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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
SCHEDULE 14D-9
(AMENDMENT NO. 1)
SOLICITATION/RECOMMENDATION STATEMENT
PURSUANT TO SECTION 14(D)(4) OF THE
SECURITIES EXCHANGE ACT OF 1934
VARLEN CORPORATION
(Name of Subject Company)
VARLEN CORPORATION
(Name of Person Filing Statement)
COMMON STOCK, PAR VALUE $.10 PER SHARE
(AND ASSOCIATED PREFERRED SHARE PURCHASE RIGHTS)
(Title of Class of Securities)
922248 10 9
(CUSIP Number of Class of Securities)
------------------------
RAYMOND A. JEAN
PRESIDENT AND CHIEF EXECUTIVE OFFICER
VARLEN CORPORATION
55 SHUMAN BOULEVARD, P.O. BOX 3089
NAPERVILLE, ILLINOIS 60566-7089
(630) 420-0400
(Name, Address and Telephone Number of Person Authorized
to Receive Notice and Communications on Behalf of the Person Filing Statement)
WITH COPIES TO:
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Vicki L. Casmere, Esq. R. Scott Falk, Esq. Kevin G. Abrams, Esq.
Vice President, General Kirkland & Ellis Richards, Layton & Finger
Counsel & Secretary 200 East Randolph Drive One Rodney Square
Varlen Corporation Chicago, Illinois 60601 P. O. Box 551
55 Shuman Boulevard (312) 861-2000 Wilmington, Delaware 19899
P.O. Box 3089 Naperville, (302) 658-6541
Illinois 60566-7089
(630) 420-0400
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This Amendment No. 1 amends and supplements the Solicitation/Recommendation
Statement on Schedule 14D-9 (the "Schedule 14D-9") filed with the Securities and
Exchange Commission (the "Commission") on June 7, 1999, by Varlen Corporation
(the "Company" or "Varlen"), relating to the cash tender offer by Track
Acquisition Incorporated ("Track"), a Delaware corporation and a wholly owned
subsidiary of Amsted Industries Incorporated ("Amsted"), to purchase all
outstanding shares of the Company's common stock, par value $.10 per share (the
"Common Stock"), including the associated Preferred Share Purchase Rights (the
"Rights," and together with the Common Stock, the "Shares") issued pursuant to
the Rights Agreement dated as of June 17, 1996, as amended on September 28, 1998
and May 25, 1999 (the "Rights Agreement"), between the Company and Harris Trust
and Savings Bank (the "Rights Agent"), at a price of $35.00 per Share, net to
the seller in cash, on the terms and subject to the conditions set forth in the
Offer to Purchase, dated May 24, 1999, and in the related Letter of Transmittal
(which together, as amended and supplemented, constitute the "Amsted Offer").
The Amsted Offer is disclosed in a Tender Offer Statement on Schedule 14D-1,
dated May 24, 1999 and amended June 9, 1999, June 17, 1999, June 21, 1999, June
22, 1999 and July 6, 1999 (the "Schedule 14D-1"), as filed with the Commission.
Unless otherwise indicated, all capitalized terms used but not defined herein
shall have the meanings ascribed to them in the Schedule 14D-9.
ITEM 3. IDENTITY AND BACKGROUND.
The response to Item 3(b) is hereby amended and supplemented by adding the
following:
On July 9, 1999, the Company and Amsted entered into a
confidentiality/standstill agreement (the "Amsted Confidentiality Agreement")
pursuant to which the Company will provide Amsted with access to the Company's
senior management and confidential business information. The Amsted
Confidentiality Agreement is filed as Exhibit 40 hereto and is incorporated by
reference herein.
Under the provisions of the Amsted Confidentiality Agreement, Amsted will
not, directly or indirectly, from July 9, 1999 to August 23, 1999, among other
things, (a) purchase Shares of Varlen whether pursuant to the Amsted Offer or
otherwise, (b) solicit written consents from Varlen stockholders or take steps
in furtherance thereof by filing preliminary proxy materials with the
Commission, or (c) seek to convene a special meeting of the stockholders of
Varlen.
