<PAGE>
COMMUNICATION CABLE, INC.
CORPORATE OFFICES PO BOX 1757 SANFORD, NC 27331 USA
(919) 775-7755 FAX (919) 776-5601
(CCI Logo appears here)
January 25, 1996
To Our Stockholders:
Reference is made to the Company's Schedule 14D-9 previously mailed to
you on December 12, 1995 in response to the Tender Offer by Kuhlman Corporation
initiated on November 29, 1995, and subsequent amended Schedule 14-D-9's mailed
by the Company.
On January 23, 1996, Kuhlmun again amended its Tender Offer, increasing
the price per share from $13 1/16 to $14.00, after the execution of the
Merger Agreement with Pentair, Inc., described below. That amendment
extended the offer from January 31 to February 15, 1996. The offer
is still subject to certain other conditions.
Previously, on January 17, 1996, Kuhlman had amended its Tender
Offer by increasing the purchase price from $12.00 per share to $13
1/16 per share, net to the seller in cash. In addition to changing its
price, Kuhlman amended the "Minimum Tender Condition" of its tender offer to
require beneficial ownership by Kuhlman, giving effect to the tender offer,
of a majority, excluding shares already owned by Kuhlman (rather than the
80% set forth in its original offer) of common shares outstanding.
On January 15, 1996, the Company had signed a non-binding letter
of intent to merge with a subsidiary of Pentair, Inc., a publicly held
holding company located in Minneapolis, at a cash price of $13.00 per
share for each share of outstanding company common stock. Then on
January 20, 1996, the Company signed an Agreement and Plan of Merger
with Pentair and a Pentair subsidiary, providing for a merger of the
Company with such subsidiary at a cash price of $13.50 per share for
each share of outstanding Company common stock. Pursuant to the terms of the
Merger Agreement, the Company granted to Pentair an option to purchase
up to 300,000 shares of the Company's common stock at $13.50,
exercisable until February 22, 1996. The Company will be required to pay
Pentair a $1,000,000 termination fee, plus expenses of up to $250,000,
if the Company is acquired by another party and under certain other
circumstances. Consummation of the merger is subject to CCI shareholder
approval and certain other conditions. Pentair has not yet responded to
the $14.00 Kuhlman Offer.
<PAGE>
The Board of Directors takes no position with respect to the
Kuhlman Tender Offer at this time.
The enclosed copy of the Company's Amendment No. 3 to its Schedule
14D-9, as filed with the Securities and Exchange Commission, describes
the Board's decision and contains other important information relating
to this decision. We urge you to consider this information carefully.
By Order of the Board of Directors.
Sincerely,
(Signature of James R. Fore)
James R. Fore President
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 3
TO
SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION STATEMENT
PURSUANT TO SECTION 14(D)(4) OF THE
SECURITIES EXCHANGE ACT OF 1934
COMMUNICATION CABLE, INC.
(Name of Subject Company)
Communication Cable, Inc.
(Name of Person(s) Filing Statement)
Common Stock Par Value $1.00 Per Share
(Title of Class of Securities)
203378 I0 4
(CUSIP Number of Class of Securities)
James R. Fore
President and Chief Executive Officer
Communication Cable, Inc.
1378 Charleston Drive
Post Office Box 1757
Sanford, North Carolina 27331
(800) 410-9473
(Name, address and telephone number of person
authorized to receive notice and communications
on behalf of the person(s) filing statement.)
With a Copy to:
L. Bruce McDaniel
Post Office Box 58186
Raleigh, North Carolina 27658
(919) 872-3000
<PAGE>
Communication Cable, Inc. hereby amends its Schedule 14D-9 (the
"Statement"), originally filed on December 12, 1995, with respect to the tender
offer by Kuhlman Corporation initiated on November 29, 1995. Capitalized terms
not defined herein have the meaning assigned to them in the Statement.
Item 2. Tender Offer of the Bidder.
Additional paragraphs are added to Item 2. as follows:
On January 17, 1996, Kuhlman amended its Tender Offer by Amended
14D-1, increasing the purchase price in its previously announced tender offer
for any and all outstanding shares of common stock of the Company from $12.00
per share to $13 1/16 per share, net to the seller in cash. Kuhlman also
announced that it would extend the expiration time of the tender offer from
January 22, 1996 to January 31, 1996. In addition to changing its price, Kuhlman
amended the "Minimum Tender Condition" of its tender offer to require beneficial
ownership by Kuhlman, giving effect to the tender offer, of a majority,
excluding shares already owned by Kuhlman, (rather than the 80% set forth in its
original offer) of common shares outstanding. The Company's Press Release of
January 16, 1996, announcing the foregoing, is attached as Exhibit 9(a).
On January 23, 1996, Kuhlman again amended its Tender Offer,
increasing the price per share from $13 1/16 to $14.00, after the execution of
the Merger Agreement with Pentair, Inc., described below. That amendment also
extended the offer from January 31 to February 15, 1996. The offer is still
subject to certain other conditions. A copy of that Amended Tender Offer is
attached as Exhibit 9(b).
Item 3. Identity and Background.
Item 3 is amended by adding thereto the following:
On November 29, 1995, Kuhlman commenced the Offer at $12.00 per
share. Subsequently, a representative of the Company contacted an officer of
Kuhlman in an attempt to discuss the price of the Offer. Kuhlman responded
that it was not interested in negotiating with the Board of Directors of the
Company and would not increase the price of the Offer.
Subsequently, the Company announced it had received an indication
of interest from a third party, Pentair, Inc., to merge at a cash price range
of $12 to $13 per share. Subsequently, counsel for the Company and counsel
for Kuhlman were in regular contact. Counsel for Kuhlman was kept apprised
of the general timing of Pentair's consideration of making an offer to merge.
Specifically, counsel for Kuhlman was informed that Pentair was expected to
make an offer at the Company's January 12, 1996 meeting of the Board of
Directors.
At the January 12 Board meeting representatives of Pentair
indicated that they were prepared to make an offer to merge, but that as
a condition to doing so, the Company had to agree to keep the offer in
confidence. The Company agreed. Pentair then submitted a letter of intent
calling for a merger at $13 per share. Pentair also insisted on a termination
fee of $1,250,000, including expenses and the grant of options for 300,000
shares. Finally, Pentair demanded that the letter of intent be signed at the
meeting or the offer would be permanently withdrawn. The Board informed Pentair
that it needed to consider the offer and would not sign the letter of intent
that day. Pentair stated that the offer was withdrawn but that it would
consider the possibility of renewing the offer on Sunday, January 14, 1996,
if the Company would continue to keep the offer confidential and if the
Company was prepared to act at that time. The Board then established a
Special Committee of outside directors to consider the Pentair offer and
the Kuhlman offer.
The evening of January 12, 1996, counsel for Pentair informed
counsel for the Special Committee that it was imperative that a letter of
intent be signed by January 14 and a merger agreement shortly thereafter
in order for Pentair to proceed. Also on January 12, counsel for the Company
informed counsel for Kuhlman that discussions with Pentair were ongoing
and that something may happen shortly.
On Saturday, January 13, a meeting of the Special Committee was
held at which the Special Committee considered the terms of a draft letter of
intent and merger agreement presented by Pentair. The Special Committee also
discussed the best way to proceed to maximize shareholder value and provide
both Pentair and Kuhlman with fair opportunities to increase their offers.
The Special Committee concluded that shareholder value would be enhanced by
entering into the Pentair letter of intent at $13 per share which would not
preclude a higher offer from Kuhlman. The Special Committee considered,
among other factors, that Kuhlman had ample opportunity to increase its
offer or enter into merger discussions in light of Pentair's interest, but
it had chosen not to do so. The Special Committee considered that should
the Company not proceed with the letter of intent that the $13 Pentair offer
may be withdrawn and shareholders would be left with Kuhlman's $12 offer.
