<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 19, 1997
REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549-1004
------------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
VARLEN CORPORATION
(Exact name of registrant as specified in its charter)
------------------------------
<TABLE>
<S> <C>
DELAWARE 13-2651100
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
RICHARD L. WELLEK
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
55 SHUMAN BOULEVARD VARLEN CORPORATION
POST OFFICE BOX 3089 55 SHUMAN BOULEVARD
NAPERVILLE, ILLINOIS POST OFFICE BOX 3089
60566-7089 NAPERVILLE, ILLINOIS
(630) 420-0400 60566-7089
(630) 420-0400
(Address, including zip code and (Name, address, including zip code,
telephone number, and telephone number,
including area code, of registrant's including area code, of agent for
principal executive offices) service)
</TABLE>
------------------------------
COPIES TO:
<TABLE>
<S> <C>
Suzanne E. Sutkowski Jeffrey Small
Kirkland & Ellis Davis Polk & Wardwell
200 East Randolph Drive 450 Lexington Avenue
Chicago, Illinois 60601-6636 New York, New York 10017
</TABLE>
------------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
AS SOON AS PRACTICABLE AFTER THE EFFECTIVE DATE OF THE REGISTRATION STATEMENT.
------------------------------
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. / /
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act of 1933, please check the
following box and list the Securities Act registration statement number of the
earlier effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act of 1933, please check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434
under the Securities Act of 1933, please check the following box. / /
------------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED MAXIMUM
PROPOSED MAXIMUM AGGREGATE
TITLE OF EACH CLASS OF AMOUNT TO OFFERING PRICE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED BE REGISTERED(1) PER SHARE(2) PRICE(1)(2) REGISTRATION FEE
<S> <C> <C> <C> <C>
Common Stock, $0.10 par value per share (3).... 2,421,279 shares $32.1875 $77,934,918.00 $23,617.00
</TABLE>
(1) Maximum number of shares issuable upon conversion of the $54,695,000
principal amount of Varlen Corporation 6 1/2% Convertible Subordinated
Debentures due 2003 outstanding at close of business on August 18, 1997.
(2) Estimated in accordance with Rule 457(c), solely for purposes of determining
the registration fee, based on the average of the high and low sale prices
on the Nasdaq Stock Market on August 18, 1997.
(3) Includes associated preferred share purchase rights. Prior to the occurrence
of certain events, the preferred share purchase rights will not be evidenced
separately from the Common Stock.
------------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THIS REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(a), MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>
SUBJECT TO COMPLETION, DATED AUGUST 19, 1997
PROSPECTUS
, 1997
2,421,279 SHARES
VARLEN CORPORATION
COMMON STOCK
By notification to be dated August 20, 1997, Varlen Corporation, a Delaware
Corporation (the "Company") intends to call all of its outstanding 6 1/2%
Convertible Subordinated Debentures due 2003 ("Debentures") for redemption for
cash on September 4, 1997 (the "Redemption Date") at a redemption price of
$1,039.00 per $1,000 principal amount of Debentures, plus accrued and unpaid
interest of $16.79 to, but not including, the Redemption Date, for an aggregate
redemption price of $1,055.79 per $1,000 principal amount of Debentures (the
"Redemption Price"). Interest on Debentures will cease to accrue on the
Redemption Date. Prior to the close of business on September 3, 1997 (the
"Conversion Expiration Date"), Debentures may be converted into shares of the
Company's common stock, $0.10 par value per share (the "Common Stock") and
associated preferred share purchase rights at a conversion price of $22.5893 per
share, into 44.2688 shares of Common Stock per $1,000 principal amount of
Debentures. After the close of business on the Conversion Expiration Date, no
conversion of Debentures may be made. The Common Stock and Debentures are listed
on the Nasdaq Stock Market ("NASDAQ") under the trading symbols VRLN and VRLNG,
respectively. On August 18, 1997, the last reported sale price of the Common
Stock on the NASDAQ was $32.375 per share.
If a holder of $1,000 principal amount of Debentures had converted such
Debentures on August 18, 1997, such holder would have received Common Stock
(including cash in lieu of any fractional shares) having a market value of
approximately $1,433.20, based on the last reported sales price of the Common
Stock on the NASDAQ on that date. So long as the market price of a share of
Common Stock is more than $23.85 per share, the shares of Common Stock
(including cash in lieu of any fractional shares) which holders would receive
upon conversion of their Debentures would have a greater market value than the
cash that such holders would receive upon redemption of such Debentures. See
"Redemption of Debentures; Available Alternatives."
This Prospectus relates to the issuance of a maximum of 2,421,279 shares of
Common Stock of the Company, issuable upon conversion of the $54,695,000
principal amount of Debentures outstanding as of August 18, 1997 and under the
standby arrangements described in this Prospectus.
The Company has arranged for Donaldson, Lufkin & Jenrette Securities
Corporation, Piper Jaffray Inc. and Robert W. Baird & Co. Incorporated (the
"Purchasers") to purchase, subject to certain conditions, directly from the
Company up to such whole number of shares of Common Stock as would have been
issuable upon conversion of any Debentures which are not duly surrendered for
conversion by the close of business on the Conversion Expiration Date (the
"Purchased Shares"). The Purchasers may also purchase Debentures in the open
market, and any Debentures so purchased shall be converted into Common Stock.
See "Standby and Other Arrangements." Any Debentures not duly surrendered for
conversion or purchase prior to the close of business on the Conversion
Expiration Date will be redeemed for cash on the Redemption Date.
SEE "RISK FACTORS" BEGINNING ON PAGE 5 OF THIS PROSPECTUS FOR CERTAIN
INFORMATION THAT SHOULD BE CONSIDERED BY HOLDERS OF DEBENTURES AND PROSPECTIVE
INVESTORS IN THE COMMON STOCK.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
Prior to and after the Redemption Date, the Purchasers may offer Common
Stock obtained as described above in part directly to the public at varying
prices and in part to certain securities dealers at prices which may represent
concessions from the prices at which such shares are then being offered to the
public. The Purchasers may allow, and such dealers may reallow, a concession to
certain brokers and dealers. The amount of such concessions and reallowances
will be determined from time to time by the Purchasers. In effecting such
transactions, the Purchasers may realize profits and losses independent of the
compensation referred to under "Standby and Other Arrangements." The Purchasers
have agreed to remit to the Company a portion of the profit realized on sales of
up to 121,064 Purchased Shares as described under "Standby and Other
Arrangements." Any Common Stock will be offered by the Purchasers when, as and
if accepted by the Purchasers and subject to their right to reject orders, in
whole or in part. See "Standby and Other Arrangements" for a description of the
Purchasers' compensation and indemnification arrangements with the Company.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
PIPER JAFFRAY INC.
ROBERT W. BAIRD & CO.
INCORPORATED
<PAGE>
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK.
SPECIFICALLY, THE PURCHASERS MAY MAKE SHORT SALES OF THE COMMON STOCK IN
CONNECTION WITH THE OFFERING AND MAY BID FOR AND PURCHASE SHARES OF THE COMMON
STOCK IN THE OPEN MARKET. IN NO CASE WILL THE PURCHASERS STABILIZE THE COMMON
STOCK IN SUPPORT OF AN AT-THE-MARKET OFFERING. FOR A DESCRIPTION OF THESE
ACTIVITIES, SEE "STANDBY AND OTHER ARRANGEMENTS."
2
<PAGE>
PROSPECTUS SUMMARY
ALL REFERENCES TO COMMON STOCK IN THIS PROSPECTUS, UNLESS OTHERWISE NOTED,
INCLUDE THE ASSOCIATED PREFERRED SHARE PURCHASE RIGHTS ISSUED PURSUANT TO THE
RIGHTS AGREEMENT DATED AS OF JUNE 17, 1996 BETWEEN THE COMPANY AND HARRIS TRUST
AND SAVINGS BANK, AS RIGHTS AGENT. PRIOR TO THE OCCURRENCE OF CERTAIN EVENTS,
THE PREFERRED SHARE PURCHASE RIGHTS WILL NOT BE EVIDENCED SEPARATELY FROM THE
COMMON STOCK.
THE COMPANY
Varlen Corporation designs, manufactures and markets engineered industrial
products primarily for specialized applications in the transportation and
analytical instruments markets. The Company's principal business strategy is to
employ its product development capabilities, advanced manufacturing processes
and marketing skills in market niches where the Company believes it can achieve
a market leadership position. The Company's operations are conducted through
subsidiaries that are relatively autonomous, while its small corporate
headquarters staff oversees financial controls and provides strategic direction.
Management continually emphasizes improvements in quality, product performance
and delivery time, cost reductions and other value adding activities. Although
many of the markets for the Company's products are mature, the Company seeks
growth opportunities through technological and product improvement and by
acquiring and developing new products that can be sold through its distribution
networks. In addition, the Company's development efforts increasingly focus on
new products specifically designed for international markets.
REDEMPTION OF DEBENTURES; AVAILABLE ALTERNATIVES
Pursuant to the terms of the Indenture, dated May 27, 1993, between Harris
Trust and Savings Bank (the "Trustee") and the Company (the "Indenture"), by
notification to be dated August 20, 1997 the Company intends to call, for
redemption for cash, all outstanding Debentures on the Redemption Date. Holders
of Debentures will be entitled to receive a redemption price of $1,039.00 per
$1,000 principal amount of Debentures, plus accrued and unpaid interest of
$16.79 to, but not including, the Redemption Date, for an aggregate Redemption
Price of $1,055.79 per $1,000 principal amount of Debentures.
As more fully described in this Prospectus, holders of Debentures have as
alternatives, in addition to the right to sell their Debentures through usual
broker facilities, (i) the right to convert their Debentures into Common Stock
and (ii) the right to have their Debentures redeemed for cash on the Redemption
Date for the Redemption Price. The availability of the first alternative
described above will terminate at the close of business on the Conversion
Expiration Date. Any Debentures not duly surrendered for conversion prior to the
close of business on the Conversion Expiration Date will be automatically
redeemed for cash at the Redemption Price.
SO LONG AS THE MARKET PRICE OF A SHARE OF COMMON STOCK IS MORE THAN $23.85
PER SHARE, THE SHARES OF COMMON STOCK AND CASH IN LIEU OF FRACTIONAL SHARES
WHICH HOLDERS WOULD RECEIVE UPON CONVERSION OF THEIR DEBENTURES WOULD HAVE A
GREATER MARKET VALUE THAN THE CASH THAT SUCH HOLDERS WOULD RECEIVE UPON
REDEMPTION OF SUCH DEBENTURES. ON THE BASIS OF THE LAST REPORTED SALE PRICE OF
THE COMMON STOCK ON THE NASDAQ ON AUGUST 18, 1997 OF $32.375 PER SHARE, THE
44.2688 SHARES OF COMMON STOCK INTO WHICH EACH $1,000 PRINCIPAL AMOUNT OF
OUTSTANDING DEBENTURES ARE CONVERTIBLE HAD A MARKET VALUE EQUIVALENT TO
APPROXIMATELY $1,433.20. IT SHOULD BE NOTED, HOWEVER, THAT THE TRADING PRICE OF
THE COMMON STOCK RECEIVED UPON CONVERSION WILL FLUCTUATE IN THE MARKET, AND THE
HOLDER MAY INCUR VARIOUS EXPENSES OF SALE IF SUCH COMMON STOCK IS SOLD IN THE
MARKET. SEE "COMMON STOCK PRICE RANGE AND DIVIDENDS" FOR ADDITIONAL MARKET PRICE
INFORMATION. IN LIGHT OF THE FOREGOING, HOLDERS OF DEBENTURES ARE URGED TO
OBTAIN CURRENT MARKET QUOTATIONS FOR THE COMMON STOCK BEFORE MAKING THEIR
ELECTIONS.
3
<PAGE>
SUMMARY CONSOLIDATED FINANCIAL DATA
The following summary financial data were derived from, and should be read
in conjunction with, the Company's Annual Report on Form 10-K for the fiscal
year ended January 31, 1997 and the Quarterly Report on Form 10-Q for the
quarter ended May 3, 1997 which are incorporated herein by reference. All
references to annual periods in this Prospectus and in the documents
incorporated by reference herein refer to the Company's fiscal years which for
all periods presented ended on January 31. The summary financial data at May 3,
1997 and for the three months ended May 3, 1997 and May 4, 1996 have been
derived from the Company's unaudited condensed consolidated financial statements
which, in the opinion of management, reflect all adjustments, which are of a
normal recurring nature, necessary for a fair presentation of the financial
position and results of operations for the unaudited periods. The results of
operations for the three months ended May 3, 1997 are not necessarily indicative
of operating results for the full year.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
--------------------- FISCAL YEARS
MAY 3, MAY 4, ----------------------------------
1997 1996 1996 1995 1994
---------- --------- ---------- ---------- ----------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
STATEMENT OF EARNINGS DATA:
Net sales:
Transportation products........................... $ 116,002 $ 77,589 $ 363,999 $ 317,122 $ 261,835
Analytical instruments............................ 7,973 14,386 45,476 69,865 79,686
---------- --------- ---------- ---------- ----------
Total net sales................................. $ 123,975 $ 91,975 $ 409,475 $ 386,987 $ 341,521
---------- --------- ---------- ---------- ----------
---------- --------- ---------- ---------- ----------
Net earnings........................................ $ 5,009 $ 4,822 $ 17,857 $ 19,609 $ 14,762
---------- --------- ---------- ---------- ----------
---------- --------- ---------- ---------- ----------
PER SHARE DATA:
Primary earnings per share.......................... $ 0.84 $ 0.79 $ 2.96 $ 3.19 $ 2.44
Fully diluted earnings per share.................... $ 0.63 $ 0.60 $ 2.27 $ 2.43 $ 1.92
Weighted average number of shares--primary.......... 5,959 6,095 6,023 6,141 6,064
Weighted average number of shares--fully diluted.... 9,048 9,159 9,078 9,199 9,136
</TABLE>
<TABLE>
<CAPTION>
MAY 3, 1997
--------------------------
ACTUAL AS ADJUSTED(1)
---------- --------------
(IN THOUSANDS)
<S> <C> <C>
BALANCE SHEET DATA:
Working capital..................................................................... $ 73,397 $ 72,785
Total assets........................................................................ 396,167 394,283
Total debt, excluding current portion............................................... 181,056 112,056
Stockholders' equity................................................................ 114,043 181,159
</TABLE>
- ------------------------
(1) As adjusted to give effect to the conversion of the entire $69,000,000
aggregate principal amount of Debentures originally issued by the Company
($14,305,000 aggregate principal amount having been converted prior to the
date of this Prospectus), the payment of $461,980 to the Purchasers as
described under "Standby and Other Arrangements" and the payment of an
estimated $150,000 of other expenses in connection with the offering.
Accordingly, the As Adjusted information assumes that no Purchased Shares
are purchased by the Purchasers.
4
<PAGE>
RISK FACTORS
HOLDERS OF DEBENTURES AND PROSPECTIVE INVESTORS IN THE COMMON STOCK SHOULD
CAREFULLY CONSIDER THE FACTORS SET FORTH BELOW, AS WELL AS THE OTHER INFORMATION
SET FORTH OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS, BEFORE MAKING AN
INVESTMENT IN THE COMMON STOCK.
CYCLICALITY AND OPERATING LEVERAGE
The Company's operations are subject to cyclical fluctuations based both on
general economic conditions and the economic conditions of the specific
industries they serve. Because the Company's manufacturing operations have a
significant fixed cost component, reduced sales volume results in a
proportionately greater decline in operating profit for the Company. Conversely,
improved sales volume generally will result in a disproportionate increase in
operating profit. Given the nature of the Company's businesses and cost
structure, a prolonged economic downturn could have an adverse effect on the
Company's revenues and results of operations.
COMPETITION
All of the markets in which the Company participates are highly competitive.
Participants compete on the basis of engineering, design, quality, reliability,
service and price. Additionally, some of the Company's competitors have greater
research and development capabilities and financial, marketing and other
resources than the Company. Competitive factors could require price reductions
or increased spending on product development and marketing that would adversely
affect the Company's profit margins. Certain of the Company's products are the
subject of rigorous price competition, requiring the Company to lower its prices
in accordance with those of its competitors and precluding it from unilaterally
raising its prices.
RELIANCE UPON KEY CUSTOMERS; PRODUCT SALES CONCENTRATION
The Company's businesses have relationships with several key customers, the
loss of which could have a material adverse effect on such businesses. In
particular, during each of the last three fiscal years, Freightliner Corporation
("Freightliner") accounted for approximately 15% of the Company's net sales. The
loss of Freightliner as a customer would have a material adverse effect on the
Company's revenues and net earnings. The Company believes its relationship with
Freightliner to be satisfactory. In addition, sales of aluminum hubs and hub
assemblies aggregated 12%, 14% and 10% of consolidated net sales in fiscal 1996,
1995 and 1994, respectively, and sales of cushioning devices and related parts
for railroad freight cars and locomotive engines accounted for 11% and 13% of
consolidated net sales in fiscal 1995 and 1994, respectively.
CERTAIN LITIGATION
The Company is a defendant in certain claims, investigations and lawsuits
including but not limited to litigation in the United States District Court for
the Eastern District of Virginia entitled Means Industries, Inc. v. Epilogics,
Inc. Civil Action No. 3:97CV276 and Epilogics, Inc. v. Means Industries, Inc.,
Varlen Corp., and Brenco, Inc. Civil Action No. 3:97CV461 relating to the
Company's Mechanical Diode-Registered Trademark- clutch patent license. Based on
the advice of counsel, management believes that the outcome of these actions,
individually or in the aggregate, will not have a material adverse effect on the
Company's consolidated financial position.
5
<PAGE>
REDEMPTION OF DEBENTURES; AVAILABLE ALTERNATIVES
Pursuant to the terms of the Indenture, by notification to be dated August
20, 1997 the Company intends to call for redemption for cash, all outstanding
Debentures on the Redemption Date. Holders of Debentures will be entitled to
receive a redemption price of $1,039.00 per $1,000 principal amount of
Debentures, plus accrued and unpaid interest of $16.79 to, but not including,
the Redemption Date, for an aggregate Redemption Price of $1,055.79 per $1,000
principal amount of Debentures.
As more fully described below, holders of Debentures have as alternatives,
in addition to the right to sell their Debentures through usual broker
facilities, (i) the right to convert their Debentures into Common Stock and (ii)
the right to have their Debentures redeemed for cash on the Redemption Date for
the Redemption Price. The availability of the first alternative described above
will terminate at the close of business on the Conversion Expiration Date. ANY
DEBENTURES NOT DULY SURRENDERED FOR CONVERSION PRIOR TO THE CLOSE OF BUSINESS ON
THE CONVERSION EXPIRATION DATE WILL BE AUTOMATICALLY REDEEMED FOR CASH AT THE
REDEMPTION PRICE.
SO LONG AS THE MARKET PRICE OF A SHARE OF COMMON STOCK IS MORE THAN $23.85
PER SHARE, THE SHARES OF COMMON STOCK AND CASH IN LIEU OF FRACTIONAL SHARES
WHICH HOLDERS WOULD RECEIVE UPON CONVERSION OF THEIR DEBENTURES WOULD HAVE A
GREATER MARKET VALUE THAN THE CASH THAT SUCH HOLDERS WOULD RECEIVE UPON
REDEMPTION OF SUCH DEBENTURES. ON THE BASIS OF THE LAST REPORTED SALE PRICE OF
THE COMMON STOCK ON THE NASDAQ ON AUGUST 18, 1997 OF $32.375 PER SHARE, THE
44.2688 SHARES OF COMMON STOCK INTO WHICH EACH $1,000 PRINCIPAL AMOUNT OF
OUTSTANDING DEBENTURES ARE CONVERTIBLE HAD A MARKET VALUE EQUIVALENT TO
APPROXIMATELY $1,433.20. IT SHOULD BE NOTED, HOWEVER, THAT THE TRADING PRICE OF
THE COMMON STOCK RECEIVED UPON CONVERSION WILL FLUCTUATE IN THE MARKET, AND THE
HOLDER MAY INCUR VARIOUS EXPENSES OF SALE IF SUCH COMMON STOCK IS SOLD IN THE
MARKET. SEE "COMMON STOCK PRICE RANGE AND DIVIDENDS" FOR ADDITIONAL MARKET PRICE
INFORMATION. IN LIGHT OF THE FOREGOING, HOLDERS OF DEBENTURES ARE URGED TO
OBTAIN CURRENT MARKET QUOTATIONS FOR THE COMMON STOCK BEFORE MAKING THEIR
ELECTIONS.
ALTERNATIVES AVAILABLE TO HOLDERS OF DEBENTURES
Holders of Debentures have the following alternatives, which should be
carefully considered:
1. CONVERSION OF DEBENTURES INTO COMMON STOCK. Until the close of business
on the Conversion Expiration Date, at the offices listed below, Debentures are
convertible pursuant to the Indenture, at the option of the holder of such
Debentures, into shares of Common Stock at a conversion price of $22.5893 per
share of Common Stock, into 44.2688 shares of Common Stock for each $1,000
principal amount of Debentures. On the basis of the last reported sale price of
the Common Stock on the NASDAQ on August 18, 1997 of $32.375 per share, the
44.2688 shares of Common Stock into which each $1,000 principal amount of
outstanding Debentures are convertible had a market value equivalent to
approximately $1,433.20. See "Common Stock Price Range and Dividends" for
additional market price information. Any conversion of Debentures will be
effective immediately prior to the close of business on the date on which such
shares are duly surrendered as described below. Thereafter, the person or
persons entitled to receive the Common Stock issuable upon such conversion shall
be treated for all purposes as the record holder or holders of such shares of
Common Stock (including for purposes of determining holders entitled to receive
payments of dividends and to vote on matters submitted to a vote of the holders
of Common Stock). No payment or adjustment will be made for interest accrued on
Debentures surrendered for conversion. Accordingly, any holder surrendering
Debentures for conversion will not receive any interest with respect to such
Debentures accrued since June 1, 1997.
To convert any Debentures into Common Stock, the holder thereof shall
surrender such Debentures prior to the close of business on the Conversion
Expiration Date to HARRIS TRUST AND SAVINGS BANK, TRUSTEE, 311 WEST MONROE
STREET, CHICAGO, ILLINOIS 60606, ATTENTION: DAN DONOVAN. In order to duly
surrender such Debentures for conversion, the holder must also give written
notice that such holder elects to convert such Debentures into Common Stock and
that portion of such Debentures that such holder wishes to convert. Each
Debenture surrendered for conversion must be duly assigned or endorsed for
transfer. Notice of conversion given to the Trustee (including the assignment
required as described in the preceding sentence) may be provided by surrendering
Debentures accompanied by a duly executed Letter
6
<PAGE>
of Transmittal (the "Letter of Transmittal") that will be mailed to all record
holders of Debentures as of August 12, 1997. In addition, a holder may surrender
Debentures duly assigned or endorsed for transfer to the Trustee at the address
set forth above, accompanied by a written notice of conversion contained on the
reverse of the certificate for the Debentures. Since it is the time of receipt,
rather than the time of mailing, that determines whether Debentures have been
properly surrendered for conversion, holders wishing to convert their Debentures
should allow sufficient time for Debentures sent by mail to be received prior to
the close of business on the Conversion Expiration Date.
As promptly as practicable after the surrender of Debentures in the proper
manner, the Company will issue and will deliver to the Trustee, a certificate or
certificates for the number of whole shares of Common Stock to which such holder
is entitled upon conversion together with cash in lieu of any fractional shares.
If only a portion of Debentures are surrendered for conversion, the Company
shall issue and cause the Trustee to deliver to such holder or such holder's
designee a new Debenture of authorized denomination equal to the unconverted
portion of the principal amount of such Debenture, provided that, after the
Conversion Expiration Date, no such Debenture will be issued and all such
Debentures shall be redeemed as described herein.
No fractional shares of Common Stock will be issued upon conversion of any
Debentures. In lieu of any fraction of a share of Common Stock which would
otherwise be issuable in respect of the aggregate number of Debentures
surrendered for conversion at one time by the same holder, such holder will be
paid an amount in cash equal to the same fraction of the Closing Price (as
hereinafter defined) of Common Stock on the close of business on the day of
conversion. The "Closing Price" for any trading date means the last reported
sales price regular way or, in the case no such reported sales takes place on
such day, the average of the reported closing bid and asked prices regular way,
in either case on the NASDAQ.
2. REDEMPTION OF DEBENTURES ON THE REDEMPTION DATE. Any Debentures which
have not been converted into Common Stock by a holder on or prior to the close
of business on the Conversion Expiration Date, will be redeemed on the
Redemption Date for cash in an amount equal to the redemption price of $1,039.00
per $1,000 principal amount of Debentures, plus accrued and unpaid interest of
$16.79 to, but not including, the Redemption Date, for an aggregate Redemption
Price of $1,055.79 per $1,000 principal amount of Debentures. To receive the
Redemption Price for any such Debentures the holder thereof must surrender such
Debentures to the Trustee at the address set forth above. On and after the
Redemption Date, interest will cease to accrue and holders of Debentures will
not have any rights as such holders other than the right to receive $1,055.79
per $1,000 principal amount of Debentures upon surrender of their Debentures.
------------------------
The Company will pay any and all stock transfer and documentary stamp taxes
that may be payable in respect of any issuance or delivery of shares of Common
Stock on account of the conversion of any Debentures. The Company will not,
however, pay any such tax which may be payable in respect of any transfer
involved in the issuance and delivery of shares of Common Stock or Debentures in
a name other than that in which Debentures with respect to which such shares are
issued were registered, or any payment to any person other than the registered
holder thereof, and will not make any such issuance or payment unless and until
the person otherwise entitled to such issuance or payment has paid to the
Company or the Trustee on behalf of the Company the amount of any such tax or
has presented evidence to establish, to the satisfaction of the Company, that
such tax has been paid or is not payable.
The Company has retained the services of D.F. King & Co., Inc. to act as the
information agent in connection with the redemption of Debentures for which D.F.
King & Co., Inc. will receive a fee of $5,000. For additional copies of this
Prospectus, Notice of Redemption or Letter of Transmittal, holders of Debentures
may contact D.F. King & Co., Inc. by mail at 77 Water Street, New York, New York
10005 or by telephone at (800) 755-7250.
7
<PAGE>
COMMON STOCK PRICE RANGE AND DIVIDENDS
The table below shows the range of reported per share sale prices of Common
Stock on the NASDAQ for the periods indicated. A recent per share reported sale
price, as reported on the NASDAQ, is set forth on the cover page of this
Prospectus. The Common Stock is listed on the NASDAQ under the trading symbol
VRLN.
<TABLE>
<CAPTION>
FISCAL YEAR HIGH LOW
- -------------------------------------------------------------------------- ------------ ------------
<S> <C> <C>
1995
First Quarter........................................................... $ 20 3/64 $ 17 9/64
Second Quarter.......................................................... 23 41/64 19
Third Quarter........................................................... 25 58/64 20 11/16
Fourth Quarter.......................................................... 24 25/32 19 5/16
1996
First Quarter........................................................... $ 23 1/16 $ 20 29/64
Second Quarter.......................................................... 23 55/64 19 49/64
Third Quarter........................................................... 23 5/8 20 7/8
Fourth Quarter.......................................................... 22 1/2 18 3/4
1997
First Quarter........................................................... $ 23 $ 18 1/8
Second Quarter.......................................................... 32 3/8 22 1/2
Third Quarter (through August 18, 1997)................................. 35 3/4 31 1/2
</TABLE>
The Company has paid a $0.09 quarterly dividend in respect of each of the
quarters listed above through the second quarter of fiscal 1997. The Company has
paid a cash dividend on its Common Stock since 1970. The declaration and payment
of dividends are dependent on the Company's earnings, financial condition and
capital needs and are at the discretion of the Company's Board of Directors (the
"Board of Directors"). The Company's long-term debt agreements contain, among
other provisions, covenants limiting the payment of dividends.
USE OF PROCEEDS
The net proceeds to be received by the Company from the sale to the
Purchasers of any Common Stock pursuant to the Standby Agreement will be used to
effect the redemption of any Debentures not converted. The proceeds of this
offering are dependent upon the number of Purchased Shares, if any, to be
acquired by the Purchasers from the Company, which will not be determinable
until after the close of business on the Conversion Expiration Date. To the
extent that a portion of the profits realized by the Purchasers on the sale of
up to 121,064 Purchased Shares are remitted to the Company as described under
"Standby and Other Arrangements," such proceeds will be used by the Company for
general corporate purposes. The Company will not receive any proceeds from the
issuance of Common Stock upon the conversion of Debentures and will not receive
any proceeds from the sale of shares of Common Stock, if any, received by the
Purchasers upon conversion of Debentures purchased by the Purchasers in the open
market.
8
<PAGE>
DESCRIPTION OF CAPITAL STOCK
The authorized capital stock of the Company consists of 20,500,000 shares of
capital stock, 20,000,000 of such shares being Common Stock, par value $0.10 per
share, and 500,000 of such shares being preferred stock, par value $1.00 per
share ("Preferred Stock"). At August 18, 1997, there were outstanding 6,427,908
shares of Common Stock and no shares of Preferred Stock, and 724,460 shares of
Common Stock were reserved for issuance in connection with stock options issued
to the Company's directors and employee stock and option plans.
The Company's Certificate of Incorporation authorizes the Board of Directors
to provide for the issuance, from time to time, of Preferred Stock in one or
more series, to establish the number of shares to be included in each such
series and to fix the designations and powers, preferences and rights of the
shares of each such series and any qualifications, limitations or restrictions
thereof. Because the Board of Directors has the power to establish the
preferences and rights of the shares of each series of Preferred Stock, it may
afford the holders of any Preferred Stock preferences, powers and rights
(including voting rights) senior to the rights of the holders of Common Stock,
which could adversely affect the rights, including voting rights, of holders of
Common Stock.
