<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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SCHEDULE 14D-1
TENDER OFFER STATEMENT PURSUANT TO SECTION 14(d)(1)
OF THE SECURITIES EXCHANGE ACT OF 1934
----------------
VARLEN CORPORATION
(Name of Subject Company)
AMSTED INDUSTRIES INCORPORATED
TRACK ACQUISITION INCORPORATED
(Bidders)
COMMON STOCK, PAR VALUE $.10 PER SHARE
(AND ASSOCIATED PREFERRED SHARE PURCHASE RIGHTS)
(Title of Class of Securities)
92224810
(CUSIP Number of Class of Securities)
Thomas C. Berg, Esq.
Track Acquisition Incorporated
c/o Amsted Industries Incorporated
44th Floor--Boulevard Towers South
205 North Michigan Avenue
Chicago, Illinois 60601
(312) 819-8470
(Name, Address and Telephone Number of Person Authorized to Receive
Notices and Communications on Behalf of Bidder)
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Copies to:
Gary A. Goodman, Esq. Robert J. Minkus, Esq.
Terrence R. Brady, Esq. Schiff Hardin & Waite
Winston & Strawn 6600 Sears Tower
35 West Wacker Drive Chicago, Illinois 60606
Chicago, Illinois 60601 Telephone: (312) 258-5500
Telephone: (312) 558-5600
CALCULATION OF FILING FEE
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<TABLE>
<CAPTION>
Transaction Valuation* Amount of Filing Fee**
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<S> <C>
$620,107,915 $124,021.58
</TABLE>
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*For purposes of calculating the filing fee only. This amount assumes the
purchase in cash of (i) 17,010,834 shares of Common Stock, par value $.10
per share (and the associated Preferred Share Purchase Rights) at a price of
$35.00 per share and (ii) 706,535 unexercised outstanding options to acquire
shares of Common Stock under various employee stock option plans, at a price
of $35.00 per share, such number of shares and outstanding options based on
the Subject Company's Annual Report on Form 10-K for the fiscal year ended
January 31, 1999 less 100 shares owned by Track Acquisition Incorporated.
**The fee, calculated in accordance with Rule 0-11(d) of the Securities
Exchange Act of 1934, is 1/50th of one percent of the aggregate Transaction
Valuation.
[_] Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the Form
or Schedule and date of its filing.
Amount Previously Paid: None
Form or Registration No.: N/A
Filing Party: N/A
Date Filed: N/A
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<PAGE>
SCHEDULE 14D-1
Item 1. Security and Subject Company.
(a) The name of the subject company is Varlen Corporation, a Delaware
corporation. The address of its principal executive offices is 55 Shuman
Boulevard, P.O. Box 3089, Naperville, Illinois 60566-7089.
(b) The class of securities to which this statement relates is the 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"), of the Company. The information set forth in the
Introductory Section and Section 1 of the Offer to Purchase (the "Offer to
Purchase") annexed hereto as Exhibit (a)(1) is incorporated herein by
reference.
(c) The information set forth in Section 6 of the Offer to Purchase is
incorporated herein by reference.
Item 2. Identity and Background.
(a)-(d); (g) The information set forth in Section 9 of the Offer to
Purchase is incorporated herein by reference. The name, business address,
present principal occupation or employment, the material occupations,
positions, offices or employments for the past five years and citizenship of
each director and executive officer of Amsted Industries Incorporated, a
Delaware corporation ("Parent"), and of Track Acquisition Incorporated, a
Delaware corporation (the "Purchaser") and wholly owned subsidiary of Parent,
and the name, principal business and address of any corporation or other
organization in which such occupations, positions, offices and employments are
or were carried on are set forth in Schedule A to the Offer to Purchase and
are incorporated herein by reference.
(e); (f) During the last five years, neither the Purchaser nor Parent, nor,
to the best of their knowledge, any of the directors or executive officers of
the Purchaser or Parent has been convicted in a criminal proceeding (excluding
traffic violations or similar misdemeanors) or was a party to a civil
proceeding of a judicial or administrative body of competent jurisdiction as a
result of which any such person was or is subject to a judgment, decree or
final order enjoining future violations of, or prohibiting activities subject
to, federal or state securities laws or finding any violation of such law.
Item 3. Past Contacts, Transactions or Negotiations with the Subject Company.
(a)-(b) The information set forth in the Introductory Section and Sections
10 and 11 of the Offer to Purchase is incorporated herein by reference.
Item 4. Source and Amount of Consideration.
(a)-(b) The information set forth in Section 12 of the Offer to Purchase is
incorporated herein by reference.
Item 5. Purpose of the Tender Offer and Plans or Proposals of the Bidder.
The information set forth in the Introductory Section and Sections 7 and 11
of the Offer to Purchase is incorporated herein by reference.
Item 6. Interest in Securities of the Subject Company.
(a)-(b) The information set forth in Sections 9 and 10 of the Offer to
Purchase and in Schedule B to the Offer to Purchase is incorporated herein by
reference.
2
<PAGE>
Item 7. Contracts, Arrangements, Understandings or Relationships with Respect
to the Subject Company's Securities.
None.
Item 8. Persons Retained, Employed or to be Compensated.
The information set forth in Section 16 of the Offer to Purchase is
incorporated herein by reference.
Item 9. Financial Statements of Certain Bidders.
The financial statements of Parent and Purchaser are not material to the
investment decision to be made by the holders of Shares.
Item 10. Additional Information.
(a) None.
(b)-(c); (e) The information set forth in Section 15 of the Offer to
Purchase is incorporated herein by reference.
(d) The information set forth in Section 7 of the Offer to Purchase is
incorporated herein by reference.
(f) The information set forth in the Offer to Purchase and the Letter of
Transmittal is incorporated herein by reference in its entirety.
Item 11. Material to be Filed as Exhibits.
<TABLE>
<C> <S>
(a)(1) Offer to Purchase, dated May 24, 1999.
(a)(2) Form of Letter of Transmittal.
(a)(3) Form of letter, dated May 24, 1999, to brokers, dealers,
commercial banks, trust companies and other nominees.
(a)(4) Form of letter to clients to be used by brokers, dealers,
commercial banks, trust companies and other nominees.
(a)(5) Press Release, dated May 18, 1999.
(a)(6) Press Release, dated May 24, 1999.
(a)(7) Form of summary advertisement, dated May 24, 1999.
(a)(8) Notice of Guaranteed Delivery.
(a)(9) IRS Guidelines to Substitute Form W-9.
(b) Commitment Letter, dated April 29, 1999.
(c) None.
(d) None.
(e) Not Applicable.
(f) None.
</TABLE>
3
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SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and
correct.
Dated: May 24, 1999
Amsted Industries Incorporated
/s/ Thomas C. Berg
By: _________________________________
Name: Thomas C. Berg
Title: Vice President, General
Counsel and Secretary
Track Acquisition Incorporated
/s/ Thomas C. Berg
By: _________________________________
Name: Thomas C. Berg
Title: Vice President and
Secretary
4
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description
------- -----------
<C> <S>
(a)(1) Offer to Purchase, dated May 24, 1999.
(a)(2) Form of Letter of Transmittal.
(a)(3) Form of letter, dated May 24, 1999, to brokers, dealers, commercial
banks, trust companies and other nominees.
(a)(4) Form of letter to clients to be used by brokers, dealers, commercial
banks, trust companies and other nominees.
(a)(5) Press Release, dated May 18, 1999.
(a)(6) Press Release, dated May 24, 1999.
(a)(7) Form of summary advertisement, dated May 24, 1999.
(a)(8) Notice of Guaranteed Delivery.
(a)(9) IRS Guidelines to Substitute Form W-9.
(b) Commitment Letter, dated April 29, 1999.
(c) None.
(d) None.
(e) Not Applicable.
(f) None.
</TABLE>
5
<PAGE>
Exhibit (a)(1)
Offer to Purchase for Cash
All of the Shares of Common Stock
(Including the Associated Preferred Share Purchase Rights)
of
Varlen Corporation
at
$35.00 Net Per Share
by
Track Acquisition Incorporated
a wholly owned subsidiary of
Amsted Industries Incorporated
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON
MONDAY, JUNE 21, 1999, UNLESS THE OFFER IS EXTENDED.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (I) THERE BEING VALIDLY
TENDERED PRIOR TO THE EXPIRATION OF THE OFFER AND NOT WITHDRAWN A NUMBER OF
SHARES OF 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"), OF VARLEN CORPORATION (THE
"COMPANY") WHICH, TOGETHER WITH THE SHARES BENEFICIALLY OWNED BY THE PURCHASER
AND ITS AFFILIATES, WILL CONSTITUTE AT LEAST A MAJORITY OF THE OUTSTANDING
SHARES ON A FULLY DILUTED BASIS AS OF THE DATE THE SHARES ARE ACCEPTED FOR
PAYMENT PURSUANT TO THE OFFER (THE "MINIMUM TENDER CONDITION"); (II) THE
RIGHTS HAVING BEEN REDEEMED BY THE COMPANY'S BOARD OF DIRECTORS, OR THE
PURCHASER OTHERWISE BEING SATISFIED IN ITS SOLE DISCRETION THAT THE RIGHTS ARE
OTHERWISE INVALID OR INAPPLICABLE TO THE TRANSACTIONS CONTEMPLATED HEREIN (THE
"RIGHTS CONDITION"); (III) THE ACQUISITION OF SHARES PURSUANT TO THE OFFER
BEING APPROVED PURSUANT TO SECTION 203 OF THE DELAWARE GENERAL CORPORATION LAW
OR THE PURCHASER BEING SATISFIED IN ITS SOLE DISCRETION THAT THE PROVISIONS OF
SECTION 203 RESTRICTING CERTAIN BUSINESS COMBINATIONS ARE INVALID OR
INAPPLICABLE TO THE ACQUISITION OF SHARES PURSUANT TO THE OFFER AND THE
PROPOSED MERGER (AS DEFINED HEREIN) (BY ACTION OF THE COMPANY'S BOARD OF
DIRECTORS, THE ACQUISITION OF A SUFFICIENT NUMBER OF SHARES OR OTHERWISE) (THE
"SECTION 203 CONDITION"); AND (IV) ANY WAITING PERIOD UNDER THE HART-SCOTT-
RODINO ANTITRUST IMPROVEMENTS ACT OF 1976, AS AMENDED, AND THE REGULATIONS
THEREUNDER (THE "HSR ACT") AND UNDER ANY LAWS OF FOREIGN JURISDICTIONS THAT
ARE APPLICABLE TO THE PURCHASE OF SHARES PURSUANT TO THE OFFER HAVING EXPIRED
OR BEEN TERMINATED (THE "ANTITRUST CONDITION"). THE OFFER IS ALSO SUBJECT TO
CERTAIN OTHER CONDITIONS DESCRIBED IN SECTION 13.
THE OFFER IS NOT CONDITIONED UPON PARENT OR THE PURCHASER OBTAINING
FINANCING.
IMPORTANT
Any stockholder desiring to tender all or any portion of such stockholder's
Shares should (1) complete and sign the Letter of Transmittal or a facsimile
thereof in accordance with the instructions in the Letter of Transmittal,
including any required signature guarantees, and mail or deliver the Letter of
Transmittal or such facsimile with such stockholder's certificate(s) for the
tendered Shares and any other required documents to the Depositary (as defined
herein), (2) follow the procedure for book-entry tender of Shares set forth in
Section 3 or (3) request such stockholder's broker, dealer, commercial bank,
trust company or other nominee to effect the transaction for such stockholder.
Stockholders having Shares registered in the name of a broker, dealer,
commercial bank, trust company or other nominee must contact such broker,
dealer, commercial bank, trust company or other nominee if they desire to
tender Shares so registered. Unless the context requires otherwise, all
references to Shares herein shall include the associated Rights.
The Rights are presently evidenced by the certificates for the Common Stock
and a tender by a stockholder of such stockholder's shares of Common Stock
will also constitute a tender of the associated Rights. A stockholder who
desires to tender Shares and whose certificates for such Shares are not
immediately available, or who cannot comply with the procedure for book-entry
transfer on a timely basis, may tender such Shares by following the procedures
for guaranteed delivery set forth in Section 3.
Questions and requests for assistance may be directed to the Information
Agent (as defined herein) or to the Dealer Manager (as defined herein) at
their respective addresses and telephone numbers set forth on the back cover
of this Offer to Purchase. Requests for additional copies of this Offer to
Purchase and the Letter of Transmittal may be directed to the Information
Agent, the Dealer Manager or to brokers, dealers, commercial banks or trust
companies.
The Dealer Manager for the Offer is:
SALOMON SMITH BARNEY
May 24, 1999
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Section Page
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<S> <C>
INTRODUCTION.............................................................. 1
1. Terms of the Offer.................................................. 3
2. Acceptance for Payment and Payment for Shares....................... 4
3. Procedure for Tendering Shares...................................... 5
4. Rights of Withdrawal................................................ 9
5. Certain Federal Income Tax Consequences of the Offer................ 9
6. Price Range of Shares; Dividends.................................... 10
7. Effect of the Offer on the Market for the Shares, Stock Quotation,
Margin Regulations and Exchange Act Registration.................... 10
8. Certain Information Concerning the Company.......................... 11
9. Certain Information Concerning Parent and the Purchaser............. 13
10. Background of the Offer; Contacts with the Company.................. 15
11. Purpose of the Offer; Plans for the Company; the Proposed Merger.... 18
12. Source and Amount of Funds.......................................... 21
13. Certain Conditions of the Offer..................................... 22
14. Dividends and Distributions......................................... 25
15. Certain Legal Matters............................................... 25
16. Fees and Expenses................................................... 27
17. Miscellaneous....................................................... 28
Schedule A Information Concerning the Directors and Executive Officers of
Amsted Industries Incorporated and Track Acquisition Incorporated........ A-1
Schedule B Acquisition of Shares.......................................... B-1
Schedule C Summary of Rights.............................................. C-1
</TABLE>
i
<PAGE>
To the Holders of Shares of Varlen Corporation:
INTRODUCTION
Track Acquisition Incorporated, a Delaware corporation (the "Purchaser")
and a wholly owned subsidiary of Amsted Industries Incorporated, a Delaware
corporation ("Parent"), hereby offers to purchase all of the outstanding
shares of common stock, par value $.10 per share (the "Common Stock"), of
Varlen Corporation, a Delaware corporation (the "Company"), including the
associated preferred share purchase rights (the "Rights") issued pursuant to
the Rights Agreement, dated as of June 17, 1996, as amended (the "Rights
Agreement"), between the Company and Harris Trust and Savings Bank, as Rights
Agent (the Common Stock and the Rights together are referred to herein as the
"Shares"), at $35.00 per Share, net to the seller in cash, upon the terms and
subject to the conditions set forth in this Offer to Purchase and in the
related Letter of Transmittal (which, together with any amendments or
supplements hereto or thereto, collectively constitute the "Offer"). Tendering
stockholders who have Shares registered in their own name and who tender
directly to the Depositary (as defined herein) will not be obligated to pay
brokerage fees or commissions or, subject to Instruction 6 of the Letter of
Transmittal, transfer taxes on the purchase of Shares by the Purchaser
pursuant to the Offer. Stockholders who hold their Shares through their broker
or bank should consult with such institution as to whether there are any fees
applicable to a tender of Shares. The Purchaser will pay all charges and
expenses of Citibank, N.A., as depositary (the "Depositary"), Salomon Smith
Barney Inc. ("Salomon Smith Barney") as dealer manager (the "Dealer Manager"),
and Innisfree M&A Incorporated, as information agent (the "Information
Agent"). Unless the context requires otherwise, all references to Shares
herein shall include the associated Rights, and all references to the Rights
shall include all benefits that may inure to the holders of the Rights
pursuant to the Rights Agreement.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (I) THE MINIMUM TENDER
CONDITION; (II) THE RIGHTS CONDITION; (III) THE SECTION 203 CONDITION; AND
(IV) THE ANTITRUST CONDITION. THE OFFER IS ALSO SUBJECT TO CERTAIN OTHER
CONDITIONS DESCRIBED IN SECTION 13. THE OFFER IS NOT CONDITIONED UPON PARENT
OR THE PURCHASER OBTAINING FINANCING.