The Special Committee also concluded that it should negotiate the terms of
the letter of intent, including price, amount of termination fee and
options, applicability of termination fee, a termination expense
reimbursement in favor of the Company, and the Company's right to announce
the letter of intent.
The Board of Directors of the Company met on Sunday, January 14
to consider the recommendation of the Special Committee that the Company
enter into a letter of intent with Pentair on terms to be negotiated. The
Board approved the Special Committee's recommendations. Representatives
of the Special Committee then negotiated terms of the letter of intent
with representatives of Pentair. A revised letter of intent was presented
by Pentair the evening of January 14 which remained at $13 but which
made concessions regarding the amount and scope of the termination fee,
the ability of the Company to announce the letter of intent, and an
expense reimbursement in favor of the Company.
On the morning of January 15, the letter of intent was executed
by both the Company and Pentair and the Company delivered the letter of
intent to Pentair at approximately 2:00 p.m. A press release was prepared
and reviewed by both parties. The announcement of the letter of intent was
released to NASDAQ at approximately 3:30 p.m. and to the public at
approximately 4:00 p.m. At approximately the same time as the issuance of the
press release, counsel for the Special Committee received a message and a
letter from counsel for Kuhlman requesting that the Company discuss the terms
of any letter of intent or other agreement with Kuhlman prior to entering into
such an agreement. Upon receiving the message and the letter, counsel for the
Special Committee called to inform counsel for Kuhlman that the Company already
had entered into a letter of intent with Pentair which would not
preclude a higher Kuhlman offer. Counsel for the Special Committee indicated
that the Special Committe wanted to keep lines of communication open.
Kuhlman responded that it remained interested but had not acted to increase
its offer because it did not want to negotiate against itself.
Later in the evening, counsel for Kuhlman informed counsel
for the Special Committee that Kuhlman would increase its Offer to
$13 1/16 per share. Counsel for the Special Committee asked Kuhlman to
provide information regarding its financing for the Offer since exhibits
filed by Kuhlman with its Offer indicated that there were a number of
conditions to Kuhlman's banks' obligations to loan funds for the Offer.
Counsel for Kuhlman confirmed in writing Kuhlman's increase in the Offer
to $13 1/16, but no information regarding financing was provided. The
letter also demanded, among other things, that the Company not enter into
a merger agreement with Pentair.
On January 16, the Company issued a press release announcing
Kuhlman's intent to increase the Offer to $13 1/16 and indicating that
the Company was in discussions with both Kuhlman and Pentair. Pentair's
counsel provided information from its lender indicating that financing
for the proposed merger was in place and that Pentair would represent
in a merger agreement that it has sufficient funds available to fund
the merger without any consent or approval of lenders required. Other
terms of a proposed merger agreement also were discussed. The Company
requested and received confirmation of an extension of the letter of
intent to January 18.
On January 17, counsel for the Special Committee wrote to
counsel for Kuhlman again requesting further information regarding
Kuhlman's financing arrangements and conditions to its Offer. The
Company also agreed, as demanded by Kuhlman, to mail its proxy
statement in connection with a special meeting of shareholders under
the Control Share Acquisition Act. The meeting is scheduled for
February 16, 1996. Also on January 17, counsel for Pentair indicated
that Pentair would respond once Pentair had been able to review
Kuhlman's amended offer of $13 1/16.
On January 18, counsel for Pentair indicated that Pentair
would have a response late in the day and that the response likely
would be favorable. Counsel for the Special Committee informed
counsel for Kuhlman of this fact. Counsel for Kuhlman indicated Kuhlman
would be able to respond immediately. Counsel for Kuhlman indicated that
work had begun on a definitive credit agreement and that Kuhlman was
prepared to waive many of the conditions of its Offer. Counsel for the
Special Committee informed Kuhlman's counsel that time was of the
essence and that the issues needed to be addressed immediately.
<PAGE>
Later in the day on January 18, representatives of Pentair informed
representatives of the Company that Pentair was prepared to sign the
proposed merger agreement at a price of $13.50 but that: (i) Pentair would
require Special Committee approval before signing the merger agreement; (ii)
the Company would have to grant options for 300,000 shares at a price of $13.50
per share; and (iii) the termination fee would have to be increased from
$750,000 to the $1 million originally proposed. Later in the evening on
January 18, counsel for the Special Committee informed Kuhlman's
counsel that Pentair had expressed a strong interest in going forward
and that Kuhlman would have to increase its price in excess of $13.50
to go forward. Counsel for the Special Committee also addressed again
financing issues and other conditions of the Kuhlman offer. The Counsel for
the special committee indicated to Kuhlman that, as in the past, the
Company wanted to keep the lines of communication open and was also
willing to consider merger terms with Kuhlman it if chose to proceed on that
basis. Counsel for Kuhlman responded that Kuhlman would be able to respond
quickly and that it believed Kuhlman would be able to take care of financing
issues and other conditions. Later in the night, however, counsel for Kuhlman
called counsel for the Special Committee and indicated that the chief
executive officer of Kuhlman and a Kuhlman director were on a plantation
in South Carolina and could not be disturbed until the next morning.
He also indicated that Kuhlman would be able to respond either over the
weekend or by Monday and that the response may be that Kuhlman had no
further interest or it might be a higher offer. Counsel for the Special
Committee reiterated that time was of the essence and that Kuhlman had known
about a competing party for a long period of time.
Late in the morning on January 19, counsel for Kuhlman informed
counsel for the Special Committee that Kuhlman remained very interested but
that Kuhlman may need until sometime during the day on Monday to respond.
Early in the afternoon on January 19, the Special Committee held a meeting
to consider the Pentair proposal at $13.50. The Special Committee considered
its alternatives to maximize shareholder value in a manner calculated
to promote a higher price without losing the $13.50 proposal made
by Pentair. After considering a number of alternatives, the Special Committee
decided to inform both sides that they could submit new offers through Monday,
January 22 and that the Special Committee would attempt to make a final
decision at that time if both parties would make their best offer. The
Special Committee also discussed, however, that unless the parties were
willing to enter into formal, private auction procedures, there would be no
assurances that the parties would choose to participate in this manner.
After the Special Committee meeting, counsel for the Special
Committee informed both counsel for Pentair and Kuhlman that the
Special Committee would give both parties until Monday to increase their
offers. Counsel for the Special Committee emphasized that
<PAGE>
both parties had been expressing concern about being involved in a
bidding situation and that this method of proceeding was designed to
bring closure to the process. Counsel for both Pentair and Kuhlman took
the matter under advisement.
In the middle of the afternoon on January 19, counsel for the
Special Committee received a call and a letter from counsel for Pentair
in which Pentair rejected the process of the Special Committee to solicit
offers from both parties on Monday. Pentair demanded that the Company accept
the Pentair offer to merge at $13.50 per share by executing the merger
agreement and returning it to Pentair no later than 4:00 p.m. on January
19 or Pentair would issue a press release publicly withdrawing the offer
and indicating that it had no further interest in pursuing the merger
with the Company. Counsel for the Special Committee then called counsel
for Kuhlman and informed him of Pentair's ultimatum and requested that Kuhlman
respond by 4:00 p.m. if it was able to do so. Counsel for the Special Committee
informed counsel for Kuhlman that the Special Committee would have to take
Pentair's ultimatum under advisement and act in a manner which it considered
to be in the best interest of shareholders and that the Special Committee
could not assure Kuhlman that it would be able to obtain anymore time.
Counsel for Kuhlman urged the Special Committee to delay action. On
several occasions during the remainder of the evening on January 19,
counsel for the Special Committee informed counsel for Kuhlman that the
Special Committee may have to proceed to act in the near future and that
Kuhlman should respond if it is able to do so. Counsel for Kuhlman reiterated
his request that the Special Committee delay action.