Subject to the rights of holders of any Preferred Stock then outstanding,
holders of Common Stock are entitled to receive such dividends as may from time
to time be declared by the Board of Directors out of funds legally available
therefor. Holders of Common Stock are entitled to one vote per share on all
matters on which the holders of Common Stock are entitled to vote. Because
holders of Common Stock do not have cumulative voting rights, the holders of a
majority of the shares of Common Stock represented at a meeting can elect all of
the directors. In the event of a liquidation, dissolution or winding up of the
Company, holders of Common Stock would be entitled to share ratably in assets of
the Company available for distribution to the holders of Common Stock.
All outstanding shares of Common Stock are validly issued, fully paid and
non-assessable. There are no preemptive rights for the Common Stock.
The transfer agent and registrar for the Common Stock is Harris Trust and
Savings Bank.
The Company is a Delaware corporation subject to Section 203 of the General
Corporation Law of the State of Delaware, which prohibits a publicly held
Delaware corporation from consummating a "business combination," except under
certain circumstances, with an "interested stockholder" for a period of three
years after the time such person became an "interested stockholder" unless (i)
prior to the time of the business combination the board of directors of the
corporation approved such business combination or the transaction which resulted
in the stockholder becoming an interested stockholder, (ii) upon consummation of
the transaction which resulted in the stockholder becoming an interested
stockholder, the interested stockholder owned at least 85% of the outstanding
voting stock, or (iii) at or after such time the business combination is
approved by the board of directors and authorized at a meeting of the
stockholders by the affirmative vote of at least 66 2/3% of the outstanding
voting stock which is not owned by the interested stockholder. An "interested
stockholder" is defined as any person who, together with affiliates and
associates, owns (or, within the prior three years, owned) 15% or more of a
corporation's outstanding voting stock. A "business combination" includes any
merger, sale of assets and other transaction resulting in a financial benefit to
an interested stockholder.
9
<PAGE>
CERTAIN UNITED STATES FEDERAL TAX CONSIDERATIONS
The following discussion is a general summary of certain anticipated United
States Federal income tax consequences of the conversion or redemption of
Debentures as described herein. This discussion is based on currently existing
provisions of the Internal Revenue Code of 1986, as amended (the "Code"),
existing and proposed Treasury Regulations thereunder and current administrative
rulings and court decisions, all of which are subject to change. Any such
change, which may or may not be retroactive, could alter the tax consequences to
holders of Debentures as described herein. As used herein, the term "United
States Holder" means the beneficial owner of a Debenture that for United States
Federal income tax purposes is (i) a citizen or resident of the United States,
(ii) treated as a domestic corporation or domestic partnership, or (iii) an
estate or trust that is subject to United States Federal income taxation on a
net income basis in respect of Debentures, and the term "Non-United States
Holder" means the beneficial owner of a Debenture who or that is not a United
States Holder.
Holders of Debentures should be aware that this discussion does not deal
with all United States Federal income tax considerations that may be relevant to
particular holders in light of their particular circumstances, such as holders
who are dealers in securities, banks, insurance companies or tax-exempt
organizations. In addition, the following discussion does not address the tax
consequences of any of the available alternatives to holders of Debentures under
foreign, state or local tax laws or the tax consequences of transactions (if
any) effectuated prior to or after the consummation of any such alternative
(whether or not such transactions are undertaken in connection with such
alternative). ACCORDINGLY, HOLDERS OF DEBENTURES ARE URGED TO CONSULT THEIR OWN
TAX ADVISORS CONCERNING THE FEDERAL, STATE, LOCAL AND FOREIGN TAX CONSEQUENCES
OF THE ALTERNATIVES AVAILABLE TO THEM.
CONVERSION
As a general rule, no gain or loss will be recognized by a holder upon the
conversion of Debentures into Common Stock (except to the extent of any cash
received in lieu of fractional shares of Common Stock). A holder must also
recognize interest income to the extent of any accrued but unpaid interest on
Debentures not previously recognized by the holder at the time of the
conversion. Except for fractional shares of Common Stock for which cash is
received and any Common Stock received that is attributable to previously
unrecognized accrued but unpaid interest, a holder's adjusted tax basis in the
Common Stock received on conversion of Debentures will be the same as the
holder's adjusted tax basis in the Debentures converted at the time of the
conversion, and the holding period for the Common Stock received on conversion
will include the holding period of the Debentures converted (assuming such
Debentures are held as a capital asset at the time of conversion). A holder's
adjusted tax basis in a Debenture will equal the cost of the Debenture to the
holder, increased by any market discount previously included in income by the
holder or reduced by any bond premium amortization previously deducted by the
holder with respect to such Debenture. Holders of two or more blocks of
Debentures with different holding periods should consult with their tax advisors
on how tax bases and holding periods should be allocated among shares of Common
Stock received in the conversion.
Although it is not free from doubt until confirmed by the issuance of
Treasury Regulations, any accrued market discount not previously taken into
income prior to the conversion of a Debenture in shares of Common Stock should
carry over to the Common Stock received on conversion and be treated as ordinary
income upon a subsequent disposition of such Common Stock (as opposed to being
treated as ordinary income upon the conversion), to the extent of any gain
recognized on such disposition. "Market discount" is defined generally as the
excess, if any, of (i) the principal amount of the Debenture over (ii) the tax
basis of the Debenture in the hands of the holder immediately after its
acquisition by such holder.
10
<PAGE>
REDEMPTION
The redemption of Debentures will result in the recognition of gain or loss
to the selling holder in an amount equal to the difference between the cash
received upon redemption of such Debentures (except to the extent such amount is
attributable to accrued but unpaid interest or market discount not previously
recognized by the holder, which is taxable as ordinary income) and the holder's
adjusted tax basis in such Debentures. Such gain or loss will be capital gain or
loss provided that at the time of the redemption such Debentures were held as a
capital asset. A holder's adjusted tax basis in a Debenture will be determined
in the same manner as described above under the heading "Conversion."
A Non-United States Holder of a Debenture will generally not be subject to
United States Federal income tax or withholding tax on any gain realized on the
redemption of such Debenture (including the receipt of cash in lieu of
fractional shares upon conversion of a Debenture into Common Stock but, in
certain cases, not including any amount representing interest or accrued market
discount) unless (1) the gain is effectively connected with a United States
trade or business of the Non-United States Holder, (2) in the case of a
Non-United States Holder who is an individual, such holder is present in the
United States for a period or periods aggregating 183 days or more during the
taxable year of the disposition and certain other requirements are met, or (3)
the holder is subject to tax pursuant to the provisions of the Code applicable
to certain United States expatriates.
CAPITAL GAINS RATES
The maximum United States Federal income tax rate applied to capital gains
realized on a redemption of a Debenture held by an individual after July 28,
1997 will generally be (i) 20% if such Debenture has been held by such
individual for more than 18 months as of the date of the redemption, (ii) 28% if
such Debenture has been held by such individual for more than 12 months but not
more than 18 months as of the date of the redemption, and (iii) the rate that
applies to ordinary income (I.E., a graduated rate up to a maximum of 39.6%) if
such Debenture has been held by such individual for no more than 12 months as of
the date of the redemption.
BACKUP WITHHOLDING ON PROCEEDS FROM REDEMPTION
The redemption of Debentures by holders will ordinarily not be subject to
backup withholding of United States Federal income taxes. However, the Trustee
will be required to withhold tax at the rate of 31% from redemption proceeds
paid to United States Holders who (i) have failed to furnish their taxpayer
identification number ("TIN") to the Trustee; (ii) have, according to the IRS,
furnished an incorrect TIN to the Trustee, (iii) have, according to the IRS,
underreported interest, dividends or patronage dividend income in the past; or
(iv) have failed to satisfy the payee certification requirements of Section 3406
of the Code. Each United States Holder who sells Debentures, or whose Debentures
are redeemed, will be required to provide and certify his or her correct TIN and
to certify that he or she is an exempt recipient. A Non-United States Holder
will generally not be subject to backup withholding of United States Federal
income taxes, but may be subject to withholding tax at the rate of 30% (or, if
applicable, a lower treaty rate) from redemption proceeds attributable to
accrued interest or market discount on such Debentures.
THE FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL
INFORMATION ONLY. EACH HOLDER IS URGED TO CONSULT SUCH HOLDER'S OWN TAX ADVISOR
TO DETERMINE THE PARTICULAR TAX CONSEQUENCES TO SUCH HOLDER (INCLUDING THE
APPLICABILITY AND EFFECT OF THE CONSTRUCTIVE OWNERSHIP RULES AND STATE, LOCAL
AND FOREIGN TAX LAWS) OF THE CONVERSION OR REDEMPTION OF DEBENTURES.
11
<PAGE>
STANDBY AND OTHER ARRANGEMENTS
Subject to the terms and conditions contained in the Standby Agreement dated
August 20, 1997 (the "Standby Agreement") among the Company and Donaldson,
Lufkin & Jenrette Securities Corporation, Piper Jaffray Inc. and Robert W. Baird
& Co. Incorporated (the "Purchasers") the Purchasers, have agreed, severally and
not jointly, to purchase directly from the Company, subject to certain
conditions, at a price of $23.85 per share, that number of shares of Common
Stock which in the aggregate equal the whole number of shares of Common Stock as
would have been issuable upon conversion of any Debentures which are not duly
surrendered for conversion by the close of business on the Conversion Expiration
Date (the "Purchased Shares"), in the respective percentages set forth below.
<TABLE>
<CAPTION>
PURCHASERS PERCENTAGE
- ---------------------------------------------------------------------------------- -------------
<S> <C>
Donaldson, Lufkin & Jenrette Securities Corporation............................... 50%
Piper Jaffray Inc................................................................. 25
Robert W. Baird & Co. Incorporated................................................ 25
---
Total......................................................................... 100%
---
---
</TABLE>
The Purchasers may also purchase Debentures in the open market prior to the
close of business on the Conversion Expiration Date. The Purchasers have agreed
with the Company to convert any Debentures so purchased into shares of Common
Stock.
Pursuant to the terms of the Standby Agreement and in consideration of their
obligations thereunder, the Company has agreed to pay the Purchasers the sum of
(i) $461,980, plus (ii) an additional amount equal to $0.8348 per share for each
Purchased Share in excess of 121,064 shares (5% of the maximum number of shares
of Common Stock issuable upon the conversion of the Debentures outstanding at
the close of business on August 18, 1997) purchased from the Company pursuant to
the Standby Agreement.
The Purchasers propose to offer any Common Stock obtained as described above
in part directly to the public as set forth on the cover page of this Prospectus
and in part to certain securities dealers at prices which may represent
concessions from the prices at which such shares are then being offered to the
public. The Purchasers may allow, and such dealers may reallow, a concession to
certain brokers and dealers. The amount of such concessions and reallowances
will be determined from time to time by the Purchasers. In effecting such
transactions, the Purchasers may realize profits and losses independent of the
compensation referred to above.
Each Purchaser has agreed, severally and not jointly, to remit to the
Company 50% of the Excess Proceeds (as defined below), if any, received by such
Purchaser from (i) in the case of Donaldson, Lufkin & Jenrette Securities
Corporation, the first 60,532 Purchased Shares sold by it, (ii) in the case of
Piper Jaffray Inc., the first 30,266 Purchased Shares sold by it and (iii) in
the case of Robert W. Baird & Co. Incorporated, the first 30,266 Purchased
Shares sold by it. For purposes of the foregoing, the "Excess Proceeds" with
respect to a Purchaser shall mean the aggregate actual sales price (net of
selling concessions, transfer taxes and other expenses of sale) of the first
60,532 Purchased Shares sold by Donaldson, Lufkin & Jenrette Securities
Corporation, the first 30,266 Purchased Shares sold by Piper Jaffray Inc. and
the first 30,266 Purchased Shares sold by Robert W. Baird & Co. Incorporated
less, in each case, $23.85 per Purchased Share.
The Company has agreed that from the date of the Standby Agreement until the
earlier of (i) the date all Purchased Shares and shares of Common Stock acquired
by the Purchasers upon conversion of Debentures purchased by the Purchasers in
the open market have been sold and (ii)(a) 30 days after the Redemption Date if
the Purchasers purchase 121,064 Purchased Shares or less or (b) 90 days after
the Redemption Date if the Purchasers purchase more than 121,064 Purchased
Shares, it will not, without the prior written consent of the Purchasers, (x)
offer, pledge, sell, contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or warrant to
purchase, or
12
<PAGE>
otherwise transfer or dispose of, directly or indirectly, any shares of Common
Stock or any securities convertible into or exercisable or exchangeable for
Common Stock, or (y) enter into any swap or other arrangement that transfers all
or a portion of the economic consequences associated with the ownership of any
Common Stock (regardless of whether any of the transactions described in clause
(x) or (y) is to be settled by delivery of Common Stock, or other such
securities, in cash or otherwise). The foregoing sentence shall not apply to (i)
sales to the Purchasers pursuant to the Standby Agreement, (ii) any shares of
Common Stock issued by the Company upon the exercise of an option or warrant or
the conversion of a security (including the Debentures) outstanding on the date
of the Standby Agreement, (iii) the grant of options pursuant to the Company's
stock option plans or the issuance of Common Stock pursuant to the Company's
employee stock purchase plan and (iv) from and after the Redemption Date, Common
Stock or any security convertible into or exercisable or exchangeable for Common
Stock, issued in a private placement to a seller in connection with any
acquisition by the Company or any of its subsidiaries.
In connection with the offering, the Purchasers may engage in transactions
that stabilize, maintain or otherwise affect the price of the Common Stock.
Specifically, the Purchasers may make short sales of the Common Stock in the
open market. In addition, the Purchasers may bid for and purchase shares of
Common Stock in the open market to stabilize the price of the Common Stock.
These activities may stabilize or maintain the market price of the Common Stock
above independent market levels. The Purchasers are not required to engage in
these activities, and may end any of these activities at any time.
The Company has agreed to indemnify the Purchasers against certain
liabilities, including liabilities under the Securities Act of 1933, as amended
(the "Securities Act"), or to contribute to payments that the Purchasers may be
required to make in respect thereof.
Certain of the Purchasers or their affiliates have rendered, and are
expected to continue to render, various investment banking and other advisory
services to the Company, for which they have received normal and customary fees.
13
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Commission. Such reports, proxy statements and other information filed by the
Company with the Securities and Exchange Commission (the "Commission") can be
inspected, and copies may be obtained, at the Public Reference Section of the
Commission, 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates,
as well as at the following Regional Offices of the Commission: Seven World
Trade Center, Suite 1300, New York, New York 10048; and Citicorp Center, 500
West Madison Street, Suite 1400, Chicago, Illinois 60661-2511. Such material may
also be accessed electronically by means of the Commission's home page on the
Internet at http://www.sec.gov.
The Company has filed with the Commission a Registration Statement on Form
S-3 (as amended and including exhibits, the "Registration Statement") under the
Securities Act, with respect to the shares of Common Stock offered hereby. This
Prospectus does not contain all of the information set forth in the Registration
Statement, certain parts of which are omitted in accordance with the rules and
regulations of
the Commission. For further information, reference is hereby made to the
Registration Statement.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, which have been filed by the Company with the
Commission, are incorporated herein by reference.
1. Annual Report on Form 10-K for the fiscal year ended January 31, 1997;
2. Quarterly Report on Form 10-Q for the quarter ended May 3, 1997;
3. Current Report on Form 8-K dated August 19, 1997; and
4. The description of the Company's Preferred Share Purchase Rights
included in the Registration Statement on Form 8-A dated July 19, 1996,
as amended.
All documents filed by the Company with the Commission pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this Prospectus
and prior to the termination of the offering made hereunder shall be deemed to
be incorporated by reference in this Prospectus and to be a part hereof from the
date of filing of such documents. Any statement contained herein or in a
document incorporated or deemed to be incorporated by reference herein shall be
deemed to be modified or superseded for purposes of this Prospectus to the
extent that a statement contained herein or in any other subsequently filed
document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
The Company will provide without charge to each person, including any
beneficial owner, to whom this Prospectus is delivered, upon the written or oral
request of such person, a copy of any or all of the documents which have been or
may be incorporated by reference in this Prospectus, other than exhibits to such
documents not specifically described above. Requests for such documents should
be directed to Varlen Corporation, 55 Shuman Boulevard, Post Office Box 3089,
Naperville, Illinois, 60566-7089 (Telephone Number (630) 420-0400).
14
<PAGE>
LEGAL MATTERS
The legality of the shares of Common Stock offered hereby will be passed
upon for the Company by Vicki L. Casmere, Vice President, General Counsel and
Secretary of the Company. Certain other matters will be passed on for the
Company by Kirkland & Ellis, Chicago, Illinois. Certain legal matters related to
this offering will be passed upon for the Purchasers by Davis Polk & Wardwell,
New York, New York.
EXPERTS
The consolidated financial statements and the related consolidated financial
statement schedule incorporated in this Prospectus by reference from the
Company's Annual Report on Form 10-K for the year ended January 31, 1997 have
been audited by Deloitte & Touche LLP, independent auditors, as stated in their
reports which are incorporated herein by reference, and have been so
incorporated in reliance upon the reports of such firm given their authority as
experts in accounting and auditing.
15
<PAGE>
- -------------------------------------------
-------------------------------------------
- -------------------------------------------
-------------------------------------------
NO DEALER, SALESPERSON OR OTHER PERSON IS AUTHORIZED TO GIVE ANY INFORMATION
OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS IN CONNECTION WITH THE OFFER CONTAINED IN THIS
PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR THE PURCHASERS.THIS
PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER
TO BUY ANY OF THE SECURITIES OFFERED HEREBY IN ANY JURISDICTION TO ANY PERSON TO
WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION IN SUCH JURISDICTION.THE
DELIVERY OF THIS PROSPECTUS AT ANY TIME OR ANY SALE MADE HEREUNDER DOES NOT
IMPLY THAT THE INFORMATION HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE
DATE HEREOF.
--------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
Prospectus Summary............................. 3
Risk Factors................................... 5
Redemption of Debentures; Available
Alternatives................................. 6
Common Stock Price Range And Dividends......... 8
Use of Proceeds................................ 8
Description of Capital Stock................... 9
Certain United States Federal Tax
Considerations............................... 10
Standby And Other Arrangements................. 12
Available Information.......................... 14
Incorporation of Certain Documents by
Reference.................................... 14
Legal Matters.................................. 15
Experts........................................ 15
</TABLE>
2,421,279 SHARES
VARLEN CORPORATION
COMMON STOCK
-----------------
PROSPECTUS
-----------------
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
PIPER JAFFRAY INC.
ROBERTW. BAIRD & CO.
INCORPORATED
AUGUST , 1997
- -------------------------------------------
-------------------------------------------
- -------------------------------------------
-------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The Company is paying the expenses of the offering. The amounts set forth
below, except for the Securities and Exchange Commission registration fee, are
estimated:
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee............... $ 23,617
Nasdaq Stock Market Listing Fee................................... 17,500
Legal fees........................................................ 50,000
Printing and engraving expenses................................... 20,000
Auditors' fees.................................................... 20,000
Blue sky fees..................................................... 2,000
Miscellaneous..................................................... 16,883
---------
Total......................................................... $ 150,000
---------
---------
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company shall, to the full extent permitted by the General Company Law
of the State of Delaware, Article EIGHTH of the Company's Certificate of
Incorporation and Article VII, Section 4 of the Company's By-Laws, indemnify all
persons whom it has the power to indemnify pursuant thereto.
Article 102 of the General Corporation Law of the State of Delaware and
Article NINTH of the Company's Certificate of Incorporation permit the
limitation of directors' personal liability to the Company or its stockholders
for monetary damages for breach of fiduciary duty as a director except in
certain situations including the breach of a director's duty of loyalty or acts
or omissions not made in good faith.
The Company has director and officer insurance coverage, which effectively
acts as a personal liability policy for third party claims against any officer
or director of the Company acting in such capacity on behalf of the Company or
any Subsidiary of which the Company owns more than 50% of the outstanding stock.
The Company has entered into an Indemnification Agreement with each of its
officers and directors whereby the Company has agreed to indemnify and advance
expenses to such persons to the fullest extent permitted by applicable law.
ITEM 16. EXHIBITS.
<TABLE>
<C> <S>
1.1 Form of Standby Agreement
4.1 Form of Indenture between the Harris Trust and Savings Bank and the
Company (incorporated herein by reference to Exhibit 4.2 to the
Company's Registration Statement on Form S-3, File No. 33-61826)
4.2 Company's Restated Articles of Incorporation, as amended through October
1, 1996
4.3 Company's By-Laws, as amended through May 29, 1997
5.1 Opinion of Vicki L. Casmere, Vice President, General Counsel and Secretary
of the Company, with respect to legality
8.1 Opinion of Kirkland & Ellis with respect to tax matters
23.1 Consent of Deloitte & Touche LLP, independent auditors
23.2 Consent of Vicki L. Casmere (included in Exhibit 5.1)
23.2 Consent of Kirkland & Ellis (included in Exhibit 8.1)
</TABLE>
II-1
<PAGE>
<TABLE>
<C> <S>
24.1 Powers of Attorney
99.1 Form of Notice of Redemption
99.2 Form of Letter of Transmittal
</TABLE>
ITEM 17. UNDERTAKINGS.
The undersigned Registrant hereby undertakes:
1. For purposes of determining any liability under the Securities Act of
1933 (the "Securities Act"), each filing of the Registrant's annual report
pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of
1934 that is incorporated by reference in the Registration Statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
2. Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
3. For purposes of determining any liability under the Securities Act, the
information omitted from the form of prospectus filed as part of the
Registration Statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of the Registration
Statement as of the time it was declared effective.
4. For the purpose of determining any liability under the Securities Act,
each post-effective amendment that contains a form of prospectus shall be deemed
to be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
II-2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Naperville, State of Illinois on August 19, 1997.
<TABLE>
<S> <C> <C>
VARLEN CORPORATION
By: /s/ RICHARD L. WELLEK
------------------------------------------
Richard L. Wellek
CHAIRMAN OF THE BOARD OF DIRECTORS AND
CHIEF EXECUTIVE OFFICER
</TABLE>
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed on August 19, 1997 by the following
persons in the capacities indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE
<C> <S>
Chairman of the Board of
/s/ RICHARD L. WELLEK Directors and Chief
- ------------------------------ Executive Officer
(Richard L. Wellek) (principal executive
officer)
Vice President, Finance
/s/ RICHARD A. NUNEMAKER and Chief Financial
- ------------------------------ Officer (principal
(Richard A. Nunemaker) accounting officer)
/s/ RUDOLPH GRUA*
- ------------------------------ Director
(Rudolph Grua)
/s/ ERNEST H. LORCH*
- ------------------------------ Director
(Ernest H. Lorch)
/s/ L. WILLIAM MILES*
- ------------------------------ Director
(L. William Miles)
/s/ GREG A. ROSENBAUM*
- ------------------------------ Director
(Greg A. Rosenbaum)
/s/ JOSEPH J. ROSS*
- ------------------------------ Director
(Joseph J. Ross)
/s/ THEODORE A. RUPPERT*
- ------------------------------ Director
(Theodore A. Ruppert)
</TABLE>
*By: /s/ RICHARD A.
NUNEMAKER
-------------------------
Richard A. Nunemaker,
ATTORNEY-IN-FACT
<PAGE>
EXHIBIT INDEX
<TABLE>
<C> <S> <C>
1.1 Form of Standby Agreement
4.1 Form of Indenture between the Harris Trust and Savings Bank and the
Company (incorporated herein by reference to Exhibit 4.2 to the
Company's Registration Statement on Form S-3, File No. 33-61826)
4.2 Company's Restated Articles of Incorporation, as amended through
October 1, 1996
4.3 Company's By-Laws, as amended through May 29, 1997
5.1 Opinion of Vicki L. Casmere, Vice President, General Counsel and
Secretary of the Company, with respect to legality
8.1 Opinion of Kirkland & Ellis with respect to tax matters
23.1 Consent of Deloitte & Touche LLP, independent auditors
23.2 Consent of Vicki L. Casmere (included in Exhibit 5.1)
23.2 Consent of Kirkland & Ellis (included in Exhibit 8.1)
24.1 Powers of Attorney
99.1 Form of Notice of Redemption
99.2 Form of Letter of Transmittal
</TABLE>
<PAGE>
VARLEN CORPORATION
6 1/2% Convertible Subordinated Debentures
due 2003
STANDBY AGREEMENT
August [ ], 1997
<PAGE>
Donaldson, Lufkin & Jenrette
Securities Corporation
Piper Jaffray Inc.
Robert W. Baird & Co. Incorporated
c/o Donaldson, Lufkin & Jenrette
Securities Corporation
2121 Avenue of the Stars
Los Angeles, CA 90067
Dear Sirs and Madames:
Varlen Corporation, a Delaware corporation (the "COMPANY"), has outstanding
$___________ aggregate principal amount of its 6 1/2% Convertible
Subordinated Debentures due 2003 (the "DEBENTURES") issued pursuant to the
Indenture dated as of May 27, 1993 between the Company and Harris Trust and
Savings Bank, as Trustee (the "INDENTURE"). The Company proposes to redeem
on September 4, 1997 (the "REDEMPTION DATE") all the outstanding Debentures
pursuant to a notice of redemption, dated August 20, 1997. The Debentures
will be redeemed at the redemption price of $1,039.00, plus accrued and
unpaid interest of $16.79 to, but not including, the Redemption Date, for an
aggregate redemption price of $1055.79 per $1,000 principal amount per
Debenture (the "REDEMPTION PRICE"). The Debentures are convertible into
shares of Common Stock, $0.10 par value per share (the "COMMON STOCK"), at a
conversion price of $22.5893 per share, into approximately 44.2688 shares of
Common Stock per $1,000 principal amount of Debentures. The right to convert
the Debentures into shares of Common Stock will terminate at the close of
business (5:00 p.m. New York City Time) on September 3, 1997 (the "CONVERSION
EXPIRATION TIME").
The Company desires to make arrangements with Donaldson, Lufkin & Jenrette
Securities Corporation ("DLJ"), Piper Jaffray Inc. ("PIPER JAFFRAY") and
Robert W. Baird & Co. Incorporated ("ROBERT W. BAIRD") (collectively, the
"PURCHASERS," and each individually, a "PURCHASER"), pursuant to which you
will severally purchase authorized but unissued shares of Common Stock which
would have been issuable upon conversion of those Debentures which are not
duly surrendered for conversion on or prior to the Conversion Expiration
Time, for a purchase price equal to $23.85 per share of Common Stock (the
"PURCHASE
2
<PAGE>
PRICE"). Each Purchased Share shall have attached thereto one stock
purchase right (collectively, the "RIGHTS") issued pursuant to a Rights
Agreement dated as of June 17, 1996 (the "RIGHTS AGREEMENT") between the
Company and Harris Trust and Savings Bank, as Rights Agent.
The Company has prepared and filed with the Securities and Exchange
Commission (the "COMMISSION") in accordance with the provisions of the
Securities Act of 1933, as amended, and the rules and regulations of the
Commission thereunder (collectively, the "SECURITIES ACT"), a registration
statement on Form S-3 relating to 2,421,279 shares of Common Stock (the
"COMMON SHARES") issuable by the Company upon conversion of the Debentures
and in accordance with this Agreement. The Company has also filed such
amendments thereto, if any, as may have been required to the date hereof and
will file, if required, on or prior to the effective date of the registration
statement one or more additional amendments thereto. As used in this
Agreement, the term "REGISTRATION STATEMENT" means such registration
statement in the form in which it becomes effective and includes all
financial statements, schedules, reports and documents incorporated by
reference therein and not required to be filed therewith by Form S-3 under
the Securities Act (the "INCORPORATED DOCUMENTS"), filed in accordance with
the Securities Exchange Act of 1934, as amended, and the rules, regulations
and forms of the Commission thereunder (collectively, the "EXCHANGE ACT") on
or before the date on which the Registration Statement becomes effective.
The term "PROSPECTUS" means the prospectus, including any Incorporated
Documents, on file with the Commission at the time the Registration Statement
becomes effective; PROVIDED, that (a) if the prospectus filed by the Company
pursuant to Rule 424(b) of the rules and regulations of the Commission under
the Exchange Act differs from such prospectus, the term "Prospectus" shall
refer to the Rule 424(b) Prospectus from and after the time it is mailed or
otherwise delivered to the Commission for filing, and (b) if the Company
files any documents pursuant to Section 13 or 14 of the Exchange Act after
the time the Registration Statement becomes effective and prior to the
termination of the offering of the Common Stock by the Purchasers, which
documents are deemed to be incorporated by reference into the Prospectus, the
term "Prospectus" shall refer to said Prospectus as supplemented by the
documents so filed from and after the time said documents are filed with the
Commission.
I.
The Company represents and warrants to each of the Purchasers that:
(a) The Company and the transactions contemplated by this Agreement meet
the requirements for using Form S-3 under the Securities Act. The
3
<PAGE>
Registration Statement in the form in which it becomes effective, and also in
such form as it may be when any post-effective amendment thereto shall become
effective and the Prospectus and any supplement or amendment thereto when
filed with the Commission under Rule 424(b) under the Securities Act,
complied or will comply in all material respects with the provisions of the
Securities Act and will not at any such times contain an untrue statement of
a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading; except
that this representation and warranty does not apply to statements in or
omissions from the Registration Statement or the Prospectus made in reliance
upon and in conformity with information furnished to the Company in writing
by any of the Purchasers expressly for use therein.