Purpose of the Offer; The Proposed Merger. The purpose of the Offer is to
acquire for cash as many outstanding Shares as possible as a first step in
acquiring the entire equity interest in the Company. The Purchaser currently
intends, as soon as practicable upon consummation of the Offer, to propose and
seek to have the Company effect a merger or some similar business combination
(the "Proposed Merger") between the Company and the Purchaser or an affiliate
thereof, pursuant to which each then outstanding Share (other than Shares held
by the Company in treasury, or owned by Parent, the Purchaser or any other
direct or indirect wholly owned subsidiary of Parent, or Shares, if any, that
are held by stockholders who are entitled to and who properly exercise
dissenters' rights under Delaware law) would be converted pursuant to the
terms of the Proposed Merger into the right to receive an amount in cash equal
to the per Share price paid pursuant to the Offer, without interest. See
Section 11.
Parent and the Purchaser are seeking to negotiate with the Company with
respect to the acquisition of the Company by Parent. The Purchaser reserves
the right to amend the Offer upon entering into a merger agreement with the
Company.
Parent has requested that the Board of Directors of the Company redeem the
Rights or otherwise take action to render the Rights inapplicable to the Offer
and the Proposed Merger. If the Board of Directors does not do so, in
connection with the Offer and the Proposed Merger and in order to satisfy the
Rights Condition, Parent and the Purchaser intend, if necessary, to solicit
written consents from the holders of Shares to remove the Company's Board of
Directors and to elect nominees of the Purchaser as the directors of the
Company. As an alternative to or in addition to the solicitation of consents,
the Purchaser may seek through the solicitation of proxies from holders of
Shares to elect, at an annual or special meeting of the Company's
stockholders, nominees of the Purchaser as the directors of the Company. If
Parent commences a solicitation of proxies or consents from
<PAGE>
the holders of Shares and the Purchaser's nominees are elected to the Board of
Directors of the Company, the Purchaser expects that such nominees will,
subject to their fiduciary duties to stockholders of the Company in light of
the circumstances then existing, take all necessary action to redeem the
Rights and thereby satisfy the Rights Condition, approve the acquisition of
Shares pursuant to the Offer and the Proposed Merger, satisfy the Section 203
Condition and authorize the Company to enter into a merger agreement with
Parent and the Purchaser to effect the Proposed Merger.
THIS OFFER DOES NOT CONSTITUTE A SOLICITATION OF PROXIES OR CONSENTS. ANY
SUCH SOLICITATION WHICH PARENT OR THE PURCHASER MIGHT MAKE WILL BE MADE
PURSUANT TO SEPARATE PROXY OR CONSENT SOLICITATION MATERIALS COMPLYING WITH
THE REQUIREMENTS OF SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF 1934 AND
THE RULES AND REGULATIONS PROMULGATED THEREUNDER (THE "EXCHANGE ACT").
In the event the Purchaser obtains 90% or more of the outstanding Shares
pursuant to the Offer or otherwise, the Purchaser will effect the Proposed
Merger pursuant to the short-form merger provisions of the Delaware General
Corporation Law (the "DGCL"), without prior notice to, or any action by, any
other stockholder of the Company. See Section 11.
Minimum Tender Condition. The Offer is conditioned on, among other things,
there being validly tendered prior to the Expiration Date (as defined below)
and not withdrawn at least that number of Shares (the "Minimum Number of
Shares") that, together with the Shares beneficially owned by the Purchaser,
would represent a majority of all outstanding Shares on a fully diluted basis
on the date of purchase. For purposes of the Offer (other than in the context
of financial statement information), on a "fully diluted basis" means, as of
any date, the number of Shares outstanding together with Shares that the
Company is required to issue pursuant to obligations outstanding at that date
under convertible securities, warrants, stock options or otherwise upon
conversion or exercise thereof. The Purchaser reserves the right (subject to
the applicable rules and regulations of the Securities and Exchange Commission
(the "SEC")) to waive or reduce the minimum tender condition and to elect to
purchase, pursuant to the Offer, fewer than the Minimum Number of Shares. See
Sections 1 and 14.
According to the Company's Annual Report on Form 10-K for the fiscal year
ended January 31, 1999 (the "Company 10-K"), as of April 1, 1999, there were
17,010,934 Shares issued and outstanding and, as of January 31, 1999, there
were 706,535 Shares subject to issuance upon exercise of outstanding options.
The Purchaser owns 100 Shares. Based on the foregoing and assuming that no
options were granted or canceled or expired after January 31, 1999, and
assuming no Shares were issued or reacquired since April 1, 1999, there would
be 17,717,469 Shares outstanding on a fully diluted basis on May 24, 1999,
and, given the Purchaser's and its affiliates' ownership of 100 Shares, the
Minimum Number of Shares on such date would be 8,858,685. However, the actual
Minimum Number of Shares will depend on the facts as they exist on the date of
purchase.
Rights Condition. The Offer is conditioned on, among other things, the
Rights Condition being satisfied. See Section 13. Unless the Rights Condition
shall have been satisfied, stockholders will be required to tender one Right
for each share of Common Stock tendered in order to effect a valid tender in
accordance with the procedures set forth in Section 2. The tender of Rights
with Common Stock shall not, in itself, however, satisfy the Rights Condition.
Unless separate certificates for the Rights are issued, a tender of Common
Stock will also constitute a tender of the associated Rights. For a
description of the Rights, see Schedule C.
The Section 203 Condition. The Offer is conditioned on, among other things,
the Section 203 Condition being satisfied. See Section 13. The Offer is
subject to the condition that the acquisition of Shares pursuant to the Offer
and the Proposed Merger shall have been approved pursuant to Section 203 of
the DGCL ("Section 203") or that the Purchaser shall be satisfied in its sole
discretion that the provisions of Section 203 restricting certain business
combinations are invalid or inapplicable to the acquisition of Shares pursuant
to the Offer and the Proposed Merger (by action of the Company's Board of
Directors, the acquisition of a sufficient number of Shares or otherwise). The
provisions of Section 203 are described in Section 11.
2
<PAGE>
There can be no assurance that the Board will approve the acquisition of
Shares pursuant to the Offer and the Proposed Merger for purposes of Section
203. Even if such Board approval is not obtained, Section 203 will be
inapplicable to the Offer and the Proposed Merger if, upon the purchase of
Shares pursuant to the Offer, the Purchaser owns at least 85% of the
outstanding Shares, excluding for purposes of determining the number of Shares
outstanding those Shares owned (i) by persons who are directors and also
officers of the Company and (ii) employee stock plans of the Company in which
employee participants do not have the right to determine confidentially
whether Shares held subject to the plan will be tendered in a tender or
exchange offer.
The Antitrust Condition. The Offer is conditioned on, among other things,
the Antitrust Condition being satisfied. For a more detailed description of
certain time periods applicable to this condition, see Section 15.
Certain other conditions to the Offer are described in Section 13. The
Purchaser reserves the right (but shall not be obligated) to waive any or all
such conditions. See Sections 1, 11, 13 and 15.
The Offer is not conditioned upon Parent or the Purchaser obtaining
financing.
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS
MADE WITH RESPECT TO THE OFFER.
1. Terms of the Offer.
Upon the terms and subject to the conditions set forth in the Offer
(including the terms and conditions set forth in Section 13 (the "Offer
Conditions") and, if the Offer is extended or amended, the terms and
conditions of such extension or amendment), the Purchaser will accept for
payment, and pay for, all Shares validly tendered on or prior to the
Expiration Date (as defined herein) and not withdrawn as permitted by Section
4. The term "Expiration Date" means 12:00 Midnight, New York City time, on
Monday, June 21, 1999, unless and until the Purchaser shall, in its sole
discretion, have extended the period for which the Offer is open, in which
event the term "Expiration Date" shall mean the latest time and date on which
the Offer, as so extended by the Purchaser, shall expire.
Subject to the applicable rules and regulations of the SEC, the Purchaser
expressly reserves the right, in its sole discretion, at any time or from time
to time, to extend the period of time during which the Offer is open by giving
oral or written notice of such extension to the Depositary and by making a
public announcement thereof. During any such extension, all Shares previously
tendered and not withdrawn will remain subject to the Offer, subject to the
right of a tendering stockholder to withdraw such stockholder's Shares. See
Section 4. Subject to the applicable regulations of the SEC, the Purchaser
also expressly reserves the right, in its sole discretion, at any time or from
time to time, (i) to delay acceptance for payment of or (regardless of whether
such Shares were theretofore accepted for payment) payment for, any tendered
Shares, or to terminate or amend the Offer as to any Shares not then paid for,
if any of the conditions set forth in Section 13 are not satisfied and (ii) to
waive any condition and to set forth or change any other term or condition of
the Offer, by giving oral or written notice of such delay, termination,
amendment or waiver to the Depositary and by making a public announcement
thereof. If the Purchaser accepts any Shares for payment pursuant to the terms
of the Offer, it will accept for payment all Shares validly tendered prior to
the Expiration Date and not withdrawn, and, subject to the terms and
conditions of the Offer, including but not limited to the Offer Conditions, it
will accept for payment and promptly pay for all Shares so accepted for
payment. The Purchaser confirms that its reservation of the right to delay
payment for Shares which it has accepted for payment is limited by Rule 14e-
1(c) under the Exchange Act, which requires that a tender offeror pay the
consideration offered or return the tendered securities promptly after the
termination or withdrawal of a tender offer.
Any extension, delay, termination, amendment or waiver of the Offer will be
followed as promptly as practicable by public announcement thereof, such
announcement in the case of an extension to be issued no later than 9:00 A.M.,
New York City time, on the next business day after the previously scheduled
Expiration Date.
3
<PAGE>
Subject to applicable law (including Rules 14d-4(c), 14d-6(d) and 14e-1 under
the Exchange Act, which require that any material change in the information
published, sent or given to stockholders in connection with the Offer be
promptly disseminated to stockholders in a manner reasonably designed to
inform stockholders of such change) and without limiting the manner in which
the Purchaser may choose to make any public announcement, the Purchaser shall
have no obligation to publish, advertise or otherwise communicate any such
public announcement other than by issuing a press release or other
announcement.
The Purchaser confirms that if it makes a material change in the terms of
the Offer or the information concerning the Offer, or if it waives a material
condition of the Offer, the Purchaser will extend the Offer to the extent
required by Rules 14d-4(c), 14d-6(d) and 14e-1 under the Exchange Act.
If, prior to the Expiration Date, the Purchaser, in its sole discretion,
shall decrease the percentage of Shares being sought or increase or decrease
the consideration offered to holders of Shares, such increase or decrease
shall be applicable to all holders whose Shares are accepted for payment
pursuant to the Offer and, if at the time notice of any increase or decrease
is first published, sent or given to holders of Shares, the Offer is scheduled
to expire at any time earlier than the tenth business day from and including
the date that such notice is first so published, sent or given, the Offer will
be extended so that it shall not expire earlier than the expiration of such
ten business day period. For purposes of the Offer, a "business day" means any
day other than a Saturday, Sunday or United States federal holiday and
consists of the time period from 12:01 A.M. through 12:00 Midnight, New York
City time.
A request is being made to the Company for the use of the Company's
stockholder list and security position listings for the purpose of, among
other things, disseminating the Offer to stockholders. Upon compliance by the
Company with such request, this Offer to Purchase and the related Letter of
Transmittal will be mailed to record holders of Shares and will be furnished
to brokers, banks and similar persons whose names, or the names of whose
nominees, appear on the stockholder list or, if applicable, who are listed as
participants in a clearing agency's security position listing for subsequent
transmittal to beneficial owners of Shares.
2. Acceptance for Payment and Payment for Shares.
Upon the terms and subject to the conditions of the Offer (including the
Offer Conditions and, if the Offer is extended or amended, the terms and
conditions of any such extension or amendment), the Purchaser will accept for
payment, and will pay for, Shares validly tendered and not withdrawn as
promptly as practicable after the later of (i) the satisfaction of the
Antitrust Condition and the date all required filings or consents,
registrations, approvals, permits or authorizations of any governmental entity
shall have been obtained on terms satisfactory to Purchaser in its sole
discretion and (ii) the Expiration Date, if at the time of the later of the
occurrence of (i) and (ii) above, the Offer Conditions have been satisfied or
waived.
In addition, subject to applicable rules of the SEC, the Purchaser
expressly reserves the right to delay acceptance for payment of or payment for
Shares in order to comply, in whole or in part, with any applicable law. See
Section 13. In all cases, payment for Shares tendered and accepted for payment
pursuant to the Offer will be made only after timely receipt by the Depositary
of certificates for such Shares (or a confirmation of a book-entry transfer of
such Shares (a "Book-Entry Confirmation") into the Depositary's account at The
Depository Trust Company (the "Book-Entry Transfer Facility")), a properly
completed and duly executed Letter of Transmittal (or facsimile thereof) and
any other required documents.
