<PAGE>
As filed with the Securities and Exchange Commission on April 4, 2000
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
SCHEDULE TO
(Rule 14d-100)
TENDER OFFER STATEMENT UNDER SECTION 14(d)(1) OR 13(e)(1)
OF THE SECURITIES EXCHANGE ACT OF 1934
Farr Company
(Name of Subject Company (Issuer))
Ratos Acquisition Corp.
a wholly owned subsidiary of
Forvaltnings AB Ratos
(Names of Filing Persons (Offerors))
Common Stock, $0.10 Par Value Per Share
(Title of Class of Securities)
311648 10 9
(CUSIP Number of Class of Securities)
Michael M. Maney, Esq.
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
Telephone: (212) 558-4000
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications on Behalf of Filing Persons)
CALCULATION OF FILING FEE
<TABLE>
<S> <C>
Transaction Valuation* Amount of Filing Fee
$134,024,308.60 $26,804.87
</TABLE>
- --------
* The transaction value has been determined assuming (i) the purchase of 100%
of the outstanding share of common stock of the Issuer, par value $0.10 per
share (the "Common Stock"), including the associated rights to purchase
Common Stock (the "Rights" and, together with the Common Stock, the "Shares")
at a price per Share of $17.45, net to the seller in cash (the "Offer
Price"), and (ii) the cancellation of and payment for all of the outstanding
options to purchase Shares under the Issuer's stock option and incentive
plans (the "Company Options") at a price equal to the excess of the Offer
Price over the per share exercise price under such Company Options. Pursuant
to the Agreement and Plan of Merger, dated as of March 27, 2000, among the
Issuer and the Offerors, the Issuer represented to the Offerors that as of
the date of such agreement there were 7,249,519 Shares outstanding and
697,200 Shares reserved for issuance under the Company Options having an
average exercise price of $7.79. The transaction value has been estimated for
purposes of calculating the amount of the filing fee only.
[_]Check the box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the Form or
Schedule and the date of its filing.
Amount Previously Paid: None. Filing Party: Not Applicable.
Form or Registration No.: Not applicable. Date Filed: Not applicable.
[_]Check the box if the filing relates solely to preliminary communications made
before the commencement of a tender offer.
Check the appropriate boxes below to designate any transactions to which the
statement relates:
[X]third-party tender offer subject to Rule 14d-1.
[_]issuer tender offer subject to Rule 13e-4.
[_]going-private transaction subject to Rule 13e-3.
[_]amendment to Schedule 13D under Rule 13d-2.
Check the following box if the filing is a final amendment reporting the
results of the tender offer: [_]
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<PAGE>
This Tender Offer Statement on Schedule TO ("Schedule TO") is filed by Ratos
Acquisition Corp., a Delaware corporation ("Purchaser") and an indirect wholly
owned subsidiary of Forvaltnings AB Ratos (publ.), a Swedish corporation
("Ratos"). This Schedule TO relates to a tender offer by Purchaser to purchase
all of the issued and outstanding shares of common stock, par value $0.10 per
share (the "Common Stock"), including the associated rights to purchase Common
Stock (the "Rights" and, together with the Common Stock, the "Shares"), of Farr
Company, a Delaware corporation (the "Company"), at a price of $17.45 per
Share, net to the seller in cash, upon the terms and subject to the conditions
set forth in the Offer to Purchase, dated April 4, 2000 (the "Offer to
Purchase"), and in the related Letter of Transmittal (the "Letter of
Transmittal", and together with the Offer to Purchase and any amendments or
supplements thereto, the "Offer"). Copies of the Offer to Purchase and the
Letter of Transmittal are attached hereto as Exhibits (a)(1) and (a)(2),
respectively.
ITEMS 1, 2, 4, 5, 6, 7, 9 and 11.
The information set forth in the Offer to Purchase and the Letter of
Transmittal, Exhibits (a)(1) and (a)(2) to this Schedule TO, respectively, or
referred to or incorporated by reference therein, is incorporated herein by
reference with respect to Items 1, 2, 4, 5, 6, 7, 9 and 11 of this Schedule TO.
ITEM 3. IDENTITY AND BACKGROUND OF FILING PERSONS.
(a) The information set forth in the Introduction and Section 9 ("Certain
Information Concerning Purchaser, Ratos and Camfil") of the Offer to Purchase,
or referred to or incorporated by reference therein, is incorporated herein by
reference with respect to Item 3 of this Schedule TO.
(b) Neither Purchaser nor Ratos, nor, to the best of their knowledge, any of
the persons listed in Schedule A or Schedule B of the Offer to Purchase has
during the past five years (i) been convicted in any criminal proceeding
(excluding traffic violations or similar misdemeanors) or (ii) been a party to
any judicial or administrative proceeding (except for matters that were
dismissed without sanction or settlement) that resulted in a judgement, decree
or final order enjoining the person from future violations of, or prohibiting
activities subject to, federal or state securities laws, or a finding of any
violations of such laws.
ITEM 8. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
The information set forth in Section 9 ("Certain Information Concerning
Purchaser, Ratos and Camfil") of the Offer to Purchase, or referred to or
incorporated by reference therein, is incorporated herein by reference with
respect to Item 8 of this Schedule TO.
ITEM 10. FINANCIAL STATEMENTS.
Not applicable.
1
<PAGE>
ITEM 12. EXHIBITS.
<TABLE>
<C> <S>
(a)(1) Offer to Purchase dated April 4, 2000.
(a)(2) Form of Letter of Transmittal.
(a)(3) Form of Notice of Guaranteed Delivery.
(a)(4) Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies
and Other Nominees.
(a)(5) Form of Letter to Clients for use by Brokers, Dealers, Commercial
Banks, Trust Companies and Other Nominees.
(a)(6) Text of Press Release issued by Ratos and Purchaser on April 4, 2000.
(a)(7) Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
(a)(8) Form of Summary Advertisement dated April 4, 2000.
(a)(9) Text of press release issued by Ratos and Purchaser on March 27, 2000;
filed with the Securities and Exchange Commission under cover of
Schedule TO on March 27, 2000, and incorporated herein by reference.
(b) None.
(d)(1) Agreement and Plan of Merger, dated as of March 26, 2000, among Ratos,
Purchaser and the Company.
(d)(2) Form of Agreement to Tender and Resign, dated as of March 26, 2000,
among Ratos, Purchaser and each of the members of the Board of
Directors of the Company, these being: Robert Batinovich, Richard P.
Bermingham, Dennis R. Brown, A. Frederick Gerstell, John C. Johnston,
John J. Kimes, H. Jack Meany and John A. Sullivan.
(d)(3) Form of Share Exchange Option Agreement, dated as of March 25, 2000,
among Ratos, Camfil AB and certain majority shareholders of Camfil AB
identified therein.
(g) None.
(h) None.
</TABLE>
ITEM 13. INFORMATION REQUIRED BY SCHEDULE 13E-3.
Not applicable.
2
<PAGE>
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify that
the information set forth in this statement is true, complete and correct.
Date: April 4, 2000
RATOS ACQUISITION CORP.
/s/ Bo Jungner
By: _________________________________
Name: Bo Jungner
Title: Vice President and Secretary
FORVALTNINGS AB RATOS
/s/ Bo Jungner
By: _________________________________
Name: Bo Jungner
Title: Senior Investment Manager
3
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
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<C> <S>
(a)(1) Offer to Purchase dated April 4, 2000.
(a)(2) Form of Letter of Transmittal.
(a)(3) Form of Notice of Guaranteed Delivery.
(a)(4) Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies
and Other Nominees.
(a)(5) Form of Letter to Clients for use by Brokers, Dealers, Commercial
Banks, Trust Companies and Other Nominees.
(a)(6) Text of Press Release issued by Forvaltnings AB Ratos and Ratos
Acquisition Corp. on April 4, 2000.
(a)(7) Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
(a)(8) Form of Summary Advertisement dated April 4, 2000.
(a)(9) Text of press release issued by Forvaltnings AB Ratos and Ratos
Acquisition Corp. on March 27; filed with the Securities and Exchange
Commission under cover of Schedule TO on March 27, 2000, and
incorporated herein by reference.
(b) None.
(d)(1) Agreement and Plan of Merger, dated as of March 26, 2000, among
Forvaltnings AB Ratos, Ratos Acquisition Corp. and Farr Company.
(d)(2) Form of Agreement to Tender and Resign, dated as of March 26, 2000,
among Forvaltnings AB Ratos, Ratos Acquisition Corp. and each of the
members of the Board of Directors of Farr Company, these being: Robert
Batinovich, Richard P. Bermingham, Dennis R. Brown, A. Frederick
Gerstell, John C. Johnston, John J. Kimes, H. Jack Meany and John A.
Sullivan.
(d)(3) Form of Share Exchange Option Agreement, dated as of March 25, 2000,
among Forvaltnings AB Ratos, Camfil AB and certain majority
shareholders of Camfil AB identified therein.
(g) None.
(h) None.
</TABLE>
<PAGE>
Exhibit (a)(1)
Offer to Purchase for Cash
All of the Outstanding Shares of Common Stock
of
FARR COMPANY
at
$17.45 Net Per Share
by
RATOS ACQUISITION CORP.
A Wholly Owned Subsidiary of
FORVALTNINGS AB RATOS (publ.)
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON MAY 1, 2000, WHICH DATE MAY BE EXTENDED.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (I) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN A NUMBER OF SHARES OF COMMON STOCK, PAR VALUE $0.10
PER SHARE ("THE COMMON STOCK"), INCLUDING THE ASSOCIATED RIGHTS TO PURCHASE
COMMON STOCK ("THE RIGHTS" AND COLLECTIVELY WITH THE COMMON STOCK, THE
"SHARES") OF FARR COMPANY (THE "COMPANY") REPRESENTING AT LEAST A MAJORITY OF
THE OUTSTANDING SHARES OF COMMON STOCK ON A FULLY DILUTED BASIS AS OF THE DATE
THE SHARES ARE ACCEPTED FOR PAYMENT PURSUANT TO THE OFFER; AND (II) THE
EXPIRATION OR TERMINATION OF ANY AND ALL WAITING PERIODS UNDER THE HART-SCOTT-
RODINO ANTITRUST IMPROVEMENTS ACT OF 1976, AS AMENDED, AND THE REGULATIONS
THEREUNDER. CERTAIN OTHER CONDITIONS TO CONSUMMATION OF THE OFFER ARE DESCRIBED
IN SECTION 13.
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY DETERMINED THAT THE
OFFER AND THE MERGER ARE FAIR TO AND IN THE BEST INTERESTS OF THE COMPANY AND
ITS STOCKHOLDERS AND HAS UNANIMOUSLY APPROVED THE OFFER AND THE MERGER
AGREEMENT AND UNANIMOUSLY RECOMMENDS THAT THE COMPANY'S STOCKHOLDERS ACCEPT THE
OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER.
----------------
IMPORTANT
Any stockholder desiring to tender all or any portion of such stockholder's
Shares should (1) complete and sign the Letter of Transmittal or a facsimile
thereof in accordance with the instructions in the Letter of Transmittal,
including any required signature guarantees, and mail or deliver the Letter of
Transmittal or such facsimile with such stockholder's certificate(s) for the
tendered Shares and any other required documents to the Depositary, (2) follow
the procedure for book-entry tender of Shares set forth in Section 3 or (3)
request such stockholder's broker, dealer, commercial bank, trust company or
other nominee to effect the transaction for such stockholder. Stockholders
having Shares registered in the name of a broker, dealer, commercial bank,
trust company or other nominee must contact such broker, dealer, commercial
bank, trust company or other nominee if they desire to tender Shares so
registered. Unless the context requires otherwise, all references to Shares
herein shall include the associated Rights.
The Rights are presently evidenced by the certificates for the Common Stock
and a tender by a stockholder of such stockholder's shares of Common Stock will
also constitute a tender of the associated Rights. A stockholder who desires to
tender Shares and whose certificates for such Shares are not immediately
available, or who cannot comply with the procedure for book-entry transfer on a
timely basis, may tender such Shares by following the procedures for guaranteed
delivery set forth in Section 3.
Questions and requests for assistance may be directed to the Information
Agent (as defined herein) at the address and telephone number set forth on the
back cover of this Offer to Purchase. Requests for additional copies of this
Offer to Purchase and the Letter of Transmittal may be directed to the
Information Agent or to brokers, dealers, commercial banks or trust companies.
----------------
The date of this Offer to Purchase is:
Tuesday, April 4, 2000
<PAGE>
SUMMARY TERM SHEET
This summary highlights important and material information from this Offer
to Purchase but does not purport to be complete. To fully understand the offer
described in this document and for a more complete description of the terms of
the offer described in this document, you should read carefully this entire
Offer to Purchase and Letter of Transmittal. We have included section
references to direct you to a more complete description of the topics contained
in this summary.
. WHO IS OFFERING TO BUY MY SECURITIES?
Ratos Acquisition Corp., a Delaware corporation and a wholly owned
subsidiary of Forvaltnings AB Ratos, is offering to buy your securities as
described in this document. Acquisition Corp. was incorporated to, among other
things, facilitate the offer described in this document and has no business
operations. Ratos, a Swedish corporation, is one of Sweden's oldest and largest
private equity companies; it is listed on the Stockholm Stock Exchange. See
Section 9 of this document for further information about the offerors.
The offer for your securities was precipitated by an attempt by Ratos to
acquire an interest in another air filter manufacturer, the Swedish corporation
Camfil AB, in the fall of 1999. Cognizant of Ratos' interest in Camfil,
representatives from Camfil approached Ratos when they received an invitation
to make a bid for Farr Company in December, 1999. Ratos and Camfil subsequently
came to an agreement whereby Ratos would purchase Farr, but would have the
option (but not the obligation) generally to require Camfil to purchase its
shares of Farr should Farr be taken private following the merger of Acquisition
Corp. into Farr. Ratos is not obligated to exercise this put option and the
offer for your securities is in no respect conditioned upon the exercise of
this option. In spite of the fact that Camfil is not offering to purchase your
securities, further information about Camfil is provided in Section 9 of this
document.
. WHAT ARE THE CLASSES AND AMOUNTS OF SECURITIES SOUGHT IN THE OFFER?
Acquisition Corp. is offering to buy all of the shares of Common Stock, par
value $0.10 per share, of Farr including the associated rights to purchase
shares of Common Stock. For more information about the rights to purchase
Common Stock or the conditions to which the offer is subject, see Section 1 and
Section 13 of this Offer to Purchase, respectively.
. HOW MUCH IS ACQUISITION CORP. OFFERING TO PAY AND WHAT IS THE FORM OF
PAYMENT?
Acquisition Corp. is offering to pay $17.45, net to the seller in cash, for
each share of Common Stock, including the associated rights to purchase Common
Stock, of Farr. See Section 1 of this document for information about the terms
of the offer.
. DOES ACQUISITION CORP. HAVE THE FINANCIAL RESOURCES TO PAY FOR MY
SECURITIES?
Yes. Acquisition Corp. will receive the funds to pay for your shares from
Ratos, which will be financing the offer described in this document with cash
on hand and liquid invested assets. See Section 12 of this document for more
information about how Acquisition Corp. and Ratos will finance the offer.
. IS ACQUISITION CORP.'S FINANCIAL CONDITION RELEVANT TO MY DECISION OF
WHETHER TO TENDER IN THE OFFER?
Since the offer is for cash and is not subject to any financing condition,
Acquisition Corp.'s financial condition should not be relevant to your decision
of whether to tender your shares in the offer.
i
<PAGE>
. HOW LONG DO I HAVE TO DECIDE WHETHER TO TENDER IN THE INITIAL OFFERING
PERIOD?
You may tender your shares into the offer until May 1, 2000, which is the
scheduled expiration date of the offering period, unless Acquisition Corp.
decides to extend the offering period or provide a subsequent offering period.
See Section 3 of this document for information about tendering your shares.
. CAN THE OFFER BE EXTENDED, AND UNDER WHAT CIRCUMSTANCES?
Yes, Acquisition Corp. may elect to extend the offer by issuing a press
release by 9:00 a.m. on the next business day following the scheduled
expiration date of the offer which states the length of the extension and the
approximate number of shares tendered to date. See Section 1 of this document
for information about extension of the offer.
. WILL THERE BE A SUBSEQUENT OFFERING PERIOD?
Following the satisfaction of all the conditions to the offer and the
acceptance of and payment for all the shares tendered during the offering
period, Acquisition Corp. may elect to provide a subsequent offering period,
although Acquisition Corp. currently has no intention to do so.
. HOW WILL I BE NOTIFIED IF THE OFFER IS EXTENDED?
Acquisition Corp. will announce by press release any extension of the offer
no later than 9:00 A.M., New York City time, on the next day after the
previously scheduled expiration date. See Section 1 of this document for more
information about extension of the offer. If Acquisition Corp. determines to
provide a subsequent offering period, it will publicly disclose its intentions
by issuing a press release no later than 9:00 a.m., New York City time, five
business days prior to the expiration date of the offering period.
. WHAT ARE THE MOST SIGNIFICANT CONDITIONS TO THE OFFER?
The offer is conditioned upon, among other things, (i) there being validly
tendered and not withdrawn a number of shares of Common Stock, including the
associated rights to purchase shares of Common Stock, representing at least a
majority of the outstanding shares of Common Stock on a fully diluted basis as
of the date the shares are accepted for payment pursuant to the offer; and (ii)
the expiration or termination of any and all waiting periods under the Hart-
Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the
regulations thereunder. The offer is not conditioned upon the expiration of any
waiting periods under the Hart-Scott-Rodino Act in connection with the exercise
by Ratos of its right to require Camfil to purchase Ratos' shares of the
corporation surviving the merger of Acquisition Corp. and Farr, which action,
should it occur, would require separate filings by Camfil and Ratos under the
Hart-Scott-Rodino Act. For a complete description of all of the conditions to
which the offer is subject, see Section 13 of this document.
. HOW DO I TENDER MY SHARES?
If you hold the certificates for your shares, you should complete the
enclosed Letter of Transmittal and enclose all of the documents required by it,
including your certificates, and send them to the Depositary at the address
listed on the back cover of this document. If your broker holds your shares for
you in "street name" you must instruct your broker to tender your shares on
your behalf. In any case, the Depositary must receive all required documents
prior to May 1, 2000, which is the expiration date of the offer, unless
Acquisition Corp. decides to extend the offer. If you cannot comply with any of
these procedures, you still may be able to tender your shares by using the
guaranteed delivery procedures described in this document. See Section 3 of
this document for more information on the procedures for tendering your shares.
ii
<PAGE>
. UNTIL WHAT TIME CAN I WITHDRAW PREVIOUSLY TENDERED SHARES?
The tender of your shares may be withdrawn at any time prior to the
expiration date of the offering period. There will be no withdrawal rights
during any subsequent offering period. See Section 4 of this document for more
information.
. HOW DO I WITHDRAW PREVIOUSLY TENDERED SHARES?
You (or your broker if your shares were held in "street name") must notify
the Depositary at the address and telephone number listed on the back cover of
this document, and the notice must include the name of the shareholder that
tendered the shares, the number of shares to be withdrawn and the name in which
the tendered shares are registered. For complete information about the
procedures for withdrawing your previously tendered shares, see Section 4 of
this document.
. WHAT DOES MY BOARD OF DIRECTORS THINK OF THE OFFER?
The Board of Directors of Farr has unanimously determined that the offer and
the merger are fair to and in the best interests of Farr and its stockholders
and has unanimously approved the offer and the merger agreement and unanimously
recommends that Farr's stockholders accept the offer and tender their shares of
Common Stock pursuant to the offer.
. IF ACQUISITION CORP. CONSUMMATES THE TENDER OFFER, WHAT ARE ITS PLANS WITH
RESPECT TO ALL THE SHARES THAT ARE NOT TENDERED IN THE OFFER?
If at least a majority of the shares of Common Stock of Farr are tendered in
the offer, we intend to cause a merger to occur between Acquisition Corp. and
Farr in which you will also receive $17.45 in cash, subject to your right to
dissent and demand the fair cash value of your shares. If we do not receive at
least a majority of the shares, we do not presently intend to acquire any
shares.
. IF I DECIDE NOT TO TENDER, HOW WILL THE OFFER AFFECT MY SHARES?
The purchase of shares by Acquisition Corp. will reduce the number of shares
that might otherwise trade publicly and may reduce the number of holders of
shares, which could adversely affect the liquidity and market value of the
remaining shares held by the public. The shares may also cease to be quoted on
NASDAQ. Also, Farr may cease making filings with the SEC or otherwise being
required to comply with the SEC's rules relating to publicly held companies. As
soon as possible, and in any event immediately following the merger of
Acquisition Corp. and Farr, Ratos intends to cause the shares of Farr to cease
to be quoted on NASDAQ and to cease to be registered under the Securities
Exchange Act of 1934, as amended. See Section 7 of this document for complete
information about the effect of the offer on your shares.
. WHAT WAS THE MARKET VALUE OF MY SHARES AS OF MARCH 24, 2000?
On March 24, 2000, the last full trading day prior to the public
announcement of the offer, the reported closing price on NASDAQ of the Farr
Common Stock was $11.875 per share. Thus, the offer represents a 47% premium
over the closing price of the Farr Common Stock on March 24, 2000 (and a
premium of 67% over the average closing price of the Farr Common Stock during
the previous 30 days). You should obtain a recent market quotation for shares
of Farr Company Common Stock in deciding whether to tender your shares. See
Section 6 of this document for recent high and low sales prices for the shares.
iii
<PAGE>
. WHO CAN I TALK TO IF I HAVE QUESTIONS ABOUT THE TENDER OFFER?
If you have questions or you need assistance you should contact the
Information Agent at the following address and applicable telephone number:
Georgeson Shareholder Communications Inc.
17 State Street
10th Floor
New York, New York 10004
Banks and Brokers Call Collect: (212) 440-9800
All Others Call Toll Free: (800) 223-2064
iv
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Section Page
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<S> <C>
SUMMARY TERM SHEET........................................................ i
Introduction.............................................................. 1
1. Terms of the Offer.................................................. 2
2. Acceptance for Payment and Payment for Shares....................... 4
3. Procedure for Tendering Shares...................................... 5
4. Rights of Withdrawal................................................ 7
5. Certain Federal Income Tax Consequences of the Offer................ 8
6. Price Range of Shares............................................... 9
7. Effect of the Offer on the Market for the Shares, Stock Quotation,
Margin Regulations and Exchange Act Registration.................... 9
8. Certain Information Concerning the Company.......................... 10
9. Certain Information Concerning Purchaser, Ratos and Camfil.......... 13
10. Background of the Offer; Contacts with the Company.................. 14
11. Purpose of the Offer; Plans for the Company; the Merger............. 17
12. Source and Amount of Funds.......................................... 24
13. Certain Conditions of the Offer..................................... 24
14. Dividends and Distributions......................................... 26
15. Certain Legal Matters............................................... 26
16. Fees and Expenses................................................... 29
17. Miscellaneous....................................................... 29
Schedule A Information Concerning the Directors and Executive Officers of
Ratos and Purchaser........................................... A-1
Schedule B Information Concerning the Directors and Executive Officers of
Camfil........................................................ B-1
</TABLE>
v
<PAGE>
To the Holders of Shares of Farr Company:
Introduction.
RATOS ACQUISITION CORP., a Delaware corporation ("Purchaser") and a wholly
owned subsidiary of FORVALTNINGS AB RATOS (publ.), a Swedish corporation
("Ratos"), hereby offers to purchase all of the outstanding shares of common
stock, par value $0.10 per share (the "Common Stock"), including the associated
rights to purchase Common Stock (the "Rights") issued pursuant to the Rights
Agreement, dated as of April 3, 1989 (the "Rights Agreement"), between the
Company and ChaseMellon Shareholder Services, L.L.C., (the "Rights Agent")
(successor under the Rights Agreement to Security Pacific National Bank), as
amended (the Common Stock and the Rights together are referred to herein as the
"Shares") of FARR COMPANY, a Delaware corporation (the "Company") at $17.45 per
Share, net to the seller in cash, upon the terms and subject to the conditions
set forth in this Offer to Purchase and in the related Letter of Transmittal
(the "Letter of Transmittal" and, together with the Offer to Purchase and any
amendments or supplements thereto, the "Offer") Stockholders of record who
tender directly to the Depositary (as defined below) will not be obligated to
pay brokerage fees or commissions or, subject to Instruction 6 of the Letter of
Transmittal, stock transfer taxes, if any, on the purchase of Shares by Ratos
pursuant to the Offer. Stockholders who hold their Shares through a broker or
bank should consult such institution as to whether it charges any service fees.
Purchaser will pay all charges and expenses of ChaseMellon Shareholder
Services, L.L.C. (the "Depositary") and Georgeson Shareholder Communications
Inc. (the "Information Agent"). Unless the context requires otherwise, all
references to Shares herein shall include the associated Rights, and all
references to the Rights shall include all benefits that may inure to the
holders of the Rights pursuant to the Rights Agreement.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (I) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN A NUMBER OF SHARES OF COMMON STOCK OF THE COMPANY
REPRESENTING AT LEAST A MAJORITY OF THE OUTSTANDING SHARES OF COMMON STOCK ON A
FULLY DILUTED BASIS AS OF THE DATE THE SHARES ARE ACCEPTED FOR PAYMENT PURSUANT
TO THE OFFER; AND (II) THE EXPIRATION OR TERMINATION OF ANY AND ALL WAITING
PERIODS UNDER THE HART-SCOTT-RODINO ANTITRUST IMPROVEMENTS ACT OF 1976, AS
AMENDED (THE "HSR ACT"), AND THE REGULATIONS THEREUNDER. CERTAIN OTHER
CONDITIONS TO CONSUMMATION OF THE OFFER ARE DESCRIBED IN SECTION 13.
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY DETERMINED THAT THE
OFFER AND THE MERGER ARE FAIR TO AND IN THE BEST INTERESTS OF THE COMPANY AND
ITS STOCKHOLDERS AND HAS UNANIMOUSLY APPROVED THE OFFER AND THE MERGER
AGREEMENT AND UNANIMOUSLY RECOMMENDS THAT THE COMPANY'S STOCKHOLDERS ACCEPT THE
OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER.
The Offer is being made pursuant to an Agreement and Plan of Merger (the
"Merger Agreement"), dated as of March 26, 2000, among the Company, Ratos and
Purchaser, pursuant to which, after the completion of the Offer, Purchaser will
be merged with and into the Company (the "Merger") and each issued and
outstanding Share (other than Shares owned by the Company in treasury or by any
subsidiary of the Company, owned by Ratos, Purchaser or any other subsidiary of
Ratos or Shares, if any, that are held by stockholders who are entitled to and
who properly exercise dissenters' rights ("Dissenting Stockholders") pursuant
to Section 262 of the Delaware General Corporation Law (the "DGCL") shall, by
virtue of the Merger and without any action on the part of the holder thereof,
be converted into the right to receive, without interest, an amount in cash
equal to $17.45 or any different amount per Share paid pursuant to the Offer
(the "Merger Consideration"). As a result of the Merger, the Company (sometimes
referred to herein as the "Surviving Corporation") will become a wholly owned
subsidiary of Ratos.
Tucker Anthony Cleary Gull ("Tucker Anthony"), the Company's financial
advisor, delivered to the Board of Directors of the Company on March 26, 2000,
a written opinion that, as of the date of the written opinion,
1
<PAGE>
the cash consideration to be received in the Offer and the Merger by holders of
Shares was fair to holders of Shares from a financial point of view. A copy of
the Tucker Anthony opinion is included with the Company's
Solicitation/Recommendation Statement on Schedule 14D-9, which will be sent to
holders of Shares of the Company contemporaneously with or shortly after the
delivery of this Offer to Purchase, and stockholders are urged to read the
opinion in its entirety. The opinion sets forth the procedures followed,
matters reviewed and assumptions made by Tucker Anthony.
According to the Company, as of March 24, 2000 there were 7,294,519 Shares
outstanding and there were 697,200 Shares reserved for issuance under then-
current outstanding stock options pursuant to the Company's stock option and
incentive plans. Simultaneously with entering into the Merger Agreement, Ratos
and Purchaser entered into an Agreement, dated as of March 26, 2000 (the
"Tender Agreement"), with each member of the Company's Board of Directors,
these being Robert Batinovich, Richard P. Bermingham, Dennis R. Brown,
Frederick Gerstell, John C. Johnston, John J. Kimes, H. Jack Meany and John A.
Sullivan (each a "Director") wherein each Director agreed to tender his Shares
(including any and all options to purchase Shares) into the Offer, subject to a
right of withdrawal should the Company receive an offer that is, among other
things, more favorable to the Company's stockholders from a financial point of
view than the Offer. See "Background of the Offer; Contacts with the Company."
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION AND SHOULD BE READ IN THEIR ENTIRETY BEFORE ANY DECISION
IS MADE WITH RESPECT TO THE OFFER.
1.Terms of the Offer.
Upon the terms and subject to the conditions set forth in the Offer
(including the terms and conditions set forth in Section 13 (the "Offer
Conditions") and if the Offer is extended or amended, the terms and conditions
of such extension or amendment), Purchaser will accept for payment, and pay
for, all Shares validly tendered on or prior to the Expiration Date (as defined
herein) and not withdrawn as permitted by Section 4. The term "Expiration Date"
means 12:00 Midnight, New York City time, on May 1, 2000, unless and until
Purchaser shall have extended the period 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 Purchaser, shall expire. The period until 12:00
Midnight, New York City time, on May 1, 2000, as such may be extended, is
referred to as the "Offering Period."
Purchaser may elect, in its sole discretion, to provide a subsequent
offering period of 3 to 20 business days (the "Subsequent Offering Period"). A
Subsequent Offering Period, if one is provided, is not an extension of the
Offering Period. A Subsequent Offering Period would be an additional period of
time, following the expiration of the Offering Period, in which shareholders
may tender Shares not tendered during the Offering Period. Any decision to
provide a Subsequent Offering Period will be announced at least five business
days prior to the expiration of the Offering Period and Purchaser will announce
the approximate number and percentage of securities deposited as of the
expiration of the Offering Period no later than 9:00 a.m., New York City time,
on the next business day following the expiration of the Offering Period, and
such securities will be immediately accepted and promptly paid for. All Offer
Conditions must be satisfied or waived prior to the commencement of any
Subsequent Offering Period. Purchaser does not currently intend to provide a
Subsequent Offering Period.
Pursuant to the Rights Agreement and a Rights dividend, the record date for
which was April 17, 1989, the Company issued to each shareholder one Right to
purchase Common Stock for each share of Common Stock held by such shareholder.
The purchase price for each share of Common Stock pursuant to the exercise of
two Rights was set at $40, subject to adjustment for stock splits, etc. A Right
may be exercised upon, among other things, the expiration of ten days following
the public announcement of the intent of any person to commence a tender offer
that would result in the person becoming the beneficial owner of shares of
Common Stock totaling more than 30% of the outstanding Common Stock of the
Company. Via an amendment dated as of March 26, 2000 (the "Rights Agreement
Amendment"), the Company and the Rights Agent agreed to
2
<PAGE>
amend the Rights Agreement such that, so long as the Merger Agreement has not
been terminated pursuant to the termination provisions thereof, the Rights
shall not be exercisable. Rights are presently evidenced by the certificates
for the Common Stock and the tender by a stockholder of such stockholder's
shares of Common Stock will also constitute a tender of the associated Rights.
In any event, the Rights Agreement Amendment provides that the Rights shall
expire immediately prior to the consummation of the Offer.
Subject to the terms of the Merger Agreement (see Section 11) and applicable
rules and regulations of the Securities and Exchange Commission (the "SEC"),
Purchaser expressly reserves the right, in its sole discretion, at any time or
from time to time, to extend the Offering Period by giving oral or written
notice of such extension to the Depositary. During any such extension of the
Offering Period, all Shares previously tendered and not withdrawn will remain
subject to the Offer, subject to the right of a tendering stockholder to
withdraw such stockholder's Shares. See Section 4. Subject to the applicable
regulations of the SEC, Purchaser also expressly reserves the right, in its
sole discretion (subject to the Merger Agreement), at any time or from time to
time, (i) to delay acceptance for payment of or (regardless of whether such
Shares were theretofore accepted for payment) payment for, any tendered Shares,
or to terminate or amend the Offer as to any Shares not then paid for, on the
occurrence of any of the conditions specified in Section 13 and (ii) to waive
any condition (other than the Minimum Tender Condition) and to set forth or
change any other term of the Offer, by giving oral or written notice of such
delay, termination or amendment to the Depositary and by making a public
announcement thereof, provided that, unless previously approved by the Company
in writing, no provision may be set forth or changed which decreases the price
per Share payable in the Offer, changes the form of consideration payable in
the Offer (other than by adding consideration), reduces the maximum number of
Shares to be purchased in the Offer, imposes conditions to the Offer in
addition to those set forth herein, amends any other term of the Offer in a
manner adverse to the holders of the Shares, extends the Offer other than in
accordance with the Merger Agreement, or amends the Minimum Tender Condition.
If Ratos elects to provide a Subsequent Offering Period, it expressly reserves
the right, in its sole discretion, at any time or from time to time, to extend
the Subsequent Offering Period (not beyond a total of 20 business days) by
giving oral or written notice of such extension to the Depositary. If Purchaser
accepts any Shares for payment pursuant to the terms of the Offer, it will
accept for payment all Shares validly tendered during the Offering Period and
not withdrawn, and, on the terms and subject to the conditions of the Offer,
including but not limited to the Offer Conditions, it will promptly pay for all
Shares so accepted for payment and will immediately accept for payment and
promptly pay for all Shares as they are tendered in any Subsequent Offering
Period. Purchaser confirms that its reservation of the right to delay payment
for Shares which it has accepted for payment is limited by Rule 14e-1(c) under
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), which
requires that a tender offeror pay the consideration offered or return the
tendered securities promptly after the termination or withdrawal of a tender
offer.
Pursuant to the Merger Agreement, if one or more of the conditions set forth
in paragraphs (a), (b) or (c) of Section 13 are not satisfied on any scheduled
Expiration Date, then, if all such conditions are reasonably capable of being
satisfied prior to May 31, 2000, and so long as the Merger Agreement has not
been terminated and the Company's Board of Directors has not withdrawn or
changed in a manner adverse to Ratos its recommendation of the Offer or the
Merger or recommended another offer for the acquisition of the Company, or
resolved to do any of these things, Purchaser shall extend the Offer from time
to time (each such extension not to exceed ten business days after the
previously scheduled Expiration Date) until such conditions are waived or
satisfied, provided that Purchaser shall not be required to extend the Offer
beyond May 31, 2000.
Any extension, delay, termination or amendment of the Offer will be followed
as promptly as practicable by public announcement thereof, such announcement in
the case of an extension to be issued no later than 9:00 A.M., New York City
time, on the next business day after the previously scheduled Expiration Date.
Subject to applicable law (including Rules 14d-4(d), 14d-6(c) and 14e-1 under
the Exchange Act, which require that any material change in the information
published, sent or given to stockholders in connection with the Offer be
promptly disseminated to stockholders in a manner reasonably designed to inform
stockholders of such change) and without limiting the manner in which Purchaser
may choose to make any public announcement, Purchaser shall have no obligation
to publish, advertise or otherwise communicate any such public announcement
other than by issuing a press release or other announcement.
3
<PAGE>
Purchaser confirms that if it makes a material change in the terms of the
Offer or the information concerning the Offer, or if it waives a material
condition of the Offer, Purchaser will extend the Offer to the extent required
by Rules 14d-4(d), 14d-6(c) and 14e-1 under the Exchange Act.
If, during the Offering Period, Purchaser, if previously approved by the
Company in writing, shall decrease the percentage of Shares being sought or
increase or decrease the consideration offered to holders of Shares (the
consent of the Company not being required in connection with an increase in the
consideration offered), such increase or decrease shall be applicable to all
holders whose Shares are accepted for payment pursuant to the Offer and, if at
the time notice of any increase or decrease is first published, sent or given
to holders of Shares, the Offer is scheduled to expire at any time earlier than
the tenth business day from and including the date that such notice is first so
published, sent or given, the Offer will be extended until the expiration of
such ten business day period. For purposes of the Offer, a "business day" means
any day other than a Saturday, Sunday or federal holiday and consists of the
time period from 12:01 A.M. through 12:00 Midnight, New York City time.
The Company has provided Purchaser with the Company's stockholder lists and
security position listings for the purpose of disseminating the Offer to
holders of the Shares. This Offer to Purchase, the related Letter of
Transmittal and other relevant materials will be mailed by Purchaser to record
holders of Shares and will be furnished by Purchaser to brokers, dealers,
banks, trust companies and similar persons whose names, or the names of whose
nominees, appear on the stockholder lists or, if applicable, who are listed as
participants in a clearing agency's security position listing, for subsequent
transmittal to beneficial owners of Shares.
2.Acceptance for Payment and Payment for Shares.
Upon the terms and subject to the conditions of the Offer (including the
Offer Conditions and, if the Offer is extended or amended, the terms and
conditions of any such extension or amendment), Purchaser will accept for
payment, and will pay for, Shares validly tendered and not withdrawn as
promptly as practicable after the expiration of the Offering Period. If there
is a Subsequent Offering Period, all Shares tendered during the Offering Period
will be immediately accepted for payment and promptly paid for following the
expiration thereof and Shares tendered during a Subsequent Offering Period will
be immediately accepted for payment and paid for as they are tendered. Subject
to applicable rules of the SEC, Purchaser expressly reserves the right to delay
acceptance for payment of or payment for Shares in order to comply, in whole or
in part, with any applicable law. See Section 13. In all cases, payment for
Shares tendered and accepted for payment pursuant to the Offer will be made
only after timely receipt by the Depositary of certificates for such Shares (or
a confirmation of a book-entry transfer of such Shares (a "Book-Entry
Confirmation") into the Depositary's account at The Depository Trust Company
(the "Book-Entry Transfer Facility")), a properly completed and duly executed
Letter of Transmittal (or facsimile thereof) and any other required documents.
For purposes of the Offer, Purchaser will be deemed to have accepted for
payment Shares validly tendered and not withdrawn as, if and when Purchaser
gives oral or written notice to the Depositary of its acceptance for payment of
such Shares pursuant to the Offer. Payment for Shares accepted for payment
pursuant to the Offer will be made by deposit of the purchase price therefor
with the Depositary, which will act as agent for the tendering stockholders for
the purpose of receiving payments from Purchaser and transmitting such payments
to the tendering stockholders. Under no circumstances will interest on the
purchase price for Shares be paid, regardless of any delay in making such
payment.
If any tendered Shares are not accepted for payment pursuant to the terms
and conditions of the Offer for any reason, or if certificates are submitted
for more Shares than are tendered, certificates for such unpurchased Shares
will be returned, without expense to the tendering stockholder (or, in the case
of Shares tendered by book-entry transfer of such Shares into the Depositary's
account at the Book-Entry Transfer Facility pursuant to the procedures set
forth in Section 3, such Shares will be credited to an account maintained with
the Book-Entry Transfer Facility), as soon as practicable following expiration
or termination of the Offer.
4
<PAGE>
If, prior to the Expiration Date, we increase the price offered to holders
of Shares in the Offer, we will pay the increased price to all holders of
Shares that we purchase in the Offer, whether or not the Shares were tendered
before the increase in price.
Purchaser reserves the right to transfer or assign in whole or in part from
time to time to one or more direct or indirect subsidiaries of Ratos the right
to purchase all or any portion of the Shares tendered pursuant to the Offer,
but any such transfer or assignment will not relieve Purchaser of its
obligations under the Offer and will in no way prejudice the rights of
tendering stockholders to receive payment for Shares validly tendered and
accepted for payment pursuant to the Offer.
3.Procedure for Tendering Shares.
Valid Tender. To tender Shares pursuant to the Offer, (a) a properly
completed and duly executed Letter of Transmittal (or a facsimile thereof) in
accordance with the instructions of the Letter of Transmittal, with any
required signature guarantees, certificates for Shares to be tendered, and any
other documents required by the Letter of Transmittal, must be received by the
Depositary prior to the Expiration Date at one of its addresses set forth on
the back cover of this Offer to Purchase, (b) such Shares must be delivered
pursuant to the procedures for book-entry transfer described below (and the
Book-Entry Confirmation of such delivery received by the Depositary, including
an Agent's Message (as defined herein) if the tendering stockholder has not
delivered a Letter of Transmittal), prior to the Expiration Date, or (c) the
tendering stockholder must comply with the guaranteed delivery procedures set
forth below. The term "Agent's Message" means a message transmitted by the
Book-Entry Transfer Facility to, and received by, the Depositary and forming a
part of a Book-Entry Confirmation, which states that the Book-Entry Transfer
Facility has received an express acknowledgment from the participant in the
Book-Entry Transfer Facility tendering the Shares which are the subject of such
Book-Entry Confirmation, that such participant has received and agrees to be
bound by the terms of the Letter of Transmittal and that Purchaser may enforce
such agreement against the participant.
The Rights presently are transferred only with the certificates for Common
Stock and the surrender for transfer of any certificates for Common Stock will
also constitute the transfer of the Rights associated with the Common Stock
represented by such certificates. In any event, the Rights Agreement Amendment
provides that the Rights shall expire immediately prior to the consummation of
the Offer.
Book-Entry Delivery. The Depositary will establish accounts with respect to
the Shares at the Book-Entry Transfer Facility for purposes of the Offer within
two business days after the date of this Offer to Purchase. Any financial
institution that is a participant in the Book-Entry Transfer Facility's systems
may make book-entry transfer of Shares by causing the Book-Entry Transfer
Facility to transfer such Shares into the Depositary's account in accordance
with the Book-Entry Transfer Facility's procedures for such transfer. However,
although delivery of Shares may be effected through book-entry transfer, either
the Letter of Transmittal (or facsimile thereof), properly completed and duly
executed, together with any required signature guarantees, or an Agent's
Message in lieu of the Letter of Transmittal, and any other required documents,
must, in any case, be transmitted to and received by the Depositary at one of
its addresses set forth on the back cover of this Offer to Purchase by the
Expiration Date, or the tendering stockholder must comply with the guaranteed
delivery procedures described below. The confirmation of a book-entry transfer
of Shares into the Depositary's account at a Book-Entry Transfer Facility as
described above is referred to herein as a "Book-Entry Confirmation." Delivery
of documents to a Book-Entry Transfer Facility in accordance with such Book-
Entry Transfer Facility's procedures does not constitute delivery to the
Depositary.
THE METHOD OF DELIVERY OF COMMON STOCK, RIGHTS, THE LETTER OF TRANSMITTAL
AND ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH THE BOOK-ENTRY
TRANSFER FACILITY, IS AT THE ELECTION AND RISK OF THE TENDERING STOCKHOLDER.
SHARES WILL BE DEEMED DELIVERED ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY
(INCLUDING, IN THE CASE OF A BOOK-ENTRY TRANSFER, BY BOOK-ENTRY
5
<PAGE>
CONFIRMATION). IF DELIVERY IS BY MAIL, IT IS RECOMMENDED THAT THE STOCKHOLDER
USE PROPERLY INSURED REGISTERED MAIL WITH RETURN RECEIPT REQUESTED. IN ALL
CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
Signature Guarantees. Except as otherwise provided below, all signatures on
a Letter of Transmittal must be guaranteed by a financial institution
(including most commercial banks, savings and loan associations and brokerage
houses) that is a participant in the Security Transfer Agents Medallion
Program, the New York Stock Exchange Medallion Signature Guarantee Program or
the Stock Exchange Medallion Program (each, an "Eligible Institution").
Signatures on a Letter of Transmittal need not be guaranteed (a) if the Letter
of Transmittal is signed by the registered holder (which term, for purposes of
this section, includes any participant in the Book-Entry Transfer Facility's
systems whose name appears on a security position listing as the owner of the
Shares or Rights) of Shares and such registered holder has not completed the
box entitled "Special Payment Instructions" or the box entitled "Special
Delivery Instructions" on the Letter of Transmittal or (b) if such Shares are
tendered for the account of an Eligible Institution. See Instructions 1 and 5
of the Letter of Transmittal. If the certificates for Shares are registered in
the name of a person other than the signer of the Letter of Transmittal, or if
payment is to be made or certificates for Shares not tendered or not accepted
for payment are to be returned to a person other than the registered holder of
the certificates surrendered, then the tendered certificates must be endorsed
or accompanied by appropriate stock powers, in either case signed exactly as
the name or names of the registered holders or owners appear on the
certificates, with the signatures on the certificates or stock powers
guaranteed as described above. See Instructions 1 and 5 of the Letter of
Transmittal.
Guaranteed Delivery. A stockholder who desires to tender Shares pursuant to
the Offer and whose certificates for Shares are not immediately available, or
who cannot comply with the procedure for book-entry transfer on a timely basis,
or who cannot deliver all required documents to the Depositary prior to the
Expiration Date, may tender such Shares by following all of the procedures set
forth below:
(i) such tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form provided by Purchaser, is received by
the Depositary, as provided below, prior to the Expiration Date; and
(iii) the certificates for all tendered Shares, in proper form for
transfer (or a Book-Entry Confirmation with respect to all such Shares),
together with a properly completed and duly executed Letter of Transmittal
(or facsimile thereof), with any required signature guarantees (or, in the
case of a book-entry transfer, an Agent's Message in lieu of the Letter of
Transmittal), and any other required documents, are received by the
Depositary within three trading days after the date of execution of such
Notice of Guaranteed Delivery. A "trading day" is any day on which the New
York Stock Exchange, Inc. (the "NYSE") is open for business.
The Notice of Guaranteed Delivery may be delivered by hand to the Depositary
or transmitted by telegram, facsimile transmission or mail to the Depositary
and must include a guarantee by an Eligible Institution in the form set forth
in such Notice of Guaranteed Delivery.
Other Requirements. Notwithstanding any provision hereof, payment for Shares
accepted for payment pursuant to the Offer will in all cases be made only after
timely receipt by the Depositary of (a) certificates for (or a timely Book-
Entry Confirmation with respect to) Common Stock and the associated Rights, (b)
a Letter of Transmittal (or facsimile thereof), properly completed and duly
executed, with any required signature guarantees (or, in the case of a book-
entry transfer, an Agent's Message in lieu of the Letter of Transmittal) and
(c) any other documents required by the Letter of Transmittal. Accordingly,
tendering stockholders may be paid at different times depending upon when
certificates for Shares or Book-Entry Confirmations with respect to Shares are
actually received by the Depositary. Under no circumstances will interest on
the purchase price of the Shares be paid by Purchaser, regardless of any
extension of the Offer or any delay in making such payment.
6
<PAGE>
Tender Constitutes an Agreement. The valid tender of Shares pursuant to one
of the procedures described above will constitute a binding agreement between
the tendering stockholder and Purchaser upon the terms and subject to the
conditions of the Offer.
Appointment. By executing a Letter of Transmittal as set forth above, the
tendering stockholder irrevocably appoints designees of Purchaser as such
stockholder's proxies, each with full power of substitution, to the full extent
of such stockholder's rights with respect to the Shares tendered by such
stockholder and accepted for payment by Purchaser and with respect to any and
all other Shares or other securities issued or issuable in respect of such
Shares on or after March 27, 2000. All such proxies will be considered coupled
with an interest in the tendered Shares. Such appointment is effective when,
and only to the extent that, Purchaser deposits the payment for such Shares
with the Depositary. Upon the effectiveness of such appointment, all prior
powers of attorney, proxies and consents given by such stockholder will be
revoked, and no subsequent powers of attorney, proxies and consents may be
given (and, if given, will not be deemed effective). Purchaser's designees
will, with respect to the Shares for which the appointment is effective, be
empowered to exercise all voting and other rights of such stockholder as they,
in their sole discretion, may deem proper at any annual, special or adjourned
meeting of the stockholders of the Company, by written consent in lieu of any
such meeting or otherwise. Purchaser reserves the right to require that, in
order for Shares to be deemed validly tendered, immediately upon Purchaser's
payment for such Shares, Purchaser must be able to exercise full voting rights
with respect to such Shares.
Determination of Validity. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance of any tender of Shares
will be determined by Purchaser in its sole discretion, which determination
will be final and binding. Purchaser reserves the absolute right to reject any
and all tenders determined by it not to be in proper form or the acceptance for
payment of or payment for which may, in the opinion of Purchaser's counsel, be
unlawful. Purchaser also reserves the absolute right to waive any defect or
irregularity in the tender of any Shares of any particular stockholder whether
or not similar defects or irregularities are waived in the case of other
stockholders. No tender of Shares will be deemed to have been validly made
until all defects and irregularities relating thereto have been cured or
waived. None of Purchaser, the Depositary, the Information Agent, or any other
person will be under any duty to give notification of any defects or
irregularities in tenders or incur any liability for failure to give any such
notification. Purchaser's interpretation of the terms and conditions of the
Offer (including the Letter of Transmittal and Instructions thereto) will be
final and binding.
Backup Withholding. In order to avoid "backup withholding" of Federal income
tax on payments of cash pursuant to the Offer, a stockholder surrendering
Shares in the Offer must, unless an exemption applies, provide the Depositary
with such stockholder's correct taxpayer identification number ("TIN") on a
Substitute Form W-9 and certify under penalties of perjury that such TIN is
correct and that such stockholder is not subject to backup withholding. If a
stockholder does not provide such stockholder's correct TIN or fails to provide
the certifications described above, the Internal Revenue Service (the "IRS")
may impose a penalty on such stockholder and payment of cash to such
stockholder pursuant to the Offer may be subject to backup withholding of 31%.
All stockholders surrendering Shares pursuant to the Offer should complete and
sign the main signature form and the Substitute Form W-9 included as part of
the Letter of Transmittal to provide the information and certification
necessary to avoid backup withholding (unless an applicable exemption exists
and is proved in a manner satisfactory to Purchaser and the Depositary).
Certain stockholders (including, among others, all corporations and certain
foreign individuals and entities) are not subject to backup withholding. Non-
corporate foreign stockholders should complete and sign the main signature form
and a Form W-8, Certificate of Foreign Status, a copy of which may be obtained
from the Depositary, in order to avoid backup withholding. See Instruction 11
to the Letter of Transmittal.