During the afternoon and evening on January 19, numerous
conversations took place between representatives of Pentair and the Company
regarding the Pentair ultimatum. Pentair indicated that it would give hour-by-
hour extensions of time on its ultimatum as long as it was
satisfied that the Special Committee and the board of directors were
acting as quickly as possible.
On the night of January 19, the Special Committee met to
consider the Pentair ultimatum. The Special Committee balanced the desire
to ensure shareholders at least $13.50 per share while wanting to preserve
an opportunity for Kuhlman to make a higher offer. As part of its
deliberations, the Special Committee considered the fact that the merger
agreement would not preclude a higher offer from Kuhlman and that it did not
view an increase in the termination fee by $250,000 and the grant of
options for 300,000 shares at an exercise price of $13.50 per share to be
likely to impede a higher Kuhlman offer. The Special Committee concluded that
it would recommend to the board of directors approval of the Pentair merger
agreement at a price of $13.50 per share with the caveat that the Special
Committee would try to negotiate the terms of the increase in the termination
fee and the grant of options. Following the meeting of the Special Committee,
a board meeting was held and the board received the report of the Special
Committee. The board
<PAGE>
adopted the Special Committee's recommendation that the Company enter into
the merger agreement with Pentair at $13.50 per share.
On Saturday morning, January 20, a representative of the Company
spoke with a representative of Pentair regarding the board's willingness
to enter into the merger agreement at $13.50 per share subject to certain
modifications, including with respect to the termination fee and the option
agreement. Pentair would not reduce the termination fee below $1 million
nor would it alter the terms of the option agreement. The Pentair
representatives did affirm to the Company representative that Pentair
would not use the option agreement or the underlying shares to block
a higher offer. Accordingly, later in the day on January 20, the merger
agreement and option agreement were fully executed and delivered.
On Sunday, January 21, counsel for the Special Committee informed
counsel for Kuhlman that the Company had proceeded to enter into a merger
agreement with Kuhlman, the details of which would be announced Monday
morning through a press release and that the merger agreement did not
preclude Kuhlman from making a higher offer.
On the morning of January 22, the Company issued a press
release announcing the merger, Counsel for the Special Committee delivered
a copy of the merger agreement to counsel for Kuhlman. Later in the day
on January 22, counsel for Kuhlman informed counsel for the Special
Committee that Kuhlman had issued a press release increasing its offer
to $14.00 per share. Counsel for Kuhlman informed counsel for the
Special Committee that Kuhlman believes that the Company's board acted
hastily and that Kuhlman has no desire to deal with the Company's board
of directors or Special Committee. Counsel for the Special Committee again
inquired about Kuhlman's financing arrangements and other conditions
of the offer. Kuhlman responded to this request in a letter to counsel for
the Special Committee dated January 24 in which Kuhlman stated that its
relationship with its lenders was good, that financing was not
a condition to the offer and that Kuhlman considers the Special
Committee's request regarding financing arrangements to be "immaterial".
On January 25, the Special Committee responded, through counsel, that the
past due diligence the Company had conducted on Kuhlman's financial condition
led the Special Committee to believe that its request for additional
information regarding Kuhlman's financing arrangements for the offer are
reasonable and relevant to the Special Committee's deliberations.
This Special Committee has been informed by Pentair that Pentair
plans to respond to the $14.00 Kuhlman offer by Friday, January 26, 1996.
Item 4. The Solicitation or Recommendation.
The Special Committee of the Board has unanimously
determined that the shareholders be advised, that it takes no position
with respect to this Tender Offer at the present time.
This decision was made because of consideration of the
following factors during the course of essentially the past year up to
the date of such action:
1. The Special Committee has requested additional information
from Kuhlman regarding its Offer
2. Kuhlman's financing commitments for the Offer contain
conditions.
3. The Special Committee has requested that Kuhlman undertake
not to reduce the price of the Offer and such request is being considered by
Kuhlman.
4. The Offer price and terms compared to the Merger price and
terms and the fact that discussions are continuing.
5. The previously received, in connection with the Kuhlman
Tender Offer, fairness opinion from Interstate/Johnson Lane
indicating that a price of $12.00 per share was fair to the shareholders
from a financial point of view;
6. The execution of a Merger Agreement with Pentair, Inc.,
a publicly held Minnesota corporation, at a price of $13.50 per share
for each share of the Company's common stock. See Item 6(d) below, and
Exhibit 9(c);
7. The consideration of prices discussed in indications
of interest received by the Company during the past year;
8. The fact that the current market price of the Company's
Shares for every trading day since the Kuhlman Offer was announced has
been at or above the per-share price of the Offer; and that as of
January 23, 1996, the lowest bid price of the shares was $14.00 dollars per
share;
9. The nature of the Offer;
<PAGE>
10. An assessment by directors of the strengths and
weaknesses of the Company's current business, business plans, prospects,
financial condition, and stock market perception;
11. A review of the trading history and current market value of
the shares of the Company;
12. The effect of the acquisition on the Company's customers,
employees, suppliers, and business plans.
Other than as set forth above, there was no basis for the
decision on the Tender Offer, and no relative weight was assigned to any
individual factor considered in reaching its determination.
Item 6. Recent Transactions and Intent With Respect to Securities.
Paragraph (d) of Item 6 is hereby revised and restated in full as
follows:
(d) On January 14, 1996, the Company received an offer to merge from
Pentair, Inc., a Minnesota corporation, at a price of $13.00 per share for each
share of common stock of the Company. That offer culminated in a letter of
intent to merge, at that price, dated and signed on January 15, 1996.
Then on January 20, 1996, the Company signed an Agreement and Plan
of Merger with Pentair and a Pentair subsidiary, providing for a merger of the
Company with such subsidiary at a cash price of $13.50 per share for each share
of outstanding Company common stock. Pursuant to the terms of the Merger
Agreement, the Company granted to Pentair an option to purchase up to 300,000
shares of the Company's common stock at $13.50, exercisable until February 22,
1996. The Company will be required to pay Pentair a $1,000,000 termination
fee, plus expenses of up to $250,000, if the Company is acquired by another
party and under certain other circumstances. Consummation of the merger is
subject to CCI shareholder approval and certain other conditions. This Merger
Agreement is attached as Exhibit 9(c) hereto and is incorporated herein by
reference.
Item 7. Certain Negotiations and Transactions by the Subject Company.
(a) Other than as disclosed herein, the Company is not engaged in
any negotiations in response to the Offer which relate to or would result in:
(1) an extraordinary transaction such as a merger or reorganization, involving
the Company or any subsidiary of the Company; (2) a purchase, sale, or transfer
of a material amount of assets by the Company or any subsidiary of the Company;
(3) a tender offer for or other acquisition of securities by or of the Company;
or (4) any material change in the present capitalization or dividend policy of
the Company. See Item 6(d) for a discussion of a recent receipt of an indication
of interest.
(b) Other than disclosed herein, there are no
transactions, board resolutions, agreements in principle, or signed
contracts in response to the Offer, which relate or would result in one
or more of the matters referred to in Item 7(a)(1), (2), (3), or (4)
above.
Shareholders are requested to monitor further developements. Action is
expected to be taken at a Special Meeting or Meetings of Shareholders in
the near future, at a date or dates to be announced.
Item 9. Material to be Filed as Exhibits.
(a) Press Release of January 16, 1996
(b) Kuhlman Tender Offer Amendment filed January 23, 1996
<PAGE>
(c) Communication Cable/Pentair Merger Agreement dated January 20,
1996
(d) Communication Cable/Pentair Option Agreement dated
January 20, 1996
(e) Communication Cable consent dated January 20, 1996
Copies of the above listed Exhibits are not being distributed
to shareholders, in the interest of time and economy. Any shareholder
desiring a copy of any such Exhibit should call Brenda Clarke, Executive
Secretary of the Company at 1-800-410-9473.