In accordance with the terms of the Amsted Confidentiality Agreement,
representatives of Amsted may conduct due diligence, including receiving
presentations from representatives of the Company, including the Company's
management and its legal and financial advisors, and receiving access to certain
non-public written information regarding the Company.
The Company has also entered into confidentiality/standstill agreements with
other third parties, pursuant to which it has provided such parties with
management presentations and access to certain non-public information regarding
the Company. Pursuant to the terms of such agreements, the standstill provisions
of those agreements will be modified to conform to the August 23, 1999
termination date of the standstill provisions in the Amsted Confidentiality
Agreement.
The process being conducted by the Company is expected to result in
continued discussions, additional expressions of interest and negotiations with
one or more third parties with respect to a potential strategic transaction. The
process being conducted by the Company could result at any time in (i) the
Company requesting and receiving formal proposals from one or more third parties
to engage in a strategic transaction with the Company, (ii) an agreement for a
strategic transaction between the Company and a third party, (iii) an auction of
the Company involving multiple parties that have communicated expressions of
interest in the Company, or (iv) other strategic alternatives including but not
limited to (a) an extraordinary transaction such as a merger or reorganization
involving the Company or one or more subsidiaries of the Company and a third
party, (b) a purchase, sale or transfer of a material amount of assets by the
Company or any of its subsidiaries, (c) a tender or exchange offer for, or open
market or privately negotiated purchases or other acquisitions of securities by
or of, the Company, (d) a material
2
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change in the present capitalization or dividend policy of the Company, or (e) a
business combination or joint venture involving the Company or any of its
subsidiaries.
There can be no assurance that any of the foregoing will result in any
transaction being recommended to the Board, that any transaction that may be
recommended to the Board will be authorized or consummated, or that a
transaction other than those described herein will not be proposed, authorized
or consummated.
ITEM 4. THE SOLICITATION OR RECOMMENDATION.
The response to Item 4(a) is hereby amended and supplemented by adding the
following:
On June 9, 1999, representatives of Amsted contacted the Company's financial
advisors and expressed an interest in executing a confidentiality/standstill
agreement in return for being granted access to the Company's senior management
and confidential business information. On June 11, 1999, Morgan Stanley, on
behalf of the Company, sent Amsted a proposed confidentiality/standstill
agreement on terms pursuant to which the Company was prepared to grant Amsted
the access requested. On June 11, 12, and 13, the respective legal advisors of
Amsted and the Company had discussions regarding possible terms for a
confidentiality/standstill agreement, but were unable to reach an agreement at
that time. On June 13, 1999, Amsted's advisors advised the Company's advisors
that Amsted was not interested in executing a confidentiality/standstill
agreement. On June 17, 1999, Mr. Goetschel sent a letter to Mr. Jean formally
stating Amsted's refusal to execute the proposed form of
confidentiality/standstill agreement, and Amsted filed a copy of such proposed
form of confidentiality/standstill agreement and Mr. Goetschel's letter with the
Commission.
On June 21, 1999, Amsted announced that the expiration date of the Amsted
Offer had been extended to 12:00 midnight, New York City time on July 6, 1999.
On July 6, 1999, representatives of Amsted again contacted the Company's
financial advisors and expressed an interest in executing a
confidentiality/standstill agreement in return for being granted access to the
Company's senior management and confidential business information. On that same
date, Amsted announced that the expiration date of the Amsted Offer had been
extended to 12:00 midnight, New York City time on July 21, 1999.
On July 8, 1999, Varlen's advisors and Amsted's advisors undertook
discussions with respect to a confidentiality/standstill agreement and on July
9, 1999 executed the Amsted Confidentiality Agreement, which is incorporated by
reference herein. On July 12, 1999, the Company issued a press release
announcing the execution of the Amsted Confidentiality Agreement. A copy of the
press release is filed as Exhibit 41 hereto and is incorporated by reference
herein.
ITEM 6. RECENT TRANSACTIONS AND INTENT WITH RESPECT TO SECURITIES.
The response to Item 6(a) is hereby amended and supplemented by adding the
following:
On April 16, 1999, Richard L. Wellek, the Company's retired Chief Executive
Officer, exercised stock options with respect to, and sold in the open market,
19,769 Shares.
ITEM 7. CERTAIN NEGOTIATIONS AND TRANSACTIONS BY THE SUBJECT COMPANY.