4.Rights of Withdrawal.
Tenders of Shares made pursuant to the Offer are irrevocable except that
Shares tendered pursuant to the Offer may be withdrawn at any time prior to the
termination of the Offering Period and, unless theretofore accepted for payment
by Purchaser pursuant to the Offer, may also be withdrawn at any time after
June 3,
7
<PAGE>
2000. There will be no withdrawal rights during any Subsequent Offering Period
for Shares tendered during the Subsequent Offering Period.
For a withdrawal to be effective, a written, telegraphic, telex or facsimile
transmission notice of withdrawal must be timely received by the Depositary at
one of its addresses set forth on the back cover of this Offer to Purchase. Any
such notice of withdrawal must specify the name of the person having tendered
the Shares to be withdrawn, the number or amount of Shares to be withdrawn and
the names in which the certificate(s) evidencing the Shares to be withdrawn are
registered, if different from that of the person who tendered such Shares. The
signature(s) on the notice of withdrawal must be guaranteed by an Eligible
Institution, unless such Shares have been tendered for the account of any
Eligible Institution. If Shares have been tendered pursuant to the procedures
for book-entry tender as set forth in Section 3, any notice of withdrawal must
specify the name and number of the account at the Book-Entry Transfer Facility
to be credited with the withdrawn Shares. If certificates for Shares to be
withdrawn have been delivered or otherwise identified to the Depositary, the
name of the registered holder and the serial numbers of the particular
certificates evidencing the Shares to be withdrawn must also be furnished to
the Depositary as aforesaid prior to the physical release of such certificates.
All questions as to the form and validity (including time of receipt) of any
notice of withdrawal will be determined by Purchaser, in its sole discretion,
which determination shall be final and binding. None of Purchaser, Ratos, the
Depositary, the Information Agent or any other person will be under any duty to
give notification of any defects or irregularities in any notice of withdrawal
or incur any liability for failure to give such notification. Withdrawals of
tender for Shares may not be rescinded, and any Shares properly withdrawn will
be deemed not to have been validly tendered for purposes of the Offer. However,
withdrawn Shares may be retendered by following one of the procedures described
in Section 3 at any time prior to the Expiration Date.
If Purchaser extends the Offer, is delayed in its acceptance for payment of
Shares, or is unable to accept for payment Shares pursuant to the Offer, for
any reason, then, without prejudice to Purchaser's rights under this Offer, the
Depositary may, nevertheless, on behalf of Purchaser, retain tendered Shares,
and such Shares may not be withdrawn except to the extent that tendering
stockholders are entitled to withdrawal rights as set forth in this Section 4.
5.Certain Federal Income Tax Consequences of the Offer.
Sales of Shares pursuant to the Offer and the exchange of Shares for cash
pursuant to the Merger will be taxable transactions for Federal income tax
purposes and may also be taxable under applicable state, local and other tax
laws. For Federal income tax purposes, a stockholder whose Shares are purchased
pursuant to the Offer or who receives cash as a result of the Merger will
realize gain or loss equal to the difference between the adjusted basis of the
Shares sold and the amount of cash received therefor. Such gain or loss will be
capital gain or loss if the Shares are held as capital assets by the
stockholder. Long-term capital gain of a non-corporate stockholder is generally
subject to a maximum tax rate of 20% in respect of property held for more than
one year.
THE INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL
INFORMATION ONLY AND MAY NOT BE APPLICABLE TO STOCKHOLDERS IN SPECIAL
SITUATIONS SUCH AS STOCKHOLDERS WHO RECEIVED THEIR SHARES UPON THE EXERCISE OF
EMPLOYEE STOCK OPTIONS OR OTHERWISE AS COMPENSATION AND STOCKHOLDERS WHO ARE
NOT UNITED STATES PERSONS. STOCKHOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS
WITH RESPECT TO THE SPECIFIC TAX CONSEQUENCES TO THEM OF THE OFFER AND THE
MERGER, INCLUDING THE APPLICATION AND EFFECT OF FEDERAL, STATE, LOCAL, FOREIGN
OR OTHER TAX LAWS.
8
<PAGE>
6.Price Range of Shares.
The Shares are traded on the Nasdaq Stock Market's National Market (the
"Nasdaq National Market") under the symbol "FARC". The following table sets
forth, for the calendar quarters indicated, the high and low sales prices for
the Shares on the Nasdaq National Market based upon public sources:
<TABLE>
<CAPTION>
Sales Price
---------------
High Low
------- -------
<S> <C> <C>
Calendar Year
1998:
First Quarter............................................ $13.000 $ 9.000
Second Quarter........................................... 14.328 10.500
Third Quarter............................................ 13.000 9.000
Fourth Quarter........................................... 10.625 8.250
1999:
First Quarter............................................ 10.000 8.500
Second Quarter........................................... 11.000 7.938
Third Quarter............................................ 11.000 9.125
Fourth Quarter........................................... 10.000 7.500
2000:
First Quarter............................................ 17.187 9.125
</TABLE>
The Rights trade together with the Common Stock. On March 24, 2000, the last
full trading day prior to the public announcement of the terms of the Offer and
the Merger, the reported closing price on the Nasdaq National Market was
$11.875 per Share. On April 3, 2000, the last full trading day prior to
commencement of the Offer, the reported closing price on the Nasdaq National
Market was $17.125 per Share. Stockholders are urged to obtain a current market
quotation for the Shares.
7. Effect of the Offer on the Market for the Shares, Stock Quotation, Margin
Regulations and Exchange Act Registration.
Market for Shares. The purchase of Shares by Purchaser pursuant to the Offer
will reduce the number of Shares that might otherwise trade publicly and may
reduce the number of holders of Shares, which could adversely affect the
liquidity and market value of the remaining Shares held by the public.
Stock Quotation. The shares of Common Stock are listed on the Nasdaq
National Market. Following the Expiration Date, it is Ratos' intention to
delist the shares of Common Stock from the Nasdaq National Market and to cause
the shares of Common Stock to cease to be registered under the Exchange Act.
According to published guidelines of the National Association of Securities
Dealers, the Shares might no longer be eligible for quotation on the Nasdaq
National Market if, among other things, either (x) the number of Shares
publicly held was less than 750,000, there were fewer than 400 holders of round
lots, the aggregate market value of publicly held Shares was less than
$5,000,000, net tangible assets were less than $4,000,000 and there were fewer
than two registered and active market makers for the Shares, or (y) the number
of Shares publicly held was less than 1,100,000, there were fewer than 400
holders of round lots, the aggregate market value of publicly held Shares was
less than $15,000,000, there were fewer than four registered and active market
makers, and either (w) the Company's market capitalization was less than
$50,000,000 or (z) the total assets and total revenue of the Company for the
most recently completed fiscal year or two of the last three most recently
completed fiscal years, was less than $50,000,000. Shares held directly or
indirectly by directors, officers or beneficial owners of more than 10% of the
Shares are not considered as being publicly held for this purpose. According to
information furnished to Purchaser by the Company, as of the close of business
on March 24, 2000, there were 391 holders of record of Shares not including
beneficial holders of Common Stock in street name and there were 7,294,519
Shares outstanding.
9
<PAGE>
If the Shares were to cease to be quoted on the Nasdaq National Market, the
market for the Shares could be therefor adversely affected. It is possible that
the Shares would be traded or quoted on securities exchanges or in the over-
the-counter market, and that price quotations would be reported by such
exchanges, or through the National Association of Securities Dealers Automated
Quotation System, Inc. ("NASDAQ") or other sources. The extent of the public
market for the shares of Common Stock and associated Rights and the
availability of such quotations would, however, depend upon the number of
stockholders and/or the aggregate market value of the shares of Common Stock
and associated Rights remaining at such time, the interest in maintaining a
market in the shares of Common Stock and associated Rights on the part of
securities firms, the possible termination of registration of the Shares under
the Exchange Act and other factors.
Margin Regulations. The shares of Common Stock are presently "margin
securities" under the regulations of the Board of Governors of the Federal
Reserve Board (the "Federal Reserve Board"), which has the effect, among other
things, of allowing brokers to extend credit on the collateral of such shares
of Common Stock. Depending upon factors similar to those described above
regarding listing and market quotations, the shares of Common Stock might no
longer constitute "margin securities" for the purposes of the Federal Reserve
Board's margin regulations in which event the shares of Common Stock would be
ineligible as collateral for margin loans made by brokers.
Exchange Act Registration. The Shares are currently registered under the
Exchange Act. Such registration may be terminated by the Company upon
application to the SEC if the outstanding Shares are not listed on a national
securities exchange and if there are fewer than 300 holders of record of
Shares. Termination of registration of the Shares under the Exchange Act would
reduce the information required to be furnished by the Company to its
stockholders and to the SEC and would make certain provisions of the Exchange
Act, such as the short-swing profit recovery provisions of Section 16(b) and
the requirement to furnish a proxy statement in connection with stockholders'
meetings pursuant to Section 14(a) and the related requirement to furnish an
annual report to stockholders, no longer applicable with respect to the Shares.
Furthermore, the ability of "affiliates" of the Company and persons holding
"restricted securities" of the Company to dispose of such securities pursuant
to Rule 144 under the Securities Act of 1933, as amended, may be impaired or
eliminated. If registration of the Shares under the Exchange Act were
terminated, the Shares would no longer be eligible for NASDAQ reporting or for
continued inclusion on the Federal Reserve Board's list of "margin securities".
Purchaser intends to seek to cause the Company to apply for termination of
registration of the Shares as soon as possible after consummation of the Offer
if the requirements for termination of registration are met.
8.Certain Information Concerning the Company.
The Company is a Delaware corporation with its principal executive offices
located at 2201 Park Place, El Segundo, California 90425 (telephone number:
(310) 727-6300). According to information furnished to Purchaser by the
Company, as of the close of business on March 24, 2000, there were 391 holders
of record of Shares not including beneficial holders of Common Stock in street
name and there were 7,294,519 Shares outstanding. For information regarding the
recent high and low sales prices on NASDAQ for the shares of Common Stock, see
Section 6 of this Offer to Purchase. The following description of the Company
and its business set forth below has been taken from the Company's Annual
Report for the fiscal year ended January 1, 2000 on Form 10-K (the "Form 10-
K"), filed with the SEC on March 27, 2000, and is qualified in its entirety by
reference to the Company's Form 10-K:
Farr Company and its subsidiaries are engaged in the design, development,
manufacture, sale and service of filters and filtration systems. These
products are used for a wide variety of applications, including heating,
ventilation and air conditioning systems, manufacturing and process
cleanrooms, special application filters for original equipment
manufacturers, diesel-powered truck engines, railroad locomotives, dust
collection systems and gas turbines. Air filter efficiencies range from 20
percent in disposable products to 99.9999+ percent in cleanroom products.
Products are available as standard items or may be custom engineered. They
range in size and complexity from a small throwaway air filter to large gas
turbine systems with a single filter component module weighing in excess of
twenty tons.
10
<PAGE>
Set forth below is certain summary consolidated financial information for
each of the Company's last three fiscal years for the period ended December 31
as contained in the Company's Form 10-K. More comprehensive financial
information is included in such reports (including management's discussion and
analysis of financial condition and results of operation) and other documents
filed by the Company with the SEC, and the following summary is qualified in
its entirety by reference to such reports and other documents and all of the
financial information and notes contained therein. Copies of such reports and
other documents may be examined at or obtained from the SEC in the manner set
forth below.
FARR COMPANY
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(In thousands, except per share data)
<TABLE>
<CAPTION>
Fiscal Year Ended December 31
-----------------------------
1999 1998 1997
<S> <C> <C> <C>
Income Statement Data
Net sales........................................ $ 116,520 $ 122,285 $ 125,762
Income before income taxes....................... 11,175 10,993 11,240
Income tax provision............................. 4,002 3,778 3,865
Net income....................................... 7,173 7,205 7,375
Per share:
Basic earnings per common share................ $ 0.95 $ 0.87 $ 0.90
Diluted earnings per common share.............. 0.93 0.86 0.88
Balance Sheet Data
Current assets................................... $ 41,808 $ 39,090 $ 41,007
Total assets..................................... 63,011 59,901 60,828
Current liabilities.............................. 17,300 14,565 19,270
Long-term debt, net of current portion........... -- -- --
Stockholders' investment......................... 41,278 42,054 38,507
</TABLE>
Except as otherwise set forth herein, the information concerning the Company
contained in this Offer to Purchase has been taken from or based upon publicly
available documents and records on file with the SEC and other public sources
and is qualified in its entirety by reference thereto. Although Ratos,
Purchaser and the Information Agent have no knowledge that would indicate that
any statements contained herein based on such documents and records are untrue,
Ratos, Purchaser and the Information Agent cannot take responsibility for the
accuracy or completeness of the information contained in such documents and
records, or for any failure by the Company to disclose events which may have
occurred or may affect the significance or accuracy of any such information but
which are unknown to Ratos, Purchaser or the Information Agent.
CERTAIN FINANCIAL PROJECTIONS (UNAUDITED)
In the course of the discussions between representatives of the Company and
representatives of Ratos, Ratos' representatives were provided with certain
projections of the future operating performance of the Company prepared by the
Company's management for fiscal years 2000-2003, including projections of
revenue and earnings before interest, income taxes, depreciation and
amortization. Such information has been set forth below for the limited purpose
of giving stockholders access to projections by the Company's management that
were available for review by Ratos in connection with the Offer:
The projected financial information set forth below necessarily reflects
numerous assumptions with respect to general business and economic conditions
and other matters, many of which are inherently uncertain or beyond the Company
or Ratos' control, and does not take into account any changes in the Company's
11
<PAGE>
operations or capital structure which may result from the Offer and the Merger.
It is not possible to predict whether the assumptions made in preparing the
projected financial information will be valid, and actual results may prove to
be materially higher or lower than those contained in the projections. The
inclusion of this information should not be regarded as an indication that the
Company or any other person who received this information considered it a
reliable predictor of future events, and this information should not be relied
on as such. None of the Company, Ratos or any of their respective
representatives assumes any responsibility for the validity, reasonableness,
accuracy or completeness of the projected financial information, and the
Company has made no representation to Purchaser regarding such information.
<TABLE>
<CAPTION>
Years Ended December 31,
-----------------------------------
2000 2001 2002 2003
-------- -------- -------- --------
(in thousands)
<S> <C> <C> <C> <C>
Revenue..................................... $129,666 $152,463 $182,919 $213,690
EBITDA*..................................... $ 16,124 $ 22,118 $ 30,984 $ 40,287
</TABLE>
- --------
*Earnings before interest, income taxes, depreciation and amortization
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS. Certain matters
discussed herein, including without limitation, the projections set forth
above, are forward-looking statements that involve risks and uncertainties.
Such information has been included in this Offer to Purchase for the limited
purpose of giving stockholders access to projections generated by the Company's
management that were made available to Ratos. The foregoing projections were
based on assumptions concerning the Company's operations and business prospects
during the years 2000-2003, inclusive, including the assumption that the
Company would continue to operate under the same ownership structure as then
existed. The Company's projections were also based on other revenue, expense
and operating assumptions. Information of this type is based on estimates and
assumptions that are inherently subject to significant economic and competitive
uncertainties and contingencies, all of which are difficult to predict and many
of which are beyond the Company's control. Such uncertainties and contingencies
include, but are not limited to, changes in the economic conditions in which
the Company operates, greater than anticipated competition or price pressures,
new product offerings, better or worse than expected customer growth resulting
in the need to expand operations and make capital investments, and the impact
of investments required to enter new markets. Accordingly, there can be no
assurance that the projected results would be realized or that actual results
would not be significantly higher or lower than those set forth above. In
addition, the Company's projections were not prepared with a view to public
disclosure or compliance with the published guidelines of the SEC or the
guidelines established by the American Institute of Certified Public
Accountants regarding projections and forecasts, and are included in this Offer
to Purchase only because such information was made available to Ratos by the
Company. Neither Ratos nor the Company's independent accountants have examined,
compiled or applied any agreed upon procedures to this information, and,
accordingly, do not express an opinion or any form of assurance with respect
thereto and assume no responsibility for this information. Neither Ratos nor
the Company nor any other party assumes any responsibility for the accuracy or
validity of the foregoing projections of the Company. Neither Ratos nor the
Company intends to provide any updated information with respect to any forward-
looking statements.
Available Information. The Company is subject to the information and
reporting requirements of the Exchange Act and in accordance therewith is
obligated to file reports and other information with the SEC relating to its
business, financial condition and other matters. Information, as of particular
dates, concerning the Company's directors and officers, their remuneration,
stock options granted to them, the principal holders of the Company's
securities, any material interests of such persons in transactions with the
Company and other matters is required to be disclosed in proxy statements
distributed to the Company's stockholders and filed with the SEC. Such reports,
proxy statements and other information should be available for inspection at
the public reference room at the SEC's offices at 450 Fifth Street, N.W.,
Washington, D.C., 20549 and also should be available for inspection and copying
at the regional offices of the SEC located at Seven World Trade Center, 13th
Floor, New York, New York 10048 and Citicorp Center, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60611. Copies may be obtained, by mail, upon
payment of the SEC's customary charges, by writing to
12
<PAGE>
its principal office at 450 Fifth Street, N.W., Judiciary Plaza, Washington,
D.C. 20549 and can be obtained electronically on the SEC's Web Site at
http://www.sec.gov.
9.Certain Information Concerning Purchaser, Ratos and Camfil.
Purchaser is a Delaware corporation and to date has engaged in no activities
other than those incident to its formation and the commencement of the Offer.
Purchaser is an indirect wholly owned subsidiary of Ratos. The principal
executive offices of Purchaser and Ratos are located at Drottninggatan 2, SE-
111 96, Stockholm, Sweden (telephone number: +46-8-700-17-00). Purchaser and
Ratos have made no arrangements in connection with the Offer to provide holders
of Shares access to their corporate files or to obtain counsel or appraisal
services at their expense.
Forvaltnings AB Ratos (publ.), a publicly traded Swedish corporation listed
on the Stockholm Stock Exchange, is one of Sweden's oldest and largest private
equity companies. Ratos' business concept is to maximize shareholder value
through the professional and responsible management of its investments,
including an active involvement in the governance of its portfolio companies.
The net asset value of Ratos' investments exceeds $1.2 billion. The company's
current holdings include: Scandic Hotels, Telelogic, Dahl, Superfos, Capona,
Esselte, DataVis, Telia Overseas and ACE.
Additional information concerning Ratos is set forth in Ratos' 1999 Annual
Report, which can be obtained on Ratos' Web Site at www.ratos.se.
The name, citizenship, business address, business telephone number, current
principal occupation (including the name and principle business and address of
the organization in which such occupation is conducted), and material positions
held during the past five years (including the name and principle business and
address of the organization in which such occupation was conducted), of each of
the directors and executive officers of Purchaser and Ratos is set forth on
Schedule A to this Offer to Purchase.
Neither Purchaser nor Ratos, nor, to the best of their knowledge, any of the
persons listed on Schedule A hereto nor any associate or majority-owned
subsidiary of any of the foregoing, beneficially owns or has a right to acquire
any Shares or has engaged in any transactions in Shares in the past 60 days.
Neither Purchaser nor Ratos has purchased any Shares during the past two years.
Except as set forth in Section 10, since April 1, 1998, there have been no
negotiations, transactions or material contacts between Ratos or Purchaser, or,
to the best of their knowledge, any of the persons listed in Schedule A hereto,
on the one hand, and the Company or any of its affiliates, on the other hand,
concerning a merger, consolidation or acquisition, a tender offer or other
acquisition of securities, an election of directors, or a sale or other
transfer of a material amount of assets, nor to the best knowledge of Purchaser
and Ratos have there been any negotiations or material contacts between
subsidiaries, executive officers and directors. Except as described in Section
10, neither Purchaser nor Ratos, nor, to the best of their knowledge, any of
the persons listed on Schedule A hereto, has since April 1, 1998, had any
transaction with the Company or any of its executive officers, directors or
affiliates that would require disclosure under the rules and regulations of the
SEC applicable to the Offer.
Camfil AB. Ratos and Camfil AB ("Camfil") are parties to a Share Exchange
Option Agreement pursuant to which Camfil has granted Ratos a put option that
will permit Parent to require Camfil to purchase the shares of the Surviving
Corporation in exchange for a minority equity interest in Camfil. The Share
Exchange Option Agreement is summarized in Section 11 of this Offer to
Purchase. Prior to November 1, 2000, the put option may only be exercised if
the shares of Common Stock of the Company have been delisted from the Nasdaq
National Market and have ceased to be registered under the Exchange Act. In any
event, given the presence of the Minimum Condition, prior to exercising its
right to require Camfil to purchase all of the shares of the Surviving
Corporation, ALL of the current shareholders of the Company, excluding the
Company, any subsidiaries of the Company and those shareholders who have
properly perfected
13
<PAGE>
appraisal rights under Delaware law will have been paid the Merger
Consideration owed to them in exchange for their shares pursuant to the Offer
or in accordance with the terms of the Merger Agreement and the Surviving
Corporation will have become a wholly owned subsidiary of Ratos. Neither the
Offer nor the Merger is conditioned upon the exercise of the above-mentioned
put option by Ratos; nor, as discussed in Section 12, is the Offer or the
Merger conditioned upon Purchaser obtaining adequate financing. Ratos has
sufficient cash on hand and liquid investments to permit Purchaser to purchase
all of the outstanding securities of the Company in the Offer without outside
financing. The involvement of Camfil in the negotiations leading up to the
Offer is described in detail in Section 10 of this Offer to Purchase.
Camfil, a private Swedish corporation, is a leading manufacturer of air
filters and clean air technology. The principal executive offices of Camfil
are located at Industrigatan 3, SE-619 33, Trosa, Sweden (telephone number:
+46-8-156-536-00). The company is represented through subsidiaries and
distributors throughout Europe, Asia and North America. To date, Camfil's
presence in the United States has been confined to the microelectronics
cleanroom sub-industry, in which its subsidiary, Filtra Corp., a New Jersey
corporation, is an acknowledged leader. Additional information about Camfil
can be found on the company's web site at www.camfil.com
The name, citizenship, business address, business telephone number, current
principal occupation (including the name and principle business of the
organization in which such occupation is conducted), and material positions
held during the past five years (including the name and principle business of
the organization in which such occupation was conducted), of each of the
directors and executive officers of Camfil is set forth on Schedule B to this
Offer to Purchase.
Neither Camfil nor, to the best of its knowledge, any of its directors or
officers, nor any associate or majority-owned subsidiary of any of the
foregoing, beneficially owns or has a right to acquire any Shares or has
engaged in any transactions in Shares in the past 60 days. Camfil has not
purchased any Shares during the past two years.
Except as set forth in Section 10, since April 1, 1998, there have been no
negotiations, transactions or material contacts between Camfil, or, to the
best of its knowledge, any of its directors, officers, associates or majority-
owned subsidiaries, on the one hand, and the Company or any of its affiliates,
on the other hand, concerning a merger, consolidation or acquisition, a tender
offer or other acquisition of securities, an election of directors, or a sale
or other transfer of a material amount of assets, nor to the best knowledge of
Camfil has there been any negotiations or material contacts between
subsidiaries, executive officers and directors. Except as described in Section
10, neither Camfil, nor, to the best of its knowledge, any of its directors,
officers, associates or majority-owned subsidiaries, has since April 1, 1998,
had any transaction with the Company or any of its executive officers,
directors or affiliates that would require disclosure under the rules and
regulations of the SEC applicable to the Offer were Camfil to be considered an
offeror for the Company thereunder.
10.Background of the Offer; Contacts with the Company.
On September 1, 1999, Ratos approached Camfil regarding an investment by
Ratos in Camfil.
During the fall of 1999, Ratos explored with Camfil possible investment
opportunities in Camfil by Ratos.
On December 8, 1999, John Johnston, President and Chief Executive Officer
of the Company, contacted Jan Eric Larson, President and Chief Executive
Officer of Camfil, via telephone and informed Mr. Larson that the Company had
retained Tucker Anthony to explore strategic alternatives to maximize
shareholder value. Mr. Johnston asked Mr. Larson if Camfil would be interested
in participating in an auction process. Mr. Larson responded that Camfil would
be interested in such an opportunity.
Mr. Larson determined after his conversation with Mr. Johnston that Camfil
could not finance the transaction independently. Mr. Larson consulted Camfil's
regular financial adviser, Stefan Haskel of Erneholm
14
<PAGE>
& Haskel AB, in mid-December, 1999, regarding the merit of an acquisition of
the Company. On or around December 21, 1999, a representative of Camfil
telephoned Ratos regarding the possible acquisition of the Company. The parties
discussed the means by which Ratos might invest in Camfil by participating in
the acquisition.
On January 4, 2000, Camfil and Ratos reached an agreement in principal
regarding the acquisition of the Company and Ratos' interest in acquiring a
minority equity stake in Camfil, the main elements of the agreement being that
Ratos would acquire the Company and could eventually transfer the Company to
Camfil in exchange for 20% of the voting stock of Camfil.
On January 7, 2000, Tucker Anthony, together with the senior management of
the Company including Jack Meany, John Johnston, Richard Larson and Steve Pegg,
made a presentation to Jan Eric Larson, Alan O'Connell, Johan Ryrberg and
Armando Brunetti of Camfil regarding the Company's business, operations and
projected results of operations. The meeting took place in Denver, Colorado.
On February 4, 2000, Ratos and Camfil submitted a preliminary non-binding
proposal letter to Tucker Anthony in which they indicated that they would be
interested in acquiring the Company for a total purchase price of between
$102,042,321-$117,997,097, i.e., between $13.50-$15.50 per Share.
On February 9, 2000, Tucker Anthony indicated that the Company would not
pursue a transaction at the valuation range indicated in the February 4, 2000,
non-binding proposal of Ratos and Camfil. On or around February 10, 2000, a
conference call was held between Ratos, Camfil and Tucker Anthony for the
purpose of discussing the Company's projections.
On February 11, 2000, Ratos and Camfil submitted an amendment to their non-
binding proposal, which amendment increased the parties' non-binding aggregate
valuation of the Company, subject to the findings of a due diligence
investigation of the Company, to $137,940,567, or $18 per share. In this
February 11, 2000, letter the parties also (i) explained that any acquisition
of the Company would be effected by Ratos and not by Camfil, and (ii) indicated
that they considered the Company's management to be integral to the success of
the Company and the acquisition by Ratos of the Company would be conditioned on
the execution of employment agreements with certain key employees of the
Company.
On February 14, 2000, a representative of Tucker Anthony reviewed a number
of items with representatives of Ratos and Camfil regarding the corporations'
February 11, 2000 amendment to their non-binding proposal. On February 15,
2000, Ratos and Camfil delivered to Tucker Anthony a final amendment to their
non-binding proposal, which amendment confirmed the valuation the interested
parties had placed on the Company in their February 11, 2000, letter and
addressed several due diligence issues raised by a representative of Tucker
Anthony, including, among other things, concerns over the financing of the
transaction, the identity of the individuals whom the interested parties
considered to be key employees, and the identification of the regulatory
approvals that would be required to consummate the transaction.
On February 19, 2000, an Exclusive Negotiating Agreement was entered into
between the Company and Ratos, the term of the exclusive negotiating period
thereunder expiring at midnight on March 10, 2000.
From February 21, 2000, until March 1, 2000, representatives of Ratos
conducted a due diligence investigation of the Company in Los Angeles. On
February 24, 2000, representatives of Ratos met in New York with counsel to
Ratos, Sullivan & Cromwell. Between February 23, 2000 and February 25, 2000,
Mr. J.E. Larson and Mr. O'Connell traveled to most of the Company's domestic
manufacturing facilities with Mr. Johnston.
A conference call between representatives of Ratos, Camfil and the Company
was conducted on March 6, 2000, regarding, among other things, environmental
due diligence issues.
15
<PAGE>
On March 7, 2000, Mr. Johnston discussed valuation issues with
representatives of both Ratos and Camfil. During these discussions, Ratos
indicated that, due to certain due diligence findings, Ratos was not willing to
pay $18.00 per Share as suggested in the February 11, 2000, amendment to the
non-binding proposal. The parties tentatively agreed to a valuation for the
Company of approximately $17.50 per Share, subject to the outcome of Ratos'
investigation of its remaining due diligence concerns, which by this time were
limited to certain litigation, environmental and real property matters.
On March 10, 2000, the Board of Directors of the Company approved an
extension of the exclusive negotiating period to permit Ratos to complete its
due diligence investigation of the Company. By action of the Board of Directors
the exclusivity period was extended until the execution by the Company and
Ratos of an amendment to the Exclusive Negotiating Agreement, effective as of
March 10, 2000, which extended the exclusive negotiating period until midnight
on Saturday, March 25, 2000.
On March 20 and 21, 2000, representatives of Ratos and Camfil met with their
outside counsel at the New York offices of Sullivan & Cromwell to discuss,
among other things, the remaining due diligence issues, the timetable for the
transaction, the Merger Agreement, and employment issues relating to the
ongoing employment following the Merger of the senior management of the
Company.
On March 22, 2000, representatives of Ratos and Camfil met with members of
the senior management of the Company, including Mr. Johnston, at the Los
Angeles offices of Sullivan & Cromwell to discuss employment-related matters.
It was determined that the Employment Agreements already in place for the
senior executives of the Company, with the exception of that of Mr. Johnston
and Mr. Meany, were satisfactory and did not require revision prior to the
commencement of the Offer.
On March 23, 2000, Ratos and the Company's advisors met to negotiate the
Merger Agreement at the Los Angeles (Century City) offices of Counsel to the
Company, Gibson, Dunn & Crutcher. A draft of the Merger Agreement reflecting
the day's negotiations and a draft of Tucker Anthony's fairness opinion were
distributed to the members of the Board of Directors of the Company in the
early evening. Negotiations continued the following day and included
representatives of the management of each of Ratos, Camfil and the Company.
Ratos and the management of the Company reached an agreement on the acquisition
by Ratos, through Purchaser, of all of the outstanding Shares of the Company
for $17.45 per Share, subject to Board approval. In addition, Mr. Johnston
entered into a long term Employment Agreement with the Company, the effective
date of the Agreement being the effective date of the Merger. The terms of the
Employment Agreement of Mr. Johnston are set forth in Section 11 of this Offer
to Purchase. Prior to the conclusion of the negotiations, the Company and Ratos
executed an agreement that extended the exclusive negotiating period until
midnight on March 27, 2000.
On March 25, 2000, Ratos and Camfil finalized their agreement regarding the
purchase by Ratos, through Purchaser, of the Company. This Share Exchange
Option Agreement grants Ratos a put option whereby Ratos may require Camfil to
purchase the shares of the corporation surviving the Merger in exchange for a
minority equity interest in Camfil. The put option may only be exercised prior
to November 1, 2000, if the shares of the Company have been delisted from the
Nasdaq National Market and have ceased to be registered under the Exchange Act.
The Share Exchange Option Agreement is described in greater detail in Section
11 of this Offer to Purchase.
On March 26, 2000, the Board of Directors of the Company met to determine
whether or not it was advisable for the Company to enter into the Merger
Agreement as negotiated by the Company's management and advisers. The Board of
Directors of the Company received presentations from the Company's legal and
financial advisors and considered the Offer, the Merger and the Merger
Agreement. At the meeting, Tucker Anthony delivered its opinion that, as of
March 26, 2000, and based upon and subject to certain matters and assumptions,
the consideration to be received by the holders of Shares pursuant to the
Merger Agreement was fair from a financial point of view (the Tucker Anthony
Fairness Opinion is described in greater detail in the
Solicitation/Recommendation Statement on Schedule 14D-9 filed by the Company
with the SEC on or around
16
<PAGE>
April 4, 2000 (the "Schedule 14D-9"), which can be obtained for review in the
manner described in Section 8 of this Offer to Purchase; the Tucker Anthony
Fairness Opinion is attached as an exhibit to the Schedule 14D-9). After
considerable deliberation, including a discussion of Tucker Anthony's fairness
opinion, the Board of Directors of the Company determined that the terms of the
Offer and the Merger were fair to and in the best interests of the shareholders
of the Company and approved the Merger Agreement and the transactions
contemplated thereby, including the Offer and the Merger, and determined to
recommend that the Company's shareholders accept the Offer and tender their
Shares pursuant to the Offer and approve and adopt the Merger Agreement.
Subsequently, signature pages being held in escrow were released and the Merger
Agreement became effective as of March 26, 2000. Also as of March 26, 2000, the
individual members of the Board of Directors of the Company each executed an
Agreement whereby each member agreed to, among other things, tender his Shares
(including any and all options to purchase Shares) into the Offer, subject to a
right of withdrawal should the Company receive an offer that is, among other
things, more favorable to the Company's stockholders from a financial point of
view than the Offer. Finally, Jack Meany executed an Amendment to his
Employment Agreement on March 26, 2000, whereby Mr. Meany agreed to relinquish
his duties as Chairman of the Board of Directors of the Company following the
Merger and to accept the role of Director of Corporate Development. The terms
of the Merger Agreement and the Agreement to Tender Shares are set forth in
Section 11.
Copies of the Merger Agreement, the Agreement to Tender Shares and the
Employment Agreement of Mr. Johnston have been filed as Exhibits to the
Schedule TO filed by Ratos with the SEC and are available for inspection and
copying at the principal office of the SEC in the manner set forth in Section
8. The foregoing descriptions of these documents are qualified in their
entirety by reference to such documents.
11.Purpose of the Offer; Plans for the Company; the Merger.
Purpose. The purpose of the Offer is to acquire for cash at least a
majority, and as many as possible, of the outstanding Shares as a first step in
acquiring the entire equity interest in the Company.
The Merger. The Merger Agreement provides that, promptly after the purchase
of Shares pursuant to the Offer and receipt of any required approval by the
Company's stockholders of the Merger Agreement and the satisfaction or waiver
of certain other conditions, Purchaser will be merged with and into the
Company. Upon consummation of the Merger (the "Effective Time"), each then
outstanding Share (other than Shares owned by the Company in treasury or by any
subsidiary of the Company, owned by Ratos, Purchaser or any other subsidiary of
Ratos or Shares, if any, that are held by Dissenting Stockholders), shall, by
virtue of the Merger and without any action on the part of the holder thereof
be converted into the right to receive $17.45 in cash, without interest, or any
different amount per share which may be paid pursuant to the Offer.
Vote Required to Approve Merger. Under the DGCL, if Purchaser owns at least
90% of the outstanding Shares, Purchaser could effect the Merger using the
"short-form" merger procedures without prior notice to, or the vote of, or any
action by, any other stockholders of the Company. Therefore, if at least
approximately 6,565,100 Shares (or such greater number as may be necessary if
options are exercised) are acquired pursuant to the Offer or otherwise,
Purchaser will be able to and intends to effect the Merger without a meeting of
holders of Shares. The DGCL requires, among other things, that the adoption of
any plan of merger or consolidation of the Company must be approved by the
holders of a majority of the Company's outstanding Shares if the "short-form"
merger procedure described above is not available. Under the DGCL, the
affirmative vote of holders of a majority of the outstanding Shares (including
any Shares owned by Purchaser) is required to approve the Merger. If Purchaser
acquires, through the Offer or otherwise, voting power with respect to at least
a majority of the outstanding Shares (which would be the case if the Minimum
Tender Condition were satisfied and Purchaser were to accept for payment Shares
tendered pursuant to the Offer), it would have sufficient voting power to
effect the Merger without the vote of any other stockholder of the Company.
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Conditions to the Merger. The respective obligations of the Company, Ratos
and Purchaser to consummate the Merger are subject to the fulfillment of
certain conditions set forth in the Merger Agreement, including:
(a) if required by the DGCL, the approval of the Merger Agreement by the
holders of a majority of the Shares;
(b) the expiration or termination of any and all waiting periods
applicable to the consummation of the Merger under the HSR Act;
(c) the filing, other than the filing of the Delaware certificate of
merger, with any Governmental Authority (as defined in the Merger
Agreement) of all filings to be made prior to the Effective Time by Ratos
or the Company or any of their respective subsidiaries in connection with
the execution and delivery of the Merger Agreement and the consummation of
the transactions contemplated thereby, except where the failure to do so
will not result in either a Company Material Adverse Effect or a Ratos
Material Adverse Effect (as such expressions are defined in the Merger
Agreement);
(d) the procurement of all Government Consents (as defined in the Merger
Agreement) required to be obtained prior to the Effective Time by Ratos or
the Company or any of their respective subsidiaries in connection with the
execution and delivery of the Merger Agreement and the consummation of the
transactions contemplated thereby, except where the failure to do so will
not result in either a Company Material Adverse Effect or a Ratos Material
Adverse Effect; and
(e) there being no statute, rule, regulation, judgment, decree,
injunction or other order (whether temporary, preliminary or permanent)
enacted, issued, promulgated, enforced or entered by any court or other
Governmental Entity of competent jurisdiction which restrains, enjoins or
otherwise prohibits consummation of the transactions contemplated by the
Merger Agreement (collectively, an "Order") and there being no unresolved
proceeding seeking that any such Order be instituted by any Governmental
Entity.
The obligations of Ratos and Purchaser to consummate the Merger are also
subject to the satisfaction or waiver by Ratos prior to the Effective Time of
certain other conditions set forth in the Merger Agreement, including:
(a) the verity and correctness, in all material respects, as of the date
of the Merger Agreement and as of the date of the Closing (as defined in
the Merger Agreement) of the Merger, of the representations and warranties
of the Company set forth in the Merger Agreement; and
(b) the performance by the Company, in all material respects, of all
obligations to be performed by it under the Merger Agreement at or prior to
the date of the Closing of the Merger.
Similarly, the obligations of the Company to consummate the Merger are
subject to the satisfaction or waiver by the Company prior to the Effective
Time of the following conditions:
(a) the verity and correctness, in all material respects, as of the date
of the Merger Agreement and as of the date of the Closing of the Merger, of
the representations and warranties of Ratos and Purchaser set forth in the
Merger Agreement; and
(b) the performance by Ratos and Purchaser, in all material respects, of
all obligations to be performed by them under the Merger Agreement at or
prior to the date of Closing of the Merger.
Termination of the Merger Agreement. According to its terms, the Merger
Agreement may be terminated and the Merger may be abandoned at any time prior
to the Effective Time:
(a) by mutual written consent of Ratos, Purchaser and the Company, or by
action of their respective Boards of Directors, whether before or after the
approval of the Merger Agreement by the stockholders of the Company;
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(b) by action of the Board of Directors of either Ratos or the Company,
if:
(i) any Order permanently restraining, enjoining or otherwise
prohibiting the Merger shall be entered (whether before or after the
approval by the stockholders of the Company) and such Order is or shall
have become nonappealable; provided, however, that the party seeking to
terminate the Merger Agreement pursuant to such provision of the Merger
Agreement shall have used reasonable commercial efforts to remove or
lift such Order; or
(ii) the Minimum Tender Condition shall not have been satisfied on or
before May 31, 2000; or
(c) by the Company, whether before or after the approval of the Merger
Agreement by the stockholders of the Company, if:
(i) the Purchaser fails to commence the Offer as provided in the
Merger Agreement;
(ii) after May 31, 2000, Purchaser shall have failed to accept the
Shares for payment pursuant to the Offer; provided, however, that the
right to terminate the Merger Agreement pursuant to such provision of
the Merger Agreement shall not be available to the Company if it has
breached in any material respects its obligations under the Merger
Agreement in any manner that shall have proximately contributed to the
failure referenced in such provision;
(iii) the Offer is terminated or withdrawn pursuant to its terms
without any Shares being purchased thereunder; provided, however, that
the right to terminate the Merger Agreement pursuant to such provision
of the Merger Agreement shall not be available to the Company if it has
breached in any material respects its obligations under the Merger
Agreement in any manner that shall have proximately contributed to the
termination or withdrawal of the Offer;
(iv) prior to Purchaser's purchase of Shares pursuant to the Offer,
the Company, after complying with the procedures set forth in the Merger
Agreement, enters into a written agreement with another offeror with
respect to a bona fide proposal by such offeror to acquire, directly or
indirectly, for consideration consisting of cash and/or securities more
than 50% of the Shares then outstanding or all or substantially all the
assets of the Company and its subsidiaries, taken as a whole, and
otherwise on terms which the Board of Directors of the Company by a
majority vote determines in its good faith judgment (after consultation
with its financial adviser) to be reasonably capable of being completed
(taking into account all material legal, financial, regulatory and other
aspects of the proposal and the third party making the proposal) and
more favorable to the Company's stockholders from a financial point of
view than the transactions contemplated by the Merger Agreement (a
"Superior Proposal"); or
(v) there has been a material breach by Ratos or Purchaser of any
representation, warranty, covenant or agreement contained in the Merger
Agreement that is not curable or, if curable, is not cured prior to the
earlier of (A) twenty days after written notice of such breach is given
by the Company to Ratos, and (B) two business days before the date on
which the Offer expires; or
(d) by action of either Ratos or Purchaser, whether before or after the
approval of the Merger by the stockholders of the Company, if:
(i) after May 31, 2000, Purchaser shall not have accepted Shares for
payment pursuant to the Offer; provided, however, that the right to
terminate the Merger Agreement pursuant to such provision of the Merger
Agreement shall not be available to Ratos and Purchaser if either of
them has breached in any material respect its obligations under the
Merger Agreement in any manner that shall have proximately contributed
to the occurrence of this failure to purchase Shares;
(ii) the Board of Directors of the Company shall have withdrawn or
modified its approval or recommendation of the Merger Agreement in a
manner materially adverse to Ratos or Purchaser; or
(iii) Purchaser shall have terminated the Offer in accordance with
the provisions of Annex A to the Merger Agreement (which provisions are
explained in Section 13 below); provided, however, that
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the right to terminate the Merger Agreement pursuant to such provisions
of the Merger Agreement shall not be available to Ratos and Purchaser
if either of them has breached in any material respect its obligations
under the Merger Agreement in any manner that shall have proximately
contributed to the termination of the Offer.
Following the election or appointment of the Ratos Directors (as defined
below) and prior to the Effective Time, if any Independent Directors (as
defined below) shall have been appointed, any termination of the Merger
Agreement by the Company will require the concurrence of a majority of such
Independent Directors.
Termination Fee. The Merger Agreement provides that in lieu of any liability
to pay damages, provided that there shall not have been a material breach of
any representation, warranty, covenant or agreement on the part of the Company,
then if Ratos shall have terminated the Merger Agreement for any reason other
than the failure of the waiting periods under the HSR Act to have been
satisfied, Ratos shall pay to the Company a fee of $6,701,216 within sixty (60)
calendar days of such termination. Conversely, the Merger Agreement provides
that in lieu of any liability to pay damages, provided that there shall not
have been a material breach of any representation, warranty, covenant or
agreement on the part of Ratos or Purchaser, then if the Company shall have the
right to terminate the Merger Agreement upon execution of a written agreement
with respect to a Superior Proposal, the Company shall pay to Ratos within
sixty (60) calendar days of such termination or, if earlier, concurrently with
the closing of the transaction that is the subject of the Superior Proposal, a
fee of $5,360,973, plus an expense allowance of $1,000,000.
Amendment of the Merger Agreement. Subject to the applicable provisions of
the DGCL, at any time prior to the Effective Time, the parties to the Merger
Agreement may modify or amend the Merger Agreement by written agreement
executed and delivered by duly authorized officers of the respective parties.
Following the election or appointment of the Ratos Directors (as defined below)
and prior to the Effective Time, if any Independent Directors (as defined
below) shall have been appointed, the Company's consent to any amendment of the
Merger Agreement will require the concurrence of a majority of such Independent
Directors.
Treatment of Options. The Merger Agreement provides that at the Effective
Time, all outstanding purchase rights or options to purchase Shares (whether
vested or unvested) (each a "Company Option") shall be canceled and only
entitle each holder thereof to receive from the Surviving Corporation an amount
in cash equal to, for each share with respect to such Company Option, the
excess, if any, of (A) the Merger Consideration over (B) the per Share exercise
price under such Company Option.
Indemnification of Officers and Directors. The Merger Agreement provides
that from and after the Effective Time, Ratos and the Surviving Corporation
will, to the fullest extent that the Company would have been permitted under
Delaware law, the Company's certificate of incorporation and bylaws and other
agreements in effect on the date of the Merger Agreement, jointly and severally
indemnify, defend and hold harmless any present or former director, officer,
employee or agent of the Company or any of its subsidiaries (with certain
specific exceptions), determined as of the Effective Time, against any costs or
expenses (including reasonable attorneys' fees), judgments, settlement amounts,
fines, losses, claims, demands, damages or liabilities incurred in connection
with any claim, action, suit, proceeding or investigation, whether civil,
criminal or administrative, arising out of matters existing or occurring at or
prior to the Effective Time, whether threatened, asserted or claimed prior to,
at or after the Effective Time, which is based in whole or in part on, or
arises in whole or in part out of the fact that such person was a director
(including as a member of any special committee, if any) or officer of the
Company or any of its subsidiaries (with certain specific exceptions).
Treatment of Employee Benefits. The Merger Agreement provides that,
following the Effective Time, the employees of the Company and its subsidiaries
who are employed by the Surviving Corporation or its subsidiaries shall
continue participating in the employee benefit plans and arrangements
maintained by the Company, and Ratos shall cause the Surviving Corporation to
honor, in accordance with their terms, all employee benefit obligations to
current and former employees under the Compensation and Benefit Plans (as
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defined in the Merger Agreement) in existence on the date of the Merger
Agreement and all employment or severance agreements entered into by the
Company.
Acquisition Proposals. The Company has agreed that neither it nor any of its
subsidiaries nor any of its or its subsidiaries' employees or directors shall,
and it shall direct and use its best efforts to cause its and its subsidiaries'
agents and representatives (including any investment banker and any attorney,
consultant or accountant retained by it or any of its subsidiaries
(collectively, the "Company Advisors")) not to, directly or indirectly,
initiate, solicit or otherwise facilitate any inquiries in respect of, or the
making of any proposal for, a Third Party Acquisition (as defined below). The
Company has further agreed that neither it nor any of its subsidiaries nor any
of its or its subsidiaries' employees or directors shall, and it shall direct
and use its best efforts to cause all Company Advisors not to engage in any
negotiations concerning, or provide any confidential information or data to, or
have any discussions with, any third party relating to the proposal of a Third
Party Acquisition, or otherwise attempt to make or implement a Third Party
Acquisition; provided, however, that if at any time prior to the acceptance for
payment of Shares pursuant to the Offer, the Company's Board of Directors
determines in good faith, after taking into consideration the advice of its
outside legal counsel, that it is likely to be required in order for its
members to comply with their fiduciary duties under applicable law, the Company
may, in response to an inquiry, proposal or offer for a Third Party Acquisition
which was not solicited subsequent to the date of the Merger Agreement, (x)
furnish non-public information with respect to the Company to any such person
pursuant to a confidentiality agreement on terms substantially similar to the
confidentiality agreement entered into between the Company and Ratos prior to
the execution of the Merger Agreement and (y) participate in discussions and
negotiations regarding such inquiry, proposal or offer; and provided, further,
that nothing contained in the Merger Agreement shall prevent the Company or the
Company's Board of Directors from complying with Rules 14d-9 and 14e-2
promulgated under the Exchange Act with regard to any proposed Third Party
Acquisition or from withdrawing its recommendation of the Offer or the Merger
in accordance with the terms of the Merger Agreement.
Pursuant to the Merger Agreement, the Company's Board of Directors shall not
withdraw its recommendation of the Offer or the Merger and the other
transactions contemplated by the Merger Agreement or approve or recommend, or
cause the Company to enter into any agreement with respect to, any Third Party
Acquisition. Notwithstanding the preceding sentence, if the Company's Board of
Directors determines in its good faith judgment, after taking into
consideration the advice of its outside legal counsel, that it is likely to be
required in order for its members to comply with their fiduciary duties under
applicable law, the Company's Board of Directors may withdraw its
recommendation of the Offer or the Merger and the other transactions
contemplated by the Merger Agreement, or approve or recommend or cause the
Company to enter into an agreement with respect to a Superior Proposal;
provided, however, that the Company shall not be entitled to enter into any
agreement with respect to a Superior Proposal unless the Merger Agreement is
concurrently terminated in accordance with the relevant termination provision
contained in the Merger Agreement.
For purposes of the Merger Agreement, "Third Party Acquisition" means the
occurrence of any of the following events:
(a) the acquisition of the Company by merger or otherwise by any Person
(which includes a "person" as such term is defined in Section 13(d)(3) of
the Exchange Act) other than Ratos, Purchaser or any of their affiliates (a
"Third Party");
(b) the acquisition by a Third Party of 15% or more of the total assets
of the Company and its subsidiaries, taken as a whole (other than the
purchase of the Company's products in the ordinary course of business);
(c) the acquisition by a Third Party of 15% or more of the outstanding
Shares;
(d) the adoption by the Company of a plan of partial or complete
liquidation or the declaration or payment of an extraordinary dividend;
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(e) the repurchase by the Company or any of its subsidiaries of 15% or
more of the outstanding Shares; or
(f) the acquisition by the Company or any of its subsidiaries by merger,
purchase of stock or assets, joint venture or otherwise of a direct or
indirect ownership interest or investment in any business whose annual
revenues, net income or assets are equal to or greater than 15% of the
annual revenues, net income or assets of the Company and its subsidiaries,
taken as a whole.
Representations and Warranties; Covenants. The Merger Agreement contains
representations, warranties and covenants that are typical of and customary to
transactions of this kind.
Composition of the Board of Directors. The Merger Agreement provides that
promptly upon the purchase of the Shares pursuant to the Offer, and from time
to time thereafter, if the Minimum Tender Condition shall have been met, Ratos
shall be entitled to designate such number of directors, rounded up to the next
whole number, on the Company's Board of Directors as is equal to the product of
the total number of directors on the Company's Board of Director (determined
after giving effect to the directors elected pursuant to this sentence)
multiplied by the percentage that the aggregate number of Shares beneficially
owned by Ratos or its affiliates bears to the total number of Shares then
outstanding; provided, however, that if Purchaser shall have acquired at least
90% of the outstanding Shares in the Offer, Parent shall be entitled to
designate all of the members of the Company's Board (the "Ratos Directors"). In
furtherance thereof, the Company shall, upon request of Ratos following the
Expiration Date, promptly take all actions necessary to cause the Ratos
Directors to be so appointed, including, if necessary, increasing the size of
the Company's Board of Directors (to the extent permitted by the Company's
certificate of incorporation and bylaws) and/or seeking the resignations of one
or more existing directors. The Merger Agreement further provides that if
Purchaser shall not have acquired at least 90% of the outstanding Shares prior
to the Effective Time, the Company's Board of Directors shall at all times have
at least two members who were members of the Company's Board of Directors on
the date of the Merger Agreement and who were neither officers of the Company
nor of any of its subsidiaries, nor officers or directors of Ratos or any of
its affiliates (the "Independent Directors").