SIGNATURE
After reasonable inquiry and to the best of his knowledge and
belief, the undersigned certifies that the information set forth in this
statement is true, complete, and correct.
Date: January 25, 1996 COMMUNICATION CABLE, INC.
By:
James R. Fore
President and
Chief Executive Officer
<PAGE>
EXHIBIT 9(a)
FOR IMMEDIATE RELEASE
FOR IMMEDIATE RELEASE -- JANUARY 16, 1996
Communication Cable, Inc. (NASDAQ Symbol -- "CABL"), a
specialty electronic wire and cable manufacturer, announced today that it has
been notified by Kuhlman Corporation that Kuhlman is in the process of
increasing its tender offer from $12.00 to $13.062 per share. Yesterday, CCI
announced that it had signed a non-binding letter of intent to merge with a
subsidiary of Pentair, Inc. at a cash price of $13.00 per share for each share
of outstanding CCI common stock. CCI currently is in discussions with Pentair
and Kuhlman. Upon receipt of the increased tender offer by Kuhlman, the CCI
board will consider its response. CCI shareholder tender and withdrawal rights
are subject to a deadline currently established by Kuhlman as January 22, 1996.
Shareholders are urged to review the tender and withdrawal procedures and
deadline set forth in the Kuhlman tender offer previously delivered to
shareholders and to monitor further corporate announcements.
NASDAQ/NMS Symbol CABL Contact: James R. Fore
President
Telephone: 919-775-7775
Fax: 919-776-5601
<PAGE>
EXHIBIT 9(b)
SUPPLEMENT DATED JANUARY 23, 1996 TO OFFER TO PURCHASE DATED NOVEMBER
29, 1995
KUHLMAN ACQUISITION CORP.
A WHOLLY-OWNED SUBSIDIARY OF
KUHLMAN CORPORATION
HAS INCREASED THE OFFER PRICE
TO
$14.00 NET PER SHARE
IN ITS
OFFER TO PURCHASE FOR CASH
ANY AND ALL OUTSTANDING SHARES OF COMMON STOCK
OF
COMMUNICATION CABLE, INC.
THE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON THURSDAY, FEBRUARY
15,
1996, UNLESS EXTENDED. TENDERS OF SHARES MAY BE WITHDRAWN AT ANY TIME PRIOR
THERETO AND, UNLESS THERETOFORE ACCEPTED FOR PAYMENT, AT ANY TIME THEREAFTER.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (1) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER A NUMBER OF
SHARES THAT, EXCLUDING THE SHARES BENEFICIALLY OWNED BY THE PURCHASER,
CONSTITUTES AT LEAST A MAJORITY OF THE COMMON STOCK OUTSTANDING ON A FULLY
DILUTED BASIS (THE "MINIMUM TENDER CONDITION") AND (2) THE PURCHASER BEING
SATISFIED, IN ITS SOLE DISCRETION, THAT THE NORTH CAROLINA CONTROL SHARE
ACQUISITION ACT HAS BEEN COMPLIED WITH OR IS INVALID OR OTHERWISE INAPPLICABLE
TO THE OFFER AND THAT ALL SHARES THEN OWNED BY THE PURCHASER HAVE, AND ALL
SHARES TENDERED FOR PURCHASE PURSUANT TO THE OFFER WILL HAVE, UPON PURCHASE BY
THE PURCHASER, THE SAME VOTING RIGHTS AS ALL OTHER SHARES NOT CONSTITUTING
"INTERESTED SHARES" WITHIN THE MEANING OF SUCH ACT (THE "VOTING RIGHTS
CONDITION").
IMPORTANT
Any holder of Shares desiring to tender all or any portion of such Shares
should either (1) complete and sign the Letter of Transmittal accompanying the
Offer to Purchase (as defined herein) or a facsimile copy thereof in accordance
with the instructions in the Letter of Transmittal and mail or deliver it with
such holder's stock certificates, and any other required documents, to the
Depositary (or tender such Shares pursuant to the procedure for book-entry
transfer set forth in Section 3 of the Offer to Purchase, if such means are
available to such holder) or (2) request such holder's broker, dealer, bank or
other nominee to effect the transaction for such holder. A holder whose Shares
are registered in the name of a broker, dealer, bank or other nominee must
contact such broker, dealer, bank or other nominee to tender such Shares.
Any holder who desires to tender Shares and whose certificates for such
Shares are not immediately available, or who cannot comply in a timely manner
with the procedure for book-entry transfer of Shares, may tender such Shares by
following the procedure for guaranteed delivery set forth in Section 3 of the
Offer to Purchase.
Questions and requests for assistance or for additional copies of the Offer
to Purchase, this Supplement and the Letter of Transmittal may be directed to
the Information Agent.
The Information Agent for the Offer is:
GEORGESON
& COMPANY INC.
Wall Street Plaza
New York, New York 10005
(800) 223-2064 (call toll-free)
(212) 440-9800 (banks and brokers call collect)
<PAGE>
TO THE SHAREHOLDERS OF
COMMUNICATION CABLE, INC.:
The following information (the "Supplement") amends and supplements the
Offer to Purchase dated November 29, 1995 (the "Offer to Purchase") of Kuhlman
Acquisition Corp., a North Carolina corporation (the "Purchaser") and a
wholly-owned subsidiary of Kuhlman Corporation ("Kuhlman"). The Purchaser has
amended the terms of its offer and is now offering to purchase any and all
outstanding shares (the "Shares") of common stock, par value $1.00 per share
(the "Common Stock"), of Communication Cable, Inc., a North Carolina corporation
(the "Company"), at a price of $14.00 per Share, net to the seller in cash (the
"Offer Price"), upon the terms and subject to the conditions set forth in the
Offer to Purchase, in this Supplement (which in itself amends and restates the
Supplement dated January 17, 1996 to the Offer to Purchase) and in the Letter of
Transmittal accompanying the Offer to Purchase (which, together with any
amendments or supplements hereto or thereto, collectively constitute the
"Offer").
EXCEPT AS OTHERWISE STATED HEREIN, THE TERMS AND CONDITIONS SET FORTH IN
THE OFFER TO PURCHASE AND THE LETTER OF TRANSMITTAL REMAIN APPLICABLE IN ALL
RESPECTS TO THE OFFER. TERMS NOT DEFINED HEREIN HAVE THE MEANINGS SET FORTH IN
THE OFFER TO PURCHASE. THIS SUPPLEMENT SHOULD BE READ IN CONJUNCTION WITH THE
OFFER TO PURCHASE.
Procedures for accepting the Offer and tendering Shares are set forth in
Section 3 of the Offer to Purchase. Tendering Shareholders should use the Letter
of Transmittal previously circulated with the Offer to Purchase. Although the
Letter of Transmittal refers to an Offer Price of $12.00 per Share and does not
mention this Supplement, by using the Letter of Transmittal to tender their
Shares holders will nevertheless receive $14.00 net per Share for each Share
validly tendered and not withdrawn and accepted for payment pursuant to the
Offer, subject to the terms and conditions of the Offer as amended by this
Supplement. Shareholders who have previously validly tendered and not withdrawn
their Shares pursuant to the Offer are not required to take any further action
in order to receive, subject to the conditions of the Offer, the Offer Price of
$14.00 net per Share, if the Shares are accepted for payment and paid for by the
Purchaser pursuant to the Offer.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (1) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER A NUMBER OF
SHARES THAT, EXCLUDING THE SHARES BENEFICIALLY OWNED BY THE PURCHASER,
CONSTITUTES AT LEAST A MAJORITY OF THE COMMON STOCK OUTSTANDING ON A FULLY
DILUTED BASIS (THE MINIMUM TENDER CONDITION) AND (2) THE PURCHASER BEING
SATISFIED, IN ITS SOLE DISCRETION, THAT THE NORTH CAROLINA CONTROL SHARE
ACQUISITION ACT HAS BEEN COMPLIED WITH OR IS INVALID OR OTHERWISE INAPPLICABLE
TO THE OFFER AND THAT ALL SHARES THEN OWNED BY THE PURCHASER HAVE, AND ALL
SHARES TENDERED FOR PURCHASE PURSUANT TO THE OFFER WILL HAVE, UPON PURCHASE BY
THE PURCHASER, THE SAME VOTING RIGHTS AS ALL OTHER SHARES NOT CONSTITUTING
"INTERESTED SHARES" WITHIN THE MEANING OF SUCH ACT (THE VOTING RIGHTS
CONDITION). THE OFFER IS ALSO SUBJECT TO OTHER TERMS AND CONDITIONS CONTAINED IN
THE OFFER TO PURCHASE, IN THIS SUPPLEMENT AND IN THE LETTER OF TRANSMITTAL.
