AGREEMENT AND PLAN OF MERGER
AMONG
COMMUNICATION CABLE, INC.,
PENTAIR ACQUISITION CORPORATION
AND
PENTAIR, INC.
AS OF JANUARY 20, 1996
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated as of January 20, 1996 (the
"Agreement"), by and among Communication Cable, Inc., a North Carolina
corporation ("CCI"), Pentair Acquisition Corporation, a North Carolina
corporation ("Pentair Subsidiary"), which two corporations are being merged as
hereinafter provided and shall be referred to as the "Constituent Corporations",
and Pentair, Inc., a Minnesota corporation ("Pentair").
As of January 16, 1996, the authorized capital stock of CCI consisted of
10,000,000 shares of Common Stock, $1.00 par value per share ("CCI Common
Stock"), of which 2,641,033 shares are issued and outstanding as of the date
hereof and of which 239,469 are reserved for issuance under various options to
purchase shares of CCI Common Stock;
The authorized capital stock of Pentair Subsidiary consists of 1,000 shares
of common stock, par value $.01 per share, all of which shares are issued and
outstanding and are owned by Pentair;
The respective Boards of Directors of CCI, Pentair and Pentair Subsidiary
deem the merger provided for herein (the "Merger") desirable and in the best
interests of their respective shareholders.
The respective Boards of Directors of CCI, Pentair and Pentair Subsidiary
have duly adopted resolutions approving the Agreement, and the Board of
Directors of CCI has directed that the Agreement be submitted for approval by
CCI's shareholders.
In consideration of the premises and the respective representations,
warranties, covenants and agreements set forth herein, the parties hereto agree
as follows:
ARTICLE I
THE MERGER
1.1 THE MERGER. In accordance with the provisions of this Agreement and
the North Carolina Business Corporation Act ("NCBCA"), at the Effective Time (as
herein defined), Pentair Subsidiary shall be merged with and into CCI and the
separate existence of Pentair Subsidiary shall thereupon cease, and the name of
CCI, as the surviving corporation in the Merger (the "Surviving Corporation"),
shall be "Communication Cable, Inc."
1.2 EFFECTIVE TIME. The Merger shall become effective when properly
executed Articles of Merger in the form attached as Exhibit A hereto, are duly
filed with the Secretary of State of North Carolina, which filing shall be made
as promptly as practicable after the closing contemplated by this Agreement in
accordance with Article VI hereof. As used herein, the term "Effective Time"
shall mean the date and time at which such Articles are so filed or such later
time as is specified in the Articles of Merger.
1.3 EFFECT OF THE MERGER. At the Effective Time, title to all property
owned by the Constituent Corporations shall be vested in the Surviving
Corporation without reversion or impairment. The Surviving Corporation shall
have all liabilities of the Constituent Corporations. The shares of CCI Common
Stock shall be converted into cash in the manner and on the basis described
below and the former holders of such shares shall be entitled only to the rights
provided in this Agreement or under the NCBCA.
1.4 ARTICLES OF INCORPORATION. The Articles of Incorporation of Pentair
Subsidiary in effect at the time of the Merger shall be the Articles of
Incorporation of the Surviving Corporation. Such Articles of Incorporation,
separate and apart from this Agreement, shall be, and may be separately
certified as, the Articles of Incorporation of the Surviving Corporation.
1.5 BYLAWS. The Bylaws of Pentair Subsidiary in effect at the time of the
Merger shall be the Bylaws of the Surviving corporation until altered, amended
or repealed.
1.6 DIRECTORS AND OFFICERS. The directors and officers of the Surviving
Corporation at the Bylaws of the Surviving Corporation until altered, amended or
repealed.
President and Chief Executive Officer, Director Xxxxxx X. Xxxxx
Vice President - Finance and Treasurer, Director Xxxxx X. Xxxxxxxx
Secretary, Director Xxx X. Xxxx
who shall serve, in each case, until their successors shall have been elected
and shall qualify. If at the Effective Time a vacancy shall exist on the Board
of Directors or in any of the offices of the Surviving Corporation, such vacancy
may thereafter be filled in the manner provided by the Bylaws of the Surviving
Corporation.
1.7 CONVERSION OF SHARES. The manner and basis of converting and exchanging
the shares of CCI Common Stock and Pentair Subsidiary common stock, and the
manner and basis of making distributions, if any, to shareholders of CCI and
Pentair Subsidiary, shall be as follows:
(a) Each share of CCI Common Stock which is issued and outstanding
immediately prior to the Effective Time, other than Dissenting CCI Shares
(as defined below), shall by virtue of the Merger and without any action on
the part of the holder thereof, at and after the Effective Time, be
converted into the right to receive $13.50 in cash (subject to appropriate
adjustment for any stock split, reverse stock split, cash dividend, stock
dividend or other similar distribution or reclassification with respect to
the outstanding shares of CCI Common Stock from the date hereof to the
Effective Time) (the "Merger Consideration").
(b) Each share of CCI Common Stock, if any, which is issued and held in the
treasury of CCI, shall, by virtue of the Merger and without any action on
the part of Pentair Subsidiary or of CCI, at the Effective Time, be retired
and cancelled, an no cash or other consideration shall be issued with
respect thereto.
(c) All shares of common stock of Pentair Subsidiary issued and outstanding
at the Effective
Time shall be converted into and exchanged for an equal number of shares of
common stock of the Surviving Corporation so that the Surviving Corporation
shall become a wholly-owned subsidiary of Pentair. Pentair as sole holder
of the shares of Pentair Subsidiary common stock outstanding immediately
before the Effective Time shall, as promptly as possible after the
Effective Time, surrender the certificate representing such shares of
Pentair Subsidiary common stock to the Surviving Corporation in exchange
for a certificate representing an equal number of shares of common stock of
the Surviving Corporation, which shall constitute all the outstanding
shares of capital stock of the Surviving Corporation.
1.8 SURRENDER OF SHARES. As promptly as practicable after the Effective
Time, each holder of shares of CCI Common Stock shall, upon presentation and
surrender of the certificate or certificates therefor to the Paying Agent (as
defined below) for cancellation in accordance with the transmittal materials
described below, be entitled to receive in exchange therefor a check or checks
payable to such person representing payment of cash into which such holder's
shares of CCI Common Stock have been converted at the Effective Time. Each
certificate which represented issued and outstanding shares of CCI Common Stock
immediately prior to the Effective Time shall be deemed canceled at the
Effective Time and shall represent only the right to receive cash for each share
represented by such certificate. In no event shall the holder of any such
surrendered certificates be entitled to receive interest on any of the funds to
be received in the Merger.
1.9 DESIGNATION OF PAYING AGENT; INVESTMENT OF FUNDS. Pentair and Pentair
Subsidiary shall make available to First Citizens Bank to act as paying agent
(the "Paying Agent") at or prior to the Effective Time an amount in cash equal
to the product of the Merger Consideration times the number of shares of CCI
Common Stock outstanding immediately prior to the Effective Time, which shall
not include (i) the number of shares of CCI Common Stock held in CCI's treasury,
(ii) the number of Dissenting CCI Shares whose holders have complied with the
provisions of Article 13 of the NCBCA at or prior to the Effective Time and
(iii) any shares owned by Pentair, Pentair Subsidiary or any other subsidiary or
affiliate of Pentair. The cash deposited with the Paying Agent shall be invested
by the Paying Agent as directed by Pentair.
1.10 TRANSMITTAL MATERIALS. As promptly as practicable following the
Effective Time, Pentair shall send or cause to be sent to each former holder of
record of shares of CCI Common Stock transmittal materials for use in
surrendering their certificate or certificates in exchange for cash. The letter
of transmittal will contain instructions with respect to the surrender of such
certificates. Pentair shall instruct record date holders of CCI Common Stock who
hold such shares for the account of others to provide the respective beneficial
holders of such shares instructions with respect to the surrender of their
shares.
1.11 DISSENTING CCI SHARES. Each outstanding share of CCI Common Stock for
which written notice of intent to demand payment therefor is delivered in
accordance with Article 13 of the NCBCA and is not voted in favor of the Merger
shall not be converted into or represent a right to receive cash hereunder,
unless and until the holder thereof shall have failed to perfect his demand for
payment under Article 13 of the NCBCA, in which event that holder's shares shall
be converted into a right to receive cash in the same manner and subject to the
same conditions as provided for other outstanding shares of CCI Common Stock in
this Article I. All such shares of CCI Common Stock for which such a written
notice of intent to demand payment is so delivered and which are not voted in
favor of the Merger, except for such shares of CCI
Common Stock for which a demand for payment is not perfected in accordance
with the NCBCA, are herein called "Dissenting CCI Shares." CCI shall give
Pentair and Pentair Subsidiary prompt notice upon receipt by CCI of any
such written notice of intent to demand payment for shares of CCI Common Stock.