Agreement to Tender and Resign. To induce Ratos and Purchaser to enter into
the Merger Agreement, on March 26, 2000, Robert Batinovich, Richard P.
Bermingham, Dennis R. Brown, A. Frederick Gerstell, John C. Johnston, John J.
Kimes, H. Jack Meany and John A. Sullivan (each of whom is a member of the
Board of Directors of the Company, collectively, the "Directors"), Ratos and
Purchaser entered into an agreement pursuant to which each of the Directors
agreed:
(a) to tender his Shares into the Offer and not to withdraw any Shares
so tendered unless the Board of Directors of the Company in the future
determined to recommend another offer to the shareholders of the Company
that would be more favorable from a financial point of view to the
shareholders of the Company; and
(b) to the extent required in order to allow the Company to comply with
the applicable provisions of the Merger Agreement and in accordance with
the terms and conditions contained in the Merger Agreement:
(i) to take all actions necessary to appoint such number of new
members of the Board of Directors of the Company as shall be designated
by Ratos in accordance with the Merger Agreement; and
(ii) to resign as a director of the Company upon the request of
Ratos and/or Purchaser.
Employment Agreement of Chief Executive Officer. As part of the negotiations
surrounding the Offer, the Company and John C. Johnston (the "CEO") entered
into an Amended and Restated Employment Continuation Agreement, dated as of
March 27, 2000 (the "Employment Agreement"), pursuant to which the Company and
the CEO agreed to extend the term of the existing employment relationship
between the
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Company and the CEO until December 31, 2003. The effective date of the
Employment Agreement is the Effective Date of the Merger.
The Employment Agreement provides that during the employment period the
CEO's position, authority and responsibilities shall be at least commensurate
with those held by, exercised and assigned to the CEO immediately prior to the
Effective Date.
During the term of the Employment Agreement the CEO shall be entitled to
receive a base salary at least equal to $204,000 and shall also be entitled to
participate in an annual bonus plan on the same terms and conditions as the
annual bonus plan the CEO had participated in during the fiscal year
immediately preceding the Effective Time. The maximum annual bonus that may be
earned by the CEO under the annual bonus plan is 180% of the CEO's base salary.
The Employment Agreement also provides that the CEO shall participate in the
benefit plans of the Company, as well as perquisites and fringe benefits
provided by the Company, at a level commensurate with the CEO's participation
in such plans, perquisites or benefits, as the case may be, immediately prior
to the Effective Date, or if more favorable to the CEO, at the level made
available to the CEO at any time thereafter. Thus, the CEO will be eligible to
participate in a special bonus plan expected to be developed by the Surviving
Corporation following the Merger the purpose of which will be to replace the
stock option awards currently made available to the CEO and other senior
managers of the Company and to provide the CEO with adequate incentives to
stimulate superior job performance. The total cumulative compensation available
to all participants over the course of the next 4 years under such a special
bonus plan is not expected to exceed $5 million.
In addition to the customary cases of termination for death or disability of
the CEO, the Employment Agreement may be voluntarily terminated by the CEO for
any reason and by the Company for Cause (as defined therein). In the event that
the Employment Agreement is voluntarily terminated by the CEO (for any reason
other than Good Reason (as defined in the Employment Agreement)) or by the
Company for Cause, the Company shall pay the CEO the base salary accrued
through the date of termination and any vested amount or benefits owed to the
CEO under any applicable employee benefit plans and programs (in accordance
with the terms of such plans or programs), including any compensation
previously deferred by the CEO. This is a change from the CEO's former
Employment Agreement, which provided that the CEO would be paid one year's
salary, bonus and benefits if the CEO voluntarily terminated the Employment
Agreement in the period commencing six months after, and ending twelve months
after, a change of control of the Company. If the Employment Agreement is
terminated by the CEO for Good Reason or by the Company for Cause, in addition
to the above payments, the CEO shall be entitled: (a) to receive a cash amount
(payable in fifty-two equal instalments) equal to two times the sum of (i) the
CEO's annual base salary and (ii) the last annual bonus earned by the CEO; and
(b) to continue participating in any medical, health, dental, group life and
group disability insurance plans in which the CEO participated prior to the
date of termination of the Employment Agreement for two years thereafter. So
long as the CEO is receiving such compensation, he may not in any way compete
with the business of the Company.
Share Exchange Option Agreement. Ratos, Camfil and certain majority
shareholders of Camfil have entered into a Share Exchange Option Agreement
dated as of March 25, 2000 (the "Option Agreement"), which Option Agreement
grants Ratos the right to require Camfil to purchase all of the outstanding
shares of the Surviving Corporation in exchange for certain shares of Camfil,
all in accordance with the terms and conditions of the Option Agreement.
Pursuant to the Option Agreement, Ratos may exercise the put option, should it
wish to do so, during the period beginning on the later of (and not before):
(i) the date on which the shares of Common Stock of the Company cease to be
registered under the Exchange Act, and (ii) the date on which the Merger has
been consummated by the filing of a Certificate of Merger with the Secretary of
State of the State of Delaware pursuant to the Merger Agreement (the "Going
Private Conditions"), and ending on November 15, 2000; provided, however, that
if the Going Private Conditions have not been satisfied on or before October
31, 2000, Ratos may exercise the put option in any event between November 1,
2000 and November 15, 2000, inclusive. The put option and any and all rights
thereunder shall expire and terminate on November 16, 2000, if it has not been
exercised prior to or on such date.
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The Option Agreement further provides that from the date of any transfer of
the shares of the Surviving Corporation to Camfil, Camfil shall assume all of
the obligations of Ratos and Purchaser under or relating to the Merger
Agreement. Should Ratos or any of its directors, officers, employees, agents or
subsidiaries, or any of its subsidiaries' directors, officers, employees or
agents suffer a loss relating to the Offer, the Merger or the Merger Agreement,
Camfil shall indemnify the relevant Ratos party for such loss.
Appraisal Rights. Holders of Shares do not have appraisal rights as a result
of the Offer. However, if the Merger is consummated, each holder of Shares who
has neither voted in favor of the Merger nor consented thereto in writing will
be entitled to an appraisal by the Delaware Court of Chancery of the fair value
of his Shares, exclusive of any element of value arising from the
accomplishment or expectation of the Merger, together with a fair rate of
interest, if any, to be paid. In determining such fair value, the Court may
consider all relevant factors. The value so determined could be more or less
than the consideration to be paid in the Offer and the Merger. Any judicial
determination of the fair value could be based upon considerations other than
or in addition to the market value of the Shares, including, among other
things, asset values and earning capacity.
If any holder of Shares who demands appraisal under Section 262 of the DGCL
fails to perfect, or effectively withdraws or loses his right to appraisal as
provided in the DGCL, the Shares of such stockholder will be converted into the
Merger Consideration in accordance with the Merger Agreement. A stockholder may
withdraw his demand for appraisal by delivery to Ratos of a written withdrawal
of his demand for appraisal and acceptance of the Merger.
The foregoing discussion is not a complete statement of law pertaining to
appraisal rights under the DGCL and is qualified in its entirety by the full
text of Section 262 of the DGCL.
Failure to follow the steps required by Section 262 of the DGCL for
perfecting appraisal rights may result in the loss of such rights.
Rule 13e-3. The Merger would have to comply with any applicable Federal law
operative at the time of its consummation. Rule 13e-3 under the Exchange Act is
applicable to certain "going private" transactions. Purchaser does not believe
that Rule 13e-3 will be applicable to the Merger unless the Merger is
consummated more than one year after the termination of the Offer. If
applicable, Rule 13e-3 would require, among other things, that certain
financial information concerning the Company and certain information relating
to the fairness of the Merger and the consideration offered to minority
stockholders be filed with the SEC and disclosed to minority stockholders prior
to consummation of the Merger.
12.Source and Amount of Funds.
Purchaser estimates that the total amount of funds required to purchase all
of the outstanding Shares pursuant to the Offer and the Merger and to pay
related fees and expenses will be approximately $135 million (the "Tender
Funds"). As of March 29, 2000, Ratos had cash on hand and invested liquid
assets of approximately $655 million; it will draw upon these assets when
funding Purchaser. Ratos expects to obtain a portion of the Tender Funds from
one or two Swedish banks from which it borrows on a regular basis, provided
that the terms of any such financing are attractive to Purchaser. However,
Ratos has not yet reached an agreement with either bank regarding such
financing. Ratos securing such credit is not a condition of the Offer and
should Ratos not be able to obtain financing on attractive terms, it will in
any event transfer the Tender Funds to, and maintain the Tender Funds with,
Purchaser.
13.Certain Conditions of the Offer.
Notwithstanding any other provision of the Offer or the Merger Agreement,
and subject to any applicable rules and regulations of the SEC, including Rule
14e-1(c) relating to Purchaser's obligation to pay for or return tendered
shares after termination or withdrawal of the Offer, neither Purchaser nor
Ratos shall be required to
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accept for payment or pay for any Shares tendered pursuant to the Offer, and,
if required by Section 1.1(b) of the Merger Agreement, Purchaser shall extend
the Offer by one or more extensions until May 31, 2000, as provided in Section
1.1(b) of the Agreement, and, except as otherwise provided in the Merger
Agreement, may terminate the Offer at any time after May 31, 2000 if (i) less
than the number of Shares necessary to satisfy the Minimum Tender Condition
have been tendered pursuant to the Offer prior to the expiration of the Offer
and not withdrawn; (ii) any applicable waiting periods under the HSR Act have
not expired or terminated prior to the Expiration Date of the Offer; or (iii)
at any time after the date of the Merger Agreement, and before acceptance for
payment of any Shares, any of the following events shall occur and be
continuing on or after May 31, 2000:
(a) There shall have been any action taken, or any statute, rule,
regulation, judgment, order or injunction promulgated, entered, enforced,
enacted, issued or deemed applicable to the Offer or the Merger by any
domestic or foreign court or other Governmental Entity (other than the
application of the waiting period provisions of the HSR Act to the Offer or
to the Merger) that, in the reasonable judgment of Purchaser, would be
expected to, directly or indirectly:
(i) prohibit or impose any material limitations on Purchaser, Camfil or
Ratos' ownership or operation of all or a material portion of the Company's
businesses or assets, or compel Purchaser, Camfil or Ratos to dispose of or
hold separate any material portion of its businesses or assets or, where
applicable, its Subsidiaries' business or assets, or the business or assets
of the Company or its Subsidiaries, in each case taken as a whole;
(ii) prohibit, or make illegal, the acceptance for payment, payment for
or purchase of Shares or the consummation of the Offer, the Merger or the
other transactions contemplated by the Merger Agreement;
(iii) result in the material delay in or restrict the ability of
Purchaser, or render Purchaser unable, to accept for payment, pay for or
purchase some or all of the Shares; or
(iv) impose material limitations on the ability of Purchaser effectively
to exercise full rights of ownership of the Shares, including the right to
vote the Shares purchased by it on all matters properly presented to the
Company's stockholders;
(b)(i) The representations and warranties of the Company set forth in the
Merger Agreement shall not be true and correct in any material respect as
of the date of the Merger Agreement and as of consummation of the Offer as
though made on or as of such date (except for representations and
warranties made as of a specified date) but only if the respects in which
the representations and warranties made by the Company are inaccurate would
in the aggregate have a Company Material Adverse Effect;
(ii) the Company shall have failed to comply with its covenants and
agreements contained in the Merger Agreement in all material respects which
failure is likely to have a Company Material Adverse Effect and, with
respect to any breach or failure described in clause (b)(i) or (b)(ii)
above that can be cured, the breach or failure shall not have been cured
prior to ten (10) Business Days after Purchaser has furnished the Company
written notice of such breach or failure; or
(iii) there shall have occurred any events or changes which have had or
which are likely to have a Company Material Adverse Effect; or
(c) There shall have occurred and continue to exist:
(i) any general suspension of, or limitation on prices for, trading in
securities on the New York Stock Exchange (other than a shortening of
trading hours or any coordinated trading halt triggered solely as a result
of a specified increase or decrease in a market index);
(ii) the declaration of any banking moratorium or any suspension of
payments in respect of banks, or any limitation (whether or not mandatory)
by any Governmental Entity on, or other event materially adversely
affecting, the extension of credit by lending institutions in the United
States; or
25
<PAGE>
(iii) a commencement of a war or armed hostilities directly involving
the United States, which has and continues to have a material adverse
effect on the trading of securities on the New York Stock Exchange.
In any event, Purchaser may terminate the Offer immediately if:
(d) The Board of Directors of the Company shall have withdrawn, or modified
or changed in a manner adverse to Ratos (including by amendment of the
Schedule 14D-9), its recommendation of the Offer, the Merger Agreement or
the Merger, or recommended another proposal or offer for the acquisition of
the Company, or the Board of Directors of the Company shall have resolved
to do any of the foregoing; or
(e) The Merger Agreement shall have terminated in accordance with its
terms.
The foregoing conditions, other than the Minimum Tender Condition, are for
the sole benefit of Ratos and Purchaser and may be waived upon the mutual
agreement of Ratos and Purchaser, in whole or in part at any time and from time
to time. The failure by Purchaser or Ratos at any time to exercise any of the
foregoing rights shall not be deemed a waiver of any such right and each such
right shall be deemed an ongoing right which may be asserted at any time and
from time to time, except as otherwise provided in the Merger Agreement.
14.Dividends and Distributions.
Pursuant to the Merger Agreement, the Company has agreed that during the
term of the Merger Agreement the Company may not declare, set aside or pay any
dividend or any other distribution with respect to the shares of Common Stock.
15.Certain Legal Matters.
General. Except as otherwise disclosed herein, based upon an examination of
publicly available filings with respect to the Company, Ratos and Purchaser are
not aware of any licenses or other regulatory permits which appear to be
material to the business of the Company and which might be adversely affected
by the acquisition of Shares by Purchaser pursuant to the Offer or of any
approval or other action by any governmental, administrative or regulatory
agency or authority which would be required for the acquisition or ownership of
shares by Purchaser pursuant to the Offer. Should any such approval or other
action be required, it is currently contemplated that such approval or action
would be sought or taken. There can be no assurance that any such approval or
action, if needed, would be obtained or, if obtained, that it will be obtained
without substantial conditions or that adverse consequences might not result to
the Company's or Ratos' business or that certain parts of the Company's or
Ratos' business might not have to be disposed of in the event that such
approvals were not obtained or such other actions were not taken, any of which
could cause Purchaser to elect to terminate the Offer without the purchase of
the Shares thereunder. Purchaser's obligation under the Offer to accept for
payment and pay for shares is subject to certain conditions. See Section 13.
Antitrust Compliance. Under the HSR Act and the rules that have been
promulgated thereunder by the Federal Trade Commission ("FTC"), certain
acquisition transactions may not be consummated unless certain information has
been furnished to the Antitrust Division of the Department of Justice (the
"Antitrust Division") and the FTC and certain waiting period requirements have
been satisfied. The acquisition of Shares by Purchaser is subject to these
requirements. See Section 2 of this Offer to Purchase as to the effect of the
HSR Act on the timing of Purchaser's obligation to accept Shares for payment.
Pursuant to the HSR Act, Ratos will file a Notification and Report Form with
respect to the acquisition of Shares pursuant to the Offer and the Merger with
the Antitrust Division and the FTC on Wednesday, April 5, 2000. Under the
provisions of the HSR Act applicable to the purchase of Shares pursuant to the
Offer, such purchases may not be made until the expiration of a 15-calendar day
waiting period following the filing by Ratos. Accordingly, the waiting period
under the HSR Act will expire at 11:59 p.m., New York City time, on
26
<PAGE>
Thursday, April 20, 2000, unless early termination of the waiting period is
granted or Ratos receives a request for additional information or documentary
material prior thereto. Pursuant to the HSR Act, Parent has requested early
termination of the waiting period applicable to the Offer. There can be no
assurances given, however, that the 15-day HSR Act waiting period will be
terminated early. If either the FTC or the Antitrust Division were to request
additional information or documentary material from Parent, the waiting period
would expire at 11:59 p.m., New York City time, on the tenth calendar day after
the date of substantial compliance by Ratos with such request unless the
waiting period is sooner terminated by the FTC or the Antitrust Division.
Thereafter, the waiting period could be extended only by agreement or by court
order. See Section 2. Only one extension of such waiting period pursuant to a
request for additional information is authorized by the rules promulgated under
the HSR Act, except by agreement or by court order. Any such extension of the
waiting period will not give rise to any withdrawal rights not otherwise
provided for by applicable law. See Section 4. Although the Company is required
to file certain information and documentary material with the Antitrust
Division and the FTC in connection with the Offer, neither the Company's
failure to make such filings nor a request from the Antitrust Division or the
FTC for additional information or documentary material made to the Company will
extend the waiting period.
The Antitrust Division and the FTC frequently scrutinize the legality under
the antitrust laws of transactions such as the proposed acquisition of Shares
by Purchaser pursuant to the Offer. At any time before or after Purchaser's
purchase of shares, the Antitrust Division or the FTC could take such action
under the antitrust laws as it deems necessary or desirable in the public
interest, including seeking to enjoin the acquisition of shares pursuant to the
Offer or seeking divestiture of shares acquired by Purchaser or the divestiture
of substantial assets of Ratos, the Company or any of their respective
subsidiaries. Private parties may also bring legal action under the antitrust
laws under certain circumstances. There can be no assurance that a challenge to
the Offer on antitrust grounds will not be made or, if a challenge is made,
what the result will be. See Section 13 of this Offer to Purchase for certain
conditions to the Offer that could become applicable in the event of such a
challenge.
Foreign Approvals. The Company owns property or conducts business in various
foreign countries and jurisdictions. In connection with the acquisition of the
Shares pursuant to the Offer, the laws of certain of those foreign countries
and jurisdictions may require the filing of information with, or the obtaining
of the approval of, governmental authorities in such countries and
jurisdictions. The governments in such countries and jurisdictions might
attempt to impose additional conditions on the Company's operations conducted
in such countries and jurisdictions as a result of the acquisition of the
shares pursuant to the Offer. There can be no assurance that Ratos will be able
to cause the Company or its subsidiaries to satisfy or comply with such laws or
that compliance or non-compliance will not have a material adverse effect on
the financial condition, properties, business or results of operations of the
Company and its subsidiaries taken as a whole or impair Ratos, Purchaser or the
Company or any of their respective affiliates, following consummation of the
Offer or Merger, to conduct any material business or operations in any
jurisdiction where they are now being conducted. See Section 13.
Federal Reserve Board Regulations. Regulations G, T, U and X (the "Margin
Regulations") promulgated by the Federal Reserve Board place restrictions on
the amount of credit that may be extended for the purpose of purchasing margin
stock (including the shares) if such credit is secured directly or indirectly
by margin stock. Ratos and Purchaser will attempt to ensure that the financing
of the acquisition of the Shares will be in compliance with the Margin
Regulations.
State Takeover Laws. A number of states have adopted laws and regulations
applicable to offers to acquire securities of corporations which are
incorporated in such states and/or which have substantial assets, stockholders,
principal executive offices or principal places of business therein. In Edgar
v. MITE Corporation, the Supreme Court of the United States held that the
Illinois Business Takeover Statute, which made the takeover of certain
corporations more difficult, imposed a substantial burden on interstate
commerce and was therefore unconstitutional. In CTS Corporation v. Dynamics
Corporation of America, the Supreme Court held that as a matter of corporate
law, and in particular, those laws concerning corporate governance, a state may
27
<PAGE>
constitutionally disqualify an acquirer of "Control Shares" (ones representing
ownership in excess of certain voting power thresholds e.g. 20%, 33% or 50%) of
a corporation incorporated in its state and meeting certain other
jurisdictional requirements from exercising voting power with respect to those
shares without the approval of a majority of the disinterested stockholders.
Section 203 of the DGCL limits the ability of a Delaware corporation to
engage in business combinations with "interested stockholders" (defined
generally as any beneficial owner of 15% or more of the outstanding voting
stock of the corporation) unless, among other things, the corporation's board
of directors has given its prior approval to either the business combination or
the transaction which resulted in the stockholder becoming an "interested
stockholder." The Company's Board of Directors has approved the Merger
Agreement and Purchaser's acquisition of Shares pursuant to the Offer and,
therefore, Section 203 of the DGCL is inapplicable to the Offer and the Merger.
See Section 11.
Based on information supplied by the Company, Purchaser does not believe
that any state takeover laws purport to apply to the Offer or the Merger.
Neither Purchaser nor Ratos has currently complied with any state takeover
statute or regulation. Purchaser reserves the right to challenge the
applicability or validity of any state law purportedly applicable to the Offer
or the Merger and nothing in this Offer to Purchase or any action taken in
connection with the Offer or the Merger is intended as a waiver of such right.
If it is asserted that any state takeover statute is applicable to the Offer or
the Merger and if an appropriate court does not determine that it is
inapplicable or invalid as applied to the Offer or the Merger, Purchaser might
be required to file certain information with, or to receive approvals from, the
relevant state authorities, and Purchaser might be unable to accept for payment
or pay for Shares tendered pursuant to the Offer, or be delayed in consummating
the Offer or the Merger. In such case, Purchaser may not be obliged to accept
for payment or pay for any Shares tendered pursuant to the Offer.
If it is asserted that one or more state takeover laws applies to the Offer
and it is not determined by an appropriate court that such act or acts do not
apply or are invalid as applied to the Offer, Purchaser might be required to
file certain information with, or receive approvals from, the relevant state
authorities. In addition, if enjoined, Purchaser might be unable to accept for
payment any Shares tendered pursuant to the Offer, or be delayed in
consummating the Offer. In such case, Purchaser may not be obligated to accept
for payment any Shares tendered. See Section 13.
Exon-Florio Under Section 721 of Title VII of the United States Defense
Production Act of 1950, as amended by Section 5021 of the Omnibus Trade and
Competitiveness Act of 1988 ("Exon-Florio"), the President of the United States
is authorized to prohibit or suspend acquisitions, mergers or takeovers by
foreign persons of persons engaged in interstate commerce in the United States
if the President determines, after investigation, that such foreign persons in
exercising control of such acquired persons might take action that threatens to
impair the national security of the United States and that other provisions of
existing law do not provide adequate authority to protect national security.
Pursuant to Exon-Florio, notice of an acquisition by a foreign person is to be
made to the Committee on Foreign Investment in the United States ("CFIUS"),
which is comprised of representatives of the Departments of the Treasury,
State, Commerce, Defense and Justice, the Office of Management and Budget, the
United States Trade Representative's Office and the Council of Economic
Advisors and which has been selected by the President to administer Exon-
Florio, either voluntarily by the parties to such proposed acquisition, merger
or takeover or by any member of CFIUS.
A determination that an investigation is called for must be made within 30
days after notification of a proposed acquisition, merger or takeover is first
filed with CFIUS. Any such investigation must be completed within 45 days of
such determination. Any decision by the President to take action must be
announced within 15 days of the completion of the investigation. Although Exon-
Florio does not require the filing of a notification, nor does it prohibit the
consummation of an acquisition, merger or takeover if notification is not made,
such an acquisition, merger or takeover thereafter remains indefinitely subject
to divestment should the President subsequently determine that the national
security of the United States has been threatened or
28
<PAGE>
impaired. Purchaser does not believe that the Offer or the Merger threatens to
impair the national security of the United States and does not intend to notify
CFIUS of the proposed transaction.
16.Fees and Expenses.
Purchaser has retained Georgeson Shareholder Communications Inc. to act as
the Information Agent in connection with the Offer. The Information Agent may
contact holders of Shares by mail, telephone, telex, telegraph and personal
interviews and may request brokers, dealers and other nominee stockholders to
forward materials relating to the Offer to beneficial owners of Shares. The
Information Agent will receive reasonable and customary compensation for such
services, plus reimbursement of out-of-pocket expenses and Purchaser will
indemnify the Information Agent against certain liabilities and expenses in
connection with the Offer, including liabilities under the federal securities
laws.
Purchaser has retained ChaseMellon Shareholder Services, L.L.C. to act as
the Depositary in connection with the Offer. Purchaser will pay the Depositary
reasonable and customary compensation for its services in connection with the
Offer, plus reimbursement for out-of-pocket expenses, and will indemnify the
Depositary against certain liabilities and expenses in connection therewith,
including liabilities under the federal securities laws. Brokers, dealers,
commercial banks and trust companies will be reimbursed by Purchaser for
customary mailing and handling expenses incurred by them in forwarding material
to their customers.
17.Miscellaneous.
The Offer is not being made to (nor will tenders be accepted from or on
behalf of) holders of Shares in any jurisdiction in which the making of the
Offer or the acceptance thereof would not be in compliance with the laws of
such jurisdiction. However, Purchaser may, in its sole discretion, take such
action as it may deem necessary to make the Offer in any such jurisdiction and
extend the Offer to holders of Shares in such jurisdiction.
Neither Purchaser nor Ratos is aware of any jurisdiction in which the making
of the Offer or the acceptance of Shares in connection therewith would not be
in compliance with the laws of such jurisdiction.
Purchaser and Ratos have filed with the SEC a Statement on Schedule TO
pursuant to Rule l4d-3 of the General Rules and Regulations under the Exchange
Act, furnishing certain additional information with respect to the Offer, and
may file amendments thereto. Such Statement and any amendments thereto,
including exhibits, may be examined and copies may be obtained from the
principal office of the SEC in Washington, D.C. in the manner set forth in
Section 8.
No person has been authorized to give any information or make any
representation on behalf of Ratos or Purchaser not contained in this Offer to
Purchase or in the Letter of Transmittal and, if given or made, such
information or representation must not be relied upon as having been
authorized.
Ratos Acquisition Corp.
April 4, 2000
29
<PAGE>
SCHEDULE A
INFORMATION CONCERNING THE DIRECTORS AND EXECUTIVE
OFFICERS OF RATOS AND PURCHASER
The following tables set forth the name, business address, present principal
occupation and principal business of any corporation or other organization in
which the employment or occupation is conducted, and material occupations,
positions, offices or employment held within the past five years of each
director and executive officer of Ratos and Purchaser. Unless otherwise
specified, each person listed below is a citizen of Sweden. The business
address of each such person is c/o Forvaltnings AB Ratos, Drottninggatan 2, SE-
111 96, Stockholm, Sweden.
Forvaltnings AB Ratos
<TABLE>
<CAPTION>
Present Principal Occupation or Employment,
Name Material Positions Held During the Past Five Years
---- --------------------------------------------------
<C> <S>
Olof Stenhammar Present Principal Occupations:
Chairman of the Board of Directors of Forvaltnings AB Ratos
(since 1998); Chairman of the Board of Directors of OM Gruppen
AB (Stock Exchange Operator, Manufacturer of Stock Exchange
Software) (since 1996); Senior Partner of Ledstiernan AB
(private equity firm) (since 1998).
Material Positions Held During the Past Five Years:
Member of the Board of Directors, of Forvaltnings AB Ratos
(since 1994; (appointed Chairman in 1998)); President and
Chief Executive Officer of OM Gruppen AB (March 1984-March
1996).
Peggy Bruzelius Present Principal Occupations:
Chairman of the Board of Directors of Grand Hotel Holdings AB
and Lancelot Asset Management; Member of the Board of
Directors of Forvaltnings AB Ratos (since 1998), AB
Electrolux, Scania AB (truck manufacturer), and Celsius AB
(defense contractor).
Material Positions Held During the Past Five Years:
Executive Vice President responsible for Asset Management of
Skandinaviska Enskilda Banken (1997) (bank); President of ABB
Financial Services (1991-1997).
Harry Faulkner Present Principal Occupations:
(UK citizen)
Chairman of Arcona (property management company), B&N
Nordsjofrakt (shipping company) and SEB Fondforvaltning (asset
management firm); Member of the Board of Directors of
Forvaltnings AB Ratos (since 1986), Ahlstrom (Finland) (forest
products company), EQT Denmark Scandinavian Equity Partners 1
(private equity firm), Tetra Laval (packaging company);
Material Positions Held During the Past Five Years:
Retired; formerly President and Chief Executive Officer of
Alfa-Laval (farming products).
Goran Grosskopf Present Principal Occupations:
Chairman of the Board of Directors of Tetra Laval Group
(packaging company); Member of the Board of Directors of
Forvaltnings AB Ratos (since 1996).
Material Positions Held During the Past Five Years:
See above.
</TABLE>
A-1
<PAGE>
<TABLE>
<CAPTION>
Present Principal Occupation or Employment,
Name Material Positions Held During the Past Five Years
---- --------------------------------------------------
<C> <S>
Mikael Lilius Present Principal Occupations:
(citizen of Finland)
President and C.E.O. of Gambro AB (medical technology
company); Member of the Board of Directors of
Forvaltnings AB Ratos (since 1997), Huhtamaki Oy
(packaging company); Instrumentarium Oy (medical
technology company) and Perlos Oy (tele-communications
and electronics company).
Material Positions Held During the Past Five Years:
See above.
Lars Soderberg Present Principal Occupations:
Member of the Board of Directors of Forvaltnings AB Ratos
(since 1998) and Omnibroker.com (e-commerce company);
Business Development Director of Omnibroker.com.
Material Positions Held During the Past Five Years:
Postal Development Manager, TNT Express Worldwide
(trucking company).
Sven P.O. R:son Present Principal Occupations:
Soderberg
Member of the Board of Directors of Forvaltnings AB Ratos
(since 1971).
Material Positions Held During the Past Five Years:
Chairman of the Board of Directors of Forvaltnings AB
Ratos (1993--1998) and Skandia (insurance company)
(1988--1999).
Arne Karlsson Present Principal Occupations:
Chief Executive Officer of Forvaltnings AB Ratos (since
January 1, 1999); President and Chairman, Ratos
Acquisition Corp.
Material Positions Held During the Past Five Years:
Chief Analyst, Atle AB (private equity firm) (1993--
1998); Managing Director of Atle Mergers & Acquisitions
AB (private equity firm) (1996--1998).
Thomas Mossberg Present Principal Occupations:
Executive Vice President of Forvaltnings AB Ratos (since
1988).
Material Positions Held During the Past Five Years:
Employed by Forvaltnings AB Ratos since 1977.
Bo Jungner Present Principal Occupations:
Senior Investment Manager of Forvaltnings AB Ratos (since
1998); Vice President, Treasurer and Secretary of Ratos
Acquisition Corp.
Material Positions Held During the Past Five Years:
Employed by Brummer & Partners (investment bank) (1996--
1998); SEB Enskilda Securities (1983-1996).
Ratos Acquisition Corp.
<CAPTION>
Present Principal Occupation or Employment,
Name Material Positions Held During the Past Five Years
---- --------------------------------------------------
<C> <S>
Present Principal Occupations and Material Positions Held
Arne Karlsson During the Past Five Years are set forth above.
Present Principal Occupations and Material Positions Held
Bo Jungner During the Past Five Years are set forth above.
</TABLE>
A-2
<PAGE>
SCHEDULE B
INFORMATION CONCERNING THE DIRECTORS AND EXECUTIVE
OFFICERS OF CAMFIL
The following table sets forth the name, present principal occupation and
principal business of any corporation or other organization in which the
employment or occupation is conducted, and material occupations, positions,
offices or employment held within the past five years of each director and
executive officer of Camfil. Unless otherwise specified, each person listed
below is a citizen of Sweden. The business address of each such person is c/o
Camfil AB, Industrigatan 3, SE-619 33 Trosa, Sweden.
<TABLE>
<CAPTION>
Present Principal Occupation or Employment,
Material Positions Held During the Past
Name Five Years
---- -------------------------------------------
<C> <S>
Jan Eric Larson Present Principal Occupations:
President and Chief Executive Officer of
Camfil AB; Member of the Executive
Management Group of Camfil Group; Member of
the Board of Directors of Camfil since
1983; Member of the Board of Directors of
Kaare A Rustad A/S.
Material Positions Held During the Past
Five Years:
See Present Principal Occupations.
Johan Markman Present Principal Occupations:
Executive Vice President and Chief
Financial Officer of Camfil AB; Member of
the Executive Management Group of Camfil
Group; Member of the Board of Directors of
Camfil AB since 1983; Member of the Board
of Directors of Exportforeningen (Swedish
export association), Trosa Stadshotell AB
(hotel), and Trobo AB (municipal real
estate management company).
Material Positions Held During the Past
Five Years:
See Present Principal Occupations.
Eric Giertz Present Principal Occupations:
Member of the Board of Directors of Camfil
AB since 1992; Managing Director and Senior
Consultant of IndustriEkonomi AB
(consulting firm); Associate Professor in
Industrial Economics and Management at the
Royal Institute of Technology, Stockholm.
Material Positions Held During the Past
Five Years:
See Present Principal Occupations.
Carl-Anders Sundvik Present Principal Occupations:
Chairman of the Board of Directors of
Camfil AB; Member of the Board of Directors
of Camfil AB since 1990; Member of the
Board of Directors of various SEB Bank
subsidiaries; Managing Director of SEB e-
Invest; Vice Chairman of Coalition of
Swedish Service Industries.
Material Positions Held During the Past
Five Years:
Vice President of European Mortgage
Federation; Managing Director of SEB
Telephone and Internet Bank, and Managing
Director of SEB Mortgage Bank.
</TABLE>
B-1
<PAGE>
<TABLE>
<CAPTION>
Present Principal Occupation or Employment,
Material Positions Held During the Past
Name Five Years
---- -------------------------------------------
<C> <S>
Christer Zetterberg Present Principal Occupations:
Member of the Board of Directors of Camfil
AB since 1998; Chairman of Industrial
Development & Investment AB, Ekman & Co. AB
(import-export company), Segerstrom &
Svensson AB (electronics industry), TumIT
AB (investment company), Micronic Laser
Systems AB and SwedeShip Marine AB
(shipyard); Member of the Board of
Directors of L E Lundbergforetagen AB (real
estate company), MoDo AB (forest products
company) and Wedins Norden AB (shoe and
glove retailer).
Material Positions Held During the Past
Five Years:
See Present Principal Occupations.
Carl Wilhelm Ros Present Principal Occupations:
Member of the Board of Directors of Camfil
(since 1999); Chairman of Framfab AB
(internet consulting firm), Atle AB
(investment company), VLT AB (newspaper
publisher); Member of the Board of
Directors of SEB, AssiDoman AB (forest
products company), NCC AB (construction
company) and Profilgruppen AB (aluminum
profile company).
Material Positions Held During the Past
Five Years:
Senior Executive Vice President of Ericsson
AB.
Alan O'Connell Present Principal Occupations:
Vice President - Sales of Camfil AB; and
Member of the Executive Management Group of
Camfil Group.
Material Positions Held During the Past
Five Years:
See Present Principal Occupations.
Johan Ryrberg Present Principal Occupations:
Vice President and Chief Operating Officer
of Camfil AB; and Member of the Executive
Management Group of Camfil Group.
Material Positions Held During the Past
Five Years:
Director of Finance and Administration of
Anixter Sverige AB (computer company).
Armando Brunetti Present Principal Occupations:
Managing Director of Filtra Corp. (U.S.A.);
and Member of the Executive Management
Group of Camfil Group.
Material Positions Held During the Past
Five Years:
See Present Principal Occupations.
Michael Krasa Present Principal Occupations:
Managing Director of Camfil GmbH (Germany);
and Member of the Executive Management
Group of Camfil Group.
Material Positions Held During the Past
Five Years:
Director of Finance for DOM, a division of
Black & Decker.
</TABLE>
B-2
<PAGE>
<TABLE>
<CAPTION>
Present Principal Occupation or
Employment,
Material Positions Held During the Past
Name Five Years
---- ------------------------------------------
<C> <S>
Bengt Osswald Present Principal Occupations:
Managing Director of Camfil International
AB; and Member of the Executive Management
Group of Camfil Group.
Material Positions Held During the Past
Five Years:
See Present Principal Occupations.
</TABLE>
B-3
<PAGE>
Facsimile copies of the Letter of Transmittal will be accepted. The Letter of
Transmittal, certificates for the Shares and any other required documents
should be sent by each stockholder of the Company or his or her broker-dealer,
commercial bank, trust company or other nominee to the Depositary as follows:
The Depositary for the Offer is:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
By Mail: By Overnight Courier: By Hand:
Reorganization Reorganization Reorganization
Department Department Department
P.O. Box 3301 85 Challenger Road 120 Broadway
South Hackensack, NJ Mail Stop - Reorg 13th Floor
07606 Ridgefield, NJ 07660 New York, NY 10271
By Facsimile Transmission (For Eligible Institutions Only):
(201) 296-4293
Confirm Receipt of Facsimile by Telephone Only:
(201) 296-4860
Any questions or requests for assistance or additional copies of the Offer
to Purchase and the Letter of Transmittal may be directed to the Information
Agent at its address and applicable telephone number listed below. You may also
contact your broker, dealer, commercial bank or trust company or other nominee
for assistance concerning the Offer.
The Information Agent for the Offer is:
[LOGO]
GEORGESON
SHAREHOLDER
COMMUNICATIONS INC.
17 State Street
10th Floor
New York, NY 10004
Banks and Brokers Call Collect: (212) 440-9800
All Others Call Toll Free: (800) 223-2064
<PAGE>
Exhibit (a)(2)
Letter of Transmittal
To Tender Shares of Common Stock
of
FARR COMPANY
at
$17.45 Net Per Share
by
RATOS ACQUISITION CORP.
a Wholly Owned Subsidiary of
FORVALTNINGS AB RATOS (publ.)
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON MAY 1, 2000, UNLESS THE OFFER IS EXTENDED.
The Depositary for the Offer is:
ChaseMellon Shareholder Services, L.L.C.
By Mail: By Overnight Courier: By Hand:
Reorganization Reorganization Reorganization
Department Department Department
P.O. Box 3301 85 Challenger Road 120 Broadway
South Hackensack, NJ Mail Stop--Reorg 13th Floor
07606 Ridgefield Park, NJ New York, NY 10271
07660
By Facsimile Transmission (for Eligible Institutions Only): (201) 296-4293
---------------
Confirm Receipt of Facsimile by Telephone Only: (201) 296-4860
---------------
DESCRIPTION OF SHARES TENDERED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Name(s) and Address(es) of
Registered Holder(s)
(Please fill in if blank,
exactly as name(s)
appear(s) on Share Certificate(s) and Number of Shares Tendered
certificate(s)) (Attach additional list if necessary)
- -------------------------------------------------------------------------------
Total Number
of Shares Number
Certificate Represented by of Shares
Number(s)(1) Certificate(s)(1) Tendered(2)
---------------------------------------------------
<S> <C> <C> <C>
---------------------------------------------------
---------------------------------------------------
---------------------------------------------------
---------------------------------------------------
---------------------------------------------------
Total Shares
</TABLE>
- --------------------------------------------------------------------------------
(1) Need not be completed by Book-Entry Shareholders.
(2) Unless otherwise indicated, it will be assumed that all Shares described
above are being tendered. See Instruction 4 of this Letter of Transmittal.
<PAGE>
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE, OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TO A NUMBER OTHER THAN AS
LISTED ABOVE, DOES NOT CONSTITUTE A VALID DELIVERY. YOU MUST SIGN THIS LETTER
OF TRANSMITTAL WHERE INDICATED BELOW AND COMPLETE THE SUBSTITUTE FORM W-9
PROVIDED BELOW.
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
This Letter of Transmittal is to be completed by shareholders of Farr
Company either if certificates are to be forwarded herewith or, unless an
Agent's Message (as defined in Section 3 of the Offer to Purchase (defined
below)) is utilized, if delivery is to be made by book-entry transfer to an
account maintained by ChaseMellon Shareholder Services, L.L.C. (the
"Depositary") at The Depository Trust Company (the "Book-Entry Transfer
Facility") pursuant to the procedures set forth in Section 3 of the Offer to
Purchase. Shareholders who deliver Shares by book-entry transfer are referred
to herein as "Book-Entry Shareholders" and other shareholders are referred to
herein as "Certificate Shareholders." Shareholders whose certificates for
Shares are not immediately available or who cannot comply with the procedure
for book-entry transfer on a timely basis, or who cannot deliver all required
documents to the Depositary prior to the Expiration Date (as defined in Section
1 of the Offer to Purchase), may tender their Shares in accordance with the
guaranteed delivery procedure set forth in Section 3 of the Offer to Purchase.
See Instruction 2 of this Letter of Transmittal. DELIVERY OF DOCUMENTS TO THE
BOOK-ENTRY TRANSFER FACILITY IN ACCORDANCE WITH THE BOOK-ENTRY TRANSFER
FACILITY'S PROCEDURES DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
[_]CHECK HERE IF A CERTIFICATE HAS BEEN LOST OR MUTILATED. SEE INSTRUCTION 10
OF THIS LETTER OF TRANSMITTAL.
[_]CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER
MADE TO THE ACCOUNT MAINTAINED BY THE DEPOSITARY WITH THE BOOK-ENTRY
TRANSFER FACILITY AND COMPLETE THE FOLLOWING (ONLY FINANCIAL INSTITUTIONS
THAT ARE PARTICIPANTS IN THE SYSTEM OF THE BOOK-ENTRY TRANSFER FACILITY MAY
DELIVER SHARES BY BOOK-ENTRY TRANSFER):
Name of Tendering Institution _______________________________________________
Account Number ______________________________________________________________
Transaction Code Number _____________________________________________________
[_]CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY, ENCLOSE A PHOTOCOPY
OF SUCH NOTICE OF GUARANTEED DELIVERY AND COMPLETE THE FOLLOWING:
Name(s) of Registered Holder(s) _____________________________________________
Date of Execution of Notice of Guaranteed Delivery __________________________
Name of Institution which Guaranteed Delivery _______________________________
If delivered by book-entry transfer, check box:
[_]The Depository Trust Company
Account Number ______________________________________________________________
Transaction Code Number _____________________________________________________
2
<PAGE>
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
The undersigned hereby tenders to Ratos Acquisition Corp., a Delaware
corporation ("Purchaser") and an indirect wholly owned subsidiary of
Forvaltnings AB Ratos (publ.), a Swedish corporation ("Ratos"), the above-
described shares of Common Stock, par value $0.10 per share, including the
associated rights to purchase Common Stock (the "Rights") issued pursuant to
the Rights Agreement, dated as of April 3, 1989 (the "Rights Agreement"),
between the Company and ChaseMellon Shareholder Services, L.L.C., as Rights
Agent (successor under the Rights Agreement to Security Pacific National Bank),
as amended (the Common Stock and the Rights together are referred to herein as
the "Shares") of Farr Company, a Delaware corporation (the "Company"), pursuant
to the Offer to Purchase, dated April 4, 2000 (the "Offer to Purchase"), all of
the outstanding Shares at a price of $17.45 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, receipt of which is hereby acknowledged, and in
this Letter of Transmittal (the "Letter of Transmittal" and, together with the
Offer to Purchase and any amendments or supplements thereto, the "Offer"). The
undersigned understands that Purchaser reserves the right to transfer or
assign, from time to time, in whole or in part, to one or more of the
affiliates of Ratos, the right to purchase the Shares tendered herewith.
On the terms and subject to the conditions of the Offer (including the
conditions set forth in Section 13 of the Offer to Purchase), subject to and
effective upon acceptance for payment of, and payment for, the Shares tendered
herewith in accordance with the terms of the Offer, the undersigned hereby
sells, assigns and transfers to, or upon the order of, Purchaser, all right,
title and interest in and to all of the Shares being tendered hereby and any
and all cash dividends, distributions, rights, other Shares or other securities
issued or issuable in respect of such Shares on or after April 4, 2000
(collectively, "Distributions"), and appoints the Depositary the true and
lawful agent and attorney-in-fact of the undersigned with respect to such
Shares (and any Distributions) with full power of substitution (such power of
attorney being deemed to be an irrevocable power coupled with an interest) to
the fullest extent of such shareholder's rights with respect to such Shares
(and any Distributions) (a) to deliver such Share Certificates (as defined
herein) (and any Distributions) or transfer ownership of such Shares (and any
Distributions) on the account books maintained by the Book-Entry Transfer
Facility, together in either such case with all accompanying evidences of
transfer and authenticity, to or upon the order of Purchaser, (b) to present
such Shares (and any Distributions) for transfer on the books of the Company
and (c) to receive all benefits and otherwise exercise all rights of beneficial
ownership of such Shares (and any Distributions), all in accordance with the
terms and the conditions of the Offer.
The undersigned hereby irrevocably appoints the designees of Purchaser, and
each of them, the attorneys-in-fact and proxies of the undersigned, each with
full power of substitution, to the full extent of such shareholder's rights
with respect to the Shares tendered hereby which have been accepted for payment
by Purchaser and with respect to any Distributions. The designees of Purchaser
will, with respect to the Shares (and any associated Distributions) for which
the appointment is effective, be empowered to exercise all voting and any other
rights of such shareholder, as they, in their sole discretion, may deem proper
at any annual, special or adjourned meeting of the Company's shareholders, by
written consent in lieu of any such meeting or otherwise. This proxy and power
of attorney shall be irrevocable and coupled with an interest in the tendered
Shares. Such appointment is effective when, and only to the extent that,
Purchaser deposits the payment for such Shares with the Depositary. Upon the
effectiveness of such appointment, without further action, all prior powers of
attorney, proxies and consents given by the undersigned with respect to such
Shares (and any associated Distributions) will be revoked, and no subsequent
powers of attorney, proxies, consents or revocations may be given (and, if
given, will not be deemed effective). Purchaser reserves the right to require
that, in order for Shares to be deemed validly tendered, immediately upon
Purchaser's acceptance for payment of such Shares, Purchaser must be able to
exercise full voting rights with respect to such Shares (and any associated
Distributions), including voting at any meeting of shareholders.
The undersigned hereby represents and warrants that the undersigned has full
power and authority to tender, sell, assign and transfer the Shares (and any
Distributions) tendered hereby and, when the same are accepted for payment by
Purchaser, Purchaser will acquire good, marketable and unencumbered title
thereto, free and clear of all liens, restrictions, charges and encumbrances,
and the same will not be subject to any adverse claim. The undersigned will,
upon request,
3
<PAGE>
execute and deliver any additional documents deemed by the Depositary or
Purchaser to be necessary or desirable to complete the sale, assignment and
transfer of the Shares (and any Distributions) tendered hereby and, when the
same are accepted for payment by Purchaser, Purchaser will acquire good,
marketable and unencumbered title thereto, free and clear of all liens,
restrictions, charges and encumbrances, and the same will not be subject to any
adverse claim. The undersigned will, upon request, execute and deliver any
additional documents deemed by the Depositary or Purchaser to be necessary or
desirable to complete the sale, assignment and transfer of the Shares (and any
Distributions) tendered hereby. In addition, the undersigned shall promptly
remit and transfer to the Depositary for the account of Purchaser any and all
Distributions in respect of the Shares tendered hereby, accompanied by
appropriate documentation of transfer; and, pending such remittance or
appropriate assurance thereof, Purchaser shall be entitled to all rights and
privileges as owner of any such Distributions and may withhold the entire
purchase price or deduct from the purchase price the amount or value thereof,
as determined by Purchaser in its sole discretion.
All authority conferred or agreed to be conferred pursuant to this Letter of
Transmittal shall not be affected by, and shall survive, the death or
incapacity of the undersigned and any obligation of the undersigned hereunder
shall be binding upon the heirs, personal representatives, successors and
assigns of the undersigned. Except as stated in the Offer to Purchase, this
tender is irrevocable. See Section 4 of the Offer to Purchase.
The undersigned understands that the valid tender of Shares pursuant to one
of the procedures described in Section 3 of the Offer to Purchase will
constitute a binding agreement between the undersigned and Purchaser upon the
terms and subject to the conditions of the Offer. The undersigned recognizes
that under certain circumstances set forth in the Offer to Purchase, Purchaser
may not be required to accept for payment any of the Shares tendered hereby.
Unless otherwise indicated herein under "Special Payment Instructions,"
please issue the check for the Offer Price and/or return any certificates for
Shares not tendered or accepted for payment in the name(s) of the registered
holder(s) appearing under "Description of Shares Tendered." Similarly, unless
otherwise indicated under "Special Delivery Instructions," please mail the
check for the purchase price and/or return any certificates for Shares not
tendered or accepted for payment (and accompanying documents, as appropriate)
to the address(es) of the registered holder(s) appearing under "Description of
Shares Tendered." In the event that both the Special Delivery Instructions and
the Special Payment Instructions are completed, please issue the check for the
Offer Price and/or issue any certificates for Shares not tendered or accepted
for payment (and any accompanying documents, as appropriate) in the name of,
and deliver such check and/or return such certificates (and any accompanying
documents, as appropriate) to, the person or persons so indicated. The
undersigned recognizes that Purchaser has no obligation pursuant to the Special
Payment Instructions to transfer any Shares from the name of the registered
holder thereof if Purchaser does not accept for payment any of the Shares so
tendered.
SPECIAL PAYMENT INSTRUCTIONS (See SPECIAL DELIVERY INSTRUCTIONS
Instructions 1, 5, 6 and 7) (See Instructions 1, 5 and 7)
To be completed ONLY if certifi- To be completed ONLY if certifi-
cate(s) for Shares not tendered cate(s) for Shares not tendered
or not accepted for payment or not accepted for payment
and/or the check for the purchase and/or the check for the purchase
price of Shares accepted for pay- price of Shares accepted for pay-
ment are to be issued in the name ment are to be sent to someone
of someone other than the under- other than the undersigned, or to
signed. the undersigned at an address
other than that shown above.