For purposes of the Offer, the Purchaser will be deemed to have accepted
for payment Shares validly tendered and not withdrawn, if and when the
Purchaser gives oral or written notice to the Depositary of its acceptance for
payment of such Shares pursuant to the Offer. Payment for Shares accepted for
payment pursuant to the Offer will be made by deposit of the purchase price
therefor with the Depositary, which will act as agent for the tendering
stockholders for the purpose of receiving payments from the Purchaser and
transmitting such payments to the tendering stockholders. Under no
circumstances will interest on the purchase price for Shares be paid,
regardless of any delay in making such payment.
4
<PAGE>
If any tendered Shares are not accepted for payment pursuant to the terms
and conditions of the Offer for any reason, or if certificates are submitted
for more Shares than are tendered, certificates for such unpurchased Shares
will be returned, without expense to the tendering stockholder (or, in the
case of Shares tendered by book-entry transfer of such Shares into the
Depositary's account at the Book-Entry Transfer Facility pursuant to the
procedures set forth in Section 3, such Shares will be credited to an account
maintained with the Book-Entry Transfer Facility), as soon as practicable
following expiration or termination of the Offer.
The Purchaser reserves the right to transfer or assign in whole or in part
from time to time to one or more direct or indirect subsidiaries of Parent the
right to purchase all or any portion of the Shares tendered pursuant to the
Offer, but any such transfer or assignment will not relieve the Purchaser of
its obligations under the Offer and will in no way prejudice the rights of
tendering stockholders to receive payment for Shares validly tendered and
accepted for payment pursuant to the Offer.
3. Procedure for Tendering Shares.
Valid Tender. To tender Shares pursuant to the Offer, (a) a properly
completed and duly executed Letter of Transmittal (or a facsimile thereof) in
accordance with the instructions of the Letter of Transmittal, together with
any required signature guarantees, certificates for Shares to be tendered, and
any other documents required by the Letter of Transmittal, must be received by
the Depositary prior to the Expiration Date at one of its addresses set forth
on the back cover of this Offer to Purchase, (b) such Shares must be delivered
pursuant to the procedures for book-entry transfer described below (and a
Book-Entry Confirmation of such delivery received by the Depositary, including
an Agent's Message (as defined herein) if the tendering stockholder has not
delivered a Letter of Transmittal), prior to the Expiration Date, or (c) the
tendering stockholder must comply with the guaranteed delivery procedures set
forth below. The term "Agent's Message" means a message transmitted by the
Book-Entry Transfer Facility to, and received by, the Depositary and forming a
part of a Book-Entry Confirmation, which states that the Book-Entry Transfer
Facility has received an express acknowledgment from the participant in the
Book-Entry Transfer Facility tendering the Shares which are the subject of the
Book-Entry Confirmation, that such participant has received and agrees to be
bound by the terms of the Letter of Transmittal and that the Purchaser may
enforce such agreement against the participant.
Unless the Rights Condition is satisfied, stockholders will be required to
tender one Right (subject to adjustment) for each share of Common Stock
tendered in order to effect a valid tender of Shares. Accordingly,
stockholders who sell their Rights separately from their shares of Common
Stock and do not otherwise acquire Rights may not be able to satisfy the
requirements of the Offer for a valid tender of such shares. Unless separate
certificates representing the Rights are issued, a tender of shares of Common
Stock will also constitute a tender of the associated Rights.
Rights are presently evidenced by the certificates for the Common Stock,
and the tender by a stockholder of such stockholder's shares of Common Stock
will also constitute a tender of the associated Rights. However, after a
Distribution Date (as defined in the Rights Agreement), upon request the
Rights Agent will send to each record holder of Shares as of the close of
business on the Distribution Date a Rights certificate evidencing one Right
for each share of Common Stock held. Pursuant to the Offer, no separate
payment will be made by the Purchaser for the Rights. If separate certificates
representing the Rights are issued to holders of Common Stock prior to the
time a holder's Shares are tendered pursuant to the Offer, certificates
representing a number of Rights equal to the number of shares of Common Stock
tendered must be delivered to the Depositary, or, if available, a Book-Entry
Confirmation received by the Depositary with respect thereto, in order for
such shares of Common Stock to be validly tendered. If the Distribution Date
occurs and separate certificates representing the Rights are not distributed
prior to the time shares of Common Stock are tendered pursuant to the Offer,
Rights may be tendered prior to a stockholder receiving the certificates for
Rights by use of the guaranteed delivery procedure described below. A tender
of shares of Common Stock constitutes an agreement by the tendering
stockholder to deliver certificates representing all Rights formerly
associated with the number of shares of Common Stock tendered pursuant to the
Offer to the Depositary prior to expiration of the period permitted by such
guaranteed delivery procedures for delivery of certificates for, or a Book-
Entry Confirmation with respect to, Rights (the "Rights
5
<PAGE>
Delivery Period"). However, after expiration of the Rights Delivery Period,
the Purchaser may elect to reject as invalid a tender of shares of Common
Stock if certificates for, or a Book-Entry Confirmation with respect to, the
number of Rights required to be tendered with such Common Stock have not been
received by the Depositary. Nevertheless, the Purchaser will be entitled to
accept for payment shares of Common Stock tendered by a stockholder prior to
receipt of the certificates for the Rights required to be tendered with such
shares of Common Stock, or a Book-Entry Confirmation with respect to such
Rights, and either (a) subject to complying with applicable rules and
regulations of the SEC, withhold payment for such shares of Common Stock
pending receipt of the certificates for, or a Book-Entry Confirmation with
respect to, such Rights or (b) make payment for shares of Common Stock
accepted for payment pending receipt of the certificates for, or a Book-Entry
Confirmation with respect to, such Rights in reliance upon the agreement of a
tendering stockholder to deliver Rights and such guaranteed delivery
procedures. Any determination by the Purchaser to make payment for shares of
Common Stock in reliance upon such agreement and such guaranteed delivery
procedures or, after expiration of the Rights Delivery Period, to reject a
tender as invalid will be made in the sole and absolute discretion of the
Purchaser.
Book-Entry Delivery. The Depositary will establish an account with respect
to the Shares at the Book-Entry Transfer Facility for purposes of the Offer
within two business days after the date of this Offer to Purchase. Any
financial institution that is a participant in the Book-Entry Transfer
Facility's system may make book-entry transfer of Shares by causing the Book-
Entry Transfer Facility to transfer such Shares into the Depositary's account
in accordance with the Book-Entry Transfer Facility's procedures for such
transfer. However, although delivery of Shares may be effected through book-
entry transfer, either the Letter of Transmittal (or facsimile thereof),
properly completed and duly executed, together with any required signature
guarantees, or an Agent's Message in lieu of the Letter of Transmittal, and
any other required documents, must, in any case, be transmitted to and
received by the Depositary at one of its addresses set forth on the back cover
of this Offer to Purchase by the Expiration Date, or the tendering stockholder
must comply with the guaranteed delivery procedures described below. If the
Distribution Date occurs, the Depositary will also make a request to establish
an account with respect to the Rights at the Book-Entry Transfer Facility, but
no assurance can be given that book-entry transfer of Rights will be
available. If book-entry transfer of Rights is available, the foregoing book-
entry transfer procedures will also apply to Rights. If book-entry transfer of
Rights is not available and the Distribution Date occurs, a tendering
stockholder will be required to tender Rights by means of physical delivery of
certificates for Rights to the Depositary (in which event references in this
Offer to Purchase to Book-Entry Confirmations with respect to Rights will be
inapplicable). The confirmation of a book-entry transfer of Shares or Rights
into the Depositary's account at the Book-Entry Transfer Facility as described
above is referred to herein as a "Book-Entry Confirmation." Delivery of
documents to the Book-Entry Transfer Facility in accordance with the Book-
Entry Transfer Facility's procedures does not constitute delivery to the
Depositary.
THE METHOD OF DELIVERY OF SHARES, RIGHTS, THE LETTER OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH THE BOOK-ENTRY TRANSFER
FACILITY, IS AT THE ELECTION AND RISK OF THE TENDERING STOCKHOLDER. SHARES
WILL BE DEEMED DELIVERED ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY
(INCLUDING, IN THE CASE OF A BOOK-ENTRY TRANSFER, BY BOOK-ENTRY CONFIRMATION).
IF DELIVERY IS BY MAIL, IT IS RECOMMENDED THAT THE STOCKHOLDER USE PROPERLY
INSURED REGISTERED MAIL WITH RETURN RECEIPT REQUESTED. IN ALL CASES,
SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
Signature Guarantees. Except as otherwise provided below, all signatures on
a Letter of Transmittal must be guaranteed by a financial institution
(including most commercial banks, savings and loan associations and brokerage
houses) that is a participant in the Securities Transfer Agents Medallion
Program or an "eligible guarantor institution," as such term is defined in
Rule 17Ad-15 under the Exchange Act (each, an "Eligible Institution").
Signatures on a Letter of Transmittal need not be guaranteed (a) if the Letter
of Transmittal is signed by the registered holders (which term, for purposes
of this Section, includes any participant in the Book-Entry Transfer
Facility's system whose name appears on a security position listing as the
owner of such security) of Shares (or Rights, if applicable) tendered
therewith and such registered holder has not completed the box
6
<PAGE>
entitled "Special Payment Instructions" or the box entitled "Special Delivery
Instructions" on the Letter of Transmittal or (b) if such Shares (or Rights,
if applicable) are tendered for the account of an Eligible Institution. See
Instructions 1 and 5 of the Letter of Transmittal. If the certificates for
Shares or Rights are registered in the name of a person other than the signer
of the Letter of Transmittal, or if payment is to be made or certificates for
Shares or Rights not tendered or not accepted for payment are to be returned
to a person other than the registered holder of the certificates surrendered,
then the tendered certificates must be endorsed or accompanied by appropriate
stock powers, in either case signed exactly as the name or names of the
registered holders or owners appear on the certificates, with the signatures
on the certificates or stock powers guaranteed as described above. See
Instructions 1 and 5 of the Letter of Transmittal.
Guaranteed Delivery. A stockholder who desires to tender Shares (or Rights,
if applicable) pursuant to the Offer and whose certificates for Shares (or
Rights, if applicable) are not immediately available (including because
certificates for Rights have not yet been distributed by the Rights Agent), or
who cannot comply with the procedure for book-entry transfer on a timely
basis, or who cannot deliver all required documents to the Depositary prior to
the Expiration Date, may tender such Shares (or Rights, if applicable) by
following all of the procedures set forth below:
(i) such tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form provided by the Purchaser, is received
by the Depositary, as provided below, prior to the Expiration Date; and
(iii) the certificates for all tendered Shares or Rights, in proper form
for transfer (or a Book-Entry Confirmation with respect to all such Shares
or Rights), together with a properly completed and duly executed Letter of
Transmittal (or facsimile thereof), with any required signature guarantees
(or, in the case of a book-entry transfer, an Agent's Message in lieu of
the Letter of Transmittal), and any other required documents, are received
by the Depositary within (a) in the case of Shares, three trading days
after the date of execution of such Notice of Guaranteed Delivery or (b) in
the case of Rights, a period ending on the later of (1) three trading days
after the date of execution of such Notice of Guaranteed Delivery or (2)
three trading days after the date certificates for Rights are distributed
to stockholders by the Rights Agent. A "trading day" is any day on which
the Nasdaq Stock Market's National Market (the "Nasdaq National Market") is
open for business.
The Notice of Guaranteed Delivery may be delivered by hand to the
Depositary or transmitted by telegram, facsimile transmission or mail to the
Depositary and must include a guarantee by an Eligible Institution in the form
set forth in such Notice of Guaranteed Delivery.
Other Requirements. Notwithstanding any provision hereof, payment for
Shares accepted for payment pursuant to the Offer will in all cases be made
only after timely receipt by the Depositary of (a) certificates for (or a
timely Book-Entry Confirmation with respect to) such Shares and, if the
Distribution Date occurs, certificates for (or a timely Book-Entry
Confirmation, if available, with respect to) the associated Rights (unless the
Purchaser elects to make payment for such Shares pending receipt of the
certificates for, or a Book-Entry Confirmation with respect to, such Rights as
described above), (b) a Letter of Transmittal (or facsimile thereof), properly
completed and duly executed, with any required signature guarantees (or, in
the case of a book-entry transfer, an Agent's Message in lieu of the Letter of
Transmittal) and (c) any other documents required by the Letter of
Transmittal. Accordingly, tendering stockholders may be paid at different
times depending upon when certificates for Shares (or Rights) or Book-Entry
Confirmations with respect to Shares (or Rights, if available) are actually
received by the Depositary. Under no circumstances will interest on the
purchase price of the Shares be paid by the Purchaser, regardless of any
extension of the Offer or any delay in making such payment.
If the Rights Condition is satisfied, the guaranteed delivery procedures
with respect to certificates for Rights and the requirement for the tender of
Rights will no longer apply.
7
<PAGE>
Tender Constitutes an Agreement. The valid tender of Shares and, if
applicable, Rights pursuant to one of the procedures described above will
constitute a binding agreement between the tendering stockholder and the
Purchaser upon the terms and subject to the conditions of the Offer.
Appointment. By executing a Letter of Transmittal as set forth above, the
tendering stockholder irrevocably appoints designees of the Purchaser as such
stockholder's proxies, each with full power of substitution, to the full
extent of such stockholder's rights with respect to the Shares tendered by
such stockholder and accepted for payment by the Purchaser and with respect to
any and all cash dividends, distributions, rights, other Shares or other
securities issued or issuable in respect of such Shares on or after May 24,
1999. All such proxies will be considered coupled with an interest in the
tendered Shares. Such appointment is effective when, and only to the extent
that, the Purchaser deposits the payment for such Shares with the Depositary.
Upon the effectiveness of such appointment, all prior powers of attorney,
proxies and consents given by such stockholder will be revoked, and no
subsequent powers of attorney, proxies and consents may be given (and, if
given, will not be deemed effective). The Purchaser designees will, with
respect to the Shares for which the appointment is effective, be empowered to
exercise all voting and other rights of such stockholder as they, in their
sole discretion, may deem proper at any annual, special or adjourned meeting
of the stockholders of the Company, by written consent in lieu of any such
meeting or otherwise. The Purchaser reserves the right to require that, in
order for Shares to be deemed validly tendered, immediately upon the
Purchaser's payment for such Shares, the Purchaser must be able to exercise
full voting rights with respect to such Shares.