The response to Item 7(a)-(b) is hereby amended and supplemented by adding the
following:
In response to the Amsted Offer, the Board has considered and reviewed the
feasibility and desirability of exploring a variety possible alternative
transactions. As a result of the process of exploring the Company's strategic
alternatives as adopted by the Board on May 25, 1999 and affirmed by the Board
on June 4, 1999, the Company has entered into confidentiality/standstill
agreements pursuant to which the
3
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Company has provided third parties with access to the Company's senior
management and confidential business and financial information.
On June 9, 1999, representatives of Amsted contacted the Company's financial
advisors and expressed an interest in executing a confidentiality/standstill
agreement in return for being granted access to the Company's senior management
and confidential business information. On June 11, 1999, Morgan Stanley, on
behalf of the Company, sent Amsted a proposed confidentiality/standstill
agreement on terms pursuant to which the Company was prepared to grant Amsted
the access requested. On June 11, 12, and 13, the respective legal advisors of
Amsted and the Company had discussions regarding possible terms for a
confidentiality/standstill agreement, but were unable to reach an agreement at
that time. On June 13, 1999, Amsted's advisors informed the Company's advisors
that Amsted was not interested in executing a confidentiality/standstill
agreement. On June 17, 1999, Mr. Goetschel sent a letter to Mr. Jean formally
stating Amsted's refusal to execute the proposed form of
confidentiality/standstill agreement. On June 21, 1999, Amsted announced that
the expiration date of the Amsted Offer had been extended to 12:00 midnight, New
York City time on July 6, 1999. On July 6, 1999, representatives of Amsted again
contacted the Company's financial advisors and expressed an interest in
executing a confidentiality/standstill agreement in return for being granted
access to the Company's senior management and confidential business information.
On that same date, Amsted announced that the expiration date of the Amsted Offer
had been extended to 12:00 midnight, New York City time on July 21, 1999. On
July 8, 1999, Varlen's advisors and Amsted's advisors undertook discussions with
respect to a confidentiality/standstill agreement and on July 9, 1999 executed
the Amsted Confidentiality Agreement.
As part of the Company's process of gathering information regarding possible
strategic alternatives, the Company and its financial advisors have held
preliminary discussions and will continue to engage in discussions or
negotiations with a number of parties concerning possible strategic
alternatives. The Company has received preliminary communications from third
parties expressing interest in making an investment in the Company or acquiring
the Company at a price per share in excess of that being offered by Amsted. In
light of these developments, the process being conducted by the Company is
expected to result in continued discussions, additional expressions of interest
and negotiations with one or more third parties with respect to a potential
strategic transaction. The process being conducted by the Company could result
at any time in (i) the Company requesting and receiving formal proposals from
one or more third parties to engage in a strategic transaction with the Company,
(ii) an agreement for a strategic transaction between the Company and a third
party, (iii) an auction of the Company involving multiple parties that have
communicated expressions of interest in the Company, or (iv) other strategic
alternatives including but not limited to (a) an extraordinary transaction such
as a merger or reorganization involving the Company or one or more subsidiaries
of the Company and a third party, (b) a purchase, sale or transfer of a material
amounts of assets by the Company or any of its subsidiaries, (c) a tender or
exchange offer for, or open market or privately negotiated purchases or other
acquisitions of securities by or of, the Company, (d) a material change in the
present capitalization or dividend policy of the Company, or (e) a business
combination or joint venture involving the Company or any of its subsidiaries.
The Board expects to evaluate the strategic alternatives available to the
Company, decide what action is in the best interest of the Company's
stockholders and implement that decision. No timetable has been set for the
completion of this process. No assurance can be given as to the outcome of the
pursuit of any of these alternatives or that any discussions or negotiations
with one or more third parties which may be entered into will result in a
request for or submission of any proposal regarding or an investment in or a
strategic transaction with the Company or will result in an auction of the
Company or that any such proposal, if made, by one or more third parties will
result in an agreement regarding an investment in or strategic transaction with
the Company. There can be no assurance that any of the foregoing will result in
any transaction being recommended to the Board, that any transaction that may be
recommended to the Board will be authorized or consummated, or that a
transaction other than those described herein will not be proposed, authorized
or consummated. The commencement or continuation of any of the foregoing
4
<PAGE>
may also be dependent upon the future actions of Amsted with respect to the
Amsted Offer. The proposal, authorization, announcement or consummation of any
transaction of the type referred to in this Item 7 could adversely affect or
result in withdrawal of the Amsted Offer.