(b) The Incorporated Documents heretofore filed, when they were filed
(or, if any amendment with respect to any such document was filed, when such
amendment was filed), conformed in all material respects with the
requirements of the Exchange Act and the rules and regulations thereunder;
any further Incorporated Documents so filed will, when they are filed,
conform in all material respects with the requirements of the Exchange Act
and the rules and regulations thereunder; no such document when it was filed
(or, if an amendment with respect to any such document was filed, when such
amendment was filed), contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary
in order to make the statements therein not misleading; and no such further
document, when it is filed, will contain an untrue statement of a material
fact or will omit to state a material fact required to be stated therein or
necessary in order to make the statements therein not misleading.
(c) The Company has been duly incorporated, is validly existing as a
corporation in good standing under the laws of the State of Delaware, has the
full corporate power and authority to own, lease and operate its properties
and to conduct its business as described in the Registration Statement and
the Prospectus, and is duly qualified to transact business and is in good
standing in each jurisdiction or place in which the conduct of its business
or its ownership or leasing of property requires such qualification, except
to the extent that the failure so to qualify or be in good standing would not
have a material adverse effect on the condition (financial or other),
business, properties, net worth or results of operations of the Company and
its subsidiaries, taken as a whole.
(d) Each subsidiary of the Company listed on Schedule II hereto
(collectively, the "SIGNIFICANT SUBSIDIARIES") has been duly incorporated, is
validly existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation, has the corporate power and authority to
own,
4
<PAGE>
lease and operate its property and to conduct its business as described
in the Prospectus and is duly qualified to transact business and is in good
standing in each jurisdiction in which the conduct of its business or its
ownership or leasing of property requires such qualification, except to the
extent that the failure to be so qualified or be in good standing would not
have a material adverse effect on the condition (financial or other),
business, properties, net worth or results of operations of the Company and
its subsidiaries, taken as a whole. Except as set forth in Schedule II
hereto, no other subsidiary of the Company constitutes a "significant
subsidiary" as defined under Rule 1-02 of Regulation S-X.
(e) All the outstanding shares of Common Stock of the Company have been
duly authorized and validly issued, are fully paid and nonassessable; the
Debentures have been duly authorized and validly issued; the Purchased Shares
(as defined in paragraph II(a)) to be issued and sold by the Company have
been duly authorized and, when issued and delivered to the Purchasers against
payment therefor in accordance with the terms hereof, will be validly issued,
fully paid and nonassessable and free of any preemptive or similar rights
(other than under the Rights Agreement); the shares of Common Stock issuable
upon conversion of the Debentures have been duly authorized and reserved for
issuance upon such conversion and when issued and delivered upon such
conversion in accordance with the terms of the Indenture, such shares of
Common Stock will be validly issued, fully paid and nonassessable and free of
any preemptive or similar rights; and the capital stock of the Company
conforms in all material respects to the description thereof in the
Registration Statement and the Prospectus.
(f) The Rights under the Rights Agreement attached to the outstanding
shares of Common Stock have been duly authorized and validly issued; and the
Rights under the Rights Agreement to which the holders of Purchased Shares
and the holders of shares of Common Stock issuable upon conversion of the
Debentures will be entitled have been duly authorized and, upon issuance of
such Purchased Shares in accordance with this Agreement and such Common Stock
in accordance with the Indenture, will be validly issued.
(g) All of the outstanding shares of capital stock of each of the
Significant Subsidiaries have been duly authorized and are validly issued,
fully paid and non-assessable, and are owned of record and beneficially by
the Company or a subsidiary of the Company (except in the case of foreign
subsidiaries for directors' qualifying shares) free and clear of all liens,
adverse claims, security interests, pledges, charges, encumbrances,
stockholders' agreements and voting trusts, except for pledges made under
certain of the Company's and the Company's subsidiaries' credit agreements.
There is no commitment, plan or arrangement to issue, and no outstanding
option, warrant or
5
<PAGE>
other right calling for the issuance of any share of capital stock of the
Company or any of the Company's subsidiaries to any person or any security or
other instrument which by its terms is convertible into, exercisable for or
exchangeable for capital stock of the Company or any of the Company's
subsidiaries, except for the Debentures, grants made under and in accordance
with the Company's stock option plans and issuances of Common Stock pursuant
to the Company's employee stock purchase plan (collectively, the "Plans") and
pursuant to the Rights Agreement. There are no contracts, agreements or
understandings between the Company and any person granting such person the
right to require the Company to include any securities of the Company in the
Registration Statement.
(h) This Agreement has been duly authorized, executed and delivered by
the Company.
(i) (A) The redemption of the Debentures and conversion thereof in
accordance with the terms of this Agreement and the execution and delivery by
the Company of, and the performance by the Company of its obligations under,
this Agreement and the consummation of the transactions contemplated hereby
will not contravene (1) the certificate of incorporation or by-laws (or other
organizational documents) of the Company or the Significant Subsidiaries or
(2) in any material respect, any agreement, contract, bond, indenture or
other instrument binding upon the Company or any of its subsidiaries that is
material to the Company and its subsidiaries, taken as a whole, or (3) except
for any such contraventions that, individually and in the aggregate, do not
have, and are not reasonably expected to have, a material adverse effect on
the condition (financial or other), business, properties, net worth, results
of operations of the Company and its subsidiaries taken as a whole, any
statute, law, rule or regulation or judgment, order or decree of any
governmental body, agency or court having jurisdiction over the Company or
any subsidiary, and (B) no consent, approval, authorization or order of or
qualification with any governmental body or agency is required for any such
actions or for the performance by the Company of its obligations under this
Agreement and the consummation of the transactions contemplated hereby,
except the registration under the Securities Act of the Common Shares
deliverable upon conversion of the Debentures and upon purchase pursuant to
Article II hereof, and except such consents, approvals, authorizations,
orders or qualifications as may be required under the rules of the National
Association of Securities Dealers, Inc. or the securities, or Blue Sky, laws
of the various states in connection with the acquisition, sale and
distribution of the Common Shares by the Purchasers. The redemption of the
Debentures and conversion thereof in accordance with the terms of this
Agreement and the execution and delivery by the Company of, and the
performance by the Company of its obligations under, this Agreement and the
consummation of the transactions
6
<PAGE>
contemplated hereby will not result in the imposition of any lien, charge or
encumbrance upon any of the assets of the Company or any of its subsidiaries,
pursuant to the terms of any agreement, indenture or instrument to which the
Company or any of its subsidiaries is a party or by which any of them is
bound.
(j) There has not occurred any material adverse change, or any
development involving a prospective material adverse change, in the
condition, financial or otherwise, or in the earnings, business, operations,
or prospects of the Company and its subsidiaries, taken as a whole, from that
set forth in the Prospectus. Since the date of the latest financial
statements incorporated by reference in the Prospectus and except as set
forth in the Prospectus, neither the Company nor any of its subsidiaries has
incurred any material liabilities or obligations, direct or contingent, or
entered into any material transactions, not in the ordinary course of
business, and there has not been any material adverse change in the
condition, financial or otherwise, or in the business, prospects or results
of operations of the Company and its subsidiaries, taken as a whole or any
material change in the capital stock or increase in the long-term debt of the
Company or any of its subsidiaries except for issuances of Common Stock upon
conversion of the Debentures and pursuant to the Plans..
(k) There are no legal or governmental proceedings pending or, to the
best of the Company's knowledge, threatened against the Company or any of its
subsidiaries or to which the Company or any of its subsidiaries is a party or
to which any of the properties of the Company or any of its subsidiaries is
subject that affects the transactions contemplated by this Agreement or that
are required to be described in the Registration Statement or the Prospectus
and are not so described, or any statutes, regulations, contracts,
instruments, leases, licenses or other documents that are required to be
described in the Registration Statement or the Prospectus or to be filed as
exhibits to the Registration Statement that are not described or filed as
required.
(l) The Company and each of its subsidiaries carry, or are covered by,
insurance in such amounts and covering such risks as is adequate for the
conduct of their respective businesses and the value of their respective
properties.
(m) Each of the Company and the Significant Subsidiaries has all
necessary consents, authorizations, approvals, orders, certificates and
permits (collectively, "PERMITS") of and from, and has made all declarations
and filings with, all federal, state, local and other governmental
authorities, all self-regulatory organizations and all courts and other
tribunals, to own, lease, license and use its properties and assets and to
conduct its business in all material respects in the manner described in the
Prospectus, except to the extent that the failure to obtain
7
<PAGE>
or file would not have a material adverse effect on the on the condition
(financial or other), business, properties, net worth or results of
operations of the Company and its subsidiaries, taken as a whole. Neither
the Company nor any of its subsidiaries has received any notice of
proceedings relating to the revocations or modification of any such Permits
which, singly or in the aggregate, if the subject of an unfavorable decision,
ruling or finding, would result in a material adverse effect on the condition
(financial or other), business, properties, net worth or results of
operations of the Company and its subsidiaries taken as a whole, except as
described in or contemplated by the Prospectus.
(n) Each preliminary prospectus filed as part of the registration
statement as originally filed or as part of any amendment thereto, or filed
pursuant to Rule 424 under the Securities Act, complied when so filed in all
material respects with the Securities Act and the rules and regulations of
the Commission thereunder.
(o) Neither the Company nor any of its subsidiaries is an "investment
company" or an entity "controlled" by an "investment company," as such terms
are defined in the Investment Company Act of 1940, as amended and in effect
from time to time, or is subject to any law, rule, regulation, order,
judgment or decree which regulates the redemption and conversion of the
Debentures as contemplated herein or the offering or sale of the Common
Shares by the Purchasers (other than the Securities Act, the Exchange Act,
the rules of the National Association of Securities Dealers, Inc. and the
Blue Sky or securities laws).
(p) Neither the Company nor any of the Significant Subsidiaries nor, to
the knowledge of the Company, any other party is now or is reasonably
expected by the Company or its subsidiaries to be in violation or breach of,
or in default in any material respect with respect to, any provision of any
material contract, agreement, instrument, lease, or license to which the
Company or any subsidiary is a party, the effect of which would materially
adversely affect the condition, financial or otherwise, earnings, business,
operations or prospects of the Company and its subsidiaries, taken as a
whole. Each such contract, agreement, instrument, lease or license (i) is in
full force, (ii) is the legal, valid, and binding obligation of the Company
or its subsidiaries and is enforceable as to the Company or its subsidiaries,
as the case may be, in accordance with its terms and (iii) to the Company's
knowledge, is the legal, valid and binding obligation of the other parties
thereto and is enforceable as to each of them in accordance with its terms,
it being understood that insofar as the Company's Mechanical Diode clutch
patent license is concerned, the foregoing representation and warranty is
subject to the information set forth in the Prospectus under the caption
"Risk Factors - Certain Litigation" relating to the two suits filed against
the Company
8
<PAGE>
and certain of its subsidiaries by Epilogics, Inc. Neither the
Company nor any of the Significant Subsidiaries is, or with giving of notice
or lapse of time or both would be, in violation of its certificate of
incorporation or by-laws (or other organizational documents).
(q) The Company and its subsidiaries have title in fee simple to all
real property and good and marketable title to all personal property owned by
them which is material to the business of the Company and its subsidiaries,
in each case free and clear of all liens, encumbrances and defects except
such as are described in the Prospectus or such as do not materially affect
the value of such property and do not materially interfere with the use made
and proposed to be made of such property by the Company and its subsidiaries;
and any real property and buildings held under lease by the Company and its
subsidiaries that are material to the business of the Company and its
subsidiaries are held by them under valid, subsisting and enforceable leases
with such exceptions as are not material and do not materially interfere with
the use made and proposed to be made of such property and buildings by the
Company and its subsidiaries, in each case except as described in or
contemplated by the Prospectus. Each of the Company, and its subsidiaries
enjoys peaceful and undisturbed possession under all material leases and
licenses under which it is operating.
(r) The Company and its subsidiaries are (i) in compliance with any and
all applicable foreign, federal, state and local laws and regulations
relating to the protection of human health and safety, and environment or
hazardous or toxic substances or wastes, pollutants or contaminants
("ENVIRONMENTAL LAWS"), (ii) have received all permits, licenses or other
approvals and filed all notices required of them under applicable
Environmental Laws to conduct their respective businesses and (iii) are in
compliance with all terms and conditions of any such permit, license, notice
or approval and any remedial obligations under any Environmental Law, except
in each case where such noncompliance with Environmental Laws, failure to
receive required permits, licenses or other approvals or failure to comply
with the terms and conditions of such permits, licenses, approvals or
obligations or to file such notices would not, singly or in the aggregate,
have a material adverse effect on the Company and its subsidiaries, taken as
a whole.
(s) Except as set forth in the Registration Statement and Prospectus (i)
the Company does not know of any release or potential release of any
Hazardous Material (as hereinafter defined) on or to the Company's property
the effect of which might have a materially adverse effect on the condition,
financial or otherwise, or in the earnings, business, operations or prospects
of the Company and its subsidiaries, taken as a whole; and (ii) the Company
has no present or
9
<PAGE>
contingent liability in connection with any release or potential release of
any Hazardous Material into the environment, whether on or off its property
the violation of any of which might have a materially adverse effect on the
condition, financial or otherwise, or in the earnings, business, operations
or prospects of the Company and its subsidiaries, taken as a whole. The term
"HAZARDOUS MATERIAL" means any oil (including petroleum products, crude oil
and any fraction thereof), chemical, contaminant, pollutant, solid or
hazardous waste, Hazardous Substance (as defined in Section 101(14) of the
Comprehensive Environmental Response, Compensation and Liability Act and
regulations thereunder), or other material that is toxic or harmful to human
health or the environment or the use, treatment, sale, discharge or disposal
of which is regulated by a local, state or federal government authority
charged with protection of health, safety or the environment.
(t) Except as disclosed in the Prospectus, no customer or supplier that
was material to the Company during the year ended January 31, 1997, or that
has been significant to the Company thereafter, has given notice to the
Company that it has terminated, materially reduced or threatened to terminate
or materially reduce its purchases from or provision of products or services
to the Company, as the case may be, and to the best of the Company's
knowledge, no such action is contemplated, except in any such case for
terminations, reductions or threatened terminations or reductions that would
not, individually or in the aggregate, have a material adverse effect on the
condition (financial or otherwise), business, prospects or results of
operations of the Company and its subsidiaries, considered as a whole.
(u) The Company and each of its subsidiaries is in compliance in all
material respects with all presently applicable provisions of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), and the
regulations and published interpretations thereunder; no "reportable event"
(as defined in ERISA and the regulations and published interpretations
thereunder) has occurred with respect to any "pension plan" (as defined in
ERISA and the regulations and published interpretations thereunder)
established or maintained by the Company and its subsidiaries. Neither the
Company nor any of its subsidiaries have incurred and do not expect to incur
liability under (i) Title IV of ERISA with respect to termination of, or
withdrawal from, any "pension plan" or (ii) Sections 412 or 4971 of the
Internal Revenue Code of 1986, as amended (the "CODE"); and each "pension
plan" established or maintained by the Company or any of its subsidiaries
that is intended to be qualified under Section 401(a) of the Code is so
qualified in all material respects and has received a favorable determination
letter as to its qualification and nothing has occurred, whether by action or
by failure to act, which would cause the loss of such qualification.
10
<PAGE>
(v) The Company and each of the Significant Subsidiaries have filed all
federal and all material state, local and foreign tax returns required to be
filed and neither the Company nor any Significant Subsidiary is in default in
the payment of any taxes which were payable pursuant to said returns or any
assessments with respect thereto other than any which the Company is
contesting in good faith by appropriate proceedings and for which adequate
reserves have been made.
(w) The Company (i) makes and keeps accurate books and records and (ii)
maintains internal accounting controls which provide reasonable assurance
that (A) transactions are executed in accordance with management's
authorization, (B) transactions are recorded as necessary to permit
preparation of its financial statements and to maintain accountability for
its assets, (C) access to its assets is permitted only in accordance with
management's authorization and (D) the reported accountability for its assets
is compared with existing assets at reasonable intervals.
(x) The financial statements, together with related notes and supporting
schedules, included or incorporated by reference in the Registration
Statement and the Prospectus (and any amendment or supplement thereto),
present fairly in all material respects the consolidated financial position,
results of operations shown thereby, stockholders' equity and cash flows of
the Company and its subsidiaries on the basis stated therein at the
respective dates and for the respective periods to which they apply; such
statements and related schedules and notes have been prepared in accordance
with generally accepted accounting principles applied on a consistent basis
throughout the periods involved, except as otherwise indicated therein; and
the other financial information and data included or incorporated by
reference in the Registration Statement or Prospectus (and any amendment or
supplement thereto) are accurately presented and prepared on a basis
consistent with such financial statements and the books and records of the
Company and its subsidiaries.
(y) Deloitte & Touche, who have certified certain financial statements of
the Company and whose report is included in the Prospectus or is incorporated
by reference therein, are independent public accountants within the meaning
of the Securities Act and the rules and regulations thereunder.
(z) No labor problem exists or, to the knowledge of the Company, is
imminent with the employees of the Company or any of the Significant
Subsidiaries which would have a material adverse effect on the condition,
financial or otherwise, or in the earnings, business, operations or prospects
of the Company and its subsidiaries, taken as a whole.
11
<PAGE>
(aa) At the close of business on August 18, 1997, $54,695,000 aggregate
principal amount of the Debentures was outstanding, the Debentures are
convertible, until the Conversion Expiration Time, into Common Stock at a
Conversion Price of $22.5893 per Debenture (equivalent to approximately
44.2688 shares of Common Stock per $1,000 principal amount of Debentures) and
from and after the time the Registration Statement becomes effective and
until the Conversion Expiration Time the Company will take no action which
would result in any change in the Conversion Price.
(bb) The Company has instructed Harris Trust and Savings Bank, the
conversion agent for the Debentures, to cooperate with you in order to
facilitate the conversion of Debentures acquired by you until the Conversion
Expiration Time.
(cc) The Company has not taken and shall not take, directly or indirectly,
any action designed to cause or result in, or which has constituted or which
would constitute, the stabilization or manipulation of the price of shares of
Common Stock to facilitate the sale of the Common Shares.
(dd) On and after the date hereof and prior to the Redemption Date, there
will be no change in the outstanding capital stock of the Company and the
Company will not issue or sell or enter into any agreement (other than this
Agreement), arrangement or understanding of any kind, or take any action, for
the issuance or sale of any capital stock of the Company or securities
convertible into capital stock of the Company or warrants or options for the
purchase of capital stock of the Company or securities convertible into
capital stock of the Company without the prior approval of the Purchasers,
except for the issuance of Common Stock pursuant to the Plans, upon
conversion of the Debentures or pursuant to and in accordance with the Rights
Agreement.
(ee) The redemption of all the outstanding Debentures on the Redemption
Date has been duly authorized by the Company; as of the date hereof, the
Debentures shall have been duly called for redemption on the Redemption Date
in accordance with the terms of the Indenture, and the right to convert the
Debentures into Common Stock shall expire at the Conversion Expiration Time.
(ff) All taxes, if any, required to be paid by the Company with respect to
the redemption of the Debentures and the issuance of shares of Common Stock
upon conversion of the Debentures or pursuant to this Agreement, have been or
will be paid by the Company.
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(gg) The Company and its subsidiaries own or possess all material
patents, trademarks, trademark registrations, service marks, service mark
registrations, trade names, copyrights, licenses, inventions, trade secrets
and rights described in the Prospectus as being owned by them or any of them
or necessary for the conduct of their respective businesses, and the Company
is not aware of any other person to the rights of the Company and the
subsidiaries with respect to the foregoing.
II.
(a) On the basis of the representations and warranties contained in
this Agreement, and subject to its terms and conditions, the Purchasers
agree, severally and not jointly, that the Purchasers will purchase from the
Company, and the Company agrees it will sell to the Purchasers, at the
Purchase Price, in the respective percentages set forth opposite their names
on Schedule I, up to such whole number of shares of Common Stock as would
have been issuable upon conversion of any Debentures that are not duly
surrendered for conversion on or prior to the Conversion Expiration Time;
PROVIDED, HOWEVER, that the aggregate number of such shares of Common Stock
purchased pursuant to this Agreement shall not exceed 2,421,279. Shares of
Common Stock acquired by the Purchasers pursuant to this paragraph II(a) are
referred to herein as "PURCHASED SHARES." The Purchasers shall pay the
Company for the Purchased Shares, if any, purchased pursuant to this
paragraph II(a) by wire transfer payable in Federal or other immediately
available funds to the order of the Company on the Redemption Date (the
"CLOSING DATE"). Delivery to the Purchasers of any Purchased Shares
purchased pursuant to this Article II(a) shall be made at the offices of
Donaldson, Lufkin & Jenrette, 277 Park Avenue, New York, New York 10172, on
the Closing Date.
(b) Until the Conversion Expiration Time, the Purchasers may (but shall
not be obligated to) purchase Debentures in the open market or otherwise in
such amounts and at such prices as the Purchasers may deem advisable. The
Purchasers agree to surrender for conversion at or before the Conversion
Expiration Time any Debentures beneficially owned by them. Shares of Common
Stock issued to the Purchasers upon conversion of the Debentures by them may
be sold by the Purchasers at any time or from time to time pursuant to an
effective registration statement under the Securities Act (including the
Registration Statement) or an applicable exemption under the Securities Act.
Shares of Common Stock acquired upon conversion of the Debentures referred to
in this Article II(b) are referred to as "ADDITIONAL SHARES." Purchased
Shares and Additional Shares are referred to in this Agreement as "ACQUIRED
SHARES."
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(c) The Purchasers agree to inform the Company when all Acquired Shares
have been sold or if any offering of Acquired Shares is otherwise terminated
(the "REGISTRATION TERMINATION DATE").
(d) It is understood that the Purchasers intend to resell the
Acquired Shares, if any, from time to time at prices prevailing in the open
market. Each Purchaser shall remit to the Company 50% of the Excess Proceeds
(as defined below), if any, received by such Purchaser from (i) in the case
of DLJ, the first 60,532 Purchased Shares sold by it, (ii) in the case of
Piper Jaffray, the first 30,266 Purchased Shares sold by it and (iii) in the
case of Robert W. Baird, the first 30,266 Purchased Shares sold by it. For
purposes of the foregoing, the term "EXCESS PROCEEDS" with respect to a
Purchaser shall mean the aggregate actual sales price (net of any selling
concessions, transfer taxes and other expenses of sale) of the first 60,532
Purchased Shares sold by DLJ, the first 30,266 Purchased Shares sold by Piper
Jaffray and the first 30,266 Purchased Shares sold by Robert W. Baird, less,
in each case, $23.85 per Purchased Share. Any Purchased Shares subject to
this paragraph that are not sold by or for the account of a Purchaser prior
to the close of business on the 30th day after the Redemption Date, or if
such day is not a business day, the next succeeding business day (the "LAST
PROFIT DATE"), shall be deemed to have been sold on such Last Profit Date for
an amount equal to the average of the high and low sale prices of the Common
Stock on such day as reported on the Nasdaq Stock Market. Nothing contained
herein shall limit the right of the Purchasers, in their discretion, to
determine the price or prices at which, or the time or times when, any
Acquired Shares shall be sold, whether or not prior to the Redemption Date
and whether or not for long or short account. Settlement shall occur as soon
as reasonably practicable after the final disposition (or Last Profit Date)
by a Purchaser for all Purchased Shares subject to the terms in this
paragraph.
III.
As compensation to the Purchasers for their commitment hereunder, the Company
will pay to the Purchasers: (i) on the date hereof, an aggregate standby fee
of $461,980 (the "STANDBY FEE"), by wire transfer of Federal or other
immediately available funds, which Standby Fee shall be paid to DLJ on behalf
of the Purchasers and (ii) on the Closing Date, in the event the Purchasers
acquire more than 121,064 Purchased Shares, an amount equal to $0.8348 per
Purchased Share in excess of 121,064 shares (the "TAKE-UP FEE"), by wire
transfer payable in Federal or other immediately available funds to the order
of the Purchasers, which Take-up Fee shall be paid to each Purchaser based on
the number of Purchased Shares actually purchased by such Purchaser in excess
of (a) 60,532 Purchased Shares, in the case of DLJ, (b) 30,266 Purchased
Shares, in the case of
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Piper Jaffray and (c) 30,266 Purchased Shares, in the case of Robert W.
Baird. At the option of the Purchasers, in lieu of being paid by the Company
the amount referred to in clause (ii) above, the Purchasers may deduct such
amount from the Purchase Price payable pursuant to Article II(a). Each
Purchaser will be entitled to that portion of the Standby Fee based on the
respective percentages set forth in Schedule I, and DLJ agrees to remit such
portions of the Standby Fee to such other Purchasers as soon as practicable
after deducting their portion of the expenses relating to this engagement.
IV.
The obligations of the Company and the several obligations of the
Purchasers hereunder are subject to the condition that the Registration
Statement shall have become effective not later than 5:30 p.m., New York City
time, on the date hereof.
The several obligations of the Purchasers hereunder are subject, in
their sole discretion, to the condition that all representations and
warranties and other statements of the Company herein are, at and as of the
date hereof and the Closing Date, true and correct in all respects (except
for those representations which are made at a specified date, which shall be
true as of such date), and to the condition that the Company shall have
performed all of its obligations hereunder theretofore to be performed and to
the following further conditions:
(a) (i) No stop order suspending the effectiveness of the Registration
Statement shall have been issued and no proceedings for that purpose shall be
pending or, to the knowledge of the Company, shall be contemplated by the
Commission at or prior to the Closing; (ii) there shall not be in effect any
injunction, restraining order or other order of a court or any governmental
agency that prohibits or restrains the Purchasers from converting the
Debentures into Common Stock; (iii) neither the Company nor any subsidiary
shall have incurred any material liabilities or obligations, direct or
contingent, or entered into any material transactions not in the ordinary
course of business; (iv) there shall not have been any material adverse
change in the condition, financial or otherwise, or in the earnings,
business, operations, or prospects of the Company and its subsidiaries, taken
as a whole, from that set forth in the Prospectus; and (v) there shall not
have been any material change in the capital stock of the Company or increase
in long-term debt of the Company from that set forth or contemplated in the
Registration Statement or the Prospectus (or any amendment or supplement
thereto) except for issuances of Common Stock upon conversion of the
Debentures and pursuant to the Plans.
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(b) At the time of the execution of this Agreement but prior to
the mailing of the Notice of Redemption, the Purchasers shall have received a
certificate, dated as of the date hereof and signed by an executive officer
of the Company satisfactory to you, to the effect that the representations
and warranties of the Company contained in this Agreement are true and
correct as of the date hereof and that the Company has complied with all of
the agreements and satisfied all of the conditions on its part to be
performed or satisfied hereunder on or before the date hereof and to the
effect set forth in paragraph (a).
