Document pmdQE0gyReypLq0zVxyoOEMEa

elOvk Page 29 of 84 Table of Contents The credit facility agreement is not subject to termination based on a decrease in Cooper's debt ratings or a material adverse change clause The principal financial covenants in the agreement limit Cooper's debt-to-total capitalization ratio to 60% and require Cooper to maintain a minimum earnings before interest expense, income taxes, depreciation and amortization to interest ratio of 3 to 1 Cooper is in compliance with all covenants set forth in the credit facility agreement Cooper's access to the commercial paper market could be adversely affected by a change in the credit ratings assigned to its commercial paper Should Cooper's access to the commercial paper market be adversely affected due to a change in its credit ratings, Cooper would rely on a combination of available cash and its committed credit facility to provide short-term funding The committed credit facility does not contain any provision which makes their availability to Cooper dependent on Cooper's credit ratings During June 2002, Cooper's subsidiary, Cooper Industries, Inc ("Cooper Ohio"), issued $300 million senior unsecured notes due July 1, 2007 with a 5 25% interest rate Proceeds from the notes were used to reduce outstanding commercial paper balances During September 2002, Cooper Ohio filed a Form S-4 Registration Statement to exchange the original notes for notes with substantially identical terms, except that the exchange notes are registered under the Securities Act of 1933, as amended, and the transfer restrictions and registration rights applicable to the original notes do not apply to the exchange notes The original and exchange notes are fully and unconditionally guaranteed by Cooper The exchange offer was completed on November 4, 2002 with all holders exchanging their notes Cooper Ohio did not receive any proceeds from the exchange offer During August 2003, Cooper entered into interest-rate swaps to effectively convert $300 million of 5 25% long-term fixed-rate debt to variable-rate debt at the six month LIBOR rate plus 1 91% (with semi-annual reset) The swaps mature concurrent with the long-term debt and have been designated as fair-value hedges During 1999, Cooper Ohio completed a shelf registration to issue up to $500 million of debt securities On October 28, 2002, Cooper Ohio issued $275 million senior unsecured notes due November 1, 2009, with a 5 5% interest rate Proceeds from the notes were used to repay short-term debt and other maturing indebtedness in 2002 and current maturities of long term debt in 2003 The notes are fully and unconditionally guaranteed by Cooper Cooper terminated the shelf registration effective August 6, 2004 Off-Balance Sheet Arrangements and Aggregate Contractual Obligations Cooper executes stand-by letters of credit, performance bonds and other guarantees in the normal course of business that ensure Cooper's performance or payments to third parties The aggregate notional value of these instruments was $106 6 million at December 31, 2004 Eighty-three percent of these instruments have an expiration date within one year In the past, no significant claims have been made against these financial instruments Management believes the likelihood of demand for payment under these instruments is minimal and expects no material cash outlays to occur in connection with these instruments The following table summarizes Cooper's contractual obligations at December 31,2004 and the effect such obligations are expected to have on its liquidity and cash flows in future periods 25 http //www sec gov/Archives/edgar/data/1141982/000095012905001490/h22660el0vk htm 2/6/2006