In connection with the foregoing, the Board has determined and affirmed that
disclosure at this time with respect to possible strategic alternatives or the
parties thereto, and the possible terms of any other transactions or proposals
of the type referred to above in this Item 7, prior to an agreement in principle
with respect thereto would jeopardize the commencement or continuation of any
discussions or negotiations that the Company may conduct. The Board accordingly
has instructed management and its advisors not to disclose the terms of such
discussions or negotiations, or the parties thereto, until such agreement has
been reached or as otherwise may be required by law.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
The response to Item 9 is hereby amended and supplemented by adding the
following new exhibits:
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Exhibit Rights Agreement dated as of June 17, 1996 (incorporated herein by reference to
11 Exhibit 4(a) to the Company's Quarterly Report on Form 10-Q for the fiscal
quarter ended August 3, 1996) as amended on September 28, 1998 (incorporated
herein by reference to Exhibit (4)(a) to the Company's Quarterly Report on Form
10-Q for the fiscal quarter ended October 31, 1998) and on May 25, 1999
(incorporated herein by reference to Exhibit 1 to the Company's Form 8-A/A
Registration Statement, filed with the Commission on June 7, 1999).
Exhibit Amsted Confidentiality/Standstill Agreement, dated July 9, 1999, between Varlen
40 and Amsted.
Exhibit Press release issued by Varlen on July 12, 1999.
41
</TABLE>
5
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SIGNATURE
After reasonable inquiry and to the best of its knowledge and belief, the
undersigned certifies that the information set forth in this statement is true,
complete and correct.
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VARLEN CORPORATION
By: /s/ RAYMOND A. JEAN
--------------------------------------
Raymond A. Jean
PRESIDENT AND CHIEF EXECUTIVE OFFICER
</TABLE>
Dated: July 12, 1999
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EXHIBIT 40
Varlen Corporation
55 Shuman Boulevard
P.O. Box 3089
Naperville, IL 60566-7089
July 9, 1999
Amsted Industries Incorporated
44th Floor - Boulevard Towers South
205 North Michigan Avenue
Chicago, IL 60601
Gentlemen:
1. You have requested information from Varlen Corporation (the "Company"),
in connection with your consideration of a possible transaction between the
Company or its stockholders and you. As a condition to your being furnished such
information, you agree to treat any information (whether prepared by the
Company, its advisors or otherwise, and whether oral or written) that is
furnished to you or your representatives (which term shall include your
directors, officers, partners, employees, agents, advisors and potential
financing sources) by or on behalf of the Company (herein collectively referred
to as the "Evaluation Material") in accordance with the provisions of this
letter and to take or abstain from taking certain other actions herein set
forth. The term "Evaluation Material" also shall include all notes, analyses,
compilations, studies, interpretations or other documents (including electronic,
magnetic or other forms of information storage), which contain, reflect or are
based on, in whole or in part, the information furnished pursuant to this
agreement. The term "Evaluation Material" does not include information that (i)
is already in your possession, provided that such information is not known by
you to be subject to another confidentiality agreement with or other obligation
of secrecy to the Company or another party or (ii) becomes generally available
to the public other than as a result of a disclosure by you or your
representatives or (iii) becomes available to you on a non-confidential basis
from a source other than the Company or its advisors, provided that such source
is not known by you to be bound by a confidentiality agreement with or other
obligation of secrecy to the Company or another party.
2. You hereby agree that the Evaluation Material will be used solely for the
purpose of evaluating a possible transaction between the Company or its
stockholders and you, will not be used in any way detrimental to the Company,
and will be kept confidential by you and your representatives; provided,
however, that any of such information may only be disclosed to your
representatives who need to know such information for the purpose of evaluating
any such possible transaction between the Company or its stockholders and you
and who agree with the Company in writing (such writing to be delivered to the
Company prior to any disclosure) to keep such information confidential and to be
bound by this agreement to the same extent as if they were parties hereto.