(c) At the time of the execution of this Agreement but prior to the
mailing of the Notice of Redemption, you shall have received an opinion of
Vicki L. Casmere, Vice President and General Counsel of the Company, dated
such date, in form and substance satisfactory to you to the effect that:
(i) (A) the Company has been duly incorporated, is validly
existing as a corporation in good standing under the laws of the State of
Delaware, has the corporate power and corporate authority to own, lease
and operate its property and to conduct its business as described in the
Prospectus and (B) is duly qualified to transact business and is in good
standing in each jurisdiction in which the conduct of its business or the
ownership or leasing of property requires such qualification except to the
extent that the failure so to qualify or be in good standing would not have
a material adverse effect on the condition (financial or other), business,
properties, net worth or results of operations of the Company and its
subsidiaries, taken as a whole;
(ii) each Significant Subsidiary of the Company has been duly
incorporated, is validly existing as a corporation in good standing under
the laws of the jurisdiction of its incorporation, has the corporate power
and corporate authority to own, lease and operate its property and to
conduct its business as described in the Prospectus and is duly qualified
to transact business and is in good standing in each jurisdiction in which
the conduct of its business or its ownership or leasing of property
requires such qualification, except to the extent that the failure to be
so qualified or be in good standing would not have a material adverse
effect on the condition (financial or other), business, properties, net
worth or results of operations of the Company and its subsidiaries, taken
as a whole; all of the outstanding shares of capital stock of each of the
Significant Subsidiaries have been duly authorized and are validly issued,
fully paid and non-assessable, and are owned of record and beneficially by
the Company or a subsidiary of the Company (except in the case of foreign
subsidiaries for directors' qualifying shares) free and clear of all liens,
adverse claims,
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security interests, pledges, charges, encumbrances, stockholders'
agreements and voting trusts, except for pledges made under certain of the
Company's and the Company's subsidiaries' credit agreements;
(iii) all the shares of capital stock of the Company outstanding prior
to the issuance of the Purchased Shares to be issued and sold by the
Company hereunder (including any Additional Shares and other shares of
Common Stock to be issued in connection with Debentures converted in
accordance with the Indenture prior to the Conversion Expiration Time)
have been duly authorized and are validly issued, fully paid and
non-assessable; the Rights under the Rights Agreement attached to the
shares of Common Stock outstanding prior to the issuance of the
Purchased Shares to be issued and sold by the Company hereunder
(including Rights attaching to any Additional Shares and any other shares
of Common Stock to be issued in connection with Debentures converted in
accordance with the Indenture prior to the Conversion Expiration Time)
have been duly authorized and validly issued; to the knowledge of such
counsel, there is no commitment, plan or arrangement to issue,
and no outstanding option, warrant or other right calling for the issuance
of, any share of capital stock of the Company or any of the Company's
subsidiaries to any person or any security or other instrument which by
its terms is convertible into, exercisable for or exchangeable for capital
stock of the Company or any of the Company's subsidiaries, except for the
Debentures, grants made under and in accordance with the Company's
Plans and pursuant to the Rights Agreement and there are no contracts,
agreements or understandings between the Company and any person granting
such person the right to require the Company to include any securities
of the Company in the Registration Statement;
(iv) the Purchased Shares have been duly authorized and, when issued
and delivered in accordance with the terms of this Agreement, will be
validly issued, fully paid and non-assessable, and, to the best of such
counsel's knowledge, the issuance of such shares of Common Stock is not
subject to any preemptive or similar rights and the Rights under the Rights
Agreement to which the holders of Purchased Shares will be entitled have
been duly authorized and, upon issuance of such Purchased Shares in
accordance with this Agreement, will be validly issued;
(v) neither the Company nor any of the Significant Subsidiaries is
in violation or breach of, or in default in any material respect with
respect to any term of its articles of incorporation (or other charter
document) or by-laws;
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(vi) This Agreement has been duly authorized, executed and delivered
by the Company;
(vii)(A) the redemption of the Debentures and conversion thereof in
accordance with the terms of this Agreement and the execution and
delivery by the Company of, and the performance by the Company of its
obligations under, this Agreement and the consummation of the transactions
contemplated hereby, will not contravene (1) the restated Certificate of
Incorporation or By-laws of the Company, or (2) the certificate of
incorporation or by-laws (or other organizational documents) of the
Significant Subsidiaries, or (3) any agreement, contract, bond,
indenture or other instrument binding upon the Company or any of its
subsidiaries that is material to the Company and its subsidiaries, taken
as a whole or (4), except for any such contraventions that, individually
and in the aggregate, do not have, and would not reasonably be expected
to have, a material adverse effect on the condition (financial or other),
business, properties, net worth or results of operations of the
Company and its subsidiaries, taken as a whole, to the best of such
counsel's knowledge, any statute, law, rule or regulation or any judgment,
order or decree of any governmental body, agency or court having
jurisdiction over the Company or any subsidiary, and (B) no consent,
approval, authorization or order of or qualification with any governmental
body or agency is required for any such actions or for the performance by
the Company of its obligations under this Agreement, except the
registration under the Securities Act of the Common Shares deliverable
upon conversion of the Debentures and upon purchase pursuant to Article II
hereof, and except such consents, approvals, authorizations, orders or
qualifications as may be required under the securities, or Blue Sky, laws
of the various states in connection with the offer and sale of the
Common Shares by the Purchasers;
(viii) the statements in the Registration Statement in Item 15, insofar
as such statements constitute summaries of the legal matters, documents or
proceedings referred to therein, fairly present the information called for
with respect to such legal matters, documents and proceedings and fairly
summarize the matters referred to therein;
(ix) the Registration Statement has become effective under the
Securities Act; to the knowledge of such counsel, no stop order suspending
the effectiveness of the Registration Statement has been issued and no
proceeding for that purpose has been instituted or threatened by the
Commission or the securities authority of any jurisdiction;
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(x) neither the Company nor any of its subsidiaries is an
"investment company" or an entity "controlled" by an "investment
company," as such terms are defined in the Investment Company Act of
1940, as amended, or is subject to any law, rule, regulation, order,
judgment or decree which regulates the redemption and conversion of the
Debentures as contemplated herein, the offering or sale of the Common
Shares by the Purchasers (other than the Securities Act, the Exchange
Act, and the Blue Sky, or state securities laws);
(xi) after due inquiry, such counsel does not know of any legal or
governmental proceeding pending or threatened against the Company or any
of its subsidiaries or to which the Company or any of its subsidiaries
is a party or to which any of the properties of the Company or any of
its subsidiaries is subject that (A) affects the transactions
contemplated by this Agreement or (B) are required to be described in
the Registration Statement or the Prospectus and are not so described or
of any statutes, contracts or other documents that are required to be
described in the Registration Statement or the Prospectus or to be filed
as exhibits to the Registration Statement that are not described or
filed as required;
(xii) (A) each Incorporated Document (except for financial
statements and schedules as to which such counsel need not express any
opinion) complied when filed pursuant to the Exchange Act as to form in
all material respects with the requirements of the Exchange Act and the
applicable rules and regulations of the Commission thereunder and (B)
the Registration Statement and Prospectus and any supplements or
amendments thereto (except for financial statements and schedules
incorporated by reference therein as to which such counsel need not
express any opinion) comply as to form in all material respects with the
Securities Act and the rules and regulations of the Commission
thereunder;
(xiii) The Debentures are convertible into shares of Common Stock
as provided in the Indenture and such shares of Common Stock have been
duly authorized and reserved for issuance upon conversion of the
Debentures and, when issued and delivered upon such conversion in
accordance with the terms of the Indenture, such shares of Common Stock
will be validly issued, fully paid and nonassessable and, to the best
knowledge of such counsel, the issuance of such shares of Common Stock
is not subject to any preemptive or similar rights; and
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(xiv) The redemption of all of the outstanding Debentures on the
Redemption Date has been duly authorized.
In addition, Vicki L. Casmere, Vice President and General Counsel of the
Company, shall state that such counsel participated in conferences with
officers and other representatives of the Company, representatives of the
independent public accountants for the Company and representatives of the
Purchasers at which the contents of the Registration Statement, the
Prospectus and any amendment thereof or supplement thereto, and related
matters were discussed and, although such counsel has not independently
verified and is not passing upon and does not assume any responsibility for,
the accuracy, completeness or fairness of the statements contained in the
Registration Statement and Prospectus (except as otherwise indicated above),
on the basis of the foregoing, no facts have come to the attention of such
counsel which lead them to believe that either the Registration Statement or
any amendment thereto, at the time the Registration Statement or amendment
became effective, contained an untrue statement of a material fact or omitted
to state a material fact necessary to make the statements therein not
misleading or that the Prospectus as of its date or any supplement thereto as
of its date, or the Registration Statement or the Prospectus and any
amendment or supplement thereto as of the date of such opinion contained or
contains an untrue statement of a material fact or omitted or omits to state
a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading (it being understood that such counsel need express no opinion
with respect to the financial statements and schedules and other financial
data included or incorporated by reference in the Registration Statement or
Prospectus).
(d) At the time of the execution of this Agreement but prior
to the mailing of the Notice of Redemption, you shall have received an
opinion of Kirkland & Ellis, outside counsel to the Company, dated such date,
covering the matters referred to in the paragraph immediately following
subparagraph (xiv) of paragraph (c) above and to the effect that the
statements in the Prospectus under the captions "Certain United States
Federal Tax Considerations" and "Description of Common Stock" insofar as such
statements constitute summaries of the legal matters, documents or
proceedings referred to therein, fairly present the information called for
with respect to such legal matters, documents or proceedings and fairly
summarize the matters referred to therein.
(e) At the time of the execution of this Agreement but prior to the
mailing of the Notice of Redemption, you shall have received an opinion of
Davis Polk & Wardwell, counsel for the Purchasers, dated such date, covering
the matters referred to in subparagraphs (iv) (as to the Purchased Shares
only), (vi),
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(ix), clause (B) of (xii) and the paragraph immediately
following subparagraph (xiv) of paragraph (c) above and to the further effect
that statements in the Prospectus under the caption "Standby and Other
Arrangements" insofar as such statements constitute summaries of the legal
matters or documents referred therein, fairly present the information called
for withe respect to such legal matters or documents and fairly summarize the
matters referred to therein. In rendering such opinion, such counsel may
state that their opinion is limited to matters governed by the federal laws
of the United States of America, the laws of the State of New York and the
corporate laws of the State of Delaware.
(f) At the time of the execution of this Agreement and prior to the
mailing of the Notice of Redemption, you shall have received a letter dated
the date hereof, in form and substance satisfactory to you, from Deloitte &
Touche, independent public accountants, containing statements and information
of the type ordinarily included in accountants' "comfort letters" to
underwriters with respect to the financial statements and certain financial
information contained in the Registration Statement and the Prospectus.
(g) Any certificate signed by an officer of the Company and delivered,
pursuant to this Agreement or in connection with this Agreement and the
transactions contemplated hereby, to you or your counsel shall be deemed a
representation and warranty by the Company to each of you as to the matters
covered thereby.
(h) On the Closing Date, the Purchasers shall have received, in form
and satisfactory to the Purchasers, (i) letters, dated the Closing Date, from
Vicki L. Casmere, Kirkland & Ellis and Davis Polk & Wardwell to the effect
that they reaffirm the respective opinions set forth in paragraphs (c) (other
than the opinion set forth in clause (xiii) of paragraph (c)) (d) and (e) of
this Article IV, respectively, (ii) an opinion, dated such date, from
Kirkland & Ellis, outside counsel tot he Company, to the effect set forth in
clauses (i)(A), (iv), (vi), (vii) (A)(1) and (B), (viii), (ix), (x), (xi) and
(xii)(B) of paragraph (c) above, (iii) a letter from Deloitte & Touche to the
effect that it reaffirms its statements made in its letter furnished pursuant
to Article IV(g) and (iv) a bring-down certificate dated the Closing Date to
the effect that the Company reaffirms the statements made in its certificate
furnished pursuant to Article IV(b).
If any condition specified in this Article shall not have been fulfilled
when and as required by this Agreement to be fulfilled, this Agreement and
all your obligations hereunder may be canceled by you by notifying the
Company of such cancellation in writing, and any such cancellation shall be
without liability of any
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party to any other party except as provided in
Article I, Article IV, Article V and Article VII.
V.
In further consideration of the agreements of the Purchasers herein
contained, the Company covenants as follows:
(a) The Company will use its best efforts to cause the Registration
Statement to become effective by 5:30 p.m. (New York City time) on the date
hereof and will advise the Purchasers promptly and, if requested by the
Purchasers, will confirm such advice in writing, when the Company receives
notice (written or oral) that the Registration Statement has become
effective. The Company also will advise the Purchasers promptly and, if
requested by the Purchasers, will confirm such advice in writing: (i) of any
request by the Commission for amendment of or a supplement to the
Registration Statement or the Prospectus or for additional information; and
(ii) upon knowledge thereof, of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement or of the
suspension of qualification of the Acquired Shares for offering or sale in
any jurisdiction or of the initiation of any proceeding for such purpose. If
at any time the Commission shall issue any stop order suspending the
effectiveness of the Registration Statement, the Company, upon knowledge
thereof, will make every reasonable effort to obtain the withdrawal of such
order at the earliest possible time.
(b) To furnish to you, without charge, (i) as many signed and conformed
copies of the Registration Statement (including exhibits thereto and
documents incorporated by reference) as you may reasonably request and (ii)
from time to time during such period after the date hereof as in the opinion
of your counsel the Prospectus is required by law to be delivered in
connection with sales by a Purchaser or dealer, as many copies of the
Prospectus and any supplements and amendments thereto as you may reasonably
request for the purposes contemplated by the Securities Act and the rules and
regulations thereunder. The Company consents to the use of the Prospectus
(and of any amendment or supplement thereto) in accordance with the
provisions of the Securities Act and with the securities or Blue Sky laws of
the jurisdictions in which the Acquired Shares are offered by the Purchasers
and by all dealers to whom the Acquired Shares may be sold, both in
connection with the offering and sale of the Acquired Shares and for such
period of time thereafter as the Prospectus is required by the Securities Act
to be delivered in connection with sales by the Purchasers or dealers.
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<PAGE>
(c) Before amending or supplementing the Registration Statement or the
Prospectus, to furnish to you a copy of each such proposed amendment, or
supplement and to file no such proposed amendment or supplement to which you
reasonably object, unless such amendment or supplement is, in the opinion of
Kirkland & Ellis, counsel to the Company, required by law, and before or
simultaneous with filing any document which, upon filing, becomes an
Incorporated Document, to furnish to you a copy of each such proposed
Incorporated Document.
(d) If, from the date of effectiveness of the Registration Statement
until the Registration Termination Date any event shall occur or condition
exist as a result of which it is necessary to amend or supplement the
Prospectus in order to make the statements therein, in the light of the
circumstances when the Prospectus is delivered to a purchaser, not
misleading, or if, in the opinion of your counsel, it is necessary to amend
or supplement the Prospectus to comply with law, forthwith to prepare, file
with the Commission and furnish, at its own expense, to the Purchasers a
reasonable number of copies of any amendments or supplements to the
Prospectus (in form and substance satisfactory to counsel for the Purchasers)
so that the statements in the Prospectus as so amended or supplemented will
not, in the light of the circumstances when the Prospectus is delivered to a
purchaser, be misleading or so that the Prospectus, as amended or
supplemented, will comply with law.
(e) During the period from the date of effectiveness of the
Registration Statement until the Registration Termination Date, to file in a
timely fashion all documents required to be filed with the Commission
pursuant to Section 13 or 14 of the Exchange Act subsequent to the time the
Registration Statement becomes effective.
(f) To endeavor to qualify the Acquired Shares for offer and sale under
the securities or Blue Sky laws of such jurisdictions as you shall reasonably
request, to comply with such laws as to permit the continuance of sales and
dealings in such jurisdictions for as long as may be necessary to complete
the distribution of the Acquired Shares; PROVIDED, HOWEVER, that the Company
shall not be required to qualify to do business in any jurisdiction where it
is not now so qualified or to take any action which would subject it to
taxation or service of process in suits, other than those arising out of the
offering or sale of the Acquired Shares, in any jurisdiction where it is not
now so subject; and to pay all expenses (including fees and disbursements of
counsel) in connection therewith.
(g) To make generally available to the Company's security holders and
to you as soon as practicable, but not later than 90 days after the close of
the
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period covered thereby, an earning statement covering the twelve-month
period beginning not later than the first day of the Company's fiscal quarter
next following the effective date of the post-effective amendment to the
Registration Statement notifying the Commission of the shares of Common Stock
which will not be sold by the Purchasers. Upon your request at termination
of the offering, the Company will file such a post-effective amendment with
the Commission that satisfies the provisions of Section 11(a) of the
Securities Act and the rules and regulations of the Commission thereunder.
(h) On August 20, 1997, to mail to holders of Debentures a Prospectus
and a notice of redemption complying with the requirements of the Indenture
together with notice of the other rights of the holders of Debentures.
(i) To advise the Purchasers daily, or direct the conversion agent and
redemption agent for the Debentures to advise the Purchasers daily, of the
respective number of Debentures surrendered for conversion into Common Stock
and surrendered for redemption on the preceding day.
(j) Whether or not the transactions contemplated in this Agreement are
consummated, to pay or cause to be paid all expenses incident to the
performance of its obligations under this Agreement, the redemption and
conversion of the Debentures and the authorization, issuance, sale and
delivery of the Common Stock and any expenses or taxes payable in that
connection; the fees and expenses incident to the preparation, printing and
filing under the Securities Act of the Registration Statement and any
amendments and exhibits thereto (but not the fees and expenses of counsel to
the Purchasers except as provided below); the costs of distributing the
Registration Statement as originally filed and each amendment and
post-effective amendment thereof (including exhibits), the Prospectus and any
amendment or supplement to the Prospectus or any document incorporated by
reference therein, all as provided in this Agreement, and the costs of
copying this Agreement; the expenses, including printing expenses, in
connection with mailing the Notice of Redemption and related documents and
the publication of the advertisements relating to the redemption, if any; all
costs and expenses of issuance and delivery of the shares of Common Stock
upon conversion of the Debentures, including the fees of the conversion
agent; the reasonable fees and disbursements of the Company's counsel and
accountants; the reasonable fees and expenses of preparing and printing a
Blue Sky Memorandum (including fees and expenses of counsel to the Purchasers
in connection therewith); and the fees and expenses, if any, of listing the
Common Stock on the Nasdaq Stock Market.
(k) The Company hereby agrees that, without the prior written consent
of the Purchasers, it will not, commencing from the date of this Agreement
until
24
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the earlier of (a) the Registration Termination Date and (b) (x) 30
days after the Redemption Date if the Purchasers have purchased an aggregate
of 121,064 Purchased Shares or less or (y) 90 days after the Redemption Date
if the Purchasers have purchased more than 121,064 Purchased Shares: (i)
offer, pledge, sell, contract to sell, sell any option or contract to
purchase, purchase any option or contract to sell, grant any option, right or
warrant to purchase, or otherwise transfer or dispose of, directly or
indirectly, any shares of Common Stock or any securities convertible into or
exercisable or exchangeable for Common Stock, or (ii) enter into any swap or
other arrangement that transfers all or a portion of the economic
consequences associated with the ownership of any Common Stock (regardless of
whether any of the transactions described in clause (i) or (ii) is to be
settled by delivery of Common Stock, or other such securities, in cash or
otherwise). The foregoing sentence shall not apply to (A) sales to the
Purchasers pursuant to this Agreement, (B) any shares of such Common Stock
issued by the Company upon the exercise of an option or warrant or the
conversion of a security (including, without limitation, the Debentures)
outstanding on the date hereof, (C) the grant of options pursuant to the
Company's stock option plans or the issuance of Common Stock pursuant to the
Company's employee stock purchase plan, and (D) from and after the
Redemption Date, Common Stock of the Company or any security convertible into
or exercisable or exchangeable for Common Stock of the Company issued in a
private placement to the seller in connection with any acquisition by the
Company or any of its subsidiaries.
(l) If the transactions contemplated in this Agreement are not
consummated, the Company will also reimburse the Purchasers for all of the
Purchasers' out-of-pocket expenses reasonably incurred in connection
herewith, including fees and expenses of counsel to the Purchasers.
VI.
The Company agrees to indemnify and hold harmless each Purchaser, the
officers and directors of each Purchaser and each person, if any, who
controls any Purchaser within the meaning of Section 15 of the Act or Section
20 of Exchange Act, from and against any and all losses, claims, damages,
liabilities and judgments (including, without limitation, any reasonable
legal or other expenses incurred in connection with investigating or
defending any matter, including any action, that could give rise to any such
losses, claims, damages, liabilities or judgments) caused by any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement (or any amendment thereto), or the Prospectus (or any
amendment or supplement thereto), or caused by any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, except insofar
25
<PAGE>
as such losses, claims, damages, liabilities or judgments are caused by
any such untrue statement or omission or alleged untrue statement or omission
based upon information relating to any Purchaser furnished in writing to the
Company by such Purchaser through you expressly for use therein.
Each Purchaser agrees, severally and not jointly, to indemnify and hold
harmless the Company, its directors, its officers who sign the Registration
Statement and each person, if any, who controls the Company within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act, to the
same extent as the foregoing indemnity from the Company to such Purchaser but
only with reference to information relating to such Purchaser furnished in
writing to the Company by such Purchaser through you expressly for use in the
Registrat ion Statement (or any amendment thereto) or the Prospectus (or any
amendment or supplement thereto).
In case any action shall be commenced involving any person in respect of
which indemnity may be sought pursuant to the first or second paragraph of
this Article VI (the "INDEMNIFIED PARTY"), the indemnified party shall
promptly notify the person against whom such indemnity may be sought (the
"INDEMNIFYING PARTY") in writing and the indemnifying party shall assume the
defense of such action, including the employment of counsel reasonably
satisfactory to the indemnified party and the payment of all fees and
expenses of such counsel, as incurred (except that in the case of any action
in respect of which indemnity may be sought pursuant to both the first
paragraph and the second paragraph of this Article VI, the Purchaser shall
not be required to assume the defense of such action pursuant to this
paragraph, but may employ separate counsel and participate in the defense
thereof, but the fees and expenses of such counsel, except as provided below,
shall be at the expense of such Purchaser). Any indemnified party shall
have the right to employ separate counsel in any such action and participate
in the defense thereof, but the fees and expenses of such counsel shall be at
the expense of the indemnified party unless (i) the employment of such
counsel shall have been specifically authorized in writing by the
indemnifying party, (ii) the indemnifying party shall have failed to assume
the defense of such action or employ counsel reasonably satisfactory to the
indemnified party or (iii) the named parties to any such action (including
any impleaded parties) include both the indemnified party and the
indemnifying party, and the indemnified party shall have been advised by such
counsel that there may be one or more legal defenses available to it which
are different from or additional to those available to the indemnifying party
(in which case the indemnifying party shall not have the right to assume the
defense of such action on behalf of the indemnified party). In any such
case, the indemnifying party shall not, in connection with any one action or
separate but substantially similar or related
26
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actions in the same jurisdiction arising out of the same general
allegations or circumstances, be liable for the fees and expenses of more
than one separate firm of attorneys (in addition to any local counsel) for
all indemnified parties and all such fees and expenses shall be reimbursed as
they are incurred. Such firm shall be designated in writing by Donaldson,
Lufkin & Jenrette Securities Corporation, in the case of parties indemnified
pursuant to the first paragraph of this Article VI, and by the Company, in
the case of parties indemnified pursuant to the second paragraph of this
Article VI. The indemnifying party shall indemnify and hold harmless the
indemnified party from and against any and all losses, claims, damages,
liabilities and judgments by reason of any settlement of any action (i)
effected with its wri tten consent or (ii) effected without its written
consent if the settlement is entered into more than twenty business days
after the indemnifying party shall have received a request from the
indemnified party for reimbursement for the fees and expenses of counsel (in
any case where such fees and expenses are at the expense of the indemnifying
party) and, prior to the date of such settlement, the indemnifying party
shall have failed to comply with such reimbursement request. No
indemnifying party shall, without the prior written consent of the
indemnified party, effect any settlement or compromise of, or consent to the
entry of judgment with respect to, any pending or threatened action in
respect of which the indemnified party is or could have been a party and
indemnity or contribution may be or could have been sought hereunder by the
indemnified party, unless such settlement, compromise or judgment (i)
includes an unconditional release of the indemnified party from all liability
on claims that are or could have been the subject matter of such action and
(ii) does not include a statement as to or an admission of fault, culpability
or a failure to act, by or on behalf of the indemnified party.
To the extent the indemnification provided for in this Article VI is
unavailable to an indemnified party or insufficient in respect of any losses,
claims, damages, liabilities or judgments referred to herein, then each
indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a
result of such losses, claims, damages, liabilities and judgments (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company on the one hand and the Purchasers on the other hand from the
transactions contemplated by this Agreement or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Company on
the one hand and the Purchaser on the other hand in connection with the
statements or omissions which resulted in such losses, claims, damages,
liabilities or judgments, as well as any other relevant equitable
considerations. The relative benefits received by the Company on the one
hand and the Purchasers on the other
27
<PAGE>
hand in connection with the transactions contemplated by this Agreement
shall be deemed to be in the same respective proportions as the aggregate
Redemption Price of the Debentures outstanding on the date of this Agreement
bears to the total compensation required by the Purchasers pursuant to
Article III of this Agreement. The relative fault of the Company on the one
hand and the Purchasers on the other hand shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company or the Purchasers and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission.
The Company and the Purchasers agree that it would not be just and
equitable if contribution pursuant to this Article VI were determined by pro
rata allocation (even if the Purchasers were treated as one entity for such
purpose) or by any other method of allocation which does not take account of
the equitable considerations referred to in the immediately preceding
paragraph. The amount paid or payable by an indemnified party as a result of
the losses, claims, damages, liabilities or judgments referred to in the
immediately preceding paragraph shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses incurred by such
indemnified party in connection with investigating or defending any matter,
including any action, that could have given rise to such losses, claims,
damages, liabilities or judgments. Notwithstanding the provisions of this
Article VI, no Purchaser shall be required to contribute any amount in excess
of the amount of compensation such Purchaser receives pursuant to Article III
of this Agreement. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Act) shall be entitled to contribution
from any person who was not guilty of such fraudulent misrepresentation. The
Purchasers' obligations to contribute pursuant to this Article VI are several
in proportion to the respective percentages listed on Schedule I and not
joint.
The remedies provided for in this Article VI are not exclusive and
shall not limit any rights or remedies which may otherwise be available to
any indemnified party at law or in equity.
The indemnity and contribution provisions contained in this Article VI
and the representations and warranties of the Company contained in this
Agreement shall remain operative and in full force and effect regardless of
(i) any termination of this Agreement, (ii) any investigation made by or on
behalf of any Purchaser, the officers and directors of any Purchaser or any
person controlling any Purchaser or by or on behalf of the Company, its
officers or directors or any person controlling the Company, (iii) delivery
of the Common Stock upon
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conversion of the Debentures and (iv) purchase of
the Common Stock pursuant to Article II hereof.
VII.
Prior to the time the Company mails notice of the redemption of the
Debentures, this Agreement may be terminated by the Company by written notice
to the Purchasers, or by the Purchasers by written notice to the Company.
This Agreement may be terminated at any time on or prior to the Closing
Date by you by written notice to the Company if any of the following has
occurred: (i) any outbreak or escalation of hostilities or other national or
international calamity or crisis or change in economic conditions or in the
financial markets of the United States or elsewhere that, in your judgment,
is material and adverse and, in your judgment, makes it impracticable to
proceed with the purchases of and payment for the Debentures or the Common
Stock, the conversion of the Debentures into Common Stock or the resale of
the Common Stock by the Purchasers (ii) the suspension or material limitation
of trading in securities or other instruments on the New York Stock Exchange,
the American Stock Exchange, the Chicago Board of Options Exchange, the
Chicago Mercantile Exchange, the Chicago Board of Trade or the Nasdaq
National Market or limitation on prices for securities or other instruments
on any such exchange or the Nasdaq National Market, (iii) the suspension of
trading of any securities of the Company on any exchange or in the
over-the-counter market, (iv) the enactment, publication, decree or other
promulgation of any federal or state statute, regulation, rule or order of
any court or other governmental authority which in your opinion materially
and adversely affects, or will materially and adversely affect, the business,
prospects, financial condition or results of operations of the Company and
its subsidiaries, taken as a whole, (v) the declaration of a banking
moratorium by either federal or New York State authorities or (vi) the taking
of any action by any federal, state or local government or agency in respect
of its monetary or fiscal affairs which in your opinion has a material
adverse effect on the financial markets in the United States.
VIII.
This Agreement shall become effective upon the later of (x) execution
and delivery hereof by the parties hereto and (y) release of notification of
the effectiveness of the Registration Statement by the Commission.
If, on the Closing Date, any of the Purchasers shall fail or refuse to
purchase Common Stock that it has agreed to purchase hereunder on such date,
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<PAGE>
and the aggregate number of shares of Common Stock which such defaulting
Purchaser(s) agreed but failed or refused to purchase is not more than one
tenth of the aggregate number of shares of Common Stock to be purchased on
such date, the non-defaulting Purchaser(s) may make arrangements satisfactory
to the Company for the purchase of such Common Stock by other persons,
including the non-defaulting Purchaser(s), but if no such arrangements are
made by the close of business on the Closing Date, the non-defaulting
Purchaser(s) shall be obligated to purchase the Common Stock that such
defaulting Purchaser(s) agreed but failed to purchase. If on the Closing
Date, any Purchaser(s) shall either fail or refuse to purchase Common Stock
and the aggregate number of shares of Common Stock with respect to which such
default occurs is more than one-tenth of the aggregate number of shares of
Common Stock to be purchased on such date, and arrangements satisfactory to
you and the Company for the purchase of such shares of Common Stock are not
made prior to the close of business on the Redemption Date, this Agreement
shall terminate without liability on the part of any non-defaulting
Purchaser(s). Any action taken under this paragraph shall not relieve any
defaulting Purchaser(s) from liability in respect of any default of such
Purchaser(s) under this Agreement.
If this Agreement shall be terminated by the Purchasers, or any of them,
because of any failure or refusal on the part of the Company to comply with
the terms or to fulfill any of the conditions of this Agreement, or if for
any reason the Company shall be unable to perform its obligations under this
Agreement, the Company will reimburse the Purchasers or such Purchasers as
have so terminated this Agreement with respect to themselves, severally, for
all out-of-pocket expenses (including the reasonable fees and disbursements
of their counsel) reasonably incurred by such Purchasers in connection with
this Agreement and the transactions contemplated hereunder.
Notices given pursuant to any provision of this Agreement shall be
addressed as follows: (i) if to the Company, to Varlen Corporation, 55 Shuman
Boulevard, P.O. Box 3089, Naperville, Illinois, 60566-7089, Attention:
General Counsel and (ii) if to any Purchaser to Donaldson, Lufkin & Jenrette
Securities Corporation, 277 Park Avenue, New York, New York 10172, Attention:
Syndicate Department, or in any case to such other address as the person to
be notified may have requested in writing.
Except as otherwise provided, this Agreement has been and is made solely
for the benefit of and shall be binding upon the Company, the Purchasers, the
Purchasers' directors and officers, any controlling persons referred to
herein, the Company's directors and the Company officers who sign the
Registration Statement and their respective successors and assigns, all as
and to the extent
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provided in this Agreement, and no other person shall acquire or have any
right under or by virtue of this Agreement. The term "successors and
assigns" shall not include a purchaser of any of the Acquired Shares from any
of the several Purchasers merely because of such purchase.
This Agreement may be signed in two or more counterparts, each of which
shall be an original, with the same effect as if the signatures thereto and
hereto were upon the same instrument.
This Agreement shall be governed by and construed in connection with the
internal laws of the State of New York.
Very truly yours,
VARLEN CORPORATION
By: _________________________
Name:
Title:
Accepted, August [ ], 1997
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
PIPER JAFFRAY INC.
ROBERT W. BAIRD & CO. INCORPORATED
By: Donaldson, Lufkin & Jenrette
Securities Corporation
By: _____________________________
Name:
Title:
31
<PAGE>
SCHEDULE I
PURCHASERS
Purchaser Percentage
Donaldson Lufkin & Jenrette Securities Corporation . . . . . . . 50%
Piper Jaffray Inc. . . . . . . . . . . . . . . . . . . . . . . . 25%
Robert W. Baird & Co. Incorporated.. . . . . . . . . . . . . . . 25%
------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . 100%
======
32
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SCHEDULE II
SIGNIFICANT SUBSIDIARIES
Brenco, Incorporated
Chrome Crankshaft Co.
