Document:

EX-10.2

 Exhibit 10.2 

EXECUTION VERSION 

RECEIVABLES SALE AGREEMENT 
 dated
as of July 24, 2018, 
 AMONG 

THE ORIGINATORS 
 NAMED HEREIN 

AND 
 PDC FUNDING COMPANY III, LLC

 as Buyer 

 RECEIVABLES SALE AGREEMENT 

 

 TABLE OF CONTENTS 

 

							
	 	  	 	  	PAGE	 
	 ARTICLE I
	  	AMOUNTS AND TERMS OF THE PURCHASE	  	 	1	 
			
	 Section 1.1
	  	        Purchases of Receivables 	  	 	1	 
	 Section 1.2
	  	        Payment for the Purchase	  	 	3	 
	 Section 1.3
	  	        Purchase Price Credit Adjustments	  	 	3	 
	 Section 1.4
	  	        Payments and Computations, Etc	  	 	4	 
	 Section 1.5
	  	        Transfer of Records	  	 	4	 
	 Section 1.6
	  	        Characterization	  	 	5	 
			
	 ARTICLE II
	  	REPRESENTATIONS AND WARRANTIES	  	 	5	 
			
	 Section 2.1
	  	        Representations and Warranties of Originator	  	 	5	 
			
	 ARTICLE III
	  	CONDITIONS OF PURCHASE	  	 	9	 
			
	 Section 3.1
	  	        Conditions Precedent to Initial Purchase	  	 	9	 
			
	 ARTICLE IV
	  	COVENANTS	  	 	9	 
			
	 Section 4.1
	  	        Affirmative Covenants of the Originators	  	 	9	 
	 Section 4.2
	  	        Negative Covenants of the Originators	  	 	14	 
			
	 ARTICLE V
	  	TERMINATION EVENTS	  	 	15	 
			
	 Section 5.1
	  	        Purchase Termination Events	  	 	15	 
	 Section 5.2
	  	        Remedies	  	 	16	 
			
	 ARTICLE VI
	  	INDEMNIFICATION	  	 	16	 
			
	 Section 6.1
	  	        Indemnities by the Originators	  	 	16	 
	 Section 6.2
	  	        Other Costs and Expenses	  	 	19	 
			
	 ARTICLE VII
	  	MISCELLANEOUS	  	 	19	 
			
	 Section 7.1
	  	        Waivers and Amendments	  	 	19	 
	 Section 7.2
	  	        Notices	  	 	19	 
	 Section 7.3
	  	        Protection of Ownership Interests of Buyer	  	 	20	 
	 Section 7.4
	  	        Confidentiality	  	 	20	 
	 Section 7.5
	  	        Bankruptcy Petition	  	 	21	 
	 Section 7.6
	  	        Limitation of Liability	  	 	22	 
	 Section 7.7
	  	        CHOICE OF LAW	  	 	22	 
	 Section 7.8
	  	        CONSENT TO JURISDICTION	  	 	22	 
	 Section 7.9
	  	        WAIVER OF JURY TRIAL	  	 	22	 
	 Section 7.10
	  	        Integration; Binding Effect; Survival of Terms	  	 	23	 
	 Section 7.11
	  	        Counterparts; Severability; Section References	  	 	23	 
	 Section 7.12
	  	        Subordination	  	 	23	 

  

					
		 	-i-	 	

 Exhibits 
  

			
	 Exhibit I
	  	Definitions
		
	 Exhibit II
	  	Principal Place of Business; Location(s) of Records; Federal Employer Identification Number; Other Names
		
	 Exhibit III
	  	Form of Subordinated Note

  
 -ii- 

 RECEIVABLES SALE AGREEMENT 

THIS RECEIVABLES SALE AGREEMENT, dated as July 24, 2018, is by and among Patterson Dental Supply, Inc., a Minnesota corporation
(“PDSI”) as an originator (an “Originator” and together with each other originator from time to time party hereto, each an “Originator”) and PDC FUNDING COMPANY III, LLC, a
Minnesota limited liability company (“Buyer”). Unless defined elsewhere herein, capitalized terms used in this Agreement shall have the meanings assigned to such terms in Exhibit I hereto (or, if not defined in
Exhibit I hereto, the meaning assigned to such term in Exhibit I to the Purchase Agreement (as defined below)). 
 PRELIMINARY
STATEMENTS 
 Each Originator now owns, and from time to time hereafter will own, Receivables. Each Originator wishes to
sell and assign to Buyer, and Buyer wishes to purchase from such Originator, all of such Originator’s right, title and interest in and to its Receivables, together with the Related Security and Collections with respect thereto. 

Each Originator and Buyer intend the transactions contemplated hereby to be true sales of the Receivables from such Originator
to Buyer, providing Buyer with the full benefits of ownership of the Receivables, and neither of the Originators nor Buyer intends these transactions to be, or for any purpose to be characterized as, loans from Buyer to any Originator. 

Following each purchase of Receivables from the Originators, Buyer will sell Receivables and the associated Related Security
and Collections pursuant to that certain Receivables Purchase Agreement dated as of July 24, 2018 (as the same may from time to time hereafter be amended, supplemented, restated or otherwise modified, the “Purchase
Agreement”) among Buyer, as seller, the Servicer (as defined therein), the conduits from time to time party thereto as “Conduits”, the financial institutions from time to time party thereto as “Financial
Institutions”, the purchaser agents from time to time party thereto as “Purchaser Agents” and MUFG Bank, Ltd., as agent for the Conduits and Financial Institutions or any successor agent appointed pursuant to the terms of the Purchase
Agreement (in such capacity, together with any successors or assigns, the “Agent”). 
 AGREEMENT 

NOW, THEREFORE, in consideration of the foregoing premises and the mutual agreements herein contained and other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows: 
 
ARTICLE I 
 AMOUNTS AND TERMS OF THE PURCHASE 

Section 1.1    Purchases of Receivables. 

(a)    Agreement to Sell and Purchase. (i) Upon the terms and subject to the conditions set forth herein, each
Originator agrees to sell, assign, transfer, convey and 
  

 RECEIVABLES SALE AGREEMENT 

 

 
contribute, as applicable, to Buyer, without recourse (except to the extent expressly provided herein), and Buyer hereby agrees to purchases and accepts from such Originator, from time to
time on and after the Closing Date but before the Purchase Termination Date, all of such Originator’s right, title and interest in, to and under the Receivables and all Related Security and Collections with respect thereto, in each case,
whether now existing or hereafter arising or originating. 
 (ii)    Closing Date Purchases. Effective on the
Closing Date, each Originator hereby sells, assigns, transfers, conveys and contributes, if applicable, to Buyer, and Buyer hereby purchased and accepts from such Originator, all of such Originator’s right, title and interest in, to and under
(i) each Receivable that existed and was owing to such Originator at the Cut-Off Date, (ii) each Receivable generated by such Originator after the Cut-Off
Date, to and including the Closing Date, and (iii) all Related Security and Collections with respect thereto. 

(iii)    Subsequent Purchases. After the Closing Date, until the Purchase Termination Date, each Receivable and all
Related Security and Collections with respect thereto generated by each Originator shall be, and shall be deemed to have been, sold, assigned, transferred, conveyed and contributed, if applicable, by such Originator to the Buyer immediately (and
without further action by any Person) upon the creation of such Receivable. 
 (iv)    Purchase Price. Buyer
shall be obligated to pay the Purchase Price for the Receivables purchased hereunder in accordance with Section 1.2. 

(b)    It is the intention of the parties hereto that each Purchase of Receivables made hereunder shall constitute a sale,
which sale is absolute and irrevocable and provides Buyer with the full benefits of ownership of the Receivables. Except for the Purchase Price Credits owed pursuant to Section 1.3, each sale of Receivables hereunder is
made without recourse to any Originator; provided, however, that (i) each Originator shall be liable to Buyer for all representations, warranties, covenants and indemnities made by such Originator pursuant to the terms of
the Transaction Documents to which such Originator is a party, and (ii) such sale does not constitute and is not intended to result in an assumption by Buyer or any assignee thereof of any obligation of any Originator or any other Person
arising in connection with the Receivables, the related Contracts and/or other Related Security or any other obligations of any Originator. In view of the intention of the parties hereto that the Purchases of Receivables made hereunder shall
constitute sales of such Receivables rather than loans secured thereby, each Originator agrees that it will, on or prior to the date hereof and in accordance with Section 4.1(e)(ii), mark its master data processing
records relating to the Receivables with a legend acceptable to Buyer and to the Agent (as Buyer’s assignee), evidencing that Buyer has purchased such Receivables as provided in this Agreement and to note in its financial statements that its
Receivables have been sold to Buyer. Upon the request of Buyer or the Agent (as Buyer’s assignee), each Originator will execute and file such financing or continuation statements, or amendments thereto or assignments thereof, and such other
instruments or notices, as may be necessary or appropriate to perfect and maintain the perfection of Buyer’s ownership interest in the Receivables and the Related Security and Collections with respect thereto, or as Buyer or the Agent (as
Buyer’s assignee) may reasonably request. 

  

					
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 Section 1.2    Payment for the
Purchase. 
 (a)    The Purchase Price for any Purchase of Receivables hereunder shall be payable in full by Buyer
to the Originator of such Receivables in accordance with Section 1.2(b), and shall be paid to such Originator in the following manner: 

(i)    by delivery of immediately available funds, to the extent of funds made available to Buyer in connection with its
subsequent sale of an interest in such Receivables to the Purchasers under the Purchase Agreement or other cash on hand; 

(ii)    solely in the case of PDSI, to the extent elected by PDSI in its sole discretion, by Buyer accepting a
contribution of such Receivable to Buyer’s capital in an amount equal to such portion of such Purchase Price as elected by PDSI; and 

(iii)    the balance, by delivery of the proceeds of a subordinated revolving loan from such Originator to Buyer (a
“Subordinated Loan”) in an amount not to exceed the lesser of (A) the remaining unpaid portion of such Purchase Price and (B) the maximum Subordinated Loan that could be borrowed without rendering
Buyer’s Net Worth less than the Required Capital Amount. 
 Subject to the limitations set forth in Section 1.2(a)(iii), each
Originator irrevocably agrees to advance each Subordinated Loan requested by Buyer on or prior to the Purchase Termination Date. The Subordinated Loans shall be evidenced by, and shall be payable in accordance with the terms and provisions of the
Subordinated Notes and shall be payable solely from funds which Buyer is not required under the Purchase Agreement to set aside for the benefit of, or otherwise pay over to, the Purchasers. 

(b)    The Purchase Price for each Receivable purchased hereunder shall be due and payable in full by Buyer to the
Originator of such Receivable on the Purchase Date for such Receivable. In addition, increases or decreases in the amount owing under the Subordinated Notes made pursuant to Section 1.2(a) shall be deemed to have occurred
and shall be effective as of the related Purchase Date. 
 (c)    In addition to contributions of Receivables by PDSI to
Buyer hereunder, PDSI may also, at its option in its sole discretion, contribute cash to Buyer in return for an increase in the value of the equity interest in Buyer held by PDSI. PDSI shall evidence PDSI’s election to treat all or any portion
of the Receivables as a capital contribution by recording it as such on the books and records of Buyer as maintained by PDSI, and no further notice or acceptance of any such contribution shall be necessary. PDSI and Buyer shall each record on its
respective books and records any capital contribution made by PDSI to Buyer promptly following its occurrence. 
 
Section 1.3    Purchase Price Credit Adjustments. If on any day: 
 (a)    the
Outstanding Balance of a Receivable is: 
 (i)    either (x) reduced as a result of any defective or rejected or
returned goods or services, any discount or any adjustment or otherwise by the Originator of such Receivable (other than cash Collections on account of the Receivables) or (y) reduced as a result of converting such Receivable to an Excluded
Receivable, or 

  

					
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 RECEIVABLES SALE AGREEMENT 

 

 (ii)    reduced or canceled as a result of a setoff in respect of any
claim by any Person (whether such claim arises out of the same or a related transaction or an unrelated transaction), or 

(b)    any of the representations and warranties set forth in Article II are not true when made or deemed made with
respect to any Receivable, 
 then, in such event, Buyer shall be entitled to a credit (each, a “Purchase Price Credit”)
against the Purchase Price otherwise payable hereunder to the Originator of such Receivable equal to (i) in the case of clause (a) above, the amount of such reduction or cancellation and (ii) in the case of clause
(b) above, the Outstanding Balance of such Receivable. If such Purchase Price Credit exceeds the Purchase Price on any day, then such Originator shall pay the remaining amount of such Purchase Price Credit in cash immediately;
provided that if the Purchase Termination Date has not occurred, such Originator shall be allowed to deduct the remaining amount of such Purchase Price Credit from any indebtedness owed to it under such Originator’s Subordinated Note;
provided, further, that at any time when any Amortization Event has occurred and is continuing, such Originator shall pay the entire amount of such Purchase Price Credit in cash by deposit of immediately available funds into a
Collection Account. 
 Section 1.4    Payments and Computations, Etc. All
amounts to be paid or deposited by Buyer hereunder shall be paid or deposited in accordance with the terms hereof on the day when due in immediately available funds to the account of the applicable Originator as designated from time to time by such
Originator or as otherwise directed by such Originator. In the event that any payment owed by any Person hereunder becomes due on a day that is not a Business Day, then such payment shall be made on the next succeeding Business Day. If any Person
fails to pay any amount hereunder when due, such Person agrees to pay, on demand, the Default Fee in respect thereof until paid in full; provided, however, that such Default Fee shall not at any time exceed the maximum rate permitted
by applicable law. All computations of interest payable hereunder shall be made on the basis of a year of 360 days for the actual number of days (including the first but excluding the last day) elapsed. 

Section 1.5    Transfer of Records. 

(a)    In connection with each Purchase of Receivables hereunder, each Originator hereby sells, transfers, assigns and
otherwise conveys to Buyer all of such Originator’s right and title to and interest in the Records relating to all Receivables sold hereunder, without the need for any further documentation in connection with the Purchase. In connection with
such transfer, each Originator hereby grants to each of Buyer, the Agent and the Servicer an irrevocable, non-exclusive license to use, without royalty or payment of any kind, all software used by such
Originator to account for its Receivables, to the extent necessary to administer such Receivables, whether such software is owned by such Originator or is owned by others and used by such Originator under license agreements with respect thereto,
provided that should the consent of any licensor of such software be required for the grant of the license described herein, to be effective, such Originator hereby agrees that upon the request of Buyer

  

					
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 RECEIVABLES SALE AGREEMENT 

 

 
(or Buyer’s assignee), such Originator will use its reasonable efforts to obtain the consent of such third-party licensor. The license granted hereby shall be irrevocable until the
indefeasible payment in full of the Aggregate Unpaids, and shall terminate on the date this Agreement terminates in accordance with its terms. 

(b)    Each Originator (i) shall take such action requested by Buyer and/or the Agent (as Buyer’s assignee),
from time to time hereafter, that may be necessary or appropriate to ensure that Buyer and its assigns under the Purchase Agreement have an enforceable ownership interest in the Records relating to the Receivables purchased from such Originator
hereunder, and (ii) shall use its reasonable efforts to ensure that Buyer, the Agent and the Servicer each has an enforceable right (whether by license or sublicense or otherwise) to use all of the computer software used to account for the
Receivables and/or to recreate such Records. 

Section 1.6    Characterization. If, notwithstanding the intention of the
parties expressed in Section 1.1(b), any sale by any Originator to Buyer of Receivables hereunder shall be characterized as a secured loan and not a sale or such sale shall for any reason be ineffective or unenforceable,
then this Agreement shall be deemed to constitute a security agreement under the UCC and other applicable law. For this purpose and without being in derogation of the parties’ intention that the sale of Receivables hereunder shall constitute a
true sale thereof, each Originator hereby grants to Buyer a duly perfected security interest in all of such Originator’s right, title and interest in, to and under all Receivables now existing and hereafter arising, all Collections and Related
Security with respect thereto, each Lock-Box and Collection Account, all other rights and payments relating to such Originator’s Receivables and all proceeds of the foregoing to secure the prompt and
complete payment of a loan deemed to have been made in an amount equal to the aggregate Purchase Price of the Receivables together with all other obligations of such Originator hereunder, which security interest shall be prior to all other Adverse
Claims thereto. Buyer and its assigns shall have, in addition to the rights and remedies which they may have under this Agreement, all other rights and remedies provided to a secured creditor under the UCC and other applicable law, which rights and
remedies shall be cumulative. 
 ARTICLE II 

REPRESENTATIONS AND WARRANTIES 
 
Section 2.1    Representations and Warranties of Originator. Each Originator hereby represents and warrants to Buyer on the date hereof and on the date of each Purchase that: 

(a)    Corporate Existence and Power. Such Originator is a corporation, duly organized and validly existing and in
good standing under the laws of its state of incorporation. Each such Originator is duly qualified to do business and is in good standing as a foreign corporation, and has and holds all corporate power and all governmental licenses, authorizations,
consents and approvals required to carry on its business in each jurisdiction in which its business is conducted, except where the failure to be so qualified or to have and hold such governmental licenses, authorizations, consents and approvals
could not reasonably be expected to have a Material Adverse Effect. 
 (b)    Power and Authority; Due Authorization,
Execution and Delivery. The execution and delivery by such Originator of this Agreement and each other Transaction 

  

					
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Document to which it is a party, and the performance of its obligations hereunder and thereunder and such Originator’s use of the proceeds of each Purchase from such Originator made
hereunder, are within its corporate powers and authority, and have been duly authorized by all necessary corporate action on its part. This Agreement and each other Transaction Document to which such Originator is a party has been duly executed and
delivered by such Originator. 
 (c)    No Conflict. The execution and delivery by such Originator of this
Agreement and each other Transaction Document to which it is a party, and the performance of its obligations hereunder and thereunder do not contravene or violate (i) its certificate or articles of incorporation or by-laws (or equivalent organizational documents) or any shareholder agreements, voting trusts or similar arrangements applicable to any of its authorized shares, (ii) any law, rule or regulation applicable to
it, (iii) any restrictions under any agreement, contract or instrument to which it is a party or by which it or any of its property is bound, or (iv) any order, writ, judgment, award, injunction or decree binding on or affecting it or its
property, and do not result in the creation or imposition of any Adverse Claim on assets of such Originator or its Subsidiaries (except as created hereunder). No transaction contemplated hereby requires compliance with any bulk sales act or similar
law. 
 (d)    Governmental Authorization. Other than the filing of the financing statements required hereunder,
no authorization or approval or other action by, and no notice to or filing with, any governmental authority or regulatory body is required for the due execution and delivery by such Originator of this Agreement and each other Transaction Document
to which it is a party and the performance of its obligations hereunder and thereunder. 
 (e)    Actions, Suits.
There are no actions, suits or proceedings pending, or to the best of such Originator’s knowledge, threatened, against or affecting such Originator, or any of its properties, in or before any court, arbitrator or other body, that could
reasonably be expected to have a Material Adverse Effect. Such Originator is not in default with respect to any order of any court, arbitrator or governmental body. 

