Document:

Prepared by MERRILL CORPORATION

Exhibit 10.31

EMPLOYMENT

AGREEMENT

THIS AGREEMENT,

made and entered into as of the 17th day of October, 2001 by and

between Pentair, Inc., a Minnesota corporation (hereinafter referred to as the

“Company”), and Richard J. Cathcart (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 retain the services of the Executive, and the Executive desires to

continue to be employed by the Company, on the terms and conditions set forth

in this Agreement;

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)                   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) any bonus or 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; 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.

(b)                   Annual Cash Compensation.  The term “Annual Cash Compensation” shall

mean the sum of twelve times the Executive’s highest monthly base salary

for the twelve-month period immediately preceding the month in which the Notice

of Termination is given (such salary amount is hereafter referred to as the

“Annual Base Salary”).

(c)                   Business Segment.  The term “Business Segment” shall mean

Company’s Water Technologies Group, or any other segment(s) of the Company’s

business operations for which Executive is responsible for the applicable

period.

(d)                   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 has caused

demonstrable and serious financial injury to the Employer; (ii) conviction

of a felony; 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).

(e)                   Covered Termination.  The term “Covered Termination” means any

termination of the Executive’s 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.

(f)                    Employment Period.  The term “Employment Period” means a period

commencing on the date hereof and ending at 11:59 p.m. Central Time on the

Executive’s Normal Retirement Date.

(g)                   Normal Retirement Date.  The term “Normal Retirement Date” means

“Normal Retirement Date” as defined in the primary qualified defined benefit

pension plan applicable to the Executive, or any successor plan, as in effect

on the date hereof.

(h)                   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.

(i)                    Termination Date.  Except as otherwise provided in Section 7(b),

the term “Termination Date” means (i) if the Executive’s employment is

terminated by the Executive’s death, the date of death; (ii) if the

Executive’s employment is terminated 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 employment is terminated for purposes of this Agreement by reason

of disability pursuant to Section 9, the earlier of thirty days

after the Notice of Termination is given or one day prior to the end of the

Employment Period; (iv) if the Executive’s employment is terminated by the

Executive voluntarily, the date the Notice of Termination is given; and

(v) if the Executive’s employment is terminated by the Employer (other

than by reason of disability pursuant to Section 9), the date the

Notice of Termination is given.

2.     Employment Period; Termination.  The Employer will continue 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

conditions of this Agreement.  The

Employer and the Executive shall each retain the right to terminate the

employment of the Executive at any time during the Employment Period.

3.     Duties.  During the Employment Period, the Executive shall, in the same

capacities and positions held by the Executive as of the date hereof or in such

other capacities as may be agreed to by the Employer and the Executive, 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.

4.     Termination For Cause or Voluntarily

Termination.  If there is a Covered

Termination for Cause or due to the Executive’s voluntarily terminating his

employment (any such terminations to be subject to the procedures set forth in Section 10),

then the Executive shall be entitled to receive only Accrued Benefits.

5.     Termination Giving Rise to a Termination

Payment.  If there is a Covered

Termination by the Company other than by reason of (i) death,

(ii) disability pursuant to Section 9, or (iii) Cause

(any such terminations to be subject to the procedures set forth in Section 10),

then the Executive shall be entitled to receive, and the Company shall promptly

pay, 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 11(a),

the Termination Payment pursuant to Section 6(a).

6.     Payments

Upon Termination.

(a)                   Termination Payment.  Subject to the provisions of Section 6(d)

below, the “Termination Payment” shall be an amount equal to the Annual Cash

Compensation times (i) three (3) if the Executive has not attained the age of

61, (ii) two (2) if the Executive has attained the age of 61 but has not

attained the age of 62 and (iii) one (1) if the Executive has attained the age

of 62 but has not attained the age of 63; provided, however, that the Executive

shall have no right to a Termination Payment if the Executive has attained the

age of 63.  The Termination Payment

shall be paid to the Executive in cash thirty (30) business days after the

Termination Date.  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 securing other employment or for any other

reason.  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)                   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, 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 the Notice of Termination

is given, 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 be covered,

at the Employer’s employee rate if during the period the Employer is required

to provide medical benefits under the Consolidated Omnibus Budget

Reconciliation Act of 1985, as amended, and at the Employer’s retiree medical

rate thereafter, by the same or equivalent medical coverage as was provided

under the medical plan in which the Executive was participating at any time

during the 180-day period immediately prior to the date the Notice of

Termination is given.