Chrome Crankshaft Company of Illinois
Consolidated Metco, Inc.
Keystone Industries, Inc.
Means Industries Inc.
Prime Manufacturing Corporation
Unit Rail Anchor Company, Inc.
Varlen Instruments Inc.
33
<PAGE>
RESTATED
CERTIFICATE OF INCORPORATION
OF
VARLEN CORPORATION
(ORIGINALLY INCORPORATED NOVEMBER 6, 1969)
FIRST. The name of the corporation (hereinafter referred to as the
"Corporation") is VARLEN CORPORATION.
SECOND. The registered office of the Corporation is to be located at
Corporation Trust Center, 1209 Orange Street, in the City of Wilmington, in
the County of New Castle, in the State of Delaware, 19801. The name of its
registered agent at that address is The Corporation Trust Company.
THIRD. The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General
Corporation Law of the State of Delaware.
FOURTH. The total number of shares of all classes of stock which the
Corporation is authorized to issue is twenty million five hundred thousand
(20,500,000), of which five hundred thousand (500,000) shares shall be
Preferred Stock with a par value of one dollar ($1.00) per share and of which
twenty million (20,000,000) shares shall be Common Stock with a par value of
ten cents ($.10) per share. The amount of the authorized stock of the
Corporation of any class or classes may be increased or decreased by the
affirmative vote of the holders of a majority of the stock of the Corporation
entitled to vote.
The Preferred Stock may be issued from time to time in one or more series
with such designations, preferences, and relative participating, optional or
other special rights and qualifications, limitations or restrictions adopted
by the Board of Directors providing for the issuance of such Preferred stock
or series thereof; and the Board of Directors is hereby expressly granted the
authority to fix by resolution or resolutions such designations and powers,
preferences and rights and such qualifications, limitations or restrictions
which are permitted by Section 151 of the General Corporation Law of the
State of Delaware, as amended from time to time, in respect of any class or
classes of stock or any series of any class of stock of the Corporation that
may be desired, including, but not by way of limitation, the number,
distinctive name and serial designation of such class or series; any
dividends payable and the rate, time for and priority of payment thereof;
whether such dividends shall be cumulative or not; any participating or other
special rights with respect to the payment of dividends; any conversion,
exchange, purchase, or other privilege to acquire shares of any other class
or series or of the Common Stock of the Corporation; any voting power; any
redemption and liquidation price and preferences.
<PAGE>
SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
1. DESIGNATION AND AMOUNT. There shall be a series of Preferred Stock
that shall be designated as "Series A Junior Participating Preferred Stock," and
the number of shares constituting such series shall be 50,000. Such number of
shares may be increased or decreased by resolution of the Board of Directors;
provided, however, that no decrease shall reduce the number of shares of Series
A Junior Participating Preferred Stock to less than the number of shares then
issued and outstanding plus the number of shares issuable upon exercise of
outstanding rights, options or warrants or upon conversion of outstanding
securities issued by the Corporation.
2. DIVIDENDS AND DISTRIBUTION.
(A) Subject to the prior and superior rights of the holders of any
shares of any class or series of stock of the Corporation ranking prior and
superior to the shares of Series A Junior Participating Preferred Stock with
respect to dividends, the holders of shares of Series A Junior Participating
Preferred Stock, in preference to the holders of shares of any class or series
of stock of the Corporation ranking junior to the Series A Junior Participating
Preferred Stock in respect thereof, shall be entitled to receive, when, as and
if declared by the Board of Directors out of funds legally available for the
purpose, quarterly dividends payable in cash on the last business day of March,
June, September and December, in each year (each such date being referred to
herein as a "Quarterly Dividend Payment Date"), commencing on the first
Quarterly Dividend Payment Date after the first issuance of a share or fraction
of a share of Series A Junior Participating Preferred Stock, in an amount per
share (rounded to the nearest cent) equal to the greater of (a) $100 or (b) the
Adjustment Number (as defined below) times the aggregate per share amount of all
cash dividends, and the Adjustment Number times the aggregate per share amount
(payable in kind) of all non-cash dividends or other distributions other than a
dividend payable in shares of Common Stock or a subdivision of the outstanding
shares of Common Stock (by reclassification or otherwise), declared on the
Common Stock, par value $.10 per share, of the Corporation (the "Common Stock")
since the immediately preceding Quarterly Dividend Payment Date, or, with
respect to the first Quarterly Dividend Payment Date, since the first issuance
of any share or fraction of a share of Series A Junior Participating Preferred
Stock. The "Adjustment Number" shall initially be 1000. In the event the
Corporation shall at any time after July 1, 1996 (the "Rights Declaration Date")
(i) declare and pay any dividend on Common Stock payable in shares of Common
Stock, (ii) subdivide the outstanding Common Stock or (iii) combine the
outstanding Common Stock into a smaller number of shares, then in each such case
the Adjustment Number in effect immediately prior to such event shall be
adjusted by multiplying such Adjustment Number by a fraction the numerator of
which is the number of shares of Common Stock outstanding immediately after such
event and the denominator of which is the number of shares of Common Stock that
were outstanding immediately prior to such event.
(B) The Corporation shall declare a dividend or distribution on the
Series A Junior Participating Preferred Stock as provided in paragraph (A) above
immediately after it declares a dividend or distribution on the Common Stock
(other than a dividend payable in shares of Common Stock).
2
<PAGE>
(C) Dividends shall begin to accrue and be cumulative on
outstanding shares of Series A Junior Participating Preferred Stock from the
Quarterly Dividend Payment Date next preceding the date of issue of such
shares of Series A Junior Participating Preferred Stock, unless the date of
issue of such shares is prior to the record date for the first Quarterly
Dividend Payment Date, in which case dividends on such shares shall begin to
accrue from the date of issue of such shares, or unless the date of issue is
a Quarterly Dividend Payment Date or is a date after the record date for the
determination of holders of shares of Series A Junior Participating Preferred
Stock entitled to receive a quarterly dividend and before such Quarterly
Dividend Payment Date, in either of which events such dividends shall begin
to accrue and be cumulative from such Quarterly Dividend Payment Date.
Accrued but unpaid dividends shall not bear interest. Dividends paid on the
shares of Series A Junior Participating Preferred Stock in an amount less
than the total amount of such dividends at the time accrued and payable on
such shares shall be allocated pro rata on a share-by-share basis among all
such shares at the time outstanding. The Board of Directors may fix a record
date for the determination of holders of shares of Series A Junior
Participating Preferred Stock entitled to receive payment of a dividend or
distribution declared thereon, which record date shall be no more than
60 days prior to the date fixed for the payment thereof.
3. VOTING RIGHTS. The holders of shares of Series A Junior Participating
Preferred Stock shall have the following voting rights:
(A) Each share of Series A Junior Participating Preferred Stock shall
entitle the holder thereof to a number of votes equal to the Adjustment Number
on all matters submitted to a vote of the stockholders of the Corporation.
(B) Except as required by law and by Section 10 hereof, holders of
Series A Junior Participating Preferred Stock shall have no special voting
rights and their consent shall not be required (except to the extent they are
entitled to vote with holders of Common Stock as set forth herein) for taking
any corporate action.
4. CERTAIN RESTRICTIONS.
(A) Whenever quarterly dividends or other dividends or distributions
payable on the Series A Junior Participating Preferred Stock as provided in
Section 2 are in arrears, thereafter and until all accrued and unpaid dividends
and distributions, whether or not declared, on shares of Series A Junior
Participating Preferred Stock outstanding shall have been paid in full, the
Corporation shall not:
(i) declare or pay dividends on, make any other distributions
on, or redeem or purchase or otherwise acquire for consideration any shares of
stock ranking junior (either as to dividends or upon liquidation, dissolution or
winding up) to the Series A Junior Participating Preferred Stock;
(ii) declare or pay dividends on or make any other
3
<PAGE>
distributions on any shares of stock ranking on a parity (either as to dividends
or upon liquidation, dissolution or winding up) with the Series A Junior
Participating Preferred Stock, except dividends paid ratably on the Series A
Junior Participating Preferred Stock and all such parity stock on which
dividends are payable or in arrears in proportion to the total amounts to which
the holders of all such shares are then entitled; or
(iii) purchase or otherwise acquire for consideration
any shares of Series A Junior Participating Preferred Stock, or any shares of
stock ranking on a parity with the Series A Junior Participating Preferred
Stock, except in accordance with a purchase offer made in writing or by
publication (as determined by the Board of Directors) to all holders of Series A
Junior Participating Preferred Stock, or to such holders and holders of any such
shares ranking on a parity therewith, upon such terms as the Board of Directors,
after consideration of the respective annual dividend rates and other relative
rights and preferences of the respective series and classes, shall determine in
good faith will result in fair and equitable treatment among the respective
series or classes.
(B) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any shares of
stock of the Corporation unless the Corporation could, under paragraph (A) of
this Section 4, purchase or otherwise acquire such shares at such time and in
such manner.
5. REACQUIRED SHARES. Any shares of Series A Junior Participating
Preferred Stock purchased or otherwise acquired by the Corporation in any manner
whatsoever shall be retired promptly after the acquisition thereof. All such
shares shall upon their retirement become authorized but unissued shares of
Preferred Stock and may be reissued as part of a new series of Preferred Stock
to be created by resolution or resolutions of the Board of Directors, subject to
any conditions and restrictions on issuance set forth herein.
6. LIQUIDATION, DISSOLUTION OR WINDING UP. (A) Upon any liquidation,
dissolution or winding up of the Corporation, voluntary or otherwise, no
distribution shall be made to the holders of shares of stock ranking junior
(either as to dividends or upon liquidation, dissolution or winding up) to the
Series A Junior Participating Preferred Stock unless, prior thereto, the holders
of shares of Series A Junior Participating Preferred Stock shall have received
an amount per share (the "Series A Liquidation Preference") equal to the greater
of (i) $100 plus an amount equal to accrued and unpaid dividends and
distributions thereon, whether or not declared, to the date of such payment, or
(ii) the Adjustment Number times the per share amount of all cash and other
property to be distributed in respect of the Common Stock upon such liquidation,
dissolution or winding up of the Corporation.
(B) In the event, however, that there are not sufficient assets
available to permit payment in full of the Series A Liquidation Preference and
the liquidation preferences of all other classes and series of stock of the
Corporation, if any, that rank on a parity with the Series A Junior
Participating
4
<PAGE>
Preferred Stock in respect thereof, then the assets available for such
distribution shall be distributed ratably to the holders of the Series A
Junior Participating Preferred Stock and the holders of such parity shares in
proportion to their respective liquidation preferences.
(C) Neither the merger or consolidation of the Corporation into
or with another corporation nor the merger or consolidation of any other
corporation into or with the Corporation shall be deemed to be a liquidation,
dissolution or winding up of the Corporation within the meaning of this
Section 6.
7. CONSOLIDATION, MERGER, ETC. In case the Corporation shall enter
into any consolidation, merger, combination or other transaction in which the
outstanding shares of Common Stock are exchanged for or changed into other stock
or securities, cash and/or any other property, then in any such case each share
of Series A Junior Participating Preferred Stock shall at the same time be
similarly exchanged or changed in an amount per share equal to the Adjustment
Number times the aggregate amount of stock, securities, cash and/or any other
property (payable in kind), as the case may be, into which or for which each
share of Common Stock is changed or exchanged.
8. NO REDEMPTION. Shares of Series A Junior Participating Preferred
Stock shall not be subject to redemption by the Company.
9. RANKING. The Series A Junior Participating Preferred Stock shall
rank junior to all other series of the Preferred Stock as to the payment of
dividends and as to the distribution of assets upon liquidation, dissolution or
winding up, unless the terms of any such series shall provide otherwise, and
shall rank senior to the Common Stock as to such matters.
10. AMENDMENT. At any time that any shares of Series A Junior
Participating Preferred Stock are outstanding, the Restated Certificate of
Incorporation of the Corporation shall not be amended in any manner which would
materially alter or change the powers, preferences or special rights of the
Series A Junior Participating Preferred Stock so as to affect them adversely
without the affirmative vote of the holders of two-thirds of the outstanding
shares of Series A Junior Participating Preferred Stock, voting separately as a
class.
11. FRACTIONAL SHARES. Series A Junior Participating Preferred Stock
may be issued in fractions of a share that shall entitle the holder, in
proportion to such holder's fractional shares, to exercise voting rights,
receive dividends, participate in distributions and to have the benefit of all
other rights of holders of Series A Junior Participating Preferred Stock.
FIFTH. Election of directors need not be by ballot unless the By-laws
of the Corporation shall so provide. In furtherance and not in limitation of
the powers conferred by the laws of the State of Delaware, the Board of
Directors is expressly authorized and empowered without the assent or vote of
the stockholders, to make, alter, amend and repeal the By-laws of the
Corporation, in any manner not inconsistent with the laws of the State of
Delaware or the Certificate of Incorporation of the Corporation.
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SIXTH. Whenever a compromise or arrangement is proposed between this
Corporation and its creditors or any class of them and/or between this
Corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of this Corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for this Corporation under
the provisions of Section 291 of Title 8 of the Delaware Code or on the
application of trustees in dissolution or of any receiver or receivers appointed
for this Corporation under the provisions of Section 279 of Title 8 of the
Delaware Code order a meeting of the creditors or class of creditors, and/or the
stockholders or class of stockholders of this Corporation, as the case may be,
to be summoned in such manner as the said court directs. If a majority in
number representing three-fourths in value of the creditors or class of
creditors, and/or of the stockholders or class of stockholders of this
Corporation, as the case may be, agree to any compromise or arrangement and to
any reorganization of this Corporation as a consequence of such compromise or
arrangement, the said compromise or arrangement and the said reorganization
shall, if sanctioned by the court to which the said application has been made,
be binding on all the creditors or class of creditors, and/or on all the
stockholders or class of stockholders of this Corporation, as the case may be,
and also on this Corporation.
SEVENTH. Except as otherwise provided by statute, any action which
might have been taken by a vote of the stockholders at a meeting thereof may be
taken with the written consent of such of the holders of stock who would have
been entitled to vote upon the action if a meeting were held as have not less
than the minimum percentage of the total vote required for the proposed
corporate action by statute, this Certificate of Incorporation or the By-laws of
the Corporation, as may be applicable, but in the case of the election of a
director or directors, not less than a majority of the stock of the Corporation
entitled to vote thereon; provided that prompt notice shall be given to all
stockholders of the taking of such corporate action without a meeting if less
than unanimous consent is obtained.
EIGHTH. The Corporation shall to the full extent permitted by the
General Corporation Law of the State of Delaware, as amended from time to time,
indemnify all persons whom it has the power to indemnify pursuant thereto.
NINTH. No director of the Corporation shall be personally liable to
the Corporation or its stockholders for monetary damages for breach of
fiduciary duty by such director as a director; provided, however, that this
Article NINTH shall not eliminate or limit the liability of a director to the
extent provided by applicable law (i) for any breach of the director's duty
of loyalty to the Corporation or its stockholders, (ii) for acts or omissions
not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) under Section 174 of the General Corporation Law of
the State of Delaware, or (iv) for any transaction from which the director
derived an improper personal benefit. If the General Corporation Law of the
State of Delaware is amended after approval by the stockholders of the
Corporation of this Article NINTH to further eliminate or limit the personal
liability of directors, then the liability of a director of the Corporation
shall be eliminated or limited to the fullest extent permitted by the General
Corporation Law of the State of Delaware as so amended. No amendment to or
repeal
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or modification of this Article NINTH shall adversely affect any right or
protection of a director of the Corporation existing at the time of such
amendment, repeal or modification.
IN WITNESS WHEREOF, this Restated Certificate of Incorporation, which
restates and integrates and does not further amend the provisions of the
Corporation's Certificate of Incorporation, there being no discrepancies between
those provisions and the provisions of this Restated Certificate of
Incorporation, and having been duly adopted by the Board of Directors of the
Corporation in accordance with the provisions of Section 245 of the General
Corporation Law of the State of Delaware, has been executed this first day of
October, 1996 by Vicki L. Casmere, its authorized officer.
/s/ Vicki L. Casmere
------------------------------------------------
Name: Vicki L. Casmere
Title: Secretary
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EXHIBIT 4.3
As amended through
MAY 29, 1997
BY-LAWS
OF
VARLEN CORPORATION
ARTICLE I
STOCKHOLDERS
SECTION 1. ANNUAL MEETINGS. Subject to change by resolution of the
Board of Directors, the annual meeting of the stockholders of the Corporation
for the purpose of electing directors and for the transaction of such other
business as may be brought before the meeting shall be held on the fourth
Tuesday in May of each year, if not a legal holiday, and if a legal holiday,
then on the next succeeding day not a legal holiday. The meeting may be held
at such time and such place within or without the State of Delaware as shall
be fixed by the Board of Directors and stated in the notice of the meeting.
SECTION 2. SPECIAL MEETINGS. Special meetings of the stockholders
may be called at any time by the Board of Directors, by the Chairman of the
Board or by the President of the Corporation. Special meetings shall be held
on the date and at the time and place either within or without the State of
Delaware specified in the notice thereof.
SECTION 3. NOTICE OF MEETINGS. Except as otherwise expressly
required by law or the Certificate of Incorporation of the Corporation,
written notice stating the place and time of the meeting, and in the case of
a special meeting, the purpose or purposes of such meeting, shall be given by
the Secretary to each stockholder entitled to vote thereat at his address as
it appears on the records of the Corporation not less than ten nor more than
fifty days prior to the meeting. No business other than that stated in the
notice shall be transacted at any special meeting. Notice of any meeting of
stockholders shall not be required to be given to any stockholder who shall
attend such meeting in person or by proxy; and if any stockholder shall, in
person or by attorney thereunto duly authorized, in writing or by telegraph,
cable or wireless, waive notice of any meeting, whether before or after such
meeting be held, the notice thereof need not be given to him. Notice of any
adjourned meeting of stockholders need not be given except as provided in
SECTION 4 of this ARTICLE 1.
SECTION 4. QUORUM. Subject to the provisions of law in respect of
the vote that shall be required for a specific action,
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the number of shares the holders of which shall be present or represented by
proxy at any meeting of stockholders in order to constitute a quorum for the
transaction of any business shall be a majority of all the shares issued and
outstanding and entitled to vote at such meeting.
At any meeting of stockholders, whether or not there shall be a
quorum present, the holders of a majority of shares voting at the meeting,
whether present in person at the meeting or represented by proxy at the
meeting, may adjourn the meeting from time to time without notice other than
by announcement at the meeting of the time and place of the adjourned
meeting, except that a new notice must be sent out if the adjournment is for
more than thirty days, or if a new record date for voting is fixed. At any
adjourned meeting at which a quorum shall be present, any business may be
transacted which might have been transacted at the meeting as originally
called.
SECTION 5. ORGANIZATION. The Chairman of the Board, or in his
absence or nonelection the President, or in the absence of both the foregoing
officers the Executive Vice President, or in the absence of any of the
foregoing officers a Vice President, shall call meetings of the stockholders
to order, and shall act as Chairman of such meetings. In the absence of the
Chairman of the Board, the President, the Executive Vice President or a Vice
President, the holders of a majority in number of the shares of the capital
stock of the Corporation present in person or represented by proxy and
entitled to vote at such meeting shall elect a Chairman, who may be the
Secretary of the Corporation. The Secretary of the Corporation shall act as
secretary of all meetings of the stockholders; but in the absence of the
Secretary, the Chairman may appoint any person to act as secretary of the
meeting.
SECTION 6. VOTING. Each stockholder shall, except as otherwise
provided by law or by the Certificate of Incorporation, at every meeting of
the stockholders be entitled to one vote in person or by proxy for each share
of capital stock entitled to vote held by such stockholder, but no proxy
shall be voted after three years from its date, unless said proxy provides
for a longer period. Upon the demand of any stockholder, the vote for
directors and the vote upon any matter before the meeting shall be by ballot.
Except as otherwise provided by law or by the Certificate of Incorporation
or by these By-laws, all elections for directors shall be decided by
plurality vote; all other matters shall be decided by votes cast thereon.
A complete list of the stockholders entitled to vote at any meeting
of stockholders, arranged in alphabetical order, with the address of each,
and the number of shares held by each, shall
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be open to the examination of any stockholder, for any purpose germane to the
meeting, during ordinary business hours, for a period of at least ten days
prior to the meeting, either at a place within the city where the meeting is
to be held, which place shall be specified in the notice of the meeting, or,
if not so specified, at the place where the meeting is to be held. The list
shall also be produced and kept at the time and place of the meeting during
the whole time thereof, and may be inspected by any stockholder who is
present.
SECTION 7. INSPECTORS OF ELECTION. The Board of Directors may at
any time appoint two or more persons to serve as Inspectors of Election at
the next succeeding annual meeting of stockholders or at any other meeting or
meetings, and the Board of Directors may at any time fill any vacancy in the
office of Inspector. If the Board of Directors fails to appoint Inspectors,
or if any Inspector appointed be absent or refuse to act, or if his office
becomes vacant and be not filled by the Board of Directors, the Chairman of
any meeting of the stockholders may appoint one or more temporary Inspectors
for such meeting. All proxies shall be filed with the Inspectors of Election
of the meeting before being voted upon.
SECTION 8. CONSENT OF STOCKHOLDERS IN LIEU OF MEETING.
(A) Any action required to be taken at any annual or special meeting
of stockholders of the Corporation, or any action which may be taken at any
annual or special meeting of the stockholders, may be taken without a meeting,
without prior notice and without a vote, if a consent or consents in writing,
setting for the action so taken, shall be signed by the holders of outstanding
stock having not less than the minimum number of votes that would be necessary
to authorize or take such action at a meeting at which all shares entitled to
vote thereon were present and voted and shall be delivered to the Corporation by
delivery to its registered office in Delaware, its principal place of business,
or an officer or agent of the Corporation having custody of the book in which
proceedings of meetings of stockholders are recorded. Delivery made to the
Corporation's registered office shall be made by hand or by certified or
registered mail, return receipt request.
(B) Every written consent shall bear the date of signature of
each stockholder who signs the consent and no written consent shall be effective
to take the corporate action referred to therein unless, within sixty (60) days
of the date the earliest dated consent is delivered to the Corporation, a
written consent or consents signed by a sufficient number of holders to take
action are delivered to the Corporation in the manner prescribed in paragraph
(C) of this Section.
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(C) In order that the Corporation may determine the stockholders
entitled to consent to corporate action in writing without a meeting, the Board
of Directors may fix a record date, which record date shall not precede the date
upon which the resolution fixing the record date is adopted by the Board of
Directors, and which date shall not be more than ten (10) days after the date
upon which the resolution fixing the record date is adopted by the Board of
Directors. Any stockholder of record seeking to have the stockholders authorize
or take corporate action by written consent shall, by written notice to the
Secretary, request the Board of Directors to fix a record date. The Board of
Directors shall promptly, but in all events within ten (10) days after the date
on which such a request is received, adopt a resolution fixing the record date.
If no record date has been fixed by the Board of Directors within ten (10) days
of the date on which such a request is received, the record date for determining
stockholders entitled to consent to corporate action in writing without a
meeting, when no prior action by the Board of Directors is required by
applicable law, shall be the first date on which a signed written consent
setting forth the action taken or proposed to be taken is delivered to the
Corporation in accordance with paragraphs (A) and (B) of this Section. If no
record date has been fixed by the Board of Directors and prior action by the
Board of Directors is required by applicable law, the record date for
determining stockholders entitled to consent to corporate action in writing
without a meeting shall be at the close of business on the date on which the
Board of Directors adopts the resolution taking such prior action.
(D) Within five (5) business days after receipt of the earliest
dated consent delivered to the Corporation in the manner provided in this
Section, the Corporation, shall retain nationally recognized independent
inspectors of elections for the purposes of performing a ministerial review of
the validity of consents and any revocations thereof. The cost of retaining
inspectors of election shall be borne by the Corporation.
(E) At any time that stockholders soliciting consents in writing
to corporate action have a good faith belief that the requisite number of valid
and unrevoked consents to authorize or take the action specified has been
received by them, the consents shall be delivered by the soliciting stockholders
of the Corporation's registered office in the State of Delaware or principal
place of business or to the Secretary of the Corporation, together with a
certificate stating their belief that the requisite number of valid and
unrevoked consents has been received as of a specific date, which date shall be
identified in the certificate. In the event that delivery shall be made to the
Corporation's registered office in Delaware, such delivery shall be made by hand
or by certified or registered mail, return receipt requested. Upon
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receipt of such consents, the Corporation shall cause the consents to be
delivered promptly to the inspectors of election. The Corporation also shall
deliver promptly to the inspectors of election any revocations of consents in
its possession, custody or control as of the time of receipt of the consents.
(F) As promptly as practicable after the consents and
revocations are received by them, the inspectors of election shall issue a
preliminary report to the Corporation stating: (i) the number of shares
represented by valid and unrevoked consents; (ii) the number of shares
represented by invalid consents; (iii) the number of shares represented by
invalid revocations; and (iv) the number of shares entitled to submit consents
as of the record date. Unless the Corporation and the soliciting stockholders
agree to a shorter or longer period, the Corporation and the soliciting
stockholders shall have five (5) days to review the consents and revocations and
to advise the inspectors and the opposing party in writing as to whether they
intend to challenge the preliminary report. If no timely written notice of an
intention to challenge the preliminary report is received, the inspectors shall
certify the preliminary report (as corrected or modified by virtue or the
detection by the inspectors of clerical errors) as their final report and
deliver it to the Corporation. If the Corporation or the soliciting
stockholders give timely written notice of an intention to challenge the
preliminary report, a challenge session shall be scheduled by the inspectors as
promptly as practicable. A transcript of the challenge session shall be
recorded by a certified court reporter. Following completion of the challenge
session, the inspectors shall issue as promptly as practicable their final
report and deliver it to the Corporation. A copy of the final report shall be
included in the book in which the proceedings of meetings of stockholders are
required.
(G) The Corporation shall give prompt notice to the stockholders
of the results of any consent solicitation or the taking of corporate action
without a meeting by less than unanimous written consent.
(H) This Section shall in no way impair or diminish the right of
any stockholder or director, or any officer whose title to office is contested,
to contest the validity of any consent or revocation thereof, or to take any
other action with respect thereto.
SECTION 9. NOTICE OF STOCKHOLDER BUSINESS AND NOMINATIONS.
(A) Annual Meetings of Stockholders.
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(1) Nominations of persons for election to the Board of
Directors of the Corporation and the proposal of business to be considered by
the stockholders may be made at an annual meeting of stockholders
(a) pursuant to the Corporation's notice of meeting delivered pursuant to
Article I, Section 3 of these by-laws, (b) by or at the direction of the
Chairman of the Board of Directors or (c) by any stockholder of the
Corporation who is entitled to vote at the meeting, who complied with the
notice procedures set forth in clauses (2) and (3) of this paragraph (A) of
this by-law and who was a stockholder of record at the time such notice is
delivered to the Secretary of the Corporation.
(2) For nominations or other business to be properly brought
before an annual meeting by a stockholder pursuant to clause (c) of paragraph
(A)(1) of this by-law, the stockholder must have given timely notice thereof
in writing to the Secretary of the Corporation. To be timely, a
stockholder's notice shall be delivered to the Secretary at the principal
executive offices of the Corporation not less than seventy days nor more than
ninety days prior to the first anniversary of the preceding year's annual
meeting; provided, however, that in the event that the date of the annual
meeting is advanced by more than twenty days, or delayed by more than seventy
days, from such anniversary date, notice by the stockholder to be timely must
be so delivered not earlier than the ninetieth day prior to such annual
meeting and not later than the close of business on the later of the
seventieth day prior to such annual meeting or the tenth day following the
day on which public announcement of the date of such meetings if first made.
Such stockholder's notice shall set forth (a) as to each person whom the
stockholder proposes to nominate for election or re-election as a director
all information relating to such person that is required to be disclosed in
solicitations of proxies for election of directors, or is otherwise required,
in each case pursuant to Regulation 14A under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), including such person's written
consent to being named in the proxy statement as a nominee and to serving as
a director if elected; (b) as to any other business desired to be brought
before the meeting, the reasons for conducting such business at the meeting
and any material interest in such business of such stockholder and the
beneficial owner, if any, on whose behalf the proposal is made; and (c) as to
the stockholder giving the notice and the beneficial owner, if any, on whose
behalf the nomination or proposal is made (i) the name and address of such
stockholder, as they appear on the Corporation's books, and of such
beneficial owner and (ii) the class and number of shares of the Corporation
which are owned beneficially and or record by such stockholder and such
beneficial owner.
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(3) Notwithstanding anything in the second sentence of paragraph
(A)(2) of this by-law to the contrary, in the event that the number of directors
to be elected to the Board of Directors of the Corporation is increased and
there is no public announcement naming all of the nominees for director or
specifying the size of the increased Board of Directors made by the Corporation
at least eighty days prior to the first anniversary of the preceding year's
annual meeting, a stockholder's notice required by this by-law shall also be
considered timely, but only with respect to nominees for any new positions
created by such increase, if it shall be delivered to the Secretary at the
principal executive offices of the Corporation not later than the close of
business on the tenth day following the day on which such public announcement is
first made by the Corporation.
(B) Special Meetings of Stockholders.
Only such business shall be conducted at a special meeting of
stockholders as shall have been brought before the meeting pursuant to the
Corporation's notice of meeting pursuant to Article I, Section 3 of these
by-laws. Nominations of persons for election to the Board of Directors may
be made at a special meeting of stockholders at which directors are to be
elected pursuant to the Corporation's notice of meeting (a) by or at the
direction of the Board of Directors or (b) by any stockholder of the
Corporation who is entitled to vote at the meeting, who complies with the
notice procedures set forth in this by-law and who is a stockholder of record
at the time such notice is delivered to the Secretary of the Corporation.