THE OFFER DOES NOT CONSTITUTE A SOLICITATION OF PROXIES FOR ANY MEETING OF
THE COMPANY'S SHAREHOLDERS. SUCH SOLICITATIONS ARE TO BE MADE PURSUANT TO
SEPARATE PROXY MATERIALS COMPLYING WITH THE REQUIREMENTS OF SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
The Offer will expire at 5:00 p.m., New York City time, on Thursday,
February 15, 1996, unless extended.
According to the Company's most recent relevant public disclosure, on
January 16, 1996 there were issued and outstanding 2,641,033 Shares, and on that
date there were 239,469 Shares reserved for issuance under various Common Stock
purchase options. (Kuhlman cannot determine how many options are currently
exercisable.) The Company has also disclosed that it has granted to Pentair,
Inc. ("Pentair") an option to purchase up to 300,000 shares of Common Stock at
$13.50 per share, exercisable until February 22, 1996. Kuhlman Acquisition Corp.
owns 315,703 Shares, of which all but 100 Shares have been acquired by purchase
from James R. Fore, the Company's President and Chief Executive Officer.
Assuming that Pentair exercises its option in full but that no other shares of
Common Stock are issued after January 16, 1996 (whether or not issued pursuant
to the exercise of options), the Minimum Tender Condition will be satisfied if
an aggregate of 1,470,517 Shares are validly tendered into the Offer by the
Expiration Date and not withdrawn, with the result that, upon purchase of the
tendered Shares, the Purchaser will own at least 1,786,220 Shares. The actual
number of Shares that constitutes the Minimum Tender Condition will depend on
the Company's capital accounts as they exist when the Offer is consummated. At
the close of business on January 22, 1996, 94,428 Shares had been tendered and
not withdrawn.
THE OFFER TO PURCHASE, THIS SUPPLEMENT AND THE LETTER OF TRANSMITTAL
CONTAIN IMPORTANT INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE ANY DECISION
IS MADE WITH RESPECT TO THE OFFER.
2
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<PAGE>
1. AMENDED TERMS OF THE OFFER; NUMBER OF SHARES. Upon the terms and subject
to the conditions of the Offer, the Purchaser will accept for payment and
purchase any and all Shares that are validly tendered and not properly withdrawn
on or prior to the Expiration Date (as hereinafter defined). The term
"Expiration Date" shall mean 5:00 p.m., New York City time, on Thursday,
February 15, 1996, unless the Purchaser, in its sole discretion, shall have
extended the period of time for which the Offer is open, in which event the term
"Expiration Date" shall mean the latest time and date on which the Offer, as so
extended by the Purchaser, shall expire.
2. WITHDRAWAL RIGHTS. Tenders of Shares made pursuant to the Offer may be
withdrawn at any time prior to the Expiration Date and, unless theretofore
accepted for payment as provided in the Offer to Purchase, at any time after the
Expiration Date.
3. MARKET FOR COMMON STOCK. On January 22, 1996, the last full day of
trading prior to the date of this Supplement, the last sale price for the Common
Stock, as reported by NASDAQ, was $14 1/8 per Share. The high and low closing
sale prices per Share, as reported by NASDAQ for the first quarter (through
January 22, 1996) of the fiscal year ended October 31, 1996, were $14 1/8 and
$8.50 per Share, respectively. SHAREHOLDERS ARE URGED TO OBTAIN CURRENT MARKET
QUOTATIONS FOR THE SHARES.
4. CERTAIN INFORMATION CONCERNING THE COMPANY. Set forth below is certain
selected financial information for the Company for its fiscal year ended October
31, 1995, as excerpted from financial information released to the public by the
Company on December 22, 1995. More comprehensive financial information is
included in periodic reports and in the other documents filed by the Company
with the Commission. The following summary is qualified in its entirety by
reference to such reports and other documents and all of the financial
information and related notes contained therein. Such reports and other
documents may be examined and copies may be obtained from the offices of the
Commission in the manner set forth in the Offer to Purchase.
COMMUNICATION CABLE, INC.
SELECTED FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER-SHARE DATA)
<TABLE>
<CAPTION>
YEAR ENDED
OCTOBER 31, 1995
<S> <C>
(UNAUDITED)
Income Statement Information:
Net Sales................................................... $ 56,256
Net Income.................................................. 2,118
Net Income Per Share........................................ .80
</TABLE>
The information concerning the Company contained in this Supplement has
been taken from or is based upon reports and other documents on file with the
Commission or otherwise publicly available. Although the Purchaser has no
knowledge that would indicate that any statements contained herein based on such
documents and records are untrue, it cannot take responsibility for the accuracy
or completeness of the information contained in such reports and other documents
or for any failure by the Company to disclose events that may have occurred or
may affect the significance or accuracy of any such information but are unknown
to the Purchaser.
5. BACKGROUND OF THE OFFER; CONTACTS WITH THE COMPANY. On the afternoon of
January 15, 1996, counsel to the Company informed acquisition counsel to the
Purchaser and Kuhlman that the Company had begun merger negotiations with
Pentair and that a Special Committee of the Board of Directors of the Company
(the "Special Committee") was even then on the verge of signing a letter of
intent with Pentair. Acquisition counsel to the Purchaser and Kuhlman
immediately placed a telephone call to counsel to the Special Committee. When he
could not make personal contact, he left an oral message, confirmed by
telecopier within minutes in the following letter:
3
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<PAGE>
MOST URGENT
Gerald Roach, Esq.
Smith Anderson, et. al.
Raleigh, North Carolina
Dear Mr. Roach:
I am writing to confirm the substance of the message that I left in
your office voice mail at approximately 3:25 p.m. today.
On behalf of Kuhlman Corporation, I hereby request that Communication
Cable, Inc. discuss with Kuhlman the proposed terms and conditions of the
letter of intent or any other agreement that CCI is negotiating with
Pentair before committing to that agreement or any other understanding
looking toward a business combination with Pentair. As you know, Kuhlman
Corporation has a history of negotiations with CCI relative to a business
combination. Kuhlman Corporation has a tender offer pending with an offered
price of $12.00 per share. Kuhlman Corporation has reserved the right to
increase or decrease the offered price at any time. Kuhlman Corporation is
even now a very substantial shareholder of CCI.
In view of these considerations, the directors of CCI would best serve
the interest of the shareholders of CCI by discussing the proposed terms
and conditions of the Pentair agreement before committing to that
agreement.
Very truly yours,
/s/ Patrick Daugherty
Patrick Daugherty
The Purchaser and Kuhlman were given no opportunity to discuss the proposed
terms and conditions of the Pentair letter of intent before the Company signed
it. Instead, in the early evening of January 15, 1996, counsel to the Special
Committee informed acquisition counsel to the Purchaser and Kuhlman that Pentair
and the Company had signed a letter of intent looking toward a cash merger at a
price of $13.00 per Share.