(f)    Binding Effect. This Agreement and each other Transaction Document to which such Originator is a party
constitute the legal, valid and binding obligations of such Originator enforceable against such Originator in accordance with their respective terms, except as such enforcement may be limited by applicable bankruptcy, insolvency, reorganization or
other similar laws relating to or limiting creditors’ rights generally and by general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law). 

(g)    Accuracy of Information. All information heretofore furnished by such Originator or any of its Affiliates to
Buyer (or its assigns) for purposes of or in connection with this Agreement, any of the other Transaction Documents or any transaction contemplated hereby or thereby is, and all such information hereafter furnished by such Originator or any of its
Affiliates to Buyer (or its assigns) will be, true and accurate in every material respect on the date such information is stated or certified and does not and will not contain any material misstatement of fact or omit to state a material fact or any
fact necessary to make the statements contained therein not materially misleading. 

  

					
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 (h)    Use of Proceeds. No proceeds of any Purchase hereunder
will be used (i) for a purpose that violates, or would be inconsistent with, any law, rule or regulation applicable to such Originator or (ii) to acquire any security in any transaction which is subject to Section 12,
13 or 14 of the Securities Exchange Act of 1934, as amended. 
 (i)    Good Title. Immediately prior
to each Purchase hereunder, such Originator (i) is the legal and beneficial owner of the Receivables to be sold by such Originator hereunder, and (ii) is the legal and beneficial owner of the Related Security with respect thereto or
possesses a valid and perfected security interest therein, in each case, free and clear of any Adverse Claim, except as created by the Transaction Documents. There have been duly filed all financing statements or other similar instruments or
documents necessary under the UCC (or any comparable law) of all appropriate jurisdictions to perfect such Originator’s ownership interest in each Receivable, its Collections and the Related Security. 

(j)    Perfection. This Agreement, together with the filing of the financing statements contemplated hereby, is
effective to transfer to Buyer (and Buyer shall acquire from such Originator) (i) legal and equitable title to, with the right to sell and encumber, each Receivable existing or hereafter arising, together with the Collections with respect
thereto, and (ii) all of such Originator’s right, title and interest in the Related Security associated with each Receivable, in each case, free and clear of any Adverse Claim, except as created by the Transaction Documents. There have
been duly filed all financing statements or other similar instruments or documents necessary under the UCC (or any comparable law) of all appropriate jurisdictions to perfect Buyer’s ownership interest in the Receivables, the Related Security
and the Collections. 
 (k)    Jurisdiction of Organization; Places of Business; etc. Exhibit II correctly
sets forth such Originator’s legal name, jurisdiction of organization, Federal Employer’s Identification Number and State Organizational Identification Number. Such Originator’s principal places of business anal chief executive office
and the offices where it keeps all of its Records are located at the address(es) listed on Exhibit II or such other locations of which Agent and Buyer have been notified in accordance with Section 4.2(a) in
jurisdictions where all action required by Section 4.1(g) or Section 7.3(a) has been taken and completed. Such Originator has not, within the period of one year prior to the date hereof,
(i) changed the location of its principal place of business or chief executive office or, except as set forth on Exhibit II, its organizational structure, (ii) changed its legal name, (iii) except as set
forth on Exhibit II, become a “new debtor” (within the meaning of Section 9-102(a)(56) of the UCC in effect in the State of Minnesota) or (iv) changed its
jurisdiction of organization. Such Originator is a “registered organization” (within the meaning of Section 9-102 of the UCC as in effect in the State of Minnesota). 

(l)    Collections. The conditions and requirements set forth in Section 4.1(i) have at
all times been satisfied and duly performed. The names and addresses of all Collection Banks, together with the account numbers of the Collection Accounts at each Collection Bank and the post office box number of each Lock-Box, are listed on Exhibit IV to the Purchase Agreement or have been provided to Buyer (and its assigns) in a written notice that complies with Section 4.2(b). Such Originator
has not granted any Person, other than Buyer (and its assigns) dominion and control or “control” (within the meaning of Section 9-104 of the UCC

  

					
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of all applicable jurisdictions) of any Lock-Box or Collection Account, or the right to take dominion and control or “control” (within the
meaning of Section 9-104 of the UCC of all applicable jurisdictions) of any such Lock-Box or Collection Account at a future time or upon the occurrence of a future
event. Such Originator has taken all steps necessary to ensure that Buyer (or its assigns) has “control” (within the meaning of Section 9-104 of the UCC of all applicable jurisdictions) over all
Collection Accounts. No funds other than the proceeds of Receivables are deposited to the Collection Accounts; provided, however, that to the extent that the proceeds of any Excluded Receivables are deposited to any Collection Account,
such proceeds have been removed from such Collection Account within two (2) Business Days after deposit therein. 

(m)    Material Adverse Effect. Since April 28, 2018, no event has occurred that would have a Material Adverse
Effect. 
 (n)    Names. In the past five (5) years, such Originator has not used any corporate or other
names, trade names or assumed names other than as listed on Exhibit II. 
 (o)    Ownership of Buyer. PDSI
owns 100% of the issued and outstanding membership units of Buyer, free and clear of any Adverse Claim. Such membership units are validly issued, fully paid and nonassessable, and there are no options, warrants or other rights to acquire securities
of Buyer. 
 (p)    Not an Investment Company. Such Originator is not and, after giving effect to the
transactions contemplated hereby, will not be required to be registered as, an “investment company” within the meaning of the Investment Company Act of 1940, as amended, or any successor statute. 

(q)    Compliance with Law. Such Originator has complied in all respects with all applicable laws, rules,
regulations, orders, writs, judgments, injunctions, decrees or awards to which it may be subject, except where the failure to so comply could not reasonably be expected to have a Material Adverse Effect. Each Receivable, together with any Contract
related thereto, does not contravene any laws, rules or regulations applicable thereto (including, without limitation, laws, rules and regulations relating to truth in lending, fair credit billing, fair credit reporting, equal credit
opportunity, fair debt collection practices and privacy), and no part of such Contract is in violation of any such law, rule or regulation. 

(r)    Compliance with Credit and Collection Policies. Such Originator has complied in all material respects with
such Originator’s Credit and Collection Policy with regard to each Receivable and any related Contract, and has not made any material change to such Credit and Collection Policy, except such material change as to which Buyer (or its assigns)
has been notified in accordance with Section 4.1(a)(vi) and receive Buyer’s and the Agent’s consent to the extent referenced therein. 

(s)    Payments to Originator. With respect to each Receivable transferred to Buyer by such Originator hereunder,
the Purchase Price received by such Originator constitutes reasonably equivalent value in consideration therefor and such transfer was not made for or on account of an antecedent debt. No transfer by such Originator of any Receivable hereunder is or
may be voidable under any section of the Federal Bankruptcy Code. 

  

					
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 (t)    Enforceability of Contracts. Each Contract with respect to
each Receivable sold by such Originator hereunder is effective to create, and has created, a legal, valid and binding obligation of the related Obligor to pay the Outstanding Balance of the Receivable created thereunder and any accrued interest
thereon, enforceable against the Obligor in accordance with its terms, except as such enforcement may be limited by applicable bankruptcy, insolvency, reorganization or other similar laws relating to or limiting creditors’ rights generally and
by general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law). 

(u)    Eligible Receivables. Each Receivable sold by such Originator hereunder and included at any time in the Net
Portfolio Balance as an Eligible Receivable was, on its Purchase Date, an Eligible Receivable. 

(v)    Accounting. The manner in which such Originator accounts for the transactions contemplated by this Agreement
does not jeopardize the characterization of the transactions contemplated herein as being true sales. 

(w)    Solvency. Such Originator is and, upon the making of each Purchase under this Agreement, will be, Solvent.

 ARTICLE III 

CONDITIONS OF PURCHASE 
 
Section 3.1    Conditions Precedent to Initial Purchase. The initial Purchase under this Agreement is subject to the conditions precedent that all of the conditions precedent to the initial Incremental Purchase
under the Purchase Agreement shall have been satisfied or waived in accordance with the terms thereof. 
 Notwithstanding the foregoing conditions
precedent, upon payment of the Purchase Price for any Receivable (whether by payment of cash, through an increase in the amounts outstanding under the Subordinated Notes and/or by offset of amounts owed to Buyer), title to such Receivable and the
Related Security and Collections with respect thereto shall vest in Buyer, whether or not the conditions precedent to Buyer’s obligation to pay for such Receivable were in fact satisfied. The failure of any Originator to satisfy any of the
foregoing conditions precedent, however, shall give rise to a right of Buyer to rescind the related Purchase and direct such Originator to pay to Buyer an amount equal to the Purchase Price that shall have been paid with respect to any
Receivables related thereto. 
 ARTICLE IV 

COVENANTS 
 
Section 4.1    Affirmative Covenants of the Originators. Until the date on which this Agreement terminates in accordance with its terms, each Originator hereby covenants as set forth below: 

  

					
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 (a)    Financial Reporting. Such Originator will maintain, for
itself and each of its Subsidiaries, a system of accounting established and administered in accordance with GAAP, and furnish to Buyer (and its assigns): 

(i)    Annual Reporting. Within 90 days after the close of each of its fiscal years, audited, unqualified
consolidated financial statements (which shall include balance sheets, statements of income and retained earnings and a statement of cash flows) for PDCo and its consolidated Subsidiaries for such fiscal year certified in a manner acceptable to
Buyer (or its assigns) by independent public accountants acceptable to Buyer (or its assigns). Delivery within the time period specified above of PDCo’s annual report on Form 10-K for such fiscal year
(together with PDCo’s annual report to shareholders, if any, prepared pursuant to Rule 14a-3 under the Securities Exchange Act of 1934, as amended) 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 4.1(a)(i), provided, that the report of the independent public accountants contained therein is
acceptable to the Agent. 
 (ii)    Compliance Certificate. Together with the financial statements required
hereunder, a compliance certificate in substantially the form of Exhibit V to the Purchase Agreement signed by such Originator’s Authorized Officer and dated the date of such annual financial statement. 

(iii)    Shareholder Statements and Reports. Promptly upon the furnishing thereof to the shareholders of PDCo or
such Originator, copies of all financial statements, reports and proxy statements so furnished. 
 (iv)    S.E.C.
Filings. Promptly upon the filing thereof, copies of all registration statements and annual, quarterly, monthly or other regular reports which PDCo or such Originator or any of their respective Subsidiaries files with the Securities and Exchange
Commission. 
 (v)    Copies of Notices. Promptly upon its receipt of any notice, request for consent, financial
statements, certification, report or other communication under or in connection with any Transaction Document from any Person other than Buyer, the Agent, any Purchaser Agent (so long as the Agent is copied on such communication) or any Purchaser
(so long as each other Purchaser is copied on such communication), copies of the same. 
 (vi)    Change in Credit
and Collection Policies. At least thirty (30) days prior to the effectiveness of any material change in or material amendment to such Originator’s Credit and Collection Policy, a copy of such Originator’s Credit and Collection
Policy then in effect and a notice (A) indicating such change or amendment, and (B) if such proposed change or amendment would be reasonably likely to adversely affect the collectibility of the Receivables of such Originator or decrease
the credit quality of any newly created Receivables of such Originator, requesting Buyer’s and the Agent’s consent thereto. 

(vii)    Other Information. Promptly, from time to time, such other information, documents, records or reports
relating to the Receivables or the condition or operations, financial or otherwise, of such Originator as Buyer (or its assigns) may from time to time reasonably request in order to protect the interests of Buyer (and its assigns) under or as
contemplated by this Agreement. 

  

					
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 (b)    Notices. Such Originator will notify the Buyer (or its
assigns) in writing of any of the following promptly upon learning of the occurrence thereof, describing the same and, if applicable, the steps being taken with respect thereto: 

(i)    Purchase Termination Events or Potential Purchase Termination Events. The occurrence of each Purchase
Termination Event and each Potential Purchase Termination Event, by a statement of an Authorized Officer of such Originator. 

(ii)    Judgment and Proceedings. (1) The entry of any judgment or decree against such Originator or any of
its Subsidiaries if the aggregate amount of all judgments and decrees then outstanding exceeds $10,000,000, and (2) the institution of any litigation, arbitration proceeding or governmental proceeding against such Originator that, individually
or in the aggregate, could reasonably be expected to have a Material Adverse Effect. 
 (iii)    Material Adverse
Effect. The occurrence of any event or condition that has had, or could reasonably be expected to have, a Material Adverse Effect. 

(iv)    Defaults Under Other Agreements. The occurrence of a material default or an event of default under any
other financing arrangement pursuant to which such Originator is a debtor or an obligor which has a principal amount of $5,000,000 or more in the aggregate. 

(c)    Compliance with Laws and Preservation of Corporate Existence. Such Originator will comply in all respects
with all applicable laws, rules, regulations, orders, writs, judgments, injunctions, decrees or awards to which it may be subject, except where the failure to so comply could not reasonably be expected to have a Material Adverse Effect. Such
Originator will preserve and maintain its corporate existence, rights, franchises and privileges in the jurisdiction of its incorporation, and qualify and remain qualified in good standing as a foreign corporation in each jurisdiction where its
business is conducted, except where the failure to so preserve and maintain any such rights, franchises or privileges or to so qualify could not reasonably be expected to have a Material Adverse Effect. 

(d)    Audits. Such Originator will furnish to Buyer (or its assigns) from time to time such information with
respect to it and the Receivables as Buyer (or its assigns) may reasonably request. Such Originator will, from time to time during regular business hours as requested by Buyer (or its assigns), upon reasonable notice and at the sole cost of such
Originator, permit Buyer (or its assigns) or their respective agents or representatives, (i) to examine and make copies of and abstracts from all Records in the possession or under the control of such Originator relating to the Receivables of
such Originator and the Related Security, including, without limitation, the related Contracts, and (ii) to visit the offices and properties of such Originator for the purpose of examining such materials described in clause (i) above, and
to discuss matters relating to such Originator’s financial condition or the Receivables of such Originator and the Related Security or such Originator’s performance under any of the Transaction Documents or such Originator’s
performance under the Contracts and, in each case, with any of the officers or employees of such Originator having knowledge of such matters. 

  

					
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 (e)    Keeping and Marking of Records and Books. 

(i)    Such Originator will maintain and implement administrative and operating procedures (including, without limitation,
an ability to recreate records evidencing Receivables in the event of the destruction of the originals thereof), and keep and maintain all documents, books, records and other information reasonably necessary or advisable for the collection of all
Receivables (including, without limitation, records adequate to permit the immediate identification of each new Receivable and all Collections of and adjustments to each existing Receivable) and the identification and segregation of Excluded
Receivables. Such Originator will give Buyer (or its assigns) notice of any material change in the administrative and operating procedures referred to in the previous sentence. 

(ii)    Such Originator will (A) on or prior to the date hereof, mark its master data processing records and other
books and records relating to the Receivables of such Originator with a legend, acceptable to Buyer (or its assigns), describing Buyer’s ownership interests in the Receivables and further describing the Asset Portfolio of the Agent (on behalf
of the Purchasers) under the Purchase Agreement and (B) upon the request of Buyer (or its assigns), (x) mark each Contract with a legend describing Buyer’s ownership interests in the Receivables of such Originator and further describing
the Asset Portfolio of the Agent (on behalf of the Purchasers) and (y) deliver to Buyer (or its assigns) all Contracts (including, without limitation, all multiple originals of any such Contract) relating to the Receivables. 

(f)    Compliance with Contracts and Credit and Collection Policies. Such Originator will timely and fully
(i) perform and comply with all provisions, covenants and other promises required to be observed by it under the Contracts related to the Receivables of such Originator and (ii) comply in all respects with the Credit and Collection Policy
in regard to each Receivable and the related Contract. 
 (g)    Ownership. Such Originator will take all
necessary action to establish and maintain, irrevocably in Buyer, (A) legal and equitable title to the Receivables of such Originator and the Collections and (B) all of such Originator’s right, title and interest in the Related
Security associated with the Receivables of such Originator, in each case, free and clear of any Adverse Claims other than Adverse Claims in favor of Buyer (and its assigns) (including, without limitation, the filing of all financing
statements or other similar instruments or documents necessary under the UCC (or any comparable law) of all appropriate jurisdictions to perfect Buyer’s interest in such Receivables, Related Security and Collections and such other action to
perfect, protect or more fully evidence the interest of Buyer as Buyer (or its assigns) may reasonably request). 