Nominations by stockholders of persons for election to the Board of Directors
may be made at such a special meeting of stockholders if the stockholder's
notice as required by paragraph (A)(2) of this by-law shall be delivered to
the Secretary at the principal executive offices of the Corporation not
earlier than the ninetieth day prior to such special meeting and not later
than the close of business on the later of the seventieth day prior to such
special meeting or the tenth day following the day on which public
announcement is first made of the date of the special meeting and of the
nominees proposed by the Board of Directors to be elected at such meeting.
In no event shall the public announcement of an adjournment of a special
meeting commence a new time period for the giving of a stockholder's notice
as described above.
(C) General.
(1) Only persons who are nominated in accordance with the
procedures set forth in this by-law shall be eligible to service as director
and only such business shall be conducted at a meeting of stockholders as
shall have been brought before the meeting in accordance with the procedures
set forth in this by-law. Except as otherwise provided by law, the
Certificate of
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Incorporation or these by-laws, the chairman of the meeting shall have the
power and duty to determine whether a nomination or any business proposed to
be brought before the meeting was made in accordance with the procedures set
forth in this by-law and, if any proposed nomination or business is not
compliance with this by-law, to declare that such defective proposal or
nomination shall disregarded.
(2) For purposes of this by-law, "public announcement" shall
mean disclosure in a press release reported by the Dow Jones News Service,
Associated Press or comparable national news service or in a document
publicly filed by the Corporation with the Securities and Exchange Commission
pursuant to Section 13, 14 or 15(d) of the Exchange Act.
(3) Notwithstanding the foregoing provisions of this by-law, a
stockholder shall also comply with all applicable requirements of the
Exchange Act and the rules and regulations thereunder with respect to the
matters set forth in this by-law. Nothing in this by-law shall be deemed to
affect any rights of stockholders to request inclusion of proposals in the
Corporation's proxy statement pursuant to Rule 14a-8 under the Exchange Act.
ARTICLE II
BOARD OF DIRECTORS
SECTION 1. GENERAL POWERS. The property, affairs and business of the
Corporation shall be managed by the Board of Directors.
SECTION 2. NUMBER, QUALIFICATION AND TERM OF OFFICE. The number of
directors shall be such as the Board of Directors may by resolution direct,
but not less than three nor more than nine, except that where all the stock
of the Corporation is owned beneficially and of record by either one or two
stockholders, the number of directors may be less than three, but not less
than the number of stockholders. Directors need not be stockholders. Each
director shall hold office for the term for which he is appointed or elected
and until his successor shall have been elected and shall qualify, or until
his death or until he shall resign or shall have been removed in the manner
hereinafter provided. Directors need not be elected by ballot, except upon
demand of any stockholder.
SECTION 3. QUORUM AND MANNER OF ACTION. Except as otherwise
provided by statute or these By-laws, one-half of the whole Board of
Directors (but not less than two) shall be required
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to constitute a quorum for the transaction of business at any meeting, and
the act of a majority of the directors present and voting at any meeting at
which a quorum is present shall be the act of the Board of Directors. In the
absence of a quorum, a majority of the directors present may adjourn any
meeting from time to time until a quorum be had. Notice of any adjourned
meeting need not be given. The directors shall act only as a board and
individual directors shall have no power as such.
SECTION 4. PLACE OF MEETING, ETC. The Board of Directors may hold
its meetings, have one or more offices, and keep the books and records of the
Corporation, at such place or places within or without the State of Delaware
as the Board may from time to time determine or as shall be specified or
fixed in the respective notices or waivers of notice thereof.
SECTION 5. REGULAR MEETINGS. A regular meeting of the Board of
Directors shall be held as soon as practicable after each annual meeting of
stockholders, for the election of officers and the transaction of other
business, and other regular meetings of said Board shall be held at such
times and places as said Board shall direct. No notice shall be required for
any regular meeting of the Board of Directors but a copy of every resolution
fixing or changing the time or place of regular meetings shall be mailed to
every director at least three days before the first meeting held in pursuance
thereof.
SECTION 6. SPECIAL MEETINGS. Special meetings of the Board of
Directors may be called by the Chairman of the Board, the President, the
Executive Vice President, a Vice President or any two Directors. The
Secretary or an Assistant Secretary shall give notice of the time and place
of each special meeting by mailing a written notice of the same to each
Director at his last known post office address at least two days before the
meeting or by causing the same to be delivered personally or to be
transmitted by telegraph, cable, wireless, telephone or verbally at least
twenty-four hours before the meeting to each Director.
SECTION 7. ACTION BY CONSENT. Any action required or permitted to
be taken at any meeting of the Board or of any committee thereof may be taken
without a meeting, if prior to such action a written consent thereto is
signed by all members of the Board or of such committee, as the case may be,
and such written consent is filed with the minutes of proceedings of the
Board or committee.
SECTION 8. ORGANIZATION. At each meeting of the Board of
Directors, the Chairman of the Board, or in his absence or nonelection the
President, or in the absence of both of the
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foregoing officers a director chosen by a majority of the directors, shall
act as Chairman. The Secretary, or in his absence an Assistant Secretary, or
in the absence of both the Secretary and Assistant Secretaries any person
appointed by the Chairman, shall act as Secretary of the meeting.
SECTION 9. RESIGNATIONS. Any director of the Corporation may
resign at any time by giving written notice to the Board of Directors or to
the President or to the Secretary of the Corporation. The resignation of any
directors shall take effect at the time specified therein, and unless
otherwise specified therein, the acceptance of such resignation shall not be
necessary to make it effective.
SECTION 10. REMOVAL OF DIRECTORS. Any director may be removed,
either with or without cause, at any time by the affirmative vote of a
majority in interest of the holders of record of the stock having voting
power at a special meeting of the stockholders called for the purpose; and
the vacancy in the Board caused by any such removal may be filled by the
stockholders at such meeting.
SECTION 11. VACANCIES. Subject to the rights of the holders of
any series of Preferred Stock, or any other series or class of stock as set
forth in the Certificate of Incorporation, to elect additional directors
under specified circumstances, and unless the Board of Directors otherwise
determines, vacancies resulting from death, resignation, retirement,
disqualification, removal from office or other cause, and newly created
directorships resulting from any increase in the authorized number of
directors, may be filled only by the affirmative vote of a majority of the
remaining directors, though less than a quorum of the Board of Directors, and
directors so chosen shall hold office for a term expiring at the annual
meeting of stockholders at which the term of office of the class to which
they have been elected expires and until such director's successor shall have
been duly elected and qualified.
SECTION 12. COMPENSATION OF DIRECTORS. Directors shall receive
such sum for their services and expenses as may be directed by resolution of
the Board; provided that nothing herein contained shall be construed to
preclude any director from serving the Corporation in any other capacity and
receiving compensation therefor. Members of special or standing committees
may be allowed like compensation of their services and expenses.
SECTION 13. COMMITTEES. By resolution or resolutions passed by a
majority of the whole Board at any meeting of the Board of Directors, the
directors may designate one or more committees,
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each committee to consist of two or more directors, which, to the extent
provided in said resolution or resolutions, shall have and may exercise the
powers of the Board of Directors in the management of the business and
affairs of the Corporation, including the power and authority to authorize
the seal of the Corporation to be affixed to all papers which may require it,
to declare dividends and to authorize the issuance of shares of capital stock
of the Corporation. Further, the Board of Directors may designate one or
more directors as alternate members of a committee who may replace an absent
or disqualified member at any meeting.
SECTION 14. EXECUTIVE COMMITTEE. The Board of Directors, by the
affirmative vote of a majority of the members of the Board at the time in
office, may appoint an Executive Committee, each of such members to be a
director. The number of members of the Executive Committee shall be such as
the Board of Directors by resolution directs, but not less than three nor
more than nine. The Executive Committee, except as limited from time to time
by the Board of Directors, shall have and may exercise, during the intervals
between the meetings of the directors, all of the powers vested in the Board
or committees generally, except to change the membership of the Executive
Committee; provided, however, that in the absence or disqualification of any
member of the Executive Committee, the member or members thereof present at
any meeting and not disqualified from voting, whether or not he or they
constitute a quorum, may unanimously appoint another member of the Board of
Directors to act at the meeting in the place of any such absent of
disqualified member. The Executive Committee shall have power to authorize
the seal of the Corporation to be affixed to all papers which may require it,
to declare dividends and to authorize the issuance of shares of capital stock
of the Corporation. The Board shall have the power at any time to fill
vacancies in, to change the membership of, or to dissolve, the Executive
Committee. The Executive Committee may make rules for the conduct of its
business and may appoint such committees and assistants as it shall from time
to time deem necessary. One-third of the Executive Committee, but not less
than two, shall constitute a quorum for the transaction of business. Regular
meetings of the Executive Committee shall be held at such times as the said
Executive Committee shall from time to time by resolution determine. No
notice shall be required for any regular meeting of the Executive Committee
but a copy of every resolution fixing or changing the time or place of
regular meetings shall be mailed to every member of the Executive Committee
at least three days before the first meeting held in pursuance thereof.
Special meetings of the Executive Committee may be called by the Chairman of
the Executive Committee or the Secretary of the Executive Committee, or any
two members thereof. The Secretary of the Corporation or the Secretary of the
Executive Committee shall give notice of the time
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and place of each Special Meeting by mail at least two days before such
meeting or by telegraph, cable, wireless, telephone or verbally at least 24
hours before the meeting to each member of the Executive Committee.
SECTION 15. AUDIT COMMITTEE. The audit committee shall consist
solely of directors who are independent of management. The audit committee
shall assist the board in fulfilling its fiduciary responsibilities by
reviewing the financial information, the systems of internal controls which
management and the board of directors have established, and the audit
process. To accomplish the foregoing, the audit committee shall help
directors discharge their responsibilities especially for accountability;
provide communication between directors and external and internal auditors;
ensure the external and internal auditors' independence; and maintain the
credibility and objectivity of financial reports.
SECTION 16. COMPENSATION COMMITTEE. The compensation committee
shall consist solely of directors who are independent of management. The
compensation committee shall review and recommend to the board of directors
policies, practices and procedures relating to the compensation of the
Corporation's executive officers and operating unit presidents and the
establishment and administration of the Corporation's stock options plan,
stock purchase plans and employee benefit plans.
SECTION 17. NOMINATING AND ORGANIZATION COMMITTEE. The
nominating and organization committee shall assist and advise the board of
directors in connection with board membership, board committee structure,
membership and CEO succession. The nominating and organization committee
shall evaluate and recommend to the board of directors candidates for
election or re-election as directors.
ARTICLE III
OFFICERS
SECTION 1. NUMBER. The officers of the Corporation shall be a
President, a Treasurer, and a Secretary. In addition, the Board may elect one
or more Executive Vice Presidents, one or more Vice Presidents, and such
other officers as may be appointed in accordance with the provisions of
SECTION 3 of this ARTICLE. Any number of offices may be held by the same
person. The board may elect a Chairman of the Board and/or Senior Chairman.
Such Chairman of the Board or Senior Chairman shall not be an officer of the
Corporation unless such person holds another officer position of the
Corporation. The Chief Executive Officer of the Corporation
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shall be either the Chairman of the Board or the President, as determined by
the Board.
SECTION 2. ELECTION, TERM OF OFFICE AND QUALIFICATIONS. The
officers shall be elected annually by the Board of Directors at their first
meeting after each annual meeting of the stockholders of the Corporation.
Each officer, except such officers as may be appointed in accordance with the
provisions of SECTION 3 of this ARTICLE, shall hold office until his
successor shall have been duly elected and qualified in his stead, or until
his death or until he shall have resigned or shall have become disqualified
or shall have been removed in the manner hereinafter provided. The Chairman
of the Board shall be chosen from among the directors.
SECTION 3. SUBORDINATE OFFICERS. The Board of Directors or the
President may from time to time appoint such other officers, including one or
more Assistant Treasurers and one or more Assistant Secretaries, and such
agents and employees of the Corporation as may be deemed necessary or
desirable. Such officers, agents and employees shall hold office for such
period and upon such terms and conditions, have such authority and perform
such duties as in these By-laws provided or as the Board of Directors or the
President may from time to time prescribe. The Board of Directors or the
President may from time to time authorize any officer to appoint and remove
agents and employees and to prescribe the powers and duties thereof.
SECTION 4. REMOVAL. Any officer may be removed either with or
without cause, by the vote of a majority of the whole Board of Directors at a
special meeting called for the purpose, or except in case of any officer
elected by the Board of Directors, by any committee or superior officer upon
whom the power of removal may be conferred by the Board of Directors or by
these By-laws.
SECTION 5. RESIGNATIONS. Any officer may resign at any time by
giving written notice to the Board of Directors or to the President or to the
Secretary. Any such resignation shall take effect at the date of receipt of
such notice or at any later time specified therein; and unless otherwise
specified therein, the acceptance of such resignation shall not be necessary
to make it effective.
SECTION 6. VACANCIES. A vacancy in any office because of death,
resignation, removal, disqualification or any other cause shall be filled for
the unexpired portion of the term in the manner prescribed in these By-laws
for regular election or appointment to such office.
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SECTION 7. THE CHAIRMAN OF THE BOARD AND SENIOR CHAIRMAN.
(A) The Chairman of the Board shall perform all duties incidental to
his or her office which may be required by law and all such other duties as are
properly required of him or her by the Board of Directors. Except where by law
the signature of the President is required, the Chairman of the Board shall
possess the same power as the President to sign all certificates, contracts, and
other instruments of the Corporation which may be authorized by the Board of
Directors.
(B) The Chairman of the Board shall preside at all meetings of the
stockholders and of the Board of Directors. The Chairman shall make reports to
the Board of Directors and the stockholders, and shall perform all such other
duties as are properly required of him or her by the Board of Directors. The
Chairman shall see that all orders and resolutions of the Board of Directors and
of any committee thereof are carried into effect.
(C) In the event the Chairman of the Board is unable to serve, the
Senior Chairman in addition to serving as lead outside director shall fulfill
the duties and responsibilities and have such powers and authority of the
Chairman of the Board as set forth in these By-laws.
SECTION 8. THE PRESIDENT. The President shall have general direction
of the affairs of the Corporation and general supervision over its several
officers, subject, however, to the control of the Board of Directors and, if the
Chairman of the Board be the Chief Executive Officer of the Corporation, the
Chairman of the Board. The President shall at each annual meeting and from time
to time report to the stockholders and to the Board of Directors all matters
within his knowledge which the interest of the Corporation require to be brought
to their notice; may sign with the Treasurer or an Assistant Treasurer or the
Secretary or an Assistant Secretary any and all certificates of stock of the
Corporation; in the absence of the Chairman of the Board, shall preside at all
meetings of the stockholders; shall sign and execute in the name of the
Corporation all contracts, or other instruments authorized by the Board of
Directors, except in cases where the signing and execution thereof shall be
expressly declared or permitted by the Board or by these By-laws to some other
officer or agent of the Corporation; and, in general, shall perform all duties
incident to the office of President and such other duties as from time to time
may be assigned to him by the Board of Directors or as are presented by these
By-laws.
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SECTION 9. THE EXECUTIVE VICE PRESIDENT. The Executive Vice
President, if one be elected, shall at the request of the President, or in his
absence or disability, except as otherwise provided herein, perform the duties
of the President, and, when so acting, shall have all the powers of, and be
subject to all of the restrictions upon, the President; in the absence of the
Chairman of the Board and the President, shall preside at all meetings of the
stockholders; may sign with the Treasurer or an Assistant Treasurer or the
Secretary or an Assistant Secretary any or all certificates of stock of the
Corporation; and shall perform such duties and have such powers as from time to
time may be assigned to him by the President or the Board of Directors or
prescribed by these By-laws.
SECTION 10. THE VICE PRESIDENTS. Each Vice President shall have such
powers and shall perform such duties as may from time to time be assigned to him
by the Board of Directors or by the President. A Vice President may also sign
with the Treasurer or an Assistant Treasurer or the Secretary or an Assistant
Secretary certificates of stock of the Corporation.
SECTION 11. THE SECRETARY. The Secretary shall keep or cause to be
kept in books provided for the purpose the minutes of the meetings of the
stockholders, of the Board of Directors and of any committee when so required;
shall see that all notices are duly given in accordance with the provisions of
these By-laws and as required by law; shall be custodian of the records and of
the seal of the Corporation and see that the seal is affixed to all documents,
the execution of which on behalf of the Corporation under its seal is duly
authorized in accordance with the provisions of these By-laws; shall keep or
cause to be kept, a register of the post office address of each stockholder; may
sign with the President, the Executive Vice President or Vice President
certificates of stock of the Corporation; and, in general, the Secretary shall
perform all duties incident to the office of Secretary and such other duties as
may, from time to time, be assigned to him by the Board of Directors, or by the
President.
SECTION 12. ASSISTANT SECRETARIES. At the request of the Secretary,
or in his absence or disability, the Assistant Secretaries shall perform the
duties of the Secretary and, when so acting, shall have all the powers of, and
be subject to all the restrictions upon, the Secretary. The Assistant
Secretaries shall perform such other duties as from time to time may be assigned
to them by the President, the Secretary or the Board of Directors.
SECTION 13. THE TREASURER. The Treasurer shall have charge and
custody of, and be responsible for, all funds and securities of the Corporation,
and deposit all such funds in the name of the Corporation in such banks, trust
companies or other
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depositaries as shall be selected in accordance with the provisions of these
By-laws; at all reasonable times exhibit his books of account and records,
and cause to be exhibited the books of accounts and records of any
corporation controlled by the Corporation, to any of the directors of the
Corporation upon application during business hours at the office of the
Corporation, or such other corporation, where such books and records are
kept; render a statement of the condition of the finances of the Corporation
at all regular meetings of the Board of Directors and a full financial report
at the annual meeting of the stockholders; if called upon to do so, receive,
and give receipts for, moneys due and payable to the Corporation from any
source whatsoever; may sign with the President, the Executive Vice President
or Vice President certificates of stock of the Corporation; and, in general,
perform all the duties incident to the office of Treasurer and such other
duties as from time to time may be assigned to him by the Board of Directors.
SECTION 14. ASSISTANT TREASURERS. At the request of the Treasurer,
or in his absence or disability, the Assistant Treasurers shall perform the
duties of the Treasurer, and, when so acting, shall have all the powers of, and
be subject to all the restrictions upon, the Treasurer. The Assistant
Treasurers shall perform such duties as from time to time may be assigned to
them by the President, the Treasurer or the Board of Directors.
SECTION 15. SALARIES. The salaries of the officers shall be fixed
from time to time by the Board of Directors. No officer shall be prevented from
receiving such salary by reason of the fact that he is also a director of the
Corporation.
ARTICLE IV
CONTRACTS, CHECKS, DRAFTS, BANK ACCOUNTS, ETC.
SECTION 1. CONTRACTS, ETC., HOW EXECUTED. The Board of Directors,
except as in these By-laws otherwise provided, may authorize any officer or
officers, employee or employees or agent or agents of the Corporation to enter
into any contract or execute and deliver any instrument in the name of and on
behalf of the Corporation, and such authority may be general or confined to
specific instances; and, unless so authorized by the Board of Directors or by
any committee or by these By-laws, no officer, employee or agent shall have any
power or authority to bind the Corporation by any contract or engagement or to
pledge its credit or to render it liable pecuniarily for any purpose or to any
amount.
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SECTION 2. CHECKS, DRAFTS, ETC. All checks, drafts or other orders
for the payment of money, notes, or other evidences of indebtedness issued in
the name of the Corporation shall be signed by such officer or officers,
employee or employees or agent or agents of the Corporation as shall from time
to time be determined by resolution of the Board of Directors.
SECTION 3. DEPOSITS. All funds of the Corporation shall be deposited
from time to time to the credit of the Corporation in such banks, trust
companies or other depositaries as the Board of Directors may from time to time
designate, or as may be designated by any officer or officers, employee or
employees or agent or agents of the Corporation to whom such power may be
delegated by the Board of Directors, and for the purpose of such deposit, any
officer or officers, employee or employees or agent or agents of the Corporation
as shall from time to time be determined by resolution of the Board of Directors
may endorse, assign and deliver checks, drafts and other orders for the payment
of money which are payable to the order of the Corporation.
SECTION 4. GENERAL AND SPECIAL BANK ACCOUNTS. The Board of Directors
may from time to time authorize the opening and keeping with such banks, trust
companies or other depositaries as it may designate of general and special bank
accounts, and may make such special rules and regulations with respect thereto,
not inconsistent with the provisions of these By-laws, as it may deem expedient.
SECTION 5. PROXIES. Except as otherwise in these By-laws or in the
Certificate of Incorporation of the Corporation provided, and unless otherwise
provided by resolution of the Board of Directors, the President may from time to
time appoint an attorney or attorneys, or agent or agents, of the Corporation,
in the name and on behalf of the Corporation, to cast the votes which the
Corporation may be entitled to cast as a stockholder or otherwise in any other
corporation any of whose stock or other securities may be held by the
Corporation, at meetings of the holders of the stock or other securities of such
other corporation, or to consent in writing to any action by such other
corporation, and may instruct the person or persons so appointed as to the
manner of casting such votes or giving such consent, and may execute or cause to
be executed in the name and on behalf of the Corporation and under its corporate
seal, or otherwise, all such written proxies or other instruments as he may deem
necessary or proper in the premises.
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ARTICLE V
SHARES AND THEIR TRANSFER
SECTION 1. CERTIFICATES OF STOCK. Certificates for shares of the
capital stock of the Corporation shall be in such form not inconsistent with law
as shall be approved by the Board of Directors. They shall be numbered in order
of their issue, and shall be signed by the President, the Executive Vice
President or Vice President and the Treasurer or an Assistant Treasurer or the
Secretary or an Assistant Secretary of the Corporation, and the seal of the
Corporation shall be affixed thereto, provided that where any such certificate
is signed by a transfer agent or an assistant transfer agent or by a transfer
clerk acting on behalf of the Corporation and by a registrar, if any, the
signatures of any such President, Executive Vice President, Vice President,
Treasurer, Assistant Treasurer, Secretary or Assistant Secretary and the seal of
the Corporation upon such certificate may be facsimiles. In case of any officer
or officers who shall have signed, or whose facsimile signature or signatures
shall have been used on any such certificate or certificates, shall cease to be
such officer or officers of the Corporation, whether because of death,
resignation or otherwise, before such certificate or certificates shall have
been delivered by the Corporation, such certificate or certificates may
nevertheless be adopted by the Corporation and be issued and delivered as though
the person or persons who signed such certificate or certificates or whose
facsimile signature shall have been used thereon had not ceased to be such
officer or officers of the Corporation.
SECTION 2. TRANSFER OF STOCK. Transfers of shares of the capital
stock of the Corporation shall be made only on the books of the Corporation by
the holder thereof, or by his attorney thereunto authorized by a power of
attorney duly executed and filed with the Secretary of the Corporation, or a
transfer agent of the Corporation, if any, and on surrender of the certificate
or certificates for such shares properly endorsed. A person in whose name
shares of stock stand on the books of the Corporation shall be deemed the owner
thereof as regards the Corporation, and the Corporation shall not be bound to
recognize any equitable or other claim to, or interest in, such shares on the
part of any other person, whether or not it shall have express or other notice
thereof, except as otherwise provided by the laws of Delaware; provided that
whenever any transfer of shares shall be made for collateral security, and not
absolutely, such fact, if known to the Secretary or to said transfer agent,
shall be so expressed in the entry of transfer.
SECTION 3. ADDRESSES OF STOCKHOLDERS. Each stockholder shall
designate to the Secretary of the Corporation an address at
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which notices of meetings and all other corporate notices may be served or
mailed to him, and if any stockholder shall fail to designate such address,
corporate notices may be served upon him by mail directed to him at his last
known post office address.
SECTION 4. LOST, DESTROYED AND MUTILATED CERTIFICATES. The holder of
any stock issued by the Corporation shall immediately notify the Corporation of
any loss, destruction or mutilation of the certificate therefor, or failing to
receive a certificate of stock issued by the Corporation, and the Board of
Directors or the Secretary of the Corporation may, in its or his discretion,
cause to be issued to him a new certificate or certificates of stock, upon
compliance with such rules, regulations and/or procedure as may be prescribed or
have been prescribed by the Board of Directors with respect to the issuance of
new certificates in lieu of such lost, destroyed or mutilated certificate or
certificates of stock issued by the Corporation which are not received.
SECTION 5. TRANSFER AGENT AND REGISTRAR; REGULATIONS. The
Corporation shall, if and whenever the Board of Directors shall so determine,
maintain one or more transfer offices or agencies, each in the charge of a
transfer agent designated by the Board of Directors, where the shares of the
capital stock of the Corporation shall be directly transferable, and also one or
more registry offices, each in the charge of a registrar designated by the Board
of Directors, where such shares of stock shall be registered, and no certificate
for shares of the capital stock of the Corporation, in respect of which a
Registrar and/or Transfer Agent shall have been designated, shall be valid
unless countersigned by such Transfer Agent and registered by such Registrar, if
any. The Board of Directors shall also make such additional rules and
regulations as it may deem expedient concerning the issue, transfer and
registration of certificates for shares of the capital stock of the Corporation.
ARTICLE VI
SEAL
The Board of Directors shall provide a suitable seal containing the
name of the Corporation, which seal shall be in the charge of the Secretary and
which may be used by causing it or a facsimile thereof to be impressed or
affixed or reproduced or otherwise. If and when so directed by the Board of
Directors, a duplicate of the seal may be kept and be used by any officer of the
Corporation designated by the Board.
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ARTICLE VII
MISCELLANEOUS PROVISIONS
SECTION 1. FISCAL YEAR. The fiscal year of the Corporation shall end
on January 31 of each year unless otherwise provided by the Board of Directors
of the Corporation.
SECTION 2. WAIVERS OF NOTICE. Whenever any notice whatever is
required to be given by law, or under the provisions of the Certificate of
Incorporation or of these By-laws, a waiver thereof in writing, signed by the
person or persons entitled to said notice, whether before or after the time
stated therein, shall be deemed equivalent thereto.
SECTION 3. QUALIFYING IN FOREIGN JURISDICTIONS. The directors shall
have the power at any time and from time to time to take or cause to be taken
any and all measures which they may deem necessary for qualification to do
business as a foreign corporation in any one or more foreign jurisdictions and
for withdrawal therefrom.
SECTION 4. INDEMNIFICATION.
(A) Right to Indemnification.
The Corporation shall indemnify and hold harmless, to the fullest
extent permitted by applicable law as it presently exists or may hereafter be
amended, any person (an "Indemnitee") who was or is made or is threatened to be
made a party or is otherwise involved in any action, suit or proceeding, whether
civil, criminal, administrative or investigative (a "proceeding"), by reason of
the fact that he, or a person for whom he is the legal representative, is or was
a director or officer of the Corporation or, while a director or officer of the
Corporation, is or was serving at the request of the Corporation as a director,
officer, employee or agent of another corporation or of a partnership, joint
venture, trust, enterprise or nonprofit entity, including service with respect
to employee benefit plans, against all liability and loss suffered and expenses
(including attorneys' fees) reasonably incurred by such Indemnitee.
Notwithstanding the preceding sentence, except as otherwise provided in Section
4(C) hereof, the Corporation shall be required to indemnify an Indemnitee in
connection with a proceeding (or part thereof) commenced by such Indemnitee only
if the commencement of such proceeding (or part thereof) by the Indemnitee was
authorized by the Board of Directors of the Corporation.
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(B) Prepayment of Expenses.
The Corporation shall pay the expenses (including attorneys' fees)
incurred by an Indemnitee in defending any proceeding in advance of its final
disposition, PROVIDED, final disposition of the proceeding shall be made only
upon receipt of an undertaking by the Indemnitee to repay all amounts advanced
if it should be ultimately determined that the Indemnitee is not entitled to be
indemnified under this Section 4 or otherwise.
(C) Claims.
If a claim for indemnification or payment of expenses under this
Section 4 is not paid in full within sixty days after a written claim therefor
by the Indemnitee has been received by the Corporation, the Indemnitee may file
suit to recover the unpaid amount of such claim and, if successful in whole or
in part, shall be entitled to be paid the expense of prosecuting such claim. In
any such action the Corporation shall have the burden of proving that the
Indemnitee is not entitled to the requested indemnification or payment of
expenses under applicable law.
(D) Nonexclusivity of Rights.
The rights conferred on any Indemnitee by this Section 4 shall not
be exclusive of any other rights which such Indemnitee may have or hereafter
acquire under any statute, provision of the Certificate of Incorporation, these
by-laws, agreement, vote of stockholders or disinterested directors or
otherwise.
(E) Other Sources.
The Corporation's obligation, if any, to indemnify or to advance
expenses to any Indemnitee who was or is serving at its request as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust, enterprise or nonprofit entity shall be reduced by any amount such
Indemnitee may collect as indemnification or advancement of expenses from such
other corporation, partnership, joint venture, trust, enterprise or nonprofit
enterprise.
(F) Amendment or Repeal.
Any repeal or modification of the foregoing provisions of this
Section 4 shall not adversely affect any right or protection hereunder of any
Indemnitee in respect of any act or omission occurring prior to the time of such
repeal or modification.
(G) Other Indemnification and Prepayment of Expenses.
This Section 4 shall not limit the right of the Corporation, to
the extent and in the manner permitted by law, to
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indemnify and to advance expenses to persons other than Indemnitees when and
as authorized by appropriate corporate action.