Determination of Validity. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance of any tender of Shares
or Rights will be determined by the Purchaser in its sole discretion, which
determination will be final and binding. The Purchaser reserves the absolute
right to reject any and all tenders determined by it not to be in proper form
or the acceptance for payment of or payment for which may, in the opinion of
the Purchaser's counsel, be unlawful. The Purchaser also reserves the absolute
right to waive any defect or irregularity in the tender of any Shares or
Rights of any particular stockholder whether or not similar defects or
irregularities are waived in the case of other stockholders. No tender of
Shares or Rights will be deemed to have been validly made until all defects
and irregularities relating thereto have been cured or waived. None of the
Purchaser, the Depositary, the Information Agent, the Dealer Manager or any
other person will be under any duty to give notification of any defects or
irregularities in tenders or incur any liability for failure to give any such
notification. The Purchaser's interpretation of the terms and conditions of
the Offer (including the Letter of Transmittal and the instructions thereto)
will be final and binding.
Backup Withholding. In order to avoid "backup withholding" of Federal
income tax on payments of cash pursuant to the Offer, a stockholder
surrendering Shares in the Offer must, unless an exemption applies, provide
the Depositary with such stockholder's correct taxpayer identification number
("TIN") on a Substitute Form W-9 and certify under penalties of perjury that
such TIN is correct and that such stockholder is not subject to backup
withholding. If a stockholder does not provide such stockholder's correct TIN
or fails to provide the certifications described above, the Internal Revenue
Service (the "IRS") may impose a penalty on such stockholder and payment of
cash to such stockholder pursuant to the Offer may be subject to backup
withholding of 31%. All stockholders surrendering Shares pursuant to the Offer
should complete and sign the main signature form and the Substitute Form W-9
included as part of the Letter of Transmittal to provide the information and
certification necessary to avoid backup withholding (unless an applicable
exemption exists and is proved in a manner satisfactory to the Purchaser and
the Depositary). If, however, the tendering stockholder completes the box
entitled "Special Payment Instructions" on the Letter of Transmittal, the
person to whom payment is to be made, rather than the tendering stockholder,
should complete and sign Substitute Form W-9. Certain stockholders (including,
among others, all corporations and certain foreign individuals and entities)
are not subject to backup withholding. Non-corporate foreign stockholders
should complete and sign the main signature form and a Form W-8, Certificate
of Foreign Status, a copy of which may be obtained from the Depositary, in
order to avoid backup withholding. See Instruction 9 to the Letter of
Transmittal.
8
<PAGE>
4. Rights of Withdrawal.
Tenders of Shares made pursuant to the Offer are irrevocable except that
Shares tendered pursuant to the Offer may be withdrawn at any time prior to
the Expiration Date and, unless theretofore accepted for payment by the
Purchaser pursuant to the Offer, may also be withdrawn at any time after July
22, 1999 (or such later date as may apply in case the Offer is extended).
For a withdrawal to be effective, a written, telegraphic or facsimile
transmission notice of withdrawal must be timely received by the Depositary at
one of its addresses set forth on the back cover of this Offer to Purchase.
Any such notice of withdrawal must specify the name of the person having
tendered the Shares to be withdrawn, the number of Shares to be withdrawn and
the names in which the certificate(s) evidencing the Shares to be withdrawn
are registered, if different from that of the person who tendered such Shares.
The signature(s) on the notice of withdrawal must be guaranteed by an Eligible
Institution, unless such Shares have been tendered for the account of any
Eligible Institution. If Shares have been tendered pursuant to the procedures
for book-entry tender as set forth in Section 3, any notice of withdrawal must
specify the name and number of the account at the Book-Entry Transfer Facility
to be credited with the withdrawn Shares. If certificates for Shares to be
withdrawn have been delivered or otherwise identified to the Depositary, the
name of the registered holder and the serial numbers of the particular
certificates evidencing the Shares to be withdrawn must also be furnished to
the Depositary as aforesaid prior to the physical release of such
certificates. All questions as to the form and validity (including time of
receipt) of any notice of withdrawal will be determined by the Purchaser, in
its sole discretion, which determination shall be final and binding. None of
Parent, the Purchaser, the Dealer Manager, the Depositary, the Information
Agent, or any other person will be under any duty to give notification of any
defects or irregularities in any notice of withdrawal or incur any liability
for failure to give such notification. Withdrawals of tender for Shares may
not be rescinded, and any Shares properly withdrawn will be deemed not to have
been validly tendered for purposes of the Offer. However, withdrawn Shares may
be retendered by following one of the procedures described in Section 3 at any
time prior to the Expiration Date.
If the Purchaser extends the Offer, is delayed in its acceptance for
payment of Shares, or is unable to accept for payment Shares pursuant to the
Offer, for any reason, then, without prejudice to the Purchaser's rights under
this Offer, the Depositary may, nevertheless, on behalf of the Purchaser,
retain tendered Shares, and such Shares may not be withdrawn except to the
extent that tendering stockholders are entitled to withdrawal rights as set
forth in this Section 4.
5. Certain Federal Income Tax Consequences of the Offer.
Sales of Shares pursuant to the Offer and the exchange of Shares for cash
pursuant to the Proposed Merger will be taxable transactions for federal
income tax purposes and may also be taxable transactions under applicable
state, local, foreign and other tax laws. The tax consequences of the receipt
of cash in exchange for Shares pursuant to the Offer of the Proposed Merger
may vary depending on, among other things, the particular circumstances of a
stockholder. For federal income tax purposes, a stockholder whose Shares are
purchased pursuant to the Offer or who receives cash as a result of the
Proposed Merger generally will recognize gain or loss equal to the difference
between such stockholder's adjusted basis of the Shares sold or exchanged and
the amount of cash received therefor. Such gain or loss will be capital gain
or loss if the Shares are held as capital assets by the stockholder and will
be long-term capital gain or loss if the stockholder's holding period in such
Shares for federal income tax purposes is more than one year at the time of
the sale or exchange. Long-term capital gain recognized by a non-corporate
stockholder is generally subject to tax at a maximum rate of 20%. In addition,
a stockholder's ability to use capital losses to offset ordinary income is
limited.
A stockholder that tenders Shares pursuant to the Offer or exchanges Shares
for cash pursuant to the Proposed Merger may be subject to backup withholding
at a rate of 31% unless such stockholder provides a TIN and certifies under
penalties of perjury that such TIN is correct or properly certifies that such
stockholder is awaiting a TIN, or unless an exemption applies. See "Backup
Withholding" under Section 3 and Instruction 9 in the Letter of Transmittal.
9
<PAGE>
THE INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL
INFORMATION ONLY AND MAY NOT BE APPLICABLE TO STOCKHOLDERS IN SPECIAL
SITUATIONS SUCH AS STOCKHOLDERS WHO RECEIVED THEIR SHARES UPON THE EXERCISE OF
EMPLOYEE STOCK OPTIONS OR OTHERWISE AS COMPENSATION AND STOCKHOLDERS WHO ARE
NOT UNITED STATES PERSONS. STOCKHOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS
WITH RESPECT TO THE SPECIFIC TAX CONSEQUENCES TO THEM, IN THEIR PARTICULAR
CIRCUMSTANCES, OF THE OFFER AND THE PROPOSED MERGER, INCLUDING THE APPLICATION
AND EFFECT OF FEDERAL, STATE, LOCAL, FOREIGN OR OTHER TAX LAWS.
6. Price Range of Shares; Dividends.
The Shares are traded on the Nasdaq National Market under the symbol
"VRLN." The following table sets forth, for the fiscal quarters indicated,
dividends per Share and the high and low bid quotations for the Shares on the
Nasdaq National Market, based upon published financial sources. All dividend
amounts and Share prices have been adjusted to reflect a three-for-two stock
split paid to stockholders of record on October 31, 1997 and a five-for-four
stock split paid to stockholders of record on October 30, 1998.
<TABLE>
<CAPTION>
Dividends Sale Price
--------- -------------------
Fiscal Year Ended January 31 High Low
- ---------------------------- --------- ---------
<S> <C> <C> <C>
1998:
First Quarter................................... $0.048 $11 1/16 $ 9 43/64
Second Quarter.................................. 0.048 17 11 17/32
Third Quarter................................... 0.048 25 1/16 15 19/32
Fourth Quarter.................................. 0.048 22 51/64 19
1999:
First Quarter................................... 0.048 30 45/64 19 29/32
Second Quarter.................................. 0.048 30 19/64 24 1/2
Third Quarter................................... 0.048 25 21/32 17 45/64
Fourth Quarter.................................. 0.050 28 3/4 22 11/32
2000:
First Quarter................................... 0.050 28 20 1/2
Second Quarter (through May 17, 1999)........... -- 28 3/16 25 13/16
</TABLE>
The Rights trade together with the Common Stock. On May 17, 1999, the last
full trading day prior to the public disclosure that Parent proposed to
commence the Offer, the reported closing bid price per Share reported on the
Nasdaq National Market was $25 13/16. On May 21, 1999, the last full trading
day prior to commencement of the Offer, the reported closing bid price per
Share reported on the Nasdaq National Market was $37.00. Stockholders are
urged to obtain a current market quotation for the Shares.
7. Effect of the Offer on the Market for the Shares, Stock Quotation, Margin
Regulations and Exchange Act Registration.
Market for Shares. The purchase of Shares by the Purchaser pursuant to the
Offer will reduce the number of Shares that might otherwise trade publicly and
may reduce the number of holders of Shares, which could adversely affect the
liquidity and market value of the remaining Shares held by the public.
Stock Quotation. The Shares are authorized for quotation on the Nasdaq
National Market. According to published guidelines of the Nasdaq National
Market, the Shares might no longer be eligible for quotation on the Nasdaq
National Market if, among other things, either (i) the number of Shares
publicly held were less than
10
<PAGE>
750,000, there were fewer than 400 holders of round lots, the aggregate market
value of publicly held Shares were less than $5,000,000, net tangible assets
were less than $4,000,000 and there were fewer than two registered and active
market makers for the Shares, or (ii) the number of Shares publicly held were
less than 1,100,000, there were fewer than 400 holders of round lots, the
aggregate market value of publicly held Shares were less than $15,000,000, and
either (x) the Company's market capitalization was less than $50,000,000 or
(y) the total assets and total revenue of the Company for the most recently
completed fiscal year or two of the last three most recently completed fiscal
years were less than $50,000,000 and there were fewer than four registered and
active market makers. Shares held directly or indirectly by directors or
officers of the Company or beneficial owners of more than 10% of the Shares
are not considered as being publicly held for this purpose. According to the
Company 10-K, as of January 31, 1999, there were approximately 400
stockholders of record.
If the Shares were to cease to be quoted on the Nasdaq National Market, the
market for the Shares could be adversely affected. It is possible that the
Shares would be traded or quoted on other securities exchanges (with trades
published by such exchanges), the Nasdaq Stock Market (with quotations
published in the Nasdaq "additional list" or in one of the "local lists") or
in the over-the-counter market. The extent of the public market for the Shares
and the availability of such quotations would, however, depend upon the number
of stockholders and the aggregate market value of the Shares remaining at such
time, the interest in maintaining a market in the Shares on the part of
securities firms, the possible termination of registration of the Shares under
the Exchange Act and other factors.
Margin Regulations. The Shares are presently "margin securities" under the
regulations of the Board of Governors of the Federal Reserve Board (the
"Federal Reserve Board"), which has the effect, among other things, of
allowing brokers to extend credit on the collateral of such Shares. Depending
upon factors similar to those described above regarding listing and market
quotations, the Shares might no longer constitute "margin securities" for the
purposes of the Federal Reserve Board's margin regulations in which event the
Shares would be ineligible as collateral for margin loans made by brokers.
Exchange Act Registration. The Shares are currently registered under the
Exchange Act. Such registration may be terminated by the Company upon
application to the SEC if the outstanding Shares are not listed on a national
securities exchange and if there are fewer than 300 holders of record of
Shares. Termination of registration of the Shares under the Exchange Act would
reduce the information required to be furnished by the Company to its
stockholders and to the SEC and would make certain provisions of the Exchange
Act, such as the short-swing profit recovery provisions of Section 16(b) and
the requirement to furnish a proxy statement in connection with stockholders'
meetings pursuant to Section 14(a) and the related requirement to furnish an
annual report to stockholders, no longer applicable with respect to the
Shares. Furthermore, the ability of "affiliates" of the Company and persons
holding "restricted securities" of the Company to dispose of such securities
pursuant to Rule 144 under the Securities Act of 1933, as amended, may be
impaired or eliminated. If registration of the Shares under the Exchange Act
were terminated, the Shares would no longer be eligible for Nasdaq reporting
or for continued inclusion on the Federal Reserve Board's list of "margin
securities". The Purchaser intends to seek to cause the Company to apply for
termination of registration of the Shares under the Exchange Act as soon as
possible after consummation of the Offer if the requirements for termination
of registration are met.
8. Certain Information Concerning the Company.
The information concerning the Company contained in this Offer to Purchase
has been taken from or based upon publicly available documents and records on
file with the SEC and other public sources and is qualified in its entirety by
reference thereto. None of Parent, the Purchaser, the Information Agent or the
Dealer Manager can take responsibility for the accuracy or completeness of the
information contained in such documents and records, or for any failure by the
Company to disclose events which may have occurred or may affect the
significance or accuracy of any such information but which are unknown to
Parent, the Purchaser, the Information Agent or the Dealer Manager.
11
<PAGE>
The Company is a Delaware corporation with its principal executive offices
located at 55 Shuman Boulevard, P.O. Box 3089, Naperville, Illinois 60566-
7089, and its telephone number is (630) 420-0400. The following description of
the Company's business has been taken from, and is qualified in its entirety
by reference to, the Company 10-K.
The Company was founded in 1969 and designs, manufactures and markets
products used in the manufacturing of components for locomotives, railcars and
track fasteners in its Railroad Products segment, components for automobiles,
light and heavy duty trucks in its Vehicular Products segment and petroleum
analyzers in its Petroleum Analyzers segment.
The selected financial information of the Company and its consolidated
subsidiaries set forth below has been excerpted and derived from the Company
10-K. More comprehensive financial and other information is included in such
report (including management's discussion and analysis of financial condition
and results of operations) and in other reports and documents filed by the
Company with the SEC. The financial information set forth below is qualified
in its entirety by reference to such reports and documents filed with the SEC
and the financial statements and related notes contained therein. These
reports and other documents may be examined and copies thereof may be obtained
in the manner set forth below.