(h)    Purchasers’ Reliance. Each Originator acknowledges that the Agent, the Purchaser Agents and the
Purchasers are entering into the transactions contemplated by the Purchase Agreement in reliance upon Buyer’s identity as a legal entity that is separate 

  

					
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from such Originator and any Affiliates thereof. Therefore, from and after the date of execution and delivery of this Agreement, such Originator will take all reasonable steps including, without
limitation, all steps that Buyer or any assignee of Buyer may from time to time reasonably request to maintain Buyer’s identity as a separate legal entity and to make it manifest to third parties that Buyer is an entity with assets and
liabilities distinct from those of such Originator and any Affiliates thereof and not just a division of such Originator or any such Affiliate. Without limiting the generality of the foregoing and in addition to the other covenants set forth herein,
such Originator (i) will not hold itself out to third parties as liable for the debts of Buyer nor purport to own the Receivables and other assets acquired by Buyer, (ii) will take all other actions necessary on its part to ensure that
Buyer is at all times in compliance with the covenants set forth in Section 7.1(i) of the Purchase Agreement and (iii) will cause all tax liabilities arising in connection with the transactions contemplated herein or
otherwise to be allocated between such Originator and Buyer on an arm’s-length basis and in a manner consistent with the procedures set forth in U.S. Treasury Regulations §§1.1502- 33(d) and 1.1552-1. 
 (i)    Collections. Such Originator will cause (1) all ACH
Receipts to be deposited immediately to a Collection Account and all proceeds from all Lock-Boxes to be directly deposited by a Collection Bank into a Collection Account and (2) each Lock-Box and
Collection Account to be subject at all times to a Collection Account Agreement that is in full force and effect. In the event any payments relating to Receivables are remitted directly to such Originator or any Affiliate of such Originator, such
Originator will remit such payments (or will cause all such payments to be remitted) directly to a Collection Bank for deposit into a Collection Account within one (1) Business Day following receipt thereof and, at all times prior to such
remittance, such Originator will itself hold such payments or, if applicable, will cause such payments to be held, in trust for the exclusive benefit of Buyer and its assigns. Such Originator will transfer exclusive ownership, dominion and control
(including “control” within the meaning of Section 9-104 of the UCC of all applicable jurisdictions) of each Lock-Box and Collection Account to Buyer and
will not grant the right to take dominion and control or establish “control” (within the meaning of Section 9-104 of the UCC of all applicable jurisdictions) of any Lock-Box or Collection Account at a future time or upon the occurrence of a future event to any Person, except to Buyer (or its assigns) as contemplated by this Agreement and the Purchase Agreement. With respect to
each Collection Account, such Originator shall take all steps necessary to ensure that Agent has “control” (within the meaning of Section 9-104 of the UCC of all applicable jurisdictions) over
each such Collection Account. 
 (j)    Taxes. Such Originator will file all tax returns and reports required by
law to be filed by it and promptly pay all taxes and governmental charges at any time owing. Such Originator will pay when due any taxes payable in connection with the Receivables of such Originator, exclusive of taxes on or measured by income or
gross receipts of Buyer and its assigns. 
 (k)    Insurance. Such Originator will maintain in effect, or cause -
to be maintained in effect, at such Originator’s own expense, such casualty and liability insurance as such Originator deems appropriate in its good faith business judgment. Buyer and the Agent, for the benefit of the Purchasers, shall be named
as additional insureds with respect to all such liability insurance maintained by such Originator. Such Originator will pay, or cause to be paid, the premiums therefor and deliver to Buyer and the Agent evidence satisfactory to Buyer and the

  

					
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Agent of such insurance coverage. Copies of each policy shall be furnished to Buyer, the Agent and any Purchaser in certificated form upon Buyer’s, the Agent’s or such Purchaser’s
request. 
 (l)    Federal Assignment of Claims Act; Etc. If requested by the Buyer following the occurrence of
an Amortization Event, prepare and make any filings under the Federal Assignment of Claims Act (or any other similar Applicable Law) with respect to Government Receivables, that are necessary or desirable in order for the Buyer to enforce such
Government Receivable against the Obligor thereof. 
 Section 4.2    Negative
Covenants of the Originators. Until the date on which this Agreement terminates in accordance with its terms, each Originator hereby covenants that: 

(a)    Name Change, Jurisdiction of Organization, Offices and Books of Account. Such Originator will not change its
name, jurisdiction of organization, identity, corporate or other organizational structure (within the meaning of Sections 9-503 and/or 9-507 of the
UCC of all applicable jurisdictions) or relocate its chief executive office, principal place of business or any office where Records are kept unless it shall have: (i) given Buyer and the Agent at least forty-five (45) days’ prior
written notice thereof and (ii) delivered to Buyer and the Agent all financing statements, instruments, opinions and other documents requested by Buyer or the Agent in connection with such change or relocation, in form and substance acceptable
to the Agent. 
 (b)    Change in Payment Instructions to Obligors. Such Originator will not add or terminate any
bank as a Collection Bank, or make any change in the instructions to Obligors regarding payments to be made to any Lock-Box or Collection Account, unless Buyer (or its assigns) shall have received, at least
ten (10) days before the proposed effective date therefor, (i) written notice of such addition, termination or change and (ii) with respect to the addition of a Collection Bank or a Collection Account or
Lock-Box, an executed Collection Account Agreement with respect to the new Collection Account or Lock-Box; provided, however, that such Originator
may make changes in instructions to Obligors regarding payments if such new instructions require such Obligor to make payments to another existing Collection Account. 

(c)    Modifications to Contracts and Credit and Collection Policy. Such Originator will not make any change
to its Credit and Collection Policy that could adversely affect the collectibility of the Receivables of such Originator, or decrease the credit quality of any newly created Receivables of such Originator. Except as otherwise permitted in its
capacity as sub-Servicer pursuant to Article VIII of the Purchase Agreement, such Originator will not extend, amend or otherwise modify the terms of any Receivable or the Contract related thereto other
than in accordance with such Originator’s Credit and Collection Policy. 
 (d)    Sales, Liens. Such
Originator will not sell, assign (by operation of law or otherwise) or otherwise dispose of, or grant any option with respect to, or create or suffer to exist any Adverse Claim upon (including, without limitation, the filing of any financing
statement) or with respect to, any Receivable of such Originator or any Related Security or Collections, or upon or with respect to the Contract under which any Receivable of such Originator arises, or any
Lock-Box or Collection Account, or assign any right to receive income 

  

					
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with respect thereto (other than, in each case, the creation of the interests therein in favor of Buyer provided for herein), and such Originator will defend the right, title and interest of
Buyer in, to and under any of the foregoing property, against all claims of third parties claiming through or under such Originator. Such Originator shall not create or suffer to exist any mortgage, pledge, security interest, encumbrance, lien,
charge or other similar arrangement on any of its inventory the financing or lease of which gives rise to any Receivable of such Originator. 

(e)    [Reserved.] 

(f)    Accounting for Purchase. Such Originator will not, and will not permit any Affiliate to, account for or
treat (whether in financial statements or otherwise) the transactions contemplated hereby in any manner other than the sale of the Receivables of such Originator and the Related Security by such Originator to Buyer or in any other respect
account for or treat the transactions contemplated hereby in any manner other than as a sale of the Receivables of such Originator and the Related Security by such Originator to Buyer except to the extent that such transactions are not recognized on
account of consolidated financial reporting in accordance with GAAP. 
 (g)    Collections. Such Originator will
not deposit or otherwise credit, or cause or permit to be so deposited or credited, to any Collection Account, cash or cash proceeds other than Collections. Such Originator will not deposit or otherwise credit, or cause or permit to be so deposited
or credited, any Collections or proceeds thereof to any lock-box account or to any other account not covered by a Collection Account Agreement. 

ARTICLE V 

TERMINATION EVENTS 
 
Section 5.1    Purchase Termination Events. The occurrence of any one or more of the following events shall constitute a “Purchase Termination Event”: 

(a)    Originator shall fail (i) to make any payment or deposit required hereunder when due, or (ii) to perform
or observe any term, covenant or agreement hereunder (other than as referred to in clause (i) of this paragraph (a)) or any other Transaction Document to which it is a party and such failure shall continue for seven
(7) consecutive Business Days. 
 (b)    Any representation, warranty, certification or statement made by any
Originator in this Agreement, any other Transaction Document to which it is a party or in any other document delivered pursuant hereto or thereto shall prove to have been incorrect in any material respect when made or deemed made. 

(c)    Failure of any Originator to pay any Indebtedness when due in excess of $10,000,000; or the default by such
Originator in the performance of any term, provision or condition contained in any agreement under which any such Indebtedness was created or is governed, the effect of which is to cause, or to permit the holder or holders of such Indebtedness to
cause, such Indebtedness to become due prior to its stated maturity; or any such Indebtedness of such Originator shall be declared to be due and payable or required to be prepaid (other than by a regularly scheduled payment) prior to the date of
maturity thereof. 

  

					
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 (d)    (i) Any Originator or any of its Subsidiaries shall generally not
pay its debts as such debts become due or shall admit in writing its inability to pay its debts generally or shall make a general assignment for the benefit of creditors; or (ii) any proceeding shall be instituted by or against any Originator
or any of its Subsidiaries seeking to adjudicate it bankrupt or insolvent, or seeking liquidation, winding up, reorganization, arrangement, adjustment, protection, relief or composition of it or its debts under any law relating to bankruptcy,
insolvency or reorganization or relief of debtors, or seeking the entry of an order for relief or the appointment of a receiver, trustee or other similar official for it or any substantial part of its property and, solely in the case of a
proceeding instituted against (and not by) such Originator, such proceeding is not dismissed within 60 days; or (iii) any Originator or any of its Subsidiaries shall take any corporate action to authorize any of the actions set forth in the
foregoing clauses (i) or (ii) of this paragraph (d). 
 (e)    A Change of Control shall
occur. 
 (f)    One or more final judgments for the payment of money in an amount in excess of $10,000,000,
individually or in the aggregate, shall be entered against any Originator on claims not covered by insurance or as to which the insurance carrier has denied its responsibility, and such judgment shall continue unsatisfied and in effect for fifteen
(15) consecutive days without a stay of execution. 

Section 5.2    Remedies. Upon the occurrence and during the continuation of a
Purchase Termination Event, Buyer may, with the prior written consent of the Agent, take any of the following actions: (i) declare the Purchase Termination Date to have occurred, whereupon the Purchase Termination Date shall forthwith occur,
without demand, protest or further notice of any kind, all of which are hereby expressly waived by each Originator; provided, however, that upon the occurrence of a Purchase Termination Event described in
Section 5.1(d), or of an actual or deemed entry of an order for relief with respect to any Originator under the Federal Bankruptcy Code or under any other applicable bankruptcy, insolvency, arrangement, moratorium or
similar laws of any other jurisdiction (foreign or domestic), the Purchase Termination Date shall automatically occur, without demand, protest or any notice of any kind, all of which are hereby expressly waived by each Originator and (ii) to
the fullest extent permitted by applicable law, declare that the Default Fee shall accrue with respect to any amounts then due and owing by each Originator to Buyer. The aforementioned rights and remedies shall be without limitation and shall be in
addition to all other rights and remedies of Buyer and its assigns otherwise available under any other provision of this Agreement, by operation of law, at equity or otherwise, all of which are hereby expressly preserved, including, without
limitation, all rights and remedies provided under the UCC, all of which rights shall be cumulative. 

ARTICLE VI 

INDEMNIFICATION 
 
Section 6.1    Indemnities by the Originators. Without limiting any other rights that Buyer may have hereunder or under applicable law, each Originator hereby agrees to indemnify (and pay upon demand to) Buyer and
its assigns (and their respective Affiliates), officers, directors, agents and employees (each an “Indemnified Party”) from and against any 

  

					
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and all damages, losses, claims, taxes, liabilities, costs, expenses and for all other amounts payable, including reasonable attorneys’ fees (which attorneys may be employees of Buyer or any
such assign) and disbursements (all of the foregoing being collectively referred to as “Indemnified Amounts”) awarded against or incurred by any of them arising out of or as a result of this Agreement, or the
use of proceeds of any Purchase hereunder, or the acquisition, funding or ownership either directly or indirectly, by Buyer of an interest in the Receivables, or any Receivable or any Contract or Related Security, or any action or inaction of such
Originator, excluding, however: 
 (x) Indemnified Amounts to the extent a final judgment of a court of competent
jurisdiction holds that such Indemnified Amounts resulted from gross negligence or willful misconduct on the part of the Indemnified Party seeking indemnification; 

(y) Indemnified Amounts to the extent the same includes losses in respect of Receivables that are uncollectible on account of
the insolvency, bankruptcy or lack of creditworthiness of the related Obligor; or 
 (z) taxes imposed by the jurisdiction in
which such Indemnified Party’s principal executive office is located, on or measured by the overall net income of such Indemnified Party to the extent that the computation of such taxes is consistent with the characterization for income tax
purposes of the acquisition by the Purchasers of Asset Portfolio under the Purchase Agreement as a loan or loans by the Purchasers to Buyer secured by, among other things, the Receivables, the Related Security and the Collections; 

provided, however, that nothing contained in this sentence shall limit the liability of any Originator or limit the recourse of Buyer to any
Originator for amounts otherwise specifically provided to be paid by such Originator under the terms of this Agreement. Without limiting the generality of the foregoing indemnification, each Originator shall indemnify Buyer for Indemnified Amounts
(including, without limitation, losses in respect of uncollectible receivables, regardless of whether reimbursement therefor would constitute recourse to Originator) relating to or resulting from: 

(i)    any representation or warranty made by such Originator (or any officers of such Originator) under or
in connection with this Agreement, any other Transaction Document or any other information or report delivered by such Originator pursuant hereto or thereto that shall have been false or incorrect when made or deemed made; 

(ii)    the failure by such Originator, to comply with any applicable law, rule or regulation with respect
to any Receivable or Contract related thereto, or the nonconformity of any Receivable or Contract included therein with any such applicable law, rule or regulation or any failure of such Originator to keep or perform any of its obligations, express
or implied, with respect to any Contract; 

  

					
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 (iii)    any failure of such Originator to perform its
duties, covenants or other obligations in accordance with the provisions of this Agreement or any other Transaction Document; 

(iv)    any products liability, personal injury or damage, suit or other similar claim arising out of or in
connection with merchandise, insurance or services that are the subject of any Contract or any Receivable; 

(v)    any dispute, claim, offset or defense (other than discharge in bankruptcy of the Obligor) of the
Obligor to the payment of any Receivable of such Originator (including, without limitation, a defense based on such Receivable or the related Contract not being a legal, valid and binding obligation of such Obligor enforceable against it in
accordance with its terms), or any other claim resulting from the sale of the merchandise or service related to such Receivable or the furnishing or failure to furnish such merchandise or services; 

(vi)    the commingling of Collections of Receivables of such Originator at any time with other funds
(including collections of Excluded Receivables); 
 (vii)    any investigation, litigation or proceeding
related to or arising from this Agreement or any other Transaction Document, the transactions contemplated hereby, the use of the proceeds of any Purchase, the ownership of the Receivables of such Originator or any other investigation, litigation or
proceeding relating to such Originator in which any Indemnified Party becomes involved as a result of any of the transactions contemplated hereby; 

(viii)    any inability to litigate any claim against any Obligor in respect of any Receivable of such
Originator as a result of such Obligor being immune from civil and commercial law and suit on the grounds of sovereignty or otherwise from any legal action, suit or proceeding; 

(ix)    any Purchase Termination Event described in Section 5.1(d); 

(x)    any failure to vest and maintain vested in Buyer, or to transfer to Buyer, legal and equitable title
to, and ownership of, the Receivables of such Originator and the Collections, and all of such Originator’s right, title and interest in the Related Security associated with the Receivables of such Originator, in each case, free and clear of any
Adverse Claim; 
 (xi)    the failure to have filed, or any delay in filing, financing statements or
other similar instruments or documents under the UCC of any applicable jurisdiction or other applicable laws with respect to any Receivable of such Originator and the Related Security and Collections with respect thereto, and the proceeds of any
thereof, whether at the time of the Purchase or at any subsequent time; 

  

					
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 (xii)    any action or omission by such Originator which
reduces or impairs the rights of Buyer with respect to any Receivable of such Originator or the value of any such Receivable; 

(xiii)    any attempt by any Person to void the Purchase hereunder under statutory provisions or common law
or equitable action; and 
 (xiv)    the failure of any Receivable of such Originator included in the
calculation of the Net Portfolio Balance as an Eligible Receivable to be an Eligible Receivable at the time so included. 
 
Section 6.2    Other Costs and Expenses. Each Originator shall be jointly and severally liable for, and shall reimburse Buyer on demand for, all costs and out-of- pocket expenses in connection with the preparation, negotiation, arrangement, execution, delivery, enforcement and administration of this Agreement, the transactions contemplated hereby and the other
documents to be delivered hereunder. Each Originator shall reimburse Buyer on demand for any and all costs and expenses of Buyer, if any, including reasonable counsel fees and expenses, in connection with the enforcement of this Agreement and the
other documents delivered hereunder and in connection with any restructuring or workout of this Agreement or such documents, or the administration of this Agreement following a Purchase Termination Event. 

ARTICLE VII 

MISCELLANEOUS 
 
Section 7.1    Waivers and Amendments. 
 (a)    No failure or delay on the part of
Buyer (or its assigns) in exercising any power, right or remedy under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or remedy preclude any other further exercise thereof or the
exercise of any other power, right or remedy. The rights and remedies herein provided shall be cumulative and nonexclusive of any rights or remedies provided by law. Any waiver of this Agreement shall be effective only in the specific instance and
for the specific purpose for which given. 
 (b)    No provision of this Agreement may be amended, supplemented,
modified or waived except in writing signed by each Originator, the Buyer, the Agent and the Required Purchasers. 
 
Section 7.2    Notices. All communications and notices provided for hereunder shall be in writing (including bank wire, telecopy or electronic facsimile transmission or similar writing) and shall be given to the
other parties hereto at their respective addresses or telecopy numbers set forth on the signature pages hereof or at such other address or telecopy number as such Person may hereafter specify for the purpose of notice to each of the other parties
hereto. Each such notice or other communication shall be effective (i) if given by telecopy, upon the receipt thereof, (ii) if given by mail, three (3) Business Days after the time such communication is deposited in the mail with
first class postage prepaid or (iii) if given by any other means, when received at the address specified in this Section 7.2. 