ARTICLE VIII
AMENDMENTS
All By-laws of the Corporation shall be subject to alteration or
repeal, and new By-laws not inconsistent with any provision of the
Certificate of Incorporation of the Corporation or any provision of law may
be made, either by the affirmative vote of the holders of record of a
majority of the outstanding stock of the Corporation entitled to vote in
respect thereof, given at an annual meeting or at any special meeting,
provided that notice of the proposed alteration or repeal or of the proposed
new By-laws be included in the notice of such meeting, or by the Board of
Directors at any regular or special meeting.
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EXHIBIT 5.1
[Varlen Corporation Letterhead]
August __, 1997
Varlen Corporation
55 Shuman Boulevard
Post Office Box 3089
Naperville, Illinois 60566-7089
Ladies and Gentlemen:
This opinion is delivered to you in connection with the registration
statement on Form S-3 to be filed with the Securities and Exchange Commission
on the date hereof (the "Registration Statement") relating to the
registration of shares of common stock, $0.10 par value per share (the
"Shares"), issuable upon conversion of the outstanding 6 1/2% Convertible
Subordinated Debentures due 2003 (the "Debentures") of Varlen Corporation
(the "Company"). Issuance of the Shares is contemplated in connection with
the underwritten call of the Debentures for redemption.
I, in my capacity as Vice President, General Counsel and Secretary
of Varlen Corporation, am familiar with the proceedings to date with respect
to the proposed issuance of the Shares, and have examined such records,
documents and matter of law and satisfied myself as to such matters of fact
as I have considered relevant for the purposes of this opinion.
I am of the opinion that:
1. the Company is a corporation validly existing under the laws of the
State of Delaware; and
2. upon completion of the proceedings being taken or contemplated by us to
be taken prior to the issuance of the Shares, the Shares, when issued in the
manner referred to in the Registration Statement, will be validly issued,
fully paid and nonassessable.
I do not find it necessary for the purposes of this opinion, and
accordingly do not purport to cover herein, the application of the securities
or "blue sky" laws of the various states to the sale of the Shares.
This opinion is limited to the specific issues addressed herein, and
no opinion may be inferred or implied beyond that expressly stated herein. I
assume no obligation to revise or supplement this opinion should the present
laws of the States of Illinois or Delaware or the federal law of the United
States be changed by legislative action, judicial decision or otherwise.
<PAGE>
I hereby consent to the filing of this opinion with the Securities
and Exchange Commission as Exhibit 5.1 to the Registration Statement. In
giving this consent, I do not thereby admit that I am in the category of
persons whose consent is required under Section 7 of the Securities Act of
1933, as amended, or the rules and regulations of the Securities and Exchange
Commission.
Very truly yours,
/s/Vicki L. Casmere
---------------------------------
Vicki L. Casmere
Vice President, General Counsel
and Secretary
<PAGE>
EXHIBIT 8.1
August 19, 1997
Varlen Corporation
55 Shuman Boulevard
Post Office Box 3089
Naperville, Illinois 60566-7089
Ladies and Gentlemen:
In connection with the call of all of the outstanding 6 1/2% Convertible
Subordinated Debentures due 2003 (the "Debentures") of Varlen Corporation, as
described in the Registration Statement filed with the Securities and Exchange
Commission under the Securities Act of 1933, as amended, you have requested our
opinion concerning certain United States Federal income tax consequences of the
available alternatives to holders of the Debentures ("Holders") as set forth in
the Registration Statement. We have examined the Registration Statement and
such other documents and such legal authorities as we have deemed relevant for
purposes of expressing the opinions contained herein. Any capitalized term not
defined herein has the meaning given to it in the Registration Statement.
Our opinion is based upon the applicable provisions of the Internal Revenue Code
of 1986, as amended through the date hereof (the "Code"), Treasury regulations
promulgated and proposed thereunder, current positions of the Internal Revenue
Service (the "IRS") contained in published Revenue Rulings and Revenue
Procedures and existing judicial decisions. No tax rulings have been or will be
sought from the IRS with respect to any of the matters discussed herein.
Based on the foregoing, and subject to the discussion set forth under the
caption "Certain United States Federal Income Tax Considerations" in the
Prospectus forming part of the Registration Statement, our opinion as to the
material Federal income tax consequences to Holders of the conversion, sale or
redemption of the Debentures is as follows:
1. Except to the extent of any cash received in lieu of fractional shares and
accrued but unpaid interest not previously included in gross income, no
gain or loss will be recognized by a Holder upon the conversion of
Debentures into Common Stock where such Debentures were not acquired with
market discount and no gain or loss should be recognized by a Holder upon
the conversion of Debentures into Common Stock where such Debentures were
acquired with market discount.
2. Except for fractional shares of Common Stock for which cash is received and
any Common Stock received in respect of accrued but unpaid interest, the
Holder's basis in the Common Stock received on conversion of Debentures
will be the same as the Holder's basis in the Debentures converted at the
time of the conversion, and the holding period for the Common Stock received
on conversion will include the holding period of the Debentures converted
(assuming such Debentures are held as a capital asset at the time of
conversion).
3. A redemption of the Debentures will result in the recognition of gain or
loss to the selling Holder in an amount equal to the difference between
the cash received in exchange for the Debentures and the Holder's adjusted
tax basis in the Debentures (except to the extent such amount is
attributable to accrued but unpaid interest or market discount not
previously recognized by the Holder, which is taxable as ordinary income).
Such gain or loss will be capital gain or loss provided that at the time of
the redemption the Debentures were held as a capital asset.
4. A Holder who or that is a nonresident alien individual, foreign corporation,
foreign partnership, or nonresident fiduciary of a foreign estate or trust
(a "Foreign Holder") generally will not be subject to United States Federal
income tax with respect to gain realized on a redemption of the Debentures
(except with respect to any amount representing interest or accrued market
discount), unless (i) the gain is effectively connected with such Foreign
Holder's conduct of a trade or business within the United States, or (ii) in
the case of certain Foreign Holders who are nonresident alien individuals
and hold such Debentures as a capital asset, the Foreign Holder is present
in the United States for 183 or more days in the taxable year of the
redemption, or (iii) the Foreign Holder is subject to tax pursuant to the
provisions of the Code applicable to certain United States expatriates.
<PAGE>
5. The discussion set forth under the caption "Certain United States Federal
Income Tax Considerations" in the Prospectus forming part of the
Registration Statement is based upon reasonable interpretations of existing
law.
There can be no assurance that these views will not be successfully challenged
by the IRS or significantly altered by new legislation, changes in IRS positions
or judicial decisions, any of which challenges or alterations may be applied
retroactively with respect to completed transactions.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and the use of our name under the caption "Legal Matters"
in the Prospectus forming part of the Registration Statement.
Very truly yours,
/s/ Kirkland & Ellis
Kirkland & Ellis
<PAGE>
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement
of Varlen Corporation on Form S-3 of our reports dated March 3, 1997 appearing
in and incorporated by reference in the Annual Report on Form 10-K of Varlen
Corporation for the year ended January 31, 1997 and to the reference to us under
the heading "Experts" in the Prospectus, which is part of this Registration
Statement.
/s/ DELOITTE & TOUCHE LLP
- -----------------------------
Chicago, Illinois
August 19, 1997
<PAGE>
VARLEN CORPORATION
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned directors
of Varlen Corporation (the "Company") does hereby irrevocably constitute and
appoint Richard A. Nunemaker, his attorney-in-fact and agent to sign and
execute in his name and on his behalf in any and all capacities in which he
may be required to sign, the Registration Statement of the Company on Form
S-3 under the Securities Act of 1933 with respect to the Company's Common
Stock, par value $0.10 per share issuable upon conversion of the Company's
6 1/2% Convertible Subordinated Debentures due 2003, to be filed with the
Securities and Exchange Commission, and any amendments, (including
post-effective amendments) revisions or supplements thereto, including any
exhibits, schedules and documents in connection therewith and any other
instruments necessary or incidental thereto, all as fully and to the same
effect as he might or could do in person if present and acting, and does
hereby ratify and confirm all that his attorney-in-fact shall do or cause to
be done incident to or in connection with the foregoing or by virtue of the
foregoing.
IN WITNESS WHEREOF, each of the undersigned has duly executed this Power
of Attorney this 12th day of August, 1997.
- --------------------------------- -----------------------------
Ernest H. Lorch, Greg A. Rosenbaum,
Director Director
- --------------------------------- -----------------------------
Rudolph Grua, L. William Miles,
Director Director
- --------------------------------- -----------------------------
Theodore A. Ruppert, Joseph J. Ross,
Director Director
<PAGE>
VARLEN CORPORATION
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned directors
of Varlen Corporation (the "Company") does hereby irrevocably constitute and
appoint Richard A. Nunemaker, his attorney-in-fact and agent to sign and
execute in his name and on his behalf in any and all capacities in which he
may be required to sign, the Registration Statement of the Company on Form
S-3 under the Securities Act of 1933 with respect to the Company's Common
Stock, par value $0.10 per share issuable upon conversion of the Company's
6 1/2% Convertible Subordinated Debentures due 2003, to be filed with the
Securities and Exchange Commission, and any amendments, (including
post-effective amendments) revisions or supplements thereto, including any
exhibits, schedules and documents in connection therewith and any other
instruments necessary or incidental thereto, all as fully and to the same
effect as he might or could do in person if present and acting, and does
hereby ratify and confirm all that his attorney-in-fact shall do or cause to
be done incident to or in connection with the foregoing or by virtue of the
foregoing.
IN WITNESS WHEREOF, each of the undersigned has duly executed this Power
of Attorney this 12th day of August, 1997.
- --------------------------------- -----------------------------
Ernest H. Lorch, Greg A. Rosenbaum,
Director Director
- --------------------------------- -----------------------------
Rudolph Grua, L. William Miles,
Director Director
/s/ Theodore A. Ruppert
- --------------------------------- -----------------------------
Theodore A. Ruppert, Joseph J. Ross,
Director Director
<PAGE>
VARLEN CORPORATION
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned directors
of Varlen Corporation (the "Company") does hereby irrevocably constitute and
appoint Richard A. Nunemaker, his attorney-in-fact and agent to sign and
execute in his name and on his behalf in any and all capacities in which he
may be required to sign, the Registration Statement of the Company on Form
S-3 under the Securities Act of 1933 with respect to the Company's Common
Stock, par value $0.10 per share issuable upon conversion of the Company's
6 1/2% Convertible Subordinated Debentures due 2003, to be filed with the
Securities and Exchange Commission, and any amendments, (including
post-effective amendments) revisions or supplements thereto, including any
exhibits, schedules and documents in connection therewith and any other
instruments necessary or incidental thereto, all as fully and to the same
effect as he might or could do in person if present and acting, and does
hereby ratify and confirm all that his attorney-in-fact shall do or cause to
be done incident to or in connection with the foregoing or by virtue of the
foregoing.
IN WITNESS WHEREOF, each of the undersigned has duly executed this Power
of Attorney this 12th day of August, 1997.
- --------------------------------- -----------------------------
Ernest H. Lorch, Greg A. Rosenbaum,
Director Director
- --------------------------------- -----------------------------
Rudolph Grua, L. William Miles,
Director Director
/s/ Joseph J. Ross
- --------------------------------- -----------------------------
Theodore A. Ruppert, Joseph J. Ross,
Director Director
<PAGE>
VARLEN CORPORATION
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned directors
of Varlen Corporation (the "Company") does hereby irrevocably constitute and
appoint Richard A. Nunemaker, his attorney-in-fact and agent to sign and
execute in his name and on his behalf in any and all capacities in which he
may be required to sign, the Registration Statement of the Company on Form
S-3 under the Securities Act of 1933 with respect to the Company's Common
Stock, par value $0.10 per share issuable upon conversion of the Company's
6 1/2% Convertible Subordinated Debentures due 2003, to be filed with the
Securities and Exchange Commission, and any amendments, (including
post-effective amendments) revisions or supplements thereto, including any
exhibits, schedules and documents in connection therewith and any other
instruments necessary or incidental thereto, all as fully and to the same
effect as he might or could do in person if present and acting, and does
hereby ratify and confirm all that his attorney-in-fact shall do or cause to
be done incident to or in connection with the foregoing or by virtue of the
foregoing.
IN WITNESS WHEREOF, each of the undersigned has duly executed this Power
of Attorney this 12th day of August, 1997.
- --------------------------------- -----------------------------
Ernest H. Lorch, Greg A. Rosenbaum,
Director Director
/s/ Rudolph Grua
- --------------------------------- -----------------------------
Rudolph Grua, L. William Miles,
Director Director
- --------------------------------- -----------------------------
Theodore A. Ruppert, Joseph J. Ross,
Director Director
<PAGE>
VARLEN CORPORATION
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned directors
of Varlen Corporation (the "Company") does hereby irrevocably constitute and
appoint Richard A. Nunemaker, his attorney-in-fact and agent to sign and
execute in his name and on his behalf in any and all capacities in which he
may be required to sign, the Registration Statement of the Company on Form
S-3 under the Securities Act of 1933 with respect to the Company's Common
Stock, par value $0.10 per share issuable upon conversion of the Company's
6 1/2% Convertible Subordinated Debentures due 2003, to be filed with the
Securities and Exchange Commission, and any amendments, (including
post-effective amendments) revisions or supplements thereto, including any
exhibits, schedules and documents in connection therewith and any other
instruments necessary or incidental thereto, all as fully and to the same
effect as he might or could do in person if present and acting, and does
hereby ratify and confirm all that his attorney-in-fact shall do or cause to
be done incident to or in connection with the foregoing or by virtue of the
foregoing.
IN WITNESS WHEREOF, each of the undersigned has duly executed this Power
of Attorney this 12th day of August, 1997.
/s/ Greg A. Rosenbaum
- --------------------------------- -----------------------------
Ernest H. Lorch, Greg A. Rosenbaum,
Director Director
- --------------------------------- -----------------------------
Rudolph Grua, L. William Miles,
Director Director
- --------------------------------- -----------------------------
Theodore A. Ruppert, Joseph J. Ross,
Director Director
<PAGE>
VARLEN CORPORATION
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned directors
of Varlen Corporation (the "Company") does hereby irrevocably constitute and
appoint Richard A. Nunemaker, his attorney-in-fact and agent to sign and
execute in his name and on his behalf in any and all capacities in which he
may be required to sign, the Registration Statement of the Company on Form
S-3 under the Securities Act of 1933 with respect to the Company's Common
Stock, par value $0.10 per share issuable upon conversion of the Company's
6 1/2% Convertible Subordinated Debentures due 2003, to be filed with the
Securities and Exchange Commission, and any amendments, (including
post-effective amendments) revisions or supplements thereto, including any
exhibits, schedules and documents in connection therewith and any other
instruments necessary or incidental thereto, all as fully and to the same
effect as he might or could do in person if present and acting, and does
hereby ratify and confirm all that his attorney-in-fact shall do or cause to
be done incident to or in connection with the foregoing or by virtue of the
foregoing.
IN WITNESS WHEREOF, each of the undersigned has duly executed this Power
of Attorney this 12th day of August, 1997.
- --------------------------------- -----------------------------
Ernest H. Lorch, Greg A. Rosenbaum,
Director Director
/s/ L. William Miles
- --------------------------------- -----------------------------
Rudolph Grua, L. William Miles,
Director Director
- --------------------------------- -----------------------------
Theodore A. Ruppert, Joseph J. Ross,
Director Director
<PAGE>
VARLEN CORPORATION
NOTICE OF REDEMPTION
6 1/2% CONVERTIBLE SUBORDINATED DEBENTURES DUE 2003
(CONVERTIBLE INTO SHARES OF COMMON STOCK)
------------------------
The Redemption Date is September 4, 1997
------------------------
NOTICE IS HEREBY GIVEN that, pursuant to the provisions of the Indenture,
dated May 27, 1993, between Varlen Corporation (the "Company") and Harris Trust
and Savings Bank (the "Indenture"), establishing and designating the 6 1/2%
Convertible Subordinated Debentures due 2003 (the "Debentures") of the Company,
the Company has called all outstanding Debentures for redemption for cash on
September 4, 1997 (the "Redemption Date"), at a redemption price of $1,039.00
per $1,000 principal amount of Debentures, plus accrued and unpaid interest of
$16.79 to, but not including, the Redemption Date for an aggregate redemption
price of $1,055.79 per $1,000 principal amount of Debentures (the "Redemption
Price"). Payment of the Redemption Price will be made, without interest and
subject to provision for transfer taxes, on or after the Redemption Date upon
presentation and surrender of the Certificates evidencing Debentures at the
offices of Harris Trust and Savings Bank (the "Trustee") as set forth below.
As of the close of business on the Redemption Date, regardless of whether
the Certificates evidencing any Debentures shall have been surrendered, all such
Debentures shall be deemed no longer to be outstanding, interest with respect to
such Debentures shall cease to accrue and all rights of the holder with respect
to such Debentures shall forthwith cease and terminate, except for the right to
receive the Redemption Price for each such Debenture in cash, without interest
and subject to provision for transfer taxes, upon surrender of the Certificate
therefor. For purposes hereof, close of business shall be 5:00 p.m., New York
City time. SINCE IT IS THE TIME OF RECEIPT, RATHER THAN THE TIME OF MAILING,
THAT DETERMINES WHETHER DEBENTURES HAVE BEEN PROPERLY SURRENDERED FOR CONVERSION
AS DESCRIBED BELOW, HOLDERS WISHING TO CONVERT THEIR DEBENTURES SHOULD ALLOW
SUFFICIENT TIME FOR DEBENTURES SENT BY MAIL TO BE RECEIVED PRIOR TO THE CLOSE OF
BUSINESS ON SEPTEMBER 3, 1997 (THE "CONVERSION EXPIRATION DATE").
Debentures are convertible, at the option of the holder thereof, into shares
of the Company's Common Stock, $0.10 par value per share (the "Common Stock").
ALTERNATIVES AVAILABLE TO HOLDERS OF DEBENTURES
Pursuant to the terms of the Indenture, the Company has called all
outstanding Debentures for redemption for cash on the Redemption Date. Holders
of Debentures will be entitled to receive a redemption price of $1,039.00 per
$1,000 principal amount of Debentures, plus accrued and unpaid interest of
$16.79 to, but not including, the Redemption Date, for an aggregate Redemption
Price of $1,055.79 per $1,000 principal amount of Debentures.
As more fully described below, holders of Debentures have as alternatives,
in addition to the right to sell their Debentures through usual broker
facilities, (i) the right to convert their Debentures into Common Stock and (ii)
the right to have their Debentures redeemed for cash on the Redemption Date for
the Redemption Price. The availability of the first alternative described above
will terminate at the close of business on the Conversion Expiration Date. Any
Debentures not duly surrendered for conversion prior to the close of business on
the Conversion Expiration Date will be redeemed on the Redemption Date.
SO LONG AS THE MARKET PRICE OF A SHARE OF COMMON STOCK IS MORE THAN $23.85
PER SHARE, THE SHARES OF COMMON STOCK AND CASH IN LIEU OF FRACTIONAL SHARES
WHICH HOLDERS WOULD RECEIVE UPON CONVERSION OF THEIR DEBENTURES WOULD HAVE A
GREATER MARKET VALUE THAN THE CASH THAT SUCH HOLDERS WOULD RECEIVE UPON
REDEMPTION OF SUCH DEBENTURES. ON THE BASIS OF THE LAST REPORTED SALE PRICE OF
THE COMMON STOCK ON THE NASDAQ STOCK MARKET (THE "NASDAQ") ON AUGUST 18, 1997 OF
$32.375 PER SHARE, THE 44.2688 SHARES OF COMMON STOCK INTO WHICH EACH $1,000
PRINCIPAL AMOUNT OF OUTSTANDING DEBENTURES ARE CONVERTIBLE HAD A MARKET VALUE
EQUIVALENT TO APPROXIMATELY $1,433.20. IT SHOULD BE NOTED, HOWEVER, THAT THE
TRADING PRICE OF
<PAGE>
THE COMMON STOCK RECEIVED UPON CONVERSION WILL FLUCTUATE IN THE MARKET, AND THE
HOLDER MAY INCUR VARIOUS EXPENSES OF SALE IF SUCH COMMON STOCK IS SOLD IN THE
MARKET. IN LIGHT OF THE FOREGOING, HOLDERS OF DEBENTURES ARE URGED TO OBTAIN
CURRENT MARKET QUOTATIONS FOR THE COMMON STOCK BEFORE MAKING THEIR ELECTIONS.
ALTERNATIVES AVAILABLE TO HOLDERS OF DEBENTURES
Holders of Debentures have the following alternatives, which should be
carefully considered:
1. CONVERSION OF DEBENTURES INTO COMMON STOCK. Until the close of business
on September 3, 1997 at the offices listed below, Debentures are convertible
pursuant to the Indenture, at the option of the holder thereof, into shares of
Common Stock at a conversion price of $22.5893 per share of Common Stock, into
44.2688 shares of Common Stock for each $1,000 principal amount of Debentures.
On the basis of the last reported sale price of the Common Stock on the NASDAQ
on August 18, 1997 of $32.375 per share, the 44.2688 shares of Common Stock into
which each $1,000 principal amount of outstanding Debentures are convertible had
a market value equivalent to approximately $1,433.20. Any conversion of
Debentures will be effective immediately prior to the close of business on the
date on which such shares are duly surrendered as described below. Thereafter,
the person or persons entitled to receive the Common Stock issuable upon such
conversion shall be treated for all purposes as the record holder or holders of
such shares of Common Stock (including for purposes of determining holders
entitled to receive payments of dividends and to vote on matters submitted to a
vote of the holders of Common Stock). No payment or adjustment will be made for
interest accrued on Debentures surrendered for conversion. Accordingly, any
holder surrendering Debentures for conversion will not receive any interest with
respect to such Debentures accrued since June 1, 1997.
To convert any Debentures into Common Stock, the holder thereof shall
surrender such Debentures prior to the close of business on the Conversion
Expiration Date to HARRIS TRUST AND SAVINGS BANK, TRUSTEE, 311 WEST MONROE
STREET, CHICAGO, ILLINOIS 60606, ATTENTION: DAN DONOVAN. In order to duly
surrender such Debentures for conversion, the holder must also give written
notice that such holder elects to convert such Debentures into Common Stock and
that portion of such Debentures that such holder wishes to convert. Each
Debenture surrendered for conversion must be duly assigned or endorsed for
transfer. Notice of conversion given to the Trustee (including the assignment
required as described in the preceding sentence) may be provided by surrendering
Debentures accompanied by a duly executed Letter of Transmittal (the "Letter of
Transmittal") that accompanies this notice. In addition, a holder may surrender
Debentures duly assigned or endorsed for transfer to the Trustee at the address
set forth above, accompanied by a written notice of conversion. Since it is the
time of receipt, rather than the time of mailing, that determines whether
Debentures have been properly surrendered for conversion, holders wishing to
convert their Debentures should allow sufficient time for Debentures sent by
mail to be received prior to the close of business on the Conversion Expiration
Date.
As promptly as practicable after the surrender of Debentures in the proper
manner, the Company will issue and will deliver to the Trustee, a certificate or
certificates for the number of whole shares of Common Stock to which such holder
is entitled upon conversion together with cash in lieu of any fractional shares.
If only a portion of Debentures are surrendered for conversion, the Company
shall issue and cause the Trustee to deliver to such holder or such holder's
designee a new Debenture of authorized denomination equal to the unconverted
portion of the principal amount of such Debenture, provided that, after the
Conversion Expiration Date, no such Debenture will be issued and all such
Debentures shall be redeemed as described herein.
No fractional shares of Common Stock will be issued upon conversion of any
Debentures. In lieu of any fraction of a share of Common Stock which would
otherwise be issuable in respect of the aggregate number of Debentures
surrendered for conversion at one time by the same holder, such holder will be
paid an amount in cash equal to the same fraction of the Closing Price (as
hereinafter defined) of Common Stock on the close of business on the day of
conversion. The "Closing Price" for any trading date means the last reported
sales price regular way or, in the case no such reported sales takes place on
such day, the average of the reported closing bid and asked prices regular way,
in either case on the NASDAQ.
2
<PAGE>
2. REDEMPTION OF DEBENTURES ON THE REDEMPTION DATE. Any Debentures which
have not been converted into Common Stock by a holder on or prior to the close
of business on the Conversion Expiration Date, will be redeemed on the
Redemption Date for cash in an amount equal to the redemption price of $1,039.00
per $1,000 principal amount of Debentures, plus accrued and unpaid interest of
$16.79 to, but not including, the Redemption Date, for an aggregate Redemption
Price of $1,055.79 per $1,000 principal amount of Debentures. To receive the
Redemption Price for any such Debentures the holder thereof must surrender such
Debentures to the Trustee at the address set forth above. On and after the
Redemption Date, interest will cease to accrue and holders of Debentures will
not have any rights as such holders other than the right to receive $1,055.79
per $1,000 principal amount of Debentures upon surrender of their Debentures.
------------------------
The Company will pay any and all stock transfer and documentary stamp taxes
that may be payable in respect of any issuance or delivery of shares of Common
Stock on account of the conversion of any Debentures. The Company will not,
however, pay any such tax which may be payable in respect of any transfer
involved in the issuance and delivery of shares of Common Stock or Debentures in
a name other than that in which Debentures with respect to which such shares are
issued were registered, or any payment to any person other than the registered
holder thereof, and will not make any such issuance or payment unless and until
the person otherwise entitled to such issuance or payment has paid to the
Company or the Trustee on behalf of the Company the amount of any such tax or
has presented evidence to establish, to the satisfaction of the Company, that
such tax has been paid or is not payable.
CERTAIN UNITED STATES FEDERAL TAX CONSIDERATIONS
The following discussion is a general summary of certain anticipated United
States Federal income tax consequences of the conversion or redemption of
Debentures as described herein. This discussion is based on currently existing
provisions of the Internal Revenue Code of 1986, as amended (the "Code"),
existing and proposed Treasury Regulations thereunder and current administrative
rulings and court decisions, all of which are subject to change. Any such
change, which may or may not be retroactive, could alter the tax consequences to
holders of Debentures as described herein. As used herein, the term "United
States Holder" means the beneficial owner of a Debenture that for United States
Federal income tax purposes is (i) a citizen or resident of the United States,
(ii) treated as a domestic corporation or domestic partnership, or (iii) an
estate or trust that is subject to United States Federal income taxation on a
net income basis in respect of Debentures, and the term "Non-United States
Holder" means the beneficial owner of a Debenture who or that is not a United
States Holder.
Holders of Debentures should be aware that this discussion does not deal
with all United States Federal income tax considerations that may be relevant to
particular holders in light of their particular circumstances, such as holders
who are dealers in securities, banks, insurance companies or tax-exempt
organizations. In addition, the following discussion does not address the tax
consequences of any of the available alternatives to holders of Debentures under
foreign, state or local tax laws or the tax consequences of transactions (if
any) effectuated prior to or after the consummation of any such alternative
(whether or not such transactions are undertaken in connection with such
alternative). ACCORDINGLY, HOLDERS OF DEBENTURES ARE URGED TO CONSULT THEIR OWN
TAX ADVISORS CONCERNING THE FEDERAL, STATE, LOCAL AND FOREIGN TAX CONSEQUENCES
OF THE ALTERNATIVES AVAILABLE TO THEM.
CONVERSION
As a general rule, no gain or loss will be recognized by a holder upon the
conversion of Debentures into Common Stock (except to the extent of any cash
received in lieu of fractional shares of Common Stock). A holder must also
recognize interest income to the extent of any accrued but unpaid interest on
Debentures not previously recognized by the holder at the time of the
conversion. Except for fractional shares of Common Stock for which cash is
received and any Common Stock received that is attributable to previously
unrecognized accrued but unpaid interest, a holder's adjusted tax basis in the
Common Stock
3
<PAGE>
received on conversion of Debentures will be the same as the holder's adjusted
tax basis in the Debentures converted at the time of the conversion, and the
holding period for the Common Stock received on conversion will include the
holding period of the Debentures converted (assuming such Debentures are held as
a capital asset at the time of conversion). A holder's adjusted tax basis in a
Debenture will equal the cost of such Debenture to the holder, increased by any
market discount previously included in income by the holder or reduced by any
bond premium amortization previously deducted by the holder with respect to such
Debenture. Holders of two or more blocks of Debentures with different holding
periods should consult with their tax advisors on how tax bases and holding
periods should be allocated among shares of Common Stock received in the
conversion.
Although it is not free from doubt until confirmed by the issuance of
Treasury Regulations, any accrued market discount not previously taken into
income prior to the conversion of a Debenture in shares of Common Stock should
carry over to the Common Stock received on conversion and be treated as ordinary
income upon a subsequent disposition of such Common Stock (as opposed to being
treated as ordinary income upon the conversion), to the extent of any gain
recognized on such disposition. "Market discount" is defined generally as the
excess, if any, of (i) the principal amount of a Debenture over (ii) the tax
basis of such Debenture in the hands of the holder immediately after its
acquisition by such holder.
REDEMPTION
The redemption of Debentures will result in the recognition of gain or loss
to the selling holder in an amount equal to the difference between the cash
received upon redemption of such Debentures (except to the extent such amount is
attributable to accrued but unpaid interest or market discount not previously
recognized by the holder, which is taxable as ordinary income) and the holder's
adjusted tax basis in such Debentures. Such gain or loss will be capital gain or
loss provided that at the time of the redemption such Debentures were held as a
capital asset. A holder's adjusted tax basis in a Debenture will be determined
in the same manner as described above under the heading "Conversion."