Issue[_] Check
[_] Certificate(s) to: Deliver: [_] Check [_] Certifi-
cate(s) to:
Name: ____________________________
(Please Print)
Name: ____________________________
Address: _________________________ (Please Print)
__________________________________ Address: _________________________
(Include Zip Code)
__________________________________
__________________________________ (Include Zip Code)
(Tax Identification or Social
Security No.)
4
<PAGE>
IMPORTANT
SIGN HERE
(also complete Substitute Form W-9 below)
.......................................................
(Signature(s) of Holder(s))
Dated: .........................................., 2000
(Must be signed by registered holder(s) exactly as
name(s) appear(s) on stock certificate(s) or on a
security position listing or by person(s) authorized
to become registered holder(s) by certificates and
documents transmitted herewith. If signature is by
trustees, executors, administrators, guardians,
attorneys-in-fact, officers of corporations or others
acting in a fiduciary or representative capacity,
please set forth full title below and see Instruction
5.)
Name(s)................................................
(Please Print)
Address................................................
................................................
(Include Zip Code)
Capacity (full title)..................................
...................... ......................
(Area Code and (Tax Identification
Telephone Number) or Social Security
No.)
Guarantee of Signature(s) (See Instructions 1 and 5)
Authorized Signature...................................
Name...................................................
(Please Type or Print)
Address................................................
................................................
(Include Zip Code)
Full Title and Name of Firm ...........................
Dated: .........................................., 2000
5
<PAGE>
INSTRUCTIONS
Forming Part of the Terms and Conditions of the Offer
1. Guarantee of Signatures. Except as otherwise provided below, all
signatures on this Letter of Transmittal must be guaranteed by a financial
institution (including most commercial banks, savings and loan associations and
brokerage houses) which is a participant in the Securities Transfer Agents
Medallion Program, the New York Stock Exchange Medallion Signature Guarantee
Program or the Stock Exchange Medallion Program (an "Eligible Institution").
Signatures on this Letter of Transmittal need not be guaranteed (a) if this
Letter of Transmittal is signed by the registered holder (which term, for
purposes of this document, includes any participant in the Book-Entry Transfer
Facility whose name appears on a security position listing as the owner of the
Shares) of Shares tendered herewith and such registered holder has not
completed the box entitled "Special Payment Instructions" or the box entitled
"Special Delivery Instructions" on this Letter of Transmittal or (b) if such
Shares are tendered for the account of an Eligible Institution. See Instruction
5 of this Letter of Transmittal.
2. Delivery of Letter of Transmittal and Certificates or Book-Entry
Confirmations. This Letter of Transmittal is to be used either if certificates
are to be forwarded herewith or if tenders are to be made pursuant to the
procedures for tender by book-entry transfer set forth in Section 3 of the
Offer to Purchase. Certificates for all physically tendered Shares ("Share
Certificates"), or confirmation of any book-entry transfer into the
Depositary's account at the Book-Entry Transfer Facility of Shares tendered by
book-entry transfer, as well as this Letter of Transmittal properly completed
and duly executed with any required signature guarantees (or, in the case of a
book-entry transfer, an Agent's Message), and all other documents required by
this Letter of Transmittal, must be received by the Depositary at one of its
addresses set forth herein on or prior to the Expiration Date (as defined in
the Offer to Purchase).
Shareholders whose certificates for Shares are not immediately available or
who cannot deliver all other required documents to the Depositary on or prior
to the Expiration Date or who cannot comply with the procedures for book-entry
transfer on a timely basis may nevertheless tender their Shares by properly
completing and duly executing a Notice of Guaranteed Delivery pursuant to the
guaranteed delivery procedure set forth in Section 3 of the Offer to Purchase.
Pursuant to such procedure: (i) such tender must be made by or through an
Eligible Institution; (ii) a properly completed and duly executed Notice of
Guaranteed Delivery substantially in the form provided by Purchaser must be
received by the Depositary prior to the Expiration Date; and (iii) Share
Certificates or confirmation of any book-entry transfer into the Depositary's
account at the Book-Entry Transfer Facility of Shares tendered by book-entry
transfer, as well as this Letter of Transmittal properly completed and duly
executed with any required signature guarantees (or, in the case of a book-
entry transfer, an Agent's Message), and all other documents required by this
Letter of Transmittal, must be received by the Depositary within three New York
Stock Exchange trading days after the date of execution of such Notice of
Guaranteed Delivery.
If Share Certificates are forwarded separately to the Depositary, a properly
completed and duly executed Letter of Transmittal must accompany each such
delivery.
THE METHOD OF DELIVERY OF SHARE CERTIFICATES AND ALL OTHER REQUIRED
DOCUMENTS, INCLUDING DELIVERY THROUGH THE BOOK-ENTRY TRANSFER FACILITY, IS AT
THE ELECTION AND RISK OF THE TENDERING SHAREHOLDER. THE DELIVERY WILL BE DEEMED
MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY (INCLUDING, IN THE CASE OF A
BOOK-ENTRY TRANSFER, BY BOOK-ENTRY CONFIRMATION). IF SUCH DELIVERY IS BY MAIL,
IT IS RECOMMENDED THAT SUCH CERTIFICATES AND DOCUMENTS BE SENT BY REGISTERED
MAIL, PROPERLY INSURED, WITH RETURN RECEIPT REQUESTED. IN ALL CASES, SUFFICIENT
TIME SHOULD BE ALLOWED TO ASSURE TIMELY DELIVERY.
No alternative, conditional or contingent tenders will be accepted and no
fractional Shares will be purchased. All tendering shareholders, by execution
of this Letter of Transmittal (or facsimile thereof), waive any right to
receive any notice of the acceptance of their Shares for payment.
6
<PAGE>
3. Inadequate Space. If the space provided herein is inadequate, the
certificate numbers and/or the number of Shares should be listed on a separate
schedule attached hereto.
4. Partial Tenders (Applicable to Certificate Shareholders Only). If fewer
than all the Shares evidenced by any certificate submitted are to be tendered,
fill in the number of Shares which are to be tendered in the box entitled
"Number of Shares Tendered." In such cases, new certificate(s) for the
remainder of the Shares that were evidenced by the old certificate(s) will be
sent to the registered holder, unless otherwise provided in the appropriate box
on this Letter of Transmittal, as soon as practicable after the Expiration
Date. All Shares represented by certificates delivered to the Depositary will
be deemed to have been tendered unless otherwise indicated.
5. Signatures on Letter of Transmittal; Stock Powers and Endorsements. If
this Letter of Transmittal is signed by the registered holders of the Shares
tendered hereby, the signature must correspond with the names as written on the
face of the certificates without alteration, enlargement or any other change
whatsoever.
If any of the Shares tendered hereby are owned of record by two or more
joint owners, all such owners must sign this Letter of Transmittal.
If any of the tendered Shares are registered in different names on several
certificates, it will be necessary to complete, sign and submit as many
separate Letters of Transmittal as there are different registrations of
certificates.
If this Letter of Transmittal or any certificates or stock powers are signed
by trustees, executors, administrators, guardians, attorneys-in-fact, officers
of corporations or others acting in a fiduciary or representative capacity,
such persons should so indicate when signing, and proper evidence satisfactory
to the Purchaser of their authority so to act must be submitted.
If this Letter of Transmittal is signed by the registered holder(s) of the
Shares listed above and transmitted hereby, no endorsements of certificates or
separate stock powers are required unless payment is to be made to, or
certificates for Shares not tendered or accepted for payment are to be issued
in the name of, a person other than the registered holder(s). Signatures on
such certificates or stock powers must be guaranteed by an Eligible
Institution.
If this Letter of Transmittal is signed by a person other than the
registered holder of the certificates(s) listed above, the certificate(s) must
be endorsed or accompanied by the appropriate stock powers, in either case
signed exactly as the name or names of the registered holder or holders appears
on the certificate(s). Signatures on such certificates or stock powers must be
guaranteed by an Eligible Institution.
6. Stock Transfer Taxes. Purchaser will pay any stock transfer taxes with
respect to the transfer and sale of Shares to it or its order pursuant to the
Offer. If, however, payment of the purchase price is to be made to, or (in the
circumstances permitted hereby) if certificates for Shares not tendered or
accepted for payment are to be registered in the name of, any person other than
the registered holder, or if tendered certificates are registered in the name
of any person other than the person(s) signing this Letter of Transmittal, the
amount of any stock transfer taxes (whether imposed on the registered holder or
such person) payable on account of the transfer to such person will be deducted
from the purchase price if satisfactory evidence of the payment of such taxes,
or exemption therefrom, is not submitted.
Except as provided in this Instruction 6, it will not be necessary for
transfer tax stamps to be affixed to the certificates listed in this Letter of
Transmittal.
7. Special Payment and Delivery Instructions. If a check is to be issued in
the name of, and/or certificates for Shares not tendered or accepted for
payment are to be issued or returned to, a person other than the signer of this
Letter of Transmittal or if a check and/or such certificates are to be mailed
to a person other than the signer of this Letter of Transmittal or to an
address other than that shown above, the appropriate boxes on this Letter of
Transmittal should be completed.
8. Requests for Assistance or Additional Copies. Questions or requests for
assistance may be directed to the Information Agent at the telephone number and
address set forth below or to your broker, dealer, commercial bank or trust
7
<PAGE>
company. Additional copies of the Offer to Purchase, this Letter of
Transmittal, the Notice of Guaranteed Delivery and other tender offer
materials may be obtained from the Information Agent.
9. Waiver of Conditions. The conditions of the Offer, with the exception of
the Minimum Tender Condition (as defined in the Offer to Purchase), may be
waived by Purchaser, in whole or in part, at any time or from time to time, in
Purchaser's discretion. The conditions of the Offer are listed in Section 13
of the Offer to Purchase.
10. Lost or Destroyed Certificates. If any Share Certificate(s) have been
lost, destroyed or stolen, the shareholder should promptly notify the
Company's Transfer Agent, ChaseMellon Shareholder Services, L.L.C. (telephone:
(800) 522-6645) for instructions as to the procedures for replacing the Share
Certificate(s). This Letter of Transmittal and related documents cannot be
processed until the lost, destroyed or stolen certificates have been replaced
and the replacement Share Certificate(s) have been delivered to the Depositary
in accordance with the procedures set forth in Section 3 of the Offer to
Purchase and the instructions contained in this Letter of Transmittal.
11. Substitute Form W-9. Each tendering shareholder is required to provide
the Depositary with a correct Taxpayer Identification Number ("TIN"),
generally the shareholder's social security or federal employer identification
number, on Substitute Form W-9 below. Failure to provide the information on
the form may subject the tendering shareholder to 31% federal income tax
backup withholding on the payment of the purchase price. The box in Part 3 of
the form may be checked if the tendering shareholder has not been issued a TIN
and has applied for a TIN or intends to apply for a TIN in the near future. If
the box in Part 3 is checked and the Depositary is not provided with a TIN
within 60 days, the Depositary will withhold 31% of all payments of the
purchase price thereafter until a TIN is provided to the Depositary.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR MANUALLY SIGNED FACSIMILE
THEREOF), TOGETHER WITH ANY REQUIRED SIGNATURE GUARANTEES, OR, IN THE CASE OF
A BOOK-ENTRY TRANSFER, AN AGENT'S MESSAGE, AND ANY OTHER REQUIRED DOCUMENTS,
MUST BE RECEIVED BY THE DEPOSITARY PRIOR TO THE EXPIRATION OF THE OFFER, AND
EITHER SHARE CERTIFICATES FOR TENDERED SHARES MUST BE RECEIVED BY THE
DEPOSITARY OR SHARES MUST BE DELIVERED PURSUANT TO THE PROCEDURES FOR BOOK-
ENTRY TRANSFER, IN EACH CASE PRIOR TO THE EXPIRATION DATE OF THE OFFER, OR THE
TENDERING STOCKHOLDER MUST COMPLY WITH THE PROCEDURES FOR GUARANTEED DELIVERY.
IMPORTANT TAX INFORMATION
Under the federal income tax law, a shareholder whose tendered Shares are
accepted for purchase is required by law to provide the Depositary (as payer)
with such shareholder's correct taxpayer identification number ("TIN") on
Substitute Form W-9 below and to certify that such TIN is correct (or that
such shareholder is awaiting a TIN) or otherwise establish a basis for
exemption from backup withholding. If such shareholder is an individual, the
TIN is his or her social security number. If a shareholder fails to provide a
TIN to the Depositary, such shareholder may be subject to a $50 penalty
imposed by the Internal Revenue Service. In addition, payments that are made
to such shareholder with respect to Shares purchased pursuant to the Offer may
be subject to backup withholding of 31% (see below).
Certain shareholders (including, among others, all corporations and certain
foreign individuals) are not subject to these backup withholding and reporting
requirements. In order for a foreign individual to qualify as an exempt
recipient, that shareholder must generally submit a Form W-8, signed under
penalties of perjury, attesting to that individual's exempt status. A Form W-8
can be obtained from the Depositary. See the enclosed Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9 for
additional instructions.
If backup withholding applies, the Depositary is required to withhold 31%
of any payments made to the shareholder or payee. Backup withholding is not an
additional tax. Rather, the tax liability of persons subject to backup
withholding will be reduced by the amount of tax withheld. If withholding
results in an overpayment of taxes, a refund may be obtained from the Internal
Revenue Service.
8
<PAGE>
The box in Part 3 of the Substitute Form W-9 may be checked if the tendering
shareholder has not been issued a TIN and has applied for a TIN or intends to
apply for a TIN in the near future. If the box in Part 3 is checked, the
shareholder or other payee must also complete the Certification of Awaiting
Taxpayer Identification Number below in order to avoid backup withholding. If a
shareholder's TIN is provided to the Depositary within 60 days of the date of
the Substitute Form W-9, payment will be made to such shareholder without the
imposition of backup withholding. If a shareholder's TIN is not provided to the
Depositary within such 60-day period, the Depositary will make such payment,
subject to backup withholding.
Purpose of Substitute Form W-9
To prevent backup withholding on payments made to a shareholder whose
tendered Shares are accepted for purchase, the shareholder is required to
notify the Depositary of its correct TIN by completing Substitute Form W-9
certifying that the TIN provided on such Form is correct (or that such
shareholder is awaiting a TIN, in which case the shareholder should check the
box in Part 3 of the Substitute Form W-9) and that (A) such shareholder is
exempt from backup withholding, (B) such shareholder has not been notified by
the Internal Revenue Service that such shareholder is subject to backup
withholding as a result of failure to report all interest or dividends or (C)
the Internal Revenue Service has notified the shareholder that the shareholder
is no longer subject to backup withholding. The shareholder must sign and date
the Substitute Form W-9 where indicated, certifying that the information on
such Form is correct.
Alternatively, a shareholder that qualifies as an exempt recipient (other
than a shareholder required to complete Form W-8 as described above) should
write "Exempt" in Part 1 of the Substitute Form W-9, enter its correct TIN and
sign and date such Form where indicated.
What Number to Give the Depositary
The shareholder is required to give the Depositary the social security
number or employer identification number of the record holder of the Shares or
of the last transferee appearing on the transfers attached to, or endorsed on,
the Shares. If the Shares are in more than one name or are not in the name of
the actual owner, consult the enclosed Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9 for additional guidance on which
number to report.
9
<PAGE>
TO BE COMPLETED BY ALL TENDERING SHAREHOLDERS
(See Instruction 11)
PAYER'S NAME: CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
Part I--PLEASE PROVIDE YOUR
TIN IN THE BOX AT RIGHT AND ----------------------
SUBSTITUTE CERTIFY BY SIGNING AND Social security number
Form W-9 DATING BELOW. OR
----------------------
Department of Employer identification
the Treasury number
Internal
Revenue
Service
--------------------------------------------------------
Part II--Certification--Under penalties of perjury, I
certify that:
(1) The number shown on this form is my correct
Taxpayer Identification Number (or I am waiting
for a number to be issued to me); and
(2) I am not subject to backup withholding because
(i) I am exempt from backup withholding, (ii) I
have not been notified by the Internal Revenue
Service ("IRS") that I am subject to backup
Payor's Request for withholding as a result of a failure to report
Taxpayer all interest or dividends, or (iii) the IRS has
Identification notified me that I am no longer subject to backup
Number (TIN) withholding.
--------------------------------------------------------
Certification Instructions--You must
cross out item (2) in Part 2 above if
you have been notified by the IRS
that you are subject to backup with-
holding because of under-reporting
interest or dividends on your tax re-
turn. However, if after being noti-
fied by the IRS that you were subject
to backup withholding you received Part 3
another notification from the IRS Awaiting
stating that you are no longer sub- TIN [_]
ject to backup withholding, do not
cross out item (2).
Signature: _____________ Date: ____ ,2000
Name (Please Print):
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW
THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL INFORMATION.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU
CHECKED THE BOX IN PART 3 OF SUBSTITUTE FORM W-9.
CERTIFICATION OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number
has not been issued to me, and either (i) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration Office or
(ii) I intend to mail or deliver an application in the near future. I
understand that if I do not provide a taxpayer identification number to the
Depositary within 60 days, 31% of all reportable payments made to me
thereafter will be withheld until I provide a taxpayer identification number
to the Depositary.
__________________________________ _________________________________, 2000
Signature Date
__________________________________
Name (Please Print)
10
<PAGE>
Manually signed facsimile copies of this Letter of Transmittal will be
accepted. The Letter of Transmittal, Shares Certificate(s) and any other
required documents should be sent or delivered by each shareholder of the
Company or such shareholder's broker, dealer, commercial bank, trust company or
other nominee to the Depositary at one of its addresses set forth below.
The Depositary for the Offer is:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
By Mail: By Overnight Courier: By Hand:
Reorganization Reorganization Reorganization
Department Department Department
P.O. Box 3301 85 Challenger Road 120 Broadway
South Hackensack, NJ Mail Stop--Reorg 13th Floor
07606 Ridgefield, NJ 07660 New York, NY 10271
By Facsimile Transmission (For Eligible Institutions Only):
(201) 296-4293
Confirm Receipt of Facsimile by Telephone Only:
(201) 296-4860
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE TO A NUMBER OTHER THAN AS
SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY TO THE DEPOSITARY.
Any questions or requests for assistance or additional copies of the Offer
to Purchase and the Letter of Transmittal may be directed to the Information
Agent at its address and applicable telephone number listed below. You may also
contact your broker, dealer, commercial bank or trust company or other nominee
for assistance concerning the Offer.
The Information Agent for the Offer is:
[LOGO]
GEORGESON
SHAREHOLDER
COMMUNICATIONS INC.
17 State Street
10th Floor
New York, New York 10004
Banks and Brokers Call Collect: (212) 440-9800
All Others Call Toll Free: (800) 223-2064
April 4, 2000
11
<PAGE>
Exhibit (a)(3)
Notice of Guaranteed Delivery
for
Tender of Shares of Common Stock
of
FARR COMPANY
Pursuant to the Offer to Purchase dated April 4, 2000
This Notice of Guaranteed Delivery (or one substantially in the form hereof)
must be used to accept the Offer (as defined below) if (i) certificates ("Share
Certificates") representing shares of common stock, par value $0.10 per share
(the "Shares"), of Farr Company, a Delaware corporation (the "Company"), are
not immediately available, or (ii) the procedures for book-entry transfer, as
set forth in the offer, dated April 4, 2000, by Ratos Acquisition Corp. to
purchase all of the outstanding Shares of the Company (the "Offer to
Purchase"), cannot be complied with on a timely basis, or (iii) if time will
not permit all required documents to be delivered to ChaseMellon Shareholder
Services, L.L.C. (the "Depositary") on or prior to the Expiration Date (as
defined in Section 1 of the Offer to Purchase). This Notice of Guaranteed
Delivery may be delivered by hand to the Depositary or transmitted by telegram,
facsimile transmission or mail to the Depositary and must include a guarantee
by an Eligible Institution (as defined below). See Section 3 of the Offer to
Purchase and Section 2 of the Instructions to the Letter of Transmittal.
The Depositary is:
ChaseMellon Shareholder Services, L.L.C.
<TABLE>
<S> <C> <C>
By Mail: By Overnight Courier: By Hand:
Reorganization Department Reorganization Department Reorganization Department
P.O. Box 3301 85 Challenger Road 120 Broadway
South Hackensack, NJ 07606 Mail Stop--Reorg 13th Floor
Ridgefield, NJ 07660 New York, NY 10271
</TABLE>
By Facsimile Transmission
(For Eligible Institutions Only):
(201) 296-4293
Confirm Receipt of Facsimile by Telephone Only:
(201) 296-4860
----------------
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS
SET FORTH ABOVE, OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TO A NUMBER
OTHER THAN AS LISTED ABOVE, DOES NOT CONSTITUTE A VALID DELIVERY.
This Notice of Guaranteed Delivery is not to be used to guarantee
signatures. If a signature on a Letter of Transmittal is required to be
guaranteed by an Eligible Institution under the instructions thereto, such
signature guarantee must appear in the applicable space provided in the
signature box on the Letter of Transmittal.
1
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to Ratos Acquisition Corp., a Delaware
corporation, on the terms and subject to the conditions set forth in the Offer
to Purchase, dated April 4, 2000, and the related Letter of Transmittal (the
"Letter of Transmittal" and, together with the Offer to Purchase and any
amendments or supplements thereto, the "Offer"), receipt of which is hereby
acknowledged, the number of Shares set forth below, all pursuant to the
guaranteed delivery procedures set forth in Section 3 of the Offer to Purchase
and Section 2 of the Instructions to the Letter of Transmittal.
The undersigned hereby represents and warrants that the undersigned has full
power and authority to accept the Offer. The undersigned will, upon request,
execute and deliver any additional documents deemed by the Depositary or Ratos
Acquisition Corp. to be necessary or desirable to perfect the undersigned's
acceptance of the Offer, as indicated below.
Number of Shares: ______________________
Shares Certificate No(s). (if
available):
________________________________________
________________________________________
[_](Check the box and indicate account
number at Book-Entry Transfer
Facility if Shares will be tendered
by book-entry transfer)
Account
Number: ________________________________
Dated: ___________________________, 2000
Name(s) of Record Holder(s) ____________
________________________________________
________________________________________
(Please Type or Print)
Address(es): ___________________________
________________________________________
Zip Code
Daytime Telephone Number:
________________________________________
(Area Code)
Signature(s) of Record Holder(s):
________________________________________
2
<PAGE>
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a bank, broker, dealer, credit union, savings association
or other entity which is a participant in the Security Transfer Agent Medallion
Program, the New York Stock Exchange Medallion Signature Guarantee Program or
the Stock Exchange Medallion Program (each, an "Eligible Institution"), hereby
(a) represents that the above named person(s) "own(s)" the Shares tendered
hereby within the meaning of Rule 14e-4 of the Securities Exchange Act of 1934,
as amended ("Rule 14e-4"), (b) represents that such tender of Shares complies
with Rule 14e-4, and (c) guarantees delivery to the Depositary, at one of its
addresses set forth above, of either the Share Certificates evidencing all
Shares tendered hereby in proper form for transfer, or confirmation of the
book-entry transfer of Shares into the Depositary's accounts at The Depository
Trust Company, in either case together with delivery of a properly completed
and duly executed Letter of Transmittal (or facsimile thereof) with any
required signature guarantee, or an Agent's Message (as defined in Section 3 of
the Offer to Purchase) in connection with a book-entry delivery, and any other
required documents, within three New York Stock Exchange trading days after the
date hereof.
The Eligible Institution that completes this form must communicate this
guarantee to the Depositary and must deliver the Letter of Transmittal, Share
Certificates and any other required documents to the Depositary within the time
period shown herein. Failure to do so could result in a financial loss to such
Eligible Institution.
Name of Firm: __________________________________________________________________
Address: _______________________________________________________________________
_______________________________________________________________________
Zip Code
Area Code and Telephone Number: ________________________________________________
Authorized Signature
Name: __________________________________________________________________________
(Please Type or Print)
Title: _________________________________________________________________________
Dated: ________________________________ , 2000
NOTE: DO NOT SEND SHARE CERTIFICATES WITH THIS FORM. SHARE CERTIFICATES SHOULD
BE SENT WITH YOUR LETTER OF TRANSMITTAL.
3
<PAGE>
INSTRUCTIONS FOR NOTICE OF GUARANTEED DELIVERY
1. Delivery of this Notice of Guaranteed Delivery. A properly completed and
duly executed copy of this Notice of Guaranteed Delivery (or facsimile thereof)
and any other documents required by this Notice of Guaranteed Delivery must be
received by the Depositary at its address set forth herein on or prior to the
Expiration Date (as defined in the Offer to Purchase). The method of delivery
of this Notice of Guaranteed Delivery and any other required documents to the
Depositary is at the election and risk of the holder, and the delivery will be
deemed made only when actually received by the Depositary. Instead of delivery
by mail, it is recommended that the holder use an overnight or hand-delivery
service, properly insured. If delivery is by mail, it is recommended that such
certificates and documents be sent by registered mail, properly insured, with
return receipt requested. In all cases, sufficient time should be allowed to
assure timely delivery.
2. Signatures on this Notice of Guaranteed Delivery. If this Notice of
Guaranteed Delivery is signed by the holder(s) of the Shares specified herein,
the signature(s) must correspond exactly to the name(s) written on the face of
the Share Certificates or on a security position listing with respect thereto
without any alteration, enlargement or change whatsoever. If any of the
tendered Shares are held by two or more persons, all such persons must sign
this Notice of Guaranteed Delivery. If any of the tendered Shares are
registered in different names, it will be necessary to complete, sign and
submit as many separate Notices of Guaranteed Delivery as there are different
registrations. If this Notice of Guaranteed Delivery is signed by a person or
persons other than the holder(s) of any Shares specified herein or a
participant of the Book-Entry Transfer Facility, this Notice of Guaranteed
Delivery must be accompanied by appropriate stock powers, signed as the name of
the holder(s) appears on the Share Certificates or signed as the name of the
participant appears on the Book-Entry Transfer Facility's security position
listing. If this Notice of Guaranteed Delivery or any other instrument of
transfer is signed by a trustee, executor, administrator, guardian, attorney-
in-fact, agent, officer of a corporation, or other person acting in a fiduciary
or representative capacity, such person should so indicate when signing and
must submit proper evidence satisfactory to the Depositary and Ratos
Acquisition Corp. of his or her authority so to act.
3. Requests for Assistance or Additional Copies. Requests for assistance or
additional copies of the Offer to Purchase or the Letter of Transmittal or this
Notice of Guaranteed Delivery should be directed to the Information Agent at
the address and telephone number set forth on the back cover page of the Offer
to Purchase and in the Letter of Transmittal.
4
<PAGE>
Exhibit (a)(4)
Offer to Purchase for Cash
All of the Outstanding Shares of Common Stock
(Including the Associated Rights to Purchase
Common Stock)
of
FARR COMPANY
at
$17.45 Net Per Share
by
RATOS ACQUISITION CORP.
a Wholly Owned Subsidiary of
FORVALTNINGS AB RATOS (publ.)
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON MAY 1, 2000, UNLESS THE OFFER IS EXTENDED.
April 4, 2000
To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
We have been engaged by Ratos Acquisition Corp., a Delaware corporation
("Purchaser") and a wholly owned subsidiary of Forvaltnings AB Ratos (publ.),
a Swedish corporation ("Ratos"), to act as Information Agent in connection
with Purchaser's offer to purchase all the outstanding shares of common stock,
par value $0.10 per share (the "Common Stock"), including the associated
rights to purchase Common Stock (the "Rights" and, together with the Common
Stock, the "Shares"), of Farr Company, a Delaware corporation (the "Company"),
at $17.45 per Share, net to the seller in cash (the "Offer Price"), on the
terms and subject to the conditions set forth in the Offer to Purchase, dated
April 4, 2000, and the related Letter of Transmittal (the "Letter of
Transmittal" and, together with the Offer to Purchase and any amendments or
supplements thereto, the "Offer"). Please furnish copies of the enclosed
materials to those of your clients for whom you hold Shares registered in your
name or in the name of your nominee.
Enclosed herewith are the following documents:
1. Offer to Purchase, dated April 4, 2000;
2. Letter of Transmittal to be used by stockholders of the Company in
accepting the Offer;
3. Form of letter that may be sent to your clients for whose accounts you
hold Shares in your name or in the name of your nominee, with space
provided for obtaining such clients' instructions with regard to the
Offer;
4. Letter to the stockholders of the Company from both the Chairman, and
the President and Chief Executive Officer of the Company, accompanied by
the Company's Solicitation/Recommendation Statement on Schedule 14D-9;
5. Notice of Guaranteed Delivery;
6. Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9; and
7. Return envelope addressed to ChaseMellon Shareholder Services, L.L.C.,
the Depositary.
<PAGE>
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (1) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN A NUMBER OF SHARES OF COMMON STOCK OF THE COMPANY
REPRESENTING AT LEAST A MAJORITY OF THE OUTSTANDING SHARES OF COMMON STOCK ON A
FULLY DILUTED BASIS AS OF THE DATE THE SHARES ARE ACCEPTED FOR PAYMENT PURSUANT
TO THE OFFER AND (2) THE EXPIRATION OR TERMINATION OF ANY AND ALL WAITING
PERIODS UNDER THE HART-SCOTT-RODINO ANTITRUST IMPROVEMENTS ACT OF 1976, AS
AMENDED, AND THE REGULATIONS THEREUNDER. CERTAIN OTHER CONDITIONS TO
CONSUMMATION OF THE OFFER ARE DESCRIBED IN SECTION 13 OF THE OFFER TO PURCHASE.
We urge you to contact your clients promptly. Please note that the Offer and
withdrawal rights will expire at 12:00 midnight, New York City time, on May 1,
2000 unless the Offer is extended.
The Board of Directors of the Company has unanimously determined that each of
the Merger Agreement (as defined below), the Offer and the Merger (as defined
below) is fair to and in the best interests of the Company's stockholders and
has unanimously approved the Merger Agreement and the transactions contemplated
thereby (including the Offer and the Merger) and unanimously recommends that
the Company's stockholders accept the Offer, tender their shares to Purchaser
and approve and adopt the Merger Agreement and the Merger.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated as
of March 26, 2000 (the "Merger Agreement"), among the Company, Ratos and
Purchaser, pursuant to which, following the completion of the Offer, Purchaser
will be merged with and into the Company (the "Merger") and each issued and
outstanding Share (other than Shares owned by the Company in treasury or by any
subsidiary of the Company, owned by Ratos or Purchaser or any other subsidiary
of Ratos, or Shares, if any, that are held by stockholders who properly
exercise dissenters' rights pursuant to Section 262 of the Delaware General
Corporation Law) shall, by virtue of the Merger and without any action on the
part of the holder thereof, be converted into the right to receive, without
interest, an amount in cash equal to $17.45 or any different amount per Share
paid pursuant to the Offer. As a result of the Merger, the Company will become
a wholly owned subsidiary of Ratos.
In all cases, payment for Shares accepted for payment pursuant to the Offer
will be made only after timely receipt by ChaseMellon Shareholder Services,
L.L.C. (the "Depositary") of (i) certificates for such Shares (or timely
confirmation of the book-entry transfer of such Shares into the Depositary's
account at The Depository Trust Company pursuant to the procedures set forth in
Section 3 of the Offer to Purchase), (ii) the Letter of Transmittal (or a
facsimile thereof), properly completed and duly executed, with any required
signature guarantees (or, in the case of a book-entry transfer, an Agent's
Message (as defined in Section 3 of the Offer to Purchase)) and (iii) any other
documents required by the Letter of Transmittal. Under no circumstances will
interest be paid on the Offer Price for Shares, regardless of any extension of
the Offer or any delay in making such payment pursuant to the Offer.
Neither Ratos nor Purchaser will pay any fees or commissions to any broker or
dealer or other person (other than the Depositary and the Information Agent, as
disclosed in the Offer to Purchase) in connection with the solicitation of
tenders of Shares pursuant to the Offer. You will be reimbursed upon request
for customary mailing and handling expenses incurred by you in forwarding the
enclosed offering materials to your clients.
Questions and requests for assistance may be directed to the Information Agent
at the address and telephone number set forth on the back cover of the enclosed
Offer to Purchase. Requests for additional copies of the enclosed materials may
be directed to the Information Agent.
Very truly yours,
GEORGESON SHAREHOLDER COMMUNICATIONS INC.
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL RENDER YOU OR ANY
OTHER PERSON THE AGENT OF RATOS, PURCHASER, THE DEPOSITARY OR THE INFORMATION
AGENT, OR ANY AFFILIATE OF ANY OF THEM, OR AUTHORIZE YOU OR ANY OTHER PERSON TO
GIVE ANY INFORMATION OR USE ANY DOCUMENT OR MAKE ANY REPRESENTATION ON BEHALF
OF ANY OF THEM WITH RESPECT TO THE OFFER NOT CONTAINED IN THE OFFER TO PURCHASE
OR THE LETTER OF TRANSMITTAL.
<PAGE>
Exhibit (a)(5)
Offer to Purchase for Cash
All of the Outstanding Shares of Common Stock
(Including the Associated Rights to Purchase
Common Stock)
of
FARR COMPANY
at
$17.45 Net Per Share
by
RATOS ACQUISITION CORP.
a Wholly Owned Subsidiary of
FORVALTNINGS AB RATOS (publ.)
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON MAY 1, 2000, UNLESS THE OFFER IS EXTENDED.
April , 2000
To Our Clients:
Enclosed for your consideration is an Offer to Purchase, dated April 4, 2000
(the "Offer to Purchase"), and the related Letter of Transmittal (the "Letter
of Transmittal" and, together with the Offer to Purchase and any amendments or
supplements thereto, the "Offer") relating to the offer by Ratos Acquisition
Corp., a Delaware corporation ("Purchaser") and an indirect wholly owned
subsidiary of Forvaltnings AB Ratos (publ.), a Swedish company ("Ratos"), to
purchase for cash all of the outstanding shares of common stock, par value
$0.10 per share (the "Common Stock"), including the associated rights to
purchase Common Stock (the "Rights" and, together with the Common Stock, the
"Shares") , of Farr Company, a Delaware corporation (the "Company"), on the
terms and subject to the conditions set forth in the Offer. Also enclosed is a
letter to the stockholders of the Company from both the Chairman, and the
President and Chief Executive Officer of the Company, accompanied by the
Company's Solicitation/Recommendation Statement on Schedule 14D-9.
We are the holder of record of Shares held by us for your account. A tender
of such Shares can be made only by us as the holder of record and pursuant to
your instructions. The Letter of Transmittal is furnished to you for your
information only and cannot be used to tender Shares held by us for your
account.
We request instructions as to whether you wish to tender any or all of the
Shares held by us for your account, pursuant to the terms and conditions set
forth in the Offer.
Your attention is directed to the following:
1. The Offer price is $17.45 per Share (the "Offer Price"), net to the
Seller in cash (but subject to any applicable tax withholdings), without
interest thereon, upon the terms and subject to the conditions of the
Offer.
2. The Offer is being made for all of the outstanding Shares.
3. The Board of Directors of the Company has unanimously determined that
each of the Merger Agreement (as defined below), the Offer and the
Merger (as defined below) is fair to and in the best interests of the
stockholders of the Company and has unanimously approved the Merger
Agreement and the transactions contemplated thereby (including the Offer
and the Merger). The Board of Directors of the Company unanimously
recommends that all holders of Shares
1
<PAGE>
accept the Offer and immediately tender their Shares pursuant to the
Offer. Each of the members of the Board of Directors of the Company has
entered into a tender agreement with Purchaser and Ratos pursuant to
which each member has agreed to tender all of his Shares in the Offer.
4. The Offer is conditioned upon, among other things, (i) there being
validly tendered and not withdrawn a number of shares of Common Stock of
the Company representing at least a majority of the outstanding shares
of Common Stock on a fully diluted basis as of the date the Shares are
accepted for payment pursuant to the Offer and (ii) the expiration or
termination of any and all waiting periods under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended, and the regulations
thereunder. Certain other conditions to consummation of the Offer are
described in Section 13 of the Offer to Purchase.
5. The Offer and withdrawal rights expire at 12:00 midnight, New York City
time, on Monday, May 1, 2000, unless the Offer is extended by Purchaser
(the "Expiration Date").
6. The Offer is being made pursuant to an Agreement and Plan of Merger,
dated as of March 26, 2000 (the "Merger Agreement"), among the Company,
Ratos and Purchaser, pursuant to which, following the completion of the
Offer, Purchaser will be merged with and into the Company (the "Merger")
and each issued and outstanding Share (other than Shares owned by the
Company in treasury or by any subsidiary of the Company, owned by Ratos
or Purchaser or any other subsidiary of Ratos, or Shares, if any, that
are held by stockholders who properly exercise dissenters' rights
pursuant to Section 262 of the Delaware General Corporation Law) shall,
by virtue of the Merger and without any action on the part of the holder
thereof, be converted into the right to receive, without interest, an
amount in cash equal to $17.45 or any different amount per Share paid
pursuant to the Offer. As a result of the Merger, the Company will
become a wholly-owned subsidiary of Ratos. The Merger Agreement is more
fully described in Section 11 of the Offer to Purchase.
7. Any stock transfer taxes applicable to a sale of Shares to Purchaser
will be borne by Purchaser, except as otherwise provided in Instruction
6 of the Letter of Transmittal.
Your instructions to us should be forwarded promptly to permit us to submit
a tender on your behalf prior to the Expiration Date.
If you wish to have us tender any of or all of the Shares held by us for
your account, please so instruct us by completing, executing, detaching and
returning to us the instruction form on the detachable part hereof. Your
instructions should be forwarded to us in ample time to permit us to submit a
tender on your behalf prior to the Expiration Date.
In all cases, payment for Shares accepted for payment pursuant to the Offer
will be made only after timely receipt by ChaseMellon Shareholder Services,
L.L.C. (the "Depositary") of (i) certificates for such Shares (or timely
confirmation of the book-entry transfer of such Shares into the Depositary's
account at The Depository Trust Company pursuant to the procedures set forth in
Section 3 of the Offer to Purchase), (ii) the Letter of Transmittal (or a
facsimile thereof), properly completed and duly executed, with any required
signature guarantees (or, in the case of a book-entry transfer, an Agent's
Message (as defined in the Offer to Purchase) pursuant to the procedures set
forth in Section 3 of the Offer to Purchase) and (iii) any other documents
required by the Letter of Transmittal. Accordingly, tendering stockholders may
be paid at different times depending upon when certificates for Shares or
confirmations of the book-entry transfer of Shares are actually received by the
Depositary. Under no circumstances will interest be paid on the Offer Price for
Shares, regardless of any extension of the Offer or any delay in making such
payment pursuant to the Offer.
The Offer is not being made to, nor will tenders be accepted from, or on
behalf of, holders of Shares in any jurisdiction in which the making or
acceptance of the Offer would not be in compliance with the laws of such
jurisdiction. In any jurisdiction where the securities or blue sky laws require
the Offer to be made by a licensed broker or dealer, the Offer will be deemed
made on behalf of Purchaser by one or more registered
2
<PAGE>
brokers or dealers that are licensed under the laws of such jurisdiction. An
envelope in which to return your instructions to us is enclosed. If you
authorize tender of your Shares, all such Shares will be tendered unless
otherwise indicated in your instructions to us. Please forward your
instructions to us as soon as possible to allow us ample time to tender Shares
on your behalf prior to the Expiration Date.
3
<PAGE>
INSTRUCTIONS WITH RESPECT TO THE
OFFER TO PURCHASE FOR CASH
ALL OF THE OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED RIGHTS)
OF
FARR COMPANY
The undersigned acknowledge(s) receipt of your letter, the Offer to Purchase
dated April 4, 2000, and the related Letter of Transmittal regarding the offer
by Ratos Acquisition Corp. to purchase all of the shares of Common Stock, par
value $0.10 per share (the "Common Stock"), including the associated rights
(the "Rights" and, together with the Common Stock, the "Shares"), of Farr
Company, a Delaware corporation.
This will instruct you to tender the number of Shares indicated below held
by you for the account of the undersigned, on the terms and subject to the
conditions set forth in the Offer to Purchase and the related Letter of
Transmittal.
SIGN HERE
Number of Shares to be Ten-
dered:* __________________________
__________________________________
Shares ___________________________ __________________________________
Signature(s)
__________________________________
(Daytime Area Code and Telephone __________________________________
No.)
__________________________________
__________________________________
(Tax Identification No. or Social __________________________________
Security No.)
__________________________________
Dated: ____________________ , 2000 (Please print name(s) and
address(es))
- -------
* Unless otherwise indicated, it will be assumed that all of your Shares are to
be tendered.
4
<PAGE>
Exhibit 99.(a)(6)
FOR IMMEDIATE RELEASE
RATOS ACQUISITION CORP. COMMENCES CASH TENDER OFFER
FOR ALL OF THE OUTSTANDING COMMON STOCK OF FARR COMPANY
STOCKHOLM, APRIL 4, 2000 -- Forvaltnings AB Ratos, a publicly traded Swedish
private equity company, announced today that its wholly owned subsidiary, Ratos
Acquisition Corp., has commenced its previously announced cash tender offer to
acquire all of the outstanding shares of common stock of Farr Company (NASDAQ:
FARC) at a price of $17.45 per share. The total purchase consideration for Farr
is approximately $134 million.
The tender offer is scheduled to expire at 12:00 midnight (New York City
time) on Monday, May 1, 2000, unless extended. The tender offer is being made
pursuant to an Agreement and Plan of Merger entered into between Ratos, Ratos
Acquisition and Farr as of March 26, 2000. The tender offer is conditioned upon
the tender of at least a majority of the outstanding Farr common stock in the
offer, as well as certain customary conditions, including the expiration or
termination of any and all waiting periods under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended.
Following the completion of the tender offer and subject to the
satisfaction of certain conditions, Ratos Acquisition will be merged with and
into Farr, with Farr remaining as the surviving corporation. Each share of Farr
common stock not acquired pursuant to the offer will be converted in the merger
into the right to receive $17.45 in cash.
Prior to the execution of the merger agreement, Ratos entered into an
option agreement with Camfil AB, a Swedish air filter and clean air systems
manufacturer. Under the terms of the option agreement, Ratos has the right to
require Camfil to purchase the post-merger Farr in exchange for a minority
equity interest in Camfil.
This news release does not constitute an offer to purchase or a
solicitation of an offer to sell securities. The complete terms and conditions
of this tender offer are set forth in an offer to purchase and related letter of
transmittal, which are being filed today with the Securities and Exchange
Commission and mailed to Farr's shareholders.
FORVALTNINGS AB RATOS, one of Sweden's oldest and largest private equity
companies, is listed on the Stockholm Stock Exchange. Ratos' business concept
is to maximize shareholder value through the professional and responsible
management of its investments, including an active involvement in the governance
of its portfolio companies. The net asset value of Ratos' investments exceeds
SEK 10bn. The company's current holdings include: Scandic Hotels, Telelogic,
Dahl, Superfos, Capona, Esselte, DataVis, Telia Overseas and ACE.
Further Information:
Forvaltnings AB Ratos
- ---------------------
Internet: http://www.ratos.se
-------------------
Arne Karlsson, President and C.E.O.
+46-8-700-17-00
Bo Jungner, Senior Investment Manager
+46-8-700-17-85
<PAGE>
Exhibit (a)(7)
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
PART 1
Name. If you are an individual, you must generally enter the name shown on your
social security card. However, if you have changed your last name, for
instance, due to marriage, without informing the Social Security Administration
of the name change, enter your first name, the last name shown on your Social
Security card, and your new last name. If the account is in joint names, list
first and then circle the name of the person or entity whose number you enter
in Part I of the form. If you are a sole proprietor, you must enter your
individual name as shown on your Social Security card. You may enter your
business, trade, or "doing business as" name on the business name line. If you
are any other entity, enter your business name as shown on required Federal tax
documents. This name should match the name shown on the charter or other legal
document creating the entity. You may enter any business, trade, or "doing
business as" name on the business name line.
Guidelines For Determining The Proper Name And Identification Number To Give
The Payer. Social Security numbers have nine digits separated by two hyphens,
e.g., 000-00-0000. Employer Identification numbers have nine digits separated
by only one hyphen, e.g., 00-0000000. The table below will help determine which
name and number to give to the payer.
<TABLE>
<CAPTION>
- ------------------------------------------------- -----------------------------------------------------------
Give the name and Give the name and
SOCIAL SECURITY EMPLOYER IDENTIFICATION
For this type of account number of-- For this type of account number of--
- ------------------------------------------------- -----------------------------------------------------------
<S> <C> <C> <C>
1. Individual The individual 6. Sole proprietorship The owner(3)
2. Two or more individuals The actual owner 7. A valid trust, The legal entity(4)
(joint account) of the account estate, or pension
or, if combined trust
funds, the first
individual on 8. Corporation The corporation
the account(1)
9. Association, club, The organization
3. Custodian account of a The minor(2) religious, charitable,
minor (Uniform Gifts to educational or other
Minors Act) tax-exempt organization
4. a. The usual revocable The grantor- 10. Partnership The partnership
savings trust (grantor trustee(1)
is also trustee) 11. A broker or
registered nominee The broker or nominee
b. So-called trust The actual
account that is not a owner(1) 12. Account with the The public entity
legal or valid trust Department of Agriculture
under state law in the name of a public
entity (such as a state
5. Sole proprietorship The owner(3) or local government, school
district, or prison) that
receives agricultural
program payments
- ------------------------------------------------- -----------------------------------------------------------
</TABLE>
(1) List first and circle the name of the person whose number you furnish. If
only one person on a joint account has a Social Security Num ber, that
person's number must be furnished.
(2) Circle the minor's name and furnish the minor's Social Security Number.
(3) You must show your individual name, but you may also enter your business or
"doing business as" name. You may use either your Social Security Number or
Employer Identification Number (if you have one).
(4) List first and circle the name of the legal trust, estate, or pension
trust. (Do not furnish the Taxpayer Identification Number of the personal
representative or trustee unless the legal entity itself is not designated
in the account title.)
<PAGE>
Note: If no name is circled when more than one name is listed, the number will
be considered to be that of the first name listed.
How To Get A Taxpayer Identification Number. If you do not have a Taxpayer
Identification Number, apply for one immediately. To apply for a Social
Security Number (for individuals), obtain Form SS-5, Application for a Social
Security Card, at the local office of the Social Security Administration.
Obtain Form W-7, Application for IRS Individual Taxpayer Identification Number,
to apply for an Individual Taxpayer Identification Number (for individuals not
eligible to obtain a Social Security Number), or Form SS-4, Application for
Employer Identification Number, to apply for an Employer Identification Number
(for businesses and all other entities). You can get Forms W-7 and SS-4 from
the Internal Revenue Service ("IRS") by calling 1-800-TAX-FORM (1-800-829-3676)
or from the IRS's Web Site at www.irs.gov.
If you do not have a Taxpayer Identification Number, write, "Applied For" in
the space for the Taxpayer Identification Number, sign and date the form, and
give it to the payer. For interest and dividend payments and certain payments
made with respect to readily tradable instruments, you will generally have 60
days to get a Taxpayer Identification Number and give it to the payer. If the
payer does not receive your Taxpayer Identification Number within 60 days,
backup withholding, if applicable, will begin and continue until you furnish
your Taxpayer Identification Number.
Note: Writing, "Applied For" on the form means that you have already applied
for a Taxpayer Identification Number OR that you intend to apply for one soon.
As soon as you receive your Taxpayer Identification Number, complete a Form W-
9, include your Taxpayer Identification Number, sign and date the form, and
give it to the payer.
PART 2
Payees Exempt from Backup Withholding. Individuals (including sole proprietors)
are NOT exempt from backup withholding. Corporations are exempt from backup
withholding for certain payments, such as interest and dividends.
If you are exempt from backup withholding, you should still complete Substitute
Form W-9 to avoid possible erroneous backup withholding. Enter your correct
Taxpayer Identification Number in Part 1, write "Exempt" in Part 2, and sign
and date the form. If you are a nonresident alien or a foreign entity not
subject to backup withholding, give the requester a completed Form W-8,
Certificate of Foreign Status.
The following is a list of payees exempt from backup withholding and for which
no information reporting is required. For dividends, all listed payees are
exempt except those covered by item (9). For broker transactions, payees listed
in (1) through (14) are exempt.
(1) A corporation.
(2) An organization exempt from tax under Section 501(a), or an individual
retirement plan ("IRA"), or a custodial account under Section
403(b)(7), if the account satisfies the requirements of Section
401(f)(2).*
(3) The United States or any of its agencies or instrumentalities.
(4) A state, the District of Columbia, a possession of the United States,
or any of their subdivisions or instrumentalities.
(5) A foreign government, a political subdivision of a foreign government,
or any of their agencies or instrumentalities.
(6) An international organization or any of its agencies or
instrumentalities.
(7) A foreign central bank of issue.
(8) A dealer in securities or commodities registered in the United States,
the District of Columbia, or a possession of the United States.
2
<PAGE>
(9) A futures commission merchant registered with the Commodity Futures
Trading Commission.
(10) A real estate investment trust.
(11) An entity registered at all times during the tax year under the
Investment Company Act of 1940.
(12) A common trust fund operated by a bank under Section 584(a).
(13) A financial institution.
(14) A person registered under the Investment Advisers Act of 1940 who
regularly acts as a broker.
- --------
* All section references are to the Internal Revenue Code of 1986, as
amended.
Exempt payees described above should file Form W-9 to avoid possible erroneous
backup withholding. FILE THE FORM WITH THE PAYER, FURNISH YOUR TAXPAYER
IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, SIGN AND DATE
THE FORM AND RETURN IT TO THE PAYER.
Certain payments that are not subject to information reporting are also not
subject to backup withholding. For details, see Sections 6041, 6041A, 6042,
6044, 6045, 6049, 6050A and 6060N, and their regulations.
PRIVACY ACT NOTICE. Section 6109 requires you to give your correct Taxpayer
Identification Number to persons who must file information returns with the IRS
to report interest, dividends, and certain other income paid to you, mortgage
interest you paid, the acquisition or abandonment of secured property,
cancellation of debt, or contributions you made to an IRA. The IRS uses the
numbers for identification purposes and to help verify the accuracy of your tax
return. The IRS may also provide this information to the Department of Justice
for civil and criminal litigation and to cities, states, and the District of
Columbia to carry out their tax laws.