CCI agrees that prior to the Effective Time it will not, except with the
prior written consent of Pentair, voluntarily make any payment with respect to,
or settle or offer to settle, any such demand for payment. Each holder of
Dissenting CCI Shares who becomes entitled, pursuant to Article 13 of the NCBCA,
to receive payment for the fair value of his shares shall receive payment
therefor from CCI as the Surviving Corporation (but only after the amount
thereof shall have been agreed upon or finally determined pursuant to such
provisions), and such shares shall be retired and canceled.
1.12 TERMINATION OF PAYING AGENT'S DUTIES. Promptly following the date
which is six months after the Effective Time, the Paying Agent shall deliver
to CCI all cash and other documents in its possession relating to the
transactions described in this Agreement, and the Paying Agent's duties shall
terminate. Thereafter, each holder of a certificate formerly representing
shares of CCI Common Stock who has not previously surrendered such certificate
may surrender such certificate to the Surviving Corporation and (subject to
applicable abandoned property, escheat and similar laws) receive in exchange
therefore the Merger Consideration.
1.13 CLOSING OF CCI'S TRANSFER BOOKS. At the Effective Time, the stock
transfer records of CCI shall be closed and no transfer of shares of CCI Common
Stock shall thereafter be made.
1.14. STOCK OPTIONS. As of the Effective Time, each stock option listed
in Section 1.14 of the CCI Schedule (as defined below) which is outstanding on
the day before the Effective Time shall be converted into the right to receive
cash equal to the difference between (i) the product of (A) the number of shares
of CCI Common Stock into which such option would then be exercisable in
accordance with its terms and (B) the Merger Consideration and (ii) the option
exercise price, subject to any required withholding of any amount for purposes
of federal, state, local or foreign taxes. CCI shall thereupon immediately pay
to the holder of such option such cash amount. CCI shall take all appropriate
actions to obtain such consents as may be necessary for the transactions
contemplated by this Article 1.14.
1.15 GRANT OF STOCK OPTION. Upon execution hereof, CCI shall execute
and deliver to Pentair the Stock Option Agreement attached hereto as Exhibit
B, pursuant to which CCI is granting to Pentair an option to purchase from the
Company up to 300,000 authorized but unissued shares of its common stock at
a price of $13.50 per share.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE PARTIES
2.1 REPRESENTATIONS AND WARRANTIES OF CCI. CCI represents and
warrants to Pentair and Pentair Subsidiary as follows:
(a) CCI SCHEDULE. CCI has delivered in connection with this Agreement
and Plan of Merger
a schedule of information supplementing the disclosures contained in this
Agreement and has included certain other information in its SEC Reports (as
hereinafter defined) (collectively the "CCI Schedule"), which shall be made
a part of and incorporated into this Agreement as if fully set forth
herein.
(b) ORGANIZATION AND STANDING OF CCI. CCI is a corporation duly organized
and validly existing under the laws of the State of North Carolina and has
the corporate power to own or lease its properties and to carry on its
business as now being conducted. CCI is duly qualified or otherwise
authorized to transact business as a foreign corporation and is in good
standing in every jurisdiction in which such qualification or authorization
is required by law carry on its business as now being conducted.
(c) CCI SUBSIDIARIES. CCI conducts its business directly and not through
any subsidiary, association, joint venture, partnership or other business
entity.
(d) AUTHORIZED STOCK. As of January 16, 1996, the authorized capital stock
of CCI consisted of 10,000,000 shares of Common Stock, par value $1.00 per
share, of which 2,641,033 shares are issued and outstanding as of the date
hereof. All of the issued and outstanding shares of CCI Common Stock have
been validly issued and are fully paid and non-assessable (subject to
statutory obligations of holders, if any) and free of preemptive rights. As
of the date hereof:
(i) 134,780 shares of CCI Common Stock were reserved for issuance
upon exercise of outstanding CCI stock options granted pursuant to the
Communication Cable, Inc. Employee Stock Option Plan,
(ii) 79,969 shares of CCI Common Stock were reserved for issuance
upon exercise of outstanding CCI stock options granted under the
Communication Cable, Inc. Director Stock Option Plan and
(iii) 24,720 shares of CCI Common Stock were reserved for issuance
upon exercise of outstanding stock options granted under the
Communication Cable, Inc. 1995 Outside Directors Stock Option Plan.
Except for the options and shares specified above and as reflected in
Section 2.1(d) of the CCI Schedule, there is no contract, understanding,
restriction or agreement, including any voting trust or other agreement or
understanding with respect to the voting of any of the capital stock of
CCI, or any convertible, exchangeable or exercisable security, option,
warrant, call, or commitment on the part of CCI of any character relating
to issued or unissued shares of the capital stock of CCI. All transfers of
ownership of shares of CCI Common Stock have been appropriately recorded on
the stock transfer books of CCI.
(e) AUTHORIZATION. The Board of Directors of CCI has adopted resolutions
approving the Agreement and the transactions contemplated hereby and has
authorized the execution and delivery of the Agreement and has adopted
resolutions approving this Agreement, recommending to the
shareholders of CCI approve this Agreement and the Merger and submitting
this Agreement to a vote of the holders of shares of CCI Common Stock taken
at a meeting called for the purpose of considering and acting upon this
Agreement. CCI has full power and authority to enter into this Agreement
and, upon appropriate consent of its shareholders in accordance with the
NCBCA, subject to obtaining all required regulatory approvals, to
consummate the transactions contemplated hereby. This Agreement has been
duly executed and delivered by CCI and constitutes the valid and legally
binding obligation of CCI, enforceable against it in accordance with its
terms, subject to bankruptcy, receivership, insolvency, reorganization,
moratorium or similar laws affecting or relating to creditors rights
generally and subject to general principles of equity.
(f) ARTICLES OF INCORPORATION AND BYLAWS. CCI has delivered to Pentair true
and complete copies of its Articles of Incorporation and Bylaws as in
effect as of the date hereof. All actions of the shareholders and of the
Board of Directors of CCI to the date hereof have been properly and
completely recorded in the books and records of CCI.
(g) CONSENTS AND APPROVALS. Except for the consents and approvals listed on
the Schedule 2.1(g) of the CCI Schedule, no filing with, and no permit,
authorization, consent or approval of, any public body or authority is
necessary for the consummation by CCI of the transactions contemplated by
this Agreement.
(h) DEFAULTS AND CONFLICTS. CCI is not currently nor immediately prior to
the Effective Time will be in default under its Articles of Incorporation
or Bylaws, or in default under any indenture or under any material
agreement or other material instrument to which it is a party or by which
it or any of its properties is bound or to which it is subject. Subject to
the receipt of all consents and approvals contemplated by this Agreement,
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 CCI, (ii) conflict with the terms, conditions or
provisions of the Articles of Incorporation or Bylaws of CCI, (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
CCI is a party or by which CCI is bound, (iv) result in the creation of any
lien, charge or encumbrance upon any of the assets of CCI under any such
agreement or instrument, or (v) terminate or give any party thereto the
right to terminate any such indenture, agreement or instrument. Except as
disclosed in Section 2.1(h) of the CCI Schedule, no consent of any third
party to any indenture or any material agreement or other material
instrument to which CCI is a party is required in connection with the
Merger.
(i) SEC REPORTS; FINANCIAL STATEMENTS. CCI has filed all required forms,
reports, registration statements and documents with the Securities and
Exchange Commission (the "SEC"), since December 31, 1991 (collectively, the
"SEC Reports"), each of which, as of its respective date, complied in all
material respects with all applicable requirements of the Securities Act of
1933, as amended (the "Securities Act") and the Securities Exchange Act of
1934, as amended (the "Exchange Act"). As of their respective dates, none
of the SEC Reports, including, without limitation, any financial statements
or schedules included therein, contained any untrue statement
of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading.
None of the information to be included in the proxy statement to be mailed
to the shareholders of CCI in connection with the Merger or in any
amendments thereof or supplements thereto (the "Proxy Statement") will, at
the time of (i) the first mailing thereof and (ii) the meeting of
shareholders to be held in connection with the Merger, contain any untrue
statement of a material fact or omit to state any material fact required to
be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading.
The audited consolidated financial statements of CCI included in its Annual
Report on Form 10-K for the years ended October 31, 1992, 1993 and 1994,
and the unaudited consolidated interim financial statements included in its
Quarterly Report on Form 10-Q for its quarter ended July 31, 1995 (and the
audited consolidated financial statements of CCI included in its Annual
Report on Form 10-K for the years ended October 31, 1995, when filed, will)
fairly present in conformity with generally accepted accounting principles
applied on a consistent basis (except as may be indicated therein or in the
notes thereto) the financial position of CCI as of the dates thereof and
their consolidated statements of operations, shareholders' equity, and cash
flows for the periods then ended (in the case of any unaudited interim
financial statements, subject to (i) normal year-end adjustments and (ii)
standard limitations on the application of generally accepted accounting
principles).