  

					
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 Section 7.3    Protection of
Ownership Interests of Buyer. 
 (a)    Each Originator agrees that from time to time, at its expense, it will
promptly execute and deliver all instruments and documents, and take all actions, that may be necessary or desirable, or that Buyer (or its assigns) may request, to perfect, protect or more fully evidence the interest of Buyer hereunder and the
Asset Portfolio transferred pursuant to the Purchase Agreement, or to enable Buyer (or its assigns) to exercise and enforce their rights and remedies hereunder. Without limiting the foregoing, each Originator will, upon the request of Buyer (or its
assigns), file such financing or continuation statements, or amendments thereto or assignments thereof, and execute and file such other instruments and documents, that may be necessary or desirable, or that Buyer (or its assigns) may reasonably
request, to perfect, protect or evidence such interest of Buyer (or such Asset Portfolio). At any time, Buyer may, at the applicable Originator’s sole cost and expense, direct such Originator to notify the Obligors of Receivables of such
Originator of the ownership interests of Buyer under this Agreement and may also direct that payments of all amounts due or that become due under any or all Receivables be made directly to Buyer or its designee. 

(b)    If any Originator fails to perform any of its obligations hereunder, Buyer (or its assigns) may (but shall not be
required to) perform, or cause performance of, such obligations, and Buyer’s (or such assigns’) costs and expenses incurred in connection therewith shall be payable by the Originators as provided in Section 6.2.
Each Originator irrevocably authorizes Buyer (and its assigns) at any time and from time to time in the sole and absolute discretion of Buyer (or its assigns), and appoints Buyer (and its assigns) as its attorney(ies)-in-fact, to act on behalf of such Originator (i) to authorize and/or execute on behalf of such Originator as debtor and to file financing or continuation statements (and amendments thereto
and assignments thereof) necessary or desirable in Buyer’s (or its assigns’) sole and absolute discretion to perfect and to maintain the perfection and priority of the interest of Buyer in the Receivables and (ii) to file a carbon,
photographic or other reproduction of this Agreement or any financing statement with respect to the Receivables as a financing statement in such offices as Buyer (or its assigns) in their sole and absolute discretion deem necessary or desirable to
perfect and to maintain the perfection and priority of Buyer’s interests in the Receivables. This appointment is coupled with an interest and is irrevocable. The authorization by each Originator set forth in the second sentence of this
Section 7.3(b) is intended to meet all requirements for authorization by a debtor under Article 9 of any applicable enactment of the UCC, including without limitation,
Section 9-509 thereof. 

Section 7.4    Confidentiality. 

(a)    Each Originator shall maintain and shall cause each of its employees and officers to maintain the confidentiality
of this Agreement and the other confidential or proprietary information with respect to the Agent, each Purchaser Agent and each Purchaser and their respective businesses obtained by it or them in connection with the structuring, negotiating and
execution of the transactions contemplated herein, except that such Originator and its officers and employees may disclose such information to such Originator’s external accountants and attorneys and as required by any applicable law or order
of any judicial or administrative proceeding. 

  

					
		 	20	 	

 RECEIVABLES SALE AGREEMENT 

 

 (b)    Anything herein to the contrary notwithstanding, each Originator
hereby consents to the disclosure of any nonpublic information with respect to it (i) to Buyer, the Agent, the Purchaser Agents, the Financial Institutions or the Conduits by each other, (ii) by Buyer, the Agent, the Purchaser Agents or
the Purchasers to any prospective or actual assignee or participant of any of them and (iii) by the Agent, any Purchaser Agent or any Purchaser to any rating agency, Funding Source, Commercial Paper dealer or provider of a surety, guaranty or
credit or liquidity enhancement to any Conduit or any entity organized for the purpose of purchasing, or making loans secured by, financial assets for which MUFG Bank, Ltd. or any Purchaser Agent acts as the administrative agent and to any officers,
directors, employees, outside accountants and attorneys of any of the foregoing, provided each such Person is informed of, and agrees to maintain the confidential nature of, such information, In addition, the Purchasers, the Purchaser Agents and the
Agent may disclose any such nonpublic information pursuant to any law, rule, regulation, direction, request or order of any judicial, administrative or regulatory authority or proceedings (whether or not having the force or effect of law). 

(c)    Buyer shall maintain and shall cause each of its employees and officers to maintain the confidentiality of this
Agreement and the other confidential or proprietary information with respect to each Originator, the Obligors and their respective businesses obtained by it in connection with the due diligence evaluations, structuring, negotiating and execution of
the Transaction Documents, and the consummation of the transactions contemplated herein and any other activities of Buyer arising from or related to the transactions contemplated herein provided, however, that each of
Buyer and its employees and officers shall be permitted to disclose such confidential or proprietary information: (i) to the Agent, each Purchaser Agent and each Purchaser, (ii) to any prospective or actual assignee or participant of the
Agent, any Purchaser Agent or any Purchaser, (iii) to any rating agency, Funding Source or provider of a surety, guaranty or credit or liquidity enhancement to any Conduit, (iv) to any officers, directors, employees, outside accountants
and attorneys of any of the foregoing, and (v) to the extent required pursuant to any applicable law, rule, regulation, direction, request or order of any judicial, administrative or regulatory authority or proceedings with competent
jurisdiction (whether or not having the force or effect of law) so long as such required disclosure is made under seal to the extent permitted by applicable law or by rule of court or other applicable body. 

Section 7.5    Bankruptcy Petition. (a) Each Originator and Buyer each
hereby covenants and agrees that, prior to the date that is one year and one day after the payment in full of all outstanding senior indebtedness of any Funding Source that is a special purpose bankruptcy remote entity or of any Conduit or any
Financial Institution, it will not institute against, or join any other Person in instituting against, any such entity or the Conduit any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings or other similar proceeding
under the laws of the United States or any state of the United States. 
 (b)    Each Originator covenants and agrees
that, prior to the date that is one year and one day after the payment in full of all outstanding obligations of Buyer under the Purchase Agreement, it will not institute against, or join any other Person in instituting against, Buyer any
bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings or other similar proceeding under the laws of the United States or any state of the United States. 

  

					
		 	21	 	

 RECEIVABLES SALE AGREEMENT 

 

 Section 7.6    Limitation of
Liability. Except with respect to any claim arising out of the willful misconduct or gross negligence of any Conduit, the Agent, any Purchaser Agent, any Funding Source or any Financial Institution, no claim may be made by any Originator or any
other Person against the Conduit, the Agent or any Financial Institution or their respective Affiliates, directors, officers, employees, attorneys or agents for any special, indirect, consequential or punitive damages in respect of any claim for
breach of contract or any other theory of liability arising out of or related to the transactions contemplated by this Agreement, or any act, omission or event occurring in connection therewith; and each Originator hereby waives, releases, and
agrees not to sue upon any claim for any such damages, whether or not accrued and whether or not known or suspected to exist in its favor. 

Section 7.7    CHOICE OF LAW. THIS AGREEMENT SHALL BE GOVERNED AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK (INCLUDING SECTIONS 5-1401 AND 5-1402 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK, BUT WITHOUT REGARD TO
ANY OTHER CONFLICTS OF LAW PROVISIONS THEREOF, EXCEPT TO THE EXTENT THAT THE PERFECTION, THE EFFECT OF PERFECTION OR PRIORITY OF THE INTERESTS OF AGENT OR ANY PURCHASER IN THE ASSET PORTFOLIO IS GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE
STATE OF NEW YORK). 
 Section 7.8    CONSENT TO JURISDICTION. EACH
ORIGINATOR HEREBY IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR NEW YORK STATE COURT SITTING IN NEW YORK CITY, NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR ANY DOCUMENT EXECUTED BY SUCH ORIGINATOR PURSUANT TO THIS AGREEMENT AND EACH ORIGINATOR HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT AND
IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH COURT IS AN INCONVENIENT FORUM. NOTHING HEREIN SHALL LIMIT THE RIGHT OF BUYER (OR ITS ASSIGNS)
TO BRING PROCEEDINGS AGAINST ANY ORIGINATOR IN THE COURTS OF ANY OTHER JURISDICTION. ANY JUDICIAL PROCEEDING BY ANY ORIGINATOR AGAINST BUYER (OR ITS ASSIGNS) OR ANY AFFILIATE THEREOF INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY WAY ARISING
OUT OF, RELATED TO, OR CONNECTED WITH THIS AGREEMENT OR ANY DOCUMENT EXECUTED BY SUCH ORIGINATOR PURSUANT TO THIS AGREEMENT SHALL BE BROUGHT ONLY IN A COURT IN NEW YORK CITY, NEW YORK. 

Section 7.9    WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES TRIAL BY
JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH THIS AGREEMENT, ANY DOCUMENT EXECUTED BY ANY ORIGINATOR PURSUANT
TO THIS AGREEMENT OR THE RELATIONSHIP ESTABLISHED HEREUNDER OR THEREUNDER. 

  

					
		 	22	 	

 RECEIVABLES SALE AGREEMENT 

 

 Section 7.10    Integration;
Binding Effect; Survival of Terms. 
 (a)    This Agreement and each other Transaction Document contain the final
and complete integration of all prior expressions by the parties hereto with respect to the subject matter hereof and shall constitute the entire agreement among the parties hereto with respect to the subject matter hereof superseding all prior oral
or written understandings. 
 (b)    This Agreement shall be binding upon and inure to the benefit of each Originator
and Buyer, and their respective successors and permitted assigns (including any trustee in bankruptcy). No Originator may assign any of its rights and obligations hereunder or any interest herein without the prior written consent of Buyer. Buyer may
assign at any time its rights and obligations hereunder and interests herein to any other Person without the consent of any Originator. Without limiting the foregoing, each Originator acknowledges that Buyer, pursuant to the Purchase Agreement, may
assign to the Agent, for the benefit of the Purchasers, its rights, remedies, powers and privileges hereunder and that the Agent may further assign such rights, remedies, powers and privileges to the extent permitted in the Purchase Agreement. Each
Originator agrees that the Agent, as the assignee of Buyer, shall, subject to the terms of the Purchase Agreement, have the right to enforce this Agreement and to exercise directly all of Buyer’s rights and remedies under this Agreement
(including, without limitation, the right to give or withhold any consents or approvals of Buyer to be given or withheld hereunder) and each Originator agrees to cooperate fully with the Agent in the exercise of such rights and remedies. This
Agreement shall create and constitute the continuing obligations of the parties hereto in accordance with its terms and shall remain in full force and effect until terminated in accordance with its terms, provided, however, that the
rights and remedies with respect to (i) any breach of any representation and warranty made by the Originators pursuant to Article II; (ii) the indemnification and payment provisions of Article VI; and
(iii) Section 
7.5 shall be continuing and shall survive any termination of this Agreement. 
 Section 7.11 
   Counterparts; Severability; Section References. This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an
original and all of which when taken together shall constitute one and the same Agreement. Any provisions of this Agreement which are 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 not invalidate or render unenforceable such provision in any other jurisdiction. Unless
otherwise expressly indicated, all references herein to “Article,” “Section,” “Schedule” or “Exhibit” shall mean articles and sections of, and schedules and exhibits to, this Agreement. 

Section 7.12    Subordination. Each Originator shall have the right to receive, and Buyer
shall make, any and all payments relating to any indebtedness, obligation or claim such Originator may from time to time hold or otherwise have against Buyer or any assets or properties of Buyer, whether arising hereunder or otherwise existing,
provided that, after giving effect to any such payment, the aggregate Outstanding Balance of Receivables owned by Buyer 

  

					
		 	23	 	

 RECEIVABLES SALE AGREEMENT 

 

 
at such time exceeds the sum of (a) the Aggregate Unpaids under the Purchase Agreement, plus (b) the aggregate outstanding principal balance of the Subordinated Loans. Each Originator
hereby agrees that at any time during which the condition set forth in the proviso of the immediately preceding sentence shall not be satisfied, such Originator shall be subordinate in right of payment to the prior payment of any indebtedness or
obligation of Buyer owing to the Agent, any Purchaser Agent or any Purchaser under the Purchase Agreement. 
 (Signature Page Follows)

  

  

					
		 	24	 	

 RECEIVABLES SALE AGREEMENT 

 

 IN WITNESS WHEREOF. the parties hereto have caused this Agreement to he executed and
delivered by their duly authorized officers as of the date hereof. 
  

			
	PATTERSON DENTAL SUPPLY, INC.
		
	By:	 	/s/ Les B. Korsh
	Name: Les B. Korsh
	Title: Secretary

 
			
		
	Address:	 	 1031 Mendota Heights Road
 St. Paul, MN
55120

		
	Attn:	 	Chief Financial Officer
	Facsimile:	 	(651) 686-8984

  

			
	PDC FUNDING COMPANY III, LLC
		
	By:	 	/s/ Les B. Korsh
	Name: Les B. Korsh
	Title: Secretary

 
			
		
	Address:	 	 1031 Mendota Heights Road
 St. Paul, MN
55120

		
	Attn:	 	Chief Financial Officer
	Facsimile:	 	(651) 686-8984

  

					
		 	S-1	 	

 RECEIVABLES SALE AGREEMENT 

 

 Exhibit I 

Definitions 
 As used in
this Agreement and the Exhibits thereto, capitalized terms have the meanings set forth in this Exhibit I (such meanings to be equally applicable to the singular and plural forms thereof). If a capitalized term is used in this Agreement,
or any Exhibit thereto, and not otherwise defined therein or in this Exhibit I, such term shall have the meaning assigned thereto in Exhibit I to the Purchase Agreement. 

“Agent” has the meaning set forth in the Preliminary Statements to this Agreement. 

“Agreement” means this Receivables Sale Agreement, as the same may be - amended, restated, supplemented or
otherwise modified from time to time. 
 “Buyer” has the meaning set forth in the preamble to this Agreement.

 “Cut-Off Date” means June 23, 2018. 

“Default Fee” means a per annum rate of interest equal to the sum of (i) the Prime Rate, plus (ii) 2% per
annum. 
 “Dilutions” means, at any time, the aggregate amount of reductions or cancellations described in
Section 1.3(a) of this Agreement. 
 “Discount Factor” means a percentage
calculated to provide Buyer with a reasonable return on its investment in the Receivables of any Originator after taking account of (i) the time value of money based upon the anticipated dates of collection of the Receivables of such Originator
and the cost to Buyer of financing its investment in such Receivables during such period and (ii) the risk of nonpayment by the Obligors. The Originator of such Receivables and Buyer may agree from time to time to change the Discount Factor
based on changes in one or more of the items affecting the calculation thereof, provided that any change to the Discount Factor shall take effect as of the commencement of a Fiscal Month, shall apply only prospectively and shall not affect
the Purchase Price payment made prior to the Fiscal Month during which such Originator and Buyer agree to make such change. 

“Material Adverse Effect” means a material adverse effect on (i) the financial condition or operations of any
Originator and its Subsidiaries, (ii) the ability of any Originator to perform its obligations under the Agreement or any other Transaction Document, (iii) the legality, validity or enforceability of the Agreement or any other Transaction
Document, (iv) any Originator’s, Buyer’s, the Agent’s or any Purchaser’s interest in the Receivables generally or in any significant portion of the Receivables, the Related Security or Collections with respect thereto, or
(v) the collectibility of the Receivables generally or of any material portion of the Receivables. 
 “Net Worth”
means, as of any date of determination, the excess, if any, of (a) the aggregate Outstanding Balance of the Receivables at such time, over (b) the sum of (i) the Aggregate Capital outstanding at such time, plus
(ii) the aggregate outstanding principal balance of the Subordinated Loans (including any Subordinated Loan proposed to be made on the date of determination). 

  

					
		 		 	

 RECEIVABLES SALE AGREEMENT 

 

 “Originator” has the meaning set forth in the preamble to this
Agreement. 
 “Potential Purchase Termination Event” means an event which, with the passage of time or the giving of
notice, or both, would constitute a Purchase Termination Event. 
 “Purchase” means either (i) a purchase of
Receivables pursuant to Section 1.1(a) of this Agreement by Buyer from any Originator of such Receivables and the Related Security and Collections related thereto, together with all related rights in connection therewith or
(ii) a contribution of Receivables and the Related Security and Collections related thereto pursuant to Section 1.1(a) of this Agreement by PDSI to Buyer. 

“Purchase Agreement” has the meaning set forth in the Preliminary Statements to this Agreement. 

“Purchase Date” means (i) the Closing Date and (ii) each Business Day thereafter that any Receivable is
generated. 
 “Purchase Price” means, with respect to any Purchase from any Originator hereunder, the aggregate
price to be paid by Buyer to such Originator for such Purchase in accordance with Section 1.2 for the Receivables of such Originator, Collections and Related Security being sold to Buyer, which price shall equal on any date
(i) the product of (x) the Outstanding Balance of such Receivables on such date, multiplied by (y) one minus the Discount Factor in effect on such date, minus (ii) any Purchase Price Credits to be credited
against the Purchase Price otherwise payable to such Originator in accordance with Section 1.3. 

“Purchase Price Credit” has the meaning set forth in Section 1.3. 

“Purchase Termination Date” means the earliest to occur of (i) the Facility Termination Date, (ii) the
Business Day immediately prior to the occurrence of a Purchase Termination Event set forth in Section 5.1(d), (iii) the Business Day specified in a written notice from Buyer to Originator and the Agent following the
occurrence of any other Purchase Termination Event, which date shall be no earlier than 5 Business Days after the date of such written notice and (iv) the date which is 5 Business Days after Buyer’s and the Agent’s receipt of written
notice from Originator that it wishes to terminate the facility evidenced by this Agreement. 
 “Purchase Termination Event”
has the meaning set forth in Section 5.1 of the Agreement. 
 “Related Security”
means, with respect to any Receivable of any Originator: 
 (i)    all of such Originator’s
interest in the Related Goods or other inventory and goods (including returned or repossessed inventory or goods), if any, the sale, licensing or financing of which by such Originator gave rise to such Receivable, and all insurance contracts with
respect thereto, 

  

					
		 	Exh. I-2	 	

 RECEIVABLES SALE AGREEMENT 

 

 (ii)    all other security interests or liens and
property subject thereto from time to time, if any, purporting to secure payment of such Receivable, whether pursuant to the Contract related to such Receivable or otherwise, together with all financing statements and security agreements describing
any collateral securing such Receivable, 
 (iii)    all guaranties, letters of credit, insurance,
“supporting obligations” (within the meaning of Section 9-102(a) of the UCC of all applicable jurisdictions) and other agreements or arrangements of whatever character from time to time
supporting or securing payment of such Receivable whether pursuant to the Contract related to such Receivable or otherwise, 

(iv)    all service contracts and other contracts and agreements associated with such Receivable, 

(v)    all Records related to such Receivable, 

(vi)    all of such Originator’s right, title and interest in each
Lock-Box and each Collection Account, and any and all agreements related thereto, 

(vii)    all Collections in respect thereof, and 

(viii)    all proceeds of such Receivable and any of the foregoing. 