You must provide your Taxpayer Identification Number whether or not you are
required to file a tax return. Payers must generally withhold 31% of taxable
interest, dividends, and certain other payments to a payee who does not give a
Taxpayer Identification Number to a payer. Certain penalties may also apply.
Penalties.
(1) Failure to furnish Taxpayer Identification Number. If you fail to furnish
your Taxpayer Identification Number to a payer, you are subject to a penalty of
$50 for each such failure unless your failure is due to reasonable cause and
not to willful neglect.
(2) Civil penalty for false information with respect to withholding. If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(3) Criminal penalty for falsifying information. Willfully falsifying
certifications or affirmations may subject you to criminal penalties including
fines and/or imprisonment.
FOR ADDITIONAL INFORMATION, CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE
SERVICE.
3
<PAGE>
EXHIBIT (A)(8)
This announcement is neither an offer to purchase nor a solicitation of an
offer to sell Shares (as defined below). The Offer (as defined below) is made
solely through the Offer to Purchase dated April 4, 2000, and the related
Letter of Transmittal and any amendments or supplements thereto, and is being
made to all holders of Shares. The Offer, however, is not being made to, nor
will tenders be accepted from or on behalf of, holders of Shares in any
jurisdiction in which the making of the Offer or the acceptance thereof would
not be in compliance with the laws of such jurisdiction. Purchaser (as defined
below) may in its discretion, however, take such action as it may deem
necessary to make the Offer in any jurisdiction and extend the Offer to holders
of Shares in such jurisdiction. In jurisdictions whose laws require that the
Offer be made by a licensed broker or dealer, the Offer shall be deemed to be
made on Purchaser's behalf by one or more registered brokers or dealers
licensed under the laws of such jurisdiction.
Notice Of Offer To Purchase For Cash
All of the Outstanding Shares of Common Stock
Including the Associated Rights to Purchase Common Stock
of
Farr Company
at
$17.45 Net Per Share
by
Ratos Acquisition Corp.
an indirect wholly owned subsidiary of
Forvaltnings AB Ratos
Ratos Acquisition Corp., a Delaware corporation ("Purchaser") and an
indirect wholly owned subsidiary of Forvaltnings AB Ratos, a Swedish
corporation ("Ratos"), is offering to purchase all of the outstanding shares of
common stock, par value $0.10 per share (the "Common Stock") of Farr Company
(the "Company"), together with the associated rights to purchase common stock
issued pursuant to the Rights Agreement, dated as of April 3, 1989 (the "Rights
Agreement"), between the Company and ChaseMellon Shareholder Services, L.L.C.,
as Rights Agent (successor under the Rights Agreement to Security Pacific
National Bank), as amended (the "Rights" and together with the Common Stock,
the "Shares"), at a price of $17.45 per Share, net to the selling stockholder
in cash, without interest thereon, upon the terms and subject to the conditions
set forth in the Offer to Purchase dated April 4, 2000 (the "Offer to
Purchase") and in the related Letter of Transmittal (which, together with any
amendments or supplements thereto, collectively constitute the "Offer").
Stockholders of record who tender directly to the Depositary (as defined below)
will not be obligated to pay brokerage fees or commissions or, subject to
Instruction 6 of the Letter of Transmittal, stock transfer taxes, if any, on
the purchase of Shares by Purchaser pursuant to the Offer. Stockholders who
hold their Shares through a broker or bank should consult such institution as
to whether it charges any service fees. Purchaser will pay all charges and
expenses of ChaseMellon Shareholder Services, L.L.C., which is acting as
depositary (the "Depositary"), and Georgeson Shareholder Communications Inc.,
which is acting as the information agent (the "Information Agent"), incurred in
connection with the Offer.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON MONDAY, MAY 1, 2000, UNLESS THE OFFER IS EXTENDED.
The offer is conditioned upon, among other things, (1) there being validly
tendered and not withdrawn a number of Shares representing at least a majority
of the outstanding Shares on a fully diluted basis (excluding any shares held
by the Company or any of its subsidiaries) as of the date the shares are
accepted for payment pursuant to the Offer (the "Minimum Tender Condition"),
and (2) the expiration or termination of any and all
1
<PAGE>
waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended, and the regulations thereunder. For a complete description of all
of the conditions to which the offer is subject, see Section 13 of the Offer to
Purchase. The Offer is not conditioned upon Ratos or Purchaser obtaining
financing. The Offer is being made pursuant to an Agreement and Plan of Merger,
dated as of March 26, 2000 (the "Merger Agreement"), among Ratos, Purchaser and
the Company. The Merger Agreement provides, among other things, that following
the completion of the Offer and the satisfaction or waiver, if permissible, of
all conditions set forth in the Merger Agreement and in accordance with the
General Corporation Law of the State of Delaware (the "DGCL"), Purchaser will
be merged with and into the Company (the "Merger"), with the Company surviving
the Merger as a wholly owned subsidiary of Ratos. At the effective time of the
Merger (the "Effective Time"), each outstanding Share (other than Shares held
in the Company's treasury or by any subsidiary of the Company immediately
before the Effective Time, and Shares held by Ratos, Purchaser any other
subsidiary of Ratos immediately before the Effective Time, all of which will be
cancelled, and other than Shares with respect to which appraisal rights are
properly exercised under the DGCL) will be converted into the right to receive
$17.45 in cash, without interest thereon. The Merger Agreement is more fully
described in Section 11 of the Offer to Purchase.
On March 26, 2000, the Board of Directors of the Company unanimously (1)
determined that the Offer, the Merger and the Merger Agreement are advisable,
fair to, and in the best interests of, the Company's stockholders, (2) approved
the Offer, the Merger, the Merger Agreement and the other transactions
contemplated by the Merger Agreement and (3) resolved to recommend that the
Company's stockholders accept the Offer and tender their Shares pursuant
thereto and approve and adopt the Merger Agreement.
Upon the terms and subject to the conditions of the Offer (including, if the
Offer is extended or amended, the terms and conditions of any such extension or
amendment), Purchaser will accept for payment, and will pay for, Shares validly
tendered and not withdrawn as promptly as practicable after the expiration of
the offering period. Subject to applicable rules of the SEC, Purchaser
expressly reserves the right to delay acceptance for payment of or payment for
Shares in order to comply, in whole or in part, with any applicable law. See
Section 13 of the Offer to Purchase. In all cases, payment for Shares tendered
and accepted for payment pursuant to the Offer will be made only after timely
receipt by the Depositary of certificates for such Shares (or a confirmation of
a book-entry transfer of such Shares into the Depositary's account at The
Depository Trust Company (the "Book-Entry Transfer Facility")), a properly
completed and duly executed Letter of Transmittal (or facsimile thereof) and
any other required documents.
For purposes of the Offer, Purchaser will be deemed to have accepted for
payment, and thereby purchased, Shares validly tendered and not withdrawn as,
if and when Purchaser gives oral or written notice to the Depositary of its
acceptance for payment of such Shares pursuant to the Offer. Payment for Shares
accepted for payment pursuant to the Offer will be made by deposit of the
purchase price therefor with the Depositary, which will act as agent for the
tendering stockholders for the purpose of receiving payments from Purchaser and
transmitting such payments to the tendering stockholders. Under no
circumstances will interest on the purchase price for Shares be paid,
regardless of any delay in making such payment. If any tendered Shares are not
accepted for payment pursuant to the terms and conditions of the Offer for any
reason, or if certificates are submitted for more Shares than are tendered,
certificates for such unpurchased Shares will be returned without expense to
the tendering stockholder (or, in the case of Shares tendered by book-entry
transfer of such Shares into the Depositary's account at the Book-Entry
Transfer Facility pursuant to the procedures set forth in Section 3 of the
Offer to Purchase, such Shares will be credited to an account maintained with
the Book-Entry Transfer Facility), as soon as practicable following the
expiration or termination of the Offer (including any extension thereof). If,
prior to the expiration date of the Offer, Purchaser increases the price
offered to holders of Shares in the Offer, Purchaser will pay the increased
price to all holders of Shares in respect of all Shares purchased in the Offer,
whether or not the Shares were tendered before the increase in price. Purchaser
reserves the right to transfer or assign in whole or in part from time to time
to one or more direct or indirect subsidiaries of Purchaser the right to
purchase all or any portion of the Shares
2
<PAGE>
tendered pursuant to the Offer, but any such transfer or assignment will not
relieve Purchaser of its obligations under the Offer and will in no way
prejudice the rights of tendering stockholders to receive payment for Shares
validly tendered and accepted for payment pursuant to the Offer.
The period until 12:00 Midnight, New York City time, on May 1, 2000, as such
may be extended, is referred to as the "Offering Period." Subject to the terms
of the Merger Agreement, as summarized in Section 11 of the Offer to Purchase,
and applicable rules and regulations of the Securities and Exchange Commission
(the "SEC"), Purchaser expressly reserves the right, in its sole discretion, at
any time or from time to time, to extend the Offering Period by giving oral or
written notice of such extension to the Depositary. During any such extension
of the Offering Period, all shares previously tendered and not withdrawn will
remain subject to the Offer, subject to the right of a tendering stockholder to
withdraw such stockholder's Shares. See Section 4 of the Offer to Purchase.
Subject to the applicable regulations of the SEC, Purchaser also expressly
reserves the right, in its sole discretion (subject to the Merger Agreement),
at any time or from time to time, (i) to delay acceptance for payment of or
(regardless of whether such Shares were theretofore accepted for payment)
payment for, any tendered Shares, or to terminate or amend the Offer as to any
Shares not then paid for, on the occurrence of any of the conditions specified
in Section 13 of the Offer to Purchase and (ii) to waive any condition (other
than the Minimum Tender Condition) and to set forth or change any other term of
the Offer, by giving oral or written notice of such delay, termination or
amendment to the Depositary and by making a public announcement thereof,
provided that, unless previously approved by the Company in writing, no
provision may be set forth or changed which decreases the price per Share
payable in the Offer, changes the form of consideration payable in the Offer
(other than by adding consideration), reduces the maximum number of Shares to
be purchased in the Offer, imposes conditions to the Offer in addition to those
set forth herein, amends any other term of the Offer in a manner adverse to the
holders of the Shares, extends the Offer other than in accordance with the
Merger Agreement, or amends the Minimum Tender Condition.
Purchaser may elect, in its sole discretion, to provide a subsequent
offering period of 3 to 20 business days (the "Subsequent Offering Period"),
although Purchaser has no present intention to do so. A Subsequent Offering
Period, if one is provided, is not an extension of the Offering Period but an
additional period of time, following expiration of the Offering Period, in
which shareholders may tender Shares not tendered during the Offering Period.
Any decision to provide a Subsequent Offering Period will be announced at least
five business days prior to the expiration of the Offering Period and Purchaser
will announce the approximate number and percentage of securities deposited as
of the expiration of the Offering Period no later than 9:00 a.m., New York City
time, on the next business day following the expiration of the Offering Period,
and such securities will be immediately accepted and promptly paid for. If
Purchaser elects to provide a Subsequent Offering Period, it expressly reserves
the right, in its sole discretion, at any time or from time to time, to extend
the Subsequent Offering Period (not beyond a total of 20 business days) by
giving oral or written notice of such extension to the Depositary.
If purchaser accepts any Shares for payment pursuant to the terms of the
Offer, it will accept for payment all Shares validly tendered during the
Offering Period and not withdrawn, and, on the terms and subject to the
conditions of the Offer, it will promptly pay for all Shares so accepted for
payment and will immediately accept for payment and promptly pay for all Shares
as they are tendered in any Subsequent Offering Period. Purchaser confirms that
its reservation of the right to delay payment for Shares which it has accepted
for payment is limited by Rule 14e-1(c) under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), which requires that a tender offeror pay
the consideration offered or return the tendered securities promptly after the
termination or withdrawal of a tender offer.
Tenders of Shares made pursuant to the Offer are irrevocable except that
Shares tendered pursuant to the Offer may be withdrawn at any time prior to the
termination of the Offering Period and, unless theretofore accepted for payment
by Purchaser pursuant to the Offer, may also be withdrawn at any time after
June 3, 2000. There will be no withdrawal rights during any Subsequent Offering
Period for Shares tendered during the Subsequent Offering Period. For a
withdrawal to be effective, a written, telegraphic, telex or facsimile
transmission notice of withdrawal must be timely received by the Depositary at
one of its addresses set forth on
3
<PAGE>
the back cover of this Offer to Purchase. Any such notice of withdrawal must
specify the name of the person
having tendered the Shares to be withdrawn, the number or amount of Shares to
be withdrawn and the names in which the certificate(s) evidencing the Shares to
be withdrawn are registered, if different from that of the person who tendered
such Shares. The signature(s) on the notice of withdrawal must be guaranteed by
an Eligible Institution (as defined in the Offer to Purchase), unless such
Shares have been tendered for the account of any Eligible Institution. If
Shares have been tendered pursuant to the procedures for book-entry tender as
set forth in Section 3 of the Offer of Purchase, any notice of withdrawal must
specify the name and number of the account at the Book-Entry Transfer Facility
to be credited with the withdrawn Shares. If certificates for Shares to be
withdrawn have been delivered or otherwise identified to the Depositary, the
name of the registered holder and the serial numbers of the particular
certificates evidencing the Shares to be withdrawn must also be furnished to
the Depositary as aforesaid prior to the physical release of such certificates.
All questions as to the form and validity (including time of receipt) of any
notice of withdrawal will be determined by Purchaser, in its sole discretion,
which determination shall be final and binding. None of Ratos, Purchaser, the
Depositary, the Information Agent or any other person will be under any duty to
give notification of any defects or irregularities in any notice of withdrawal
or incur any liability for failure to give such notification. Withdrawals of
tender for Shares may not be rescinded, and any Shares properly withdrawn will
be deemed not to have been validly tendered for purposes of the Offer. However,
withdrawn Shares may be retendered by following one of the procedures described
in Section 3 at any time prior to the Expiration Date. If purchaser extends the
Offer, is delayed in its acceptance for payment of Shares, or is unable to
accept for payment Shares pursuant to the Offer, for any reason, then, without
prejudice to Purchaser's rights under this Offer, the Depositary may,
nevertheless, on behalf of Purchaser, retain tendered Shares, and such Shares
may not be withdrawn except to the extent that tendering stockholders are
entitled to withdrawal rights, as set forth above.
The receipt of cash in exchange for Shares pursuant to the Offer (or the
Merger) will be a taxable transaction for U.S. federal income tax purposes and
may also be a taxable transaction under applicable state, local or foreign tax
laws. See Section 5 of the Offer of Purchase. The information required to be
disclosed by paragraph (d)(1) of Rule 14d-6 of the General Rules and Regulation
under the Exchange Act is contained in the Offer to Purchase and is
incorporated herein by reference. In connection with the Offer, the Company has
provided Purchaser with the names and addresses of all record holders of Shares
and security position listings of Shares held in stock depositories. The Offer
to Purchase, the related Letter of Transmittal and other related materials will
be mailed to registered holders of Shares and will be furnished to brokers,
dealers, commercial banks, trust companies and similar persons whose names, or
the names of whose nominees, appear on the Company's stockholder list or, if
applicable, who are listed as participants in a clearing agency's security
position listing for subsequent transmittal to beneficial owners of Shares.
The Offer to Purchase and the related Letter of Transmittal contain
important information that should be read carefully before any decision is made
with respect to the Offer.
Any questions or requests for assistance or for additional copies of the
Offer to Purchase, the related Letter of Transmittal and other related tender
offer materials may be directed to the Information Agent at the address and
telephone number set forth below, and copies will be furnished promptly at
Purchaser's expense. Purchaser will not pay any fees or commissions to any
broker or dealer or any other person (other than the Depositary and the
Information Agent) in connection with the solicitation of tenders of Shares
pursuant to the Offer.
The Information Agent for the Offer is:
Georgeson Shareholder Communications Inc.
17 State Street, 10th Floor
New York, New York 10004
Brokers and Bankers Call Collect (212) 440-9800
All Others Call Toll-Free (800) 223-2064
April 4, 2000
4
<PAGE>
EXECUTION COPY
Exhibit (D)(1)
AGREEMENT AND PLAN OF MERGER
Among
FARR COMPANY
and
FORVALTNINGS AB RATOS (PUBL.)
and
RATOS ACQUISITION CORP.
Dated as of March 26, 2000
<PAGE>
TABLE OF CONTENTS
-----------------
Page
----
ARTICLE I THE OFFER .........................................................1
1.1. The Offer .........................................................1
1.2. Company Actions ...................................................4
1.3. Board of Directors; Section 14(f) .................................5
ARTICLE II THE MERGER; CLOSING; EFFECTIVE TIME ...............................6
2.1. The Merger ........................................................6
2.2. Closing ...........................................................6
2.3. Effective Time ....................................................7
2.4. Options ...........................................................7
ARTICLE III CERTIFICATE OF INCORPORATION AND BYLAWS OF THE
SURVIVING CORPORATION; OFFICERS AND DIRECTORS OF
THE SURVIVING CORPORATION .........................................7
3.1. Certificate of Incorporation ......................................7
3.2. Bylaws ............................................................7
3.3. Directors .........................................................7
3.4. Officers ..........................................................8
ARTICLE IV EFFECT OF THE MERGER ON CAPITAL STOCK; EXCHANGE OF
CERTIFICATES FOR MERGER CONSIDERATION .............................8
4.1. Effect on Capital Stock ...........................................8
(a) Merger Consideration .........................................8
(b) Cancellation of Excluded Shares ..............................8
(c) Merger Sub ...................................................8
4.2. Exchange of Certificates for Payment ..............................8
(a) Exchange Agent ...............................................8
(b) Exchange Procedures ..........................................8
(c) Transfers ....................................................9
(d) Termination of Merger Fund ...................................9
(e) Return of Consideration ......................................9
(f) Lost, Stolen or Destroyed Certificates .......................9
4.3. Dissenters' Shares ...............................................10
ARTICLE V REPRESENTATIONS AND WARRANTIES ...................................10
5.1. Representations and Warranties of the Company ....................10
(a) Organization, Good Standing, Corporate Power and
Qualification; Subsidiaries and Other Interests .............10
(b) Capital Structure ...........................................10
i
<PAGE>
(c) Corporate Authority; Approval and Fairness ..................11
(d) Governmental Filings; No Violations .........................11
(e) Company Reports; Financial Statements .......................12
(f) Absence of Certain Changes ..................................13
(g) Litigation and Liabilities ..................................13
(h) Employee Benefits ...........................................14
(i) Compliance with Laws ........................................15
(j) Takeover Statutes ...........................................16
(k) Environmental Matters .......................................16
(l) Taxes .......................................................17
(m) Labor Matters ...............................................18
(n) Brokers and Finders .........................................18
(o) Certain Business Practices ..................................18
(p) Insurance ...................................................18
(q) Intellectual Property .......................................18
(r) Rights Plan .................................................19
(s) Contracts ...................................................19
(t) Real Property and Other Assets ..............................20
5.2. Representations and Warranties of Parent and Merger Sub ..........20
(a) Organization, Good Standing and Qualification ...............20
(b) Ownership of Merger Sub .....................................20
(c) Corporate Authority .........................................20
(d) Governmental Filings; No Violations .........................21
(e) Brokers and Finders .........................................21
(f) Financing ...................................................21
(g) Share Exchange Option Agreement .............................22
(h) Environmental Reports .......................................22
ARTICLE VI COVENANTS ........................................................22
6.1. Interim Operations ...............................................22
6.2. Third Party Acquisitions .........................................24
6.3. Filings; Other Actions; Notification .............................25
6.4. Information Supplied .............................................27
6.5. Stockholders Meeting .............................................27
6.6. Access ...........................................................28
6.7. Publicity ........................................................28
6.8. Status of Company Employees; Employee Benefits ...................28
6.9. Expenses .........................................................28
6.10. Indemnification ..................................................29
6.11. Other Actions by the Company and Parent ..........................31
ARTICLE VII CONDITIONS .......................................................31
7.1. Conditions to Each Party's Obligation to Effect Merger ...........31
(a) Stockholder Approval ........................................31
(b) Regulatory Consents .........................................31
(c) Litigation ..................................................31
ii
<PAGE>
7.2. Conditions to Obligations of Parent and Merger Sub ..............32
(a) Representations and Warranties .............................32
(b) Performance of Obligations of the Company ..................32
7.3. Conditions to Obligations of the Company ........................32
(a) Representations and Warranties .............................32
(b) Performance of Obligations of Parent and Merger Sub ........32
ARTICLE VIII TERMINATION .....................................................32
8.1. Termination by Mutual Consent ...................................32
8.2. Termination by Either Parent or the Company .....................32
8.3. Termination by the Company ......................................33
8.4. Termination by Parent and Merger Sub ............................33
8.5. Effect of Termination and Abandonment; Termination Fee ..........34
8.6. Procedure for Termination .......................................34
ARTICLE IX MISCELLANEOUS ...................................................35
9.1. Survival ........................................................35
9.2. Certain Definitions .............................................35
(a) Affiliate ..................................................35
(b) Business Day ...............................................35
(c) Capital Stock ..............................................35
(d) Company Material Adverse Effect ............................35
(e) Depositary .................................................35
(f) knowledge, to the knowledge of, has received no notice .....35
(g) Lien .......................................................35
(h) Parent Material Adverse Effect .............................36
(i) Permitted Liens ............................................36
(j) Person .....................................................36
(k) Subsidiary or Subsidiaries .................................36
9.3. No Personal Liability ...........................................36
9.4. Modification or Amendment .......................................36
9.5. Waiver of Conditions ............................................36
9.6. Counterparts ....................................................37
9.7. Governing Law and Venue; Waiver of Jury Trial ...................37
9.8. Notices .........................................................38
9.9. Entire Agreement ................................................39
9.10. No Third Party Beneficiaries ....................................39
9.11. Obligations of the Company and Surviving Corporation ............39
9.12. Severability ....................................................39
9.13. Interpretation ..................................................39
9.14. Assignment ......................................................40
ANNEX A .....................................................................A-1
iii
<PAGE>
INDEX OF DEFINED TERMS
----------------------
Page
----
Affiliate .....................................................................5
Agreement .....................................................................1
Annex A .......................................................................2
Audit Date ...................................................................12
Balance Sheet ................................................................13
Beneficial Owner .............................................................19
beneficially own .............................................................19
Business Day .................................................................35
Bylaws ........................................................................7
Camfil .......................................................................22
Capital Stock ................................................................35
Certificate ...................................................................8
Charter .......................................................................7
Claim ........................................................................29
Closing .......................................................................6
Closing Date ..................................................................7
Code .........................................................................14
Common Stock ..................................................................1
Commonly Controlled Entity ...................................................14
Company .......................................................................1
Company 10-K .................................................................12
Company Advisors .............................................................24
Company Disclosure Schedule ..................................................10
Company Employees ............................................................28
Company Labor Agreements .....................................................18
Company Material Adverse Effect ..............................................35
Company Option ...............................................................11
Company Reports ..............................................................12
Company Requisite Vote .......................................................11
Company's Board ...............................................................2
Compensation and Benefit Plans ...............................................14
Confidential Information .....................................................28
Confidentiality Agreement ....................................................28
Contract .....................................................................12
Costs ........................................................................29
Delaware Certificate of Merger ................................................7
Depositary ...................................................................35
DGCL ..........................................................................4
Dissenters' Shares ...........................................................10
Effective Time ................................................................7
Employment Agreements .........................................................2
iv
<PAGE>
Employment and Severance Agreements ..........................................28
Environmental Laws ...........................................................16
ERISA ........................................................................14
Exchange Act ..................................................................1
Exchange Agent ................................................................8
Excluded Shares ...............................................................8
Expiration Date ...............................................................2
Fairness Opinion ..............................................................4
Financial Advisor .............................................................4
GAAP .........................................................................13
Government Consents ..........................................................12
Governmental Entity ..........................................................12
Hazardous Material ...........................................................16
HSR Act ......................................................................12
HSR Filing ...................................................................12
Indemnified Parties ..........................................................29
Indemnified Party ............................................................29
Independent Directors .........................................................5
knowledge, to the knowledge of, has received no notice .......................35
Laws .........................................................................15
Lien .........................................................................35
Merger ........................................................................1
Merger Consideration ......................................................... 8
Merger Fund ...................................................................8
Merger Sub. ...................................................................1
Minimum Condition .............................................................2
NASD .........................................................................12
Offer .........................................................................1
Offer Documents ...............................................................3
Offer Price ...................................................................1
Option Agreement .............................................................22
Order ........................................................................31
Parent ........................................................................1
Parent Directors ..............................................................5
Parent Material Adverse Effect ...............................................36
Pension Plans ................................................................14
Permitted Liens ..............................................................36
Person .......................................................................36
Proxy Statement ..............................................................27
Representatives ..............................................................28
Rights Agreement .............................................................19
Schedule 14D-9 ................................................................4
Schedule TO ...................................................................3
SEC ...........................................................................3
Shares ........................................................................1
Stock Option Plans ...........................................................11
v
<PAGE>
Stockholders Meeting .........................................................27
Subsidiary or Subsidiaries ...................................................36
Superior Proposal ............................................................25
Surviving Corporation .........................................................6
Takeover Statute .............................................................16
Taxes ........................................................................17
Third Party ..................................................................25
Third Party Acquisition ......................................................25
Transaction Value .............................................................1
Transfer .....................................................................22
Voting Debt ..................................................................11
COMPANY DISCLOSURE SCHEDULE
Section Description
Section 5.1(a)(i) Company Subsidiaries and Other Interests
Section 5.1(f) Certain Changes
Section 5.1(g) Litigation and Liabilities
Section 5.1(h)(i) Compensation and Benefit Plans
Section 5.1(i) Compliance with Laws
Section 5.1(k) Environmental Matters
Section 5.1(l) Certain Tax Matters
Section 5.1(m) Labor Matters
Section 5.1(q) Intellectual Property
Section 5.1(s) Contracts
Section 5.1(t) Real Property and Other Assets
Section 6.10 Indemnity Contracts
vi
<PAGE>
AGREEMENT AND PLAN OF MERGER
----------------------------
AGREEMENT AND PLAN OF MERGER (hereinafter called this "Agreement"), dated
---------
as of March 26, 2000, among Farr Company, a Delaware corporation (the
"Company"), Forvaltnings AB Ratos (publ.), a Swedish corporation ("Parent"), and
------- ------
Ratos Acquisition Corp., a Delaware corporation and an indirect, wholly owned
subsidiary of Parent ("Merger Sub").
----------
RECITALS
WHEREAS, the respective Boards of Directors of each of Parent, Merger Sub
and the Company have approved the merger of Merger Sub with and into the Company
(the "Merger") and approved the Merger upon the terms and subject to the
------
conditions set forth in this Agreement; and
WHEREAS, in furtherance thereof, pursuant to this Agreement, Merger Sub has
agreed to commence a tender offer (the "Offer") to acquire all of the
-----
outstanding shares (the "Shares") of common stock, par value $.10 per share, of
------
the Company (the "Common Stock") and to cash out all of the Company Options (as
------------
defined in Section 5.1(b)) for a total cash consideration of U.S.$134,024,308.60
(the "Transaction Value"), which translates into a price, if the representations
-----------------
in Section 5.1(b) are correct, of $17.45 per Share (such price (contingent upon
the accuracy of the representations in Section 5.1(b)), or any different amount
per share paid pursuant to the Offer, being hereinafter referred to as the
"Offer Price"), all in accordance with the terms and subject to the conditions
-----------
provided herein;
WHEREAS, Parent, Merger Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger and also to prescribe various conditions to the Merger.
NOW, THEREFORE, in consideration of the premises, and of the
representations, warranties, covenants and agreements contained herein, the
parties hereto agree as follows:
ARTICLE I
THE OFFER
1.1. The Offer.
---------
(a) Subject to compliance with the four conditions listed below, as
promptly as practicable, but in no event later than Tuesday, April 4, 2000, or,
if later, as soon as each of the four conditions listed below has been
satisfied, Merger Sub shall commence (within the meaning of Rule 14d-2 under the
Securities Exchange Act of 1934, as amended (the "Exchange Act")) the Offer for
------------
any and all of the Shares at the Offer Price, which Offer shall be subject to
the conditions set forth in Annex A (as defined below):
(i) This Agreement shall not have been terminated in accordance
with Article VIII;
<PAGE>
(ii) Each member of the Board of Directors of the Company on and
as of the date hereof shall have entered into a binding agreement with Parent
and Merger Sub obligating him or her (x) to tender all shares held by him or her
into the Offer unless the Board determines not to recommend the Offer pursuant
to Section 1.2(b) or Section 6.2(b), and (y) to appoint new members to and to
resign from the Board of Directors to the extent required in order to allow the
Company to comply with Section 1.3(a);
(iii) The employment agreement between the Company and John C.
Johnston and the amendment to the employment agreement between the Company and
H. Jack Meany, substantially in the form previously conveyed by Parent to the
Company (together, the "Employment Agreements"), shall have been executed and
remain in effect; and
(iv) The Company shall be prepared to comply with Sections 1.2(b)
and 6.3(c).
The parties agree such public announcement shall occur promptly after the
execution and delivery of this Agreement. The obligation of Merger Sub to accept
for payment and to pay for any Shares tendered shall be subject only to (i) the
condition that more than a majority of the issued and outstanding Shares be
validly tendered and not withdrawn (the "Minimum Condition"), and (ii) the other
-----------------
conditions set forth in Annex A hereto ("Annex A"). Merger Sub expressly
-------
reserves the right to increase the Offer Price or to make any other changes in
the terms and conditions of the Offer; provided, however, that, unless
previously approved by the Board of Directors of the Company (the "Company's
---------
Board") in writing, no change may be made which (i) decreases the Offer Price,
- -----
(ii) changes the form of consideration to be paid in the Offer, (iii) reduces
the maximum number of Shares to be purchased in the Offer, (iv) imposes
conditions to the Offer in addition to those set forth in Annex A, (v) amends
the conditions set forth in Annex A to broaden the scope of such conditions,
(vi) amends any other term of the Offer in a manner adverse to the holders of
the Shares, (vii) extends the Offer except as provided in Section 1.1(b), or
(viii) amends the Minimum Condition. It is agreed that the conditions set forth
in Annex A, other than the Minimum Condition, are for the sole benefit of Parent
and Merger Sub and may be waived by Parent or Merger Sub, in whole or in part at
any time and from time to time in its sole discretion; the Minimum Condition may
only be waived by Parent with the prior written approval of the Company's Board.
The failure by Parent at any time to exercise any of the foregoing rights shall
not be deemed a waiver of any such right and each such right shall be deemed an
ongoing right which may be asserted at any time and from time to time. The
Company agrees that no Shares held by the Company or any of its Subsidiaries (as
defined in Section 9.2) will be tendered in the Offer.
(b) Subject to the terms and conditions thereof, the Offer shall expire at
midnight, New York City time, on the date that is twenty (20) Business Days
after the date the Offer is commenced (the initial "Expiration Date", and any
---------------
expiration time and date established pursuant to an authorized extension of the
Offer as so extended, also an "Expiration Date"); provided, however, that
---------------
without the consent of the Company's Board, Merger Sub may (i) from time to time
extend the Offer (each such individual extension not to exceed five (5) Business
Days after the previously scheduled Expiration Date), if at the scheduled
Expiration Date of the Offer any of the conditions to the Offer shall not have
been satisfied or waived, until such time as such conditions are satisfied or
waived; (ii) extend the Offer for any period required by any
2
<PAGE>
rule, regulation, interpretation or position of the Securities and Exchange
Commission (the "SEC") or the staff thereof applicable to the Offer; or (iii)
---
extend the Offer for a subsequent offering period (as provided in Rule 14d-11
under the Exchange Act) of up to twenty (20) Business Days in order to acquire
over 90% of the outstanding Shares, provided that no such extension for a
subsequent offering period shall occur unless Merger Sub has purchased Shares in
number fulfilling the Minimum Condition and all additional shares tendered
through the period of the last Expiration Date. Merger Sub agrees that if any of
the conditions to the Offer set forth on Annex A other than the last two
conditions thereon (conditions (a) and (b) on page A-2 of this Agreement) are
not satisfied on any scheduled Expiration Date, then if all such conditions are
reasonably capable of being satisfied prior to May 31, 2000, Merger Sub shall
extend the Offer from time to time (each such individual extension not to exceed
ten (10) Business Days after the previously scheduled Expiration Date) until
such conditions are satisfied or waived; provided, that Merger Sub shall not be
required to extend the Offer beyond, and without the approval of the Company's
Board the Offer will not be extended beyond, May 31, 2000. Subject to the terms
and conditions of the Offer and this Agreement, Merger Sub shall accept for
payment, and pay for, all Shares validly tendered and not withdrawn pursuant to
the Offer that Merger Sub becomes obligated to accept for payment and pay for
pursuant to the Offer, as promptly as practicable after the expiration of the
Offer.
(c) As soon as practicable on the date the Offer is commenced, Merger Sub
shall file with the SEC a Tender Offer Statement on Schedule TO (together with
all amendments and supplements thereto, and including all exhibits thereto, the
"Schedule TO") with respect to the Offer. The Schedule TO shall contain as an
-----------
exhibit or incorporate by reference the Offer to Purchase (or portions thereof)
and forms of the related letter of transmittal and summary advertisement. Parent
and Merger Sub agree that the Schedule TO, the Offer to Purchase and all
amendments or supplements thereto (which together constitute the "Offer
-----
Documents") shall comply in all material respects with the Exchange Act and the
- ---------
rules and regulations thereunder and other applicable Laws (as defined in
Section 5.1(i)). Parent and Merger Sub further agree that the Offer Documents,
on the date first published, sent or given to the Company's stockholders, shall
not 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, except that no representation or warranty is made by Parent or
Merger Sub with respect to information supplied by the Company or any of its
stockholders in writing specifically for inclusion or incorporation by reference
in the Offer Documents. The Company agrees that the written information provided
by the Company for inclusion or incorporation by reference in the Offer
Documents shall not 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. Each of Parent, Merger Sub and the Company agrees promptly
to correct any information provided by it for use in the Offer Documents if and
to the extent that such information shall have become false or misleading in any
material respect, and Parent and Merger Sub further agree to take all steps
necessary to cause the Schedule TO as so corrected to be filed with the SEC and
the other Offer Documents as so corrected to be disseminated to the Company's
stockholders, in each case as and to the extent required by applicable laws. The
Company and its counsel shall be given reasonable opportunity to review and
comment on the Offer Documents prior to the filing thereof with the SEC. Merger
Sub agrees to provide the Company with any comments (in writing if such comments
are
3
<PAGE>
received orally or a copy of any written comments) Merger Sub or its counsel may
receive from the SEC or its staff with respect to the Offer Documents promptly
after receipt of such comments.
1.2. Company Actions.
---------------
(a) The Company hereby approves of and consents to the Offer and
represents that the Company's Board, at a meeting duly called and held, has by
unanimous vote of the directors present at such meeting, but subject to the
terms and conditions set forth herein, (i) determined that this Agreement and
the transactions contemplated hereby, including the Offer and the Merger, taken
together, are fair to and in the best interests of the Company and its
stockholders (other than Parent and its Affiliates), (ii) approved this
Agreement and the transactions contemplated hereby, including the Offer and the
Merger, in all respects and such approval constitutes approval of the Offer,
this Agreement and the Merger for purposes of Section 203 of the Delaware
General Corporation Law (the "DGCL"), and (iii) resolved to recommend that the
----
stockholders of the Company accept the Offer, tender their Shares thereunder to
Merger Sub and approve and adopt this Agreement and the Merger; provided,
however, that such recommendation and approval may be withdrawn, modified or
amended to the extent that the Company's Board determines in good faith, after
taking into consideration the advice of its outside legal counsel, that failure
to take such action is reasonably likely to result in a breach of the fiduciary
obligations of the Company's Board under applicable law. The Company consents to
the inclusion of such recommendation and approval in the Offer Documents. The
Company also represents that the Company's Board has reviewed the opinion of
Tucker Anthony Cleary Gull, financial advisor to the Company's Board (the
"Financial Advisor"), that, as of the date of this Agreement, the consideration
-----------------
to be received pursuant to this Agreement is fair to the stockholders of the
Company (other than Parent and its Affiliates) from a financial point of view
(the "Fairness Opinion"). The Company has been authorized by the Financial
----------------
Advisor to permit, subject to the prior review and consent by the Financial
Advisor (such consent not to be unreasonably withheld), the inclusion of the
Fairness Opinion (or a reference thereto) in the Offer Documents, the Schedule
14D-9 (as defined below) and the Proxy Statement (as defined in Section 6.4).
(b) The Company shall file with the SEC, concurrently with or as soon
as practicable following the filing of the Schedule TO, but in no event later
than the next Business Day after the filing of the Schedule TO, a
Solicitation/Recommendation Statement on Schedule 14D-9 (together with all
amendments and supplements thereto, and including all exhibits thereto, the
"Schedule 14D-9 ") containing the recommendation described in Section 1.2(a)
--------------
and shall mail the Schedule 14D-9 to the stockholders of the Company to the
extent required by Rule 14d-9 promulgated under the Exchange Act and any other
applicable federal securities laws; provided, however, that if the Company's
Board determines in good faith, after taking into consideration the advice of
its outside legal counsel, that the amendment or withdrawal of such
recommendation is reasonably likely to be required in order for its members to
comply with their fiduciary duties under applicable law, then any such amendment
or withdrawal, and any related amendment of the Schedule 14D-9, shall not
constitute a breach of this Agreement. The Company agrees that the Schedule 14D-
9 shall comply in all material respects with the Exchange Act and the rules and
regulations thereunder and other applicable laws. The Company further agrees
that Schedule 14D-9, on the date first published, sent or
4
<PAGE>
given to the Company's stockholders, shall not 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, except that no
representation or warranty is made by the Company with respect to information
supplied by Parent or Merger Sub in writing specifically for inclusion or
incorporation by reference in Schedule 14D-9. Each of the Company, Parent and
Merger Sub agrees promptly to correct any written information provided by it for
use in the Schedule 14D-9 if and to the extent that such information shall have
become false or misleading in any material respect, and the Company further
agrees to take all steps necessary to cause the Schedule 14D-9 as so corrected
to be filed with the SEC and be disseminated to the Company's stockholders, in
each case as and to the extent required by applicable federal securities laws.
Parent, Merger Sub and their counsel shall be given reasonable opportunity to
review and comment on the Schedule 14D-9 prior to the filing thereof with the
SEC.
(c) In connection with the Offer, the Company shall cause its transfer
agent to promptly furnish Parent and Merger Sub with such information, including
updated lists of the stockholders of the Company, mailing labels and updated
lists of security positions, and such assistance as Parent, Merger Sub or their
agents may reasonably request in communicating the Offer to the record and
beneficial holders of Shares. Subject to the requirements of applicable law, and
except for such steps as are necessary to disseminate the Offer Documents and
any other documents necessary to consummate the Merger, Parent and Merger Sub
and their agents shall hold in confidence the information contained in any such
labels, listings and files, will use such information only in connection with
the Offer and the Merger and, if this Agreement shall be terminated, will
deliver, and will use their reasonable efforts to cause their agents to deliver,
to the Company all copies and any extracts or summaries from such information
then in their possession or control.
1.3. Company's Board; Section 14(f).
------------------------------
(a) Promptly upon the purchase of Shares pursuant to the Offer, and
from time to time thereafter, if the Minimum Condition has been met, and subject
to the next sentence of this Section 1.3(a), Parent shall be entitled to
designate such number of directors, rounded up to the next whole number, on the
Company's Board as is equal to the product of the total number of directors on
the Company's Board (determined after giving effect to the directors elected
pursuant to this sentence) multiplied by the percentage that the aggregate
number of Shares beneficially owned by Parent or its affiliates bears to the
total number of Shares then outstanding; provided, however, that if Merger Sub
shall have acquired at least 90% of the outstanding Shares in the Offer, Parent
shall be entitled to designate all of the members of the Company's Board (the
"Parent Directors"). The Company shall, upon request of Parent, promptly take
----------------
all actions necessary to cause the Parent Directors to be so appointed,
including, if necessary, increasing the size of the Company's Board (to the
extent permitted by the Company's certificate of incorporation and bylaws)
and/or seeking the resignations of one or more existing directors; provided,
however, that if Merger Sub shall not have acquired at least 90% of the
outstanding Shares prior to the Effective Time (as defined in Section 2.3), the
Company's Board shall at all times have at least two members who are members of
the Company's Board on the date of this Agreement and are neither officers of
the Company or any of its Subsidiaries, or officers or directors of Parent or
any of its Affiliates (as defined in Section 9.2) ("Independent
-----------
5
<PAGE>
Directors"). If the number of Independent Directors is reduced to one prior to
- ---------
the Effective Time, the remaining Independent Director shall be entitled to
designate a person to fill such vacancy who shall not be an officer or affiliate
of the Company or any of its Subsidiaries, or an officer, director or affiliate
of Parent or any of its Subsidiaries, and such person shall be deemed an
Independent Director for all purposes of this Agreement. If no Independent
Directors then remain, a majority of the other directors of the Company on the
date hereof shall designate two persons to fill such vacancies who shall not be
officers or affiliates of the Company or any of its Subsidiaries, or officers,
directors or affiliates of Parent or any of its Subsidiaries, and such persons
shall be deemed to be Independent Directors for all purposes of this Agreement.
(b) The Company's obligation to appoint the Parent Directors to the
Company's Board shall be subject to Section 14(f) of the Exchange Act and Rule
14f-1 promulgated thereunder. The Company shall promptly take all action
required pursuant to such Section and Rule in order to fulfill its obligations
under this Section 1.3 and shall include in the Schedule 14D-9 such information
with respect to the Company and its officers and directors as is required under
such Section and Rule in order to fulfill its obligations under this Section
1.3. Parent will supply to the Company in writing and be solely responsible for
any information with respect to itself and its nominees, officers, directors and
Affiliates required by such Section and Rule.
(c) Following the election or appointment of the Parent Directors pursuant
to this Section 1.3 and prior to the Effective Time, if there shall be any
Independent Directors, any amendment of this Agreement, any termination of this
Agreement by the Company, any extension by the Company of the time for the
performance of any of the obligations or other acts of Parent or Merger Sub or
any waiver of any of the Company's rights hereunder, will require the
concurrence of a majority of such Independent Directors.
ARTICLE II
THE MERGER; CLOSING; EFFECTIVE TIME
2.1. The Merger. Upon the terms and subject to the conditions set forth in
----------
this Agreement, at the Effective Time, Merger Sub shall be merged with and into
the Company and the separate corporate existence of Merger Sub shall thereupon
cease. The Company shall be the surviving corporation in the Merger (sometimes
hereinafter referred to as the "Surviving Corporation") and shall continue to be
---------------------
governed by the laws of the State of Delaware, and the separate corporate
existence of the Company with all its rights, privileges, immunities, powers and
franchises shall continue unaffected by the Merger, except as set forth in
Article III. The Merger shall have the effects specified in the DGCL. Parent, as
the sole stockholder of Merger Sub, hereby approves the Merger and this
Agreement.
2.2. Closing. The closing of the Merger (the "Closing") shall take place
------- -------
(i) at the offices of Gibson, Dunn & Crutcher LLP, 333 South Grand Avenue, Los
Angeles, California at 9:00 a.m., Pacific time, on the first Business Day after
the day on which the last to be fulfilled or waived of the conditions set forth
in Article VII (other than those conditions that by their nature are to be
satisfied at the Closing, but subject to the fulfillment or waiver of those
conditions) shall be satisfied or waived in accordance with this Agreement or
(ii) at such other place and
6
<PAGE>
time and/or on such other date as the Company and Parent may agree in writing
(the "Closing Date").
------------
2.3. Effective Time. As soon as practicable following the Closing, the
--------------
Company and Parent will cause a Certificate of Merger (the "Delaware Certificate
--------------------
of Merger") to be executed, acknowledged and filed with the Secretary of State
- ---------
of Delaware as provided in Section 251 or 253, as the case may be, of the DGCL.
The Merger shall become effective at the time when the Delaware Certificate of
Merger has been duly filed with the Secretary of State of Delaware (the
"Effective Time").
--------------
2.4. Options. At the Effective Time, all Company Options (whether vested or
-------
unvested) shall be cancelled and only entitle each holder thereof, and each
holder thereof shall receive from the Surviving Corporation, an amount in cash
equal to, for each share with respect to such Company Option, the excess, if
any, of (A) the Offer Price over (B) the per share exercise price under such
Company Option. Parent, or Merger Sub, as applicable, shall be entitled to
deduct or withhold from the cash consideration otherwise payable to a holder of
a Company Option any amounts required to be withheld under applicable tax laws.
ARTICLE III
CERTIFICATE OF INCORPORATION AND
BYLAWS OF THE SURVIVING CORPORATION; OFFICERS AND
DIRECTORS OF THE SURVIVING CORPORATION
3.1. Certificate of Incorporation. The certificate of incorporation of the
----------------------------
Company as in effect immediately prior to the Effective Time shall be the
certificate of incorporation of the Surviving Corporation (the "Charter"), until
-------
duly amended as provided therein or by applicable Law, except that:
(a) Article Fourth of the Charter shall be amended to read in its
entirety as follows: "The aggregate number of shares that the Corporation shall
have the authority to issue is 1,000 shares of Common Stock, par value $.01 per
share;" and
(b) The first sentence of Article Fifth of the Charter shall be
amended to read as follows: "The business and affairs of the Corporation shall
be managed by or under the direction of the Board of Directors consisting of not
less than two directors, the exact number of directors to be determined from
time to time by resolution adopted by the Board of Directors."
3.2. Bylaws. The bylaws of the Company in effect at the Effective Time
------
shall be the bylaws of the Surviving Corporation (the "Bylaws"), until
------
thereafter amended as provided therein or by applicable Law, subject to the
restrictions contained in Section 6.10(d).
3.3. Directors. The directors of Merger Sub at the Effective Time shall,
---------
from and after the Effective Time, be the directors of the Surviving Corporation
until their successors have been duly elected or appointed and qualified or
until their earlier death, resignation or removal in accordance with the Charter
and Bylaws.
7
<PAGE>
3.4. Officers. The officers of the Company at the Effective Time, with the
--------
exception of the Chairman who shall be the Chairman of Merger Sub, shall, from
and after the Effective Time, be the officers of the Surviving Corporation until
their successors have been duly elected or appointed and qualified or until
their earlier death, resignation or removal in accordance with the Charter and
Bylaws.
ARTICLE IV
EFFECT OF THE MERGER ON CAPITAL STOCK; EXCHANGE OF
CERTIFICATES FOR MERGER CONSIDERATION
4.1. Effect on Capital Stock. At the Effective Time, as a result of the
-----------------------
Merger and without any action on the part of the holder of any Capital Stock (as
defined in Section 9.2) of the Company:
(a) Merger Consideration. Each Share issued and outstanding
--------------------
immediately prior to the Effective Time (other than Shares owned by Parent,
Merger Sub or any other direct or indirect Subsidiary of Parent or Shares that
are owned by the Company or any direct or indirect Subsidiary of the Company
(collectively, the "Excluded Shares")) shall be converted into, and become
---------------
exchangeable for the Offer Price, without interest (the "Merger Consideration").
--------------------
At the Effective Time, all Shares shall no longer be outstanding and shall be
canceled and retired and shall cease to exist, and each certificate (a
"Certificate") formerly representing any of such Shares (other than Excluded
-----------
Shares) shall thereinafter represent only the right to receive the Merger
Consideration.
(b) Cancellation of Excluded Shares. Each Excluded Share issued and
-------------------------------
outstanding immediately prior to the Effective Time shall, by virtue of the
Merger and without any action on the part of the holder thereof, cease to be
outstanding, shall be canceled and retired without payment of any consideration
therefor and shall cease to exist.
(c) Merger Sub. At the Effective Time, each share of common stock, par
----------
value $.01 per share, of Merger Sub issued and outstanding immediately prior to
the Effective Time shall be converted into one share of common stock of the
Surviving Corporation.
4.2. Exchange of Certificates for Payment.
------------------------------------
(a) Exchange Agent. As of the Effective Time, Parent shall deposit, or
--------------
shall cause to be deposited, with an exchange agent selected by Parent (the
"Exchange Agent"), for the benefit of the holders of Shares, cash in U.S.
--------------
dollars in an amount equal to the Merger Consideration multiplied by the
aggregate outstanding Shares (other than Excluded Shares) to be paid pursuant to
Section 4.1(a) in exchange for outstanding Shares upon due surrender of the
Certificates (or affidavits of loss in lieu thereof) pursuant to the provisions
of this Article IV (such aggregate cash amount when paid to the Exchange Agent
being hereinafter referred to as the "Merger Fund").
-----------
(b) Exchange Procedures. Promptly after the Effective Time, the
-------------------
Surviving Corporation shall cause the Exchange Agent to mail to each holder of
record of Shares (other than holders of Excluded Shares) (i) a letter of
transmittal (which shall, among other matters,
8
<PAGE>
specify that delivery of the Certificates shall be effected, and risk of
loss and title to the Certificates shall pass, only upon actual receipt of
the Certificates (or affidavits of loss in lieu thereof) by the Exchange
Agent) and (ii) instructions for use in effecting the surrender of the
Certificates in exchange for the Merger Consideration due and payable to
such holder. Upon surrender of a Certificate for cancellation to the
Exchange Agent together with such letter of transmittal, duly executed, the
holder of such Certificate shall be entitled to receive in exchange
therefor a check in the amount (after giving effect to any required tax
withholdings) of the Merger Consideration due and payable in respect of
such holder's Shares and the Certificate so surrendered shall forthwith be
canceled. No interest will be paid or accrued on any amount payable upon
due surrender of the Certificates. All Merger Consideration paid upon
surrender for exchange of Shares in accordance with the terms of this
Agreement shall be deemed to have been paid in full satisfaction of all
rights pertaining to such Shares. In the event of a transfer of ownership
of Shares that is not registered in the transfer records of the Company, a
check for the amount of cash to be paid upon due surrender of the
Certificate may be delivered to such a transferee if the Certificate
formerly representing such Shares is presented to the Exchange Agent,
accompanied by all documents required by the Exchange Agent to evidence and
effect such transfer and to evidence that any applicable stock transfer
taxes have been paid.