VARLEN CORPORATION
AND SUBSIDIARIES
Selected Consolidated Financial Information
<TABLE>
<CAPTION>
Fiscal Year Ended January
31,
----------------------------
1999 1998 1997
-------- -------- --------
(in thousands)
<S> <C> <C> <C>
Statement of Earnings Data:
Net sales......................................... $646,672 $522,254 $409,475
Gross profit...................................... 168,737 129,670 100,448
Selling, general and administrative expenses...... 90,763 74,887 63,607
Earnings from operations.......................... 77,974 54,783 36,841
Interest expense.................................. (7,309) (9,536) (9,402)
Interest income................................... 812 234 662
Gain on sale of business.......................... -- -- 3,730
Net earnings...................................... $ 41,242 $ 25,651 $ 17,857
Balance Sheet Data (at year end):
Current assets.................................... $178,403 $150,167
Total assets...................................... 475,524 419,101
Current liabilities............................... 103,609 76,143
Long-term debt.................................... 94,643 104,715
Stockholder's equity.............................. $240,920 $198,792
</TABLE>
Available Information. The Company is subject to the information and
reporting requirements of the Exchange Act and in accordance therewith is
required to file periodic reports, proxy statements and other information with
the SEC relating to its business, financial condition and other matters.
Certain information, as of particular dates, concerning the Company's
business, principal physical properties, capital structure, material pending
legal proceedings, operating results, financial condition, directors and
officers (including their remuneration and the stock options granted to them),
the principal holders of the Company's securities, any material interests of
such persons in transactions with the Company and certain other matters is
required to be disclosed in proxy statements and annual reports distributed to
the Company's stockholders and filed with the
12
<PAGE>
SEC. Such reports, proxy statements and other information can be inspected and
copied at the public reference facilities maintained by the SEC at Judiciary
Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the SEC's
regional offices at 500 West Madison Street, Chicago, Illinois 60606, and 7
World Trade Center, New York, New York 10048. Copies of such material can also
be obtained at prescribed rates from the Public Reference Section of the SEC
at its principal office at Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549. Such material may be obtained electronically by
visiting the SEC's website on the Internet, at http://www.sec.gov.
9. Certain Information Concerning Parent and the Purchaser.
Parent is a Delaware corporation whose principal executive offices are
located at 44th Floor--Boulevard Towers South, 205 North Michigan Avenue,
Chicago, Illinois 60601.
Parent is composed of six decentralized entities whose products fall into
three product categories: railroad, construction and building, and general
industrial. Railroad products are manufactured by American Steel Foundries and
Griffin Wheel and include components for railroad freight cars and
locomotives, such as side frames and bolsters, wheels and coupling products.
Construction and building products are manufactured by two of Parent's
entities: Griffin Pipe produces ductile iron pressure pipe and fittings for
fresh water and waste water transmission, and Baltimore Aircoil produces
evaporative heat transfer and ice thermal storage equipment used in air
conditioning applications for large buildings. General industrial products are
manufactured by four of Parent's entities: American Steel Foundries, Baltimore
Aircoil, Burgess-Norton and Diamond Chain. This category includes products for
the automotive and truck industry, such as fifth wheels, piston pins and
powder metal parts; evaporative heat transfer equipment for industrial cooling
applications; and roller chain for a variety of applications. In May 1999,
Parent sold its Macwhyte Company division, which produces wire rope for
industrial applications.
The Purchaser's principal executive offices are located care of Amsted
Industries Incorporated, 44th Floor- Boulevard Towers South, 205 North
Michigan Avenue, Chicago, Illinois 60601. The Purchaser is a newly formed
Delaware corporation and a wholly owned subsidiary of Parent. The Purchaser
has not conducted any business other than in connection with the Offer and the
Merger.
Additional Information. As a privately-held company, Parent is not subject
to the information and reporting requirements of the Exchange Act and is not
required to file reports and other information with the SEC relating to its
business, financial condition and other matters.
13
<PAGE>
Set forth below are certain financial highlights relating to Parent.
AMSTED INDUSTRIES INCORPORATED
AND SUBSIDIARIES
Selected Consolidated Financial Information (1)
<TABLE>
<CAPTION>
Fiscal Year Ended September 30,
--------------------------------
1998 1997 1996
---------- ---------- ----------
(in thousands)
<S> <C> <C> <C>
Income Statement Data:
Sales.......................................... $1,251,744 $1,104,515 $1,142,664
Net income..................................... 83,500 55,300 76,900
Balance Sheet Data (at year end):
Total assets................................... $ 816,409 $ 806,843
Long-term debt................................. 62,700 57,065
Redeemable stockholders' equity (2)............ 369,498 379,125
</TABLE>
- ---------------------
(1) Derived from audited consolidated financial statements of Parent and its
consolidated subsidiaries.
(2) All of the outstanding shares of Parent's common stock are held by the
Amsted Industries Incorporated Employees' Stock Ownership Plan (ESOP). All
such shares are redeemable under a diversification program or upon
termination of employment, generally at the option of the participant, at
periodically determined values based upon independent valuations.
The name, citizenship, business address, present principal occupation, and
material positions held during the past five years of each of the directors
and executive officers of Parent and the Purchaser are set forth in Schedule A
to this Offer to Purchase.
Except as set forth in Section 10 and Schedule B, neither of Parent nor the
Purchaser, nor, to the best of their knowledge, any of the persons listed in
Schedule A nor any associate or majority-owned subsidiary of either of the
foregoing, beneficially owns or has a right to acquire any equity securities
of the Company. Except as set forth in Section 10 and Schedule B, neither of
Parent or the Purchaser, or, to the best of their knowledge, any of the
persons or entities referred to above, nor any director, executive officer or
subsidiary of either of the foregoing, has effected any transaction in such
equity securities during the past 60 days.
Except as set forth in Sections 10 and 11, neither of Parent nor the
Purchaser, nor, to the best of their knowledge, any of the persons listed in
Schedule A, has any contract, arrangement, understanding or relationship with
any other person with respect to any securities of the Company, including, but
not limited to, any contract, arrangement, understanding or relationship
concerning the transfer or the voting of any such securities, joint ventures,
loan or option arrangements, puts or calls, guaranties of loans, guaranties
against loss or the giving or withholding of proxies. Except as set forth in
Sections 10 and 11, there have been no contacts, negotiations or transactions
since February 1, 1996 between Parent or the Purchaser, or, to the best of
their knowledge, any of the persons listed in Schedule A hereto, on the one
hand, and the Company or its affiliates, on the other hand, concerning a
merger, consolidation or acquisition, a tender offer or other acquisition of
securities, an election of directors, or a sale or other transfer of a
material amount of assets. Except as described in Sections 10 and 11, neither
of Parent nor the Purchaser, nor, to the best of their knowledge, any of the
persons listed in Schedule A, has since February 1, 1996 had any transaction
with the Company or any of its executive officers, directors or affiliates
that would require disclosure under the rules and regulations of the SEC
applicable to the Offer.
14
<PAGE>
10. Background of the Offer; Contacts with the Company.
In the ordinary course of its business, Parent is engaged in the ongoing
evaluation of potential candidates for acquisitions and strategic
transactions. Through that process, in early 1999, Parent identified the
Company as a candidate with which it might pursue an acquisition or other
strategic transaction.
In March of 1999, Parent and Salomon Smith Barney began preliminary
discussions concerning a possible strategic transaction between Parent and the
Company. In April 1999, Parent retained Salomon Smith Barney to act as its
financial advisor in connection with its exploration of a possible strategic
transaction with the Company.
On May 4, 1999, Arthur W. Goetschel, the Chairman, President and Chief
Executive Officer of Parent telephoned Raymond A. Jean, the President and
Chief Executive Officer of the Company. In that conversation, Mr. Goetschel
informed Mr. Jean of Parent's interest in exploring a strategic business
combination with the Company. Mr. Goetschel then delivered the following
letter to Mr. Jean:
"May 4, 1999
Mr. Raymond A. Jean
President and Chief Executive Officer
Varlen Corporation
55 Shuman Blvd.
P.O. Box 3089
Naperville, IL 60566-7089
Dear Mr. Jean:
We have been following your company with interest for years. We recognize
Varlen as a company with truly unique products and positions in the same
important customer markets as our own. The purpose of this letter is to
express our interest in meeting with you to discuss a strategic business
combination that will benefit both companies, shareholders and employees. This
letter summarizes some of the issues presented in our phone conversation
earlier today.
Based on a review of public information, we believe that we can propose to
purchase all of Varlen's outstanding shares for cash at a price of at least
$33.00 per share conditioned upon a satisfactory due diligence review. We
would like an opportunity to conduct a brief, confidential and non-invasive
due diligence review to confirm the benefits of a business combination. This
review may enable us to uncover additional value in the form of greater
combination benefits. We have reviewed this transaction with Salomon Smith
Barney/Citibank, our financing sources, and we are confident that we can
consummate an all-cash transaction in a timely manner without requiring a
financing condition.
A combination of AMSTED and Varlen has compelling industrial logic and strong
potential for operating synergies. By integrating Varlen's bearings and
hydraulic cushioning products with our wheels, trucks and end of car
equipment, we can provide a product set to Class 1 railroads unmatched in the
industry. In our automotive and truck businesses, we should be able to put
together customer solutions unparalleled in the industry while building
substantial shareholder value.
While we know you are familiar with our company, we have enclosed additional
materials on AMSTED. AMSTED is one of the largest employee-owned companies in
the United States, with over $1.25 billion in annual sales, over $160 million
in EBITDA prior to ESOP contributions, and minimal outstanding net debt. Since
the employee stock ownership plan acquired the Company in March 1986, we have
built over $1 billion in shareholder value, a benefit shared by over 4,000 of
our employee/shareholders.
Coming from a publicly traded environment, we understand how empowering
employees with stock ownership has led to significant benefits for AMSTED.
Varlen's non-bargaining U.S. employees will share the benefits of employee
ownership as an additional employee benefit. We are proud of our record as
excellent partners in other business combinations, providing expanded
management opportunities, increased research and development, and
15
<PAGE>
improved manufacturing and expansion capabilities. Varlen's decentralized
operating unit management style is very similar to AMSTED's, and I would look
forward to discussing with you the continuation of Varlen's management team
with AMSTED.
We are extremely serious about our proposal and we urge you to meet with us at
your earliest convenience. We are convinced that our proposal is in the best
interests of both companies' shareholders and other constituencies. It is our
desire to work together with you to reach an agreement on a transaction that
can be presented to Varlen's shareholders as a joint effort of Varlen's and
AMSTED's Boards of Directors.
To move forward, we would like the opportunity to bring our advisors into the
process to conduct a due diligence review and negotiate a definitive purchase
agreement in a short time period. We look forward to your prompt response. Our
current proposal to explore a business combination on these terms remains open
only as long as our expression of interest remains confidential.
Sincerely,
Arthur W. Goetschel
Chairman, President and
Chief Executive Officer"
On the afternoon of May 7, 1999, Mr. Jean telephoned Mr. Goetschel. Mr.
Jean stated that the Company's board of directors would discuss Parent's
expression of interest in a meeting that afternoon.
On May 10, Mr. Jean telephone Mr. Goetschel. Mr. Jean stated that the
Company's board of directors had not met formally over the May 8 weekend but
were expected to meet on May 14.
Also on May 10, Mr. Goetschel sent the following letter by overnight
courier to each of the directors of the Company:
"May 10, 1999
[Name and address of director]
Dear [director]:
This letter is being sent to all Varlen directors to request consideration by
the Varlen Board of Directors of AMSTED's proposal to acquire Varlen at a
significant premium. Based on a review of public documents, we are prepared to
pay at least $33.00 per share conditioned upon a satisfactory due diligence
review. We believe a due diligence review may enable us to uncover additional
value in the form of greater combination benefits.
Although we made an initial approach to Mr. Jean on May 4, we have been
unsuccessful in scheduling a meeting. We were informed by Mr. Jean that your
Board of Directors would convene to discuss this matter this past weekend, but
we have been subsequently notified that you would not be meeting promptly. We
believe this proposal merits serious consideration of your Board of Directors.
We are prepared to work with our financial and legal advisors to perform due
diligence and negotiate a definitive agreement within a short period of time.
We look forward to your prompt response. While we would prefer to work
directly with Victor's management and Board of Directors to reach agreement on
a transaction, we believe our proposal would be well received by your
shareholders. We will notify your shareholders of this proposal Wednesday
evening unless the company meets with us before then with the purpose of
negotiating a transaction.
16
<PAGE>
This transaction offers a significant premium and immediate liquidity to the
shareholders, and offers a price above Varlen's all-time high. In addition,
other constituencies stand to benefit significantly including employees and
customers. We have reviewed this transaction with our advisors and lenders,
Salomon Smith Barney/Citibank, and are confident that we can consummate an
all-cash transaction in a timely manner without requiring a financing
condition.
We would like to provide you an overview of AMSTED, our financial capacity,
the benefits to a business combination, and our approach to completing a
transaction. AMSTED is a leading industrial company serving the railroad,
construction and building, and industrial markets (including heavy truck). We
are a strong proponent of consolidations where we believe we can better serve
our customers' needs by providing more complete solutions.
In a combination with Varlen, the industrial logic and synergistic
opportunities are particularly compelling. Although AMSTED and Varlen are not
direct competitors, AMSTED and Varlen should be able to put together customer
solutions unmatched in the railroad, automotive and truck industries while
building substantial shareholder value. For example, by coordinating Victor's
bearings and hydraulic cushioning products with our wheels, trucks and end of
car equipment, we can provide a product set to Class 1 railroads unmatched in
the industry.
While you may be familiar with our company, we have enclosed materials on
AMSTED. AMSTED is one of the largest employee-owned companies in the United
States, with over $1.25 billion in annual sales, over $160 million in EBITDA
prior to ESOP contributions, and minimal outstanding net debt. Since the
employee stock ownership plan acquired the company in March 1986, we have
built over $1 billion in shareholder value, a benefit shared by over 4,000 of
our employees.
Coming from a publicly traded environment, we understand how empowering
employees with stock ownership has led to significant benefits for AMSTED.
Victor's non-bargaining employees will share the benefits of employee
ownership. We are proud of our record as excellent partners in other business
combinations, providing expanded management opportunities, increased research
and development and improved manufacturing and expansion capabilities.
We are convinced that our proposal is in the best interest of both companies'
shareholders and other constituencies, and that it is feasible. It is our
desire to work together with you to reach an agreement on a transaction that
can be presented to Varlen's shareholders as a joint effort of Varlen's and
AMSTED's Board of Directors.
Sincerely,
Arthur W. Goetschel"
On May 11, 1999, Mr. Jean telephoned Mr. Goetschel. In that conversation,
Mr. Jean requested that Parent not make any public expression of its interest
in pursuing a transaction with the Company while the Company and its advisors
evaluated Parent's expression. Mr. Goetschel agreed to take this request under
consideration.