3. You hereby acknowledge that you are aware, and that you will advise your
representatives who are informed as to the matters which are the subject of this
letter agreement, that the United States securities laws prohibit any person who
has received from an issuer material, non-public information concerning the
matters which are the subject of this letter from purchasing or selling
securities of such issuer or from communicating such information to any other
person under circumstances in which it is reasonably foreseeable that such
person is likely to purchase or sell such securities.
<PAGE>
Amsted Industries Incorporated
July 9, 1999
Page 2
4. In the event that you or your representatives receive a request to
disclose all or any part of the information contained in the Evaluation Material
under the terms of a valid and effective subpoena or order issued by a court of
competent jurisdiction or by a governmental or regulatory body, you agree to (i)
immediately notify the Company of the existence, terms and circumstances
surrounding such a request, so that it may seek an appropriate protective order
and/or waive your compliance with the provisions of this agreement (and, if the
Company seeks such an order, to provide such cooperation as the Company shall
reasonably request). If failing the entry of a protective order or the receipt
of a waiver hereunder, you or your representative are, in the opinion of your
counsel or representative's counsel ("Counsel"), as the case may be, compelled
to disclose Evaluation Material under pain of liability for contempt or other
censure or penalty, you or such representative as applicable may disclose only
that portion of such information as is legally required without liability
hereunder; provided, that you or such representative, as applicable, agree to
exercise reasonable efforts to obtain assurance that confidential treatment will
be accorded such information.
5. In addition, without the prior written consent of the Company, you will
not, and will cause your representatives not to, disclose to any person (other
than your representatives who have entered into a confidentiality agreement with
the Company regarding the Evaluation Material) either (i) the fact that
Evaluation Material has been provided to you, (ii) the fact of any discussions
or negotiations that take place concerning a possible transaction between the
Company or its stockholders and you, or (iii) any of the terms, conditions or
other facts with respect to any such possible transaction, including the status
thereof, except that disclosure of such information may be made in a filing
required by the Securities Exchange Act of 1934, as amended (the "Exchange Act")
filed with the Securities and Exchange Commission if and to the extent, in the
opinion of your Counsel, you are required to make such disclosure pursuant to
the Exchange Act and the rules and regulations promulgated thereunder; provided
that prior to any such disclosure, you shall first give the Company a reasonable
opportunity to review the proposed disclosure and to comment thereon.
6. Without your prior written consent, the Company will not, and will cause
its representatives and advisors not to, disclose to any person either (i) the
fact that Evaluation Material has been provided to you, (ii) the fact of any
discussions or negotiations that take place concerning a possible transaction
between the Company or its stockholders and you, or (iii) any of the terms,
conditions or other facts with respect to any such possible transaction,
including the status thereof, except that disclosure of such information may be
made in a filing required by the Exchange Act filed with the Securities and
Exchange Commission if and to the extent, in the opinion of the Company's legal
counsel, the Company is required to make such disclosure pursuant to the
Exchange Act and the rules and regulations promulgated thereunder; provided that
prior to any such disclosure, the Company shall first give you a reasonable
opportunity to review the proposed disclosure and to comment thereon.
7. You hereby acknowledge that the Evaluation Material is being furnished to
you in consideration of your agreement that for a period of forty-five (45) days
from the date hereof you and your affiliates (as defined in Rule 12b-2 under the
Exchange Act) will not (and you and they will not assist, provide or arrange
financing to or for others or encourage others to), directly or indirectly,
acting alone or in concert with others, unless specifically requested in writing
in advance by the Board of Directors of the Company:
(1) accept for payment or pay for any shares of the Company pursuant to
thetender offer for all the outstanding shares of the Company commenced by
you on May 24, 1999 (the "Offer"),
(2) apart from the Offer, which shall be governed by the preceding
subparagraph, acquire or agree, offer, seek or propose to acquire (or
request permission to do so), ownership (including, but not limited to,
beneficial ownership as defined in Rule 13d-3 under the Exchange Act) of any
of the assets or businesses of the Company or any securities issued by the
Company, or any rights or options
<PAGE>
Amsted Industries Incorporated
July 9, 1999
Page 3
to acquire such ownership (including from a third party), or make any public
announcement (or request permission to make any such announcement) with
respect to any of the foregoing,
(3) seek or propose to convene a special meeting of the stockholders of
the Company, or to influence or control the management or the policies of
the Company, or to obtain representation on the Company's Board of
Directors, or to solicit or participate in the solicitation of, any proxies
or consents with respect to any securities of the Company, or make any
public announcement with respect to any of the foregoing or request
permission to do any of the foregoing,
(4) take any action which might require the Company to make a public
announcement regarding the types of matters set forth in subparagraphs (1),
(2) and (3) above,
(5) enter into any discussions, negotiations, arrangements or
understandings with any third party with respect to any of the foregoing, or
(6) seek to have the Company amend or waive any provision of this
paragraph (the "Standstill Paragraph").