Except as and to the extend reflected in the interim statement of financial
position of CCI as of July 31, 1995, and notes thereto (the "CCI July 31,
1995 Balance Sheet") or in Section 2.1(i) of the CCI Schedule, CCI has not
had as of July 31, 1995, any liability or obligation (absolute, contingent
or otherwise) except for contractual liabilities arising in the ordinary
course which are not required to be reflected in a balance sheet prepared
in accordance with generally accepted accounting principles.
(j) CHANGES SINCE JULY 31, 1995. Except as disclosed in Section 2.1(j) of
the CCI Schedule, since July 31, 1995 there has been no material adverse
change in the assets, properties, business, financial condition or results
of operations of CCI; and CCI has not, since July 31, 1995 (i) made any
change in its authorized capital stock, (ii) issued any stock options,
warrants or other rights calling for the issue, transfer, sale or delivery
of its capital stock or other securities, (iii) paid any stock dividend or
made any reclassification in respect of its outstanding shares of capital
stock, (iv) issued, transferred, sold or delivered any shares of its
capital stock (or securities convertible into or exchangeable, with or
without additional consideration, for such capital stock), (v) purchased or
otherwise acquired for a consideration any outstanding shares of its
capital stock, (vi) disposed of a material portion of CCI's assets,
properties or business other than in the ordinary course of business,
(vii) authorized or made any distribution to CCI's stockholders of any
assets of CCI by way of cash dividends or otherwise; or (viii) amended its
Articles of Incorporation or Bylaws. Except as and to the extent disclosed
in Section 2.1(j) of the CCI Schedule, CCI has not incurred any liability
or obligation (absolute, contingent or otherwise) since July 31, 1995,
other than in the ordinary course of business. No material adverse change
in inventory balances (defined for this
purpose as a reduction in excess of $300,000.00 in the stated amount of
such inventories) shall exist between the audited fiscal year end financial
statements when issued and the draft unaudited fiscal year end financial
statements attached to Section 2.1(j) of the CCI Schedule.
(k) PROPERTIES.
(i) Real Estate and Mortgages. Section 2.1(k)(i) of the CCI Schedule
sets forth a list and summary description of (A) all real property
owned by CCI and all buildings and other structures located on such
real property, (B) all leases, subleases or other agreements under
which CCI is the lessor or lessee of any real property, (C) all
unexpired options held by CCI or contractual obligations on its part
to purchase or acquire any interest in real property, (D) all
unexpired options granted by CCI or contractual obligations on its
part to sell or dispose of any interest in real property, and (E) all
mortgages held by CCI (other than as investment securities),
identifying all such mortgages, if any, for which deficiency notices
have been issued or that are otherwise not current. Except as
disclosed in Section 2.1(k)(i) of the CCI Schedule, as of the date
hereof such leases, subleases and other agreements are in full force
and effect and CCI has not received any notice of any material default
thereunder. Each of the options disclosed in Section 2(k)(i) of the
CCI Schedule is in full force and effect.
(ii) Title to Property. Except as disclosed in Section 2.1(k)(ii) of
the CCI Schedule, CCI has good and marketable title to all real
properties reflected in Section 2.1(k)(i) (the "Real Property") and
good and marketable title to all other assets and properties shown as
owned by it on the CCI July 31, 1995 Balance Sheet or acquired since
that date (except properties disposed of in the ordinary course of
business subsequent to said date), in each case free of all mortgages,
liens, charges and encumbrances of any nature whatsoever, other than
(A) liens for Taxes not yet due and payable and (B) such minor liens,
charges and encumbrances as, in the aggregate, do not and would not if
asserted have a material adverse effect on the assets, properties,
business, financial condition or results of operations of CCI. There
does not exist (a) any claim of adverse possession or prescriptive
rights involving any of the Real Property, (b) any structure located
on any Real Property which encroaches on or over the boundaries of
neighboring or adjacent properties in any material respect or (c) any
structure of any other party which encroaches on or over the
boundaries of any of such Real Property in any material respect.
Except as set forth in the CCI Schedule, none of the Real Property is
located in a flood plain, flood hazard area, wetland or lakeshore
erosion area within the meaning of any Law, regulation or ordinance.
No public improvements have been commenced which to CCI's best
knowledge none are planned which, in either case, may result in
special assessments against or otherwise materially adversely affect
any Real Property. No portion of any of the Real Property has been
used as a landfill or for storage of Waste by CCI. CCI has no notice
or knowledge of any (1) planned or proposed increase in assessed
valuations of any Real Property, (2) Order requiring repair,
alteration, or correction of any existing condition affecting any Real
Property or the systems or improvements thereon, (3) condition or
defect which could give rise to an order of the sort referred to in
"(2)" above, (4) aboveground or underground storage tanks currently
existing or previously removed from the Real Property, (5) xxxxx
(except water xxxxx) located on the
Real Property, or (6) structural, mechanical, or other defects of
material significance affecting any Real Property or the systems or
improvements thereon (including, but not limited to, inadequacy for
normal use of mechanical systems or disposal or water systems at or
serving the Real Property).
(iii) Condition. All property and assets owned or utilized by CCI
which are material to its operations are in good operating condition
and repair, free from any defects (except such minor defects as do not
interfere with the use thereof in the conduct of the normal operations
of CCI) and have been maintained consistent with prudent industry
practice. No other assets or property are needed to permit CCI to
carry on its business as conducted during the preceding 12 months. All
buildings, plants and other structures owned or otherwise utilized by
CCI are suitable and adequate for the purposes for which it is
presently being used and as it is proposed to be used.
(l) COMPLIANCE WITH LAWS AND ORDERS.
(i) Compliance. Except as set forth in the CCI Schedule, to the
knowledge of CCI, CCI is in compliance with all applicable statutes,
laws, ordinances, rules or regulations (collectively, "Laws") and all
orders, writs, injunctions, judgments, plans or decrees (collectively,
"Orders") of any court, arbitrator, department, commission, board,
bureau, agency, authority, instrumentality or other body, whether
federal, state, municipal, foreign or other (collectively,
"Government Entities") including, without limitation,
those applicable to discrimination in employment, public health,
occupational safety and health, trade practices, competition and
pricing, product warranties, zoning, building and sanitation,
employment, retirement and labor relations, product advertising and
the Environmental Laws as hereinafter defined, except where
noncompliance would not have a material adverse effect on CCI or its
business operations. Except as set forth in the CCI Schedule, CCI has
not received notice of any violation or alleged violation of, and is
subject to no liability for past or continuing violation of, any Laws
or Orders.
(ii) Licences and Permits. CCI has all material licenses, permits,
approvals, authorizations and consents of all Government Entities and
all certification organizations required for the conduct of its
business (as presently conducted and as proposed to be conducted) and
operation of its facilities (other than licenses, permits,
registrations, approvals, authorizations and consents which if not
obtained would not have a material adverse effect on CCI or its
business operations). All such licenses, permits, approvals,
authorizations and consents are described in the CCI Schedule, are in
full force and effect, are not subject to any pending or, to the best
of CCI's knowledge, threatened revocation or modification, and will
not be affected or made subject to loss, limitation or any obligation
to reapply as a result of the transactions contemplated hereby. Except
as set forth in the CCI Schedule, to the knowledge of CCI, CCI
(including its operations, properties and assets) is and has been in
compliance with all such permits and licenses, approvals,
authorizations and consents, except to the extent that noncompliance
would not have a material adverse effect on CCI or its business
operations.
(iii) Environmental Matters. For purposes of this Agreement,
applicable national, state, regional, county and local (whether
foreign or domestic) Laws relating to pollution or protection of the
environment, including, without limitation, Laws relating to
emissions, discharges, generation, storage, releases or threatened
releases of pollutants, contaminants, chemicals or industrial, toxic,
hazardous or petroleum or petroleum-based substances or wastes
("Waste") into the environment (including, without limitation, ambient
air, surface water, ground water, land surface or subsurface strata)
or otherwise relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling of Waste
including, without limitation, the Clean Water Act, the Clean Air Act,
the Resource Conservation and Recovery Act, the Toxic Substances
Control Act and the Comprehensive Environmental Response Compensation
Liability Act ("CERCLA"), as amended, are herein collectively referred
to as the "Environmental Laws." Without limiting the generality of the
foregoing provisions of this Section 2.1(l), except as set forth on
the CCI Schedule:
(1) CCI is in full compliance with all Environmental Laws or any
Order, notice or demand letter issued, entered, promulgated or
approved thereunder, except to the extent that noncompliance would not
have a material adverse effect on CCI's business operations.