On May 12, 1999, Mr. Goetschel telephoned Mr. Jean to advise that Parent
would delay a press release concerning its interest in pursuing a transaction
with the Company subject to the Company holding a board meeting on May 14 and
the Company's willingness to meet with Parent to negotiate a friendly
transaction over the following weekend.
On May 14, 1999, the respective financial and legal advisors to Parent and
the Company met to consider the possibility of negotiating a transaction. The
Company's advisors informed Parent's advisors that the Company had not
authorized its advisors to negotiate a transaction. The Company's advisors
informed Parent's advisors that the Company's board of directors would be
meeting over the following weekend to discuss, among other things, commencing
negotiations with Parent on Monday, May 17, 1999.
17
<PAGE>
On May 17, 1999, the Company communicated through its legal advisors that
the Company would not be in a position to negotiate a possible transaction
prior to 6:00 p.m. local time on May 19, 1999. Also on May 17, 1999, Mr.
Goetschel sent the following letter to Mr. Jean:
"May 17, 1999
Mr. Raymond A. Jean
President and Chief Executive Officer
Varlen Corporation
55 Shuman Blvd.
Naperville, Illinois 60566-7089
Dear Mr. Jean:
I deeply regret that Varlen has determined not to engage in negotiations with
AMSTED toward a combination of the two companies. AMSTED continues to believe
that such a combination would be to the benefit of shareholders of both
companies. Therefore, AMSTED will announce tomorrow that it intends to
commence a tender offer for all shares of Varlen at a price of $35 per share.
A copy of the press release is attached hereto as Exhibit A.
AMSTED believes that this offer is fully priced and represents a significant
premium to Varlen shareholders over any historical market price. AMSTED
understands that Varlen and its advisors may disagree as to the adequacy of
this price.
Therefore, AMSTED urges Varlen to permit Varlen shareholders to express their
own decision with respect to the offer. The only effective way to empower
Varlen shareholders to make their own decision is for the Varlen board of
directors to (i) repeal the rights plan and (ii) waive the provisions of
(S)203 of the Delaware Corporation Law, subject, in each case, to a purchase
by AMSTED of Varlen stock at a price of $35 per share.
Of course, we remain open to negotiate a consensual transaction.
Very truly yours,
Arthur W. Goetschel"
Prior to the open of trading on May 18, 1999, the Parent issued a press
release stating that it intended to commence an offer to acquire all of the
outstanding shares of the Company's Common Stock.
On May 24, 1999, Parent and the Purchaser commenced the Offer.
11. Purpose of the Offer; Plans for the Company; the Proposed Merger.
Purpose. The purpose of the Offer is to acquire for cash as many
outstanding Shares as possible as a first step in acquiring the entire equity
interest in the Company.
The Purchaser currently intends, as soon as practicable upon consummation
of the Offer, to propose and seek to have the Company effect the Proposed
Merger, pursuant to which each then outstanding Share (other than Shares held
by the Company in treasury, or owned by Parent, the Purchaser or any other
wholly owned subsidiary of Parent, or Shares, if any, that are held by
stockholders who are entitled to and who properly exercise dissenters' rights
under Delaware law) would be converted into the right to receive an amount in
cash equal to the per Share price paid pursuant to the Offer, without
interest.
18
<PAGE>
No final decisions have been made with respect to Parent's plans for the
Company if the Proposed Merger is consummated. Such decisions, when made, will
be based on Parent's review from time to time of the advisability of certain
actions as well as financial and other economic conditions and may include,
without limitation, the integration of all or some of the Company's operations
with operations conducted by Parent through its subsidiaries and affiliates.
Because there is not significant overlap of the Company's business and the
businesses conducted by Parent, Parent currently anticipates that
substantially all of the Company's businesses would continue to be conducted
following consummation of the Offer and the Proposed Merger.
Parent and the Purchaser are seeking to negotiate with the Company with
respect to the acquisition of the Company by Parent through the Purchaser.
Parent and the Purchaser reserve the right to amend the Offer upon entering
into a merger agreement with the Company.
In the event that the Purchaser acquires Shares which, together with Shares
beneficially owned by the Purchaser and its affiliates, constitute at least
90% of the outstanding Shares, Parent currently intends to transfer (and cause
any such affiliates to transfer) the Shares owned by Parent and any such
affiliates to the Purchaser to permit the Purchaser to consummate a "short-
form" merger pursuant to Section 253 of the DGCL. Section 253 of the DGCL
provides that if the Purchaser owns at least 90% of the outstanding Shares,
the Purchaser may merge with the Company without approval or any other action
on the part of the Board of Directors or the stockholders of the Company.
Therefore, if at least 90% of the outstanding Shares are acquired pursuant to
the Offer or otherwise, the Purchaser will be able to, and intends to, effect
the Proposed Merger without a meeting of holders of Shares.
If the Purchaser purchases a sufficient number of Shares to satisfy the
Minimum Tender Condition, but does not purchase a sufficient number of Shares
to effect a "short-form" merger, the Purchaser would seek to effect a merger
of the Purchaser with the Company pursuant to Section 251 of the DGCL. Under
the Company's Certificate of Incorporation and the DGCL, approval of the Board
of Directors of the Company and a vote of at least a majority of the
outstanding Shares of the Company entitled to vote thereon would be required
to approve such a merger. If the Minimum Tender Condition is satisfied,
Purchaser would have a sufficient number of votes to effect the shareholder
approval of a merger pursuant to Section 251 of the DGCL, which approval could
be effected by a vote at a meeting of shareholders or by written consent.
Approval of such a merger would nonetheless also require the approval of the
Company's Board of Directors.
Parent has requested that the Board of Directors of the Company redeem the
Rights or otherwise take action to render the Rights inapplicable to the Offer
and the Proposed Merger. If the Board of Directors does not do so, in
connection with the Offer and the Proposed Merger and in order to satisfy the
Rights Condition, Parent and the Purchaser intend, if necessary, to solicit
written consents from the holders of Shares to remove the Company's Board of
Directors and to elect nominees of the Purchaser as the directors of the
Company. As an alternative to or in addition to the solicitation of consents,
the Purchaser may seek through the solicitation of proxies from holders of
Shares to elect, at an annual or special meeting of the Company's
stockholders, nominees of the Purchaser as the directors of the Company. If
Parent commences a solicitation of proxies or consents from the holders of
Shares and Purchaser's nominees are elected to the Board of Directors of the
Company, the Purchaser expects that such nominees will, subject to their
fiduciary duties to stockholders of the Company in light of the circumstances
then existing, take all necessary action to redeem the Rights and thereby
satisfy the Rights Condition, approve the acquisition of Shares pursuant to
the Offer and the Proposed Merger, satisfy the Section 203 Condition and
authorize the Company to enter into a merger agreement with Parent and the
Purchaser to effect the Proposed Merger.
THIS OFFER DOES NOT CONSTITUTE A SOLICITATION OF PROXIES OR CONSENTS. ANY
SUCH SOLICITATION WHICH THE PURCHASER OR PARENT MIGHT MAKE WILL BE MADE
PURSUANT TO SEPARATE PROXY OR CONSENT SOLICITATION MATERIALS COMPLYING WITH
THE REQUIREMENTS OF SECTION 14(a) OF THE EXCHANGE ACT.
19
<PAGE>
Section 203 of the DGCL. In general, Section 203 of the DGCL prevents an
"Interested Stockholder" (defined generally as a person owning 15% or more of
a corporation's outstanding voting stock) of a Delaware corporation from
engaging in a "Business Combination" (defined as a variety of transactions,
including mergers, as set forth below) with such corporation for three years
following the date such person became an Interested Stockholder unless (i)
before such person became an Interested Stockholder, the Board of Directors of
the corporation approved the transaction in which the Interested Stockholder
became an Interested Stockholder or approved the Business Combination; (ii)
upon consummation of the transaction which resulted in the Interested
Stockholder becoming an Interested Stockholder, the Interested Stockholder
owned at least 85% of the voting stock of the corporation outstanding at the
time the transaction commenced (excluding stock held by directors who are also
officers of the corporation and by employee stock ownership plans of the
corporation that do not provide employees with the rights to determine
confidentially whether shares held subject to the plan will be tendered in a
tender or exchange offer); or (iii) following the transaction in which such
person became an Interested Stockholder, the Business Combination is approved
by the Board of Directors of the corporation and authorized at a meeting of
stockholders by the affirmative vote of the holders of two-thirds of the
outstanding voting stock of the corporation not owned by the Interested
Stockholder.
Section 203 provides that during such three-year period the corporation may
not merge or consolidate with an Interested Stockholder or any affiliate or
associate thereof, and also may not engage in certain other transactions with
an Interested Stockholder or any affiliate or associate thereof, including
without limitation, (i) any sale, lease, exchange, mortgage, pledge, transfer
or other disposition of assets (except proportionately as a stockholder of the
corporation) having an aggregate market value equal to 10% or more of the
aggregate market value of all assets of the corporation determined on a
consolidated basis or the aggregate market value of all the outstanding stock
of a corporation; (ii) any transaction which results in the issuance or
transfer by the corporation or by certain subsidiaries thereof of any stock of
the corporation or such subsidiaries to the Interested Stockholder, except
pursuant to a transaction which effects a pro rata distribution to all
stockholders of the corporation; (iii) any transaction involving the
corporation or certain subsidiaries thereof which has the effect of increasing
the proportionate share of the stock of any class or series, or securities
convertible into the stock of any class or series, of the corporation or any
such subsidiary which is owned directly or indirectly by the Interested
Stockholder (except as a result of immaterial changes due to fractional share
adjustments); or (iv) any receipt by the Interested Stockholder of the benefit
(except proportionately as a stockholder of such corporation) of any loans,
advances, guarantees, pledges or other financial benefits provided by or
through the corporation.
There can be no assurance that the Board of Directors of the Company will
approve the acquisition of Shares pursuant to the Offer and the Proposed
Merger for purposes of Section 203.
THE OFFER IS CONDITIONED UPON THE ACQUISITION OF SHARES PURSUANT TO THE
OFFER AND THE PROPOSED MERGER BEING APPROVED PURSUANT TO SECTION 203 OR PARENT
BEING SATISFIED IN ITS SOLE DISCRETION THAT THE PROVISIONS OF SECTION 203 ARE
INVALID OR INAPPLICABLE TO THE ACQUISITION OF SHARES PURSUANT TO THE OFFER AND
THE PROPOSED MERGER.
Appraisal Rights. Holders of Shares do not have appraisal rights as a
result of the Offer. However, if the Proposed Merger is consummated, each
holder of Shares whose shares are to be converted in the Proposed Merger and
who has neither voted in favor of the Proposed Merger nor consented thereto in
writing will be entitled to request an appraisal by the Delaware Court of
Chancery of the fair value of such stockholder's Shares, exclusive of any
element of value arising from the accomplishment or expectation of the
Proposed Merger, together with a fair rate of interest, if any, and to be paid
such amount in cash. In determining such fair value, the Court may consider
all relevant factors. The value so determined could be more or less than the
consideration to be paid in the Offer and the Proposed Merger. Any judicial
determination of the fair value could be based upon considerations other than
or in addition to the market value of the Shares, including, among other
things, asset values and earning capacity.
If any holder of Shares who demands an appraisal under the DGCL fails to
perfect, or effectively withdraws or loses such stockholder's right to an
appraisal as provided in the DGCL, the Shares of such stockholder will be
converted into the right to receive the merger consideration pursuant to the
Proposed Merger.
20
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The foregoing discussion is not a complete statement of law pertaining to
appraisal rights under the DGCL and is qualified in its entirety by the full
text of Section 262 of the DGCL.
Failure to follow the steps required by Section 262 of the DGCL for
perfecting appraisal rights may result in the loss of such rights.
Rule 13e-3. The Proposed Merger would have to comply with any applicable
federal law operative at the time of its consummation. Rule 13e-3 under the
Exchange Act is applicable to certain "going private" transactions. The
Purchaser does not believe that Rule 13e-3 will be applicable to the Proposed
Merger unless the Proposed Merger is consummated more than one year after the
termination of the Offer. If applicable, Rule 13e-3 would require, among other
things, that certain financial information concerning the Company and certain
information relating to the fairness of the Proposed Merger and the
consideration offered to minority stockholders be filed with the SEC and
disclosed to minority stockholders prior to consummation of the Proposed
Merger.
Rights Agreement. Set forth on Schedule C is a summary description of the
Rights.
The Offer is conditioned, among other things, on the Rights Condition being
satisfied. See Introduction and Section 13. Parent has requested that the
Company's Board of Directors redeem the Rights or otherwise take action to
render the Rights inapplicable to the Offer and the Proposed Merger, in order
to allow stockholders the opportunity to receive the consideration offered
pursuant to the Offer. Unless the Rights Condition shall have been satisfied,
stockholders will be required to tender all Rights associated with each share
of Common Stock tendered in order to effect a valid tender of Shares in
accordance with the procedures set forth in Section 2. Unless separate
certificates for the Rights are issued, a tender of shares of Common Stock
will also constitute a tender of the associated Rights. See Section 1.
12. Source and Amount of Funds.
The Purchaser estimates that the total amount of funds required to purchase
all of the outstanding Shares (other than those already owned by Purchaser) on
a fully diluted basis pursuant to the Offer and the Proposed Merger and to pay
related fees and expenses will be approximately $640 million. The Purchaser
will obtain these funds from Parent in the form of a capital contribution or
loan. Parent will obtain the necessary funds from its internal cash reserves
and borrowings under the Credit Agreement described below.
Parent has entered into a definitive commitment letter dated April 29, 1999
(the "Commitment Letter") with Salomon Smith Barney, Citibank, N.A.
("Citibank"), and Salomon Brothers Holding Company Inc. Pursuant to the
Commitment Letter, Salomon Smith Barney and certain of its affiliates have
committed to provide to Parent a $600 million unsecured revolving credit
facility and a $300 million unsecured term loan facility, each having a term
of five years (the "Credit Facilities"), subject to the terms and conditions
stated in the Commitment Letter. Under the Commitment Letter, Citibank has
reserved the right to syndicate all or part of the Credit Facilities to other
financial institutions in consultation with Parent.
Borrowings under the Credit Agreement may be used by Parent to finance the
acquisition of the Company, to refinance Parent's and the Company's existing
indebtedness, for working capital needs (including capital expenditures) and
for general corporate purposes. The initial borrowing under the Credit
Agreement will be subject to the satisfaction of certain conditions, including
the negotiation of a definitive credit agreement (the "Credit Agreement") and
the closing of the Credit Facilities on or prior to July 31, 1999 (or, with
the consent of Citibank, which shall not be unreasonably withheld, August 30,
1999).