(c) Transfers. After the Effective Time, there shall be no transfers
---------
on the stock transfer books of the Company of the Shares that were
outstanding immediately prior to the Effective Time.
(d) Termination of Merger Fund. Any portion of the Merger Fund
--------------------------
(including the proceeds of any investments thereof) that remains unclaimed
by the stockholders of the Company for 180 days after the Effective Time
shall be paid to Parent. Any stockholders of the Company who have not
theretofore complied with this Article IV shall thereafter look only to
Parent for payment of their Merger Consideration payable pursuant to
Section 4.1 upon due surrender of their Certificates (or affidavits of loss
in lieu thereof), in each case, without any interest thereon.
Notwithstanding the foregoing, neither Parent, the Surviving Corporation,
the Exchange Agent nor any other Person shall be liable to any former
holder of Shares for any amount properly delivered to a public official
pursuant to applicable abandoned property, escheat or similar laws.
(e) Return of Consideration. Any portion of the Merger Fund
-----------------------
representing Merger Consideration payable in respect of Dissenters' Shares
(as defined in Section 4.3) for which appraisal rights have been perfected
shall be returned to Parent, upon demand.
(f) Lost, Stolen or Destroyed Certificates. In the event any
--------------------------------------
Certificate shall have been lost, stolen or destroyed, upon the making of
an affidavit of that fact by the Person claiming such Certificate to be
lost, stolen or destroyed and, if required by Parent, the posting by such
Person of a bond in an amount determined by Parent as indemnity against any
claim that may be made against it with respect to such Certificate, the
Exchange Agent will issue in exchange for such lost, stolen or destroyed
Certificate the Merger Consideration payable pursuant to Section 4.1 upon
due surrender of the Certificate representing such Shares pursuant to this
Agreement.
9
<PAGE>
4.3. Dissenters' Shares. Notwithstanding Section 4.1, Shares outstanding
--------------
immediately prior to the Effective Time and held by a holder who has not voted
in favor of the Merger or consented thereto in writing and who has demanded
appraisal for such Shares in accordance with the DGCL ("Dissenters' Shares'")
-------------------
shall not be converted into a right to receive the Merger Consideration, unless
such holder fails to perfect or withdraws or otherwise loses such holder's right
to appraisal. If after the Effective Time such holder fails to perfect or
withdraws or loses such holder's right to appraisal, such Dissenters' Shares
shall be treated as if they had been converted as of the Effective Time into a
right to receive the Merger Consideration. The Company shall give Parent prompt
notice of any demands received by the Company for appraisal of Dissenters'
Shares, and Parent shall have the right to participate in all negotiations and
proceedings with respect to such demands. The Company shall not, except with the
prior written consent of Parent, make any payment with respect to, or settle or
offer to settle, any such demands.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
5.1. Representations and Warranties of the Company. The Company hereby
---------------------------------------------
represents and warrants to Parent and Merger Sub as follows:
(a) Organization, Good Standing, Corporate Power and Qualification;
---------------------------------------------------------------
Subsidiaries and Other Interests.
--------------------------------
(i) Each of the Company and its Subsidiaries (x) is a corporation
duly organized, validly existing and in good standing under the laws
of its respective jurisdiction of organization, (y) has all requisite
corporate or similar power and authority to own and operate its
properties and assets and to carry on its business as presently
conducted and (z) is qualified to do business and is in good standing
as a foreign corporation in each jurisdiction where the ownership or
operation of its properties or conduct of its business requires such
qualification, except where the failure to be so qualified or in good
standing, individually and in the aggregate, has not had and is not
reasonably likely to have a Company Material Adverse Effect (as
defined in Section 9.2). The Company has made available to Parent a
complete and correct copy of the Company's and its Subsidiaries'
certificates of incorporation and bylaws (or comparable governing
documents), each as amended to the date hereof. The Company's and its
Subsidiaries' certificates of incorporation and bylaws (or comparable
governing documents) are in full force and effect.
(ii) Section 5.1(a) of the Company Disclosure Schedule delivered
by the Company to Parent at least one (1) day prior to the date of
this Agreement (the "Company Disclosure Schedule") contains a correct
and complete list of each of the Company's Subsidiaries, the
jurisdiction where each of such Subsidiaries is organized and
qualified to do business and the percentage of outstanding Capital
Stock of such Subsidiaries that is directly or indirectly owned by the
Company.
(b) Capital Structure. The authorized Capital Stock of the Company
-----------------
consists of twenty million (20,000,000) Shares, of which 7,294,519 were
outstanding as of the date of this
10
<PAGE>
Agreement. All of the outstanding Shares have been duly authorized and are
validly issued, fully paid and nonassessable. The Company has no authorized
preferred stock. As of the date of this Agreement, there were 697,200
outstanding purchase rights or options to purchase Shares having an average
exercise price of $7.79 (each, a "Company Option"), including all Company
--------------
Options issued under the Company's (i) 1983 Stock Option Plan for Key
Employees, (ii) 1991 Stock Option Plan for Non-Employee Directors, and
(iii) 1993 Stock Option Plan for Key Employees, in each case as amended to
the date hereof (collectively, the "Stock Option Plans"). The Stock Option
------------------
Plans are the only plans under which any Company Options are outstanding.
As of the date of this Agreement, other than the Shares reserved for
issuance upon exercise of outstanding Company Options, there are no Shares
reserved for issuance or any commitments for the Company to issue Shares.
Each of the outstanding shares of Capital Stock or other securities of each
of the Company's Subsidiaries directly or indirectly owned by the Company
is duly authorized, validly issued, fully paid and nonassessable and owned
by the Company or by a direct or indirect Subsidiary of the Company, free
and clear of all Liens except for Permitted Liens (as defined in Section
9.2). Except for Company Options, there are no preemptive or other
outstanding rights, options, warrants, conversion rights, stock
appreciation rights, redemption rights, repurchase rights, agreements or
commitments to issue or sell any shares of Capital Stock or other
securities of the Company or any of its Subsidiaries or any securities or
obligations convertible or exchangeable into or exercisable for, or giving
any Person a right to subscribe for or acquire from the Company, any shares
of Capital Stock or other securities of the Company or any of its
Subsidiaries, and no securities or obligations evidencing such rights are
authorized, issued or outstanding. The Company does not have outstanding
any bonds, debentures, notes or other obligations the holders of which have
the right to vote (or convertible into or exercisable for securities having
the right to vote) with the stockholders of the Company on any matter
("Voting Debt"). The Shares constitute the only class of securities of the
-----------
Company or any of its Subsidiaries registered or required to be registered
under the Exchange Act.
(c) Corporate Authority; Approval and Fairness.
------------------------------------------
(i) The Company has all requisite corporate power and authority
and has taken all corporate action necessary in order to execute,
deliver and perform its obligations under this Agreement and to
consummate the Merger, subject (if required by law) only to approval
of this Agreement by the holders of a majority of the outstanding
Shares (the "Company Requisite Vote"). Assuming due execution and
----------------------
delivery by Parent and Merger Sub, this Agreement is a valid and
binding agreement of the Company enforceable against the Company in
accordance with its terms, except as such enforceability may be
limited by applicable bankruptcy laws or creditors' rights generally
or by general principles of equity.
(ii) The Company's Board has by unanimous vote of the directors
present at such meeting approved this Agreement and the Merger and the
other transactions contemplated hereby including, without limitation,
the Offer, has received and reviewed the Fairness Opinion and duly
taken all other actions described in Sections 1.2(a) and 5.1(j).
(d) Governmental Filings; No Violations.
-----------------------------------
(i) Other than the filings and/or notices (A) pursuant to Section
1.2, (B) with the Delaware Secretary of State, (C) under the
Hart-Scott-Rodino Antitrust
11
<PAGE>
Improvements Act of 1976, as amended (the "HSR Act", and a filing
-------
under the HSR Act, a "HSR Filing") and the Exchange Act, (D) to comply
----------
with state securities or "blue sky" laws and (E) with the National
Association of Securities Dealers (the "NASD"), no notices, reports or
----
other filings are required to be made nor are any consents,
registrations, approvals, permits or authorizations (collectively,
"Government Consents") required to be obtained by the Company from any
-------------------
court or other governmental or regulatory authority, agency,
commission, body or other governmental or regulatory authority,
agency, commission, body or other governmental entity (a "Governmental
------------
Entity"), in connection with the execution and delivery of this
------
Agreement by the Company and the consummation by the Company of
the Merger and the other transactions contemplated hereby, except
those that the failure to make or obtain are not, individually and in
the aggregate, reasonably likely to result in a Company Material
Adverse Effect or prevent, materially delay or materially impair the
ability of the Company to consummate the transactions contemplated by
this Agreement.
(ii) The execution, delivery and performance of this Agreement by
the Company does not, and the consummation by the Company of the
Merger and the other transactions contemplated hereby will not,
constitute or result in (A) a breach or violation of or a default
under, the certificate of incorporation or bylaws of the Company or
the comparable governing instruments of any of its Subsidiaries, (B) a
breach or violation of, or a default under, the acceleration of any
obligations or the creation of any Lien on the assets of the Company
or any of its Subsidiaries (with or without notice, lapse of time or
both) pursuant to, any agreement, lease, contract, note, mortgage,
indenture or other obligation (a "Contract") binding upon the Company
--------
or any of its Subsidiaries or any order, writ, injunction, decree of
any court or any Law or governmental or non-governmental permit or
license to which the Company or any of its Subsidiaries is subject or
(C) any change in the rights or obligations of any party under any
Contract; except, in the case of clause (B) or (C) above, for any
breach, violation, default, acceleration, or change that, when taken
together with all other breaches, violations, defaults, accelerations
or changes, is not reasonably likely to have a Company Material
Adverse Effect or prevent, materially delay or materially impair the
ability of the Company to consummate the transactions contemplated by
this Agreement.
(e) Company Reports; Financial Statements. The Company has made
-------------------------------------
available to Parent each registration statement, report, proxy statement or
information statement filed with the SEC by it in respect of the fiscal
year ended January 1, 2000 (the "Audit Date"), including the Company's
Annual Report on Form 10-K for the fiscal year ended January 1, 2000 (the
"Company 10-K"), in the form (including exhibits, annexes and any
------------
amendments thereto) filed with the SEC (collectively, including any such
reports filed subsequent to the date hereof, the "Company Reports"). As of
---------------
their respective dates, the Company Reports complied, and any Company
Reports filed with the SEC after the date hereof will comply, as to form in
all material respects with the applicable requirements of the Exchange Act
and the Securities Act of 1933, as amended, and the Company Reports did
not, and any Company Reports filed with the SEC after the date hereof will
not, at the time of their filing, contain any untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements made therein, in light of the
circumstances in which they were made, not misleading. Each of the
consolidated balance sheets included in or incorporated by reference into
the Company Reports (including the related notes and schedules) fairly
presents, or will fairly present, the consolidated financial position of
the Company and its Subsidiaries as of its date and each of the
consolidated statements of income and of changes in financial position
included in or
12
<PAGE>
incorporated by reference into the Company Reports (including any related
notes and schedules) fairly presents, or will fairly present, the results
of operations, retained earnings and changes in financial position, as the
case may be, of the Company and its Subsidiaries for the periods set forth
therein (subject, in the case of unaudited statements, to notes and normal
year-end audit adjustments), in each case in accordance with United States
generally accepted accounting principles ("GAAP") consistently applied
----
during the periods involved, except as may be noted therein. For purposes
of this Agreement, "Balance Sheet" means the consolidated balance sheet of
-------------
the Company as of January 1, 2000 set forth in the Company 10-K. Except as
set forth in Company Reports filed with the SEC prior to the date hereof or
as incurred in the ordinary course of business since the date of the most
recent financial statements included in the Company Reports, neither the
Company nor any of its Subsidiaries has any liabilities or obligations of
any nature (whether accrued, absolute, contingent or otherwise) which would
be required under GAAP to be set forth on a consolidated balance sheet
(including the notes thereto) of the Company and its Subsidiaries taken as
a whole and which individually or in the aggregate would have a Company
Material Adverse Effect.
(f) Absence of Certain Changes. Except as disclosed in Section 5.1(f)
--------------------------
of the Company Disclosure Schedule or in the Company Reports filed prior to
the date hereof, since the Audit Date, the Company and its Subsidiaries
have conducted their respective businesses in all material respects only
in, and have not engaged in any material transaction other than according
to, the ordinary and usual course of such businesses consistent with past
practices, and there has not been any (i) change in the financial
condition, properties or results of operations of the Company and its
Subsidiaries, except for those changes that, individually and in the
aggregate, have not had and are not reasonably likely to have a Company
Material Adverse Effect; (ii) material damage, destruction or other
casualty loss with respect to any material asset or property owned, leased
or otherwise used by the Company or any of its Subsidiaries, not covered by
insurance; (iii) declaration, setting aside or payment of any dividend or
other distribution in respect of the Capital Stock of the Company or any of
its Subsidiaries (other than wholly-owned Subsidiaries) or any repurchase,
redemption or other acquisition by the Company or any of its Subsidiaries
of any outstanding shares of Capital Stock or other securities of, or other
ownership interests in, the Company or any of its Subsidiaries; or (iv)
material change by the Company or any of its Subsidiaries in accounting
principles, practices or methods, except in so far as may have been
required by GAAP.
(g) Litigation and Liabilities. Except as disclosed in Section 5.1(g)
--------------------------
of the Company Disclosure Schedule or in the Company Reports filed prior to
the date hereof, and except for matters which, individually and in the
aggregate, have not had and are not reasonably likely to have a Company
Material Adverse Effect or prevent, delay or impair the ability of the
Company to consummate the transactions contemplated by this Agreement,
there are no (i) civil, criminal or administrative actions, suits, claims,
hearings, investigations or proceedings pending or, to the knowledge of the
Company, threatened against the Company or any of its Subsidiaries; or (ii)
obligations or liabilities, whether or not accrued, contingent or otherwise
and whether or not required to be disclosed, including those relating to
matters involving any Environmental Law (as defined in Section 5.1(k)); or
(iii) other facts or circumstances of which the executive officers of the
Company have knowledge that could result in any claims against, or
obligations or liabilities for, the Company or any of its Subsidiaries.
13
<PAGE>
(h) Employee Benefits.
-----------------
(i) For purposes of this Agreement, "Compensation and Benefit
Plans" means, collectively, each bonus, deferred compensation,
pension, retirement, profit-sharing, thrift, savings, employee stock
ownership, stock bonus, stock purchase, restricted stock, stock
option, employment, termination, severance, compensation, medical,
health, or other plan, agreement, policy or arrangement, whether
written or oral, that covers employees or directors of the Company or
any of its Subsidiaries, or pursuant to which former employees or
directors of the Company or any of its Subsidiaries are entitled to
current or future benefits. The Company has made available to Parent
copies of all "employee pension benefit plans" (as defined in Section
3(2) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA")) (sometimes referred to herein as "Pension Plans"),
----- -------------
employee welfare benefit plans" (as defined in Section 3(1) of ERISA
and all other Compensation and Benefit Plans maintained by, or
contributed to, the Company or any of its Subsidiaries or any person
or entity that, together with the Company and its Subsidiaries, is
treated as a single employer under Section 414(b), (c), (m) or (o) of
the Internal Revenue Code of 1986, as amended (the "Code") (the
Company and each such other person or entity, a "Commonly Controlled
-------------------
Entity") for the benefit of any current employees, officers or
------
directors of the Company or any of its Subsidiaries. The Compensation
and Benefit Plans are listed on Section 5(h)(i) of the Company
Disclosure Schedule. The Company has also made available to Parent
true, complete and correct copies of (1) the most recent annual report
on Form 5500 filed with the Internal Revenue Service with respect to
each Compensation and Benefit Plan (if any such report was required),
(2) the most recent summary plan description for each Compensation and
Benefit Plan for which such summary plan description is required and
(3) each trust agreement and group annuity contract related to any
Compensation and Benefit Plan. Each Compensation and Benefit Plan has
been administered in all material respects in accordance with its
terms. All of the Compensation and Benefit Plans are in substantial
compliance with applicable provisions of ERISA and the Code.
(ii) All Pension Plans have been the subject of determination
letters from the Internal Revenue Service to the effect that such
Pension Plans are qualified and exempt from Federal income taxes under
Sections 401(a) and 501(a), respectively, of the Code, and no such
determination letter has been revoked nor has any event occurred since
the date of its most recent determination letter or application
therefor that would adversely affect its qualification or materially
increase its costs. Each Compensation and Benefit Plan is in
substantial compliance with all reporting and disclosure requirements
of ERISA and the Code and the Company, its Subsidiaries and each
Commonly Controlled Entity is, in respect of each such plan, in
compliance with the fiduciary responsibility provisions of ERISA.
(iii) Neither the Company, nor any of its Subsidiaries, nor any
Commonly Controlled Entity has maintained, contributed or been
obligated to contribute to any Compensation and Benefit Plan that is
subject to Title IV of ERISA.
(iv) All contributions required to be made under the terms of any
Compensation and Benefit Plan as of the date hereof have been timely
made. Neither the Company, nor any of its Subsidiaries, nor any
Commonly Controlled Entity nor any officer, director or employee of
any of them has, in respect of any Compensation and Benefit Plan,
14
<PAGE>
committed any prohibited transaction under ERISA Sections 406 or 407
or Code Section 4975 or otherwise incurred excise tax liability under
Chapters 43 and 47 under Subtitle D of the Code.
(v) Except as specifically disclosed on Section 5.1(h)(i) of the
Company Disclosure Schedule, the consummation of the transactions
contemplated by this Agreement will not (x) entitle any employees of
the Company or any of the Subsidiaries to severance pay, (y)
accelerate the time of payment or vesting or trigger any payment or
funding (through a grantor trust or otherwise) of compensation or
benefits under, increase the amount payable or trigger any other
material obligation pursuant to, any of the Compensation and Benefit
Plans or (z) result in any payments under, any of the Compensation and
Benefit Plans which would not be deductible under Section 162(m) or
Section 280G of the Code.
(vi) All amendments and actions required to bring each of the
Compensation and Benefit Plans into conformity with all of the
applicable provisions of ERISA and other applicable laws have been
made or taken except to the extent that such amendments or actions are
not required by law to be made or taken until a date after the Closing
Date.
(vii) Except as disclosed in Section 5.1(h)(i) of the Company
Disclosure Schedule, neither the Company nor any of its Subsidiaries
provides any welfare benefits including health, life, or disability
insurance, pursuant to a welfare benefit plan (as defined in ERISA
Section 3(1)) or otherwise to any former employee except pursuant to
Section 4980B of the Code.
(viii) All Compensation and Benefit Plans maintained outside of
the United States comply in all material respects with applicable
local law. The Company and its Subsidiaries have no material unfunded
liabilities with respect to any such Compensation and Benefit Plan.
(i) Compliance with Laws. Except as otherwise specifically disclosed
--------------------
herein, the businesses of each of the Company and its Subsidiaries have not
been, and are not being, conducted in violation of any law, ordinance,
regulation, judgment, order, injunction, decree, arbitration award, license
or permit of any Governmental Entity (collectively, "Laws"), except for
violations or possible violations that, individually and in the aggregate,
have not had and are not reasonably likely to have a Company Material
Adverse Effect or prevent, materially delay or materially impair the
ability of the Company to consummate the transactions contemplated by this
Agreement. To the knowledge of the Company, no material change is required
in the Company's or any of its Subsidiaries' processes, properties or
procedures in connection with any such Laws, and the Company has not
received any notice or communication of any material noncompliance with any
such laws that has not been cured as of the date hereof. The Company and
its Subsidiaries each has all permits, licenses, franchises, variances,
exemptions, orders and other governmental authorizations, consents and
approvals necessary to conduct its business as presently conducted except
those the absence of which are not, individually and in the aggregate,
reasonably likely to have a Company Material Adverse Effect or prevent or
materially burden or materially impair the ability of the Company to
consummate the Merger and the other transactions contemplated by this
Agreement.
15
<PAGE>
(j) Takeover Statutes. No "fair price", "moratorium" or "control share
-----------------
acquisition" anti-takeover statute or regulation of the States of Delaware
or California (each a "Takeover Statute") is applicable to the Company, the
----------------
Shares, the Offer, the Merger or any of the other transactions contemplated
by this Agreement. The Company's Board has approved the Offer, the Merger
and this Agreement, and such approval is sufficient to render inapplicable
to the Offer, the Merger, this Agreement, and the transactions contemplated
by this Agreement the provisions of Section 203 of DGCL to the extent, if
any, such Section is applicable to the Offer, the Merger, this Agreement
and the transactions contemplated by this Agreement.
(k) Environmental Matters.
---------------------
(i) The term "Environmental Laws" means any Federal, state, local
------------------
or foreign statute, treaty, ordinance, rule, regulation, policy,
permit, consent, approval, license, agency requirement, judgment,
order, decree, common law or injunction relating to: (A) Releases (as
defined in 42 U.S.C.(S) 9601(22)) or threatened Releases of Hazardous
Material (as hereinafter defined) into the environment, (B) the
generation, treatment, storage, presence, disposal, use, handling,
manufacturing, transportation or shipment of Hazardous Material, (C)
natural resources, or (D) the protection of human health or the
environment, and includes all "Environmental Laws" as they are defined
in any indemnification provision in any contract, lease, or agreement
to which Company is a party. The term "Hazardous Material" means (1)
------------------
any substance regulated under any Environmental Law due to its harmful
or potentially harmful effects, including hazardous substances (as
defined in 42 U.S.C. (S) 9601(14)), (2) petroleum, including crude oil
and any fractions thereof, (3) natural gas, synthetic gas and any
mixtures thereof, (4) asbestos and/or asbestos containing materials,
(5) PCBs or materials containing PCBs, (6) radioactive materials, and
(7) "Hazardous Substance" or "Hazardous Material" as those terms are
defined in any indemnification provision in any contract, lease, or
agreement to which the Company is a party.
(ii) Except as specifically disclosed on Section 5.1(k) of the
Company Disclosure Schedule, during the period of ownership or
operation by the Company and its Subsidiaries of any of their current
or previously owned, leased or operated properties, (A) there have
been no Releases of Hazardous Material or contamination in, on, under
or affecting such properties or any surrounding site, and (B) neither
the Company nor any of its Subsidiaries has disposed of any Hazardous
Material in a manner that has led, or could reasonably be anticipated
to lead to a Release or contamination except as disclosed in the
Company Reports. The Company and its Subsidiaries have not received
any notice of, or entered into any order, settlement, contract,
indemnity or decree relating to: (1) any violation of or liability
under any Environmental Laws or the institution, pendency or threat of
any suit, action, claim, proceeding or investigation by any
Governmental Entity or any third party in connection with any alleged
violation of Environmental Laws; or (2) the investigation, response to
or remediation of Hazardous Material at or arising from any property.
The properties currently owned or operated by the Company or any of
its Subsidiaries possess all material permits, licenses,
authorizations and approvals required under applicable Environmental
Laws with respect to the conduct of business thereat and are in
compliance with all Environmental Laws.
(iii) Except as specifically disclosed on Section 5.1(k) of the
Company Disclosure Schedule, none of the properties of the Company or
any Subsidiary contains any
16
<PAGE>
underground storage tanks, asbestos-containing material, lead
products, or polychlorinated biphenyls and there are no other
circumstances or conditions involving the Company or any Subsidiary
that could reasonably be expected to result in any claims, liability,
investigations, costs or restrictions on the ownership, use, or
transfer of any property in connection with any Environmental Law.
(iv) The Company has delivered to Purchaser copies of all
environmental reports, studies, assessments, sampling data and other
material environmental information in its possession relating to the
Company or any Subsidiary or any of their current or former properties
or operations.
(l) Taxes. Except as set forth on Section 5.1(l) of the Company
-----
Disclosure Schedule, (i) the Company and its Subsidiaries have timely filed
or will timely file all returns and reports required to be filed by them
with any taxing authority with respect to Taxes for any period ending on or
before the date hereof, taking into account any extension of time to file
granted to or obtained on behalf of the Company or any of its Subsidiaries,
and all such returns and reports are correct and complete in all material
respects; (ii) all Taxes shown to be payable on such returns or reports
that are due prior to the date hereof have been timely paid; (iii) as of
the date hereof, no deficiency for any amount of Tax has been asserted or
assessed or, to the Company's knowledge, has been threatened or is likely
to be assessed by a taxing authority against the Company or any of its
Subsidiaries other than deficiencies as to which adequate reserves have
been provided for in the Company's consolidated financial statements; (iv)
the Company has provided in accordance with GAAP adequate reserves in its
consolidated financial statements for any Taxes that have not been paid,
whether or not shown as being due on any returns; (v) no claim has ever
been made by an authority in a jurisdiction where the Company or any of its
Subsidiaries does not file tax returns that any of the Company or its
Subsidiaries is or may be subject to taxation by that jurisdiction; and
(vi) neither the Company nor any Subsidiary has been included in any
consolidated, combined or unitary tax return (other than for a group of
which the Company is the common parent) provided for under the laws of the
United States, any state or locality with respect to Taxes for any taxable
period for which the statute of limitations has not expired; and neither
the Company nor any Subsidiary has any liability for the Taxes of any
Person under Treasury Regulation Section 1.1502-6 (or any similar provision
of state, local, or foreign law), as a transferee or successor, by
contract, or otherwise. For purposes of this Agreement, "Taxes" means any
-----
and all taxes, fees, levies, duties, tariffs, imposts and other charges of
any kind (together with any and all interest, penalties, additions to tax
and additional amounts imposed with respect thereto) imposed by any
Governmental Entity or other taxing authority, including taxes or other
charges on or with respect to net or gross income, franchises, windfall or
other profits, gross receipts, property, sales, use, Capital Stock,
payroll, employment, social security, workers' compensation, unemployment
compensation, or net worth; taxes or other charges in the nature of excise,
withholding, ad valorem, stamp, transfer, value added or gains taxes;
license, registration and documentation fees; and customers' duties,
tariffs and similar charges. Neither the Company nor any of its
Subsidiaries is subject to any Tax sharing agreement. No payments to be
made to any of the employees of the Company or any of its Subsidiaries
will, as a direct or indirect result of the Offer or the consummation of
the Merger, be subject to the deduction limitations of Section 280G of the
Code.
17
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(m) Labor Matters. Except as disclosed in Section 5.1(m) of the
-------------
Company Disclosure Schedule, neither the Company nor any of its
Subsidiaries is a party to or otherwise bound by any collective bargaining
agreement, contract or other agreement or understanding with a labor union
or labor organization, nor is the Company or any of its Subsidiaries the
subject of any proceeding asserting that the Company or any of its
Subsidiaries has committed an unfair labor practice or is seeking to compel
it to bargain with any labor union or labor organization, nor is there
pending or, to the knowledge of the Company, threatened, any labor strike,
dispute, walkout, work stoppage, slow-down or lockout involving the Company
or any of its Subsidiaries. The Company has previously made available to
Parent correct and complete copies of all labor and collective bargaining
agreements, Contracts or other agreements or understandings with a labor
union or labor organization to which the Company or any of its Subsidiaries
is party or by which any of them are otherwise bound (collectively, the
"Company Labor Agreements"). The consummation of the Merger and the other
transactions contemplated by this Agreement will not entitle any third
party (including any labor union or labor organization) to any payments
under any of the Company Labor Agreements.
((n) Brokers and Finders. Neither the Company nor any of its
-------------------
Subsidiaries, officers, directors, or employees or other Affiliates has
employed any broker or finder or incurred any liability for any brokerage
fees, commissions or finders' fees in connection with the Offer, the Merger
or the other transactions contemplated by this Agreement, except that the
Company has employed the Financial Advisor, the arrangements with which
have been partially disclosed to Parent prior to the date hereof.
(o) Certain Business Practices. Neither the Company, nor any of its
--------------------------
Subsidiaries nor any directors, officers, agents or employees of the
Company or any of its Subsidiaries has (i) used any funds for unlawful
contributions, gifts, entertainment or other unlawful expenses related to
political activity; (ii) made any unlawful payment to foreign or domestic
government officials or employees or to foreign or domestic political
parties or campaigns or violated any provision of the Foreign Corrupt
Practices Act of 1977, as amended; or (iii) made any other payment
prohibited by applicable Law.
(p) Insurance. All material fire and casualty, general liability,
---------
business interruption, product liability, title, and sprinkler and water
damage insurance policies maintained by the Company or any of its
Subsidiaries are with reputable insurance carriers, and are in character
and amount at least reasonable and customary to those carried by persons
engaged in similar businesses and subject to the same or similar perils or
hazards, except for any such failures to maintain insurance policies that,
individually and in the aggregate, are not reasonably likely to have a
Company Material Adverse Effect.
(q) Intellectual Property. Except as specifically disclosed on Section
---------------------
5.1(q) of the Company Disclosure Schedule, the Company and/or each of its
Subsidiaries owns, or is licensed or otherwise possesses legally
enforceable rights to use all patents, trademarks, trade names, service
marks, copyrights, and any applications therefor, technology, know-how,
computer software programs or applications, and tangible or intangible
proprietary information or materials that are used in the business of the
Company and its Subsidiaries as currently conducted, except for any such
failures to own, be licensed or possess that, individually and in the
aggregate, are not reasonably likely to have a Company Material Adverse
Effect, and to the
18
<PAGE>
knowledge of the Company all patents, trademarks, trade names, service
marks and copyrights held by the Company and/or its Subsidiaries are valid
and subsisting.
(r) Rights Plan.
-----------
(i) The Company's Board has taken all necessary action such that
neither Parent, Merger Sub, nor any of Parent's other Subsidiaries
will be a "Beneficial Owner" of and shall not be deemed to
----------------
"beneficially own" any Shares of the Common Stock as a result of the
----------------
Offer, the Merger, this Agreement or any of the transactions
contemplated by this Agreement, the terms "beneficially own" and
----------------
"Beneficial Owner" carrying the meaning ascribed to those terms in
----------------
Section 1(c) of the Rights Agreement (the "Rights Agreement"), dated
----------------
as of April 3, 1989, between the Company and ChaseMellon Shareholder
Services, L.L.C. (successor under the Rights Agreement to Security
Pacific National Bank), as amended by an amendment dated as of March
23, 1999.
(ii) Pursuant to Sections 7(a) and 13(b) of the Rights Agreement,
on Closing Date the Rights Agreement and the rights of holders of rights
thereunder shall be terminated.
(s) Contracts. Except as set forth on Section 5.1(s) of the Company
---------
Disclosure Schedule, which Section sets forth by paragraph the disclosures
relating to this Section 5.1(s), neither the Company nor any of its
Subsidiaries is a party to or bound by any material Contract:
(i) pursuant to which a consent or waiver is or may be required
prior to consummation of the Offer, the Merger or the other
transactions contemplated by this Agreement;
(ii) prohibiting or limiting its ability (A) to engage in any
line of business, (B) to compete with any person, or (C) to disclose
any confidential information in its possession (and not otherwise
generally available to the public) that could reasonably be expected
to have material commercial value;
(iii) with any director, officer, employee, agent, consultant,
advisor or representative for employment or for consulting,
independent contracting or similar services or containing any
severance or termination pay obligations;
(iv) granting a Lien upon any of its properties or assets, except
for Permitted Liens;
(v) pursuant to which it purchases materials, supplies or
equipment and which calls for future payments in excess of $250,000 in
any year;
(vi) that is a joint venture agreement, a license or a
representative or distributorship agreement that purports to create a
strategic partnership between the Company or any of its Subsidiaries
and a representative or distributor;
19
<PAGE>
(vii) providing for the acquisition or disposition after the date
of this Agreement of any significant amount of assets; or
(viii) not entered into in the ordinary course of business.
(t) Real Property and Other Assets. Each piece of real property owned
------------------------------
by the Company or its Subsidiaries is set forth on Section 5.1(t) of the
Company Disclosure Schedule. The Company and each of its Subsidiaries has
good, valid and marketable title to its respective properties and material
assets, and a valid leasehold interest in all real and personal property
leased by it, in each case free and clear of all Liens, except as set forth
on Section 5.1(t) of the Company Disclosure Schedule, and except for
Permitted Liens that are not substantial in amount and that do not detract
from the value or impair the present use of any of the property or assets
subject thereto or affected thereby or the business operations of the
Company in any material respect.
5.2. Representations and Warranties of Parent and Merger Sub. Parent and
-------------------------------------------------------
Merger Sub each hereby represents and warrants to the Company as follows:
(a) Organization, Good Standing and Qualification. Each of Parent and
---------------------------------------------
Merger Sub (i) is a corporation duly organized, validly existing and in
good standing under the laws of the jurisdiction of its incorporation, (ii)
has all requisite corporate or similar power and authority to own and
operate its properties and assets and to carry on its business as presently
conducted and (iii) is qualified to do business and is in good standing as
a foreign corporation in each jurisdiction where the ownership or operation
of its properties or conduct of its business requires such qualification,
except where the failure to be so qualified or in such good standing, when
taken together with all other such failures, has not had and is not
reasonably likely to have a Parent Material Adverse Effect (as defined in
Section 9.2). Parent has made available to the Company a complete and
correct copy of Parent's charter documents, as amended to the date hereof.
Parent's charter documents so delivered are in full force and effect.
(b) Ownership of Merger Sub. All of the issued and outstanding Capital
-----------------------
Stock of Merger Sub is, and at the Effective Time will be, owned by Parent,
and there are no (i) other outstanding shares of Capital Stock or other
voting securities of Merger Sub, (ii) securities of Merger Sub convertible
into or exchangeable for shares of Capital Stock or other voting securities
of Merger Sub or (iii) options or other rights to acquire from Merger Sub,
and no obligations of Merger Sub to issue, any Capital Stock, other voting
securities or securities convertible into or exchangeable for Capital Stock
or other voting securities of Merger Sub. Merger Sub was formed solely for
the purpose of engaging in the transactions contemplated hereby, has
engaged in no other business activities and has conducted its operations
only as contemplated hereby.
(c) Corporate Authority.
-------------------
(i) Each of Parent and Merger Sub has all requisite corporate
power and authority and has taken all corporate action necessary in
order to execute, deliver and perform its obligations under this
Agreement and to consummate the Offer and the Merger. Assuming due
execution and delivery by the Company, this Agreement is a valid and
binding
20
<PAGE>
agreement of Parent and Merger Sub, enforceable against each of them
in accordance with its terms, except as such enforceability may be
limited by applicable bankruptcy laws or creditors' rights generally
or by general principles of equity.
(ii) The Boards of Directors of Parent and Merger Sub have
unanimously approved this Agreement and the Merger and the other
transactions contemplated hereby, including, without limitation, the
Offer.
(d) Governmental Filings; No Violations.
-----------------------------------
(i) Other than the filings and/or notices (A) pursuant to Section
1.1, (B) under the HSR Act and the Exchange Act, (C) to comply with
state securities or "blue sky" laws, and (D) required to be made with
the NASD, no notices, reports or other filings are required to be made
by Parent or Merger Sub with, nor are any Government Consents required
to be obtained by Parent or Merger Sub from, any Governmental Entity,
in connection with the execution and delivery of this Agreement by
Parent and Merger Sub, the Offer and the consummation by Parent and
Merger Sub of the Merger and the other transactions contemplated
hereby, except those that the failure to make or obtain are not,
individually or in the aggregate, reasonably likely to have a Parent
Material Adverse Effect or prevent, materially delay or materially
impair the ability of the Parent or Merger Sub to consummate the
transactions contemplated by this Agreement.
(ii) The execution, delivery and performance of this Agreement by
Parent and Merger Sub do not, and the consummation by Parent and
Merger Sub of the Merger and the other transactions contemplated
hereby will not, constitute or result in (A) a breach or violation of,
or a default under, the certificate of incorporation or bylaws of
Parent or Merger Sub, (B) a breach or violation of, or a default
under, the acceleration of or the creation of a Lien on the assets of
Parent or any of its Subsidiaries (with or without notice, lapse of
time or both) pursuant to, any Contract binding upon Parent or any of
its Subsidiaries or any Law to which Parent or any of its Subsidiaries
is subject or (C) any change in the rights or obligations of any party
under any such Contract, except, in the case of clause (B) or (C)
above, for any breach, violation, default, acceleration, creation or
change that, individually or in the aggregate, is not reasonably
likely to have a Parent Material Adverse Effect or prevent, materially
delay or materially impair the ability of the Parent or Merger Sub to
consummate the transactions contemplated by this Agreement.
(e) Brokers and Finders. Neither Parent nor Merger Sub, nor any of
-------------------
their respective officers, directors, employees or other Affiliates, has
employed any broker or finder or incurred any liability for any brokerage
fees, commissions or finders' fees in connection with the Offer, the Merger
or the other transactions contemplated by this Agreement.
(f) Financing. Parent and Merger Sub have possession of, or have
---------
available to them under existing lines of credit and on the Expiration Date
of the Offer and at the Effective Time, Parent and Merger Sub will have
possession of, or have available, all the funds necessary for the
acquisition of all Shares pursuant to the Offer and to perform their
respective obligations under this Agreement, including without limitation
payment in full for all Shares validly tendered in the Offer or outstanding
as of the Effective Time.
21
<PAGE>
(g) Share Exchange Option Agreement. Parent has entered into a binding
-------------------------------
agreement (the "Option Agreement") with Camfil AB ("Camfil") providing
---------------- ------
that, should the transactions contemplated by this Agreement, including the
purchase by Merger Sub of 100% of the Common Stock, be consummated and
should the Common Stock be delisted from the Nasdaq National Market System
and cease to be registered under the Exchange Act, Parent shall have the
option to require Camfil to purchase all of its holdings of shares of the
Surviving Corporation in exchange for shares of Camfil representing a
minority interest therein (the "Transfer"). Following the Transfer, should
it be effected, the Surviving Corporation would become a wholly owned
subsidiary of Camfil. From the Transfer Date (as defined in the Option
Agreement) forward, Camfil shall assume all of the obligations of Parent
under this Agreement.
(h) Environmental Reports. Parent has made available to the Company
---------------------
copies of all written environmental reports received by it relating to any
of the properties of the Company.
ARTICLE VI
COVENANTS
6.1. Interim Operations. The Company covenants and agrees as to itself and
------------------
its Subsidiaries that, after the date hereof and prior to the Effective Time
(unless Parent shall otherwise approve in writing, which approval shall not be
unreasonably withheld or delayed, and except as otherwise expressly contemplated
by this Agreement):
(a) The business of it and its Subsidiaries shall be conducted in the
ordinary and usual course and, to the extent consistent therewith, it and
its Subsidiaries shall use commercially reasonable efforts to preserve its
business organization intact and maintain its existing relations and
goodwill with customers, suppliers, distributors, creditors, lessors,
employees and business associates;
(b) It shall not, (i) issue, sell or otherwise dispose of or subject
to any Lien (other than Permitted Liens) any of its Subsidiaries' Capital
Stock owned by it; (ii) amend its charter or bylaws, except for any
amendment contemplated by this Agreement; (iii) split, combine or
reclassify its outstanding shares of Capital Stock; (iv) declare, set aside
or pay any dividend payable in cash, stock or property in respect of any
Capital Stock; (v) repurchase, redeem or otherwise acquire or permit any of
its Subsidiaries to purchase or otherwise acquire, any shares of its
Capital Stock or any securities convertible into or exchangeable or
exercisable for any shares of its Capital Stock; or (vi) adopt a plan of
complete or partial liquidation or dissolution, merger or otherwise
restructure or recapitalize or consolidate with any Person other than
Merger Sub or another wholly-owned Subsidiary of Parent;
(c) Neither it nor any of its Subsidiaries shall (i) authorize for
issuance or issue, sell or otherwise dispose of or subject to any Lien
(other than Permitted Liens) any shares of, or securities convertible into
or exchangeable or exercisable for, or options, warrants, calls,
commitments or rights of any kind to acquire, any shares of its Capital
Stock of any class or any Voting Debt (other than Shares issuable pursuant
to Company Options outstanding on the date hereof); (ii) other than in the
ordinary and usual course of business, transfer, lease, license,
22
<PAGE>
guarantee, sell or otherwise dispose of or subject to any Lien (other than
Permitted Liens) any other property or assets or incur or modify any
material indebtedness or other liability (except for additional borrowings
in the ordinary course under lines of credit in existence on the date
hereof); (iii) assume, guarantee, endorse or otherwise become liable or
responsible (whether directly, contingently or otherwise) for the
obligations of any other Person except in the ordinary course of business
and except for obligations of Subsidiaries of the Company incurred in the
ordinary course of business; (iv) make any loans to any other Person (other
than to Subsidiaries of the Company or, customary loans or advances to
employees in connection with business-related travel in the ordinary course
of business consistent with past practices); or (v) make any commitments
for, make or authorize any capital expenditures other than in amounts less
than $250,000 individually and $1,000,000 in the aggregate or, by any
means, make any acquisition of, or investment in, assets or stock of any
other Person;
(d) Except as may be required to comply with applicable law or by
existing contractual commitments, neither it nor any of its Subsidiaries
shall (i) enter into any new agreements or commitments for any severance or
termination pay to, or enter into any employment or severance agreement
with, any of its directors, officers or employees or consultants except for
reasonable severance payments made to employees in the ordinary course of
business and consistent with past practices, or (ii) terminate, establish,
adopt, enter into, make any new grants or awards under, amend or otherwise
modify, any Compensation and Benefit Plan or increase or accelerate the
salary, wage, bonus or other compensation of any employees or directors
(except for increases occurring in the ordinary and usual course of
business, which shall include normal periodic performance reviews and
related compensation and benefit increases, but not any general
across-the-board increases) or consultants or pay or agree to pay any
pension, retirement allowance or other employee benefit not required by any
existing Compensation and Benefit Plan;
(e) Neither it nor any of its Subsidiaries shall, except as may be
required as a result of a change in law or in GAAP, change any of the
accounting principles, practices or methods used by it;
(f) Neither it nor any of its Subsidiaries shall revalue in any
respect any of its material assets, including writing down the value of
inventory or writing-off notes or accounts receivable, other than in the
ordinary course of business consistent with past practices;
(g) Neither it nor any of its Subsidiaries shall settle or compromise
any material claims or litigation or terminate or materially amend or
modify any of its material Contracts or waive, release or assign any
material rights or claims;
(h) Neither it nor any of its Subsidiaries shall make any Tax election
or permit any insurance policy naming it as a beneficiary or loss-payable
payee to be canceled or terminated;
(i) Neither it nor any of its Subsidiaries shall take any action or
omit to take any action that would cause any of its representations and
warranties herein to become untrue in any material respect; and
23
<PAGE>
(j) Neither it nor any of its Subsidiaries will authorize or enter
into any agreement to do any of the foregoing.
6.2. Third Party Acquisitions.
------------------------
(a) The Company agrees that neither it nor any of its Subsidiaries nor
any of its or its Subsidiaries' employees or directors shall, and it shall
direct and use its best efforts to cause its and its Subsidiaries' agents
and representatives (including the Financial Advisor or any other
investment banker and any attorney, consultant or accountant retained by it
or any of its Subsidiaries (collectively, "Company Advisors")) not to,
----------------
directly or indirectly, initiate, solicit or otherwise facilitate any
inquiries in respect of, or the making of any proposal for, a Third Party
Acquisition (as defined in Section 6.2(b)). The Company further agrees that
neither it nor any of its Subsidiaries nor any of its or its Subsidiaries'
employees or directors shall, and it shall direct and use its best efforts
to cause all Company Advisors not to engage in any negotiations concerning,
or provide any confidential information or data to, or have any discussions
with, any Third Party (as defined in Section 6.2(b)) relating to the
proposal of a Third Party Acquisition, or otherwise attempt to make or
implement a Third Party Acquisition; provided, however, that if at any time
prior to the acceptance for payment of Shares pursuant to the Offer, the
Company's Board determines in good faith, after taking into consideration
the advice of its outside legal counsel, that it is likely to be required
in order for its members to comply with their fiduciary duties under
applicable law, the Company may, in response to an inquiry, proposal or
offer for a Third Party Acquisition which was not solicited subsequent to
the date hereof, (x) furnish non-public information with respect to the
Company to any such person pursuant to a confidentiality agreement on terms
substantially similar to the confidentiality agreement entered into between
the Company and Parent prior to the execution of this Agreement and (y)
participate in discussions and negotiations regarding such inquiry,
proposal or offer; and provided, further, that nothing contained in this
Agreement shall prevent the Company or the Company's Board from complying
with Rules 14d-9 and 14e-2 promulgated under the Exchange Act with regard
to any proposed Third Party Acquisition or withdrawing its recommendation
of the Offer or the Merger pursuant to Section 6.2(b). The Company shall
immediately cease and cause to be terminated any existing activities,
discussions or negotiations with any Third Parties conducted heretofore
with respect to any of the foregoing. The Company shall take the necessary
steps to promptly inform all Company Advisors of the obligations undertaken
in this Section 6.2(a). The Company agrees to notify Parent as promptly as
reasonably practicable in writing if (i) any inquiries relating to or
proposals for a Third Party Acquisition are received by the Company, any of
its Subsidiaries or any of the Company Advisors, (ii) any confidential or
other non-public information about the Company or any of its Subsidiaries
is requested from the Company, any of its Subsidiaries or any of the
Company Advisors, or (iii) any negotiations or discussions in connection
with a possible Third Party Acquisition are sought to be initiated or
continued with the Company, any of its Subsidiaries or any of the Company
Advisors, and thereafter shall keep Parent informed in writing, on a
reasonably current basis, on the status of any such proposals or offers and
the status of any such negotiations or discussions. The Company also agrees
promptly to request each Person that has heretofore executed a
confidentiality agreement in connection with its consideration of acquiring
the Company or any of its Subsidiaries, if any, to return all confidential
information heretofore furnished to such Person by or on behalf of the
Company or any of its Subsidiaries.
24
<PAGE>
(b) Except as permitted by this Section 6.2(b), the Company's Board
shall not withdraw its recommendation of the Offer or the Merger and the other
transactions contemplated hereby or approve or recommend, or cause the Company
to enter into any agreement with respect to, any Third Party Acquisition.
Notwithstanding the preceding sentence, if the Company's Board determines in its
good faith judgment, after taking into consideration the advice of its outside
legal counsel, that it is likely to be required in order for its members to
comply with their fiduciary duties under applicable law, the Company's Board may
withdraw its recommendation of the Offer or the Merger and the other
transactions contemplated hereby, or approve or recommend or cause the Company
to enter into an agreement with respect to a Superior Proposal (as defined
below); provided, however, that the Company shall not be entitled to enter into
any agreement with respect to a Superior Proposal unless this Agreement is
concurrently terminated by its terms pursuant to Section 8.3(c). For purposes of
this Agreement, "Third Party Acquisition" means the occurrence of any of the
-----------------------
following events: (i) the acquisition of the Company by merger or otherwise by
any Person (which includes a "person" as such term is defined in Section
13(d)(3) of the Exchange Act) other than Parent, Merger Sub or any Affiliate
thereof (a "Third Party"); (ii) the acquisition by a Third Party of 15% or more
-----------
of the total assets of the Company and its Subsidiaries, taken as a whole (other
than the purchase of the Company's products in the ordinary course of business);
(iii) the acquisition by a Third Party of 15% or more of the outstanding Shares;
(iv) the adoption by the Company of a plan of partial or complete liquidation or
the declaration or payment of an extraordinary dividend; (v) the repurchase by
the Company or any of its Subsidiaries of 15% or more of the outstanding Shares;
or (vi) the acquisition by the Company or any of its Subsidiaries by merger,
purchase of stock or assets, joint venture or otherwise of a direct or indirect
ownership interest or investment in any business whose annual revenues, net
income or assets are equal to or greater than 15% of the annual revenues, net
income or assets of the Company and its Subsidiaries, taken as a whole. For
purposes of this Agreement, a "Superior Proposal" means any bona fide
-----------------
proposal to acquire directly or indirectly for consideration consisting of cash
and/or securities more than 50% of the Shares then outstanding or all or
substantially all the assets of the Company and its Subsidiaries, taken as a
whole, and otherwise on terms which the Board of Directors of the Company by a
majority vote determines in its good faith judgment (after consultation with the
Financial Advisor or another financial adviser of nationally recognized
reputation) to be reasonably capable of being completed (taking into account all
material legal, financial, regulatory and other aspects of the proposal and the
Third Party making the proposal, including the availability of financing
therefor and the payments contemplated by Section 8.5(b)(ii)) and more favorable
to the Company's stockholders from a financial point of view than the
transactions contemplated by this Agreement.
6.3. Filings; Other Actions; Notification.
------------------------------------
(a) If a vote of the Company's stockholders is required by law in
order to consummate the Merger, the Company shall promptly, following
consummation of the Offer, prepare and file with the SEC the Proxy Statement,
which shall include the recommendation of the Company's Board that stockholders
of the Company vote in favor of the approval and adoption of this Agreement and
the written opinion of the Financial Advisor that the cash consideration to be
received by the stockholders of the Company pursuant to the Merger is fair to
such stockholders from a financial point of view. The Company shall use all
reasonable efforts to have the Proxy Statement cleared by the SEC as promptly as
practicable after such filing, and
25
<PAGE>
promptly thereafter mail the Proxy Statement to the stockholders of the Company.
The Company shall also use its best efforts to obtain all necessary state
securities law or "blue sky" permits and approvals required in connection with
the Merger and to consummate the other transactions contemplated by this
Agreement and will pay all expenses incident thereto.