Later that same evening, acquisition counsel to the Purchaser and Kuhlman
informed counsel to the Special Committee that Kuhlman had decided to increase
the purchase price for Shares tendered into the Offer to $13 1/16 per Share.
At approximately 8:00 a.m. on January 16, 1996, acquisition counsel to the
Purchaser and Kuhlman delivered the following letter to counsel to the Special
Committee:
Dear Mr. Roach:
This will confirm the substance of the telephone conversation that I
initiated with you last night following my receipt of a copy of the letter
of intent signed yesterday afternoon by Pentair, Inc. ("Pentair") with your
client, Communication Cable, Inc. ("CCI"), and a copy of CCI's press
release announcing the signing of that letter of intent.
On November 29, 1995, through a wholly-owned subsidiary, Kuhlman
Corporation ("Kuhlman") commenced a tender offer for any and all
outstanding common shares of CCI at a purchase price of $12.00 per share,
net to the seller in cash, upon the terms and conditions stated in an Offer
to Purchase and related Letter of Transmittal. In doing so Kuhlman reserved
the right at any time or from time to time to amend its tender offer in any
respect.
The letter of intent and press release referred to above stipulate a
price of $13.00 per share to be paid to CCI's shareholders in the cash
merger contemplated by CCI and Pentair.
I hereby confirm to you my oral advice that Kuhlman has decided to
increase the consideration payable for shares tendered into its offer to
$13 1/16 per share.
I am speaking on behalf of Kuhlman with the intention and expectation
of inducing reliance by CCI and CCI's directors, officers and professional
advisers, including you. Kuhlman's as-yet-unannounced decision to increase
the consideration payable in its tender offer to $13 1/16 per share is
irrevocable prior to announcement. Payment of that purchase price (or any
other purchase price) will of course be subject to the terms and conditions
of the Offer to Purchase and related Letter of Transmittal as the same may
be amended.
4
<PAGE>
<PAGE>
In these particular circumstances, Kuhlman demands that CCI's Board of
Directors (i) withdraw its support for the merger proposed by Pentair, (ii)
refuse to sign a definitive merger agreement with Pentair, (iii) reevaluate
Kuhlman's bid (with a view to endorsing that bid) in light of the increase
in the purchase price offered by Kuhlman and (iv) instruct CCI's officers,
employees and professional advisers immediately to complete, file with the
SEC and disseminate to CCI's shareholders the definitive version of the
proxy statement relating to the shareholder meeting required by the North
Carolina Control Share Acquisition Act. Kuhlman expects CCI's directors to
proceed fairly and impartially, endeavoring to maximize shareholder value,
in execution of their legal duties.
Very truly yours,
/s/ Patrick Daugherty
Patrick Daugherty
During the afternoon of January 16, 1996, counsel to the Special Committee
informed acquisition counsel to the Purchaser and Kuhlman that the Special
Committee was considering the demands enumerated in such letter.
At approximately 9:00 p.m. on January 18, 1996, counsel to the Special
Committee advised acquisition counsel to the Purchaser and Kuhlman that Pentair
was understood to be considering a merger offer at $13.50 per Share. Acquisition
counsel replied immediately that Kuhlman was "definitely interested" in
responding to such a bid.
At approximately 10:55 a.m. on Friday, January 19, 1996, acquisition
counsel to the Purchaser and Kuhlman telephoned counsel to the Special
Committee, reiterated Kuhlman's strong interest in responding to a $13.50 bid
and indicated that Kuhlman would be in a position to respond on Monday.
Acquisition counsel stated that it would be imprudent for the Special Committee
or the Board to act on a definitive merger agreement before Kuhlman could
respond to the merger proposal.
At approximately 12:30 p.m., counsel to the Special Committee telephoned
acquisition counsel and advised him that the Special Committee had decided to
give both Pentair and Kuhlman until 12:00 noon on Monday to make their best and
final offers.
At approximately 3:00 p.m. on Friday, January 19, 1996, counsel to the
Special Committee telephoned acquisition counsel to the Purchaser and Kuhlman,
advised him that Pentair had issued an "ultimatum" requiring the Company to
respond by 4:00 p.m. that same day and told him that Kuhlman had one hour to
submit its own improved bid. Acquisition counsel replied that the accelerated
deadline was unfair and unreasonable and demanded that the Company not respond
to Pentair's ultimatum.
On the afternoon of January 20, 1996, counsel to the Special Committee
reported to acquisition counsel to the Purchaser and Kuhlman in a telephone
conversation that the Special Committee and the Board had taken some action, to
be announced early Monday morning, at a cost to the Company that would not
preclude a response by Kuhlman.
Counsel to the Special Committee delivered a copy of the signed Merger
Agreement to acquisition counsel to the Purchaser and Kuhlman on the morning of
January 22, 1996, concurrently with the Company's issuance of a press release
announcing such agreement.
6. THE STOCK OPTION AGREEMENT. On January 2, 1996, Kuhlman exercised its
option to acquire all 315,603 of Mr. Fore's Shares at a purchase price of $12.00
per Share.
7. SOURCE AND AMOUNT OF FUNDS. The Purchaser has purchased all 315,603
Shares subject to the Stock Option Agreement at an aggregate purchase price of
$3,787,236. If all of the remaining Shares subject to the Offer (including
Shares underlying outstanding options) are tendered into the Offer and accepted
for purchase, then the total amount of funds required by the Purchaser to
purchase such Shares pursuant to the Offer and to pay related fees and expenses
would be approximately $41 million. The Purchaser expects to obtain all funds
needed to consummate the Stock Option Agreement and the Offer by means of
capital contributions made by Kuhlman to the Purchaser. Kuhlman plans to use
funds available in its cash accounts, together with borrowings from its Banks,
to make capital contributions in an amount sufficient to consummate the Offer.
8. CERTAIN CONDITIONS OF THE OFFER. The Purchaser hereby waives conditions
(a), (f) and (g), as stated in Section 15 of the Offer to Purchase, as they
relate to all negotiations, agreements and other circumstances relating to
Pentair's interest in the Company, as summarized in the introduction to this
Supplement and in Section 5 hereof, to the extent that such negotiations,
agreements and other circumstances have been disclosed in reports and schedules
filed by the Company with the Commission.
5
<PAGE>
<PAGE>
9. CERTAIN LEGAL MATTERS. On December 13, 1995, the FTC ordered early
termination, effective that same day, of the waiting period under the HSR Act
and the HSR Rules with respect to the proposed acquisition of the Shares.
KUHLMAN ACQUISITION CORP.
January 23, 1996
6
<PAGE>
Facsimile copies of the Letter of Transmittal will be accepted. The Letter
of Transmittal and certificates for Shares should be sent or delivered by each
Shareholder or such holder's broker, dealer, bank or other nominee to the
Depositary at one of its addresses set forth below:
The Depositary for the Offer is:
HARRIS TRUST COMPANY OF NEW YORK
<TABLE>
<S> <C> <C>
By Mail: By Courier: By Hand:
Wall Street Station 77 Water Street Receive Window
P.O. Box 1023 4th Floor 77 Water Street, Fifth
New York, New York 10268-1023 New York, New York 10005 Floor
New York, New York 10005
By Facsimile:
(212) 701-7636
(212) 701-7637
Confirm Facsimile by Telephone to:
(212) 701-7623
</TABLE>
Any questions or requests for assistance or additional copies of the Offer
to Purchase, this Supplement and the Letter of Transmittal may be directed to
the Information Agent at its address and telephone number set forth below. You
may also contact your local broker, dealer, commercial bank or trust company for
assistance concerning the Offer.
The Information Agent for the Offer is:
GEORGESON
& COMPANY INC.
