to below.




          This Note is one of a series of Senior Notes (herein called the “Notes”) issued pursuant to
separate Note Purchase Agreements, dated as of May 17, 2007 (as from time to time amended, the
“Note Purchase Agreements”), between the Company and the respective Purchasers named therein and is
entitled to the benefits thereof. Each holder of this Note will be deemed, by its acceptance
hereof, (i) to have agreed to the confidentiality provisions set forth in Section 20 of the Note
Purchase Agreements and (ii) to have made the representation set forth in Section 6.2 of the Note
Purchase Agreements, provided, that such holder may (in reliance upon information provided by the
Company, which shall not be unreasonably withheld) make a representation to the effect that the
purchase by such holder of any Note will not constitute a non-exempt prohibited transaction under
section 406(a) of ERISA.




          This Note is a registered Note and, as provided in the Note Purchase Agreements, upon
surrender of this Note for registration of transfer, duly endorsed, or accompanied by a written
instrument of transfer duly executed, by the registered holder hereof or such holder’s attorney
duly authorized in writing, a new Note for a like principal amount will be issued to, and
registered in the name of, the transferee. Prior to due presentment for registration of
transfer, the Company may treat the person in whose name this Note is registered as the owner
hereof for the




Exhibit 1-A

(to Note Purchase Agreement)



 









 







purpose of receiving payment and for all other purposes, and the Company will not be
affected by any notice to the contrary.




          This Note is subject to optional prepayment, in whole or from time to time in part, at the
times and on the terms specified in the Note Purchase Agreements, but not otherwise.




          If an Event of Default, as defined in the Note Purchase Agreements, occurs and is continuing,
the principal of this Note may be declared or otherwise become due and payable in the manner, at
the price (including any applicable Make-Whole Amount) and with the effect provided in the Note
Purchase Agreements.




          The governing law of this Note shall be in accordance with Section 22.6 of the Note Purchase
Agreement




	 	 	 	 	 	 	 
	 	 	Pentair, Inc.
	 
	 	 	 	 	 	 
	 

	 	By	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Name:	 	 
	 

	 	 	 	Title:	 	 







E-1-A-2









 








[Form of Series E Note]




Pentair, Inc.




Floating Rate Senior Note, Series E, due May 17, 2012




			
	 	 	 
	No. [                    ]
	 	[Date]
	$[                              ]
	 	PPN [                    ]






          For Value Received, the undersigned, Pentair, Inc. (herein called the
“Company”), a corporation organized and existing under the laws of the State of Minnesota, hereby
promises to pay to [                                        ], or registered assigns, the principal sum of
[                    ] Dollars on May 17, 2012, with interest (computed on the basis of a
360-day year and actual days elapsed) (a) on the unpaid balance thereof at a floating rate equal to
the Adjusted LIBOR Rate from the date hereof, payable quarterly, on the 17th day of each February,
May, August and November in each year, commencing with the February 17, May 17, August 17 or
November 17, next succeeding the date hereof, until the principal hereof shall have become due and
payable, and (b) to the extent permitted by law on any overdue payment (including any overdue
prepayment) of principal, any overdue payment of interest and any overdue payment of any LIBOR
Breakage Amount (as defined in the Note Purchase Agreements referred to below), payable quarterly
as aforesaid (or, at the option of the registered holder hereof, on demand), at a rate per annum
from time to time equal to the Default Rate.




          Payments of principal of, interest on and any LIBOR Breakage Amount with respect to this Note
are to be made in lawful money of the United States of America at JPMorgan Chase Bank, N.A. or at
such other place as the Company shall have designated by written notice to the holder of this Note
as provided in the Note Purchase Agreements referred to below.