“Required Capital Amount” means, as of any date of determination, an amount equal to the product of (i) greater
of (a) the Loss Reserve Floor and (b) the Dynamic Loss Reserve Percentage, multiplied by (ii) the Net Portfolio Balance as of such date. 

“Solvent” means, with respect to any Person and as of any particular date, (i) the present fair market value (or
present fair saleable value) of the assets of such Person is not less than the total amount required to pay the probable liabilities of such Person on its total existing debts and liabilities (including contingent liabilities) as they become
absolute and matured, (ii) such Person is able to realize upon its assets and pay its debts and other liabilities, contingent obligations and commitments as they mature and become due in the normal course of business, (iii) such Person is
not incurring debts or liabilities beyond its ability to pay such debts and liabilities as they mature and (iv) such Person is not engaged in any business or transaction, and is not about to engage in any business or transaction, for which its
property would constitute unreasonably small capital after giving due consideration to the prevailing practice in the industry in which such Person is engaged. 

“Subordinated Loan” has the meaning set forth in Section 1.2(a). 

“Subordinated Note” means a promissory note in substantially the form of Exhibit III hereto as more fully
described in Section 1.2, as the same may be amended, restated, supplemented or otherwise modified from time to time. 

  

					
		 	
Exh. I-3	 	

 RECEIVABLES SALE AGREEMENT 

 

  

					
		 	
Exh. I-4	 	

 RECEIVABLES SALE AGREEMENT 

 

 EXHIBIT II 

Places of Business of the Originators; 

Locations of Records; 

Federal Employer Identification Number(s) 

On file with Agent. 

  

					
		 	Exh. II-1	 	

 RECEIVABLES SALE AGREEMENT 

 

 EXHIBIT III 

Form of Subordinated Note 

SUBORDINATED NOTE 
 [__], 20[__]

 1.    Note. FOR VALUE RECEIVED, the undersigned, PDC Funding Company III, LLC, a Minnesota limited liability
company (“SPV”), hereby unconditionally promises to pay to the order of [name of Originator] (“Originator”), in lawful money of the United States of America and in immediately available funds, on the
date following the Purchase Termination Date that is one year and one day after the date on which (i) the Outstanding Balance of all Receivables sold under the “Sale Agreement” referred to below has been reduced to zero and
(ii) Originator has paid to SPV all indemnities, adjustments and other amounts which may be owed thereunder in connection with the Purchase (the “Collection Date”), the aggregate unpaid principal sum outstanding of all
“Subordinated Loans” made from time to time by Originator to SPV pursuant to and in accordance with the terms of that certain Receivables Sale Agreement dated as of July 24, 2018, among Originator, the other originators named therein
and SPV (as amended, restated, supplemented or otherwise modified from time to time, the “Sale Agreement”). Reference to Section 1.2 of the Sale Agreement is hereby made for a statement of the terms
and conditions under which the loans evidenced hereby have been and will be made. All terms which are capitalized and used herein and which are not otherwise specifically defined herein shall have the meanings ascribed to such terms in the Sale
Agreement. 
 2.    Interest. Subject to the Subordination Provisions (as defined below), SPV further promises to
pay interest on the outstanding unpaid principal amount hereof from the date hereof until payment in full hereof at a rate equal to the Prime Rate; provided, however, that if SPV shall default in the payment of any principal hereof,
SPV promises to pay, on demand, interest at the rate of the Prime Rate plus 2.00% per annum on any such unpaid amounts, from the date such payment is due to the date of actual payment (including the date of any prepayment). Interest shall be payable
on the first Business Day of each month in arrears; provided, however, that SPV may elect on the date any interest payment is due hereunder to defer such payment and upon such election the amount of interest due but unpaid on such date
shall constitute principal under this Subordinated Note. The outstanding principal of any loan made under this Subordinated Note shall be due and payable on the Collection Date and may be repaid or prepaid at any time without premium or penalty.

 3.    Principal Payments. Subject to the Subordination Provisions, Originator is authorized and directed by
SPV to enter on the grid attached hereto, or, at its option, in its books and records, the date and amount of each loan made by it which is evidenced by this Subordinated Note and the amount of each payment of principal made by SPV, and absent
manifest error, such entries shall constitute prima facie evidence of the accuracy of the information so entered; provided that neither the failure of Originator to make any such entry or any error therein shall expand, limit or affect the
obligations of SPV hereunder. 

  

					
		 	Exh. III-1	 	

 RECEIVABLES SALE AGREEMENT 

 

 4.    Subordination Provisions. 

(i)    The subordination provisions contained in this Section 4 (the “Subordination
Provisions”) are for the direct benefit of, and may be enforced by, the Agent and the Purchasers and/or any of their respective assignees (collectively, the “Senior Claimants”) under the Purchase Agreement.
Subject to the Subordination Provisions, Originator shall have the right to receive, and SPV shall make, any and all payments relating to the loans made under this Subordinated Note and each other Subordinated Note (the “Junior
Claims”). Originator hereby agrees that Originator shall be subordinate in right of payment to the prior payment of any indebtedness or obligation of SPV owing to the Agent or any Purchaser under that certain Receivables Purchase
Agreement dated as of July 24, 2018, by and among SPV, the Servicer (as defined therein), various “Purchasers” from time to time party thereto, and MUFG Bank, Ltd., as the “Agent” (as amended, restated, supplemented or
otherwise modified from time to time, the “Purchase Agreement”). Until the date on which all “Capital” outstanding under the Purchase Agreement has been repaid in full and all other obligations of SPV and/or
the Servicer thereunder and under the “Fee Letter” referenced therein (all such obligations, collectively, the “Senior Claim”) have been indefeasibly paid and satisfied in full, Originator shall not institute
against SPV any proceeding of the type described in Section 5.1(d) of the Sale Agreement unless and until the Collection Date has occurred. Should any payment, distribution or security or proceeds or other distribution of
any kind or character from SPV or from any other source whatsoever, in respect of Junior Claims, other than as expressly permitted by the terms of this Subordinated Note, be received by Originator in violation of this Section 4, Originator
agrees that such payment or other distribution shall be received in trust for the Senior Claimants and shall immediately be turned over in cash by the Originator to Agent (for the benefit of the Senior Claimants) until the Senior Claim have
been indefeasibly paid and performed in full and in cash. All payments and distributions received by Agent in respect of this Subordinated Note, to the extent received in or converted into cash, may be applied by Agent (for the benefit of the
Senior Claimants) first, to the payment of any and all expenses (including, without limitation, attorneys’ fees and other legal expenses) paid or incurred by Agent or the Senior Claimants in enforcing these Subordination Provisions, or
in endeavoring to collect or realize upon the Junior Claims, and second, any balance thereof shall, solely as between any originator (including Originator hereunder) and the Senior Claimants, be applied by Agent toward the payment of the
Senior Claim in a manner determined by Agent to be in accordance with the Receivables Purchase Agreement; but as between SPV and its creditors, no such payments or distributions of any kind or character shall be deemed to be payments or
distributions in respect of the Senior Interests. 
 (ii)    SPV covenants and agrees, and Originator, by its
acceptance of this Subordinated Note, likewise covenants and agrees, in each case, for the benefit of the other and for the benefit of the Senior Claimants as follows: 

(A)    No payment or other distribution of SPV’s assets of any kind or character, whether in cash, securities, or
other rights or property, shall be made on account of this Subordinated Note, except to the extent such payment or other distribution is (i) permitted under the Purchase Agreement, (ii) made at a time when no Amortization Event has
occurred and is continuing and (iii) made at a time on which the Net Portfolio Balance exceeds the sum of (x) the Aggregate Capital at such time, plus (y) the Required Reserves at such time. 

  

					
		 	Exh. III-2	 	

 RECEIVABLES SALE AGREEMENT 

 

 (B)    These Subordination Provisions are intended solely for the
purpose of defining the relative rights of Originator, on the one hand, and the Senior Claimants, on the other hand. Nothing contained in the Subordination Provisions or elsewhere in this Subordinated Note is intended to or shall impair, as
between SPV, its creditors (other than the Senior Claimants) and Originator, SPV’s obligation, which is unconditional and absolute, to pay the Junior Claims as and when the same shall become due in accordance with the terms hereof and of the
Sale Agreement or to affect the relative rights of Originator and creditors of SPV (other than the Senior Claimants). 

(C)    Originator shall not, until the Senior Claim has been indefeasibly paid and performed in full and in cash:
(i) cancel, waive, forgive, transfer or assign, or commence legal proceedings to enforce or collect, or subordinate to any obligation of SPV, howsoever created, arising or evidenced, whether direct or indirect, absolute or contingent, or now or
hereafter existing, or due or to become due, other than the Senior Interests, the Junior Claims, or any rights in respect thereof or (ii) convert the Junior Claims into an equity interest in SPV, unless, in the case of each of clauses
(i) and (ii) above, Originator shall have received the prior written consent of Agent in each case. 

(D)    Originator shall not, without the advance written consent of Agent, institute against, or join any other Person in
instituting against, SPV any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings or other similar proceeding under the laws of the United States or any state of the United States until at least one year and one day shall
have passed since the Senior Claim shall have been indefeasibly paid and performed in full and in cash. 
 (E)    If, at
any time, any payment (in whole or in part) made with respect to any Senior Interest is rescinded or must be restored or returned by a Senior Interest Holder (whether in connection with any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings or otherwise), these Subordination Provisions shall continue to be effective or shall be reinstated, as the case may be, as though such payment had not been made. 

(F)    Each of the Senior Claimants may, from time to time, at its sole discretion, without notice or demand to
Originator, and without waiving any of its rights under these Subordination Provisions, take any or all of the following actions: (i) retain or obtain an interest in any property securing any of the Senior Claim pursuant to, and to the extent
set forth in, the Transaction Documents; (ii) retain or obtain the primary or secondary obligations of any other obligor or obligors with respect to any of the Senior Interests; (iii) extend or renew for one or more periods (whether or not
longer than the original period), alter or exchange any of the Senior Interests, or release or compromise any obligation of any nature with respect to any of the Senior Claim in accordance with the Transaction Documents; (iv) amend, supplement,
or otherwise modify any Transaction Document in accordance with the terms thereof; and (v) release its security interest in, or surrender, release or permit any substitution or exchange for all or any part of any rights or property securing any
of the Senior Interests, or extend or renew for one or more periods (whether or not longer than the original period), or release, compromise, alter or exchange any obligations of any nature of any obligor with respect to any such rights or property.

  

					
		 	Exh. III-3	 	

 RECEIVABLES SALE AGREEMENT 

 

 (G)    Originator agrees that its Junior Claims hereunder shall be
pari passu with all other Junior Claims. 
 (H)    These Subordination Provisions constitute a continuing offer
from SPV to all Persons who become the holders of, or who continue to hold, Senior Interests; and these Subordination Provisions are made for the benefit of the Senior Claimants, and Agent may proceed to enforce such provisions on behalf of each of
such Persons. 
 5.    Bankruptcy; Insolvency. Upon the occurrence of any proceeding of the type described in
Section 5.1(d) of the Sale Agreement involving SPV as debtor, then and in any such event the Senior Claimants shall first have been indefeasibly paid and performed in full and in cash for all amounts due or to become due on
or in respect of the Aggregate Capital and the Senior Claim (including “CP Costs” and “Financial Institution Yield” as defined and as accruing under the Purchase Agreement after the commencement of any such proceeding, whether or
not any or all of such CP Costs or Yield is an allowable claim in any such proceeding) before Originator is entitled to receive payment with respect to the Junior Claim, and to that end, any payment or distribution of assets of SPV of any kind or
character, whether in cash, securities or other property, in any applicable insolvency proceeding, which would otherwise be payable to or deliverable upon or with respect to any or all indebtedness with respect to the Junior Claim, is hereby
assigned to and shall be paid or delivered by the Person making such payment or delivery (whether a trustee in bankruptcy, a receiver, custodian or liquidating trustee or otherwise) directly to the Agent for application to, or as collateral for the
payment of, the Senior Claim until such Senior Claim shall have been paid in full and satisfied. Originator hereby irrevocably agrees that Agent, in the name of Originator or otherwise, may demand, sue for, collect, receive and receipt for any and
all such payments or distributions, and file, prove and vote or consent in any such proceeding with respect to any and all claims of Originator relating to the Junior Claim, in each case until the Senior Claim shall have been indefeasibly paid and
performed in full and in cash. 
 6.    Amendments. This Subordinated Note shall not be amended or modified
except in accordance with Section 7.1 of the Sale Agreement. The terms of this Subordinated Note may not be amended or otherwise modified without the prior written consent of the Agent for the benefit of the Purchasers.

 7.    GOVERNING LAW. THIS SUBORDINATED NOTE SHALL BE GOVERNED AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK (INCLUDING SECTIONS 5-1401 AND 5-1402 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK, BUT WITHOUT REGARD TO ANY OTHER CONFLICTS OF
LAW PROVISIONS THEREOF). 
 8.    Waivers. All parties hereto, whether as makers, endorsers, or otherwise,
severally waive presentment for payment, demand, protest and notice of dishonor. Originator additionally expressly waives all notice of the acceptance by any Senior Claimant of the subordination and other provisions of this Subordinated Note and
expressly waives reliance by any Senior Claimant upon the subordination and other provisions herein provided. 
 (Remainder of Page
Intentionally Left Blank) 

  

					
		 	Exh. III-4	 	

 RECEIVABLES SALE AGREEMENT 

 

 9.    Assignment. This Subordinated Note may not be assigned,
pledged or otherwise transferred to any party other than Originator without the prior written consent of the Agent, and any such attempted transfer shall be void. 

[Signature Page follows] 

  

					
		 	Exh. III-5	 	

 RECEIVABLES SALE AGREEMENT 

 

 
			
	PDC FUNDING COMPANY III, LLC
		
	By:	 	 
	Title:

  

					
		 	Exh. III-6	 	

 RECEIVABLES SALE AGREEMENT 

 

 Schedule 

to 
 SUBORDINATED NOTE 

SUBORDINATED LOANS AND PAYMENTS OF PRINCIPAL 
  

																	
	 Date
	 	 	  	 Amount of

Subordinated

Loan
	 	 	  	 Amount of

Principal Paid
	 	 	  	 Unpaid

Principal

Balance
	 	 	  	 Notation

made by

	 	 		  	 	 		  	 	 		  	 	 		  	 
	 	 		  	 	 		  	 	 		  	 	 		  	 
	 	 		  	 	 		  	 	 		  	 	 		  	 
	 	 		  	 	 		  	 	 		  	 	 		  	 
	 	 		  	 	 		  	 	 		  	 	 		  	 
	 	 		  	 	 		  	 	 		  	 	 		  	 
	 	 		  	 	 		  	 	 		  	 	 		  	 
	 	 		  	 	 		  	 	 		  	 	 		  	 
	 	 		  	 	 		  	 	 		  	 	 		  	 
	 	 		  	 	 		  	 	 		  	 	 		  	 
	 	 		  	 	 		  	 	 		  	 	 		  	 
	 	 		  	 	 		  	 	 		  	 	 		  	 
	 	 		  	 	 		  	 	 		  	 	 		  	 
	 	 		  	 	 		  	 	 		  	 	 		  	 
	 	 		  	 	 		  	 	 		  	 	 		  	 
	 	 		  	 	 		  	 	 		  	 	 		  	 
	 	 		  	 	 		  	 	 		  	 	 		  	 
	 	 		  	 	 		  	 	 		  	 	 		  	 
	 	 		  	 	 		  	 	 		  	 	 		  	 
	 	 		  	 	 		  	 	 		  	 	 		  	 
	 	 		  	 	 		  	 	 		  	 	 		  	 
	 	 		  	 	 		  	 	 		  	 	 		  	 
	 	 		  	 	 		  	 	 		  	 	 		  	 
	 	 		  	 	 		  	 	 		  	 	 		  	 
	 	 		  	 	 		  	 	 		  	 	 		  	 

  

					
		 	Exh. III-7Exhibit

Exhibit 10.1

KEY EXECUTIVE EMPLOYMENT AND SEVERANCE AGREEMENT
THIS AGREEMENT, made and entered into as of the ___ day of ______________________, 201__, by and between Pentair plc, an Irish corporation limited by shares (hereinafter referred to as the “Company”), and _______________  (hereinafter referred to as the “Executive”).
W I T N E S S E T H
WHEREAS, the Executive is employed by the Company and/or a subsidiary of the Company (hereinafter referred to collectively as the “Employer”) in a key executive capacity and the Executive’s services are valuable to the conduct of the business of the Company;
WHEREAS, the Company desires to continue to attract and retain dedicated and skilled management employees in a period of industry consolidation, consistent with achieving the best possible value for its shareholders in any change in control of the Company;
WHEREAS, the Company recognizes that circumstances may arise in which a change in control of the Company occurs, through acquisition or otherwise, thereby causing a potential conflict of interest between the Company’s needs for the Executive to remain focused on the Company’s business and for the necessary continuity in management prior to and following a change in control, and the Executive’s reasonable personal concerns regarding future employment with the Employer and economic protection in the event of loss of employment as a consequence of a change in control;
WHEREAS, the Company and the Executive are desirous that any proposal for a change in control or acquisition of the Company will be considered by the Executive objectively and with reference only to the best interests of the Company and its shareholders; 
WHEREAS, the Executive will be in a better position to consider the Company’s best interests if the Executive is afforded reasonable economic security, as provided in this Agreement, against altered conditions of employment which could result from any such change in control or acquisition; 
WHEREAS, the Executive possesses intimate knowledge of the business and affairs of the Company and has acquired certain confidential information and data with respect to the Company; and
WHEREAS, the Company desires to insure, insofar as possible, that it will continue to have the benefit of the Executive’s services and to protect its confidential information and goodwill.
NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants and agreements hereinafter set forth, the parties hereto mutually covenant and agree as follows:

1.Definitions.
(a)    409A Affiliate.  The term “409A Affiliate” means each entity that is required to be included in the Company’s controlled group of corporations within the meaning of Section 414(b) of the Code, or that is under common control with the Company within the meaning of Section 414(c) of the Code; provided, however, that the phrase “at least 50 percent” shall be used in place of the phrase “at least 80 percent” each place it appears therein or in the regulations thereunder.
(b)    Accrued Benefits.  The Executive’s “Accrued Benefits” shall include the following amounts, payable as described herein: (i) all base salary for the time period ending with the Termination Date; (ii) reimbursement for any and all monies advanced in connection with the Executive’s employment for reasonable and necessary expenses incurred by the Executive on behalf of the Employer for the time period ending with the Termination Date; (iii) any and all other cash earned through the Termination Date and deferred at the election of the Executive or pursuant to any deferred compensation plan then in effect; (iv) notwithstanding any provision of any cash bonus or cash incentive compensation plan applicable to the Executive, but subject to any irrevocable deferral election then in effect, a lump sum amount, in cash, equal to the sum of (A) any cash bonus or cash incentive compensation that has been allocated or awarded to the Executive for a fiscal year or other measuring period under the plan that ends prior to the Termination Date but has not yet been paid (pursuant to Section 5(e) or otherwise) and (B) a pro rata portion to the Termination Date of the aggregate value of all contingent bonus or incentive compensation awards to the Executive for all uncompleted periods under the plan calculated as to each such award as if the Goals with respect to such bonus or incentive compensation award had been attained; and (v) all other payments and benefits to which the Executive (or in the event of the Executive’s death, the Executive’s surviving spouse or other beneficiary) may be entitled on the Termination Date as compensatory fringe benefits or under the terms of any benefit plan of the Employer, excluding severance payments under any Employer severance policy, practice or agreement in effect on the Termination Date.  Payment of Accrued Benefits shall be made promptly in accordance with the Company’s prevailing practice with respect to clauses (i) and (ii) or, with respect to clauses (iii), (iv) and (v), pursuant to the terms of the benefit plan or practice establishing such benefits; provided that payments pursuant to clause (iv)(B) shall be paid on the first day of the seventh month following the month in which the Executive’s Separation from Service occurs to the extent necessary for compliance with the requirements of Code Section 409A(a)(2)(B) relating to specified employees or, to the extent not so required, within ninety (90) days of the Executive’s Separation from Service.
(c)    Act.  The term “Act” means the Securities Exchange Act of 1934, as amended.
(d)    Affiliate and Associate.  The terms “Affiliate” and “Associate” shall have the respective meanings ascribed to such terms in Rule l2b-2 of the General Rules and Regulations under the Act.
(e)    Annual Cash Compensation.  The term “Annual Cash Compensation” shall mean the sum of (i) the Executive’s Annual Base Salary (determined as of the time of the Change in Control of the Company or, if higher, immediately prior to the date the Notice of Termination is given) plus (ii) an amount equal to the greatest of the Executive’s annual cash incentive target bonus for the fiscal year in which the Termination Date occurs, the annual cash incentive bonus the Executive received during the fiscal year prior to the Change in Control of the Company or the annual cash incentive bonus the Executive received with respect to the fiscal year prior to the Change 

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in Control of the Company (the aggregate amount set forth in clause (i) and clause (ii) shall hereafter be referred to as the “Annual Cash Compensation”).
(f)    Beneficial Owner.  A Person shall be deemed to be the “Beneficial Owner” of any securities:
(i)    which such Person or any of such Person’s Affiliates or Associates has the right to acquire (whether such right is exercisable immediately or only after the passage of time) pursuant to any agreement, arrangement or understanding, or upon the exercise of conversion rights, exchange rights, rights, warrants or options, or otherwise; provided, however, that a Person shall not be deemed the Beneficial Owner of, or to beneficially own, (A) securities tendered pursuant to a tender or exchange offer made by or on behalf of such Person or any of such Person’s Affiliates or Associates until such tendered securities are accepted for purchase, or (B) securities issuable upon exercise of any rights issued pursuant to the terms of any rights agreement of the Company, at any time before the issuance of such securities;
(ii)    which such Person or any of such Person’s Affiliates or Associates, directly or indirectly, has the right to vote or dispose of or has “beneficial ownership” of (as determined pursuant to Rule l3d-3 of the General Rules and Regulations under the Act), including pursuant to any agreement, arrangement or understanding; provided, however, that a Person shall not be deemed the Beneficial Owner of, or to beneficially own, any security under this clause (ii) as a result of an agreement, arrangement or understanding to vote such security if the agreement, arrangement or understanding: (A) arises solely from a revocable proxy or consent given to such Person in response to a public proxy or consent solicitation made pursuant to, and in accordance with, the applicable rules and regulations under the Act and (B) is not also then reportable on a Schedule l3D under the Act (or any comparable or successor report); or
(iii)    which are beneficially owned, directly or indirectly, by any other Person with which such Person or any of such Person’s Affiliates or Associates has any agreement, arrangement or understanding for the purpose of acquiring, holding, voting (except pursuant to a revocable proxy as described in clause (ii) above) or disposing of any voting securities of the Company.
(g)    Cause.  “Cause” for termination by the Employer of the Executive’s employment shall be limited to (i) the engaging by the Executive in intentional conduct that the Company establishes, by clear and convincing evidence, has caused demonstrable and serious financial injury to the Employer, as evidenced by a determination in a binding and final judgment, order or decree of a court or administrative agency of competent jurisdiction, in effect after exhaustion or lapse of all rights of appeal, in an action, suit or proceeding, whether civil, criminal, administrative or investigative; (ii) the Executive’s conviction of a felony (as evidenced by binding and final judgment, order or decree of a court of competent jurisdiction, in effect after exhaustion of all rights of appeal); or (iii) continuing willful and unreasonable refusal by the Executive to perform the Executive’s duties or responsibilities (unless significantly changed without the Executive’s consent).

3

(h)    Change in Control of the Company. A “Change in Control of the Company” shall be deemed to have occurred if an event set forth in any one of the following paragraphs shall have occurred:
(i)    any Person (other than (A) the Company or any of its subsidiaries, (B) a trustee or other fiduciary holding securities under any employee benefit plan of the Company or any of its subsidiaries, (C) an underwriter temporarily holding securities pursuant to an offering of such securities or (D) a corporation owned, directly or indirectly, by the shareholders of the Company in substantially the same proportions as their ownership of stock in the Company (“Excluded Persons”)) is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company (not including in the securities beneficially owned by such Person any securities acquired directly from the Company or its Affiliates after the date of this Agreement, pursuant to express authorization by the Board that refers to this exception) representing 30% or more of either the then outstanding shares of common stock of the Company or the combined voting power of the Company’s then outstanding voting securities; or
(ii)    the following individuals cease for any reason to constitute a majority of the number of directors of the Company then serving:  (A) individuals who, on the date of this Agreement constituted the Board and (B) any new director (other than a director whose initial assumption of office is in connection with an actual or threatened election contest, including but not limited to a consent solicitation, relating to the election of directors of the Company, as such terms are used in Rule 14a 11 of Regulation 14A under the Act) whose appointment or election by the Board or nomination for election by the Company’s shareholders was approved by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors on the date of this Agreement, or whose appointment, election or nomination for election was previously so approved (collectively the “Continuing Directors”); provided, however, that individuals who are appointed to the Board pursuant to or in accordance with the terms of an agreement relating to a merger, consolidation, or share exchange involving the Company (or any direct or indirect subsidiary of the Company) shall not be Continuing Directors for purposes of this Agreement until after such individuals are first nominated for election by a vote of at least two-thirds (2/3) of the then Continuing Directors and are thereafter elected as directors by the shareholders of the Company at a meeting of shareholders held following consummation of such merger, consolidation, or share exchange; and, provided further, that in the event the failure of any such persons appointed to the Board to be Continuing Directors results in a Change in Control of the Company, the subsequent qualification of such persons as Continuing Directors shall not alter the fact that a Change in Control of the Company occurred; or
(iii)    the consummation of a merger, consolidation or share exchange of the Company with any other corporation or the issuance of voting securities of the Company in connection with a merger, consolidation or share exchange of the Company (or any direct or indirect subsidiary of the Company), in each case, which requires approval of the shareholders of the Company, other than (A) a merger, consolidation or share exchange which would result in the voting securities of the Company outstanding immediately prior to such merger, consolidation or share exchange continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or any parent thereof) at least 50% of the combined voting power of the voting securities of the Company or such surviving entity or any parent thereof outstanding immediately after such merger, 

4

consolidation or share exchange, or (B) a merger, consolidation or share exchange effected to implement a recapitalization of the Company (or similar transaction) in which no Person (other than an Excluded Person) is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company (not including in the securities beneficially owned by such Person any securities acquired directly from the Company or its Affiliates after the date of this Agreement, pursuant to express authorization by the Board that refers to this exception) representing 30% or more of either the then outstanding shares of common stock of the Company or the combined voting power of the Company’s then outstanding voting securities; or
(iv)    the consummation of a plan of complete liquidation or dissolution of the Company or a sale or disposition by the Company of all or substantially all of the Company’s assets (in one transaction or a series of related transactions within any period of 24 consecutive months), in each case, which requires approval of the shareholders of the Company, other than a sale or disposition by the Company of all or substantially all of the Company’s assets to an entity at least 75% of the combined voting power of the voting securities of which are owned by Persons in substantially the same proportions as their ownership of the Company immediately prior to such sale.
Notwithstanding the foregoing, no “Change in Control of the Company” shall be deemed to have occurred if there is consummated any transaction or series of integrated transactions immediately following which the record holders of the common stock of the Company immediately prior to such transaction or series of transactions continue to own, directly or indirectly, in the same proportions as their ownership in the Company, an entity that owns all or substantially all of the assets or voting securities of the Company immediately following such transaction or series of transactions.
(i)    Code.  The term “Code” means the Internal Revenue Code of 1986, including any amendments thereto or successor tax codes thereof.  Any reference to a specific provision of the Code includes any regulations promulgated under such provision and any successor provision.
(j)    Covered Termination.  Subject to Section 2(b), the term “Covered Termination” means any Termination of Employment during the Employment Period where the Termination Date or the date Notice of Termination is delivered is any date prior to the end of the Employment Period.
(k)    Employment Period.  Subject to Section 2(b), the term “Employment Period” means a period commencing on the date of a Change in Control of the Company, and ending at 11:59 p.m. Central Time on the earlier of the second anniversary of such date or the Executive’s Normal Retirement Date.
(l)    Good Reason.  The Executive shall have “Good Reason” for termination of employment in the event of any of the following without the Executive’s prior written consent:
(i)    any breach of this Agreement by the Employer, including specifically any breach by the Employer of the agreements contained in Section 3, Section 4, Section 5, or Section 6, other than an isolated, insubstantial and inadvertent failure not occurring in bad faith that the Employer remedies within ten (10) days after receipt of written notice thereof given by the Executive;

5

(ii)    any reduction in the Executive’s (A) base salary, (B) percentage of base salary available as cash incentive compensation or bonus opportunity, (C) grant date fair value of annual equity-based awards or (D) other benefits, in each case relative to those most favorable to the Executive in effect at any time during the 180-day period prior to the Change in Control of the Company or, to the extent more favorable to the Executive, those in effect at any time during the Employment Period;
(iii)    the removal of the Executive from, or any failure to reelect or reappoint the Executive to, any of the positions held with the Employer on the date of the Change in Control of the Company or any other positions with the Employer to which the Executive shall thereafter be elected, appointed or assigned, except in the event that such removal or failure to reelect or reappoint relates to the termination by the Employer of the Executive’s employment for Cause or by reason of disability pursuant to Section 12;
(iv)    a good faith determination by the Executive that there has been a material adverse change in the Executive’s working conditions or status with the Employer relative to the most favorable working conditions or status in effect during the 180-day period prior to the Change in Control of the Company, or, to the extent more favorable to the Executive, those in effect at any time during the Employment Period, including but not limited to (A) a significant change in the nature or scope of the Executive’s authority, powers, functions, duties or responsibilities, or (B) a significant reduction in the level of support services, staff, secretarial and other assistance, office space and accoutrements, but in each case excluding for this purpose an isolated, insubstantial and inadvertent event not occurring in bad faith that the Employer remedies within ten (10) days after receipt of written notice thereof given by the Executive;
(v)    the relocation of the Executive’s principal place of employment to a location more than 50 miles from the Executive’s principal place of employment on the date 180 days prior to the Change in Control of the Company (or if the Executive has not been employed for 180 days prior to the Change in Control of the Company, as in effect on the date the Executive entered into this Agreement);
(vi)    the Employer requires the Executive to travel on Employer business 20% in excess of the average number of days per month the Executive was required to travel during the 180-day period prior to the Change in Control of the Company; or
(vii)    failure by the Company to obtain the Agreement referred to in Section 17(a) as provided therein.
(m)    Normal Retirement Date.  The term “Normal Retirement Date” means the Executive’s attainment of age sixty-five (65).
(n)    Person.  The term “Person” shall mean any individual, firm, partnership, corporation or other entity, including any successor (by merger or otherwise) of such entity, or a group of any of the foregoing acting in concert.
(o)    Separation from Service.  For purposes of this Agreement, the term “Separation from Service” means the Executive’s Termination of Employment, or if the Executive continues to provide services following his or her Termination of Employment, such later date as is 

6

considered a separation from service from the Company and its 409A Affiliates within the meaning of Code Section 409A.  Specifically, if the Executive continues to provide services to the Company or a 409A Affiliate in a capacity other than as an employee, such shift in status is not automatically a Separation from Service.
(p)    Termination of Employment.  For purposes of this Agreement, the Executive’s termination of employment shall be presumed to occur when the Company and Executive reasonably anticipate that no further services will be performed by the Executive for the Company and its 409A Affiliates or that the level of bona fide services the Executive will perform as an employee of the Company and its 409A Affiliates will permanently decrease to no more than 20% of the average level of bona fide services performed by the Executive (whether as an employee or independent contractor) for the Company and its 409A Affiliates over the immediately preceding 36-month period (or such lesser period of services).  Whether the Executive has experienced a Termination of Employment shall be determined by the Employer in good faith and consistent with Section 409A of the Code.  Notwithstanding the foregoing, if the Executive takes a leave of absence for purposes of military leave, sick leave or other bona fide reason, the Executive will not be deemed to have incurred a Separation from Service for the first 6 months of the leave of absence, or if longer, for so long as the Executive’s right to reemployment is provided either by statute or by contract, including this Agreement; provided that if the leave of absence is due to a medically determinable physical or mental impairment that can be expected to result in death or last for a continuous period of not less than six months, where such impairment causes the Executive to be unable to perform the duties of his or her position of employment or any substantially similar position of employment, the leave may be extended by the Employer for up to 29 months without causing a Termination of Employment.
(q)    Termination Date.  Except as otherwise provided in Section 2(b), Section 10(b), and Section 17(a), the term “Termination Date” means (i) if the Executive’s Termination of Employment is by the Executive’s death, the date of death; (ii) if the Executive’s Termination of Employment is by reason of voluntary early retirement, as agreed in writing by the Employer and the Executive, the date of such early retirement which is set forth in such written agreement; (iii) if the Executive’s Termination of Employment is, for purposes of this Agreement, by reason of disability pursuant to Section 12, the earlier of thirty (30) days after the Notice of Termination is given or one day prior to the end of the Employment Period; (iv) if the Executive’s Termination of Employment is by the Executive voluntarily (other than for Good Reason), the date the Notice of Termination is given; and (v) if the Executive’s Termination of Employment is by the Employer (other than by reason of disability pursuant to Section 12) or by the Executive for Good Reason, the earlier of thirty (30) days after the Notice of Termination is given or one day prior to the end of the Employment Period.  Notwithstanding the foregoing,
(A)    If termination is for Cause pursuant to Section 1(g)(iii) and if the Executive has cured the conduct constituting such Cause as described by the Employer in its Notice of Termination within such 30-day or shorter period, then the Executive’s employment hereunder shall continue as if the Employer had not delivered its Notice of Termination.
(B)    If the Executive shall in good faith give a Notice of Termination for Good Reason and the Employer notifies the Executive that a dispute exists concerning the termination within the 15-day period following receipt thereof, then the Executive may elect to continue his or her employment during such dispute and 

7

the Termination Date shall be determined under this paragraph.  If the Executive so elects and it is thereafter determined that Good Reason did exist, the Termination Date shall be the earliest of (1) the date on which the dispute is finally determined, either (x) by mutual written agreement of the parties or (y) in accordance with Section 22, (2) the date of the Executive’s death or (3) one day prior to the end of the Employment Period.  If the Executive so elects and it is thereafter determined that Good Reason did not exist, then the employment of the Executive hereunder shall continue after such determination as if the Executive had not delivered the Notice of Termination asserting Good Reason and there shall be no Termination Date arising out of such Notice.  In either case, this Agreement continues, until the Termination Date, if any, as if the Executive had not delivered the Notice of Termination except that, if it is finally determined that Good Reason did exist, the Executive shall in no case be denied the benefits described in Section 9 (including a Termination Payment) based on events occurring after the Executive delivered his Notice of Termination.
(C)    Except as provided in Section 1(q)(B), if the party receiving the Notice of Termination notifies the other party that a dispute exists concerning the termination within the appropriate period following receipt thereof and it is finally determined that the reason asserted in such Notice of Termination did not exist, then (1) if such Notice was delivered by the Executive, the Executive will be deemed to have voluntarily terminated his employment and the Termination Date shall be the earlier of the date 15 days after the Notice of Termination is given or one day prior to the end of the Employment Period and (2) if delivered by the Company, the Company will be deemed to have terminated the Executive other than by reason of death, disability or Cause.
Capitalized terms used in this Agreement not defined in this Section 1 have the meanings assigned in the other sections of this Agreement.  The definitions of the following terms may be found in the sections indicated:
	
		
	Term
	Section

	 
	 

	Annual Base Salary
	Section 5(a)

	Base Period Income
	Section 9(b)(iii)

	Bonus Amount
	Section 5(e)(i)