8. You hereby acknowledge that the Evaluation Material is being furnished to
you also in consideration for your agreement that, for the period beginning on
the date of this letter agreement and ending one (1) year from the date of this
agreement that neither you nor any of your affiliates (as such term is defined
in Rule 12b-2 under the Exchange Act) will solicit to employ any of the officers
or key employees of the Company, without obtaining prior written consent of the
Company (it being understood that any newspaper or other public solicitation not
directed specifically to such person shall not be deemed to be a solicitation
for purposes of this provision), provided that this paragraph shall not prohibit
you or your affiliates from discussing employment opportunities with, or hiring,
any officer or key employee of the Company who initiates such discussions with
you or your affiliate.
9. The Company agrees that it will not enter into a confidentiality
agreement with another party which contains standstill provisions materially
more favorable to such third party than those set forth in the Standstill
Paragraph (including such an agreement that omits in its entirety provisions
comparable thereto), unless the Company also offers you substantially similar
provisions.
10. If at any time during such period you are approached by any third party
concerning your or their participation in a transaction involving the assets or
businesses of the Company or securities issued by the Company, you will promptly
inform the Company of the nature of such contact and the parties thereto.
11. Although the Company has endeavored to include in the Evaluation
Material information which it believes to be relevant for the purpose of your
investigation, you understand that neither the Company nor any of its
representatives or advisors have made or make any representation or warranty as
to the accuracy or completeness of the Evaluation Material. You agree that
neither the Company nor its representatives or advisors shall have any liability
to you or any of your representatives resulting from the use or contents of the
Evaluation Material or from any action taken or any inaction occurring in
reliance on the Evaluation Material.
12. At the request of the Company or in the event that you do not proceed
with a transaction which is the subject of this letter, you and your
representatives shall destroy or redeliver to the Company all Evaluation
Material and any other material (whether written or stored electronically,
magnetically or by any other means of information storage) containing or
reflecting any information in the Evaluation Material (whether prepared by the
Company, its advisors, agents or otherwise) and will not retain any copies,
extracts or other reproductions in whole or in part of such material. Such
destruction or redelivery to the Company of all Evaluation Material pursuant to
the preceding sentence shall be certified in writing to the Company an
authorized officer with knowledge of such action. All material prepared by you
or your
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Amsted Industries Incorporated
July 9, 1999
Page 4
representatives based on information in the Evaluation Material shall be
destroyed, and such destruction shall be certified in writing to the Company by
an authorized officer supervising such destruction.
13. It is further understood and agreed that no failure or delay by the
Company in exercising any right, power or privilege hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise thereof preclude any
other or further exercise thereof or the exercise of any right, power or
privilege hereunder. The agreements set forth in this letter may be modified or
waived only by a separate writing by the Company and you expressly so modifying
or waiving such agreements.
14. You agree that unless and until a definitive agreement between the
Company and you with respect to any transaction referred to in the first
paragraph of this letter has been executed and delivered, neither the Company
nor you will be under any legal obligation of any kind whatsoever with respect
to such a transaction by virtue of this or any written or oral expression with
respect to such a transaction by any of its directors, officers, employees,
agents or any other representatives or its advisors except for the matters
specifically agreed to in this letter. You further agree (i) that the Company
shall have no obligation to authorize or pursue with you or any other party any
transaction referred to in the first paragraph of this letter and you understand
that the Company has not, as of the date hereof, authorized any such transaction
and (ii) that the Company and its representatives shall be free to conduct any
process for any transaction involving the Company if and as they in their sole
discretion shall determine (including, without limitation, negotiating with any
other interested parties and entering into a definitive agreement without prior
notice to you or any other person) and that any procedures relating to such
process or transaction may be changed at any time without notice to you or any
other person.