          This Note is one of a series of Floating Rate Senior Notes (herein called the “Notes”) issued
pursuant to separate Note Purchase Agreements, dated as of May 17, 2007 (as from time to time
amended, the “Note Purchase Agreements”), between the Company and the respective Purchasers named
therein and is entitled to the benefits thereof. Each holder of this Note will be deemed, by its
acceptance hereof, (i) to have agreed to the confidentiality provisions set forth in Section 20 of
the Note Purchase Agreements and (ii) to have made the representation set forth in Section 6.2 of
the Note Purchase Agreements, provided that such holder may (in reliance upon information provided
by the Company, which shall not be unreasonably withheld) make a representation to the effect that
the purchase by such holder of any Note will not constitute a non-exempt prohibited transaction
under section 406(a) of ERISA.




          This Note is a registered Note and, as provided in the Note Purchase Agreements, upon
surrender of this Note for registration of transfer, duly endorsed, or accompanied by a
written instrument of transfer duly executed, by the registered holder hereof or such holder’s
attorney duly authorized in writing, a new Note for a like principal amount will be issued to, and
registered in the name of, the transferee. Prior to due presentment for registration of transfer,
the



Exhibit 1-B

(to Note Purchase Agreement)




 









 







Company may treat the person in whose name this Note is registered as the owner hereof for the
purpose of receiving payment and for all other purposes, and the Company will not be affected by
any notice to the contrary.




     This Note is subject to optional prepayment, in whole or from time to time in part, at the
times and on the terms specified in the Note Purchase Agreements, but not otherwise.



     If an Event of Default, as defined in the Note Purchase Agreements, occurs and is continuing,
the principal of this Note may be declared or otherwise become due and payable in the manner, at
the price (including any applicable LIBOR Breakage Amount) and with the effect provided in the Note
Purchase Agreements.



     The governing law of this Note shall be in accordance with Section 22.6 of the Note Purchase
Agreement



	 	 	 	 	 	 	 
	 	 	Pentair, Inc.
	 
	 	 	 	 	 	 
	 

	 	By	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Name:	 	 
	 

	 	 	 	Title:	 	 







E-1-B-2









 








Form of 2007 Note Purchase Subsidiary Guaranty



 Exhibit 2

(to Note Purchase Agreement)



 









 








Description of Opinion of Special Counsel

to the Company




          The closing opinion of Louis L. Ainsworth, Senior Vice President and General Counsel for the
Company, which is called for by Section 4.4(a) of the Note Purchase Agreements, shall be dated the
date of the Closing and addressed to the Purchasers, shall be satisfactory in scope and form to the
Purchasers and shall be to the effect that:





          1. The Company is a corporation, duly incorporated, validly existing and in good
standing under the laws of the State of Minnesota, has the corporate power and the corporate
authority to execute and perform the Note Purchase Agreements and to issue the Notes and has
the corporate power and the corporate authority to conduct the activities in which it is now
engaged and is duly licensed or qualified and is in good standing as a foreign corporation
in each jurisdiction in which the character of the properties owned or leased by it or the
nature of the business transacted by it makes such licensing or qualification necessary,
except in jurisdictions where the failure to be so qualified would not have a Material
Adverse Effect.




          2. Each Subsidiary of the Company which is organized under the laws of the United Sates
or any state therein, is an entity duly organized, validly existing and in good standing
under the laws of its jurisdiction of organization, and is duly licensed or qualified and is
in good standing in each jurisdiction in which the character of the properties owned or
leased by it or the nature of the business transacted by it makes such licensing or
qualification necessary except in jurisdictions where the failure to be so qualified would
not have a Material Adverse Effect.




          3. Each of the Note Purchase Agreement and the Notes has been duly authorized by all
necessary corporate action on the part of the Company has been duly executed and delivered
by the Company party thereto and constitutes the legal, valid and binding contract of the
Company enforceable in accordance with its terms, subject to bankruptcy, insolvency,
fraudulent conveyance and similar laws affecting creditors’ rights generally, and general
principles of equity (regardless of whether the application of such principles is considered
in a proceeding in equity or at law).