Wall Street Plaza
New York, New York 10005
(800) 223-2064 (call toll-free)
(212) 440-9800 (banks and brokers call collect)
<PAGE>
AGREEMENT AND PLAN OF MERGER
AMONG
COMMUNICATION CABLE, INC.,
PENTAIR ACQUISITION CORPORATION
AND
PENTAIR, INC.
AS OF JANUARY 20, 1996
<PAGE>
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.
<PAGE>
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 Gerald C. Kitch
Vice President - Finance and Treasurer, Director David D. Harrison
Secretary, Director Roy T. Rueb
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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) wells
(except water wells) located on the
<PAGE>
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.
<PAGE>
(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
<PAGE>
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.
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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,
<PAGE>
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
<PAGE>
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,
<PAGE>
(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
<PAGE>
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
<PAGE>
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.
<PAGE>
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, Mitchell & Jernigan, 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 McDaniel & Anderson, 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
<PAGE>
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 Henson & 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.
Bruce McDaniel, 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.
<PAGE>
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 Henson &
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 HART-SCOTT-RODINO ACT. Any waiting period applicable to the
consummation of the Merger under the Hart-Scott-Rodino 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.
<PAGE>
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
<PAGE>
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.
<PAGE>
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.
<PAGE>
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
1500 County Road B2 West
St. Paul, MN 55113-3105
Attention: Richard J. Cathcart
Facsimile: (612) 639-5209
with a copy to Henson & Efron, P.A.
1200 Title Insurance Building
400 Second Avenue South
Minneapolis, MN 55401
Attention: Louis L. Ainsworth
Facsimile: (612) 339-6364
if to CCI Communication Cable, Inc.
1378 Charleston Drive
P. O. Box 1757
Sanford, NC 27331
Attention: James R. Fore
Facsimile: (919) 776-5601
with a copy to McDaniel & Anderson
4942 Windy Hill Drive
P. O. Box 58186
Raleigh, NC 27658
Attention: L. Bruce McDaniel
Facsimile: (919) 790-9273
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
<PAGE>
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.
<PAGE>
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/ James R. Fore
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
<PAGE>
<PAGE>
STOCK OPTION AGREEMENT
This AGREEMENT is made as of January 22, 1996, between Communication
Cable, Inc., a North Carolina corporation (the "Company"), and Pentair, Inc.,
a Minnesota corporation ("Pentair").
RECITALS
The Company and Pentair have entered into an Agreement and Plan of Merger
of even date herewith (the "Agreement") pursuant to which Pentair Acquisition
Corporation, a North Carolina corporation, will, upon satisfaction of the
terms and conditions of the Agreement, merge with and into the Company,
by which the shareholders of the Company will receive cash for the value of
their shares in the amount of $13.50 per share (the "Merger").
To induce Pentair to enter into the Letter Agreement, the Company has
agreed to grant to Pentair the Stock Option (as hereinafter defined).
NOW, THEREFORE, the parties hereto agree as follows:
1. Grant of Stock Option. The Company hereby irrevocably grants to Pentair
an option (the "Stock Option") to purchase up to 300,000 of the Company's
common shares, par value $1.00 per share (the "Shares"), at a price of $13.50
per Share (the "Option Price").
2. Exercise of Stock Option. The Stock Option may be exercised by Pentair,
in one or more tranches, in whole or in part, at any time, or from time to
time, by given notice on or before February 22, 1996.
3. Notice of Exercise; Payment and Delivery of Certificate(s).
(a) Notice of Exercise. In the event Pentair wishes to exercise the Stock
Option, Pentair shall give written notice to the Company of its intention to
do so, specifying the number of Shares to be purchased hereunder and the place
and date for the closing of the purchase, which date shall be not later than
five business days from the date such notice is given, unless any law or
regulation does not permit the purchase to be consummated during such five-day
period, in which case the date for the closing of the purchase shall be within
two business days following the cessation of such restriction on consummation.
(b) Payment and Delivery of Certificate(s). At any closing hereunder,
Pentair shall pay the aggregate purchase price for the Shares to be purchased
by delivery of a certified or bank cashier's check or wire transfer to
the order of the Company in the amount of the Option Price multiplied by
the number of Shares to be purchased. Upon receipt of payment, the Company
will deliver to Pentair a certificate or certificates representing the
Shares so purchased, registered in the name of Pentair or its designee,
in the denominations designated by Pentair in its notice of exercise.
<PAGE>
4. Representations and Warranties of the Company. The Company hereby
represents and warrants to Pentair as follows:
(a) Due Authorization. The Company has the requisite corporate power and
authority to enter into and perform this Agreement. This Agreement has
been duly authorized by all necessary corporate action on the part of the
Company and has been duly executed by a duly authorized officer of the
Company and is the valid and binding agreement of the Company.
(b) Option Shares. Except for any filings required to be made with any
governmental authorities, which filings shall be made as soon as possible
after the date hereof, the Company has taken all necessary corporate and
other action to authorize and reserve and to permit it to issue, and at
all times from the date hereof until such time as the obligation to deliver
Shares upon the exercise of the Stock Option terminates, will have reserved
for issuance, upon any exercise of the Stock Option, the aggregate number
of Shares issuable upon exercise of the Stock Option (less the number of
Shares previously issued upon any prior exercise of the Stock Option),
which reserved Shares may be either authorized but unissued Shares or
Shares held by the Company as treasury Shares, and all of which Shares,
upon issuance pursuant hereto, shall be duly and validly issued, fully paid
and nonassessable, and shall be delivered free and clear of all claims,
liens, charges, encumbrances and security interest, including any preemptive
right of the shareholders of the Company.
(c) No Conflicts. Neither the execution and delivery of this Agreement,
the consummation of the transactions contemplated hereby or the fulfillment
of and compliance with the terms and provisions hereof, will (i) violate any
judicial, administrative or arbitral order, writ, award, judgment, injunction
or decree involving the Company, (ii) conflict with the terms, conditions
or provisions of the charter or By-Laws of the Company, or (iii) conflict
with, result in a breach of, constitute a default under or accelerate
or permit the acceleration of the performance required by, any indenture
or any material agreement or other material instrument to which the
Company is a party or by which the Company is bound. Subject to compliance
with the Hart-Scott-Rodino 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
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<PAGE>
transaction registered, or exempt from registration under, the Securities
Act of 1933, as amended (the "Securities Act").
6. Adjustment Upon Changes in Capitalization. In the event of any change
in the outstanding Shares by reason of stock dividends, stock splits, mergers
(other than the Merger), recapitalizations, combinations, conversions,
exchanges of shares or the like, the number and kind of shares or securities
subject to the Stock Option, the number and kind of shares or securities
reserved for issuance upon exercise of the Stock Option, and the Option Price
shall be appropriately adjusted. If, prior to the expiration or exercise
of the Stock Option in full, the Company shall consolidate or merge into
another corporation or liquidate, Pentair shall thereafter receive upon
exercise of the Stock Option the securities or property to which a holder
of the number of Shares issuable upon the exercise thereof would
have been entitled upon such consolidation, merger or liquidation, and
the Company shall take such steps in connection with such consolidation,
merger or liquidation as may be necessary to assure that the provisions
hereof shall thereafter be applicable, as nearly as reasonably may be
practicable, in relation to any securities or property thereafter issuable
upon exercise of the Stock Option.
