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 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 notice given 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 interests, 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
Xxxx-Xxxxx-Xxxxxx 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
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, 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:
To the Company:
Communication Cable, Inc.
0000 Xxxxxxxxxx Xxxxx
P. O. Xxx 0000
Xxxxxxx, XX 00000
Attention: Xxxxx X. Xxxx
Facsimile: (000) 000-0000
with a copy to:
XxXxxxxx & Xxxxxxxx
0000 Xxxxx Xxxx Xxxxx
P. O. Xxx 00000
Xxxxxxx, XX 00000
Attention: L. Xxxxx XxXxxxxx
Facsimile: (000) 000-0000
To Pentair:
Pentair, Inc.
0000 Xxxxxx Xxxx X0 Xxxx
Xx. Xxxx, XX 00000-0000
Attention: Xxxxxxx X. Xxxxxxxx
Facsimile: (000) 000-0000
With copies to:
Xxxxxx & Efron, P. A.
1200 Title Insurance Building
000 Xxxxxx Xxxxxx Xxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxxxx
Facsimile: (000) 000-0000
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.
(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.
By ____________________________
Its Executive Vice President
And By ____________________________
Its Secretary
COMMUNICATION CABLE, INC.
By ____________________________
Its ____________________________
And By ____________________________
Its ____________________________