          4. The 2007 Note Purchase Subsidiary Guaranty has been duly authorized by all necessary
corporate action on the part of the each of the Subsidiary Guarantors has been duly executed
and delivered by each Subsidiary Guarantor party thereto and constitutes the legal, valid
and binding contract of each of the Subsidiary Guarantors enforceable in accordance with its
terms, subject to bankruptcy, insolvency, fraudulent conveyance and similar laws affecting
creditors’ rights generally, and general principles of equity (regardless of whether the
application of such principles is considered in a proceeding in equity or at law).




          5. No approval, consent or withholding of objection on the part of, or filing,
registration or qualification with, any governmental body, Federal or state, is
necessary in connection with the execution and delivery of any of the Financing Agreements.



Exhibit 4.4(a)

(to Note Purchase Agreement)



 









 









          6. The issuance and sale of the Notes and the execution, delivery and performance by
the Company of the Note Purchase Agreement do not conflict with or result in any breach of
any of the provisions of or constitute a default under or result in the creation or
imposition of any lien upon any of the property of the Company pursuant to the provisions
of the Articles of Incorporation or By-laws of the Company or any Material agreement or
other instrument known to such counsel to which the Company is a party or by which it may be
bound.




The execution, delivery and performance by each Subsidiary Guarantor of the 2007 Note
Purchase Subsidiary Guaranty does not conflict with or result in any breach of any of the
provisions of or constitute a default under or result in the creation or imposition of any
lien upon any of the property of any such Subsidiary Guarantor pursuant to the provisions
of the Articles of Incorporation or By-laws of each such Subsidiary Guarantor or any
Material agreement or other instrument known to such counsel to which such Subsidiary
Guarantor is a party or by which it may be bound.




          7. The issuance, sale and delivery of the Notes and the 2007 Note Purchase Subsidiary
Guaranty under the circumstances contemplated by the Note Purchase Agreements do not, under
existing law, require the registration of the Notes or the Subsidiary Guaranty under the
Securities Act of 1933, as amended, or the qualification of an indenture under the Trust
Indenture Act of 1939, as amended.




          8. No violation of Regulation U, T or X of the Federal Reserve Board.



          With respect to matters of fact on which such opinion is based, such counsel shall be entitled
to rely on appropriate certificates of public officials and officers of the Company.





E-4.4(a)-2









 








Description of Opinion of Special Counsel

to the Purchasers




          The closing opinion of Chapman and Cutler, special counsel to the Purchasers, called for by
Section 4.4(b) of the Note Purchase Agreements, shall be dated the date of the Closing and
addressed to the Purchasers, shall be satisfactory in form and substance to the Purchasers and
shall be to the effect that:





          1. Each Note Purchase Agreement is enforceable against the Company in accordance with
its terms, subject to bankruptcy, insolvency, fraudulent conveyance and similar laws
affecting creditors’ rights generally, and general principles of equity (regardless of
whether the application of such principles is considered in a proceeding in equity or at
law).




          2. The Notes being delivered on the date hereof are enforceable against the Company in
accordance with their terms, subject to bankruptcy, insolvency, fraudulent conveyance and
similar laws affecting creditors’ rights generally, and general principles of equity
(regardless of whether the application of such principles is considered in a proceeding in
equity or at law).




          3. The issuance, sale and delivery of the Notes under the circumstances contemplated by
the Note Purchase Agreements do not, under existing law, require the registration of the
Notes under the Securities Act of 1933, as amended, or the qualification of an indenture
under the Trust Indenture Act of 1939, as amended.



          The opinion of Chapman and Cutler shall also state that the opinion of Louis L. Ainsworth,
Senior Vice President and General Counsel for the Company, is satisfactory in scope and form to
Chapman and Cutler and that, in their opinion, the Purchasers are justified in relying thereon.



          The opinion of Chapman and Cutler is limited to the laws of the State of Illinois and the
Federal laws of the United States.



With respect to matters of fact upon which such opinion is based, Chapman and Cutler may rely
on appropriate certificates of public officials and officers of the Company and upon
representations of the Company and the Purchasers delivered in connection with the issuance and
sale of the Notes.



Exhibit 4.4(b)

(to Note Purchase Agreement)