(iii)          The Company shall cause the Executive

to be fully and immediately vested in his accrued benefit under the Pentair,

Inc. 1999 Supplemental Executive Retirement Plan (“SERP”) and the Pentair, Inc.

Restoration Plan (“Restoration Plan”) or any successor plans thereto (the

“Plans”) (to the extent the Executive participates in the Plans) and in any

defined contribution retirement plan of the Employer.  In addition, the additional benefit described in Appendix A to the

SERP provided for the Executive shall be fully vested and the amount of such

additional benefit shall be no less than if the Executive had continued in

qualified employment through the end of the calendar year in which he would

attain age sixty-two.

(c)           Vesting and Payment of Certain

Benefits.  If there is a Covered

Termination and the Executive is entitled to Accrued Benefits and the

Termination Payment, then

(i)            the Company shall cause all

restrictions on restricted stock awards made to the Executive immediately prior

to the date the Notice of Termination is given to lapse such that the Executive

is fully and immediately vested in the Executive’s restricted stock upon the

Termination Date;

(ii)           the Company shall cause all stock

options granted to the Executive immediately prior to the date the Notice of

Termination is given pursuant to the Company’s stock option plan(s) to be fully

and immediately vested upon the Termination Date and the exercise date thereof

shall be extended for a period of the lesser of (x) three (3) years from the

Termination Date or (y) their scheduled expiration date;

(iii)          the Company shall cause all incentive

compensation units and performance awards granted to the Executive pursuant to

any long-term incentive plan maintained by the Company to be paid to the

Executive within ten (10) business days after the Termination Date (A) at

one-third (1/3) of target, if the award cycle has been in effect less than

twelve (12) months, (B) at two thirds (2/3) of the then current value

pursuant to such plan, if the award cycle has been in effect twelve (12) or

more months but less than twenty-four (24) months, and (C) at the then

current value pursuant to such plan, if the award cycle has been in effect

twenty-four (24) or more months, in each case as if all performance or

incentive requirements and periods had been satisfied; and

the

Company shall pay to the Executive within thirty (30) business days after the

Termination Date an amount under the Company’s annual incentive plan consistent

with the Company’s then current policy for senior executives.

(d)           Business Performance Factor.  If there is a Covered Termination and the

Executive is entitled to the Termination Payment, the amount of the Termination

Payment provided for in Section 6(a) above shall be adjusted  as follows:

(i)            If the average performance factor

for the Business Segment for the three fiscal years preceding the year in which

Termination occurs equals or exceeds 1.0, no adjustment shall be made;

(ii)           If the average performance factor for

the Business Segment for the three fiscal years preceding the year in which

Termination occurs is less than 1.0 but at least equal to 0.8, the Termination

Payment shall be reduced by 50%;

(iii)          If the average performance factor for

the Business Segment for the three fiscal years preceding the year in which

Termination occurs is less than 0.8, the Termination Payment shall be reduced

by 75%; provided, however, that the minimum Termination Payment for Executive

under Section 6(a) shall not be less than Annual Cash Compensation times one

(1), so long as Executive shall not have attained age 61 at the time of

delivery of any Notice of Termination.

For

the purposes of this Section 6(d), the performance factor for the Business

Segment shall be determined in accordance with the terms and provisions of the

Company’s Management Incentive Plan, as it may be amended or modified from time

to time by the Company, or any successor cash incentive compensation plan

adopted by the Company.

7.     Death.

(a)                   Except as provided in Section 7(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 by the Company, the Executive’s

estate, heirs and beneficiaries shall be entitled to the benefits described in Section 7(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.  For purposes of this Section 7(b),

the Termination Date shall be the earlier of thirty days following the giving

of the Notice of Termination, subject to extension pursuant to Section 1(h),

or one day prior to the end of the Employment Period.

8.     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.

9.     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 thirty 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 10.  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 Company in effect at the time of such termination.

10.   Termination Notice and Procedure.  Any Covered Termination by the Company or

the Executive 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 18:

(a)                   If such termination is for

disability or Cause, the Notice of Termination shall indicate in reasonable

detail the facts and circumstances alleged to provide a basis for such

termination.

(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

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 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(c)(iii).

(e)                   The recipient of any Notice

of Termination shall personally deliver or mail in accordance with Section 18

written notice of any dispute relating to such Notice of Termination to the party

giving such Notice within fifteen 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 thirty days.  After the expiration

of such period, the contents of the Notice of Termination shall become final

and not subject to dispute.

11.   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 within the United

States 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 12(a)

shall prohibit the Executive from owning stock or other securities of a

competitor amounting to less than five percent 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.

