STOCK OPTION AGREEMENT
This AGREEMENT is made as of January 22, 1996, between Communication
Cable, Inc., a North Carolina corporation (the "Company"), and Pentair, Inc.,
a Minnesota corporation ("Pentair").
RECITALS
The Company and Pentair have entered into an Agreement and Plan of Merger
of even date herewith (the "Agreement") pursuant to which Pentair Acquisition
Corporation, a North Carolina corporation, will, upon satisfaction of the
terms and conditions of the Agreement, merge with and into the Company,
by which the shareholders of the Company will receive cash for the value of
their shares in the amount of $13.50 per share (the "Merger").
To induce Pentair to enter into the Letter Agreement, the Company has
agreed to grant to Pentair the Stock Option (as hereinafter defined).
NOW, THEREFORE, the parties hereto agree as follows:
1. Grant of Stock Option. The Company hereby irrevocably grants to Pentair
an option (the "Stock Option") to purchase up to 300,000 of the Company's
common shares, par value $1.00 per share (the "Shares"), at a price of $13.50
per Share (the "Option Price").
2. Exercise of Stock Option. The Stock Option may be exercised by Pentair,
in one or more tranches, in whole or in part, at any time, or from time to
time, by given notice on or before February 22, 1996.
3. Notice of Exercise; Payment and Delivery of Certificate(s).
(a) Notice of Exercise. In the event Pentair wishes to exercise the Stock
Option, Pentair shall give written notice to the Company of its intention to
do so, specifying the number of Shares to be purchased hereunder and the place
and date for the closing of the purchase, which date shall be not later than
five business days from the date such notice is given, unless any law or
regulation does not permit the purchase to be consummated during such five-day
period, in which case the date for the closing of the purchase shall be within
two business days following the cessation of such restriction on consummation.
(b) Payment and Delivery of Certificate(s). At any closing hereunder,
Pentair shall pay the aggregate purchase price for the Shares to be purchased
by delivery of a certified or bank cashier's check or wire transfer to
the order of the Company in the amount of the Option Price multiplied by
the number of Shares to be purchased. Upon receipt of payment, the Company
will deliver to Pentair a certificate or certificates representing the
Shares so purchased, registered in the name of Pentair or its designee,
in the denominations designated by Pentair in its notice of exercise.
4. Representations and Warranties of the Company. The Company hereby
represents and warrants to Pentair as follows:
(a) Due Authorization. The Company has the requisite corporate power and
authority to enter into and perform this Agreement. This Agreement has
been duly authorized by all necessary corporate action on the part of the
Company and has been duly executed by a duly authorized officer of the
Company and is the valid and binding agreement of the Company.
(b) Option Shares. Except for any filings required to be made with any
governmental authorities, which filings shall be made as soon as possible
after the date hereof, the Company has taken all necessary corporate and
other action to authorize and reserve and to permit it to issue, and at
all times from the date hereof until such time as the obligation to deliver
Shares upon the exercise of the Stock Option terminates, will have reserved
for issuance, upon any exercise of the Stock Option, the aggregate number
of Shares issuable upon exercise of the Stock Option (less the number of
Shares previously issued upon any prior exercise of the Stock Option),
which reserved Shares may be either authorized but unissued Shares or
Shares held by the Company as treasury Shares, and all of which Shares,
upon issuance pursuant hereto, shall be duly and validly issued, fully paid
and nonassessable, and shall be delivered free and clear of all claims,
liens, charges, encumbrances and security interest, including any preemptive
right of the shareholders of the Company.