A Non-United States Holder of a Debenture will generally not be subject to
United States Federal income tax or withholding tax on any gain realized on the
redemption of such Debenture (including the receipt of cash in lieu of
fractional shares upon conversion of a Debenture into Common Stock but, in
certain cases, not including any amount representing interest or accrued market
discount) unless (1) the gain is effectively connected with a United States
trade or business of the Non-United States Holder, (2) in the case of a
Non-United States Holder who is an individual, such holder is present in the
United States for a period or periods aggregating 183 days or more during the
taxable year of the disposition and certain other requirements are met, or (3)
the holder is subject to tax pursuant to the provisions of the Code applicable
to certain United States expatriates.
CAPITAL GAINS RATES
The maximum United States Federal income tax rate applied to capital gains
realized on a redemption of a Debenture held by an individual after July 28,
1997 will generally be (i) 20% if such Debenture has been held by such
individual for more than 18 months as of the date of the redemption, (ii) 28% if
such Debenture has been held by such individual for more than 12 months but not
more than 18 months as of the date of the redemption, and (iii) the rate that
applies to ordinary income (I.E., a graduated rate up to a maximum of 39.6%) if
such Debenture has been held by such individual for no more than 12 months as of
the date of the redemption.
BACKUP WITHHOLDING ON PROCEEDS FROM REDEMPTION
The redemption of Debentures by holders will ordinarily not be subject to
backup withholding of United States Federal income taxes. However, the Trustee
will be required to withhold tax at the rate of 31% from redemption proceeds
paid to United States Holders who (i) have failed to furnish their taxpayer
identification number ("TIN") to the Trustee; (ii) have, according to the IRS,
furnished an incorrect TIN to the Trustee, (iii) have, according to the IRS,
underreported interest, dividends or patronage dividend
4
<PAGE>
income in the past; or (iv) have failed to satisfy the payee certification
requirements of Section 3406 of the Code. Each United States Holder who sells
Debentures, or whose Debentures are redeemed, will be required to provide and
certify his or her correct TIN and to certify that he or she is an exempt
recipient. A Non-United States Holder will generally not be subject to backup
withholding of United States Federal income taxes, but may be subject to
withholding tax at the rate of 30% (or, if applicable, a lower treaty rate) from
redemption proceeds attributable to accrued interest or market discount on such
Debentures.
THE FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL
INFORMATION ONLY. EACH HOLDER IS URGED TO CONSULT SUCH HOLDER'S OWN TAX ADVISOR
TO DETERMINE THE PARTICULAR TAX CONSEQUENCES TO SUCH HOLDER (INCLUDING THE
APPLICABILITY AND EFFECT OF THE CONSTRUCTIVE OWNERSHIP RULES AND STATE, LOCAL
AND FOREIGN TAX LAWS) OF THE CONVERSION OR REDEMPTION OF DEBENTURES.
AVAILABLE INFORMATION
Additional information regarding the Company is included in the Company's
Annual Report on Form 10-K for the year ended January 31, 1997, and the
Company's Quarterly Report on Form 10-Q for the quarter ended May 3, 1997 each
of which have been filed by the Company with the Securities and Exchange
Commission. Copies of such documents (without exhibits) will be provided without
charge to each person to whom this Notice of Redemption is delivered, upon the
written or oral request of such person. Requests for such documents should be
directed to Varlen Corporation, 55 Shuman Boulevard, Post Office Box 3089,
Naperville, Illinois 60566-7089, Attention: Richard A. Nunemaker (Telephone
Number: (630) 420-0400).
GENERAL
A copy of this Notice of Redemption, a form of Letter of Transmittal to
accompany Debentures surrendered for conversion and a Prospectus relating to the
Common Stock issuable upon conversion of Debentures have been sent to all
holders of record of Debentures as of August 12, 1997. Additional copies of such
documents, including such Prospectus, may be obtained from D.F. King & Co., Inc.
at 77 Water Street, New York, New York 10005 or by telephone at (800) 755-7250.
August 20, 1997
5
<PAGE>
- --------------------------------------------------------------------------------
If you wish to CONVERT your Varlen Corporation 6 1/2% Convertible Subordinated
Debentures due 2003, into Varlen Corporation Common Stock ("Common Stock"),
your Debenture certificates (the "Certificates") and related Letter of
Transmittal must be RECEIVED BY Harris Trust and Savings Bank, the Trustee,
at the address set forth below prior to the close of business on September
3, 1997. See instructions herein.
August 20, 1997
LETTER OF TRANSMITTAL
VARLEN CORPORATION
(To accompany Certificates for 6 1/2% Convertible Subordinated Debentures due
2003
surrendered for conversion into shares of Common Stock of
Varlen Corporation or surrendered for redemption as described below.)
If you wish to convert your Debenture(s) into shares of Common Stock, then
the Certificate(s) for Debenture(s) and related Letter of Transmittal must be
RECEIVED by Harris Trust and Savings Bank, the Trustee, at the address set forth
below prior to the close of business on SEPTEMBER 3, 1997. See Instruction 2
below. If you wish to surrender your Debenture(s) for redemption, such
Debenture(s) must be surrendered to the Trustee at the address set forth below.
See Instruction 3 below.
TO: HARRIS TRUST AND SAVINGS BANK, TRUSTEE
311 WEST MONROE STREET
CHICAGO, ILLINOIS 60606
ATTENTION: DAN DONOVAN
(312) 461-2908
Note: The close of business is 5:00 p.m., New York City time.
The Information Agent is:
D. F. King & Co., Inc.
77 Water Street
New York, New York 10005
FOR INFORMATION, CALL: (800) 755-7250
<PAGE>
Ladies and Gentlemen:
Reference is made to the Notice of Redemption dated August 20, 1997, receipt
of which is hereby acknowledged, with respect to the call for redemption of all
of 6 1/2% Convertible Subordinated Debentures due 2003 of Varlen Corporation
(the "Company"). All Debentures have been called for redemption for cash on
September 4, 1997 (the "Redemption Date") in an amount equal to $1,039.00 per
$1,000 principal amount of Debentures, plus accrued and unpaid interest to, but
not including, the Redemption Date, for an aggregate redemption price of
$1,055.79 per $1,000 principal amount of Debentures (the "Redemption Price").
The Debentures are subject to the terms of the Indenture, dated May 27, 1993,
between Harris Trust and Savings Bank and the Company. Surrendered herewith are
Certificate(s) representing Debenture(s) numbered as listed below:
PLEASE FOLLOW CAREFULLY THE INSTRUCTIONS HEREIN
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------
ITEM A.
DESCRIPTION OF DEBENTURES PRESENTED
- -------------------------------------------------------------------------------------------
NAME AND ADDRESS OF REGISTERED HOLDER
(IF THE NAME AND ADDRESS SHOWN ARE NOT CERTIFICATES TRANSMITTED
CURRENT, (PLEASE FILL IN NUMBERS AND AMOUNTS AND ATTACH
PLEASE INDICATE ANY CHANGES NECESSARY.) SIGNED LIST IF SPACE BELOW IS INADEQUATE.)
<S> <C> <C>
- -------------------------------------------------------------------------------------------
CERTIFICATE NUMBER(S) PRINCIPAL AMOUNT
------------------------------------------------
------------------------------------------------
------------------------------------------------
------------------------------------------------
------------------------------------------------
------------------------------------------------
------------------------------------------------
------------------------------------------------
------------------------------------------------
------------------------------------------------
------------------------------------------------
TOTAL
PRINCIPAL
AMOUNT $
- -------------------------------------------------------------------------------------------
</TABLE>
2
<PAGE>
ITEM B.
ELECTION BY HOLDER
THE DEBENTURE(S) REPRESENTED BY THE CERTIFICATE(S) LISTED ABOVE
ARE TRANSMITTED HEREWITH FOR THE ACTION INDICATED BELOW:
Indicate Choice by Checking Only One Box:
/ / ALTERNATIVE NO. 1: Conversion into Common Stock, $0.10 par value per
share, of the Company (the "Common Stock"), at a conversion price of
$22.5893 per share of Common Stock, into 44.2688 shares of Common Stock
for each $1,000 principal amount of Debentures, with cash in lieu of any
fractional shares. (See Instruction 2 below.)
/ / ALTERNATIVE NO. 2: Redemption at the price of $1,039.00 per $1,000
principal amount of Debentures, plus accrued and unpaid interest of
$16.79 to, but not including, the Redemption Date, for an aggregate
redemption price of $1,055.79 per $1,000 principal amount of Debentures
surrendered hereby. (See Instruction 3 below.)
SO LONG AS THE MARKET PRICE OF A SHARE OF COMMON STOCK IS MORE THAN $23.85 PER
SHARE, THE SHARES OF COMMON STOCK AND CASH IN LIEU OF FRACTIONAL SHARES WHICH
HOLDERS WOULD RECEIVE UPON CONVERSION OF THEIR DEBENTURE(S) WOULD HAVE A
GREATER MARKET VALUE THAN THE CASH THAT SUCH HOLDERS WOULD RECEIVE UPON
REDEMPTION OF SUCH DEBENTURES. ON THE BASIS OF THE LAST REPORTED SALE PRICE OF
THE COMMON STOCK ON THE NASDAQ STOCK MARKET ON AUGUST 18, 1997 OF $32.375 PER
SHARE, THE 44.2688 SHARES OF COMMON STOCK INTO WHICH EACH $1,000 PRINCIPAL
AMOUNT OF OUSTANDING DEBENTURES ARE CONVERTIBLE HAD A VALUE EQUIVALENT TO
APPROXIMATELY $1,433.20. IT SHOULD BE NOTED, HOWEVER, THAT THE TRADING PRICE
OF THE COMMON STOCK RECEIVED UPON CONVERSION WILL FLUCTUATE IN THE MARKET, AND
THE HOLDER MAY INCUR VARIOUS EXPENSES OF SALE IF SUCH COMMON STOCK IS SOLD IN
THE MARKET. IN LIGHT OF THE FOREGOING, HOLDERS OF DEBENTURE(S) ARE URGED TO
OBTAIN CURRENT MARKET QUOTATIONS FOR THE COMMON STOCK BEFORE MAKING THEIR
ELECTIONS.
------------------------
IF YOU WISH TO CONVERT YOUR DEBENTURE(S), your Certificate(s) together with
this properly executed Letter of Transmittal must be received as described
herein no later than the close of business on September 3, 1997.
IF NO BOX IS CHECKED, the delivery of Certificates for Debentures together
with this properly executed Letter of Transmittal prior to the close of
business on September 3, 1997, to the Trustee at the address set forth above
will be treated as an instruction to convert such Debentures into shares of
Common Stock as described in Alternative No. 1 above.
DEBENTURES RECEIVED AFTER THE CLOSE OF BUSINESS ON SEPTEMBER 3, 1997 will be
redeemed in cash for the Redemption Price (which includes accrued and unpaid
interest to, but not including the, Redemption Date) regardless of which or
whether any choice is indicated.
3
<PAGE>
ITEM C.
SPECIAL ISSUANCE AND/OR PAYMENT INSTRUCTIONS
To be completed ONLY if Common Stock certificate(s) and/or check(s) are
to be issued in a name other than as indicated in Item A above. In addition,
if Common Stock certificate(s) and/or check(s) are to be issued in a name
other than as indicated in Item A above, the Certificate(s) for Debenture(s)
surrendered must be accompanied by instruments of transfer, in form
satisfactory to the Company, duly executed by the registered holder or his
duly authorized attorney. See Instructions 4 and 5 below. (Unless otherwise
indicated in Item D, Common Stock certificate(s) and/or check(s) will be
mailed to the address indicated in this Item C.)
Issue to:
Name _______________________________________________________________________
Type or Print
Address ____________________________________________________________________
____________________________________________________________________________
Zip Code
__________________________________________________________________________
Social Security Number or Employer I.D. Number
ITEM D.
SPECIAL MAILING INSTRUCTIONS
To be completed ONLY if Common Stock certificate(s) and/or check(s) are
to be mailed to an address other than as indicated in Item A or Item C. See
Instructions 1, 2, and 3 below.
Mail to:
Name _______________________________________________________________________
Type or Print
Address ____________________________________________________________________
____________________________________________________________________________
Zip Code
4
<PAGE>
ITEM E.
REQUIRED SIGNATURES
The signature(s) on this Letter of Transmittal must correspond exactly
with the name(s) of the: (1) registered owner(s) of the Debenture
Certificate(s) transmitted herewith or (2) person(s) to whom each such
Certificate(s) have been properly assigned and transferred, in which case
evidence of transfer must accompany this Letter of Transmittal. If signature
is by a trustee, executor, administrator, guardian, attorney-in-fact, an
officer of a corporation or other persons acting in a fiduciary or
representative capacity, please so indicate and submit proper supporting
evidence. See Instructions 1, 4, 5 and 6 below.
Dated: _____________________________________________________________________
Signature: _________________________________________________________________
Telephone: ( ) __________________________________________________________
Social Security Number or
Employer I.D. Number: ____________________________________________________
ITEM F.
SIGNATURE GUARANTEE
(IF APPLICABLE)
A signature guarantee MUST be provided if Common Stock certificate(s)
and/or check(s) are to be delivered, or to be issued, in a name other than
that of the registered owner of the Debenture(s). See Instructions 4 and 5
below.
Dated: _____________________________________________________________________
Name of Firm: ______________________________________________________________
Address of Firm: ___________________________________________________________
By: ________________________________________________________________________
(--
PLEASE
SIGN
HERE
5
<PAGE>
<TABLE>
<C> <S> <C>
- --------------------------------------------------------------------------------------------------------------
ITEM G.
IMPORTANT TAX INFORMATION
- --------------------------------------------------------------------------------------------------------------
Complete and Sign Substitute Form W-9 in addition to the Signature(s) required in Item E.
(See Instruction 10.)
PAYOR'S NAME: VARLEN CORPORATION
- --------------------------------------------------------------------------------------------------------------
Name as shown on account (If joint account, list first and circle name of the person or entity whose number
you enter in Part 1 below).
- --------------------------------------------------------------------------------------------------------------
Address (If address is not completed, signature below will constitute a verification that the above address
is correct.)
- --------------------------------------------------------------------------------------------------------------
City, State and ZIP Code
- --------------------------------------------------------------------------------------------------------------
SUBSTITUTE Part 1: PLEASE PROVIDE YOUR TIN
FORM W-9 IN THE BOX AT RIGHT AND CERTIFY
BY SIGNING AND DATING BELOW
---------------------------------
Social Security Number
OR
Employer Identification Number
--------------------------------------------------------------------
Payor's Request for Taxpayer Part 2: Awaiting TIN / /
Identification Number (TIN)
- --------------------------------------------------------------------------------------------------------------
CERTIFICATION -- Under penalties of perjury, I certify that:
(1) The number shown on this form is my correct Taxpayer Identification Number (or I am waiting for a number
to be issued to me), and
(2) I am not subject to backup withholding under the provisions of Section 3406 of the Internal Revenue Code
because: (a) I am exempt from backup withholding, (b) I have not been notified by the Internal Revenue
Service ("IRS") that I am subject to backup withholding as a result of a failure to report all interest or
dividends, or (c) the IRS has notified me that I am no longer subject to backup withholding.
CERTIFICATION INSTRUCTION -- You must cross out item (2) above if you have been notified by the IRS that you
are subject to backup withholding because of underreporting interest or dividends on your tax return.
However, if after being notified by the IRS that you were subject to backup withholding you received another
notification from the IRS that you are no longer subject to backup withholding, do not cross out item (2).
- --------------------------------------------------------------------------------------------------------------
Signature -------------------------------
Date-------------
- --------------------------------------------------------------------------------------------------------------
</TABLE>
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU
CHECKED THE BOX IN PART 2 OF SUBSTITUTE FORM W-9
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number
has not been issued to me, and either (a) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration Office or (b)
I intend to mail or deliver an application in the near future.I understand that,
notwithstanding that I have checked the box in Part 2 (and have completed this
Certificate of Awaiting Taxpayer Identification Number), all reportable payments
made to me prior to the time I provide the Trustee with a properly certified
taxpayer identification number will be subject to a 31% backup withholding tax.
Signature
- ------------------------
Date
- ------------
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENTS MADE TO YOU. PLEASE REVIEW THE ENCLOSED GUIDELINES
FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM
W-9 FOR ADDITIONAL DETAILS.
6
<PAGE>
INSTRUCTIONS
1. GENERAL
Please do not send Certificate(s) evidencing Debenture(s) directly to the
Company. Your Certificate(s) evidencing Debenture(s), together with your signed
and completed Letter of Transmittal and any required supporting documents (see
Instructions 4 and 5 below), should be mailed in the enclosed addressed
envelope, or otherwise delivered, to Harris Trust and Savings Bank, at the
appropriate address as set forth herein. THE METHOD OF DELIVERY IS AT THE OPTION
AND RISK OF THE HOLDER BUT, IF MAIL IS USED, IT IS RECOMMENDED THAT REGISTERED
MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, BE USED AS A PREVENTION
AGAINST LOSS (THOUGH USE OF THAT METHOD OF DELIVERY MAY RESULT IN DELAY), AND
THAT THE MAILING BE MADE SUFFICIENTLY IN ADVANCE OF SEPTEMBER 3, 1997, TO PERMIT
DELIVERY AS DESCRIBED HEREIN ON OR BEFORE SUCH DATE. SINCE IT IS THE TIME OF
RECEIPT, RATHER THAN THE TIME OF MAILING, THAT DETERMINES WHETHER DEBENTURES
HAVE BEEN PROPERLY TENDERED FOR CONVERSION, SUFFICIENT TIME SHOULD BE ALLOWED
FOR DEBENTURES SENT BY MAIL TO BE RECEIVED PRIOR TO THE CLOSE OF BUSINESS ON
SEPTEMBER 3, 1997 (THE "CONVERSION EXPIRATION DATE").
ITEMS A, B, E AND G OF THIS LETTER OF TRANSMITTAL MUST BE COMPLETED IN ALL
CASES. IF IN ANY CASE YOU WISH A COMMON STOCK CERTIFICATE AND/OR CHECK TO BE
ISSUED IN A NAME OTHER THAN THAT SHOWN IN ITEM A, YOU MUST COMPLETE ITEMS C AND
F. IF IN ANY CASE YOU WISH A COMMON STOCK CERTIFICATE AND/OR CHECK TO BE MAILED
TO AN ADDRESS OTHER THAN THAT SHOWN IN ITEM A OR ITEM C, YOU MUST COMPLETE ITEM
D.
2. CONVERSION OF YOUR DEBENTURE(S)
If you wish to convert your Debenture(s) into Common Stock, your
Certificate(s) evidencing Debenture(s) and a properly completed Letter of
Transmittal must be received prior to the close of business on September 3,
1997, by HARRIS TRUST AND SAVINGS BANK, TRUSTEE, 311 WEST MONROE STREET,
CHICAGO, ILLINOIS 60606, ATTENTION: DAN DONOVAN. If you have elected (or have
been deemed to have elected) to convert your Debenture(s) into Common Stock,
your signature in Item E above constitutes an assignment of the Certificate(s)
described in Item A. Your conversion will be effective immediately prior to the
close of business on the date (if on or prior to September 3, 1997) on which
your Certificate(s) evidencing Debenture(s) and a properly completed Letter of
Transmittal or other proper written notice are received at the address set forth
above.
No payments or adjustments in respect of interest will be made upon the
conversion of any Debenture.
If more than one Debenture is surrendered for conversion at any one time
under the same Letter of Transmittal or other notice by the same holder, the
number of shares of Common Stock issuable upon conversion of such Debenture will
be computed upon the basis of the aggregate number of Debentures so surrendered.
Holders are also entitled to convert fewer than all Debentures they hold,
provided that any conversions are for amounts of Debentures in integral
multiples of $1,000. If only a portion of the Debentures evidenced by a
Certificate surrendered for conversion are to be converted, subject to provision
for payment of taxes as described below, the Trustee shall issue and deliver to
such holder (or such holder's designee if so indicated in Item C) a new
Certificate or Certificates evidencing the principal amount which shall not have
been converted, provided that, after the Conversion Expiration Date, no such
Certificate will be issued and all such Debentures shall be redeemed as
described herein.
Upon conversion, a single Common Stock certificate will be issued unless you
give written instructions to the contrary. Subject to the payment of taxes as
described below, the Common Stock certificate, fractional share check and
(except as described above) Certificate for any unconverted principal amount of
Debentures will be mailed by first class mail, postage prepaid, as soon as
possible after receipt of your Debenture(s).
7
<PAGE>
No fractional shares of Common Stock will be issued upon conversion of any
Debentures. In lieu of any fraction of a share of Common Stock which would
otherwise be issuable in respect of the aggregate number of Debentures
surrendered for conversion at one time by the same holder, such holder will be
paid an amount in cash equal to the same fraction of the Closing Price (as
hereinafter defined) of the Common Stock on the date such conversion becomes
effective as described above. "Closing Price" for any date means the last
reported sales price regular way or, in the case no such reported sale takes
place on such day, the average of the reported closing bid and asked prices
regular way, in either case on the Nasdaq Stock Market.
If the Common Stock certificate, fractional share check and Certificate for
any unconverted Debentures are to be issued in the same name(s) as that in which
the Certificate(s) evidencing Debenture(s) transmitted herewith is registered,
complete Items A, B, E and G. See Instruction 4 below.
If the Common Stock certificate, fractional share check and Certificate for
any unconverted Debentures are to be issued in different name(s) than those
indicated in Item A, see Instructions 4 and 5 below, and complete Items C and F,
in addition to all other applicable Items.
If the Common Stock certificate, fractional share check and Certificate for
any unconverted Debenture(s) are to be mailed to an address other than as
indicated in Item A or Item C, complete Item D, in addition to all other
applicable Items.
3. REDEMPTION OF YOUR DEBENTURE(S) ON THE REDEMPTION DATE
Any Debentures received after the close of business on the September 3, 1997
will be redeemed on the Redemption Date for cash in an amount equal to $1,039.00
per $1,000 amount of Debentures, plus accrued and unpaid interest of $16.79 to,
but not including, the Redemption Date, for an aggregate Redemption Price of
$1,055.79 per $1,000 principal amount of Debentures. To receive the Redemption
Price for any such Debenture(s), the holder thereof must surrender the
Certificate(s) evidencing such Debenture(s) to HARRIS TRUST AND SAVINGS BANK,
TRUSTEE, 311 WEST MONROE STREET, CHICAGO, ILLINOIS 60606, ATTENTION: DAN
DONOVAN, with a duly executed Letter of Transmittal. As of the close of business
on the Redemption Date, regardless of whether the Certificate(s) evidencing any
such Debentures shall have been surrendered, all such Debenture(s) shall be
deemed no longer to be outstanding, interest with respect to such Debenture(s)
shall cease to accrue, and all rights of the holder with respect to such
Debenture(s) shall forthwith cease and terminate, except for the right to
receive the Redemption Price for each such Debenture in cash, without interest,
upon surrender of the Certificate(s) therefor. Subject to provision for transfer
taxes, a check will be mailed to you promptly after the surrender of the
Certificate therefor.
If the check is to be issued is the same name(s) in which the Certificate(s)
evidencing Debenture(s) transmitted herewith are registered, complete Items A,
B, E and G. See Instruction 4 below.
If the check is to be issued in different name(s) than those indicated in
Item A, see Instructions 4 and 5, and complete Items C and F, in addition to all
other applicable Items.
If the check is to be mailed to an address other than as indicated in Item A
or Item C, complete Item D, in addition to all other applicable Items.
4. SIGNATURE, ASSIGNMENTS AND SIGNATURE GUARANTEE REQUIREMENTS
If this Letter of Transmittal is signed in Item E by the registered
holder(s) of the Debenture(s) transmitted herewith, the signature(s) must
correspond exactly with the name(s) of such registered holder(s).
If this Letter of Transmittal is signed in Item E by trustees, executors,
administrators, guardians, attorneys-in-fact, an officer of a corporation or
other persons acting in a fiduciary or representative
8
<PAGE>
capacity, such persons should so indicate when signing, and proper evidence
satisfactory to the Company of their authority so to act must be submitted.
If the Letter of Transmittal is signed in Item E by someone other than the
registered owner who is not a person described in the preceding paragraph, the
Certificate(s) evidencing Debenture(s) must be properly endorsed, so that such
endorsement is signed exactly as the name(s) of the registered owner(s) appear
on the Certificate(s) evidencing Debenture(s).
If the Certificate(s) evidencing Debenture(s) are endorsed by or signed by
trustees, executors, administrators, guardians, attorneys-in-fact, an officer of
a corporation or other persons acting in a fiduciary or representative capacity,
such persons should so indicate when signing, and proper evidence satisfactory
to the Company of their authority so to act must be submitted.
If you have completed Item C regarding special issuance and/or payment
instructions, the signature on this Letter of Transmittal must be guaranteed, in
the space provided in Item F, by a member of or a participant in Securities
Transfer Trustee's Medallion Program (STAMP), The New York Stock Exchange
Medallion Signature Program (MSP) or The Stock Exchanges Medallion Program
(SEMP) or a registered depositary as defined in the Securities Exchange Act of
1934, as amended.
5. CERTIFICATE, CHECK OR RECEIPT TO BE ISSUED IN A DIFFERENT NAME
If a Common Stock certificate, a check or a Certificate for any unconverted
Debentures is to be issued in a name other than that of the registered owner of
the Debenture(s), the Certificate(s) evidencing such Debenture(s) must be
properly endorsed, or properly executed by the registered owner(s), so that such
endorsement is signed exactly as the name(s) of the registered owner(s) appear
on the Certificates representing Debenture(s) and the signature(s) must be
properly guaranteed by a member of or a participant in Securities Transfer
Trustee's Medallion Program (STAMP), The New York Stock Exchange Medallion
Signature Program (MSP) or The Stock Exchanges Medallion Program (SEMP) or a
registered depositary as defined in the Securities Exchange Act of 1934, as
amended. Complete Items A, B, C, E, F and G. See Instruction 4 above.
6. JOINT HOLDERS AND DEBENTURE(S) CERTIFICATES REGISTERED IN DIFFERENT NAMES
If Certificate(s) evidencing Debenture(s) are tendered by joint holders or
owners, all such persons must sign the Letter of Transmittal in Item E. If
Certificate(s) evidencing Debenture(s) are registered in different names or
forms of ownership, separate Letters of Transmittal must be completed, signed
and returned for each different registration. See Instruction 5 above.
7. TAXES ON CONVERSIONS
The Company will pay any and all original issuance, transfer, stamp and
other similar taxes that may be payable in respect of the issue or delivery of
shares of Common Stock on conversion of Debentures pursuant hereto. The Company
shall not, however, be required to pay any tax which may be payable in respect
of any transfer involved in the issue and delivery of shares of Common Stock in
a name other than that of the holder of the Debenture(s) to be converted, and no
such issue or delivery shall be made unless and until the person requesting such
issue has paid to the Company the amount of any such tax, or has established to
the satisfaction of the Company that such tax has been paid.
8. LOST OR DESTROYED CERTIFICATES FOR DEBENTURE(S)
If your Certificate(s) evidencing Debenture(s) have been either lost or
destroyed, notify the Trustee of this fact promptly at the address set forth
above or by telephoning (312) 461-2908. You will then be instructed as to the
steps you must take in order to convert your Debenture(s) into Common Stock or
to
9
<PAGE>
have your Debenture(s) redeemed. This Letter of Transmittal and related
documents cannot be processed until the lost certificates procedures have been
completed.
9. QUESTIONS ON HOW TO SUBMIT YOUR CERTIFICATE(S) EVIDENCING DEBENTURE(S)
Questions and requests for assistance on how to submit your Certificate(s)
evidencing Debenture(s), as well as requests for additional copies of the Notice
of Redemption or this Letter of Transmittal, should be directed to D. F. King &
Co., Inc. at the address set forth herein or by telephoning (800) 755-7250.
10. 31% BACKUP WITHHOLDING
In order to avoid "backup withholding" of Federal income tax on the cash
received upon the surrender of Debenture(s) for conversion, sale or redemption,
the holder must, unless an exemption applies, provide his or its correct
taxpayer identification number ("TIN") on Substitute Form W-9 on this Letter of
Transmittal and certify, under penalties of perjury, that such number is correct
and that he or it is not subject to backup withholding. If the correct TIN is
not provided, or if any other information is not correctly provided, a penalty
of up to $500 may be imposed by the Internal Revenue Service (plus additional
penalties if a holder willfully makes a false certification) and payments made
with respect to the surrendered Debenture(s) may be subject to backup
withholding of 31%.
Backup withholding is not an additional Federal income tax. Rather, the
Federal income tax liability of persons subject to backup withholding will be
reduced by the amount of tax withheld. If backup withholding results in an
overpayment of taxes, a refund may be obtained provided that the required
information is furnished to the Internal Revenue Service.
The TIN to be provided on the Substitute Form W-9 is that of the registered
holder(s) of the Debenture(s). The TIN for an individual is his social security
number. The box in Part 2 of the Substitute Form W-9 may be checked if the
person surrendering the Debenture(s) has not been issued a TIN and has applied
for a TIN or intends to apply for a TIN in the near future. If the box in Part 2
is checked, the person surrendering the Debenture(s) must also complete the
Certificate of Awaiting Taxpayer Identification Number contained in the
Substitute Form W-9 in order to avoid backup withholding. Notwithstanding that
the box in Part 2 is checked (and the Certificate of Awaiting Taxpayer
Identification Number is completed), the Trustee will withhold 31% on any
payment with respect to the Debenture(s) made prior to the time it is provided
with a properly certified TIN.
Exempt persons (including, among others, corporations) are not subject to
backup withholding. A foreign individual may qualify as an exempt person by
submitting a statement, signed under penalties of perjury, certifying such
person's foreign status. Such statements can be obtained from the Trustee. A
holder should consult his tax advisor as to his qualification for an exemption
from backup withholding and the procedure for obtaining such exemption.
For additional guidance, see the enclosed Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9.
10