7. Registration Rights. Upon the request of Pentair, the Company agrees
that upon exercise of the Stock Option (i) during a period of five years
from the first purchase of Shares to effect up to three registrations under
the Securities Act and any applicable state securities laws covering any
part or all of such Shares acquired and (ii) to include any part or all
of such Shares in any registration filed by the Company under the Securities
Act and in any related applicable state securities laws registrations or
applications in which such inclusion is permitted under applicable rules
and regulations unless, in the written opinion of counsel to the Company,
addressed to Pentair, which opinion shall be satisfactory to Pentair and its
counsel, such action is not required for the prompt sale and distribution
of such Shares to the public. The registrations and applications effected
under this paragraph 7 shall be effected at the Company's expense except
for underwriting discounts relating to the Shares sold on behalf of Pentair
and except for fees of counsel to Pentair. In connection with any registration
under this paragraph 7, the parties hereto agree to indemnify each other
in the customary manner, and, in the case of an underwritten offering,
the Company agrees to enter into an underwriting agreement in customary
form and to indemnify Pentair and the underwriters, and Pentair agrees to
indemnify the Company and the underwriters, in the manner and to the
extent as is customary in such underwritten offerings. In the event of
any demand for registration pursuant to clause (i) above, the Company
may delay the filing of a registration statement for a period of up
to 90 days if, in the good faith judgment of the Board of Directors of
the Company, such delay is necessary in order to avoid interference with a
planned material transaction involving the Company. With respect to any
registration pursuant to clause (ii) above, if such registration relates
to a firm commitment underwriting of securities to be sold by the Company,
the Company may decline to include all or any portion of the Shares
acquired by Pentair upon exercise of the Stock Options if the inclusion
of such Shares would, in the judgment of the managing underwriter in
such underwriting, materially interfere therewith.
8. Extension of Option Period.
(a) In the event that, on February 22, 1996, the Stock Option has not
been exercised in full,
3
<PAGE>
and on such date the Stock Option may not be exercised by reason of any
judicial or regulatory judgment, decree or order preventing or restraining
such exercise, then the time within which the Stock Option may be exercised
hereunder shall be extended until the first date thereafter on which such
prohibition does not exist and has not existed for at least the three
preceding consecutive business days (or such other time as the Company and
Pentair agree upon).
(b) In the event that, on the date specified in a notice of exercise,
the purchase of the Shares may not be consummated by reason of any judicial
or regulatory judgment, decree or order preventing or restraining such
purchase, then the time for such purchase shall be extended until the first
date thereafter on which such prohibition does not exist and has not existed
for at least the three preceding consecutive business days (or such other
time as the Company and Pentair agree upon).
(c) The parties hereto shall use their reasonable best efforts to remove
any prohibition of the giving of notice of exercise or the purchase of Shares
upon exercise of the Stock Option, as the case may be, as soon as practicable.
9. Remedies. The Company agrees that if for any reason Pentair shall
have exercised its rights under the Stock Option and the Company shall have
failed to issue any of the Shares subject to the Stock Option or to perform
any of its other obligations under this Agreement, then Pentair shall be
entitled to specific performance and injunctive and other equitable relief,
and the Company further agrees to waive any requirement for the securing or
posting of any bond in connection with the obtaining of any such injunctive or
other equitable relief. This provision is without prejudice to any other rights
that Pentair may have against the Company for any failure to perform its
obligations under this Agreement.
10. HSR Filing. As soon as practicable after the date hereof, each of
the parties hereto shall file with the Federal Trade Commission and the
Antitrust Division of the United States Department of Justice all required
pre-merger notification and report forms and other documents and exhibits
required to be filed under the HSR Act and to permit the purchase of the Shares
subject to the Stock Options at the earliest possible date.
11. Miscellaneous.
(a) Amendments. This Agreement may not be modified, amended, altered
or supplemented, except upon the execution and delivery of a written agreement
executed by the parties hereto.
(b) Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly received if so given) by delivery, by facsimile, or
by registered or certified mail, postage pre-paid, return receipt requested,
to the respective parties as follows:
4
<PAGE>
To the Company: Communication Cable, Inc.
1378 Charleston Drive
P.O. Box 1757
Sanford, NC 27331
Attention: James R. Fore
Facsimile: (919) 776-5601
with a copy to: McDaniel & Anderson
4942 Windy Hill Drive
P.O Box 58186
Raleigh, NC 27658
Attention: L. Bruce McDaniel
Facsimile: (919) 790-9273
To Pentair: Pentair, Inc.
1500 County Road B2 West
St. Paul, MN 55113-3105
Attention: Richard J. Cathcart
Facsimile: (612) 639-5209
With copies to: Henson & Efron, P.A.
1200 Title Insurance Building
400 Second Avenue South
Minneapolis, MN 55401
Attention: Louis L. Ainsworth
Facsimile: (612) 339-6364
or to such other address as either party may have furnished to the other in
writing in accordance herewith, except that notices of change of address shall
only be effective upon actual receipt.
(c) Governing Law. This Agreement shall be governed by and construed in
accordance with the substantive law of the State of North Carolina without
giving effect to the principles of conflicts of laws thereof.
(d) Severability. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid,
void or unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall continue in full force and effect and
shall in no way be affected, impaired or invalidated.
(e) Counterparts. This Agreement may be executed in several counterparts,
each of which shall be an original, but all of which together shall constitute
one and the same agreement.
5
<PAGE>
(f) Effect of Headings. The paragraph headings herein are for
convenience only and shall not affect the construction hereof.
(g) Assignment. This Agreement shall be binding upon each party hereto
and such party's successors and assigns. This Agreement shall not be assignable
by the Company, except by operation of law, but may be assigned by Pentair
to a direct or indirect wholly-owned subsidiary of Pentair.
(h) Waiver. The conditions to each of the parties' obligations hereunder
are for the sole benefit of such party and may be waived by such party in whole
or in part to the extent permitted by applicable law.
IN WITNESS WHEREOF, the Company and Pentair have caused this
Agreement to be duly executed and attested as of the day and year first
above written.
PENTAIR INC. COMMUNICATION CABLE, INC.
By: By: /s/ James R. Fore
Its: Executive Vice President Its: President
And By: And By: /s/ Michael H. ??????
Its: Secretary Its: Assistant Secretary
<PAGE>
CONSENT
Communication Cable, Inc.
1378 Charleston Drive
P.O. Box 1757
Sanford, N.C. 27331
January 20, 1996
Pentair, Inc.
1500 County Road B2 West
St. Paul, MN 55113-3105
Ladies and Gentlemen:
We refer to the Confidentiality Agreement, dated as of
December 13, 1995 (the "Confidentiality Agreement"), between Communication
Cable, Inc. (the "Company") and Pentair, Inc. ("Pentair").
In connection with the Company entering into an Agreement and
Plan of Merger (the "Merger Agreement") with Pentair and Pentair Acquisition
Corporation ("Pentair Subsidiary", a wholly-owned subsidiary of Pentair),
providing for certain transactions, including the merger of the Company and
Pentair Subsidiary at a price of $13.50 per share of the Company's common
stock, and the entry into a Stock Option Agreement (the "Stock Option
Agreement") granting an option to Pentair to purchase up to 300,000
shares of the Company's common stock at $13.50 per share, the Company
considered whether to grant its consent as required under the Confidentiality
Agreement. In connection with the requested entry by the Company into the
Stock Option Agreement, Pentair has given verbal assurances that the option
provided for therein will not be exercised, or the underlying shares used,
in connection with any attempt to block any Acquisition Proposal (as defined
in the Merger Agreement) received by the Company from any other party which
is higher than the Pentair proposal.
The entry by Pentair into the Merger Agreement and the
consummation of the merger contemplated thereby, and the entry by Pentair
into the Stock Option Agreement and the exercise in full by Pentair
of the option provided for thereby, are transactions which require the
consent of the Company under Section 11 of the Confidentiality Agreement.
The Company hereby consents to the entry by Pentair into the Merger Agreement
and the Stock Option Agreement, and to the transactions contemplated thereby;
provided,
<PAGE>
however, that the Company expressly does not consent to any exercise of the
option granted to Pentair under the Stock Option Agreement that would result
in the direct or indirect ownership by Pentair of five percent (5%) or
more of the voting common stock of the Company.
Very truly yours,
COMMUNICATION CABLE, INC.
By (Signature of James R. Fore)
James R. Fore, President