(2) There is no litigation nor any demand, claim, hearing or
notice of violation pending or threatened against CCI relating in any
way to the Environmental Laws or any Order issued, entered,
promulgated or approved thereunder.
(3) There are no events, conditions, circumstances, activities,
practices, incidents, actions, omissions or plans which may
(A) interfere with or prevent compliance or continued
compliance with the Environmental Laws or with any Order issued,
entered, promulgated or approved thereunder, or
(B) give rise to any liability, including, without
limitation, liability under CERCLA or similar state or local
Laws, or otherwise form the basis of any litigation, hearing,
notice of violation, study or investigation, based on or related
to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling, or the emission,
discharge, release or threatened release into the environment,
of any Waste,
except to the extent that noncompliance would not have a material
adverse effect on the CCI or its business operations.
(4) CCI has made available to Pentair copies of all environmental
assessments or studies within its possession related to the Real
Property audits, now or previously owned, leased or operated by CCI.
(m) PROPRIETARY RIGHTS. Section 2.1(m) of the CCI Schedule discloses all
the trademarks, trade
names, service marks, patents and software (and all registrations,
applications, agreements and arrangements with respect thereto)
(collectively the "Proprietary Rights") used in the business of CCI. Except
as otherwise disclosed in such Schedule, CCI owns or is duly authorized to
use all of such Proprietary Rights. Such Proprietary Rights as used by CCI
in its business do not violate or infringe upon the proprietary rights of
any third party, and there is no claim, action, proceeding or investigation
pending or, to the best of CCI's knowledge, threatened against CCI with
respect to any Proprietary Rights.
(n) RECEIVABLES. The receivables shown on the July 31, 1995 Balance Sheet
of CCI, or those which have been acquired since that date, have been
collected or are collectible in the ordinary course of business in the
amounts thereof (net of applicable reserves) carried on the books of CCI.
(o) AGREEMENTS. Except as set forth in Section 2.1(o) of the CCI Schedule,
CCI is not a party to nor is CCI bound by any oral or written
(i) contract for the employment of any officer or employee which
pursuant to its terms is not terminable without liability on 30 days
(or less) notice or which provides for any further payments following
such termination, or contract with a former officer or employee
pursuant to which payments are required to be made at any time
following the date hereof, or contract with any labor union or
association representing any employee,
(ii) stock ownership, profit-sharing, bonus, deferred compensation,
stock option, severance pay, pension, retirement or similar plan or
agreement,
(iii) mortgage, indenture, note or installment obligation the unpaid
balance of which exceeds $25,000, or other instrument relating to any
borrowing of money by CCI, the unpaid balance of which exceeds
$25,000,
(iv) guaranty of any obligation for borrowings or otherwise which in
the aggregate exceed $25,000,
(v) agreement or arrangement for the sale or lease of any material
amount of its assets or part of its business other than in the
ordinary course of business or for the grant of preferential rights to
purchase or lease any material amount of its assets or part of its
business,
(vi) agreement or arrangement obligating it to register any of its
outstanding shares or other securities with the SEC,
(vii) agreement or arrangement with any officer or director of CCI or
any affiliate of CCI, or
(viii) contract, agreement or other instrument which is material to
the assets, properties, business, financial condition or results of
operations of CCI.
All contracts, plans, mortgages, indentures, guaranties and other
agreements disclosed in Section 2.1(o) of the CCI Schedule have been
provided to Pentair and are in full force and effect as of the date
hereof, neither CCI, nor to the best of its knowledge, any other party
thereto is in default in any material respect as to any provision thereof,
and no party thereto may terminate any of such agreements by reason of the
transactions contemplated by this Agreement.
(P) LITIGATION. Section 2.1(p) of the CCI Schedule sets forth a description of
each lawsuit in which CCI is a party. Except as disclosed in Section 2.1(p) of
the CCI Schedule, there are no actions, suits or proceedings pending, or to the
knowledge of CCI threatened, against or affecting CCI or its properties or
businesses, at law or in equity, or before any governmental or administrative
body or agency or before any arbitrator which, alone or in the aggregate, could
materially and adversely affect the assets, properties, business, financial
condition or results of operations of CCI or the ability of CCI to carry out the
transactions contemplated in this Agreement. Except as may be disclosed on such
Schedule, there are no unresolved disputes under any contract to which CCI is a
party or by which CCI is bound involving in the aggregate an amount in excess of
$50,000. CCI is not in default with respect to any order, writ, award, judgment,
injunction or decree of any court, governmental or administrative body or
agency, or arbitrator applicable to it which could have a materially adverse
effect on the assets, properties, business, financial condition or results of
operations of CCI.
(Q) TAXES.
(i) Except as disclosed in Section 2.1(q)(i) of the CCI
Schedule: (A) all Tax Returns (as defined below) required to be
filed with the appropriate taxing authorities have been filed by
or on behalf of CCI and all Taxes (as defined below) shown to be
due on such Tax Returns have been paid or provided for in full;
(B) there are no liens for Taxes upon the assets of CCI except
statutory liens for Taxes not yet due; (C) there are no
outstanding deficiencies in respect of Taxes asserted or
threatened or assessments of Taxes made or threatened, nor any
administrative or judicial proceedings pending or threatened
concerning Taxes, with respect to CCI and any deficiencies,
assessments or proceedings shown in the CCI Schedule are being
contested in good faith through appropriate proceedings; (D) CCI
has established on the financial statements described in Section
2(i) of this Agreement reserves and accruals adequate for the
payment of all Taxes accruing with respect to or payable by CCI
for all periods reflected therein; (E) there are no outstanding
agreements or waivers extending the statutory period of
limitations for assessment or collection applicable to any Taxes
or Tax Returns required to be filed with respect to CCI; (F) no
refund claims relating to Taxes have been filed or are
contemplated, and no refund action relating to Taxes is pending
or contemplated; and (G) CCI has not requested any extension of
time within which to file any Tax Return, which Tax Return has
not been filed within such extension.
(ii) The income Tax Returns of CCI (A) have been examined by
the Internal Revenue Service or the statute of limitations for
assessment for federal income taxes has expired for all taxable
periods up to and including October 31, 1991 or both and
(B) have been examined by the taxing authorities of all
of the states disclosed in the CCI Schedule pursuant to
Section
2.1(b) or the statute of limitations for assessment of any state
income taxes has expired for all periods up to and including
October 31, 1991, or both, and there are no outstanding or
unresolved proposed adjustments. Complete and accurate copies of
all income Tax Returns of CCI for all taxable periods ending
after october 31, 1991 have been provided to Pentair by CCI.
(iii) Except as disclosed in Section 2.1(q)(iii) of the CCI
Schedule, no power of attorney currently in force has been
granted by CCI with respect to any matter relating to Taxes.
(iv) The consummation of the transactions contemplated by this
Agreement will not give rise to any payments by CCI which
payments will not be deductible (in whole or in part) by reason
of Section 280G of the Internal Revenue Code (the "Code").
(v) CCI has made no elections under Section 341(f) (dealing
with collapsible corporations) of the Code.
(vi) CCI is not, nor has been within the last five years, a
United States real property holding corporation within the
meaning of Section 897 of the Code.
(vii) Except as described in Section 2.1(q)(iii) of the CCI
Schedule, no action is required within sixty (60) days of the
Effective Time to prevent the assessment or collection of Taxes,
or to preserve the right to a refund of Taxes, except such
action as is required or necessary in the ordinary course of
business.
For purposes of this Agreement, the term "Taxes" shall mean all taxes, charges,
fees, levies or other assessments, including without limitation, all net income,
gross income, premium or privilege, gross receipts, sales, use, ad valorem,
transfer, franchise, profits, license, withholding, payroll, employment, excise,
estimated, severance, stamp, occupation, property or other taxes, customs
duties, fees, assessments, or charges of any kind whatsoever, together with any
interest and any penalties, additions to tax or additional amounts imposed by
any governmental authority (domestic or foreign) upon CCI, and the term "Tax
Returns" shall mean all returns, declarations, reports, estimates, and
statements, regarding Taxes, required to be filed under United States federal,
state, local or any foreign laws.
(R) RELATED PARTY TRANSACTIONS. Except as disclosed in Section 2.1((r)) of the
CCI Schedule, CCI has not made any loan to any director, officer or other
affiliate of CCI which remains outstanding nor has CCI entered into any
agreement, other than an agreement referred to in Section 2.1(o) hereof, for the
purchase or sale of any property or services from or to any director, officer or
other affiliate of CCI.
(S) EMPLOYEE BENEFIT PLANS.