(c) No Conflicts. Neither the execution and delivery of this Agreement,
the consummation of the transactions contemplated hereby or the fulfillment
of and compliance with the terms and provisions hereof, will (i) violate any
judicial, administrative or arbitral order, writ, award, judgment, injunction
or decree involving the Company, (ii) conflict with the terms, conditions
or provisions of the charter or By-Laws of the Company, or (iii) conflict
with, result in a breach of, constitute a default under or accelerate
or permit the acceleration of the performance required by, any indenture
or any material agreement or other material instrument to which the
Company is a party or by which the Company is bound. Subject to compliance
with the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act (the "HSR Act"), neither
the execution and delivery of this Agreement nor the performance by the
Company of its obligations hereunder will violate any provision of law
applicable to the Company or require any consent or approval of, or filing
with or notice to, any public body or authority under any provision of
law applicable to the Company.
5. Representations and Warranties of Pentair. Pentair hereby represents
and warrants to the Company as follows:
(a) Due Authorization. Pentair has the requisite corporate power and
authority to enter into and perform this Agreement. This Agreement has
been duly authorized by all necessary corporate action on the part of Pentair
and has been duly executed by a duly authorized officer of Pentair and
is the valid and binding agreement of Pentair.
(b) Distribution. Any Shares to be acquired upon exercise of the Stock
Options will not be acquired by Pentair with a view to the public distribution
thereof and will not be transferred except in a
2
transaction registered, or exempt from registration under, the Securities
Act of 1933, as amended (the "Securities Act").
6. Adjustment Upon Changes in Capitalization. In the event of any change
in the outstanding Shares by reason of stock dividends, stock splits, mergers
(other than the Merger), recapitalizations, combinations, conversions,
exchanges of shares or the like, the number and kind of shares or securities
subject to the Stock Option, the number and kind of shares or securities
reserved for issuance upon exercise of the Stock Option, and the Option Price
shall be appropriately adjusted. If, prior to the expiration or exercise
of the Stock Option in full, the Company shall consolidate or merge into
another corporation or liquidate, Pentair shall thereafter receive upon
exercise of the Stock Option the securities or property to which a holder
of the number of Shares issuable upon the exercise thereof would
have been entitled upon such consolidation, merger or liquidation, and
the Company shall take such steps in connection with such consolidation,
merger or liquidation as may be necessary to assure that the provisions
hereof shall thereafter be applicable, as nearly as reasonably may be
practicable, in relation to any securities or property thereafter issuable
upon exercise of the Stock Option.
7. Registration Rights. Upon the request of Pentair, the Company agrees
that upon exercise of the Stock Option (i) during a period of five years
from the first purchase of Shares to effect up to three registrations under
the Securities Act and any applicable state securities laws covering any
part or all of such Shares acquired and (ii) to include any part or all
of such Shares in any registration filed by the Company under the Securities
Act and in any related applicable state securities laws registrations or
applications in which such inclusion is permitted under applicable rules
and regulations unless, in the written opinion of counsel to the Company,
addressed to Pentair, which opinion shall be satisfactory to Pentair and its
counsel, such action is not required for the prompt sale and distribution
of such Shares to the public. The registrations and applications effected
under this paragraph 7 shall be effected at the Company's expense except
for underwriting discounts relating to the Shares sold on behalf of Pentair
and except for fees of counsel to Pentair. In connection with any registration
under this paragraph 7, the parties hereto agree to indemnify each other
in the customary manner, and, in the case of an underwritten offering,
the Company agrees to enter into an underwriting agreement in customary
form and to indemnify Pentair and the underwriters, and Pentair agrees to
indemnify the Company and the underwriters, in the manner and to the
extent as is customary in such underwritten offerings. In the event of
any demand for registration pursuant to clause (i) above, the Company
may delay the filing of a registration statement for a period of up
to 90 days if, in the good faith judgment of the Board of Directors of
the Company, such delay is necessary in order to avoid interference with a
planned material transaction involving the Company. With respect to any
registration pursuant to clause (ii) above, if such registration relates
to a firm commitment underwriting of securities to be sold by the Company,
the Company may decline to include all or any portion of the Shares
acquired by Pentair upon exercise of the Stock Options if the inclusion
of such Shares would, in the judgment of the managing underwriter in
such underwriting, materially interfere therewith.