12.   Successors.

(a)                   If the Company sells, assigns

or transfers all or substantially all of its business and assets or the

business and assets of its Water Technologies Group 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.  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

assumption agreement provided for in this Section 12 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 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 12(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 4, 5, 6, 7, 8 and 9 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 immediately prior to the date the Notice

of Termination is given, that expressly govern benefits under such plan in the

event of the Executive’s death.

13.   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.

14.   Contents of Agreement; Amendment.  This Agreement sets forth the entire

understanding between the parties hereto with respect to the subject matter

hereof, except for the Key Executive Employment and Severance Agreement (the

“KEESA”) between the Executive and the Company.  Anything in this Agreement to the contrary notwithstanding, in

the event of a Change in Control of the Company (as defined in the KEESA) at a

time that the KEESA is in effect, then the rights and obligations of the

Company and the Executive in respect of the Executive’s employment shall be

determined in accordance with the KEESA rather than under this Agreement.  Nothing contained in this Agreement shall be

deemed to supersede any of the obligations, agreements, provisions or covenants

of the Company or the Executive contained in the KEESA.  This Agreement may not be amended or

modified at any time except by written instrument executed by the Company and

the Executive.

15.   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.

16.   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 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.

17.   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.  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 venue shall be Minneapolis,

Minnesota.  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.

18.   Notice.  Notices given pursuant to this Agreement shall be in writing and,

except as otherwise provided by Section 10(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,

Inc., Attention: Secretary (or President, if the Executive is then Secretary),

1500 County Road B2 West, Suite 400, Saint Paul, Minnesota, 55113, 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.

19.   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.

20.   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.

	

   

  	

  PENTAIR, INC.

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

   

  	

   

  
	

   

  	

   

  	

  Its:

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  Attest:

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

  Its:

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  EXECUTIVE:

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

  (SEAL)

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  Address:Prepared by MERRILL CORPORATION

Exhibit

10.32

 

RETIREMENT AGREEMENT AND

RELEASE

 

THIS RETIREMENT AGREEMENT

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

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

 

1.             Consideration. 

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

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

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

fees, against  Pentair and the members

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

“Group”).

 

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

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

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

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

Schedule A.  Effective as of the

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

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

 

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

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

falls during such period.  These

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

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

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

Pentair may be required by law to make. 

Collins understands and agrees that these payments are more than Pentair

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

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

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

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

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

 

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

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

awards shall be paid as described below. 

Collins understands and agrees that the payment of these awards as

described herein is discretionary and not required under the normal policies

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

without this Agreement.

 

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

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

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

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

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

paragraph 4(b) are paid.

 

 

b.             Incentive Compensation Units

(“ICUs”).  All ICUs awarded to

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

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

stated at the time of grant.  The value

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

 

c.             Stock Options.  All outstanding stock options granted to

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

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

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

is first exercisable shall not be accelerated. 

To the extent options designated as incentive stock options are

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

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

be treated as nonqualified options.

 

In the event

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

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

immediately notify Pentair of such disqualifying disposition and supply all

information with respect to such sale as is reasonably requested by

Pentair.  This notification obligation

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

the Separation Date.

 

In the event

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

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

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

the end of said six (6) month period.

 

d.             Continuing Securities

Obligations.  At the direction of

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

understanding of his continuing obligations under applicable securities laws

for purposes of any transactions in Pentair common stock.

 

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

qualified retirement plans maintained by Pentair as follows:

 

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

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

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

accordance with applicable provisions of that plan.

 

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

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

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

& Survivor options.  This benefit is

calculated by applying the provisions of the 1988 Supplemental Executive

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

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

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

Date under the SERP as of the Separation Date. 

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

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

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

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

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

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

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

the MIP in 2001.

 

Collins

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

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

would not otherwise be entitled to payment of this supplemental retirement

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

its normal policies and procedures.

 

c.             Retirement Savings and Stock

Incentive Plan (“RSIP”).  Collins

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

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

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

benefit.  From and after the Separation

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

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

date, including matching or employer discretionary contributions payable on

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

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

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

compensation.

 

d.             Non-Qualified Deferred

Compensation Plan (“Sidekick”). 

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

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

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

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

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

including matching or employer discretionary contributions payable on account

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

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

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

covered compensation.

 

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

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

Pentair as follows:

 

a.             Medical, Dental and Life

Insurance.  Collins may elect to

continue participation in such group medical, dental and life insurance

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

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

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

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

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

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

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

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

employee of Pentair.  Collins

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

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

 

b.             Supplemental Disability and

Supplemental Life Insurance. 