(i) Section 2.1(s)(i) of the CCI Schedule sets forth a true and
complete list of each employee benefit plan, as defined in Section
3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA") and each other plan,
arrangement and agreement providing employee benefits (collectively
the "Plans"), that covers current or former employees of CCI or an
affiliate thereof and that is presently or was formerly maintained
by CCI or any affiliate thereof or by any trade or business, whether
or not incorporated (an "ERISA Affiliate"), which together with CCI
would be deemed a "single employer" within the meaning of Section
4001 of ERISA. None of the Plans is a "multiemployer plan," as
defined in Section 3(37) of ERISA. CCI has delivered or made
available to Pentair copies of all such Plans; any related trust
agreements, group annuity contracts, insurance policies or other
funding agreements or arrangements relating thereto; determination
letters, if any, from the Internal Revenue Service with respect to
each of the Plans which is intended to be tax-qualified under the
Code ("ERISA Plans"); actuarial valuations, if applicable, for the
most recent plan year for which such valuations are available; the
current summary plan descriptions and summary of material
modifications thereto; the annual return/report on Form 5500, and
all schedules thereto and summary annual reports for each Plan
for each of the last three years; each audit report for a Plan
associated with such annual report; and a list and description of
the Plan's assets as of the end of the year covered by such annual
report.
(ii) Each of the ERISA Plans is and has been maintained in substantial
compliance with all applicable provisions of law, including the Code and
ERISA. Neither CCI nor any ERISA Affiliate currently maintains,
sponsors, contributes to or is obligated to contribute to a defined
benefit pension plan as defined in Section 414(j) of the Code, nor has
done so in the past. Neither CCI nor any ERISA Affiliate maintains,
sponsors, contributes to or is obligated to contribute to a plan subject
to Part 3 of Title I of ERISA or Section 412 of the Code.
(iii) The written terms of each of the Plans, and any related trust
agreement, group annuity contract, insurance policy or other funding
arrangement are in substantial compliance with all applicable laws
including ERISA, the Code, the Age Discrimination in Employment Act, and
the Medical and Family Leave Act, as applicable, and each of such Plans
has been administered in substantial compliance with such requirements.
(iv) Except with respect to income taxes on benefits paid or provided,
no income, excise or other tax or penalty (federal or state) has been
waived or excused, has been paid or is owed by any person (including,
but not limited to, any Plan, any Plan fiduciary, CCI and ERISA
Affiliates) with respect to the operations of, or any transactions with
respect to, any Plan. No action has been taken, nor has there been any
failure to take any action, nor is any action or failure to take action
contemplated, that would subject any person or entity to any liability
for any tax or penalty in connection with any Plan. No reserve for any
taxes or penalties has been established with respect to any Plan, nor
has any advice been given to any person with respect to the need to
establish such a reserve.
(v) There are no (A) actions, suits, arbitrations or claims (other
than routine claims for benefits), (B) legal, administrative or other
proceedings or governmental investigations or
audits, or (C) complaints to or by any governmental entity, which are
pending, anticipated or threatened, against a Plan or its assets or any
fiduciary with respect to any such Plan.
(vi) The present value of the future cost to CCI and ERISA Affiliates
of post-retirement medical benefits that CCI or any ERISA Affiliate is
obligated to provide, calculated on the basis of actuarial assumptions
CCI considers reasonable estimates of future experience and which have
been provided to Pentair, does not exceed the amount specified in
Section 2.1(s)(vi) of the CCI Schedule.
(vii) Neither CCI nor any ERISA Affiliate, nor any of the ERISA Plans,
nor any trust created thereunder, nor any trustee, administrator or
other fiduciary thereof has engaged in a transaction in connection with
which CCI or any ERISA Affiliate, any of the ERISA Plans, any such
trust, or any trustee, administrator or other fiduciary thereof, or any
party dealing with the ERISA Plans or any such trust could be subject to
either a civil penalty assessed pursuant to Sections 502(i) or (l) of
ERISA or a tax imposed pursuant to Section 4975 of the Code.
(T) FINDERS AND INVESTMENT BANKERS. Except as set forth on Schedule 2.1(t),
CCI has not retained any broker, finder or other agent or incurred any
liability for any brokerage fees, commissions or finders' fees with respect
to the Merger.
(U) DISCLOSURE. No representation or warranty of CCI and no statement or
information relating to CCI or its business or properties contained in (i)
this Agreement, (ii) the CCI Schedule, or (iii) in any certificate furnished
or to be furnished to Pentair or Pentair Subsidiary pursuant to this
Agreement contains or will contain any untrue statement of a material fact
or omits or will omit to state a material fact necessary to make the
statements made herein or therein, in light of the circumstances in which
they were made, not misleading.
2.2 REPRESENTATIONS AND WARRANTIES OF PENTAIR AND PENTAIR SUBSIDIARY.
Pentair and Pentair Subsidiary represent and warrant to CCI as follows:
(A) ORGANIZATION OF PENTAIR AND PENTAIR SUBSIDIARY. Pentair is a
corporation duly organized, validly existing and in good standing under the
laws of the state of Minnesota. Pentair Subsidiary is a corporation duly
organized and validly existing under the laws of the State of North
Carolina. Pentair Subsidiary is a wholly-owned subsidiary of Pentair.
(B) AUTHORIZATION. The Board of Directors of each of Pentair and Pentair
Subsidiary has adopted resolutions approving the transactions contemplated
by this Agreement and has authorized the execution and delivery of this
Agreement by Pentair and Pentair Subsidiary, respectively. Pentair and
Pentair Subsidiary each has full power and authority to enter into this
Agreement and subject to obtaining all required regulatory approvals, to
consummate the transactions contemplated hereby. This Agreement has been
duly executed and delivered by Pentair and Pentair Subsidiary and
constitutes the valid and legally binding obligation of each of them,
enforceable against them in accordance with its terms, subject to
bankruptcy, receivership, insolvency, reorganization,
moratorium or similar laws affecting or relating to creditors rights
generally and subject to general principals of equity.
(C) CONSENTS AND APPROVALS. Except for consents and approvals listed on the
Pentair Schedule, no filing with, and no permit, authorization, consent or
approval of, any public body or authority is necessary for the consummation
by Pentair or Pentair Subsidiary of the transactions contemplated by this
Agreement.
(D) DEFAULTS AND CONFLICTS. Subject to the receipt of all consents and
approvals contemplated by this Agreement, 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 not
(i) violate any judicial or administrative order, writ, award, judgment,
injunction or decree involving Pentair or Pentair Subsidiary, or (ii)
conflict with any of the terms, conditions or provisions of the charter or
bylaws of Pentair or Pentair Subsidiary. No consent of any third party to
any indenture or any material agreement or other material instrument to
which Pentair or Pentair Subsidiary is a party is required in connection
with the Merger.
(E) SEC FILINGS. None of the information supplied or to be supplied by
Pentair or Pentair Subsidiary in writing expressly for inclusion in the
Proxy Statement will, at the time of (i) the first mailing thereof and (ii)
the meeting of shareholders to be held in connection with the Merger,
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they were
made, not misleading.
(F) FUNDS AVAILABLE. Pentair and Pentair Subsidiary have available to them
sufficient funds under Pentair's credit facility with Bank America to
perform all of their respective oligations pursuant to the Merger and that
no consent or approval of the lenders thereunder is required for the
borrowing of such funds.
(G) PENTAIR SCHEDULE. Pentair has delivered in connection with this
Agreement and Plan of Merger a schedule of information supplementing the
disclosures contained in this Agreement (the "Pentair Schedule"), which
shall be made a part of and incorporated into this Agreement as if fully set
forth herein.
ARTICLE III
RIGHT TO INVESTIGATE
CCI shall afford to the officers and authorized representatives of
Pentair free and full access to the offices, properties, books and
records of CCI in order that Pentair may have full opportunity to make
such investigations as they shall desire of the affairs of CCI, and the
officers of CCI shall furnish Pentair with such additional financial and
operating data and other information as to the assets, properties and
business of CCI as Pentair shall from time to time reasonably request.
CCI shall consent to the review by the officers
and authorized representatives of Pentair of the reports and working papers of
CCI's independent auditors and to discussions by the officers and authorized
representatives of Pentair of the reports and working papers of CCI's
independent auditors and to discussions by the officers and authorized
representatives of Pentair with parties with which CCI has business
relationships. All such information shall be held confidential in accordance
with the Confidentiality Agreement delivered by Pentair to CCI dated December
13, 1995. Notwithstanding the right of Pentair to conduct such investigation,
Pentair has conducted an investigation of CCI and its business operations and
will perform its obligations under this Agreement, subject to its right to
terminate pursuant to Section 10.1 hereof, regardless of the results of such
continuing investigation.