15. The parties hereto acknowledge that money damages are an inadequate
remedy for breach of this letter agreement because of the difficulty of
ascertaining the amount of damage that will be suffered by the Company in the
event that this agreement is breached. Therefore, you agree that the Company may
obtain specific performance of this agreement and injunctive relief against any
breach hereof. In the event of litigation relating to this letter agreement, if
a court of competent jurisdiction determines that you or any of your
representatives has breached this letter agreement, then you shall be liable to
the Company for the reasonable legal fees and costs incurred by the Company in
connection with such litigation, including any appeal therefrom.
16. If any term, provision, covenant or restriction of this letter agreement
is held by a court of competent jurisdiction to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated.
17. Except as specified elsewhere herein, the terms of this letter agreement
will remain in force until the date that is two years from the date hereof.
18. This letter agreement may be executed in two or more counterparts, each
of which shall be deemed to be an original, but all of which shall constitute
the same agreement and shall become a binding agreement when one or more
counterparts have been signed by each party and delivered to the other party,
thereby constituting the entire agreement among the parties pertaining to the
subject matter hereof. This letter agreement supercedes all prior and
contemporaneous agreements, understandings and representations, whether oral or
written, of the parties in connection herewith. No covenant or condition or
representation not expressed in this letter agreement shall affect or otherwise
be effective to interpret, change or restrict this letter agreement. No prior
drafts of this letter agreement and no words or phrases from any such prior
drafts shall be admissible into evidence in any action, suit or other proceeding
involving this letter agreement. This letter agreement shall be deemed to have
been mutually prepared by the parties and shall not be construed against any of
them by reason of authorship. This letter agreement may not be changed or
terminated orally, nor shall any change, termination or attempted waiver of any
of
<PAGE>
Amsted Industries Incorporated
July 9, 1999
Page 5
the provisions of this letter agreement be binding on any party unless in
writing signed by the parties hereto. No modification, waiver, termination,
rescission, discharge or cancellation of this letter agreement and no waiver of
any provision of or default under this letter agreement shall affect the right
of any party thereafter to enforce any other provision or to exercise any right
or remedy in the event of any other default, whether or not similar.
19. This letter shall be governed by, and construed in accordance with, the
laws of the State of Delaware. All disputes related to this agreement shall be
heard exclusively in the courts of the State of Delaware and the parties agree
to submit to the jurisdiction of courts of the State of Delaware for purposes of
resolving any such disputes.
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Very truly yours,
VARLEN CORPORATION
(by Morgan Stanley & Co. Incorporated)
By: /s/ FRANCIS J. OELERICH III
--------------------------------------
Francis J. Oelerich III
Managing Director
</TABLE>
Confirmed and Agreed to:
AMSTED INDUSTRIES INCORPORATED
By: /s/ THOMAS C. BERG
- ------------------------------------
Title: VP, General Counsel, Secretary
<PAGE>
EXHIBIT 41
VARLEN ENTERS INTO CONFIDENTIALITY AND STANDSTILL
AGREEMENT WITH AMSTED
- --VARLEN BOARD ANNOUNCES THAT IT HAS RECEIVED EXPRESSIONS OF INTEREST IN EXCESS
OF THE AMSTED OFFER--
NAPERVILLE, IL, July 12, 1999 B Varlen Corporation (Nasdaq: VRLN) today
announced that it has entered into a confidentiality and standstill agreement
with Amsted Industries Incorporated.
Under the terms of the confidentiality and standstill agreement, Amsted and
Varlen have agreed that Amsted will not, prior to August 23, 1999, accept for
payment or pay for any shares pursuant to the tender offer commenced by Amsted
on May 24, 1999 and will not seek or propose to solicit or participate in the
solicitation of any proxies or consents with respect to any securities of
Varlen.
Varlen is filing the complete text of the confidentiality and standstill
agreement with the Securities and Exchange Commission.