(b) Upon and subject to the terms and conditions set forth in this
Agreement, the Company and Parent shall cooperate with each other and use (and
shall cause their respective Subsidiaries to use) all reasonable efforts to take
or cause to be taken all actions, and do or cause to be done all things,
necessary, proper or advisable under this Agreement and applicable Laws to
consummate and make effective the Offer, the Merger and the other transactions
contemplated by this Agreement as soon as practicable, including preparing and
filing as promptly as practicable all documentation to effect all necessary
applications, notices, petitions, filings and other documents and to obtain as
promptly as practicable all permits, consents, approvals and authorizations
necessary or advisable to be obtained from any third party and/or any
Governmental Entity in order to consummate the Offer, the Merger or any of the
other transactions contemplated by this Agreement; provided, however, that
nothing in this Section 6.3 shall require, or be construed to require, Parent to
proffer to, or agree to, sell or hold separate and agree to sell, before or
after the Effective Time, any material assets, businesses or any interest in any
material assets or businesses of Parent, the Company or any of their respective
Affiliates (or to consent to any sale, or agreement to sell, by the Company of
any of its material assets or businesses) or to agree to any material change in
or material restriction on the operations of any such assets or businesses;
provided, further, that nothing in this Section 6.3 shall require, or be
construed to require, a proffer or agreement that would, in the reasonable
judgment of Parent, be likely to have a material adverse effect on the
anticipated financial condition, properties, business or results of operations
of the Company or the Parent and its Subsidiaries after the Merger, taken as a
whole, in order to obtain any necessary or advisable consent, registration,
approval, permit or authorization from any Governmental Agency. Subject to
applicable Laws relating to the exchange of information, Parent and the Company
shall have the right to review in advance, and to the extent practicable each
will consult the other on, all the information relating to Parent or the
Company, as the case may be, and any of their respective Subsidiaries, that
appears in any filing made with, or written materials submitted to, any third
party and/or any Governmental Entity in connection with the Offer, the Merger
and the other transactions contemplated by this Agreement, including the Proxy
Statement. In exercising the foregoing right, the Company and Parent shall act
reasonably and as promptly as practicable.
(c) The Company and Parent have prior to the date hereof exchanged
information relating to the HSR Filings, and the Company agrees to file under
the HSR Act within one Business Day after the filing by Parent. Each of the
Company and Parent shall, upon request by the other, furnish the other with all
information concerning itself, its Subsidiaries, directors, officers and
stockholders and such other matters as may be reasonably necessary or advisable
in connection with filings pursuant to the HSR Act, the Proxy Statement or any
other statement, filing, notice or application made by or on behalf of Parent,
the Company or any of their respective Subsidiaries to any Governmental Entity
or other Person (including the NASD) in connection with the Offer, the Merger
and the other transactions contemplated by this Agreement.
26
<PAGE>
(d) Each of the Company and Parent shall keep the other apprised of
the status of matters relating to completion of the transactions contemplated
hereby, including promptly furnishing the other with copies of notices or other
communications received by Parent or the Company, as the case may be, or any of
their respective Subsidiaries, from any Third Party and/or any Governmental
Entity alleging that the consent of such third party or Governmental Entity is
or may be required with respect to the Offer, the Merger and the other
transactions contemplated by this Agreement. Each of the Company and Parent
shall give prompt notice to the other of (i) the occurrence or non-occurrence of
any fact or event which would be reasonably likely (x) to cause any
representation or warranty contained in this Agreement to be untrue or
inaccurate in any material respect at any time from the date hereof to the
Effective Time or (y) to cause any covenant, condition or agreement under this
Agreement not to be complied with or satisfied and (ii) any failure of the
Company, Parent or Merger Sub, as the case may be, to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by it
hereunder.
6.4. Information Supplied. Each of Parent and the Company agrees, as to
--------------------
information provided by itself and its Subsidiaries, that none of the
information included or incorporated by reference in the proxy statement, if
any, delivered by the Company to its stockholders in connection with the Merger
and any amendment or supplement thereto (the "Proxy Statement") will, at the
---------------
time the Proxy Statement is cleared by the SEC, at the date of mailing to
stockholders of the Company, and at the time of the Stockholders Meeting (as
defined in Section 6.5), contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading.
6.5. Stockholders Meeting.
--------------------
(a) If a vote of the Company's stockholders is required by law in
order to consummate the Merger, the Company will, following consummation of the
Offer, take, in accordance with applicable Law and its certificate of
incorporation and bylaws, all action necessary to convene a meeting of holders
of Shares (the "Stockholders Meeting") as promptly as practicable after the
--------------------
Proxy Statement is cleared by the SEC to consider and vote upon the approval of
this Agreement. The Proxy Statement shall include a statement that the Company's
Board approved this Agreement and recommended that the Company's stockholders
vote in favor of this Merger, and the Company shall use all reasonable and
customary efforts to solicit such approval; provided, however, that if the
Company's Board determines in good faith, after taking into consideration the
advice of its outside legal counsel, that the Proxy Statement not containing
such recommendation is likely to be required in order for its members to comply
with their fiduciary duties under applicable law, then any failure of the Proxy
Statement to contain such recommendation shall not constitute a breach of this
Agreement. Notwithstanding the foregoing, if Parent, Merger Sub and/or any other
Subsidiary of Parent shall acquire at least 90% of the outstanding Shares, the
parties shall take all necessary and appropriate action to cause the Merger to
become effective as soon as practicable after consummation of the Offer without
a Stockholders Meeting in accordance with Section 253 of the DGCL.
(b) Following the purchase of Shares, if any, pursuant to the Offer,
Parent shall ensure that all such Shares purchased continue to be held by
Parent, Merger Sub, and/or a
27
<PAGE>
direct or indirect wholly-owned Subsidiary of Parent until such time as the
Merger is consummated. At the Stockholders Meeting, Parent agrees to cause all
Shares purchased pursuant to the Offer and all other Shares owned by Parent,
Merger Sub or any Subsidiary of Parent to be voted in favor of the Merger.
6.6. Access. Upon reasonable notice, and except as may otherwise be
------
required by applicable law or relevant contractual provisions contained in such
agreements, the Company shall (and shall cause its Subsidiaries to) (i) afford
Parent's officers, employees, counsel, accountants and other authorized
representatives (collectively, "Representatives") access, during normal business
---------------
hours throughout the period prior to the Effective Time, to its properties,
books, contracts and records and, during such period, (ii) furnish promptly to
Parent all information concerning its business, properties and personnel as may
reasonably be requested; provided, however, that no investigation pursuant to
this Section 6.6 shall affect or be deemed to modify any representation or
warranty made by the Company. All requests for information made pursuant to this
Section 6.6 shall be directed to an executive officer of the Company or such
Person as may be designated by its officers. All of the information provided to
or obtained by Parent, its Affiliates and Representatives shall be treated as
"Confidential Information" under, and the parties shall comply with, and shall
cause their respective Representatives to comply with, all their respective
obligations under, the Mutual Confidentiality Agreement entered into on December
31, 1999 between the Company and Camfil (the "Confidentiality Agreement").
-------------------------
6.7. Publicity. The initial press release concerning the Merger has been
---------
approved by Parent and the Company and thereafter the Company and its
Subsidiaries, on the one hand, and Parent and Merger Sub, on the other hand,
shall consult with each other prior to issuing any press releases or otherwise
making public announcements with respect to the Merger and the other
transactions contemplated by this Agreement and prior to making any filings with
any Governmental Entity or other Person (including the New York Stock Exchange
or the NASD) with respect hereto, except as may be required by law or by
obligations pursuant to any listing agreement.
6.8. Status of Company Employees; Employee Benefits. Parent agrees that
----------------------------------------------
following the Effective Time, the employees of the Company and its Subsidiaries
who are employed by the Surviving Corporation or its Subsidiaries ("Company
-------
Employees") shall continue participating in the employee benefit plans and
- ---------
arrangements maintained by the Company, and Parent shall cause the Surviving
Corporation to honor in accordance with their terms all employee benefit
obligations to current and former employees under the Compensation and Benefit
Plans in existence on the date hereof (including, without limitation, the plans
and agreements listed on Section 5.1(h)(i) of the Company Disclosure Schedule)
and all employment or severance agreements entered into by the Company
(collectively, the "Employment and Severance Agreements"); it being understood
----------------------------------- -------------------
that nothing contained herein shall limit or restrict the ability of Parent or
Camfil to modify or terminate any Compensation and Benefit Plan, or to merge any
Compensation and Benefit Plan with any other plan, other than the Employment and
Severance Agreements, following the Effective Time.
6.9. Expenses. The Surviving Corporation shall pay all charges and
--------
expenses, including those of the Exchange Agent, in connection with the
transactions contemplated in Article IV. Except as otherwise provided in
Sections 8.5, whether or not the Merger is
28
<PAGE>
consummated, all costs and expenses incurred in connection with this Agreement
and the Merger and the other transactions contemplated by this Agreement shall
be paid by the party incurring such expense.
6.10. Indemnification.
---------------
(a) From and after the Effective Time, Parent and the Surviving
Corporation shall jointly and severally indemnify, defend and hold harmless each
person who is now, or has been at any time prior to the date of this Agreement
or who becomes prior to the Effective Time a director, officer, employee or
agent of the Company or any of its Subsidiaries, excluding QF Filter Sdn. Bhd.
(when acting in such capacity) (each individually, an "Indemnified Party", and
-----------------
collectively, the "Indemnified Parties"), against any costs or expenses
--------------------
(including reasonable attorneys' fees and expenses), judgments, settlement
amounts, fines, losses, claims, demands, damages or liabilities (collectively,
"Costs") incurred in connection with any claim, action, suit, proceeding or
-----
investigation, whether civil, criminal or administrative (each, a "Claim")
-----
arising out of matters existing or occurring prior to or after the Effective
Time, whether threatened, asserted or claimed prior to, at or after the
Effective Time, which is based in whole or in part on, or arising in whole or in
part out of the fact that such person is or was a director (including as a
member of the Special Committee) or officer of the Company or any of its
Subsidiaries including, without limitation, all Costs based in whole or in part
on, or arising in whole or in part out of, or pertaining to this Agreement or
the transactions contemplated hereby, including the Offer and the Merger, to the
fullest extent that the Company would have been permitted under the DGCL and its
certificate of incorporation, bylaws and other agreements in effect on the date
hereof to indemnify such individual. Parent shall, or shall cause the Surviving
Corporation to, pay all Costs in advance of the final disposition of any Claim
to each Indemnified Party to the fullest extent provided in the Company's
certificate of incorporation or bylaws as in effect on the date hereof, subject
to receipt by Parent or the Surviving Corporation of an undertaking by or on
behalf of such Indemnified Party contemplated by Section 145(e) of the DGCL.
Without limiting the generality or effect of the foregoing, in the event any
Claim is brought against any Indemnified Party (whether arising before or after
the Effective Time) and, in the opinion of counsel to an Indemnified Party,
under applicable standards of professional conduct, there is a conflict on any
significant issue between the position of the Surviving Corporation and an
Indemnified Party, the Indemnified Parties may retain counsel of their choice,
which counsel shall be reasonably satisfactory to Parent and the Surviving
Corporation (it being understood that Gibson, Dunn & Crutcher LLP is acceptable
to Parent and the Surviving Corporation), and Parent shall, or shall cause the
Surviving Corporation to, pay all reasonable fees and expenses of such counsel
for the Indemnified Parties promptly as statements therefor are received. The
Indemnified Parties as a group may not retain more than one law firm (in
addition to local counsel) to represent them with respect to each such matter
unless there is, in the opinion of counsel to an Indemnified Party, under
applicable standards of professional conduct, a conflict on any significant
issue between the positions of any two or more Indemnified Parties. The Company,
Parent and the Merger Sub (or the Surviving Corporation after the Effective
Time) agree that all rights to indemnification, including provisions relating to
advances of Costs incurred with respect to matters occurring through the
Effective Time, shall survive six years from the Effective Time; provided,
however, that all rights to indemnification in respect of any Claim asserted or
made within such period shall continue until the disposition of such Claim.
29
<PAGE>
(b) Any Indemnified Party wishing to claim indemnification under
subsection (a) of this Section 6.l0, upon learning of any such Claim, shall
promptly notify Parent and the Surviving Corporation thereof (but the failure so
to notify Parent and the Surviving Corporation shall not relieve them from any
liability which they may have under this Section 6.10 except to the extent such
failure materially prejudices such party). In the event of any such Claim
(whether arising before or after the Effective Time), Parent and the Surviving
Corporation shall have the right to assume the defense of any Claim for which an
Indemnified Party is entitled to indemnification under subsection (a) of this
Section 6.10 with counsel reasonably acceptable to such Indemnified Party (which
right shall not affect the right of the Indemnified Parties to be reimbursed for
fees and expenses of separate counsel under the circumstances specified in
Section 6.10(a)). Except as otherwise provided in this Section 6.10, neither the
Parent nor the Surviving Corporation shall be liable to any such Indemnified
Party for any legal expenses of other counsel or any other expenses incurred by
such Indemnified Party in connection with the defense thereof after either the
Parent or the Surviving Corporation, as the case may be, have assumed the
defense of such Claim. The Indemnified Party will cooperate in all respects as
reasonably requested by Parent or the Surviving Corporation, as the case may be,
in the defense of any such matter and in connection therewith, shall be entitled
to reimbursement by Parent of reasonable expenses incurred in connection
therewith on a current basis. Neither Parent nor the Surviving Corporation, as
the case may be, shall have any obligation hereunder to any Indemnified Party if
and when a court shall ultimately determine, and such determination shall have
become final and nonappealable, that the indemnification of such Indemnified
Party in the manner contemplated by this Section 6.10 is prohibited by law. If
such indemnity is not available with respect to any Indemnified Party, then
Parent, the Company and the Merger Sub (or the Surviving Corporation after the
Effective Date), on the one hand, and the Indemnified Party, on the other hand,
shall contribute to the amount payable in such proportion as is appropriate to
reflect relative faults and benefits.
(c) The provisions of this Section 6.10 are intended to be for the
benefit of, and shall be enforceable by, each of the Indemnified Parties and
their respective heirs and estates. Nothing in this Section 6.10 shall limit in
any way any other rights to indemnification that any current or former director
or officer of the Company or any of its Subsidiaries may have by contract or
otherwise.
(d) Without limiting the effect of subsection (a) of this Section
6.10, from and after the Effective Time, the Surviving Corporation shall
fulfill, assume and honor in all respects the obligations of the Company or any
of its Subsidiaries pursuant to the Company's or any of its Subsidiaries'
certificate of incorporation, bylaws and any indemnification agreement between
the Company or any of its Subsidiaries, excluding QF Filter Sdn. Bhd., which is
set forth on Section 6.10 of the Company Disclosure Schedule and any of their
respective directors and officers existing and in force as of the Effective
Time. The Surviving Corporation agrees that the indemnification obligations set
forth in the Company's certificate of incorporation and bylaws, in each case as
of the date of this Agreement, shall survive the Merger (and, as of or prior to
the Effective Time, Parent shall cause the bylaws of Merger Sub to reflect such
provisions). No subsequent amendment of the provisions of the bylaws of the
Surviving Corporation shall affect the indemnification obligations of Parent or
the Surviving Corporation in any manner that would adversely affect the rights
of the Indemnified Parties under this Section 6.10.
30
<PAGE>
(e) If Parent or the Surviving Corporation or any of its successors or
assigns (i) shall consolidate with or merge into any other Person and shall not
be the continuing or surviving corporation or Person of such consolidation or
merger or (ii) shall transfer all or substantially all of its properties and
assets to any Person, then and in each such case, proper provisions shall be
made so that the successors and assigns of the Parent and Surviving Corporation
shall assume all of the obligations set forth in this Section 6.10.
6.11. Other Actions by the Company and Parent. If any Takeover Statute is
---------------------------------------
or may become applicable to the Merger or the other transactions contemplated by
this Agreement, each of Parent and the Company and their respective Boards of
Directors shall grant such approvals and take such lawful actions as are
necessary so that such transactions may be consummated as promptly as
practicable on the terms contemplated by this Agreement or by the Merger and
otherwise act to eliminate or minimize the effects of such statute, and any
regulations promulgated thereunder, on such transactions.
ARTICLE VII
CONDITIONS
7.1. Conditions to Each Party's Obligation to Effect Merger. The respective
------------------------------------------------------
obligation of each party to effect the Merger is subject to the satisfaction or
waiver at or prior to the Closing of each of the following conditions:
(a) Stockholder Approval. If required by applicable law this Agreement
--------------------
shall have been duly approved by holders of the number of Shares constituting at
least the Company Requisite Vote.
(b) Regulatory Consents. The waiting period applicable to the
-------------------
consummation of the Merger under the HSR Act shall have expired or been
terminated and, other than filing the Delaware Certificate of Merger, all
filings with any Governmental Entity required to be made prior to the Effective
Time by the Company or Parent or any of their respective Subsidiaries, with, and
all Government Consents required to be obtained prior to the Effective Time by
the Company or Parent or any of their respective Subsidiaries in connection with
the execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby by the Company, Parent and Merger Sub shall
have been made or obtained (as the case may be),\\ except where the failure to
so make or obtain will not result in either a Company Material Adverse Effect or
a Parent Material Adverse Effect.\\
(c) Litigation. No court or other Governmental Entity of competent
----------
jurisdiction shall have enacted, issued, promulgated, enforced or entered any
statute, rule, regulation, judgment, decree, injunction or other order (whether
temporary, preliminary or permanent) that is in effect and restrains, enjoins or
otherwise prohibits consummation of the transactions contemplated by this
Agreement (collectively, an "Order"), and no Governmental Entity shall have
-----
instituted any proceeding seeking any such Order and such proceeding remains
unresolved.
31
<PAGE>
7.2. Conditions to Obligations of Parent and Merger Sub. The obligations of
--------------------------------------------------
Parent and Merger Sub to effect the Merger are also subject to the satisfaction
or waiver by Parent prior to the Effective Time of the following conditions:
(a) Representations and Warranties. The representations and warranties
------------------------------
of the Company set forth in this Agreement shall be true and correct in all
material respects as of the date of this Agreement and (except to the extent
such representations and warranties speak as of an earlier date) as of the
Closing Date as though made on and as of the Closing Date it being understood
that representations and warranties shall be deemed to be true and correct
unless the respects in which the representations and warranties (without giving
effect to any "materiality" limitations or references to "material adverse
effect" set forth therein) are untrue or incorrect in the aggregate is likely to
have a Company Material Adverse Effect.
(b) Performance of Obligations of the Company. The Company shall have
-----------------------------------------
performed in all material respects all obligations required to be performed by
it under this Agreement at or prior to the Closing Date.
7.3. Conditions to Obligations of the Company. The obligation of the
Company to effect the Merger is also subject to the satisfaction or waiver by
the Company prior to the Effective Time of the following conditions:
(a) Representations and Warranties. The representations and warranties
------------------------------
of Parent and Merger Sub set forth in this Agreement shall be true and correct
in all material respects as of the date of this Agreement and (except to the
extent such representations and warranties speak as of an earlier date) as of
the Closing Date as though made on and as of the Closing Date it being
understood that representations and warranties shall be deemed to be true and
correct unless the respects in which the representations and warranties (without
giving effect to any "materiality" limitations or references to "material
adverse effect" set forth therein) are untrue or incorrect in the aggregate is
likely to have a Parent Material Adverse Effect.
(b) Performance of Obligations of Parent and Merger Sub. Each of
---------------------------------------------------
Parent and Merger Sub shall have performed in all material respects all
obligations required to be performed by it under this Agreement at or prior to
the Closing Date.
ARTICLE VIII
TERMINATION
8.1. Termination by Mutual Consent. This Agreement may be terminated and
-----------------------------
the Merger may be abandoned at any time prior to the Effective Time, whether
before or after its approval by the stockholders of the Company, by mutual
written consent of the Company, Parent and Merger Sub, or by action of their
respective Boards of Directors.
8.2. Termination by Either Parent or the Company. This Agreement may be
-------------------------------------------
terminated and the Merger may be abandoned at any time prior to the Effective
Time by either Parent or the Company, by action of their respective Boards of
Directors if (a) any Order permanently restraining, enjoining or otherwise
prohibiting the Merger shall be entered (whether before or after the approval by
the stockholders of the Company) and such Order is or shall have
32
<PAGE>
become nonappealable; provided, however, that the party seeking to terminate
this Agreement pursuant to this subsection (a) shall have used reasonable
commercial efforts to remove or lift such Order, or (b) the Minimum Condition
shall not have been satisfied on or before May 31, 2000.
8.3. Termination by the Company. This Agreement may be terminated and the
--------------------------
Merger may be abandoned at any time prior to the Effective Time, whether before
or after its approval by the stockholders of the Company, by the Company if:
(a) (i) Merger Sub fails to commence the Offer as provided in Section
1.1 or (ii) after May 31, 2000, Merger Sub shall have failed to accept the
Shares for payment pursuant to the Offer; provided, however, that the right to
terminate this Agreement pursuant to this subsection (a) shall not be available
to the Company if it has breached in any material respects its obligations under
this Agreement in any manner that shall have proximately contributed to the
failure referenced in this subsection (a);
(b) the Offer is terminated or withdrawn pursuant to its terms without
any Shares being purchased thereunder; provided, however, that the right to
terminate this Agreement pursuant to this subsection (b) shall not be available
to the Company if it has breached in any material respects its obligations under
this Agreement in any manner that shall have proximately contributed to the
termination or withdrawal of the Offer;
(c) prior to Merger Sub's purchase of Shares pursuant to the Offer,
the Company enters into a written agreement with respect to a Superior Proposal
after complying with the procedures set forth in Section 6.2; provided, however,
that notwithstanding anything in this Agreement to the contrary, the termination
of this Agreement by the Company pursuant to this subsection (c) shall not be
deemed to violate or breach other obligations of the Company under this
Agreement; or
(d) there has been a material breach by Parent or Merger Sub of any
representation, warranty, covenant or agreement contained in this Agreement that
is not curable or, if curable, is not cured prior to the earlier of (i) twenty
(20) days after written notice of such breach is given by the Company to Parent,
and (ii) two (2) Business Days before the date on which the Offer expires.
8.4. Termination by Parent and Merger Sub. This Agreement may be terminated
------------------------------------
and the Merger may be abandoned at any time prior to the Effective Time, whether
before or after its approval by the stockholders of the Company, by Parent and
Merger Sub if:
(a) After May 31, 2000, Merger Sub shall not have accepted Shares for
payment pursuant to the Offer; provided, however, that the right to terminate
this Agreement pursuant to this subsection (a) shall not be available to Parent
and Merger Sub if either of them has breached in any material respect its
obligations under this Agreement in any manner that shall have proximately
contributed to the occurrence of the failure referred to in this subsection (a);
33
<PAGE>
(b) The Board of Directors of the Company shall have withdrawn or
modified its approval or recommendation of this Agreement in a manner materially
adverse to Parent or Merger Sub; or
(c) Merger Sub shall have terminated the Offer in accordance with the
provisions of Annex A; provided, however, that the right to terminate this
Agreement pursuant to this subsection (c) shall not be available to Parent and
Merger Sub if either of them has breached in any material respect its
obligations under this Agreement in any manner that shall have proximately
contributed to the termination of the Offer.
8.5. Effect of Termination and Abandonment; Termination Fee.
------------------------------------------------------
(a) If this Agreement is terminated and the Merger abandoned pursuant
to this Article VIII, this Agreement (other than as set forth in this Section
8.5 and in Section 9.1) shall become void and of no further effect with no
liability of any party hereto (or any of its directors, officers, employees,
agents, stockholders, legal, accounting and financial advisors or other
representatives); provided, however, that, except as otherwise provided herein,
no such termination shall relieve any party hereto of any liability or damages
resulting from any material breach of this Agreement.
(b) (i) In lieu of any liability or obligation to pay damages, if (x)
there shall not have been a material breach of any representation, warranty,
covenant or agreement on the part of the Company and (y) Parent shall have
terminated this Agreement for any reason other than the failure of the waiting
period under the HSR Act to have been satisfied, Parent shall pay to the Company
a fee of 5% of the Transaction Value within sixty (60) calendar days of such
termination.
(ii) In lieu of any liability or obligation to pay damages, if
(x) there shall not have been a material breach of any representation,
warranty, covenant or agreement on the part of Parent or Merger Sub
and (y) the Company shall have the right to terminate this Agreement
pursuant to Section 8.3(c), the Company shall pay to Parent within
sixty (60) calendar days of such termination or, if earlier,
concurrently with the closing of the transaction that is the subject
of the Superior Proposal, a fee of 4% of the Transaction Value, plus
an expense allowance of $1,000,000.
(c) The parties acknowledge that the agreements contained in Section
8.5 are an integral part of the transactions contemplated by this Agreement and
that, without these agreements, the parties would not enter into this Agreement;
accordingly, if any party fails promptly to pay the amounts required pursuant to
Section 8.5 and, in order to obtain such payment the other party commences a
suit which results in a final nonappealable judgment against the defaulting
party for such amounts, the defaulting party shall pay to the other party its
costs and expenses (including attorneys' fees) in connection with such suit.
8.6. Procedure for Termination. A termination of this Agreement pursuant to
-------------------------
this Article VIII shall, in order to be effective, be in writing specifying the
provision hereof pursuant to which such termination is made and shall require in
the case of Parent, Merger Sub or the Company, action by its Board of Directors.
34
<PAGE>
ARTICLE IX
MISCELLANEOUS
9.1. Survival. This Article IX and the agreements of the Company, Parent
--------
and Merger Sub contained in Sections 6.8 (Benefits), 6.9 (Expenses) and 6.10
(Indemnification) shall survive the consummation of the Merger. This Article IX
and the agreements of the Company, Parent and Merger Sub contained in Section
6.9 (Expenses), Section 8.5 (Effect of Termination and Abandonment; Termination
Fee) and the Confidentiality Agreement shall survive the termination of this
Agreement. All other representations, warranties, agreements and covenants in
this Agreement and in any certificate or schedule delivered pursuant hereto
shall not survive the consummation of the Merger or the termination of this
Agreement.
9.2. Certain Definitions. For the purposes of this Agreement each of the
-------------------
following terms shall have the meanings set forth below:
(a) "Affiliate" means a Person that, directly or indirectly, through
---------
one or more intermediaries controls, is controlled by or is under common control
with the first-mentioned Person.
(b) "Business Day" means any day other than a day on which banks in
------------
the State of New York are authorized to close or the New York Stock Exchange is
closed.
(c) "Capital Stock" means common stock, preferred stock, partnership
-------------
interests, limited liability company interests or other ownership interests
entitling the holder thereof to vote with respect to matters involving the
issuer thereof.
(d) "Company Material Adverse Effect " means a material adverse effect
-------------------------------
on the financial condition, properties, business or results of operations of the
Company and its Subsidiaries, taken as a whole (it being understood that the
following shall not be taken into account in determining whether there has been
a Company Material Adverse Effect: (i) any adverse effect that is caused by
conditions affecting the economy or security markets generally; (ii) any adverse
effect that is caused by conditions generally affecting the primary industry in
which the Company currently competes; and (iii) any adverse effect that is
caused by the public announcement of the transactions contemplated by this
Agreement or actions taken by Parent or its Subsidiaries after the date of this
Agreement).
(e) "Depositary" means ChaseMellon Shareholder Services, L.L.C., which
----------
will serve as the depositary for the Offer or its duly appointed successor.
(f) "knowledge", "to the knowledge of", "has received no notice" and
--------- ------------------- ----------------------
similar terms with respect to any Person, means the current actual knowledge of
such Person and if such Person is a corporation, the knowledge of the executive
officers of the corporation.
(g) "Lien" means, with respect to any asset, any mortgage, lien,
----
pledge, charge, security interest, encumbrance, hypothecation, title defect or
adverse claim of any kind in respect of such asset.
35
<PAGE>
(h) "Parent Material Adverse Effect" means a material adverse effect
------------------------------
on the ability of Parent or Merger Sub to conduct the Offer or consummate the
Merger or any of the other material transactions contemplated by this Agreement.
(i) "Permitted Liens" means (i) Liens for Taxes or other governmental
---------------
assessments, charges or claims the payment of which is not yet due; (ii)
statutory liens of landlords and liens of carriers, warehousemen, mechanics,
materialmen and other similar Persons and other liens imposed by applicable Law
incurred in the ordinary course of business for sums not yet delinquent or
immaterial in amount and being contested in good faith; (iii) liens specifically
identified as such in the Balance Sheet or the notes thereto; (iv) liens
constituting or securing executory obligations under any lease that constitutes
an "operating lease" under GAAP; and (v) any other Lien arising in the ordinary
course of business, the imposition of which would not constitute a Company
Material Adverse Effect; provided, however, that, with respect to each of the
foregoing clauses (i) through (iv), to the extent that any such lien arose prior
to the Audit Date and relates to, or secures the payment of, a liability that is
required to be accrued on the Balance Sheet under GAAP, such lien shall not be a
Permitted Lien unless accruals for such liability have been established therefor
on the Balance Sheet in conformity with GAAP. Notwithstanding the foregoing, no
lien arising under the Code or ERISA with respect to the operation, termination,
restoration or funding of any Compensation and Benefit Plan sponsored by,
maintained by or contributed to by the Company or any of its ERISA Affiliates or
arising in connection with any excise tax or penalty tax with respect to such
Compensation and Benefit Plan shall be a Permitted Lien.
(j) "Person" means an individual, corporation (including not-for-
------
profit), partnership, limited liability company, association, trust,
unincorporated organization, joint venture, estate, Governmental Entity or other
legal entity.
(k) "Subsidiary" or "Subsidiaries" of the Company, Parent, the
---------- ------------
Surviving Corporation or any other Person means any corporation, partnership,
limited liability company, association, trust, unincorporated association or
other legal entity of which the Company, Parent, the Surviving Corporation or
any such other Person, as the case may be, either alone or through or together
with any other Subsidiary, owns, directly or indirectly, 50% or more of the
Capital Stock, the holders of which are generally entitled to vote for the
election of the Board of Directors or other governing body of such corporation
or other legal entity. For greater certainty, in the case of the Company,
"Subsidiary" includes QF Filter Sdn. Bhd.
9.3. No Personal Liability. This Agreement shall not create or be deemed to
---------------------
create any personal liability or obligation on the part of any direct or
indirect stockholder of the Company, Merger Sub or Parent, or any of their
respective officers, directors, employees, agents or representatives.
9.4. Modification or Amendment. Subject to the provisions of applicable
-------------------------
Law, at any time prior to the Effective Time, the parties hereto may modify or
amend this Agreement, by written agreement executed and delivered by duly
authorized officers of the respective parties.
9.5. Waiver of Conditions. The conditions to each of the parties'
--------------------
obligations to consummate the Merger are for the sole benefit of such party
and may be waived by such party
36
<PAGE>
in whole or in part to the extent permitted by applicable Law. The failure of
any party hereto to exercise any right, power or remedy provided under this
Agreement or otherwise available in respect hereof at law or in equity, or to
insist upon strict compliance by any other party hereto with its obligations
hereunder, and any custom or practice of the parties at variance with the terms
hereof, shall not constitute a waiver by such party of its rights to exercise
any such or other right, power or remedy or to demand such compliance.
9.6. Counterparts. This Agreement may be executed in any number of
------------
counterparts, each such counterpart being deemed to be an original instrument,
and all such counterparts shall together constitute the same agreement.
9.7. Governing Law and Venue; Waiver of Jury Trial.
---------------------------------------------
(a) THIS AGREEMENT SHALL BE DEEMED TO BE MADE IN, AND IN ALL RESPECTS
SHALL BE INTERPRETED, CONSTRUED AND GOVERNED BY AND IN ACCORDANCE WITH THE LAW
OF THE STATE OF DELAWARE WITHOUT REGARD TO THE CONFLICT OF LAW PRINCIPLES
THEREOF. The parties hereby irrevocably submit to the jurisdiction of the courts
of the State of Delaware and the Federal courts of the United States of America
located in the State of Delaware solely in respect of the interpretation and
enforcement of the provisions of this Agreement and of the documents referred to
in this Agreement, and in respect of the transactions contemplated hereby, and
hereby waive, and agree not to assert, as a defense in any action, suit or
proceeding for the interpretation or enforcement hereof or of any such document,
that it is not subject thereto or that such action, suit or proceeding may not
be brought or is not maintainable in said courts or that the venue thereof may
not be appropriate or that this Agreement or any such document may not be
enforced in or by such courts, and the parties hereto irrevocably agree that all
claims with respect to such action or proceeding shall be heard and determined
in such a Delaware State or Federal court. The parties hereby consent to and
grant any such court jurisdiction over the person of such parties and over the
subject matter of such dispute and agree that mailing of process or other papers
in connection with any such action or proceeding in the manner provided in
Section 9.8 or in such other manner as may be permitted by applicable law, shall
be valid and sufficient service thereof.
(b) The parties agree that irreparable damage would occur and that the
parties would not have any adequate remedy at law in the event that any of the
provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that the
parties shall be entitled to an injunction or injunctions to prevent breaches of
this Agreement and to enforce specifically the terms and provisions of this
Agreement in any Federal court located in the State of Delaware or in Delaware
state court, this being in addition to any other remedy to which they are
entitled at law or in equity.
(c) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY
ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT
ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY
WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT
37
<PAGE>
OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY CERTIFIES AND
ACKNOWLEDGES THAT (I) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY
HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (II) EACH SUCH PARTY
UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (III) EACH SUCH
PARTY MAKES THIS WAIVER VOLUNTARILY, AND (IV) EACH SUCH PARTY HAS BEEN INDUCED
TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE INITIAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION 9.7.
9.8. Notices. Any notice, request, instruction or other document to be
-------
given hereunder by any party to the others shall be deemed given if in writing
and delivered personally or sent by registered or certified mail (return receipt
requested) or overnight courier (providing proof of delivery), postage prepaid,
or by facsimile (which is confirmed):
If to Parent or Merger Sub:
--------------------------
Arne Karlsson
Forvaltnings AB Ratos (publ.)
Drottninggatan 2
SE-111 96 Stockholm, Sweden
Attention: President
Fax: 011-46-8-10-25-59
with a copy to:
--------------
Michael M. Maney, Esq.
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
Fax: (212) 558-3588
If to the Company:
-----------------
John C. Johnston
Farr Company
2201 Park Place
El Segundo, CA 90245
Attention: President
Fax: (310) 536-9867
38
<PAGE>
with a copy to:
--------------
Robert K. Montgomery, Esq.
Gibson, Dunn & Crutcher LLP
2029 Century Park East
Los Angeles, California 90067-3026
Fax: (310) 551-8741
or to such other Persons or addresses as may be designated in writing by the
party to receive such notice as provided above.
9.9. Entire Agreement. This Agreement (including any schedules, exhibits or
----------------
annexes hereto) and the Confidentiality Agreement constitute the entire
agreement, and supersede all other prior agreements, understandings,
representations and warranties both written and oral, among the parties, with
respect to the subject matter hereof.
9.10. No Third Party Beneficiaries. Except as provided in Section 6.10
----------------------------
(Indemnification), this Agreement is not intended to confer upon any Person
other than the parties hereto any rights or remedies hereunder.
9.11. Obligations of the Company, the Surviving Corporation, Parent and
-----------------------------------------------------------------
Camfil. Whenever this Agreement requires a Subsidiary of the Company or Parent
- ------
and/or Camfil to take any action, such requirement shall be deemed to include an
undertaking on the part of the Company, Parent or Camfil, as the case may be, to
cause such Subsidiary to take such action and, after the Effective Time, on the
part of the Surviving Corporation to cause such Subsidiary to take such action.
Any obligation of Parent specified in this Agreement shall after the date of the
Transfer be an obligation of Camfil only and not of Parent.
9.12. Severability. The provisions of this Agreement shall be deemed
------------
severable and the invalidity or unenforceability of any provision hereof shall
not affect the validity or enforceability of any of the other provisions hereof.
If any provision of this Agreement, or the application thereof to any Person or
any circumstance, is illegal, invalid or unenforceable, (a) a suitable and
equitable provision shall be substituted therefor in order to carry out, so far
as may be valid and enforceable, the intent and purpose of such invalid or
unenforceable provision, and (b) the remainder of this Agreement and the
application of such provision to other Persons or circumstances shall not be
affected by such invalidity or unenforceability, nor shall such invalidity or
unenforceability affect the validity or enforceability of such provision, or the
application thereof, in any other jurisdiction.
9.13. Interpretation. The table of contents and Article, Section and
--------------
subsection headings herein are for convenience of reference only, do not
constitute a part of this Agreement and shall not be deemed to limit or
otherwise affect any of the provisions hereof. Where a reference in this
Agreement is made to a Section, Schedule, Annex or Exhibit, such reference shall
be to a Section of, or Schedule, Annex or Exhibit to, this Agreement, unless
otherwise indicated. Whenever the words "include," "includes" or "including" are
used in this Agreement, they shall be deemed to be followed by the words
"without limitation." All terms defined in this Agreement shall have the defined
meanings when used in any certificate or other document made or
39
<PAGE>
delivered pursuant hereto unless otherwise defined therein. The definitions
contained in this Agreement are applicable to the singular as well as the plural
forms of such terms and to the masculine as well as to the feminine and neuter
genders of such terms. Any agreement, instrument or statute defined or referred
to herein or in any agreement or instrument that is referred to herein means
such agreement, instrument or statute as from time to time amended, modified or
supplemented, including (in the case of agreements or instruments) by waiver or
consent and (in the case of statutes) by succession of comparable successor
statutes and references to all attachments thereto and instruments incorporated
therein. References to a Person are also to its permitted successors and assigns
and, in the case of an individual, to his or her heirs and estate, as
applicable.
9.14. Assignment. This Agreement shall not be assignable by operation of
----------
law or otherwise and any attempted assignment of this Agreement in violation of
this sentence shall be void, provided that the Transfer contemplated by Section
5.2(g) shall not violate this Section 9.14.
40
<PAGE>
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by
duly authorized officers of the parties hereto as of the date hereof.
FARR COMPANY
By: Jack Meany
__________________________
Name: Jack Meany
Title: Chairman
FORVALTNINGS AB RATOS
By: Bo Jungner
__________________________
Name: Bo Jungner
Title: Senior Investment Manager
RATOS ACQUISITION CORP.
By: Bo Jungner
__________________________
Name: Bo Jungner
Title: Senior Investment Manager
41
<PAGE>
ANNEX A
CONDITIONS OF THE OFFER
Notwithstanding any other provision of the Offer or this Agreement, and
subject to any applicable rules and regulations of the SEC, including Rule 14e-
1(c) relating to Merger Sub's obligation to pay for or return tendered shares
after termination or withdrawal of the Offer, neither Merger Sub nor Parent
shall be required to accept for payment or pay for any Shares tendered pursuant
to the Offer, and, if required by Section 1.1(b) of this Agreement, Merger Sub
shall extend the Offer by one or more extensions until May 31, 2000, as provided
in Section 1.1(b) of the Agreement, and, except as otherwise provided in this
Agreement, may terminate the Offer at any time after May 31, 2000 if (i) less
than the number of Shares necessary to satisfy the Minimum Condition have been
tendered pursuant to the Offer prior to the expiration of the Offer and not
withdrawn; (ii) any applicable waiting period under the HSR Act has not expired
or terminated prior to the Expiration Date of the Offer; or (iii) at any time
after the date of this Agreement, and before acceptance for payment of any
Shares, any of the following events shall occur and be continuing on or after
May 31, 2000:
(a) There shall have been any action taken, or any statute, rule,
regulation, judgment, order or injunction promulgated, entered, enforced,
enacted, issued or deemed applicable to the Offer or the Merger by any domestic
or foreign court or other Governmental Entity (other than the application of the
waiting period provisions of the HSR Act to the Offer or to the Merger) that, in
the reasonable judgment of Merger Sub, would be expected to, directly or
indirectly, (i) prohibit or impose any material limitations on Merger Sub,
Camfil or Parent's ownership or operation of all or a material portion of the
Company's businesses or assets, or compel Merger Sub, Camfil or Parent to
dispose of or hold separate any material portion of its businesses or assets or,
where applicable, its Subsidiaries' business or assets, or the business or
assets of the Company or its Subsidiaries, in each case taken as a whole, (ii)
prohibit, or make illegal, the acceptance for payment, payment for or purchase
of Shares or the consummation of the Offer, the Merger or the other transactions
contemplated by this Agreement, (iii) result in the material delay in or
restrict the ability of Merger Sub, or render Merger Sub unable, to accept for
payment, pay for or purchase some or all of the Shares, or (iv) impose material
limitations on the ability of Merger Sub effectively to exercise full rights of
ownership of the Shares, including the right to vote the Shares purchased by it
on all matters properly presented to the Company's stockholders;
(b) (i) The representations and warranties of the Company set forth in
this Agreement shall not be true and correct in any material respect as of the
date of this Agreement and as of consummation of the Offer as though made on or
as of such date (except for representations and warranties made as of a
specified date) but only if the respects in which the representations and
warranties made by the Company are inaccurate would in the aggregate have a
Company Material Adverse Effect, (ii) the Company shall have failed to comply
with its covenants and agreements contained in this Agreement in all material
respects which failure is likely to have a Company Material Adverse Effect and,
with respect to any breach or failure
A-1
<PAGE>
described in clause (b)(i) or (b)(ii) above that can be cured, the breach or
failure shall not have been cured prior to ten (10) Business Days after Merger
Sub has furnished the Company written notice of such breach or failure, or (iii)
there shall have occurred any events or changes which have had or which are
likely to have a Company Material Adverse Effect; or
(c) There shall have occurred and continue to exist (i) any general
suspension of, or limitation on prices for, trading in securities on the New
York Stock Exchange (other than a shortening of trading hours or any coordinated
trading halt triggered solely as a result of a specified increase or decrease in
a market index), (ii) the declaration of any banking moratorium or any
suspension of payments in respect of banks, or any limitation (whether or not
mandatory) by any Governmental Entity on, or other event materially adversely
affecting, the extension of credit by lending institutions in the United States,
or (iii) a commencement of a war or armed hostilities directly involving the
United States, which has and continues to have a material adverse effect on the
trading of securities on the New York Stock Exchange.
In any event, Merger Sub may terminate the Offer immediately if:
(a) The Board of Directors of the Company shall have withdrawn, or
modified or changed in a manner adverse to Parent (including by amendment of the
Schedule 14D-9), its recommendation of the Offer, this Agreement or the Merger,
or recommended another proposal or offer for the acquisition of the Company, or
the Board of Directors of the Company shall have resolved to do any of the
foregoing; or
(b) This Agreement shall have terminated in accordance with its terms.
The foregoing conditions, other than the Minimum Condition, are for
the sole benefit of Parent and Merger Sub and may be waived upon the mutual
agreement of Parent and Merger Sub, in whole or in part at any time and from
time to time. The failure by Merger Sub or Parent at any time to exercise any of
the foregoing rights shall not be deemed a waiver of any such right and each
such right shall be deemed an ongoing right which may be asserted at any time
and from time to time, except as otherwise provided in this Agreement.
A-2
<PAGE>
Company Disclosure Schedule
<PAGE>
Section 5.1(a)(i)
of the
FARR COMPANY DISCLOSURE SCHEDULE
Place of Jurisdictions in Percentage
Company Name: Incorporation Which Qualified Ownership
- --------------------------- ------------- ---------------- ----------
FARR COMPANY Delaware Arizona, Arkansas, 100
California, Florida,
Georgia, Illinois,
Massachusetts,
Michigan, Mississippi,
North Carolina, New Jersey,
New York, Oklahoma, Pennsylvania,
Tennessee,
Texas, Utah, Washington
FARR INC. Quebec, Can. British Columbia, 100
Manitoba, Ontario
FARR COMPANY INTERNATIONAL
California none 100
FARR CAYMAN ISLANDS Cayman Islands none 100
FARR FILTRATION LIMITED England none 100
FARR FILTRES FRANCE France none 100
FARR INTERNATIONAL, INC.
Virgin Islands none 100
QF FILTER SDN. BHD. Malaysia none 50
METALCRAFT FILTERS, INC.
North Carolina none 100
(no assets, not operating-to be dissolved shortly)
<PAGE>
Section 5.1(f)
of the
FARR COMPANY DISCLOSURE SCHEDULE
(i) None.
(ii) None.
(iii) None.
(iv) None.
Since the Audit Date, Employment Continuation Agreements have been adopted for
the benefit of the Company which involve John Johnston, Richard Larson, Steve
Pegg and John Vissers. Copies of these agreements, each of which is dated
February 15, 2000, have been provided to Parent.
The Company purchased land and improvements in Robersonville North Carolina in
the first quarter of 2000.
<PAGE>
Section 5.1(g)
of the
FARR COMPANY DISCLOSURE SCHEDULE
(i) Hydro-Quebec, Plaintiff, vs. Pratt & Whitney Canada, Inc. and Pratt &
Whitney Canada, Inc. vs. Farr Inc. This action, which was filed in the
province of Quebec, district of Montreal, arises out a claim that damages
of $948,000.00 (Canadian) were caused by an alleged failure of filters
supplied by Farr Inc. to Pratt & Whitney Canada, Inc. on equipment sold to
Hydro-Quebec.
(ii) Matters responsive to 5.1(g)(ii) are set forth in Schedule 5.1(k).
<PAGE>
Section 5.1(h)(i)
of the
FARR COMPANY DISCLOSURE SCHEDULE
COMPENSATION AND BENEFIT PLANS:
- -------------------------------
Farr Company 401(k) Retirement Plan, as Restated January 1, 1996
Farr Company Employee General Insurance Plan under MetLife policy No. 101035-G
Farr Company Employee Benefit Plan under Group Benefit Agreement effective
1/1/96
Farr Company Personal Accident Insurance Plan for Office Employees (Hartford
Policy Form 7582, employee paid, voluntary participation)
Farr Company Short Term Disability Plan (MetLife Group Policy No. 101035-G,
employee paid, voluntary participation)
Farr Company Supplementary Executive Savings Plan adopted November 21, 1995
1983 Stock Option Plan For Key Employees of Farr Company
1993 Stock Option Plan For Key Employees of Farr Company
1991 Stock Option Plan For Non-Employee Directors of Farr Company
Non-Qualified Deferred Compensation Plan, dated July 31, 1987
Deferred Compensation Plan for Directors dated April 30, 1981
Deferred Compensation Plan for Directors dated November 5, 1980
Sheet Metal Production Workers Group Insurance Benefit Plan
Teamsters Health and Welfare Plan (part of 1997-2000 Agreement with Local 986)
Teamsters Incentive Plan (part of 1997-2000 Agreement with Local 986)
Teamsters Dental and Prescription Drug Plan (part of 1997-2000 Agreement with
Local 986)
Teamsters Death Benefit Plan (part of 1997-2000 Agreement with Local 986)
Teamsters Pension Plan (part of 1997-2000 Agreement with Local 986)
Farr Company 2000 Management Incentive Plan (to be adopted March 26, 2000)
Employment Continuation Agreements of: John Johnston, Richard Larson, Steve Pegg
and John Vissers dated February 15, 2000
Employment Agreement of H. Jack Meany dated September 15, 1999
Annuity contract from Mutual of Omaha Life Insurance Company (which funds the
pension benefit of H. Jack Meany pursuant to his September 15, 1999 Employment
Agreement)
Trust Agreement dated January 17, 2000 between Farr Company and Farmers and
Merchants Trust Company for the benefit of H. Jack Meany
Farr Inc. Pension Plan for Salaried Employees Amended and Restated as of January
1, 1992
Farr Filtration Limited Pension Plan created as of June 30, 1980
The Company and its Subsidiaries are also party to various other employment
related agreements, job offer letters and arrangements entered into in the
ordinary course of business, and have other policies, arrangements or
agreements, either written or oral, regarding employment, termination,
severance, compensation, medical or health. The Company has disclosed all of
such agreements, plans, policies or arrangements which either individually or in
the aggregate are material to the Company and its Subsidiaries or which cover
either the officers or directors of the Company.
<PAGE>
CONSUMMATION TRIGGERED EFFECTS
- -------------------------------
The vesting of stock options issued under the following three plans may be
accelerated:
1983 Stock Option Plan For Key Employees of Farr Company
1993 Stock Option Plan For Key Employees of Farr Company
1991 Stock Option Plan For Non-Employee Directors of Farr Company
Employment Continuation Agreements dated February 15, 2000 with John Johnston,
Steve Pegg, Richard Larson and John Vissers provide for severance payments to be
made in the event their employment is terminated under certain circumstances
during a period commencing on the change of control of the Company and running
for twenty-four (24) months.
<TABLE>
<CAPTION>
FARR COMPANY - OUTSTANDING STOCK OPTIONS
Total # Option No. Of Exerciseable Non-vested
ISO's : to date to date
----------------------------------------------------------------
Date of Name of of shs. price Exerc'd. Cancelled Cummul. # of # of
grant Grantee granted per sh. Cur.yr. Cur.yr. # Ex.& shares shares
Canc
- ----------------------------------------------------------------------------------------------------------------
EMPLOYEE'S ISO PLAN :
- ------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
20-Mar-96 Banks, M. 1,125.0 4.111 0.0 0.0 0.0 1,125.0 0
15-JUL-97 Benson, S. 3,000.0 10.667 0.0 0.0 0.0 1,500.0 1,500
16-Feb-99 Benson, S. 2,000.0 9.500 0.0 0.0 0.0 500.0 1,500
28-MAR-94 Chickering, 1,125.0 2.833 0.0 0.0 0.0 1,125.0 0
G.
28-MAR-95 Chickering, 2,250.0 3.056 0.0 0.0 0.0 2,250.0 0
G.
29-APR-97 Chickering, 1,500.0 8.000 0.0 0.0 0.0 750.0 750
G.