ARTICLE IV
COVENANTS OF CCI
CCI covenants that, with respect to the period between the date hereof
and the Effective Time of Merger:
4.1 CONDUCT OF BUSINESS. CCI shall conduct its business operations only in
the ordinary course of business and consistent with past practices and, without
the prior written consent of Pentair, shall not:
(a) amend its Articles of Incorporation or Bylaws;
(b) dispose of any assets other than in the ordinary course of business;
(c) permit the lapse of any insurance policy material to the business;
(d) enter into any agreement of the type set forth in Section 2.1(o),
nor amend any such agreement, whether or not currently in existence;
or
(e) discharge any liabilities other than in the normal course of
business or waive or settle any material claim of CCI for less than
the actual value thereof.
4.2 LIABILITIES. Without the prior written consent of Pentair, CCI will not
agree to incur or to become subject to any material liability or obligation
(absolute, contingent or otherwise) except liabilities incurred or obligations
under contracts entered into in the ordinary course of business.
4.3 CHANGES IN STOCK. Unless the prior written consent of Pentair is first
obtained, CCI will not:
(i) make any change in its authorized capital stock,
(ii) issue any stock options, nor issue any warrants, or other
rights calling for the issue, transfer, sale or delivery of its
capital stock or other securities,
(iii) pay any stock dividend or make any reclassification in respect
of its outstanding shares of capital stock,
(iv) issue, sell, exchange or deliver any shares of its capital
stock (or securities convertible into or exchangeable, with or without
additional consideration, for such capital stock),
(v) purchase or otherwise acquire for a consideration any
outstanding shares of its capital stock, or
(vi) declare, pay or set apart in respect of its capital stock any
dividends or other distributions or payments.
4.4 STOCK OPTIONS. CCI shall take all actions necessary, if any, to comply
with the terms of Section 1.14 of this Agreement.
4.5 CONSENTS. CCI shall, as soon as practicable, prepare or cause to be
prepared and made all necessary filings with all governmental or regulatory
bodies or other entities and shall use its best efforts to obtain all consents,
waivers, approvals, authorizations, rulings or orders from all governmental or
regulatory bodies or other entities listed on the CCI Schedule and from all
parties to any indenture, agreement or other instrument material to the business
of CCI, and furnish true, correct and complete copies of each thereof to
Pentair.
4.6 NOTICE. CCI shall give prompt notice and complete copies to Pentair of
(i) any notice of, or other communication relating to, a default
or event which with notice or lapse of time or both would become a
default, received by CCI subsequent to the date of this Agreement
and prior to the Effective Time, under its Articles of
Incorporation or Bylaws or any indenture, or material instrument or
agreement, to which CCI is a party, by which it or any of its
properties is bound or to which it or any of its properties is
subject, except where such default would not have a material adverse
effect on the business operations of CCI;
(ii) any notice or other communication from any third party
alleging that the consent of such third party is or may be required
in connection with the transactions contemplated hereby;
(iii) the occurrence of any event which results in a material
adverse change in the assets, properties, business, financial
condition or results of operations of CCI;
(iv) all minutes of meetings of the Board of Directors or any
committee thereof and of the shareholders of CCI from the date hereof
to the Effective Time, certified by the Secretary or acting secretary
of the Company;
(v) any matter which, if it had occurred prior to the date hereof,
would have been required to be included on the CCI Schedule; and
(vi) any assertion by a shareholder of his, her or its dissenters'
rights under Article 13 of
the NCBCA
In addition, CCI shall give prompt notice to Pentair of any act, fact or
circumstance of which it shall become aware from the date hereof to the
Effective Time which would have been acquired to be listed on the CCI
Schedule pursuant to Section 2.1 hereof.
4.7 SHAREHOLDERS' MEETING. CCI shall duly call a meeting of its
shareholders to be held during the week of February 19, 1996 or as soon
thereafter as mutually agreeable to CCI and Pentair for the purpose of voting on
the Agreement and, in connection therewith, CCI shall prepare and file with the
SEC, as soon as is reasonably practicable, the required proxy materials with
respect thereto, in form and substance acceptable to Pentair, and shall use its
best efforts to obtain prompt clearance by the SEC for the mailing of such
material to the CCI shareholders. CCI shall thereupon mail such proxy statements
to its shareholders. CCI agrees to use its best efforts to obtain the necessary
approval of the Agreement by the stockholders of CCI.
4.8 ACQUISITION PROPOSALS. Neither CCI nor its directors, officers,
employees, financial advisors, legal counsel, accountants and other agents and
representatives shall (a) encourage, initiate or solicit, directly or
indirectly, any inquiries or the making of any proposals by, or engage in
discussions or negotiations with, any third party (other than Pentair and
Pentair Subsidiary) concerning any merger, consolidation, sale of assets, tender
offer, sale of shares or similar transaction involving CCI or any significant
assets of CCI, other than the Merger (each an "Acquisition Proposal"), or (b)
disclose directly or indirectly to any person preparing to make an Acquisition
Proposal any confidential information regarding CCI, or (c) enter into any
understanding, agreement or commitment with any third party providing for an
acquisitive transaction, equity investment or sale of any significant assets of
CCI. Notwithstanding the foregoing, the Board of Directors or any committee
thereof appointed for purposes of the foregoing (a "Committee"), officers,
employees, representatives and agents of CCI may (i) take action upon receipt of
the advice of special legal counsel that such action is advisable in order to
fulfill the fiduciary duties of the Board or the Committee, and (ii) provide
confidential information regarding CCI to a potential purchaser upon the prior
written request of such purchaser whom the Board or Committee reasonably
believes (A) is qualified and creditworth, (B) will not use such information to
the competitive disadvantage of CCI and (C) intends to make a serious offer
which may result in a transaction more favorable to the shareholders of CCI than
the consideration payable in connection with the Merger, provided that such
disclosure is made subject to an appropriate confidentiality agreement, and the
request does not arise as a result of any solicitation for expression of
interest by CCI or any of its directors, officers, employees, financial
advisors, legal counsel, accountants or other agents and representatives. CCI
will notify Pentair immediately if any Acquisition Proposal or any request for
confidential information is received, shall inform Pentair if CCI's Board or
Committee has been advised by special legal counsel to consider such Acquisition
Proposal in order to fulfill the fiduciary duties of the Board of Directors and
shall provide to Pentair such information regarding any Acquisition Proposal or
request for information as Pentair may reasonably request. No action
contemplated or permitted by this Section 4.8 shall in any manner be construed
or deemed to diminish, relieve or release any obligations of CCI or Pentair to
pay a termination fee or expense reimbursement pursuant to Sections 10.2, 10.3
or 10.4 below.
4.9 REPORTS. Promptly after filing with the applicable authorities, CCI
shall provide to Pentair
copies of any document filed with the Secretary of State of North
Carolina or the Securities and Exchange Commission, including
specifically, but without limitation, its Annual Report on Form 10-K
with respect to the fiscal year ended October 31, 1995 and its Annual
Report to shareholders for the same period.
4.10 COOPERATION. CCI shall execute such documents and other papers,
provide such information, and take such further actions as may be reasonably
requested by Pentair to carry out the provisions hereof and to consummate the
transactions contemplated hereby.
4.11 CONDITIONS PRECEDENT. CCI shall use its best efforts to cause all
of the conditions precedent to the consummation of the Merger applicable to them
to be met.
ARTICLE V
COVENANTS OF PENTAIR
AND PENTAIR SUBSIDIARY
Pentair and Pentair Subsidiary covenant that, with respect to the period
between the date hereof and the Effective time of Merger:
5.1 CONSENTS. Pentair and Pentair Subsidiary shall, as soon as practicable,
prepare and make all necessary filings with all governmental or regulatory
bodies or other entities and shall use its best efforts to obtain all consents,
waivers, approvals, authorizations, rulings or orders from all governmental or
regulatory bodies or other entities listed on the Pentair Schedule and furnish
true, correct and complete copies of each to CCI.
5.2 DIRECTORS' AND OFFICERS' INSURANCE. After the Effective Time,
Pentair will cause CCI as the Surviving Corporation, or another
affiliate of Pentair, to (i) maintain the current directors' and
officers' liability and corporate indemnification insurance policy of
CCI, or a substantially similar policy, subject to terms and conditions
no less advantageous than under such current policy, for all officers
and directors of CCI on the date of this Merger Agreement, for twenty
four (24) months after the Effective Time to cover acts and omissions of
directors and officers of CCI occurring prior to the Effective Time and
(ii) maintain in effect provisions of the Bylaws of the Surviving
Corporation, relating to the rights of officers and directors with
respect to indemnification for acts and omissions occurring prior to the
Effective Time and on terms no less advantageous to such officers and
directors as in effect prior to the Effective Time.
5.3 COOPERATION. Pentair and Pentair Subsidiary shall execute such
documents and other papers, provide such information, and take such further
actions as may be reasonably requested by CCI to carry out the provisions hereof
and to consummate the transactions contemplated hereby.