The Varlen Board also announced today that as part of Varlen's process of
exploring its strategic alternatives, Varlen has received from third parties
preliminary expressions of interest in making an investment in Varlen or
acquiring Varlen at a price per share in excess of that being offered by Amsted
in the tender offer.
The Varlen Board has determined unanimously that Varlen should explore its
strategic alternatives, including a potential merger, sale or recapitalization
of Varlen. Varlen anticipates that the confidentiality and standstill agreement
will allow Amsted to participate in Varlen's process of exploring its strategic
alternatives. As announced previously, the Varlen Board has determined
unanimously that Amsted's unsolicited cash tender offer for all of the
outstanding shares of Varlen at $35.00 per share is inadequate and not in the
best interests of its stockholders, and therefore has recommended unanimously
that Varlen's stockholders reject the Amsted Offer and not tender their shares
to Amsted.
As part of Varlen's process of exploring its strategic alternatives, Varlen
has entered into confidentiality and standstill agreements with third parties
other than Amsted. With the exception of the August 23, 1999 termination date,
the provisions of the Amsted agreement are substantially similar to the
agreements that Varlen has entered into with other third parties. Pursuant to
the terms of such agreements, the standstill provisions of those agreements will
be modified to conform to the August 23, 1999 termination date of the standstill
provisions in the Amsted agreement.
In light of these developments, the process being conducted by Varlen is
expected to result in continued discussions, additional expressions of interest
and negotiations with one or more third parties with respect to a potential
strategic transaction. The process being conducted by Varlen could result at any
time in (i) Varlen requesting and receiving formal proposals from one or more
third parties to engage in a strategic transaction with Varlen, (ii) an
agreement for a strategic transaction between Varlen and a third party, (iii) an
auction of Varlen involving multiple parties that have communicated expressions
of interest in Varlen, or (iv) other strategic alternatives including but not
limited to (a) an extraordinary transaction such as a merger or reorganization
involving Varlen or one or more subsidiaries of Varlen and a third party, (b) a
purchase, sale or transfer of a material amounts of assets by Varlen or any of
its subsidiaries, (c) a tender or exchange offer for, or open market or
privately negotiated purchases or other acquisitions of, securities by or of
Varlen, (d) a material change in the present capitalization or dividend policy
of Varlen, or (e) a business combination or joint venture involving Varlen or
any of its subsidiaries.
The Varlen Board expects to evaluate the strategic alternatives available to
Varlen, decide what action is in the best interest of Varlen's stockholders and
implement that decision. No timetable has been set for the completion of this
process. There can be no assurance that any of the foregoing will result in any
transaction being recommended to the Varlen Board, that any transaction that may
be recommended to the Varlen Board will be authorized or consummated, or that a
transaction other than those described herein will not be proposed, authorized
or consummated.
<PAGE>
Varlen is a leading manufacturer of precision-engineered transportation
products for the heavy-duty truck/trailer, automotive and railroad industries.
The company, headquartered in a Chicago suburb, manufactures products in 24
facilities in the United States and Europe and sells them to customers around
the world. Varlen's common stock is traded on Nasdaq's National Market under the
symbol VRLN.
THIS NEWS RELEASE CONTAINS FORWARD-LOOKING STATEMENTS THAT ARE BASED ON
ASSUMPTIONS ABOUT A NUMBER OF IMPORTANT FACTORS AND INVOLVE RISKS AND
UNCERTAINTIES THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM WHAT
APPEARS HERE. THESE RISK FACTORS INCLUDE REVERSAL OF MARKET TRENDS, DECREASED
DEMAND FOR PRODUCTS, LOSS OF KEY CUSTOMERS, LIMITED CUSTOMER PRODUCTION DUE TO
CAPACITY CONSTRAINTS, AND ADDITIONAL FACTORS THAT MAY BE DETAILED FROM TIME TO
TIME IN VARLEN'S SECURITIES AND EXCHANGE COMMISSION FILINGS. VARLEN ASSUMES NO
OBLIGATION TO UPDATE ITS FORWARD-LOOKING STATEMENTS.
Contacts: Joele Frank/Calvin Mitchell
Abernathy MacGregor Frank
(212) 371-5999
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