	Bonus Plan
	Section 5(e)

	Company Incentive Plan
	Section 5(e)(iii)

	Excise Tax
	Section 9(b)(i)

	Expenses
	Section 15

	Goals
	Section 5(e)(iii)

	National Tax Counsel
	Section 9(b)(ii)

	Notice of Termination
	Section 13

	Plans
	Section 9(c)(iv)

	Termination Payment
	Section 9(a)

	Total Payments
	Section 9(b)(i)

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2.    Termination or Cancellation Prior to Change in Control.
(a)    Subject to Section 2(b), the Employer and the Executive shall each retain the right to terminate the employment of the Executive at any time and for any reason (or no reason) prior to a Change in Control of the Company.  Subject to Section 2(b), in the event that prior to a Change in Control of the Company (i) the Executive’s employment is terminated or (ii) as determined in writing by the Compensation Committee of the Board of Directors of the Company in its sole discretion, the Executive’s authority, powers, functions, duties, responsibilities or pay grade are materially reduced, this Agreement shall be terminated and cancelled and of no further force and effect, and any and all rights and obligations of the parties hereunder shall cease.
(b)    Anything in this Agreement to the contrary notwithstanding, if the Executive’s employment with the Employer is terminated by the Employer (other than a termination due to the Executive’s death or as a result of the Executive’s disability (as determined under Section 12) during the period of 180 days prior to the date on which a Change in Control of the Company occurs, and if it is reasonably demonstrated by the Executive that such termination of employment (i) was at the request of a third party who has taken steps reasonably calculated to effect a Change in Control of the Company or (ii) otherwise arose in connection with or in anticipation of a Change in Control of the Company, then for all purposes of this Agreement such termination of employment shall be deemed a “Covered Termination,” a “Notice of Termination” shall be deemed to have been given, and the “Employment Period” shall be deemed to have begun on the date of such termination which shall be deemed to be the “Termination Date” and the date of the Change of Control of the Company for purposes of this Agreement.  Anything in this Agreement to the contrary notwithstanding, if the Executive’s authority, powers, functions, duties, responsibilities or pay grade were reduced pursuant to Section 2(a)(ii) during the period of 180 days prior to the date on which the Change in Control of the Company occurs, and if it is reasonably demonstrated by the Executive that such reduction in authority, powers, functions, duties, responsibilities or pay grade (i) was at the request of a third party who has taken steps reasonably calculated to effect a Change in Control of the Company or (ii) otherwise arose in connection with or in anticipation of a Change in Control of the Company, then the termination and cancellation of this Agreement pursuant to Section 2(a) shall be deemed null and void, this Agreement shall be deemed to remain in full force and effect with any and all rights and obligations of the parties hereunder continuing and such reduction in authority, powers, functions, duties, responsibilities or pay grade shall be considered “Good Reason” for the Executive to terminate employment in connection with a Change in Control of the Company.
3.    Employment Period.  If a Change in Control of the Company occurs when the Executive is employed by the Employer, the Employer will continue thereafter to employ the Executive during the Employment Period, and the Executive will remain in the employ of the Employer in accordance with and subject to the terms and provisions of this Agreement.  Any Termination of Employment during the Employment Period, whether by the Company or the Employer, shall be deemed a termination by the Company for purposes of this Agreement.
4.    Duties.  During the Employment Period, the Executive shall, in the same capacities and positions held by the Executive at the time of the Change in Control of the Company or in such other capacities and positions as may be agreed to by the Employer and the Executive in writing, devote the Executive’s best efforts and all of the Executive’s business time, attention and skill to the business and affairs of the Employer, as such business and affairs now exist and as they may hereafter be conducted.

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5.    Compensation.  During the Employment Period, the Executive shall be compensated as follows:
(a)    The Executive shall receive, at reasonable intervals (but not less often than monthly) and in accordance with such standard policies as may be in effect immediately prior to the Change in Control of the Company, an annual base salary in cash equivalent of not less than twelve times the Executive’s highest monthly base salary for the twelve-month period immediately preceding the month in which the Change in Control of the Company occurs or, if higher, annual base salary at the rate in effect immediately prior to the Change in Control of the Company (which base salary shall, unless otherwise agreed in writing by the Executive or subject to any irrevocable deferral election then in effect, include the current receipt by the Executive of any amounts which, prior to the Change in Control of the Company, the Executive had elected to defer, whether such compensation is deferred under Section 401(k) of the Code or otherwise), subject to adjustment as hereinafter provided in Section 6 (such salary amount as adjusted upward from time to time is hereafter referred to as the “Annual Base Salary”).
(b)    The Executive shall receive fringe benefits at least equal in value to the highest value of such benefits provided for the Executive at any time during the 180-day period immediately prior to the Change in Control of the Company or, if more favorable to the Executive, those provided generally at any time during the Employment Period to any executives of the Employer of comparable status and position to the Executive; and shall be reimbursed, at such intervals and in accordance with such standard policies that are most favorable to the Executive that were in effect at any time during the 180-day period immediately prior to the Change in Control of the Company, for any and all monies advanced in connection with the Executive’s employment for reasonable and necessary expenses incurred by the Executive on behalf of the Employer, including travel expenses.
(c)    The Executive and/or the Executive’s family, as the case may be, shall be included, to the extent eligible thereunder (which eligibility shall not be conditioned on the Executive’s salary grade or on any other requirement which excludes persons of comparable status to the Executive unless such exclusion was in effect for such plan or an equivalent plan at any time during the 180-day period immediately prior to the Change in Control of the Company), in any and all plans providing benefits for the Employer’s salaried employees in general, including but not limited to group life insurance, hospitalization, medical, dental, profit sharing and stock bonus plans; provided, that, (i) in no event shall the aggregate level of benefits under such plans in which the Executive is included be less than the aggregate level of benefits under plans of the Employer of the type referred to in this Section 5(c) in which the Executive was participating at any time during the 180-day period immediately prior to the Change in Control of the Company and (ii) in no event shall the aggregate level of benefits under such plans be less than the aggregate level of benefits under plans of the type referred to in this Section 5(c) provided at any time after the Change in Control of the Company to any executive of the Employer of comparable status and position to the Executive.
(d)    The Executive shall annually be entitled to not less than the amount of paid vacation and not fewer than the highest number of paid holidays to which the Executive was entitled annually at any time during the 180-day period immediately prior to the Change in Control of the Company or such greater amount of paid vacation and number of paid holidays as may be made available annually to other executives of the Employer of comparable status and position to the Executive at any time during the Employment Period.

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(e)    The Executive shall be included in all plans providing additional benefits to executives of the Employer of comparable status and position to the Executive, including but not limited to short- or long-term cash-based incentive compensation plans (such plan or plans together, the “Bonus Plan”), deferred compensation plans, supplemental retirement plans, equity awards, and similar or comparable plans; provided, that, unless otherwise provided in clauses (i) or (ii) below, in no event shall the aggregate level of benefits under such plans or awards be less than the higher of  (x) the highest aggregate level of benefits under plans of the Employer of the type referred to in this Section 5(e) in which the Executive was participating at any time during the 180-day period immediately prior to the Change in Control of the Company and (y) the aggregate levels of benefits under plans of the type referred to in this Section 5(e) provided at any time after the Change in Control of the Company to any executive of the Employer comparable in status and position to the Executive.  
(i)    With respect to the Bonus Plan, the amount of the compensation (the “Bonus Amount”) that the Executive is eligible to earn under the Bonus Plan if the threshold, target and maximum performance objectives are met shall be no less than the highest threshold, target and maximum amounts, respectively, that Executive was eligible to receive under awards outstanding under the Employer’s short- or long-term cash-based incentive compensation plan or plans as in effect at any time during the 180-day period immediately prior to the Change in Control of the Company; provided that the amount Executive is eligible to earn shall in no event be lower than the amount of short- or long-term cash-based incentive compensation that any executive of the Employer comparable in status and position to the Executive is eligible to earn.  Payment of the Bonus Amount, if earned, shall not be affected by the Executive’s Termination of Employment after the end of the Employment Period.
(ii)    With respect to equity awards, the Executive shall annually receive awards under one or more equity-based compensation plan or plans of the Employer.  Such annual equity awards shall have a grant date fair value at least equal to the aggregate grant date fair value of the largest equity-based awards granted to the Executive at any time during the one-year period immediately prior to the Change in Control of the Company, measured, in each case, as a multiple of the Executive’s Annual Base Salary; provided that, solely for purposes of determining the grant date fair value of the largest equity-based awards granted to the Executive during such one-year period immediately prior to the Change in Control of the Company, any inducement awards or other awards that are intended to be non-recurring shall be disregarded or, to the extent such awards are intended to replace more than one annual award, shall be pro-rated so that only a one-year portion of the award shall be counted; and provided further that the grant date fair value of the equity awards granted to the Executive shall in no event be lower than the grant date fair value of the annual equity-based awards granted to any executive of the Employer comparable in status and position to the Executive.
(iii)    To the extent any compensation that the Executive has an opportunity to earn after a Change in Control of the Company is subject to achieving performance objectives, such performance objectives shall be established and communicated in writing to the Executive within the first ninety (90) days of the performance period and shall be reasonably related to the business of the Employer (the “Goals”).  All Goals shall be attainable with approximately the same degree of probability as the most attainable goals under the Employer’s performance-based compensation plan or plans as in effect at any time 

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during the 180-day period immediately prior to the Change in Control of the Company (whether one or more, the “Company Incentive Plan”) and in view of the Employer’s existing and projected financial and business circumstances applicable at the time, and shall have a performance period that is no longer than the performance period corresponding to the most analogous type of compensation under the Company Incentive Plan. 
6.    Annual Compensation Adjustments.  During the Employment Period, the Board of Directors of the Company (or an appropriate committee thereof) will consider and appraise, at least annually, the contributions of the Executive to the Company, and in accordance with the Company’s practice prior to the Change in Control of the Company, due consideration shall be given to the upward adjustment of the Executive’s Annual Base Salary, at least annually, (a) commensurate with increases generally given to other executives of the Employer of comparable status and position to the Executive, and (b) as the scope of the Company’s operations or the Executive’s duties expand.
7.    Termination For Cause or Without Good Reason.  If there is a Covered Termination for Cause or due to the Executive’s voluntarily terminating his or her employment other than for Good Reason (any such terminations to be subject to the procedures set forth in Section 13), then the Executive shall be entitled to receive only Accrued Benefits.
8.    Termination Giving Rise to a Termination Payment and Certain Other Benefits.  If there is a Covered Termination by the Executive for Good Reason, or by the Company other than by reason of (i) death, (ii) disability pursuant to Section 12, or (iii) Cause (any such terminations to be subject to the procedures set forth in Section 13), then (A) the Executive shall be entitled to receive  Accrued Benefits and, in lieu of further base salary for periods following the Termination Date, as liquidated damages and additional severance pay and in consideration of the covenant of the Executive set forth in Section 14(a), the Termination Payment pursuant to Section 9(a), (B)  all equity-based and cash incentive awards then held by the Executive that were granted prior to the Change in Control of the Company shall be subject to the terms of the 2012 Stock and Incentive Awards Plan or a successor incentive compensation plan under which the awards were granted and (C) all equity-based and cash incentive awards then held by the Executive that were granted on or after the Change in Control of the Company shall vest or be earned in full immediately upon such Covered Termination, with the amount or value of any performance-based awards determined based on the deemed achievement of all applicable performance conditions at 100% of target, without pro-ration.
9.    Payments Upon Termination.
(a)    Termination Payment. The “Termination Payment” shall be an amount equal to the Annual Cash Compensation times two and one-half.  The Termination Payment shall be paid to the Executive in cash equivalent (i) on the first day of the seventh month following the month in which the Executive’s Separation from Service occurs, without interest thereon, to the extent necessary for compliance with the requirements of Code Section 409A(a)(2)(B) relating to specified employees or (ii) to the extent not so required, within ten (10) business days after the Termination Date.  Notwithstanding the foregoing, in the event the Executive’s Termination Date is pursuant to Section 2(b), the Termination Payment shall be paid within ten (10) business days after the date of the Change in Control of the Company (as defined without reference to Section 2(b)), without interest.  Such lump sum payment shall not be reduced by any present value or similar factor, and the Executive shall not be required to mitigate the amount of the Termination Payment by securing other employment or otherwise, nor will such Termination Payment be reduced by reason of the Executive

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securing other employment or for any other reason, except as provided in subsection (b) below.  The Termination Payment shall be in lieu of, and acceptance by the Executive of the Termination Payment shall constitute the Executive’s release of any rights of the Executive to, any other cash severance payments under any Company severance policy, practice or agreement.
(b)    280G Provision.
(i)    Notwithstanding any other provision of this Agreement, if any portion of the Termination Payment or any other payment or other benefit to the Executive under this Agreement, or under any other agreement with or plan of the Employer or any 409A Affiliate (in the aggregate, “Total Payments”), would constitute an “excess parachute payment” (as defined below) and would, but for this Section 9(b)(i), result in the imposition on the Executive of an excise tax under Code Section 4999 (the “Excise Tax”), then the Total Payments to be made to the Executive shall either be (A) delivered in full, or (B) delivered in a reduced amount that is One Dollar ($1.00) less than the amount that would cause any portion of such Total Payments to be subject to the Excise Tax, whichever of the foregoing results in the receipt by the Executive of the greatest benefit on an after-tax basis (taking into account the applicable federal, state and local income taxes and the Excise Tax). 
(ii)    Within forty (40) days following the Executive’s Termination of Employment or notice by one party to the other of its belief that there is a payment or benefit due the Executive that will result in an excess parachute payment, the Executive and the Company, at the Company’s expense, shall obtain the opinion (which need not be unqualified) of nationally recognized tax counsel (“National Tax Counsel”) selected by the Company’s independent auditors and reasonably acceptable to the Executive (which may be regular outside counsel to the Company), which opinion sets forth (A) the amount of the Base Period Income (as defined below), (B) the amount and present value of Total Payments, (C) the amount and present value of any excess parachute payments determined without regard to any reduction of Total Payments pursuant to Section 9(b)(i), and (D) the net after-tax proceeds to the Executive, taking into account the tax imposed under Code Section 4999 if (1) the Total Payments were reduced in accordance with Section 9(b)(i)(B), or (2) the Total Payments were not so reduced.  The opinion of National Tax Counsel shall be addressed to the Company and the Executive and shall be binding upon the Company and the Executive.  If such National Tax Counsel opinion determines that clause (B) of Section 9(b)(i) applies, then the payments hereunder or any other payment or benefit determined by such counsel to be includable in Total Payments shall be reduced or eliminated so that under the bases of calculations set forth in such opinion there will be no excess parachute payment.  In such event, payments or benefits included in the Total Payments shall be reduced or eliminated by applying the following principles, in order: (x) the payment or benefit with the higher ratio of the parachute payment value to present economic value (determined using reasonable actuarial assumptions) shall be reduced or eliminated before a payment or benefit with a lower ratio; (y) the payment or benefit with the later possible payment date shall be reduced or eliminated before a payment or benefit with an earlier payment date; and (z) cash payments shall be reduced prior to non-cash benefits; provided that if the foregoing order of reduction or elimination would violate Code Section 409A, then the reduction shall be made pro rata among the payments or benefits included in the Total Payments (on the basis of the relative present value of the parachute payments).  

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(iii)    For purposes of this Agreement, (A) the terms “excess parachute payment” and “parachute payments” shall have the meanings assigned to them in Section 280G of the Code and such “parachute payments” shall be valued as provided therein, (B) present value for purposes of this Agreement shall be calculated in accordance with Section 1274(b)(2) of the Code, (C) the term “Base Period Income” means an amount equal to the Executive’s “annualized includable compensation for the base period” as defined in Section 280G(d)(1) of the Code, (D) for purposes of the National Tax Counsel opinion, the value of any noncash benefits or any deferred payment or benefit shall be determined by the Company’s independent auditors in accordance with the principles of Section 280G(d)(3) and (4) of the Code, which determination shall be evidenced in a certificate of such auditors addressed to the Company and the Executive, and (E) the Executive shall be deemed to pay federal income tax and employment taxes at the highest marginal rate of federal income and employment taxation, and state and local income taxes at the highest marginal rate of taxation in the state or locality of the Executive’s domicile (determined in both cases in the calendar year in which the Covered Termination occurs or notice described in Section 9(b)(ii) is given, whichever is earlier), net of the maximum reduction in federal income taxes that may be obtained from the deduction of such state and local taxes.  If the National Tax Counsel so requests in connection with the opinion required by this Section 9(b), the Executive and the Company shall obtain, at the Company’s expense, and the National Tax Counsel may rely on, the advice of a firm of recognized executive compensation consultants as to the reasonableness of any item of compensation to be received by the Executive solely with respect to its status under Section 280G of the Code and the regulations thereunder.  
(iv)    The Company agrees to bear all costs associated with, and to indemnify and hold harmless, the National Tax Counsel of and from any and all claims, damages, and expenses resulting from or relating to its determinations pursuant to this Section 9(b), except for claims, damages or expenses resulting from the gross negligence or willful misconduct of such firm.
(v)    This Section 9(b) shall be amended to comply with any amendment or successor provision to Sections 280G or 4999 of the Code.  If such provisions are repealed without successor, then this Section 9(b) shall be cancelled without further effect.
(c)    Additional Benefits.  If there is a Covered Termination and the Executive is entitled to Accrued Benefits and the Termination Payment, then the Company shall provide to the Executive the following additional benefits:
(i)    The Executive shall receive until the end of the second calendar year following the calendar year in which the Executive’s Separation from Service occurs, at the expense of the Company, outplacement services, on an individualized basis at a level of service commensurate with the Executive’s status with the Company immediately prior to the date of the Change in Control of the Company (or, if higher, immediately prior to the Executive’s Termination of Employment), provided by a nationally recognized executive placement firm selected by the Company; provided that the cost to the Company of such services shall not exceed 10% of the Executive’s Annual Base Salary.
(ii)    Until the earlier of the end of the Employment Period or such time as the Executive has obtained new employment and is covered by benefits which in the aggregate are at least equal in value to the following benefits, the Executive shall continue to 

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be covered, at the expense of the Company, by the same or equivalent life insurance, hospitalization, medical and dental coverage as was required hereunder with respect to the Executive immediately prior to the date the Notice of Termination is given, subject to the following:
(A)    Following the end of the COBRA continuation period, if such hospitalization, medical or dental coverage is provided under a health plan that is subject to Section 105(h) of the Code, benefits payable under such health plan shall comply with the requirements of Treasury regulation section 1.409A-3(i)(1)(iv) and, if necessary, the Company shall amend such health plan to comply therewith.  If the Executive is entitled to the Termination Payment pursuant to Section 2(b), then within ten (10) days following the Change in Control of the Company (determined without regard to Section 2(b)), the Company shall reimburse the Executive for any COBRA premiums the Executive paid for his or her hospitalization, medical and dental coverage under COBRA from the Executive’s Termination Date through the date of the Change in Control of the Company (determined without regard to Section 2(b)).
(B)    To the extent required to comply with Code Section 409A, during the first six months following the Executive’s Separation from Service, the Executive shall pay the Company for any life insurance coverage that provides a benefit in excess of $50,000 under a group term life insurance policy..  After the end of such six month period, the Company shall make a cash equivalent payment to the Executive equal to the aggregate premiums paid by the Executive for such coverage, and thereafter such coverage shall be provided at the expense of the Company for the remainder of the period as set forth above; provided that this clause (B) shall cease to apply if on the date of the Executive’s Separation from Service, neither the Company nor any other entity that is considered a “service recipient” with respect to the Executive within the meaning of Code Section 409A has any stock which is publicly traded on an established securities market (within the meaning of Treasury Regulation Section 1.897-1(m)) or otherwise.  
(iii)    The Company shall bear up to $15,000 in the aggregate of fees and expenses of consultants and/or legal or accounting advisors engaged by the Executive to advise the Executive as to matters relating to the computation of benefits due and payable under this Section 9.
(iv)    The Company shall cause the Executive to be fully and immediately vested in his accrued benefit under the Pentair, Inc. Supplemental Executive Retirement Plan (“SERP”) and in any nonqualified defined contribution retirement plan of the Employer.  The amount of benefits under the SERP shall be determined as if the Executive had completed additional years of Benefit Service (as such term is defined in the SERP) equal to the lesser of (A) three years or (B) the greater of (x) seven minus the years of Benefit Service credited to such Executive under the SERP, determined without regard to the terms of this Agreement, as of the end of the calendar year which includes the date of the Change in Control of the Company, or (y) zero. 