5.4 CONDITIONS PRECEDENT. Pentair and Pentair Subsidiary shall use its
best efforts to cause all of the conditions precedent to the consummation of the
Merger applicable to it to be met.
ARTICLE VI
CLOSING AND CLOSING DOCUMENTS
6.1 CLOSING. The closing ("Closing") under this Agreement shall be held at
the offices of Smith, Anderson, Blount, Dorsett, Xxxxxxxx & Xxxxxxxx, L.L.P.,
in Raleigh, North Carolina at 10:00 a.m., Eastern Time, as promptly as
practicable after the fulfillment or waiver of all the terms and conditions
contained in Articles VI, VII, VIII and IX of this Agreement, or at such other
place and time as shall be mutually agreeable to the parties. The required
number of fully executed and verified copies of the Articles of Merger shall
be filed immediately after the Closing with the Secretary of State of North
Carolina.
6.2 CCI CLOSING DOCUMENTS. At the Closing, CCI shall deliver, or cause to
be delivered, to Pentair:
(A) CLOSING CERTIFICATE. A certificate of CCI, signed by its President,
which shall confirm the compliance by CCI in all material respects with its
covenants and agreements contained in this Agreement and the accuracy in all
material respects of the representations and warranties made by CCI in this
Agreement at and as of the Effective Time as if made at such time and as
contemplated by this Agreement.
(B) OPINION OF COUNSEL. The opinion of XxXxxxxx & Xxxxxxxx, counsel to
CCI, dated the Effective Time, and in form and substance satisfactory to
Pentair, covering the matters set forth in Exhibit C hereto.
(C) CERTIFICATE OF ELECTION. A certificate of CCI's inspector of
elections or secretary as to the vote taken at the meeting of the holders of
shares of CCI Common Stock with respect to this Agreement and as to the holders
of shares of CCI Common Stock that shall have demanded payment of the fair
value of their shares of CCI Common Stock pursuant to the NCBCA.
(D) RESIGNATIONS. Written resignations, effective the Effective Time, of
those directors and officers of CCI specified on a schedule to be delivered
by Pentair to CCI prior to the Closing.
(E) CERTIFIED ARTICLES. Articles of Incorporation of CCI certified by the
Secretary of State of North Carolina within ten (10) days prior to the Closing.
(F) CERTIFICATE OF EXISTENCE. A Certificate of Existence of CCI certified
by the Secretary of State of North Carolina within ten (10) days prior to the
Closing.
6.3 PENTAIR CLOSING DOCUMENTS. At the Closing, Pentair and Pentair
Subsidiary shall deliver, or cause to be delivered, to CCI:
(A) PENTAIR CLOSING CERTIFICATE. A Certificate of Pentair, signed by its
Chief Executive Officer or any Vice President, which shall confirm the
compliance by Pentair in all material respects with its covenants and
agreements contained in this Agreement and the accuracy in all material
respects
of the representations and warranties made by it in this Agreement at and as
of the Effective Time as if made at such time and as contemplated by this
Agreement.
(B) PENTAIR SUBSIDIARY CLOSING CERTIFICATE. A Certificate of Pentair
Subsidiary, signed by its President or any Vice President, which shall confirm
the compliance by Pentair Subsidiary in all material respects with its
covenants and agreements contained in this Agreement and the accuracy in all
material respects of the representations and warranties made by it in this
Agreement at and as of the Effective Time as if made at such time and as
contemplated by this Agreement.
(C) OPINION OF COUNSEL. The opinion of Xxxxxx & Efron, counsel to
Pentair and Pentair Subsidiary, dated the Effective Time, and in form and
substance satisfactory to CCI, covering the matters set forth in Exhibit D
hereto.
(D) CERTIFICATE OF EXISTENCE. A Certificate of Existence of Pentair
Subsidiary certified by the Secretary of State of North Carolina within ten
(10) days prior to the Closing.
ARTICLE VII
CONDITIONS TO THE OBLIGATIONS OF
PENTAIR AND PENTAIR SUBSIDIARY
The obligations of Pentair and Pentair Subsidiary under this Agreement
to cause the Merger contemplated hereby to be consummated are, at their
option, subject to the fulfillment of conditions that:
7.1 VALIDITY OF REPRESENTATION AND WARRANTIES. The representations and
warranties of CCI contained in Section 2.1(a) through Section 2.1(j) hereof
shall be true in all material respects when made and, in addition, shall be
true in all material respects on and at the Effective Time with the same
force and effect as though made on and at the Effective Time, and there shall
be at the time of execution hereof, no knowing breach of any representation and
warranty of CCI contained in Section 2.1(k) through Section 2.1(u) hereof.
7.2 CONSENTS. All consents, waivers, approvals, authorizations or orders
listed on the CCI Schedule shall have been obtained by CCI and copies of the
same shall have been delivered to Pentair.
7.3 COMPLIANCE WITH COVENANTS. CCI shall have performed in all material
respects all obligations and agreements and complied with all covenants and
conditions contained in this Agreement to be performed and complied with by
it at or prior to the Effective Time.
7.4 OPINION OF COUNSEL. Pentair shall have received the opinion of L.
Xxxxx XxXxxxxx, counsel for CCI, specified in Section 6.2(b).
7.5 RESIGNATIONS. The directors of CCI as specified in the schedule to be
delivered pursuant to Section 6.2(d) shall have tendered their resignations in
writing, effective on the Effective Time.
ARTICLE VIII
CONDITIONS TO THE OBLIGATIONS OF CCI
The obligations of CCI under this Agreement to cause the Merger
contemplated hereby be to consummated are, at its option, subject to fulfillment
of the conditions that:
8.1 VALIDITY OF REPRESENTATIONS AND WARRANTIES. The representations
and warranties of Pentair and Pentair Subsidiary herein contained shall have
been in all material respects true when made and, in addition, shall be true
in all material respects on and at the Effective Time with the same force and
effect as though made on and at the Effective Time.
8.2 CONSENTS. All consents, waivers, approvals, authorizations or
orders listed on the Pentair Schedule shall have been obtained by Pentair and
copies of the same shall have been delivered to CCI.
8.3 COMPLIANCE WITH COVENANTS. Pentair and Pentair Subsidiary shall have
performed in all material respects all obligations and agreements and complied
with all covenants and conditions contained in this Agreement to be performed
and complied with by them at or prior to the Effective Time.
8.4 OPINION OF COUNSEL. CCI shall have received the opinion of Xxxxxx &
Efron, P.A., counsel to Pentair, specified in Section 6.3(c).
8.5 DELIVERY OF MERGER CONSIDERATION. Pentair or Pentair Subsidiary shall
have delivered the Merger Consideration to the Paying Agent pursuant to
Section 1.9 hereof.
ARTICLE IX
CONDITIONS APPLICABLE TO PENTAIR AND CCI
The obligations of Pentair and CCI under this Agreement to cause this
Agreement to become effective and have the transactions contemplated hereby
be consummated are subject to the following terms and conditions:
9.1 XXXX-XXXXX-XXXXXX ACT. Any waiting period applicable to the
consummation of the Merger under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements
Act of 1976 shall have expired or been terminated, and no action shall have
been instituted by the Department of Justice or Federal Trade Commission
challenging or seeking to enjoin the consummation of this transaction, which
action shall have not been withdrawn or terminated.
9.2 INJUNCTION. The consummation of the Merger shall not have been
restrained, enjoined or prohibited by any court or governmental authority of
competent jurisdiction. No material litigation or administrative proceeding
shall be pending or threatened as of the Effective Time seeking to restrain,
enjoin or prohibit the consummation of this Agreement or the Merger.
9.3 APPROVAL OF CCI SHAREHOLDERS. This Agreement shall have been
approved and adopted at a duly called meeting of the shareholders of CCI
Common Stock by at least eighty percent (80%) of the issued and outstanding
shares of CCI Common Stock entitled to vote thereon by no later than
May 1, 1996.
9.4 EFFECTIVE TIME. The Effective Time shall be no later than 5:00 P.M.
Eastern Time on May 15, 1996.
ARTICLE X
TERMINATION AND TERMINATION FEE
10.1 TERMINATION. This Agreement and the transactions contemplated by this
Agreement may be terminated at any time prior to the filing of the Articles of
Merger with the Secretary of State of North Carolina, whether before or after
action by the shareholders of CCI as contemplated by Section 4.8 of this
Agreement and without further approval by the outstanding shareholders of CCI,
effective upon receipt of notice of termination to the non-terminating party:
(i) by mutual written consent of the Boards of Directors of Pentair
and CCI,
(ii) by action of the Board of Directors of Pentair in the event of
a failure of a condition set forth in Article VII of this Agreement
as of the time such condition is required hereunder to be
fulfilled,
(iii) by action of the Board of Directors of CCI in the event of
failure of a condition set forth in Article VIII of this Agreement
as of the time such condition is required hereunder to be fulfilled,
(iv) by action of the Board of Directors of either Pentair or CCI
in the event of a failure of a condition set forth in Article IX of
this Agreement as of the time such condition is required hereunder to
be fulfilled, or
(v) by action of the Board of Directors of CCI in the event CCI
enters into an Acquisition Proposal with any third party, subject to
its payment of the termination fee set forth in Section 10.2 and
the expense reimbursement in Section 10.3.