20-MAR-96 Hunt, H. 2,250.0 4.111 0.0 0.0 0.0 2,250.0 0
16-Feb-99 Huza, M. 2,000.0 9.500 0.0 0.0 0.0 500.0 1,500
12-JAN-95 Johnston, J. 99,000.0 2.222 0.0 0.0 0.0 99,000.0 0
29-APR-97 Johnston, J. 30,000.0 8.000 0.0 0.0 0.0 15,000.0 15,000
25-MAR-98 Johnston, J. 22,500.0 12.750 0.0 0.0 0.0 11,250.0 11,250
16-Feb-99 Johnston, J. 15,000.0 9.500 0.0 0.0 0.0 3,750.0 11,250
29-APR-97 Jones, C. 3,000.0 8.000 0.0 0.0 0.0 1,500.0 1,500
25-MAR-98 Jones, C. 3,000.0 12.750 0.0 0.0 0.0 1,500.0 1,500
16-Feb-99 Jones, C. 2,000.0 9.500 0.0 0.0 0.0 500.0 1,500
20-MAR-96 Karas, D. 1,125.0 4.111 0.0 0.0 0.0 1,125.0 0
15-JUL-97 Larson, R. 15,000.0 10.667 0.0 0.0 0.0 7,500.0 7,500
25-MAR-98 Larson, R. 22,500.0 12.750 0.0 0.0 0.0 11,250.0 11,250
16-Feb-99 Larson, R. 5,000.0 9.500 0.0 0.0 0.0 1,250.0 3,750
28-MAR-95 Martin, J. 1,125.0 3.056 0.0 0.0 843.8 281.0 0
29-APR-97 Martin, J. 1,500.0 8.000 0.0 0.0 375.0 375.0 750
16-Feb-99 Meany, H.J. 250,000.0 9.500 0.0 0.0 0.0 250,000.0 0
28-MAR-95 Mignacco, D. 2,250.0 3.056 0.0 0.0 563.0 1,687.0 0
29-APR-97 Mignacco, D. 1,500.0 8.000 0.0 0.0 0.0 750.0 750
16-Feb-99 Mignacco, D. 2,000.0 9.500 0.0 0.0 0.0 500.0 1,500
16-Feb-99 Morgan, L. 2,000.0 9.500 0.0 0.0 0.0 500.0 1,500
20-Mar-96 Ozgowicz, M. 1,125.0 4.111 0.0 0.0 843.0 282.0 0
</TABLE>
Options Outstanding
at end of period
- ----------------------------------------------------------
Date of # of Option
grant shares Price
- ----------------------------------------------------------
EMPLOYEE'S ISO PLAN ( QTD >>>>>>)
- -------------------
20-Mar-96 1,125.0 4,625.00
15-JUL-97 3,000.0 32,000.00
16-Feb-99 2,000.0 19,000.00
28-MAR-94 1,125.0 3,187.50
28-MAR-95 2,250.0 6,875.00
29-APR-97 1,500.0 12,000.00
20-MAR-96 2,250.0 9,250.00
16-Feb-99 2,000.0 19,000.00
12-JAN-95 99,000.0 220,000.00
29-APR-97 30,000.0 240,000.00
25-MAR-98 22,500.0 286,875.00
16-Feb-99 15,000.0 142,500.00
29-APR-97 3,000.0 24,000.00
25-MAR-98 3,000.0 38,250.00
16-Feb-99 2,000.0 19,000.00
20-MAR-96 1,125.0 4,625.00
15-JUL-97 15,000.0 160,000.00
25-MAR-98 22,500.0 286,875.00
16-Feb-99 5,000.0 47,500.00
28-MAR-95 281.3 859.38
29-APR-97 1,125.0 9,000.00
16-Feb-99 250,000.0 2,375,000.00
28-MAR-95 1,687.0 5,154.72
29-APR-97 1,500.0 12,000.00
16-Feb-99 2,000.0 19,000.00
16-Feb-99 2,000.0 19,000.00
20-Mar-96 282.0 1,159.33
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
29-APR-97 Ozgowicz, M. 1,500.0 8.000 0.0 0.0 750.0 0.0 750 750.0 6,000.00
03-Aug-98 Pegg, S. 20,000.0 10.750 0.0 0.0 0.0 5,000.0 15,000 20,000.0 215,000.00
16-Feb-99 Pegg, S. 5,000.0 9.500 0.0 0.0 0.0 1,250.0 3,750 5,000.0 47,500.00
12-MAR-91 Semonza 1,575.0 4.778 0.0 0.0 0.0 1,575.0 0 1,575.0 7,525.00
18-MAR-92 Semonza 2,250.0 5.000 0.0 0.0 0.0 2,250.0 0 2,250.0 11,250.00
28-MAR-94 Semonza 3,375.0 2.833 0.0 0.0 0.0 3,375.0 0 3,375.0 9,562.50
28-MAR-95 Semonza 2,250.0 3.056 0.0 0.0 0.0 2,250.0 0 2,250.0 6,875.00
29-APR-97 Thornburg, 1,500.0 8.000 0.0 0.0 0.0 750.0 750 1,500.0 12,000.00
D.
28-MAR-94 Vissers, J. 2,250.0 2.833 0.0 0.0 0.0 2,250.0 0 2,250.0 6,375.00
28-MAR-95 Vissers, J. 2,250.0 3.056 0.0 0.0 0.0 2,250.0 0 2,250.0 6,875.00
29-APR-97 Vissers, J. 3,000.0 8.000 0.0 0.0 0.0 1,500.0 1,500 3,000.0 24,000.00
16-Feb-99 Vissers, J. 2,000.0 9.500 0.0 0.0 0.0 500.0 1,500 2,000.0 19,000.00
28-MAR-94 Vu, H. 4,500.0 2.833 0.0 0.0 0.0 4,500.0 0 4,500.0 12,750.00
28-MAR-95 Vu, H. 2,250.0 3.056 0.0 0.0 0.0 2,250.0 0 2,250.0 6,875.00
29-APR-97 Vu, H. 1,500.0 8.000 0.0 0.0 0.0 750.0 750 1,500.0 12,000.00
16-Feb-99 Whittaker, 2,000.0 9.500 0.0 0.0 0.0 500.0 1,500 2,000.0 19,000.00
P.
<CAPTION>
Subtotals - EE ISO plan 552,075 448,950 99,750 548,700 $ 4,439,323
- ------------------------------------------------------------------------------------------------------------------------------------
NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN :
- ----------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
0.0 0.0 0.00
28-Jul-94 Batinovich, 4,500.0 2.389 0.0 0.0 0.0 4,500.0 4,500.0 10,750.00
R.
28-Mar-95 Batinovich, 4,500.0 3.056 0.0 0.0 0.0 4,500.0 4,500.0 13,750.00
R.
20-Mar-96 Batinovich, 4,500.0 4.111 0.0 0.0 0.0 4,500.0 4,500.0 18,500.00
R.
18-Feb-97 Batinovich, 4,500.0 7.667 0.0 0.0 0.0 4,500.0 4,500.0 34,500.00
R.
17-Feb-98 Batinovich, 4,500.0 11.000 0.0 0.0 0.0 4,500.0 4,500.0 49,500.00
R.
16-Feb-99 Batinovich, 4,500.0 9.500 0.0 0.0 0.0 4,500.0 4,500.0 42,750.00
R.
24-Mar-91 Bermingham, 4,500.0 4.056 0.0 0.0 0.0 4,500.0 4,500.0 18,250.00
R.
05-May-92 Bermingham, 4,500.0 4.111 0.0 0.0 0.0 4,500.0 4,500.0 18,500.00
R.
23-Mar-93 Bermingham, 4,500.0 2.222 0.0 0.0 0.0 4,500.0 4,500.0 10,000.00
R.
28-Mar-94 Bermingham, 4,500.0 2.833 0.0 0.0 0.0 4,500.0 4,500.0 12,750.00
R.
12-Sep-95 Bermingham, 4,500.0 4.056 0.0 0.0 0.0 4,500.0 4,500.0 18,250.00
R.
20-Mar-96 Bermingham, 4,500.0 4.111 0.0 0.0 0.0 4,500.0 4,500.0 18,500.00
R.
18-Feb-97 Bermingham, 4,500.0 7.667 0.0 0.0 0.0 4,500.0 4,500.0 34,500.00
R.
17-Feb-98 Bermingham, 4,500.0 11.000 0.0 0.0 0.0 4,500.0 4,500.0 49,500.00
R.
16-Feb-99 Bermingham, 4,500.0 9.500 0.0 0.0 0.0 4,500.0 4,500.0 42,750.00
R.
18-Feb-97 Brown, D. 4,500.0 7.667 0.0 0.0 0.0 4,500.0 4,500.0 34,500.00
17-Feb-98 Brown, D. 4,500.0 11.000 0.0 0.0 0.0 4,500.0 4,500.0 49,500.00
16-Feb-99 Brown, D. 4,500.0 9.500 0.0 0.0 0.0 4,500.0 4,500.0 42,750.00
28-Apr-98 Gerstell, F. 4,500.0 13.000 0.0 0.0 0.0 4,500.0 4,500.0 58,500.00
16-Feb-99 Gerstell, F. 4,500.0 9.500 0.0 0.0 0.0 4,500.0 4,500.0 42,750.00
28-Mar-95 Kimes, J. 4,500.0 3.056 0.0 0.0 0.0 4,500.0 4,500.0 13,750.00
20-Mar-96 Kimes, J. 4,500.0 4.111 0.0 0.0 0.0 4,500.0 4,500.0 18,500.00
18-Feb-97 Kimes, J. 4,500.0 7.667 0.0 0.0 0.0 4,500.0 4,500.0 34,500.00
17-Feb-98 Kimes, J. 4,500.0 11.000 0.0 0.0 0.0 4,500.0 4,500.0 49,500.00
16-Feb-99 Kimes, J. 4,500.0 9.500 0.0 0.0 0.0 4,500.0 4,500.0 42,750.00
24-Mar-91 Meany 4,500.0 4.056 0.0 0.0 0.0 4,500.0 4,500.0 18,250.00
05-May-92 Meany 4,500.0 4.111 0.0 0.0 0.0 4,500.0 4,500.0 18,500.00
23-Mar-93 Meany 4,500.0 2.222 0.0 0.0 0.0 4,500.0 4,500.0 10,000.00
28-Mar-94 Meany 4,500.0 2.833 0.0 0.0 0.0 4,500.0 4,500.0 12,750.00
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
16-Jul-96 Sullivan, J. 4,500.0 5.722 0.0 0.0 0.0 4,500.0 4,500.0 25,750.00
18-Feb-97 Sullivan, J. 4,500.0 7.667 0.0 0.0 0.0 4,500.0 4,500.0 34,500.00
17-Feb-98 Sullivan, J. 4,500.0 11.000 0.0 0.0 0.0 4,500.0 4,500.0 49,500.00
16-Feb-99 Sullivan, J. 4,500.0 9.500 0.0 0.0 0.0 4,500.0 4,500.0 42,750.00
0.0 0.0 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
Subtotals Director Plan 148,500 148,500 0 148,500 $ 991,750
- ------------------------------------------------------------------------------------------------------------------------------------
Combined Plans' Totals 700,575 597,450 99,750 697,200 $ 5,431,073
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Section 5.1(i)
of the
FARR COMPANY DISCLOSURE SCHEDULE
The Company is currently barred from making sales directly into the United Arab
Emirates or Bahrain until it reaches satisfactory arrangements to terminate its
moribund relationships with previously existing commercial sales agents in these
countries.
<PAGE>
Section 5.1(k)
of the
FARR COMPANY DISCLOSURE SCHEDULE
(ii)
The Company has disposed of Hazardous Material in a manner which led to claims
against the Company for contribution to the costs to clean up two former
landfill sites being administered by the United States Environmental Protection
Agency. These sites were both in California, the Operating Industries, Inc.
Landfill Superfund Site and the Casmalia, Landfill Superfund Site. The Company
was eligible to and participated in de minimus settlements for both sites. The
de minimus payments have been made and no further expense associated with these
sites is anticipated.
There have been releases of Hazardous Material at the following current or
former properties owned or leased by the Company as follows:
Former Properties
- -----------------
Rialto, California (remediation completed) Rosecrans Avenue property in El
Segundo, California (remediation completed)
Current Properties
- ------------------
All items specifically identified as potentially requiring remediation in the
phase I or phase II reports prepared in anticipation of the transaction by
Environmental Strategies Corporation at the direction of Sullivan and Cromwell
concerning the Company's existing properties. These include relatively minor or
moderate contamination, and similarly immaterial expense for potential
remediation at facilities in Delano, California; Crystal Lake, Illinois and
Jonesboro, Arkansas.
At the Company's Birmingham, England facility there have been releases of
chlorinated solvents at the location of the current and a prior above ground
solvent storage tank and hydrocarbons at the location of underground storage
tanks. These releases have caused contamination of the soil with hydrocarbons
and chlorinated solvents. The levels of contamination and details of the
investigation have been disclosed to Parent. The specific results of tests for
the chlorinated solvent investigation is attached as annex 5.1(k)(ii).
There have been releases of Hazardous Material (fuel oil and other materials) at
the Company's Robersonville, North Carolina facility by prior owners. These
releases were reported to governing authorities and remedial work completed
prior to purchase of the property by the Company.
(iii)
The Company's manufacturing facilities, including the recently purchased
property in Robersonville, North Carolina, contain asbestos-containing materials
and lead products in a variety of applications common to their time of
construction. Asbestos containing materials are present in varying quantities in
floor tiles, pipe and other insulating materials and ceiling materials. Lead
containing materials are present in paint, plumbing fixtures, piping and
<PAGE>
solder. To the Company's knowledge none of such applications pose a threat to
human health or safety and do not require remediation under any currently
applicable Environmental Laws.
Underground storage tanks ("USTs") are present at the following Company
properties:
Robersonville, North Carolina (1 UST)
Washington, North Carolina (1 UST)
Birmingham, England (3 USTs)
<PAGE>
ANNEX 5.1(K)(ii)
Preliminary Summary of Detectable Concentrations in Soil Samples (mg/kg)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Compound Sample Number SB1A SB1B SB2A SB2B SB3A SB3B SB4A SB5A SB5B
Depth (m bgl) 1-1.1 4.5-4.6 0.5-0.6 4.7-4.8 3-3.1 4.9-5 1.5-2.6 0.5-0.6 1.9-2
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
TPH 600 nd 76 nd 2,100 80 1,140 na na
Benzene nd nd nd nd 0.20 nd nd nd nd
Toluene nd nd 0.009 nd 1.82 nd nd 0.22 0.006
Ethylbenzene nd nd nd nd 1.74 nd nd nd nd
Xylene nd nd nd nd 7.95 nd nd 0.30 0.011
1,1 dichloroethene na na na na na na na 0.26 0.007
2,2 dichloroethene na na na na na na na 6.79 0.087
1,1,1 trichloroethane na na na na na na na 9.44 0.043
Trichloroethene na na na na na na na 121 0.72
Tetrachloroethene na na na na na na na 0.46 0.006
Trimethylbenzene na na na na na na na 0.13 nd
Total PAHs 7.1 nd 4.5 nd nd nd nd 0.2 nd
Di-n-butylphthalate nd 0.6 0.8 1.1 nd nd nd nd 0.9
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
nd - not detectable
na - not analysed
<PAGE>
ENVIRONMENTAL SETTING AT 411150 284200
1.1 Geology, Hydrogeology And Hydrology
The site is underlain by the Keuper Marls, which is the confining layer
for the Triassic Sandstone (a regional major aquifer). The Keuper Marls
are predominantly silty mudstone with occasional variable beds of fine-
grained sandstone, siltstone and gypsum. The Keuper Marls attains a
maximum thickness of 300m. The boulder clays appear to be present near
the site.
The Keuper Marl is classified as a non aquifer by the Environment Agency,
which can yield small supplies where sandstone beds are locally present.
Groundwater flow within the strata is likely to be fissure and fracture
dominated and springs are rare.
The nearest water courses the River Cole, located some 1km to the west of
the site, and Grand Union Canal, some 500m north of the site. The River
Cole and Grand Union Canal have been classified by Environment Agency as
Quality D (Fair) and Canal Quality C (Fair) respectively.
1.2 Historic and Neighbouring Land-Use
Historic Land Use
. 1888 to 1904: open ground or agricultural
. 1916 to 1938: the site was occupied by Bowden Brake Works
. 1939 to 1955: the site appeared to have been heavily industrialised
(no Info)
. 1956 to 1982: the site and surrounding areas have been occupied by a
variety of industrial works.
Environmental Setting
A database search conducted within a 1km radius of the site revealed
the following:
. Three water abstraction sites
. 22 discharge consents and one red-listed discharge consent
. Two landfill sites including the one BGS recorded
. One prosecution relating to controlled waters
. 32 pollution incidents to controlled waters
. Three waste treatment or disposal sites
. 8 waste transfer sites, two of which are located within 250m
. 6 IPC registered waste sites
<PAGE>
1.3 Over Site Sensitivity
Overall sensitivity of the site appears to be low to medium given the
site is underlain by the Keuper Marls (non aquifer).
References:
Environment Agency, 1994. Policy and practice for the protection of
groundwater, Severn Trent Region.
British Geological Survey, 1978. Geological map (one inch series).
Solid and drift edition (Sheet 168).
Ordnance Survey, 1992. Sheet 139 (1:50000).
Groundwater Vulnerability Map Sheet 22 (1:100000)
<PAGE>
Section 5.1(l)
of the
FARR COMPANY DISCLOSURE SCHEDULE
The Company has failed to timely pay property taxes on unimproved land it owns
in Copperas Cove, Texas and such taxes are now a lien on the property. The
Company intends to deed the property back to the City of Copperas Cove in lieu
of payment of the taxes.
The State of Florida asserted that the Company was obligated to report and pay
taxes in Florida. The Company subsequently investigated its obligation to do so
and in response became qualified to do business in the State of Florida in
1999, satisfied all reporting requirements and paid all back taxes owed.
Please refer to Schedule Section 5.1(h) regarding payment to be made to
employees of the Company and 280G of the Code.
<PAGE>
Section 5.1(m)
of the
FARR COMPANY DISCLOSURE SCHEDULE
TEAMSTERS UNION LOCAL 986.
SHEET METAL WORKERS INTERNATIONAL ASSOCIATION LOCAL 371
METALLURGISTES UNIS D'AMERIQUE, LOCAL 8990
A.E.E.U. and M.S.F.U.
<PAGE>
Section 5.1(q)
of the
FARR COMPANY DISCLOSURE SCHEDULE
The Company continues to manufacture products and pay license fees (in Canada
through Farr Inc.) for products covered by a now expired license with American
Warming and Ventilating Inc., dated May 9, 1988, a relationship which has been
in existence for approximately 36 years.
<PAGE>
Section 5.1(s)
of the
FARR COMPANY DISCLOSURE SCHEDULE
(i)
Business Loan Agreement for $10,000,000 dated May 13, 1999 between Bank of
America and the Company (as amended August 26, 1999).
Loan agreement for $2,000,000 Canadian (revolving overdraft facility) dated May
21, 1999 between Hong Kong Bank of Canada and Farr Inc.
Joint Venture Agreement between Farr Company and Quest Technology SDN BHD, dated
as of April 15, 1997.
Standard Industrial/Commercial Multi-Tenant Lease - Gross between Farr Company
and Fujita Investors of California dated January 17, 1997. (Lease for Santa Fe
Springs, California facility)
(ii)
Joint Venture Agreement between Farr Company and Quest Technology SDN BHD, dated
as of April 15, 1997.
Expired license between Farr Inc. and American Warming and Ventilating Inc.
dated May 9, 1988.
Private Label Supply Agreement For Heavy Duty Marine Products between Farr
Company and Racor Division of Parker-Hannifin Corporation dated as of December
1, 1999.
License agreements identified in subsection 5.1(s)(vi).
(iii)
Agreements with officers are described in Schedule Section 5.1(h)(i).
(iv)
Bank Guarantee Facility between Bank Bumiputra Malaysia Berhad and QF Filter SDN
BHD dated 5th February 1998 for RM40,000.00.
(v)
International Private Label Agreement between Farr Company and Delta Filtration
dated January 19, 2000.
(vi)
Joint Venture Agreement between Farr Company and Quest Technology SDN BHD, dated
as of April 15, 1997.
<PAGE>
STRATEGIC PARTNERS* CITY, STATE
- ------------------- -----------
AIR FILTER SYSTEMS, INC. CONWAY, AR
AIR FILTER SYSTEMS, INC. (BRANCH) FORT SMITH, AR
AIR FILTER SYSTEMS, INC. (BRANCH) SPRINGDALE, AR
FILT-AIRE CORPORATION DARBY, PA
AIR FILTER SALES & SERVICE TUCKER, GA
THERMAL RECOVERY SYSTEMS INC. TUCKER, GA
EXFIL KALAMAZOO, MI
EXFIL (BRANCH) INDIANAPOLIS, IN
EXFIL (BRANCH) NILES, MI
EXFIL BRANCH) STERLING HEIGHTS, MI
EXFIL (BRANCH) WYOMING, MI
JORBAN-RISCOE ASSOCIATES, INC. LENEXA, KS
JORBAN-RISCOE ASSOCIATES, INC. (BRANCH) WICHITA, KS
FILTRATION SYSTEMS, INC. ST. LOUIS PARK, MN
GENERAL AIRE SYSTEMS, LLC KENILWORTH, NJ
FILT-AIRE CORPORATION DARBY, PA
FILTRATION SALES & ENGINEERING HOUSTON, TX
MARSHALL, NEIL & PAULEY HOUSTON, TX
*Strategic Partnership agreements are on the Company's standard form of
strategic partner covenant delivered to Parent with the exception of variations
which are not material.
INTERNATIONAL LICENSE AGREEMENTS* CITY, COUNTRY
- --------------------------------- -------------
CASIBA S.A. BUENOS AIRES, ARGENTINA
WILECTEC CO., LTD. HONG KONG, CHINA
ANFILCO LTD. GURGAON, INDIA
NIHON SPINDLE GIKEN CO. LTD. AMAGASAKI, JAPAN
DONGHO CORPORATION PUCHUN CITY, SOUTH KOREA
INDUSTRIAS FILVAC S.A. DE C.V. MEXICO CITY, MEXICO
TAYMAC CHRISTCHURCH, NEW ZEALAND
GENMECH ENGINEERING (S) PTE LTD SINGAPORE
MSA (AFRICA PTY) LTD SOUTH AFRICA
ANTUNG TRADING CORP. TAIPEI HSIEN, TAIWAN
QF FILTER SDN. BHD. KUALA LUMPUR, MALAYSIA
*License agreements, with the exception of the license with the Company's joint
venture, QF Filter SDN. BHD., are all on a relatively standard form, copies of
which have been delivered to Parent, and which are similar with the exception of
variations which are not material.
(vii)
Total capital expenditure approvals for the year 2000 budget of approximately
$3,170,000, plus approximately $500,000 for the big round filter project
approved in January 2000, of which the significant items are: crane and
associated equipment for big round filter project approx. $200,000; powder coat
paint system $852,000; automated assembly equipment for
<PAGE>
30/30 line approx. $321,000; manipulator welding system approx. $129,000; plate
bending machine for big round filter project approx. $80,000.
(viii)
Employment Continuation Agreements and employment arrangements with H. Jack
Meany as disclose in Schedule Section 5.1(h)(i).
Letter of understanding with Tucker Anthony Cleary Gull dated November 9, 1999
concerning services as exclusive financial advisor to the Company.
<PAGE>
Section 5.1(t)
of the
FARR COMPANY DISCLOSURE SCHEDULE
UNITED STATES
- -------------
2201 Park Place, El Segundo, California
4749 Pleasant Hill Road, Memphis, Tennessee
9501 Airport Road, Jonesboro, Arkansas
5883 Robersonville Product Road, Robersonville, North Carolina
1008 Hwy. 70A, Conover, North Carolina
500 S. Main Street, Crystal Lake, Illinois
500 Industrial Way, Corcoran, California
1815 Glenwood Street, Delano, California
805 North West Street, Holly Springs, Mississippi
Industrial Circle, Copperas Cove, Texas (subject to tax liens as described in
Schedule 5.1(l))
CANADA
- ------
2785 Avenue Francis Hughes, Laval, Quebec
UNITED KINGDOM
- --------------
272 Kings Road, Tyseley, Birmingham, England
MALAYSIA
- --------
79 Jalan Telawi, Bangsar Baru, 59100 Kuala Lumpur, Malaysia
Exceptions to warranty of good, valid and marketable title:
- ------------------------------------------------------------
9501 Airport Road, Jonesboro, Arkansas*
1. Deed of Trust dated 2/3/94. Principal amount is not disclosed. Mortgagor is
Farr Company. Mortgagee is Bank of America National Trust and Savings
Association.
2. Financing Statement filed on 12/27/85 by the City of Jonesboro listing Farr
Company.
3. A judgment was filed against Farr Company by the State of Arkansas and a
Certificate of Assessment was filed by the state on 7/7/99 against the
property. Amount $20,087.07
500 S. Main Street, Crystal Lake, IL*
1. Mortgage by Farr Company to First Commercial Bank, dated 3/24/87. Amount
$8,000,000.
805 North West Street, Holly Springs, Mississippi*
1. Deed of Trust by Farr Company to Mississippi Business Finance Corporation.
Dated 8/8/91. Amount $2,500,000.
2201 Park Place, El Segundo, California*
1. Deed of Trust to Santa Monica Bank for $5,660,000.
<PAGE>
* The Company represents and warrants that the underlying debt obligations
listed above for properties in Jonesboro, Arkansas; El Segundo, California;
Crystal Lake, Illinois and Holly Springs, Mississippi have been extinguished by
satisfaction of the amounts owed prior to December 31, 1999.
<PAGE>
Section 6.10
of the
FARR COMPANY DISCLOSURE SCHEDULE
None
<PAGE>
Exhibit D(2)
AGREEMENT
---------
AGREEMENT (this "Agreement"), dated as of March 26, 2000, among
---------
Forvaltnings AB Ratos (publ.), a Swedish corporation ("Parent"), Ratos
------
Acquisition Corp., a Delaware corporation ("Merger Sub"), Robert Batinovich,
----------
Richard P. Bermingham, Dennis R. Brown, A. Frederick Gerstell, John C. Johnston,
John J. Kimes, H. Jack Meany and John A. Sullivan (each a "Director" and
collectively, the "Directors").
---------
RECITALS
WHEREAS, Parent, Merger Sub and Farr Company, a Delaware corporation (the
"Company"), have entered into an Agreement and Plan of Merger, dated as of the
-------
date hereof (the "Merger Agreement"), pursuant to which Merger Sub will commence
----------------
a cash tender offer to acquire all of the outstanding shares of common stock,
par value $.10 per share, of the Company (the "Company Common Stock") and the
--------------------
Company and Merger Sub will merge, with the Company as the surviving corporation
in the merger;
WHEREAS, as of the date hereof, each Director is a member of the board of
directors of the Company (the "Board");
-----
WHEREAS, each Director is the record and beneficial owner of the number of
shares of Company Common Stock set forth opposite such Director's name on
Schedule A hereto and the number of options to purchase shares of Company Common
Stock set forth opposite such Director's name on Schedule B hereto; such shares
and options, as they may be adjusted by stock dividend, stock split,
recapitalization, combination or exchange of shares, merger, consolidation,
reorganization or other transaction or event involving the Company, together
with any shares of Company Common Stock or options to purchase shares of Company
Common Stock that may be acquired after the date hereof by such Director, being
collectively referred to herein as the "Shares"; and
------
WHEREAS, as a condition to their willingness to enter into the Merger
Agreement, Parent and Merger Sub have requested that the Directors enter into
this Agreement;
NOW, THEREFORE, to induce Parent and Merger Sub to enter into, and in
consideration of their entering into, the Merger Agreement, the parties hereto
agree as follows:
1. Tender of Shares. Each Director hereby agrees that he or she shall
----------------
tender his or her Shares into the Offer (as defined in the Merger Agreement) and
that he or she shall not withdraw any Shares so tendered, unless the Board
determines not to
-1-
<PAGE>
recommend the Offer pursuant to Section 1.2(b) or Section 6.2(b) of the Merger
Agreement.
2. Appointment of New Directors and Resignation of Current Directors.
-----------------------------------------------------------------
(a) Subject to the terms and conditions contained in Section 1.3 of the
Merger Agreement, each Director hereby agrees (i) to take all actions necessary
to appoint such number of new members of the Board designated by Parent as
provided for in Section 1.3(a) of the Merger Agreement and (ii) to resign as
director of the Company upon request of Parent and/or Merger Sub, in each case,
to the extent required in order to allow the Company to comply with Section
1.3(a) of the Merger Agreement and in accordance with the terms and conditions
contained therein.
(b) In the event that one or more Directors fail to resign from the Board
in accordance with the terms of paragraph 2(a), above, the Board shall
immediately call a special meeting of the shareholders of the Company in order
to vote upon the removal of such Director or Directors from the Board.
3. Representations and Warranties of the Directors. Each Director
-----------------------------------------------
hereby represents and warrants severally and not jointly to Parent and Merger
Sub as follows:
(a) Authority. The Director has all requisite power and authority to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby. This Agreement has been duly executed and delivered by the
Director and, assuming this Agreement constitutes a valid and binding obligation
of Parent and Merger Sub, constitutes a valid and binding obligation of the
Director enforceable against the Director in accordance with its terms.
(b) The Shares. The Director's Shares and the certificates representing
such Shares are now, and at all times during the term hereof will be, held by
such Director, or by a nominee or custodian for the benefit of such Director,
and the Director has good and marketable title to such Shares, free and clear of
any liens, proxies, voting trusts or agreements, understandings or arrangements,
except for any such liens or proxies arising hereunder.
4. Covenants of the Directors. Each Director hereby agrees as follows:
--------------------------
(a) The Director shall not, except as contemplated by the terms of this
Agreement and the Merger Agreement, sell, transfer, pledge, assign or otherwise
dispose of, or enter into any contract, option or other arrangement or
understanding with respect to the sale, transfer, pledge, assignment or other
disposition of, or grant of any lien with respect to, the Shares to any person
other than Parent or Merger Sub or take any other action that would in any way
restrict, limit or interfere with the performance of his/her obligations
hereunder or the transactions contemplated hereby.
-2-
<PAGE>
(b) Each Director will, from time to time, execute and deliver, or cause to
be executed and delivered, such additional or further transfers, assignments,
endorsements, consents and other instruments as Parent or Merger Sub may
reasonably request for the purpose of effectively carrying out the transactions
contemplated by this Agreement.
5. Assignment. Neither this Agreement nor any of the rights, interests
----------
or obligations hereunder shall be assigned by any of the parties hereto without
the prior written consent of the other parties. Subject to the preceding
sentence, this Agreement will be binding upon, inure to the benefit of and be
enforceable by the parties and their respective successors and assigns. Each
Director agrees that the obligations to tender the Shares hereunder shall attach
to such Director's Shares and shall be binding upon any person or entity to
which legal or beneficial ownership of such Shares shall pass, whether by
operation of law or otherwise, including without limitation such Director's
heirs or successors.
6. Amendment; Waiver. This Agreement may be amended only by a written
-----------------
instrument signed by all of the parties hereto. No provision of this Agreement
may be waived orally, but only by a written instrument signed by the party
against whom enforcement of such waiver is sought.
7. Counterparts. For the convenience of the parties hereto, this
------------
Agreement may be executed in any number of counterparts, each such counterpart
being deemed to be an original instrument, and all such counterparts shall
together constitute the same agreement.
8. Governing Law. This Agreement shall be governed by, and construed
-------------
and interpreted in accordance with, the laws of the State of Delaware without
giving effect to Delaware conflicts of law principles.
9. Notices. Any notice, request, instruction or other document to be
-------
given hereunder by any party to the others shall be deemed given if in writing
and delivered personally or sent by registered mail (return receipt requested)
or overnight courier (providing proof of delivery), postage prepaid or facsimile
(which is confirmed):
If to Parent or Merger Sub, addressed to:
----------------------------------------
Arne Karlsson
Forvaltnings AB Ratos (publ.)
Drottninggatan 2
SE-111 96 Stockholm, Sweden
Attention: President
Fax: +46 810 2559
If to any Director, addressed to him or her c/o:
- -----------------------------------------------
-3-
<PAGE>
Robert K. Montgomery
Gibson, Dunn & Crutcher LLP
2029 Century Park East
Los Angeles, California 90067-3026
Fax: (310) 551-8741
or to such other addresses as may be designated in writing by the party to
receive such notice as provided above.
10. Entire Agreement. This Agreement (i) constitutes the entire agreement,
----------------
and supersedes all other prior agreements and understandings, both written and
oral, among the parties, with respect to the subject matter hereof; and (ii) is
for the benefit only of the parties hereto and is not intended to create any
obligations to, or rights in respect of, any other persons or entities.
11. Illegality. In case any provision in this Agreement shall be declared
----------
or held invalid, illegal or unenforceable, in whole or in part, whether
generally or in any particular jurisdiction, such provision shall be deemed
amended to the extent, but only to the extent, necessary to cure such
invalidity, illegality or unenforceability, and the validity, legality and
enforceability of the remaining provisions, both generally and in every other
jurisdiction, shall not in any way be affected or impaired thereby.
12. Injunctive Relief. The parties hereto acknowledge and agree that
-----------------
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. Accordingly, the parties hereto acknowledge their intention
that, to the fullest extent permissible under applicable laws, the parties shall
be entitled to an injunction or injunctions to prevent or cure breaches of the
provisions of this Agreement, this being in addition to any other remedy to
which they may be entitled by law or equity.
13. Headings. The paragraph headings herein are for convenience of
--------
reference only, do not constitute part of this Agreement and shall not be deemed
to limit or otherwise affect any of the provisions hereof.
-4-
<PAGE>
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by
the parties hereto or their duly authorized officers on the date first
hereinabove written.
FORVALTNINGS AB RATOS (PUBL.)
By: _________________________________
Name:
Title:
RATOS ACQUISITION CORP.
By: _________________________________
Name:
Title:
__________________________________ ----------------------------------
Robert Batinovich Richard P. Bermingham
__________________________________ ----------------------------------
Dennis R. Brown A. Frederick Gerstell
__________________________________ ----------------------------------
John C. Johnston John J. Kimes
__________________________________ ----------------------------------
H. Jack Meany John A. Sullivan
5
<PAGE>
SCHEDULE B
FARR COMPANY
Stock Options Held by Directors:
<TABLE>
<CAPTION>
Total # Option #Exercised #Exercised Options
Name of of shs. price or currently currently
Date of grant Grantee granted per sh. cancelled outstanding exerciseable
------------- ------- ------- ------- --------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
28-Jul-94 Batinovich, R. 4,500.0 2.389 0.0 4,500 4,500
28-Mar-95 Batinovich, R. 4,500.0 3.056 0.0 4,500 4,500
20-Mar-96 Batinovich, R. 4,500.0 4.111 0.0 4,500 4,500
18-Feb-97 Batinovich, R. 4,500.0 7.667 0.0 4,500 4,500
17-Feb-98 Batinovich, R. 4,500.0 11.000 0.0 4,500 4,500
16-Feb-99 Batinovich, R. 4,500.0 9.500 0.0 4,500 0
- --------------------------------------------------------------------------------------------------------------------------
24-Mar-91 Bermingham, R. 4,500.0 4.056 0.0 4,500 4,500
05-May-92 Bermingham, R. 4,500.0 4.111 0.0 4,500 4,500
23-Mar-93 Bermingham, R. 4,500.0 2.222 0.0 4,500 4,500
28-Mar-94 Bermingham, R. 4,500.0 2.833 0.0 4,500 4,500
12-Sep-95 Bermingham, R. 4,500.0 4.056 0.0 4,500 4,500
20-Mar-96 Bermingham, R. 4,500.0 4.111 0.0 4,500 4,500
18-Feb-97 Bermingham, R. 4,500.0 7.667 0.0 4,500 4,500
17-Feb-98 Bermingham, R. 4,500.0 11.000 0.0 4,500 4,500
16-Feb-99 Bermingham, R. 4,500.0 9.500 0.0 4,500 0
- --------------------------------------------------------------------------------------------------------------------------
18-Feb-97 Brown, D. 4,500.0 7.667 0.0 4,500 4,500
17-Feb-98 Brown, D. 4,500.0 11.000 0.0 4,500 4,500
16-Feb-99 Brown, D. 4,500.0 9.500 0.0 4,500 0
- --------------------------------------------------------------------------------------------------------------------------
28-Apr-98 Gerstell, F. 4,500.0 13.000 0.0 4,500 4,500
16-Feb-98 Gerstell, F. 4,500.0 9.500 0.0 4,500 0
- --------------------------------------------------------------------------------------------------------------------------
28-Mar-95 Kimes, J. 4,500.0 3.056 0.0 4,500 4,500
20-Mar-96 Kimes, J. 4,500.0 4.111 0.0 4,500 4,500
18-Feb-97 Kimes, J. 4,500.0 7.667 0.0 4,500 4,500
17-Feb-98 Kimes, J. 4,500.0 11.000 0.0 4,500 4,500
16-Feb-99 Kimes, J. 4,500.0 9.500 0.0 4,500 0
- --------------------------------------------------------------------------------------------------------------------------
24-Mar-91 Meany, H.J. 4,500.0 4.056 0.0 4,500 4,500
05-May-92 Meany, H.J. 4,500.0 4.111 0.0 4,500 4,500
23-Mar-93 Meany, H.J. 4,500.0 2.222 0.0 4,500 4,500
28-Mar-94 Meany, H.J. 4,500.0 2.833 0.0 4,500 4,500
16-Feb-99 Meany, H.J. 250,000.0 9.500 0.0 250,000 250,000
- --------------------------------------------------------------------------------------------------------------------------
16-Jul-96 Sullivan, J. 4,500.0 5.722 0.0 4,500 4,500
18-Feb-97 Sullivan, J. 4,500.0 7.667 0.0 4,500 4,500
17-Feb-98 Sullivan, J. 4,500.0 11.000 0.0 4,500 4,500
16-Feb-99 Sullivan, J. 4,500.0 9.600 0.0 4,500 0
- --------------------------------------------------------------------------------------------------------------------------
12-Jan-95 Johnston, J. 99,000.0 2.222 0.0 99,000 99,000
29-Apr-97 Johnston, J. 30,000.0 8.000 0.0 30,000 15,000
25-Mar-98 Johnston, J. 22,500.0 12.750 0.0 22,500 5,625
16-Feb-99 Johnston, J. 15,000.0 9.500 0.0 15,000 0
</TABLE>
<PAGE>
SCHEDULE A
FARR Company
Directors Stock Holdings
@ 3/24/00
Jack Meany 212,975
Bob Batinovich 225,000
Richard Bermingham 5,625
Dennis Brown 10,500
John Kimes 1,500
John Sullivan 8,550
Fred Gerstell 4,500
John Johnston 2,199
<PAGE>
EXHIBIT D(3)
SHARE EXCHANGE OPTION AGREEMENT
SHARE EXCHANGE OPTION AGREEMENT (the "Option Agreement"), dated as of March 25,
2000, among Forvaltnings AB Ratos (publ.) reg. No. 556008-3585 ("Ratos"), on one
side and Camfil AB, reg. No. 556230-1266 ("Camfil") and the owners of Camfil
listed on Exhibit 1, on the other side (collectively, the "Owners").
---------
WHEREAS, Ratos, Ratos Acquisition Corp., a Delaware corporation and a wholly
owned subsidiary of Ratos ("Merger Sub"), and Farr Company, a Delaware
corporation, intend to enter into an agreement and plan of merger substantially
in the form of the agreement and plan of merger attached hereto as Exhibit 2,
---------
(the "Merger Agreement") pursuant to which (i) Merger Sub shall acquire all of
the issued and outstanding shares of common stock, par value $0.10, of Farr
Company (the "Farr Shares") and (ii) Merger Sub shall be merged with and into
Farr Company (the "Merger"), the surviving entity hereinafter being referred to
as the "Surviving Corporation";
WHEREAS, Ratos may not wish to retain the issued and outstanding shares of stock
of the Surviving Corporation (the "S.C. Shares") following the Merger, and may
instead prefer to exchange the S.C. Shares for certain shares of Camfil;
WHEREAS, Camfil would be willing to purchase the S.C. Shares from Ratos in
accordance with the terms and conditions of this Option Agreement;
NOW, THEREFORE, the parties hereto agree as follows:
<PAGE>
2
PUT OPTION, PURCHASE PRICE AND TRANSFER
1.1 Camfil hereby grants Ratos an irrevocable option (the "Put Option") to
require Camfil to purchase the S.C. Shares in exchange for certain shares
of Camfil under the circumstances and subject to the terms and conditions
set forth below.
1.2 Ratos may exercise the Put Option, should it wish to do so, during the
period beginning on the later of (and not before): (i) the date on which
the Farr Shares cease to be registered under the Securities Exchange Act of
1934, as amended, and are not traded on any stock exchange, and (ii) the
date on which the Merger has been consummated and the Surviving Corporation
becomes a wholly owned subsidiary within the Ratos group by the filing of
a Certificate of Merger with the Secretary of State of the State of
Delaware pursuant to the Merger Agreement (the "Going Private Conditions"),
and ending on November 15, 2000; provided, however, that if the Going
Private Conditions have not been satisfied on or before October 31, 2000,
Ratos may exercise the Put Option in any event between November 1, 2000 and
November 15, 2000, inclusive. The Put Option and any and all rights
thereunder shall expire and terminate on November 16, 2000, if it has not
been exercised prior to or on such date. Should Ratos choose to exercise
the Put Option, then, subject to the terms and conditions of this Option
Agreement, Camfil shall fulfil its obligation to purchase the S.C. Shares
in exchange for certain Shares of Camfil.
1.3 Once Ratos exercises the Put Option and gives notice of such exercise to
Camfil, (i) the Owners shall cause the Board of Directors of Camfil to pass
all resolutions necessary to give effect to the share exchange contemplated
by the Put Option and (ii) Camfil shall promptly call a meeting of the
shareholders of Camfil, to be held as soon as reasonably and legally
possible (the "Shareholders' Meeting"). At such meeting, the Owners shall
cause to be passed a shareholders' resolution resolving to issue to Ratos
certain shares of Camfil (apportemission); such shares to represent, as
specified in the Aktieagaravtalet dated February 18, 2000 (the
"Aktieagaravtalet"),
<PAGE>
3
among Ratos, Jan Eric Larson and Johan Markman, 20 percent of the issued
and outstanding shares of Camfil and represent 20 percent of the voting
power of all shares of Camfil (the "Camfil Shares"), provided that Ratos
shall have made a capital contribution of at least MSEK 250 to Merger Sub
prior to the Merger.
1.4 Immediately after the date of the Shareholders' Meeting and following the
subscription by Ratos for the Camfil Shares, Camfil shall cause Ratos'
ownership of the Camfil Shares to be registered in Camfil's share register
book (aktiebok). In addition, Camfil shall cause the issuance of the Camfil
Shares to immediately be filed for registration (apportemission) at the
Swedish Patent- and Registration Office (the date of registration being the
"Transfer Date"). On the Transfer Date, Ratos shall transfer the S.C.
Shares to Camfil such that, on the Transfer Date, ownership of all shares
of the Surviving Corporation shall be transferred from Ratos to Camfil. The
aforementioned share transfers by Camfil and Ratos shall constitute full
payment for the shares received by each party, in the case of Camfil, such
being the S.C. Shares, and in the case of Ratos, such being the Camfil
Shares.
1.5 Should they be issued to Ratos pursuant to the terms of this Option
Agreement, the Camfil Shares shall be entitled to any and all dividends
declared by Camfil for the fiscal year 2000 on the same basis as the
dividends paid to other shareholders of Camfil holding shares of the same
class.
2. REPRESENTATIONS, WARRANTIES AND COVENANTS
2.1 The Owners represent and warrant that they collectively control at least 67
percent of the shares and voting rights of the stock of Camfil, and that
all resolutions of Camfil shareholders required to be passed by this Option
Agreement will be passed when approved by shareholders of Camfil
controlling at least 67 percent of the stock and the voting rights of the
stock of Camfil.
<PAGE>
4
2.2 Camfil and the Owners separately represent and warrant that it, in the case
of Camfil, and they, in the case of the Owners, has or have full and
complete information regarding the Surviving Corporation. The Owners and
Camfil have approved all provisions of the Merger Agreement, the Offer and
the Merger and all measures taken in order to perfect and conclude the
Offer and Merger contemplated by the Merger Agreement.
2.3 Camfil and the Owners hereby waive all present and future claims they may
have against Ratos individually or as a group in respect of the
interpretation and enforcement of the provisions of the Merger Agreement.
2.4 From the Transfer Date forward, Camfil shall assume all of the obligations
of Ratos and Merger Sub under or relating to the Merger Agreement; neither
Ratos nor Merger Sub, nor any of their respective affiliates (other than
Camfil should Camfil become an affiliate of Ratos on the Transfer Date),
shall have any obligations under, nor be subject to any liabilities
relating to, the Merger Agreement from the Transfer Date forward.
2.5 Camfil shall not declare any dividend for its 1999 fiscal year in excess of
MSEK 20.
3. COSTS AND EXPENSES
3.1 Should less than 50.1 percent of the Farr Shares be tendered into the Offer
or should Merger Sub fail to purchase at least 50.1 percent of the Farr
Shares pursuant to the Offer for any reason other than the failure of Ratos
to make a capital contribution of MSEK 250 to Merger Sub according to
Section 1.3 of the Aktieagaravtalet, Camfil shall pay 80 percent and Ratos
shall pay 20 percent of all of the costs and expenses related to the Offer
and the Merger Agreement (collectively, the "Costs"), including any and all
costs associated with: (i) the due diligence investigation of Farr Company
by Ratos, Camfil and their representatives; and (ii) the preparation for
and facilitation
<PAGE>
5
of the transactions contemplated by the Merger Agreement, such costs to
include the fees and expenses of PricewaterhouseCoopers LLP, Ohrlings
PricewaterhouseCoopers AB, Sullivan & Cromwell and any outside consultant
or agent retained by Sullivan & Cromwell, Erneholm & Haskel AB and
Advokatfirman Lindh Stabell Horten. Costs and expenses of the employees of
Ratos and Camfil to be paid by each party respectively. Should Ratos fail
to make a capital contribution of MSEK 250 to Merger Sub according to
Section 1.3 of the Aktieagaravtalet and provided this shall cause the
Merger not to be consummated pursuant to the Merger Agreement, Ratos shall
pay 100 percent of the Costs.
4. INDEMNIFICATION BY CAMFIL
4.1 Subject to Section 4.3 of this Option Agreement, Camfil shall indemnify,
defend and hold Ratos and its officers, directors, employees, agents and
representatives, as well as Ratos' successors, assigns, subsidiaries and
affiliates, and their respective officers, directors, employees, agents and
representatives (the "Ratos Indemnified Parties") harmless from and against
any and all losses, damages, claims, liabilities, costs and expenses
including reasonable legal fees and expenses directly or indirectly based
upon, arising out of, resulting from or relating to: (i) the Merger
Agreement or any of the transactions contemplated thereby, including the
Offer and the Merger; and (ii) the breach by Camfil or any of the Owners of
any of the provisions of this Option Agreement.
4.2 Camfil shall pay to the applicable Ratos Indemnified Party any amounts to
which such party is entitled as indemnification hereunder not later than 60
days after a claim for such indemnification is submitted to Camfil or, if
such claim is the subject of arbitration hereunder, not later than 60 days
after the claim is settled by arbitration according to Section 7 of this
Option Agreement. An Indemnification Claim by a Ratos Indemnified Party
shall be submitted in writing to Camfil at the address set forth in Section
8 of this Option Agreement.
<PAGE>
6
4.3 Notwithstanding Section 4.1, the aggregate liability of Camfil for any and
all claims or losses arising in connection with the Merger Agreement or
this Option Agreement payable to any Ratos Indemnified Parties shall be
limited to MSEK 250.
5. MISCELLANEOUS
For the purpose of this Option Agreement terms and references, to the
extent not defined herein, shall have the same meaning as set forth in the
Merger Agreement.
6. JOINT CONVENANTS
6.1 No announcement concerning the transaction contemplated by this Option
Agreement, or any matter ancillary thereto, shall be made by any party
hereto except upon prior notice to and in consultation with the other
party, provided that nothing herein shall prevent either party from making,
in consultation with the other party, any announcement or filing required
by applicable law or regulation or by the rules and regulations of any
stock exchange on which it is listed.
6.2 The Parties shall not, and shall cause their respective Affiliates not to,
disclose any Confidential Information of the other party, unless: (i)
required to do so by law, (ii) required to do so by any applicable stock
exchange regulations, (iii) such disclosure is required to be made in
connection with the ordinary course of business, or (iv) such disclosure
has been consented to by the other party, which consent shall not be
unreasonably withheld. This section 6.2 shall continue for a period of
three (3) years after the date of this Option Agreement.
<PAGE>
7
7. ARBITRATION
7.1 This Option Agreement shall be governed by and construed in accordance with
the laws of Sweden without any reference to its conflict of laws principles
(excluding the law 1987:822 on International Sales and the law 1990:931 on
Sale of Goods).
7.2 Any dispute or claim arising out of or in connection with this Option
Agreement, involving Ratos, Camfil, any of their respective subsidiaries or
affiliates or the Owners, or the breach, termination or invalidity thereof,
shall be finally settled by arbitration in accordance with the Swedish
Arbitration Act (Lag (1999:116 om skiljeforfarande)). The place of
arbitration shall be Stockholm and the language to be used in the arbitral
proceedings shall be Swedish.
8. NOTICES
Any notices and other communication to be provided hereunder shall be
provided in accordance with the following notice information:
If to Ratos, to:
Mr. Arne Karlsson
Forvaltnings AB Ratos (publ.)
Box 1661
SE-111 96 Stockholm, Sweden
If to Camfil or the Owners, to:
Mr. Jan Eric Larson or Mr. Johan Markman
Camfil AB
Industrigatan 3
SE-619 33 Trosa, Sweden
<PAGE>
8
IN WITNESS WHEREOF, this Option Agreement has been duly executed and delivered
by a duly authorized officer of each of Ratos and Camfil and by each Owner as of
the date hereof.
FORVALTNINGS AB RATOS
(PUBL.)
By: _________________________
Name:
Title:
CAMFIL AB
By: _________________________
Name:
Title:
_______________________ ______________________________
Name: Name:
_______________________ ______________________________
Name: Name:
<PAGE>
9
EXHIBIT 1
The following owners of shares of Camfil AB are included as "Owners" under the
aforementioned Share Exchange Option Agreement:
Mr. Jan Eric Larson 500,000 A Shares 1,960,000 B Shares
Mr. Johan Markman 500,000 A Shares 1,960,000 B Shares
Mr. Bjorn Larson 180,000 B Shares
Mr. Dan Larson 180,000 B Shares
Ms. Anna Larson 180,000 B Shares
Ms. Johanna Markman 180,000 B Shares
Mr. Erik Markman 180,000 B Shares
Ms. Frida Markman 180,000 B Shares
Mr. [Gosoa] Larson 2,000,000 B Shares