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10.    Death.
(a)    Except as provided in Section 10(b), in the event of a Covered Termination due to the Executive’s death, the Executive’s estate, heirs and beneficiaries shall receive all the Executive’s Accrued Benefits through the Termination Date.
(b)    In the event the Executive dies after a Notice of Termination is given (i) by the Company or (ii) by the Executive for Good Reason, the Executive’s estate, heirs and beneficiaries shall be entitled to the benefits described in Section 10(a) and, subject to the provisions of this Agreement, to such Termination Payment as the Executive would have been entitled to had the Executive lived, except that the Termination Payment shall be paid within 90 days following the date of the Executive’s death, without interest thereon.  For purposes of this Section 10(b), the Termination Date shall be the earlier of 30 days following the giving of the Notice of Termination, subject to extension pursuant to Section 1(q), or one day prior to the end of the Employment Period.
11.    Retirement.  If, during the Employment Period, the Executive and the Employer shall execute an agreement providing for the early retirement of the Executive from the Employer, or the Executive shall otherwise give notice that he is voluntarily choosing to retire early from the Employer, the Executive shall receive Accrued Benefits through the Termination Date; provided, that if the Executive’s employment is terminated by the Executive for Good Reason or by the Company other than by reason of death, disability or Cause and the Executive also, in connection with such termination, elects voluntary early retirement, the Executive shall also be entitled to receive a Termination Payment pursuant to Section 9.
12.    Termination for Disability.  If, during the Employment Period, as a result of the Executive’s disability due to physical or mental illness or injury (regardless of whether such illness or injury is job-related), the Executive shall have been absent from the Executive’s duties hereunder on a full-time basis for a period of six consecutive months and, within 30 days after the Company notifies the Executive in writing that it intends to terminate the Executive’s employment (which notice shall not constitute the Notice of Termination contemplated below), the Executive shall not have returned to the performance of the Executive’s duties hereunder on a full-time basis, the Company may terminate the Executive’s employment for purposes of this Agreement pursuant to a Notice of Termination given in accordance with Section 13.  If the Executive’s employment is terminated on account of the Executive’s disability in accordance with this Section, the Executive shall receive Accrued Benefits through the Termination Date and shall remain eligible for all benefits provided by any long term disability programs of the Employer in effect at the time of such termination.
13.    Termination Notice and Procedure.  Any Covered Termination by the Company or the Executive (other than a termination of the Executive’s employment that is a Covered Termination by virtue of Section 2(b)) shall be communicated by a written notice of termination (“Notice of Termination”) to the Executive, if such Notice is given by the Company, and to the Company, if such Notice is given by the Executive, all in accordance with the following procedures and those set forth in Section 24:
(a)    If such termination is for disability, Cause or Good Reason, the Notice of Termination shall indicate in reasonable detail the facts and circumstances alleged to provide a basis for such termination.

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(b)    Any Notice of Termination by the Company shall have been approved, prior to the giving thereof to the Executive, by a resolution duly adopted by a majority of the directors of the Company (or any successor corporation) then in office.
(c)    If the Notice is given by the Executive for Good Reason, the Executive may cease performing his duties hereunder on or after the date fifteen (15) days after the delivery of Notice of Termination and shall in any event cease employment on the Termination Date.  If the Notice is given by the Company, then the Executive may cease performing his duties hereunder on the date of receipt of the Notice of Termination, subject to the Executive’s rights hereunder.
(d)    The Executive shall have thirty (30) days, or such longer period as the Company may determine to be appropriate, to cure any conduct or act, if curable, alleged to provide grounds for termination of the Executive’s employment for Cause under this Agreement pursuant to Section 1(g)(iii).
(e)    The recipient of any Notice of Termination shall personally deliver or mail in accordance with Section 24 written notice of any dispute relating to such Notice of Termination to the party giving such Notice within 15 days after receipt thereof; provided, however, that if the Executive’s conduct or act alleged to provide grounds for termination by the Company for Cause is curable, then such period shall be 30 days.  After the expiration of such period, the contents of the Notice of Termination shall become final and not subject to dispute.
14.    Further Obligations of the Executive.
(a)    Competition.  The Executive agrees that, in the event of any Covered Termination where the Executive is entitled to Accrued Benefits and the Termination Payment, the Executive shall not, for a period expiring one year after the Termination Date, without the prior written approval of the Company’s Board of Directors, (i) solicit for employment an employee of the Company or its subsidiaries or (ii) participate in the management of, be employed by or own any business enterprise at a location anywhere in the World that engages in substantial competition with the Company or its subsidiaries, where such enterprise’s revenues from any competitive activities amount to 10% or more of such enterprise’s net revenues and sales for its most recently completed fiscal year; provided, however, that nothing in this Section 14(a) shall prohibit the Executive from owning stock or other securities of a competitor amounting to less than five percent (5%) of the outstanding capital stock of such competitor.
(b)    Confidentiality.  During and following the Executive’s employment by the Company, the Executive shall hold in confidence and not directly or indirectly disclose or use or copy or make lists of any confidential information or proprietary data of the Company (including that of the Employer), except to the extent authorized in writing by the Board of Directors of the Company or required by any court or administrative agency, other than to an employee of the Company or a person to whom disclosure is reasonably necessary or appropriate in connection with the performance by the Executive of duties as an executive of the Company.  Confidential information shall not include any information known generally to the public or any information of a type not otherwise considered confidential by persons engaged in the same business or a business similar to that of the Company.  All records, files, documents and materials, or copies thereof, relating to the business of the Company which the Executive shall prepare, or use, or come into contact with, shall be and remain the sole property of the Company and shall be promptly returned to the Company upon termination of employment with the Company.  Notwithstanding anything to the

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contrary herein, however, nothing in this Agreement prohibits the Executive from reporting possible violations of local, state, foreign or federal law or regulation, or related facts, to any governmental agency or entity or making other reports or disclosures that, in each case, the Executive believes are protected under the whistleblower provisions of local, state, foreign or federal law or regulation.  Without limitation, the Executive may report possible violations of law or regulation and related facts to the U.S. Department of Justice, the Securities and Exchange Commission, Congress, and any agency Inspector General.  The Executive does not need the prior authorization of the Company (including, but not limited to, its law department) to make any such reports or disclosures, and the Executive does not need to notify the Company that the Executive has made such reports or disclosures  Making such reports or disclosures does not in any way have adverse consequences to the Executive under this Agreement.
15.    Expenses and Interest.  If, after a Change in Control of the Company, (a) a dispute arises with respect to the enforcement of the Executive’s rights under this Agreement or (b) any legal or arbitration proceeding shall be brought to enforce or interpret any provision contained herein or to recover damages for breach hereof, in either case so long as the Executive is not acting in bad faith, then the Company shall reimburse the Executive for any reasonable attorneys’ fees and necessary costs and disbursements incurred as a result of the dispute, legal or arbitration proceeding (“Expenses”), and prejudgment interest on any money judgment or arbitration award obtained by the Executive calculated at the rate of interest announced by U.S. Bank National Association, Minneapolis, Minnesota, from time to time at its prime or base lending rate from the date that payments to him or her should have been made under this Agreement.  Within ten days after the Executive’s written request therefore (but in no event later than the end of the calendar year following the calendar year in which such Expense is incurred), the Company shall reimburse the Executive, or such other person or entity as the Executive may designate in writing to the Company, the Executive’s reasonable Expenses.
16.    Payment Obligations Absolute.  The Company’s obligation during and after the Employment Period to pay the Executive the amounts and to make the benefit and other arrangements provided herein shall be absolute and unconditional and shall not be affected by any circumstances, including, without limitation, any setoff, counterclaim, recoupment, defense or other right which the Company may have against him or her or anyone else.  Except as provided in Section 15, all amounts payable by the Company hereunder shall be paid without notice or demand. Each and every payment made hereunder by the Company shall be final, and the Company will not seek to recover all or any part of such payment from the Executive, or from whomsoever may be entitled thereto, for any reason whatsoever.
17.    Successors.
(a)    If the Company sells, assigns or transfers all or substantially all of its business and assets to any Person or if the Company merges into or consolidates or otherwise combines (where the Company does not survive such combination) with any Person (any such event, a “Sale of Business”), then the Company shall assign all of its right, title and interest in this Agreement as of the date of such event to such Person, and the Company shall cause such Person, by written agreement in form and substance reasonably satisfactory to the Executive, to expressly assume and agree to perform from and after the date of such assignment all of the terms, conditions and provisions imposed by this Agreement upon the Company.  Failure of the Company to obtain such written agreement prior to the effective date of such Sale of Business shall be a breach of this Agreement constituting “Good Reason” hereunder, except that for purposes of implementing the

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foregoing the date upon which such Sale of Business becomes effective shall be deemed the Termination Date.  In case of such assignment by the Company and of assumption and agreement by such Person, as used in this Agreement, “Company” shall thereafter mean such Person which executes and delivers the agreement provided for in this Section 17 or which otherwise becomes bound by all the terms and provisions of this Agreement by operation of law, and this Agreement shall inure to the benefit of, and be enforceable by, such Person.  The Executive shall, in his or her discretion, be entitled to proceed against any or all of such Persons, any Person which theretofore was such a successor to the Company and the Company (as so defined) in any action to enforce any rights of the Executive hereunder.  Except as provided in this Section 17(a), this Agreement shall not be assignable by the Company.  This Agreement shall not be terminated by the voluntary or involuntary dissolution of the Company.
(b)    This Agreement and all rights of the Executive shall inure to the benefit of and be enforceable by the Executive’s personal or legal representatives, executors, administrators, heirs and beneficiaries.  All amounts payable to the Executive under Sections 3, 7, 8, 9, 10, 11, 12 and 15 if the Executive had lived shall be paid, in the event of the Executive’s death, to the Executive’s estate, heirs and representatives; provided, however, that the foregoing shall not be construed to modify any terms of any benefit plan of the Employer, as such terms are in effect on the date of the Change in Control of the Company, that expressly govern benefits under such plan in the event of the Executive’s death.
18.    Severability.  The provisions of this Agreement shall be regarded as divisible, and if any of said provisions or any part hereof are declared invalid or unenforceable by a court of competent jurisdiction, the validity and enforceability of the remainder of such provisions or parts hereof and the applicability thereof shall not be affected thereby.
19.    Contents of Agreement; Waiver of Rights; Amendment.  This Agreement sets forth the entire understanding between the parties hereto with respect to the subject matter hereof and shall supersede in all respects, and the Executive hereby waives all rights under, any prior or other agreement or understanding between the parties with respect to such subject matter, including, but not limited to any Key Executive Employment and Severance Agreement between the Company and the Executive entered into prior to the date hereof.  This Agreement may not be amended or modified at any time except by written instrument executed by the Company and the Executive.
20.    Withholding.  The Company shall be entitled to withhold from amounts to be paid to the Executive hereunder any federal, state or local withholding or other taxes or charges which it is from time to time required to withhold; provided, that the amount so withheld shall not exceed the minimum amount required to be withheld by law.  In addition, if prior to the date of payment of the Termination Payment hereunder, the Federal Insurance Contributions Act (FICA) tax imposed under Sections 3101, 3121(a) and 3121(v)(2), where applicable, becomes due with respect to any payment or benefit to be provided hereunder, the Employer may provide for an immediate payment of the amount needed to pay the Executive’s portion of such tax (plus an amount equal to the taxes that will be due on such amount) and the Executive’s Termination Payment shall be reduced accordingly.  The Employer shall be entitled to rely on an opinion of the National Tax Counsel if any question as to the amount or requirement of any such withholding shall arise.
21.    Certain Rules of Construction.  No party shall be considered as being responsible for the drafting of this Agreement for the purpose of applying any rule construing ambiguities against the drafter or otherwise.  No draft of this Agreement shall be taken into account

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in construing this Agreement.  Any provision of this Agreement which requires an agreement in writing shall be deemed to require that the writing in question be signed by the Executive and an authorized representative of the Company.
22.    Governing Law; Resolution of Disputes.  This Agreement and the rights and obligations hereunder shall be governed by and construed in accordance with the laws of the State of Minnesota, without reference to the conflict of law principles thereof.  Any dispute arising out of this Agreement shall, at the Executive’s election, be determined by arbitration under the rules of the American Arbitration Association then in effect (in which case both parties shall be bound by the arbitration award) or by litigation.  Whether the dispute is to be settled by arbitration or litigation, the venue for the arbitration or litigation shall be Minneapolis, Minnesota or, at the Executive’s election, if the Executive is not then residing or working in the Minneapolis, Minnesota metropolitan area, in the judicial district encompassing the city in which the Executive resides; provided, that, if the Executive is not then residing in the United States, the election of the Executive with respect to such venue shall be either Minneapolis, Minnesota or in the judicial district encompassing that city in the United States among the thirty cities having the largest population (as determined by the most recent United States Census data available at the Termination Date) which is closest to the Executive’s residence.  The parties consent to personal jurisdiction in each trial court in the selected venue having subject matter jurisdiction notwithstanding their residence or situs, and each party irrevocably consents to service of process in the manner provided hereunder for the giving of notices.  
23.    Additional Section 409A Provisions.  (%2)  If, after the date of a Change in Control of the Company, any payment amount or the value of any benefit under this Agreement is required to be included in the Executive’s income prior to the date such amount is actually paid or the benefit provided as a result of the failure of this Agreement (or any other arrangement that is required to be aggregated with this Agreement under Code Section 409A) to comply with Code Section 409A, then the Executive shall receive a distribution, in a lump sum, within 90 days after the date it is finally determined that the Agreement (or such other arrangement that is required to be aggregated with this Agreement) fails to meet the requirements of Section 409A of the Code; such distribution shall equal the amount required to be included in the Executive’s income as a result of such failure and shall reduce the amount of payments or benefits otherwise due hereunder.  
(b)    The Company and the Executive intend the terms of this Agreement to be in compliance with Section 409A of the Code.  The Company does not guarantee the tax treatment or tax consequences associated with any payment or benefit, including but not limited to consequences related to Section 409A of the Code.  To the maximum extent permissible, any ambiguous terms of this Agreement shall be interpreted in a manner that avoids a violation of Section 409A of the Code.
(c)    If the Executive believes he or she is entitled to a payment or benefit pursuant to the terms of this Agreement that was not timely paid or provided, and such payment or benefit is considered deferred compensation subject to the requirements of Section 409A of the Code, the Executive acknowledges that to avoid an additional tax on such payment or benefit pursuant to the provisions of Section 409A of the Code, the Executive must make a reasonable, good faith effort to collect such payment or benefit no later than 90 days after the latest date upon which the payment could have been timely made or benefit timely provided without violating Section 409A of the Code, and if not paid or provided, must take further enforcement measures within 180 days after such latest date.

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24.    Notice.  Notices given pursuant to this Agreement shall be in writing and, except as otherwise provided by Section 13(d), shall be deemed given when actually received by the Executive or actually received by the Company’s Secretary or any officer of the Company other than the Executive.  If mailed, such notices shall be mailed by United States registered or certified mail, return receipt requested, addressee only, postage prepaid, if to the Company, to Pentair plc, c/o Pentair, Inc., Attention: Secretary (or Chief Executive Officer, if the Executive is then Secretary), 5500 Wayzata Blvd., Suite 800, Golden Valley, Minnesota 55416, or if to the Executive, at the address set forth below the Executive’s signature to this Agreement, or to such other address as the party to be notified shall have theretofore given to the other party in writing.
25.    No Waiver.  No waiver by either party at any time of any breach by the other party of, or compliance with, any condition or provision of this Agreement to be performed by the other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same time or any prior or subsequent time.
26.    Headings.  The headings herein contained are for reference only and shall not affect the meaning or interpretation of any provision of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first above written.

	
				
	 
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