Under the Credit Agreement, Parent will have the option of borrowing funds
at variable interest rates based upon a base rate of interest or LIBOR, plus a
variable applicable margin, or upon competitive bids requested by Parent made
by lenders to whom the Credit Facilities have been syndicated. Interest on
loans based on a base rate of interest ("Base Rate Loans") will be payable at
the higher of the base rate of interest charged by Citibank and the federal
funds rate plus 0.5%. Interest on a loan based on LIBOR ("LIBOR Loans") will
be payable at
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the rate at which deposits in U.S. dollars would be offered by certain
reference banks to prime banks in the London interbank market substantially in
the same amount and for the same duration as the LIBOR Loan to be made by such
reference banks, plus the applicable margin. The applicable margin for LIBOR
Loans will be based on Parent's leverage ratio determined quarterly. Depending
on the leverage ratio, the applicable margin for LIBOR Loans will vary from
0.525% to 1.25% and the aggregate margin (including facility fees) will vary
from 0.625% to 1.75%. In addition, Parent will be required to pay certain
acceptance, arrangement, agency and competitive bid fees in the amounts and on
the dates set forth in a confidential fee letter dated April 29, 1999 among
Parent, Citibank and Salomon Smith Barney.
The Credit Agreement will contain representations, warranties, conditions
to borrowing, covenants (including financial covenants) and events of default
customary for facilities of this nature.
The foregoing description of the terms and conditions of the Commitment
Letter is qualified in its entirety by reference to the full text thereof
which has been filed as an exhibit to the Tender Offer Statement on Schedule
14D-1 and is incorporated herein by reference.
No final decisions have been made concerning the method Parent will employ
to repay its borrowings incurred to consummate the Offer. These decisions,
when made, will be based on Parent's review from time to time of the
advisability of particular actions, as well as on prevailing interest rates,
stock market and financial and other economic conditions. Furthermore, of
course, there can be no assurance that Parent will be able to utilize any one
or more of the repayment options or as to the amount that will be available
under any of them.
13. Certain Conditions of the Offer.
Notwithstanding any other provision of the Offer, the Purchaser shall not
be required to accept for payment and, subject to any applicable rules and
regulations of the SEC, including Rule 14e-1(c), the Purchaser shall not be
required to pay for any Shares, may postpone the acceptance for payment of, or
payment for, tendered Shares, and may, in its sole discretion, extend,
terminate or amend the Offer as to any Shares not then accepted for payment if
the Minimum Tender Condition, the Section 203 Condition, the Rights Condition
or the Antitrust Condition has not been satisfied or, on or after the date of
this Offer to Purchase and at or prior to the Expiration Date, any of the
following events shall occur:
(a) there shall be threatened, instituted or pending any action,
proceeding or application before any court, government or governmental
authority or other regulatory or administrative agency or commission,
domestic or foreign, (i) which challenges the acquisition by the Purchaser
of the Shares, seeks to restrain, delay or prohibit the consummation of the
Offer or the transactions contemplated by the Offer, the Proposed Merger or
other subsequent business combination or seeks to obtain any material
damages or otherwise directly or indirectly relates to the transactions
contemplated by the Offer, the Proposed Merger or other subsequent business
combination, (ii) which seeks to prohibit or impose material limitations on
Parent's or the Purchaser's acquisition, ownership or operation of all or
any portion of their or the Company's business or assets (including the
business or assets of their respective affiliates and subsidiaries) or of
the Shares (including, without limitation, the right to vote the Shares
purchased by them, on an equal basis with all other Shares, on all matters
presented to the stockholders of the Company), or seeks to compel Parent or
the Purchaser to dispose of or hold separate all or any portion of their
own or the Company's business or assets (including the business or assets
of their respective affiliates and subsidiaries) as a result of the
transactions contemplated by the Offer, the Proposed Merger or other
subsequent business combination, (iii) which might adversely affect the
Company, Parent or the Purchaser, or any of their respective affiliates or
subsidiaries (such an effect, an "Adverse Effect"), or result in a
diminution in the value of the Shares or the benefits expected to be
derived by Parent or the Purchaser as a result of the transactions
contemplated by the Offer and the Proposed Merger (such a diminution, a
"Diminution in Value") or (iv) which seeks to impose any condition to the
Offer or the Proposed Merger unacceptable to Parent or the Purchaser; or
(b) other than the waiting periods that must expire or otherwise
terminate in satisfaction of the Antitrust Condition, any statute, rule,
regulation or order or injunction shall be sought, proposed, enacted,
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promulgated, entered, enforced or deemed or become applicable to the Offer,
the Proposed Merger or the transactions contemplated by the Offer or other
subsequent business combination that might, directly or indirectly, result
in any of the consequences referred to in clauses (i) through (iv) of
paragraph (a) above; or
(c) any change (or any condition, event or development involving a
prospective change) shall have occurred or be threatened that has or might
have a materially Adverse Effect on the business, properties, assets,
liabilities, capitalization, stockholders' equity, financial condition,
operations, licenses or franchises, results of operations or prospects of
the Company or any of its subsidiaries, or Parent or the Purchaser shall
have become aware of any fact that has or might have an Adverse Effect or
results or might result in a Diminution in Value; or
(d) there shall have occurred (i) any general suspension of, or
limitation on times or prices for, trading in securities on any national
securities exchange or in the over-the-counter market, (ii) a declaration
of a banking moratorium or any suspension of payments in respect of banks
in the United States, (iii) the outbreak or escalation of a war, armed
hostilities or other international or national calamity directly or
indirectly involving the United States, (iv) any limitation (whether or not
mandatory) by any governmental authority on, or any other event which might
affect the extension of credit by banks or other lending institutions, (v)
a suspension of or limitation (whether or not mandatory) on the currency
exchange markets or the imposition of, or material changes in, any currency
or exchange control laws in the United States or abroad, (vi) in the case
of any of the foregoing existing at the time of the commencement of the
Offer, a material acceleration or worsening thereof or (vii) a general
decline in the market prices of securities of publicly-traded United States
companies in the rail, truck and auto components industry; or
(e) other than the redemption of the Rights, the Company or any
subsidiary of the Company shall have (i) issued, distributed, pledged, sold
or authorized, or proposed the issuance of or sale, distribution or pledge
to any person of (A) any shares of its capital stock other than sales or
issuances pursuant to employee stock options disclosed in the Company's
publicly available filings with the SEC prior to, and outstanding on, May
4, 1999 (in accordance with the then-existing terms thereof) of any class
(including, without limitation, the Common Stock) or securities convertible
into or exchangeable for any such shares of capital stock, or any rights,
warrants or options to acquire any such shares or convertible securities or
any other securities of the Company, (B) any other securities in respect
of, in lieu of or in substitution for Common Stock outstanding on May 4,
1999 (in accordance with the then-existing terms thereof) or (C) any debt
securities or any securities convertible into or exchangeable for debt
securities or any rights, warrants or options entitling the holder thereof
to purchase or otherwise acquire any debt securities, (ii) purchased or
otherwise acquired, or proposed or offered to purchase or otherwise acquire
any outstanding shares of Common Stock or other securities, (iii) proposed,
recommended, authorized, declared, issued or paid any dividend or
distribution on any shares of Common Stock or any other security, whether
payable in cash, securities or other property (other than regular quarterly
dividends on the Shares not in excess of $0.05 per Share), (iv) altered or
proposed to alter any material term of any outstanding security, (v)
incurred, agreed to incur or announced its intention to incur any debt
other than in the ordinary course of business and consistent with past
practice, (vi) authorized, recommended, proposed or publicly announced its
intent to enter into any merger, consolidation, liquidation, dissolution,
business combination, acquisition or disposition of assets or securities
other than in the ordinary course of business consistent with past
practice, any material change in its capitalization, any release or
relinquishment of any material contractual or other rights or any
comparable event, or taken any action to implement any such transaction
previously authorized, recommended, proposed or publicly announced or (vii)
entered into any other agreement or otherwise effected any other
arrangement with any other party or with its officers or other employees of
the Company that might, individually or in the aggregate, have an Adverse
Effect or result in a Diminution in Value; or
(f) the Company or any of its subsidiaries shall have amended or
proposed or authorized any amendment to its certificate of incorporation or
by-laws or similar organizational documents or the Purchaser shall have
learned that the Company or any of its subsidiaries shall have proposed,
adopted or recommended any such amendment which has not previously been
publicly disclosed by the Company and also set forth in filings with the
SEC; or
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(g) a tender or exchange offer for some portion or all of the Shares
shall have been commenced or publicly proposed to be made by another person
(including the Company or its subsidiaries), or it shall have been publicly
disclosed or the Purchaser shall have learned that (i) any person
(including the Company or its subsidiaries), entity or "group" (as defined
in Section 13(d)(3) of the Exchange Act) shall, other than for bona fide
arbitrage purposes, have acquired or proposed to acquire more than five
percent of the outstanding Shares, or shall have been granted any option or
right, conditional or otherwise, to acquire more than five percent of the
outstanding Shares, other than acquisitions by persons or groups who have
publicly disclosed in a Schedule 13D or 13G (or amendments thereto on file
with the SEC) such ownership on or prior to May 4, 1999, (ii) any such
person, entity or group who has publicly disclosed any such ownership of
more than five percent of the outstanding Shares prior to such date shall
have acquired or proposed to acquire additional Shares constituting more
than one percent of the outstanding Shares, or shall have been granted any
option or right to acquire more than one percent of the outstanding Shares,
(iii) any new group was, or is, formed which beneficially owns more than
five percent of the outstanding Shares, (iv) any person, entity or group
shall have entered into a definitive agreement or an agreement in principle
or made a proposal with respect to a tender offer or exchange offer for
some portion or all of the outstanding Shares or a merger, consolidation or
other business combination or sale of assets (other than in the ordinary
course of business consistent with past practice) with or involving the
Company or any of its affiliates or subsidiaries or (v) any person shall
have filed a Notification and Report Form under the HSR Act or made a
public announcement reflecting an intent to acquire the Company or assets
or securities of the Company; or
(h) the Company and Parent or the Purchaser shall have reached an
agreement or understanding that the Offer be terminated or amended or the
Purchaser or Parent (or one of their respective affiliates) shall have
entered into a definitive agreement or an agreement in principle to acquire
the Company by merger or similar business combination, or purchase of
Shares or assets of the Company; or
(i) any change (or any condition, event or development involving a
prospective change) shall have occurred or be threatened in the general
economic, financial, currency exchange or market conditions in the United
States or abroad that has or might have an Adverse Effect or results or
might result in a Diminution in Value; or
(j) the Company or any of its subsidiaries shall have transferred into
trust, escrow or similar arrangement any amounts required to fund any
existing benefit, employment or severance agreements with any of its
employees or shall have entered into or otherwise effected with its
officers or any other employees any additional benefit, employment,
severance or similar agreements, arrangements or plans other than in the
ordinary course of business consistent with past practice or entered into
or amended any agreements, arrangements or plans so as to provide for
increased benefits to such employee or employees as a result of or in
connection with the transactions contemplated by the Offer or the Proposed
Merger; or
(k) any regulatory approvals and consents applicable to this Offer shall
not have been obtained on terms and conditions satisfactory to the
Purchaser;
which in the sole judgment of Parent and the Purchaser with respect to each
and every matter referred to above makes it inadvisable to proceed with the
Offer or with such acceptance for payment or payment.
The foregoing conditions are for the sole benefit of Parent and the
Purchaser and may be asserted by Parent or the Purchaser regardless of the
circumstances (including any action or inaction by Parent or the Purchaser)
giving rise to any such conditions or may be waived by Parent or the Purchaser
in whole or in part at any time and from time to time in its sole discretion.
The determination as to whether any condition has occurred shall be in the
sole judgment of Parent and the Purchaser and will be final and binding on all
parties. The failure by Parent or the Purchaser at any time to exercise any of
the foregoing rights shall not be deemed a waiver of any such right and each
such right shall be deemed an ongoing right which may be asserted at any time
and from time to time.
A public announcement shall be made of a material change in, or waiver of,
such conditions, and the Offer may, in certain circumstances, be extended in
connection with any such change or waiver.
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14. Dividends and Distributions.
If, on or after the date of this Offer to Purchase, the Company should (1)
split, combine or otherwise change the Shares or its capitalization, (2)
acquire currently outstanding Shares or otherwise cause a reduction in the
number of outstanding Shares or (3) issue or sell additional Shares, shares of
any other class of capital stock, other voting securities or any securities
convertible into, or rights, warrants or options, to acquire any of the
foregoing, other than Shares issued pursuant to the exercise of stock options
outstanding as of the date of the Offer to Purchase, then, subject to the
provisions of Section 13 above, the Purchaser, in its sole discretion, may
make such adjustments as it deems appropriate in the price per Share to be
paid pursuant to and other terms of the Offer, including, without limitation,
the number or type of securities offered to be purchased.
If, on or after the date of this Offer to Purchase, the Company should
declare or pay any cash dividend (other than regular quarterly dividends on
the Shares not in excess of $0.05 per Share) or other distribution on the
Shares, or issue with respect to the Shares any additional Shares, shares of
any other class of capital stock, other voting securities or any securities
convertible into, or rights, warrants or options, conditional or otherwise, to
acquire, any of the foregoing, payable or distributable to stockholders of
record on a date prior to the transfer of the Shares purchased pursuant to the
Offer to the Purchaser or its nominee or transferee on the Company's stock
transfer records, then, subject to the provisions of Section 13 above, (1) the
offer price may, in the sole discretion of the Purchaser, be reduced by the
amount of any such cash dividend or cash distribution and (2) the whole of any
such non-cash dividend, distribution or issuance to be received by the
tendering stockholders will (a) be received and held by the tendering
stockholders for the account of the Purchaser and will be required to be
promptly remitted and transferred by each tendering stockholder to the
Depositary for the account of the Purchaser, accompanied by appropriate
documentation of transfer, or (b) at the direction of the Purchaser, be
exercised for the benefit of the Purchaser, in which case the proceeds of such
exercise will promptly be remitted to the Purchaser. Pending such remittance
and subject to applicable law, the Purchaser will be entitled to all rights
and privileges as owner of any such noncash dividend, distribution, issuance
or proceeds and may withhold the entire offer price or deduct from the offer
price the amount or value thereof, as determined by the Purchaser in its sole
discretion.
15. Certain Legal Matters.
General. Except as otherwise disclosed herein, based upon an examination of
publicly available filings with respect to the Company, Parent and the
Purchaser are not aware of any licenses or other regulatory permits which
appear to be material to the business of the Company and which might be
adversely affected by the acquisition of Shares by the Purchaser pursuant to
the Offer or of any approval or other action by any governmental,
administrative or regulatory agency or authority which would be required for
the acquisition or ownership of Shares by the Purchaser pursuant to the Offer.