8. Extension of Option Period.
(a) In the event that, on February 22, 1996, the Stock Option has not
been exercised in full,
3
and on such date the Stock Option may not be exercised by reason of any
judicial or regulatory judgment, decree or order preventing or restraining
such exercise, then the time within which the Stock Option may be exercised
hereunder shall be extended until the first date thereafter on which such
prohibition does not exist and has not existed for at least the three
preceding consecutive business days (or such other time as the Company and
Pentair agree upon).
(b) In the event that, on the date specified in a notice of exercise,
the purchase of the Shares may not be consummated by reason of any judicial
or regulatory judgment, decree or order preventing or restraining such
purchase, then the time for such purchase shall be extended until the first
date thereafter on which such prohibition does not exist and has not existed
for at least the three preceding consecutive business days (or such other
time as the Company and Pentair agree upon).
(c) The parties hereto shall use their reasonable best efforts to remove
any prohibition of the giving of notice of exercise or the purchase of Shares
upon exercise of the Stock Option, as the case may be, as soon as practicable.
9. Remedies. The Company agrees that if for any reason Pentair shall
have exercised its rights under the Stock Option and the Company shall have
failed to issue any of the Shares subject to the Stock Option or to perform
any of its other obligations under this Agreement, then Pentair shall be
entitled to specific performance and injunctive and other equitable relief,
and the Company further agrees to waive any requirement for the securing or
posting of any bond in connection with the obtaining of any such injunctive or
other equitable relief. This provision is without prejudice to any other rights
that Pentair may have against the Company for any failure to perform its
obligations under this Agreement.
10. HSR Filing. As soon as practicable after the date hereof, each of
the parties hereto shall file with the Federal Trade Commission and the
Antitrust Division of the United States Department of Justice all required
pre-merger notification and report forms and other documents and exhibits
required to be filed under the HSR Act and to permit the purchase of the Shares
subject to the Stock Options at the earliest possible date.
11. Miscellaneous.
(a) Amendments. This Agreement may not be modified, amended, altered
or supplemented, except upon the execution and delivery of a written agreement
executed by the parties hereto.
(b) Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly received if so given) by delivery, by facsimile, or
by registered or certified mail, postage pre-paid, return receipt requested,
to the respective parties as follows:
4
To the Company: Communication Cable, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇.▇ ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: L. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
To Pentair: Pentair, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇
▇▇. ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With copies to: ▇▇▇▇▇▇ & Efron, P.A.
1200 Title Insurance Building
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address as either party may have furnished to the other in
writing in accordance herewith, except that notices of change of address shall
only be effective upon actual receipt.
(c) Governing Law. This Agreement shall be governed by and construed in
accordance with the substantive law of the State of North Carolina without
giving effect to the principles of conflicts of laws thereof.
(d) Severability. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid,
void or unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall continue in full force and effect and
shall in no way be affected, impaired or invalidated.
(e) Counterparts. This Agreement may be executed in several counterparts,
each of which shall be an original, but all of which together shall constitute
one and the same agreement.
5
(f) Effect of Headings. The paragraph headings herein are for
convenience only and shall not affect the construction hereof.
(g) Assignment. This Agreement shall be binding upon each party hereto
and such party's successors and assigns. This Agreement shall not be assignable
by the Company, except by operation of law, but may be assigned by Pentair
to a direct or indirect wholly-owned subsidiary of Pentair.
(h) Waiver. The conditions to each of the parties' obligations hereunder
are for the sole benefit of such party and may be waived by such party in whole
or in part to the extent permitted by applicable law.
IN WITNESS WHEREOF, the Company and Pentair have caused this
Agreement to be duly executed and attested as of the day and year first
above written.
PENTAIR INC. COMMUNICATION CABLE, INC.
By: By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
Its: Executive Vice President Its: President
And By: And By: /s/ ▇▇▇▇▇▇▇ ▇. ??????
Its: Secretary Its: Assistant Secretary