<PAGE>
As filed with the Securities and Exchange Commission on April 24, 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
(AMENDMENT NO. 2)
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 shares 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 (the "Company Options") to purchase Shares under the Issuer's stock
option and incentive plans (the "Company Option Plans") at a price equal to
the excess of the Offer Price over the per share exercise price applicable to
such Company Options. Pursuant to the Agreement and Plan of Merger, dated as
of March 26, 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
Option Plans 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.
[X] 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: $26,804.87 Filing Party: Ratos Acquisition
Form or Registration No.: Schedule TO Corp. Forvaltnings AB Ratos
Date Filed: April 4, 2000
[_] 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: [_]
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
This Amendment No. 2 (the "Amendment") amends and supplements the Tender
Offer Statement on Schedule TO (the "Schedule TO") filed by Ratos Acquisition
Corp., a Delaware corporation ("Purchaser") and an indirect wholly owned
subsidiary of Forvaltnings AB Ratos (publ.), a Swedish corporation ("Ratos"),
with the Securities and Exchange Commission (the "SEC") on April 4, 2000, as
amended by Amendment No. 1 to the Schedule TO filed with the SEC on April 19,
2000. The 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, 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.
ITEMS 4 and 11.
Items 4 and 11 of the Schedule TO are hereby amended and supplemented by
the information set forth in the Offer to Purchase, Exhibit (a)(1) to this
Amendment, as revised to reflect Purchaser, and Ratos' responses to the
comments on the Schedule TO received from the SEC on April 20, 2000, which
information is incorporated herein by reference.
ITEM 12. EXHIBITS.
Item 12 of the Schedule TO is hereby amended and supplemented to include
the following information:
(a)(1) Offer to Purchase dated April 4, 2000, as amended.
1
<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 24, 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
2
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
-------
<C> <S>
(a)(1) Offer to Purchase dated April 4, 2000, as amended.
(a)(2) Form of Letter of Transmittal; filed with the Securities and Exchange
Commission under cover of Schedule TO on April 4, 2000, and
incorporated herein by reference.
(a)(3) Form of Notice of Guaranteed Delivery; filed with the Securities and
Exchange Commission under cover of Schedule TO on April 4, 2000, and
incorporated herein by reference.
(a)(4) Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies
and Other Nominees; filed with the Securities and Exchange Commission
under cover of Schedule TO on April 4, 2000, and incorporated herein
by reference.
(a)(5) Form of Letter to Clients for use by Brokers, Dealers, Commercial
Banks, Trust Companies and Other Nominees; filed with the Securities
and Exchange Commission under cover of Schedule TO on April 4, 2000,
and incorporated herein by reference.
(a)(6) Text of Press Release issued by Forvaltnings AB Ratos and Ratos
Acquisition Corp. on April 4, 2000; filed with the Securities and
Exchange Commission under cover of Schedule TO on April 4, 2000, and
incorporated herein by reference.
(a)(7) Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9; filed with the Securities and Exchange Commission
under cover of Schedule TO on April 4, 2000, and incorporated herein
by reference.
(a)(8) Form of Summary Advertisement dated April 4, 2000; filed with the
Securities and Exchange Commission under cover of Schedule TO on April
4, 2000, and incorporated herein by reference.
(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; filed
with the Securities and Exchange Commission under cover of Schedule TO
on April 4, 2000, and incorporated herein by reference.
(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; filed with the Securities and Exchange Commission under
cover of Schedule TO on April 4, 2000, and incorporated herein by
reference.
(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; filed with the
Securities and Exchange Commission under cover of Schedule TO on April
4, 2000, and incorporated herein by reference.
(g) None.
(h) None.
</TABLE>
<PAGE>
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 applicable 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 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. Neither Ratos nor Purchaser, nor 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
Purchaser, nor any of their respective representatives, 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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<PAGE>
(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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<PAGE>
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 and
except that all conditions to the Offer, other than those that are dependent
upon the receipt of necessary government approvals, must be satisfied or waived
prior to the expiration of the Offer.
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>
Arne Karlsson Present Principal Occupations and Material Positions Held
During the Past Five Years are set forth above.
Bo Jungner Present Principal Occupations and Material Positions Held
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