Collins shall be covered through the Separation Date under the Pentair

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

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

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

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

insurance policies at his sole cost and expense.

 

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

continue participation in the Pentair Flexible Benefit Plan consistent with the

terms and provisions of said plan.

 

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

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

and provisions of said plan.  Said

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

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

continuation rights and immediately begin to receive benefits under the Retiree

Flex Plan in lieu of said continuation coverage.

 

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

payments and benefits as described below. 

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

be entitled to such benefits.

 

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

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

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

payments made by Pentair during 2001. 

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

submits proper documentation of expenses eligible for payment under said

plan.  Any amounts not paid to Collins

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

 

b.             Business Expenses.  Pentair will reimburse Collins for all

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

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

2001, provided Collins submits proper documentation for such expenses.

 

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

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

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

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

business partners, alliances, ventures and all other confidential information

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

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

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

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

provision shall entitle Pentair to appropriate injunctive relief and to any

damages which it may sustain due to the improper disclosure.

 

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

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

executive personnel, business strategies, product development and other confidential

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

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

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

consent of Pentair:

 

a.             own, manage, control, participate

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

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

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

Separation Date;

 

b.             become an employee or agent of any

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

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

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

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

Date;

 

c.             participate in any plan or attempt

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

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

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

 

d.                             induce or attempt

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

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

 

e.                             engage

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

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

 

In the event Collins

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

may apply to any court of competent jurisdiction for specific performance

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

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

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

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

enforcing its rights under this paragraph 9. 

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

person claiming benefits hereunder through Collins shall forfeit any right to

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

 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

or order regarding employment, compensation for employment, termination of

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

 

Collins further

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

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

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

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

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

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

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

benefits except as prohibited by law.

 

Collins represents that

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

otherwise transferred or given to anyone.

 

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

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

information as Pentair may make.  In

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

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

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

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

involved.  Collins also agrees that he

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

documents or instruments necessary or appropriate to evidence his separation

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

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

Schedule C.  Collins further agrees that

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

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

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

Group member.  Nothing in this Agreement

prevents Collins from testifying at an administrative hearing, arbitration,

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

 

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

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

after he signs this Agreement.

 

13.           Merger.  This Agreement supersedes and replaces all

prior oral and written agreements and understandings between Collins and

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

Executive Employment and Separation Agreement which Collins may have

executed.  Collins understands and

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

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

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

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

 

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

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

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

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

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

irrevocably submit to the jurisdiction of such court.

 

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

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

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

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

 

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

subsequent written agreement signed by the parties hereto.

 

17.           Collins Understands the Terms of

this Agreement.  Collins warrants

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

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

any statement or representation of Pentair or its representatives concerning

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

legally competent to execute this Agreement and accepts full responsibility

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

an attorney regarding the purpose and effect of this Agreement;

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

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

expiration of this period this Agreement shall be automatically withdrawn

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

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

consideration period.

 

Collins understands that

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

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

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

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

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

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

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

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

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

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

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

Protection Act”).  In the event Collins

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

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

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

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

55113-3105, by hand or by certified mail. 

Collins further understands that if he exercises his rescission rights

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

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

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

other than such $1,000 sum.

 

 

Dated:    ___________________________

Joseph Collins

 

 

Subscribed and sworn to

before me

this 6th day

of August, 2001.

 

 

________________________________

Notary Public

 

 

Dated:    __________________________                   PENTAIR, INC.

 

 

By

_________________________________

Its

_________________________________

 

 

Subscribed and sworn to

before me

this ____ day of

________, 2001.

 

 

_______________________________

Notary Public

 

SCHEDULE A

 

Positions Held by Joseph Collins

at Pentair

 

 

	

  Company

  	

   

  	

  Title

  
	

   

  	

   

  	

   

  
	

  Pentair, Inc.

  	

   

  	

  Vice Chairman of

  the Board, Director

  
	

  Pentair, Inc.

  	

   

  	

  Employee

  

 

 

SCHEDULE B

 

Other Positions Held by Joseph

Collins

at Pentair and Subsidiaries

 

 

	

  Committee/Plan

  	

   

  	

  Title

  
	

  Pentair, Inc.

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

  	

   

  	

  Member

  
	

  Pentair, Inc.

  Retirement Savings and Stock Incentive Plan Committee

  	

   

  	

  Member

  
	

  The Pentair Foundation

  	

   

  	

  President

  
	

  Pentair, Inc. Board

  Finance / Investment Policy Committee

  	

   

  	

  Member

  
	

  Pentair, Inc. Board

  Public Policy Committee

  	

   

  	

  Member

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