10.2 TERMINATION FEE. If:
(1) this Agreement is terminated by Pentair as a result of any
knowing breach by CCI of any representation, warranty or covenant
contained in this Agreement; or
(2) CCI enters into an Acquisition Proposal (other than this
Agreement), or any Acquisition Proposal (other than the Merger) is
consummated, on or before January 14, 1997, unless Pentair has
breached, terminated or abandoned this Agreement for any reason
other than a breach by CCI of its obligations hereunder; or
(3) any third party makes an Acquisition Proposal or acquires
CCI Common Stock and thereafter holds 20% or more of the then current
issued and outstanding CCI Common Stock, and thereafter (A) the Board
of Directors of CCI does not reject any Acquisition Proposal of any
third party, or (B) this Agreement is terminated or abandoned as a
result of the shareholders' failure to approve the Merger and the
price per share of such Acquisition Proposal is higher than the
price per share of the Merger Consideration at the time of the
shareholder vote,
then CCI shall pay to Pentair, immediately upon the occurrence of the first
event to occur set forth above in subparagraphs (1), (2) or (3) of this Section
10.2, a termination fee equal to $1,000,000.
10.3 EXPENSE REIMBURSEMENT BY CCI. If an event occurs, as a result which
a termination fee becomes payable under Section 10.2 above, CCI shall promptly
pay to Pentair upon demand the amount of Pentair's out-of-pocket expenses
incurred in connection with Pentair's investigation of CCI, the preparation,
negotiation and performance of this Agreement and any other expenses
relating to the Merger, including fees and expenses of all consultants,
counsel, accountants and other third parties, subject to a maximum amount
of $250,000. Pentair shall provide to CCI in connection with such demand a
copy of all invoices and other evidence of such costs claimed for reimbursement.
10.4 EXPENSE REIMBURSEMENT BY PENTAIR. If Pentair breaches its
obligations hereunder, Pentair shall reimburse CCI for its out-of-pocket costs
and expenses incurred to that date in connection with the Merger, including
fees and expenses of all consultants, counsel, accountants and other third
parties, subject to a maximum amount of $250,000. CCI shall provide to Pentair
in connection with such demand a copy of all invoices and other evidence of such
costs claimed for reimbursement.
10.5 SURVIVAL OF RIGHTS. The provisions of this Article X shall be
binding and effective upon execution hereof, notwithstanding any failure of
performance or satisfaction of any conditions set forth in Articles VII,
VIII or IX and notwithstanding any failure to close the Merger pursuant to
Article VI hereof.
ARTICLE XI
MISCELLANEOUS
11.1 PAYMENT OF EXPENSES. Except as provided in Article X, whether or not
the Merger shall be consummated, each party hereto shall pay its own expenses
incident to preparing for, entering and carrying out this Agreement and to
the consummation of the Merger.
11.2 ENTIRE AGREEMENT. This Agreement (together with the Schedules and
Exhibits hereto and the documents referred to herein) contains, and is intended
as, a complete statement of all of the terms of the arrangements between the
parties with respect to the matters provided for herein, and supersedes any
previous agreements and understandings between the parties with respect to those
matters.
11.3 MODIFICATIONS, AMENDMENTS AND WAIVERS. At any time prior to the
Effective Time, the parties hereto may, by written agreement, (a) extend the
time for the performance of any of the obligations or other acts of the parties
hereto, (b) waive any inaccuracies in the representations and warranties
contained in this Agreement or in any document delivered pursuant hereto, (c)
waiver compliance with any of the covenants or agreements contained in this
Agreement, or (d) make any other modification of this Agreement approved by the
respective Boards of Directors of the parties hereto. This Agreement shall not
be altered or otherwise amended except pursuant to an instrument in writing
executed and delivered on behalf of each of the parties hereto.
11.4 ASSIGNMENT; PARTIES IN INTEREST. Except as expressly provided herein,
the rights and obligations of a party hereunder may not be assigned, transferred
or encumbered without the prior written consent of the other parties. This
Agreement shall be binding upon, inure to the benefit of, and be enforceable
by the respective successors and permitted assigns of the parties hereto.
Nothing contained herein shall be deemed to confer upon any other person any
right or remedy under or by reason of this Agreement.
11.5 SCHEDULES. All information set forth in the CCI Schedule shall be
deemed a representation and warranty of CCI as to the accuracy of such
information. All information set forth in the Pentair Schedule shall be
deemed a representation and warranty of Pentair as to the accuracy of such
information.
11.6 PRESS RELEASES. Except as may otherwise be required by law, and upon
execution or material amendment hereof, no publicity release or announcement
concerning this Agreement or the transactions contemplated hereby shall be
made prior to the Effective Time without advance approval thereof by CCI and
Pentair. CCI and Pentair will cooperate with each other in the development and
distribution of all news releases and other public information disclosures with
respect to this Agreement or any of the transactions contemplated hereby.
11.7 KNOWLEDGE. Where representations and warranties are made herein
"to the knowledge of" any entity, no executive officer or director of any
party has any knowledge that such representation and warranty is not true
and correct to the same extent as provided therein and that:
(i) each such person has exercised due diligence and has made
reasonable and appropriate investigations and inquiries; and
(ii) nothing has come to the attention of such person in the course
of such investigations and inquiries or otherwise which would
reasonably cause such person, in the exercise of this individual
due diligence, to believe that such representation or warranty is
not true and correct.
11.8 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the domestic laws of the State of North Carolina without
giving effect to any choice or conflict of law provision or rule (whether
of the State of North Carolina or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of North
Carolina.
11.9 NOTICES. Any notice, request, instruction or other document to be
given hereunder by any party to the others shall be in writing and delivered
personally or sent by registered or certified mail, postage prepaid,
overnight express service or confirmed facsimile transmission,
if to Pentair or Pentair Subsidiary, Pentair
0000 Xxxxxx Xxxx X0 Xxxx
Xx. Xxxx, XX 00000-0000
Attention: Xxxxxxx X. Xxxxxxxx
Facsimile: (000) 000-0000
with a copy to Xxxxxx & Efron, P.A.
1200 Title Insurance Building
000 Xxxxxx Xxxxxx Xxxxx
Xxxxxxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxxxxx
Facsimile: (000) 000-0000
if to CCI 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
or to such other persons as may be designated in writing by the parties.
If personally delivered, such communication shall be deemed delivered
upon actual receipt; if electronically transmitted pursuant to this paragraph,
such communication shall be deemed delivered the next business day after
transmission (and sender shall bear the burden of proof of delivery); if
sent by overnight courier pursuant to this paragraph, such communication shall
be deemed delivered upon receipt; and if sent by U.S. mail pursuant to this
paragraph, such communication shall be deemed delivered as of the date of
delivery indicated on the receipt issued by the relevant postal service, or,
if the addressee fails or refuses to accept delivery, as of the date of such
failure or refusal. Any party to this Agreement may change its address for
the purposes of this Agreement by giving notice thereof in accordance with
this Section.
11.10 COUNTERPARTS. For the convenience of the parties hereto, this
Agreement and any amendment hereto may be executed in any number of
counterparts, and each such counterpart shall be
deemed to be an original instrument, and all such counterparts shall together
constitute the same agreement.
11.11 HEADINGS. The headings in this Agreement are inserted for convenience
only and shall not constitute a part hereof.
11.12 SEVERABILITY. Should any provision of this Agreement be or become
invalid in whole or in part or be incapable of performance for whatever reason,
then the validity of the remaining provisions of this Agreement shall not be
affected thereby. In such event, the parties hereby undertake to
substitute for any such invalid provision or for any provision incapable of
performance, a provision which corresponds to the spirit and purpose of such
invalid or unperformable provision as far as permitted under applicable law, so
as to provide to the parties to the fullest extent possible the economic purpose
and effect of this Agreement.
In Witness Whereof, the parties have caused this Agreement to be
executed and delivered as of the day and year first above written.
PENTAIR, INC. COMMUNICATION CABLE, INC.
By /s/ [SIGNATURE] By /s/ Xxxxx X. Xxxx
Its Executive Vice President Its President
And By /s/ [SIGNATURE] And By
Its Secretary Its
PENTAIR ACQUISITION
CORPORATION
By /s/ [SIGNATURE]
Its President
And By /s/ [SIGNATURE]
Its Secretary