Should any such approval or other action be required, it is currently
contemplated that such approval or action would be sought or taken. There can
be no assurance that any such approval or action, if needed, would be obtained
or, if obtained, that it will be obtained without substantial conditions or
that adverse consequences might not result to the Company's or Parent's
business or that certain parts of the Company's or Parent's business might not
have to be disposed of in the event that such approvals were not obtained or
such other actions were not taken, any of which could cause the Purchaser to
elect to terminate the Offer without the purchase of the Shares thereunder.
The Purchaser's obligation under the Offer to accept for payment and pay for
Shares is subject to certain conditions. See Section 13.
Antitrust Compliance. Under the HSR Act and the rules that have been
promulgated thereunder by the Federal Trade Commission ("FTC"), certain
acquisition transactions may not be consummated unless certain information has
been furnished to the Antitrust Division of the Department of Justice (the
"Antitrust Division") and the FTC and certain waiting period requirements have
been satisfied. The acquisition of Shares by the Purchaser is subject to these
requirements. See Section 2 as to the effect of the HSR Act on the timing of
the Purchaser's obligation to accept Shares for payment.
Pursuant to the HSR Act, Parent expects to file a Notification and Report
Form with respect to the acquisition of Shares pursuant to the Offer and the
Proposed Merger with the Antitrust Division and the FTC on
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or about May 24, 1999. Under the provisions of the HSR Act applicable to the
purchase of Shares pursuant to the Offer, such purchases may not be made until
the expiration of a 15-calendar day waiting period following the filing by
Parent. Accordingly, the waiting period under the HSR Act is expected to
expire at 11:59 p.m., New York City time, on or about June 8, 1999, unless
early termination of the waiting period is granted or Parent receives a
request for additional information or documentary material prior thereto.
Pursuant to the HSR Act, Parent will request early termination of the waiting
period applicable to the Offer. There can be no assurances given, however,
that the 15-day HSR Act waiting period will be terminated early. If either the
FTC or the Antitrust Division were to request additional information or
documentary material from Parent, the waiting period would expire at 11:59
p.m., New York City time, on the tenth calendar day after the date of
substantial compliance by Parent with such request unless the waiting period
is sooner terminated by the FTC or the Antitrust Division. Thereafter, the
waiting period could be extended only by agreement or by court order. See
Section 2. Only one extension of such waiting period pursuant to a request for
additional information is authorized by the rules promulgated under the HSR
Act, except by agreement or by court order. Any such extension of the waiting
period will not give rise to any withdrawal rights not otherwise provided for
by applicable law. See Section 4. Although the Company is required to file
certain information and documentary material with the Antitrust Division and
the FTC in connection with the Offer, neither the Company's failure to make
such filings nor a request from the Antitrust Division or the FTC for
additional information or documentary material made to the Company will extend
the waiting period.
The Antitrust Division and the FTC frequently scrutinize the legality under
the antitrust laws of transactions such as the proposed acquisition of Shares
by the Purchaser pursuant to the Offer. At any time before or after the
Purchaser's purchase of Shares, the Antitrust Division or the FTC could take
such action under the antitrust laws as it deems necessary or desirable in the
public interest, including seeking to enjoin the acquisition of Shares
pursuant to the Offer or seeking divestiture of Shares acquired by the
Purchaser or the divestiture of substantial assets of Parent, the Company or
any of their respective subsidiaries. Private parties may also bring legal
action under the antitrust laws under certain circumstances. There can be no
assurance that a challenge to the Offer on antitrust grounds will not be made
or, if a challenge is made, what the result will be. See Section 13 for
certain conditions to the Offer that could become applicable in the event of
such a challenge.
The acquisition of Shares by the Purchaser pursuant to the Offer may be
subject to antitrust laws or regulations in one or more foreign jurisdictions.
Such laws or regulations may require notification with respect to the Offer
and impose a mandatory waiting period similar to the requirements of the HSR
Act.
Foreign Approvals. The Company owns property or conducts business in
various foreign countries and jurisdictions. In connection with the
acquisition of the Shares pursuant to the Offer, the laws of certain of those
foreign countries and jurisdictions may require the filing of information
with, or the obtaining of the approval of, governmental authorities in such
countries and jurisdictions. The governments in such countries and
jurisdictions might attempt to impose additional conditions on the Company's
operations conducted in such countries and jurisdictions as a result of the
acquisition of the Shares pursuant to the Offer. There can be no assurance
that Parent will be able to cause the Company or its subsidiaries to satisfy
or comply with such laws or that compliance or non-compliance will not have a
material adverse effect on the financial condition, properties, business,
results of operations or prospects of the Company and its subsidiaries taken
as a whole or impair Parent, the Purchaser or the Company or any of their
respective affiliates, following consummation of the Offer or Proposed Merger,
to conduct any material business or operations in any jurisdiction where they
are now being conducted. See Section 13 for certain conditions to the Offer
that could become applicable in the event that any such foreign approvals give
rise to the above described effects.
State Takeover Laws. A number of states have adopted laws and regulations
applicable to offers to acquire securities of corporations which are
incorporated in such states or which have substantial assets, stockholders,
principal executive offices or principal places of business therein. In Edgar
v. MITE Corporation, the Supreme Court of the United States held that the
Illinois Business Takeover Statute, which made the takeover of certain
corporations more difficult, imposed a substantial burden on interstate
commerce and was therefore
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unconstitutional. In CTS Corporation v. Dynamics Corporation of America, the
Supreme Court held that as a matter of corporate law, and in particular, those
laws concerning corporate governance, a state may constitutionally disqualify
an acquiror of "Control Shares" (ones representing ownership in excess of
certain voting power thresholds: e.g., 20%, 33% or 50%) of a corporation
incorporated in its state and meeting certain other jurisdictional
requirements from exercising voting power with respect to those shares without
the approval of a majority of the disinterested stockholders.
Section 203 of the DGCL limits the ability of a Delaware corporation to
engage in business combinations with "interested stockholders" (defined
generally as any beneficial owner of 15% or more of the outstanding voting
stock of the corporation) unless, among other things, the corporation's board
of directors has given its prior approval to either the business combination
or the transaction which resulted in the stockholder becoming an "interested
stockholder." The Company's Board of Directors has not approved the
acquisition of Shares by Parent or the Purchaser pursuant to the Offer or the
Proposed Merger and, therefore, Section 203 of the DGCL is applicable to the
Offer and the Proposed Merger. The Offer is subject to the Section 203
Condition. See Section 11.
The Purchaser reserves the right to challenge the applicability or validity
of any state law purportedly applicable to the Offer or the Proposed Merger
and nothing in this Offer to Purchase or any action taken in connection with
the Offer or the Proposed Merger is intended as a waiver of such right. If it
is asserted that any state takeover statute is applicable to the Offer or the
Proposed Merger and if an appropriate court does not determine that it is
inapplicable or invalid as applied to the Offer or the Proposed Merger, the
Purchaser might be required to file certain information with, or to receive
approvals from, the relevant state authorities, and the Purchaser might be
unable to accept for payment or pay for Shares tendered pursuant to the Offer,
or be delayed in consummating the Offer or the Proposed Merger. In such case,
the Purchaser may not be obligated to accept for payment or pay for any Shares
tendered pursuant to the Offer. See Section 13.
Delaware Chancery Court Litigation. On May 19, 1999, Goldplate Holdings,
Inc. ("Plaintiff") filed a purported class action complaint (the "Complaint")
against the Company and the members of its board of directors. The Complaint
was filed in the Court of Chancery of the State of Delaware in and for New
Castle County and is captioned Goldplate Holdings, Inc. v. Ernest H. Lorch et
al. (Case No. 17172 NC). Plaintiff alleges that it is an owner of Shares and
seeks to represent all persons, other than the defendants and those in privity
with them, who own Shares.
Plaintiff alleges that the defendants breached their fiduciary duties to
the Company's stockholders by refusing to negotiate with Parent and by
refusing to take steps necessary to ensure that the Company's stockholders
receive maximum value for their Shares.
Plaintiff seeks an order declaring its action to be a proper class action
and ordering defendants to fulfill their fiduciary duties to the class by (i)
cooperating fully with persons having a bona fide interest in proposing a
transaction that would maximize shareholder value, including a transaction
involving Parent, (ii) undertaking an evaluation of the Company's worth as a
merger candidate, (iii) taking appropriate steps to enhance the Company's
value and attractiveness as a merger candidate; and (iv) taking appropriate
steps to expose the Company to the marketplace to create an active auction
process. Plaintiff seeks an order directing the individual defendants to
deploy the Rights in a manner that will produce the best value maximizing
transaction for the Company's stockholders. Plaintiff also seeks an accounting
to the class for damages suffered as a result of the sale of the Company,
costs and reasonable attorneys' and experts' fees.
Parent and the Purchaser are not named in the foregoing proceeding and have
had no contacts with Plaintiff.
16. Fees and Expenses.
Salomon Smith Barney is acting as Dealer Manager in connection with the
Offer and has provided certain financial advisory services to Parent and the
Purchaser in connection therewith. Parent and the Purchaser have
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agreed to pay Salomon Smith Barney as compensation for its services as Dealer
Manager and as financial advisor in connection with the Offer a fee of up to
$4,000,000, a significant portion of which is contingent upon the completion
of an acquisition of the Company, and, in the case of a negotiated
transaction, a termination fee not to exceed $4,000,000 based upon any break-
up fee received by Parent or the Purchaser. Parent and the Purchaser have
agreed to reimburse Salomon Smith Barney for its reasonable out-of-pocket
expenses, including the fees and expenses of its counsel, in connection with
the Offer, and have agreed to indemnify Salomon Smith Barney against certain
liabilities and expenses in connection with the Offer and the Proposed Merger,
including liabilities under the federal securities laws. Salomon Smith Barney
is an affiliate of Citibank, which is the agent under the Credit Agreement,
and is a party to the Commitment Letter and entitled to receive certain fees
in connection therewith. See Section 12.
The Purchaser has also retained Innisfree M&A Incorporated to act as the
Information Agent in connection with the Offer. The Information Agent may
contact holders of Shares by mail, telephone, telex, telegraph and personal
interviews and may request brokers, dealers and other nominee stockholders to
forward materials relating to the Offer to beneficial owners of Shares. The
Information Agent will receive reasonable and customary compensation for such
services, plus reimbursement of out-of-pocket expenses. The Purchaser will
also indemnify the Information Agent against certain liabilities and expenses
in connection with the Offer, including liabilities under the federal
securities laws.
The Purchaser will pay the Depositary reasonable and customary compensation
for its services in connection with the Offer, plus reimbursement for out-of-
pocket expenses, and will indemnify the Depositary against certain liabilities
and expenses in connection therewith, including liabilities under the federal
securities laws. Brokers, dealers, commercial banks and trust companies will
be reimbursed by the Purchaser for customary mailing and handling expenses
incurred by them in forwarding material to their customers.
17. Miscellaneous.
The Offer is not being made to (nor will tenders be accepted from or on
behalf of) holders of Shares in any jurisdiction in which the making of the
Offer or the acceptance thereof would not be in compliance with the laws of
such jurisdiction. However, the Purchaser may, in its sole discretion, take
such action as it may deem necessary to make the Offer in any such
jurisdiction and extend the Offer to holders of Shares in such jurisdiction.
Neither the Purchaser nor Parent is aware of any jurisdiction in which the
making of the Offer or the acceptance of Shares in connection therewith would
not be in compliance with the laws of such jurisdiction.
The Purchaser and Parent have filed with the SEC a Statement on Schedule
14D-1 pursuant to Rule 14d-3 of the General Rules and Regulations under the
Exchange Act, furnishing certain additional information with respect to the
Offer, and may file amendments thereto. Such Statement and any amendments
thereto, including exhibits, may be examined and copies may be obtained from
the principal office of the SEC in Washington, D.C. in the manner set forth in
Section 8.
No person has been authorized to give any information or make any
representation on behalf of Parent or the Purchaser not contained in this
Offer to Purchase or in the Letter of Transmittal and, if given or made, such
information or representation must not be relied upon as having been
authorized.
TRACK ACQUISITION CORPORATION
May 24, 1999
28
<PAGE>
SCHEDULE A
INFORMATION CONCERNING THE DIRECTORS AND EXECUTIVE OFFICERS OF
AMSTED INDUSTRIES INCORPORATED AND TRACK ACQUISITION INCORPORATED
The following tables set forth the name, business address, present principal
occupation and material positions held within the past five years of each
director and executive officer of Amsted Industries Incorporated and the Track
Acquisition Incorporated. Each person has a business address at 44th Floor--
Boulevard Towers South, 205 North Michigan Avenue, Chicago, Illinois 60601 and
is a citizen of the United States.
DIRECTORS AND EXECUTIVE OFFICERS OF AMSTED INDUSTRIES INCORPORATED
<TABLE>
<CAPTION>
Present Principal Occupation or
Employment and
Name and Citizenship Office(s) Five-year Employment History
-------------------- --------- -------------------------------
<C> <C> <S>
Arthur W. Goetschel Chairman; President; Chairman, President and Chief
Chief Executive Officer Executive Officer of Parent;
Prior to May 1999, President of
Parent. Prior to November 1997,
Vice President of Parent. Prior
to 1995, President of Griffin
Wheel Company division of
Parent.
Gordon R. Lohman Director Prior to May 1999, Chairman and
Chief Executive Officer of
Parent. Prior to November 1997,
President and Chief Executive
Officer of Parent.
David B. Whitehurst Vice President; Director Vice President of Parent.
Lewis Collens Director President of Illinois Institute
of Technology.
John M. Dixon Director Chief Executive Partner of
Chapman and Cutler. Prior to
June 1995, Partner of Chapman
and Cutler.
John E. Jones Director Retired. Prior to February 1996,
Chairman, President and Chief
Executive Officer of CBI
Industries.
W. Robert Reum Director Retired. Prior to February 1999,
Chairman, President and Chief
Executive Officer of The
Interlake Corporation.
Richard E. Terry Director Chairman and Chief Executive
Officer of Peoples Energy
Corporation.
Thomas C. Berg Vice President; General Vice President, General Counsel
Counsel; Secretary and Secretary of Parent.
Joseph W. Newman Controller Controller of Parent. Prior to
August 1994, Assistant
Controller of Parent.
O.J. Sopranos Vice President Vice President of Parent.
Gary B. Montgomery Vice President; Chief Vice President and Chief
Financial Officer Financial Officer of Parent.
Prior to August 1994,
Controller of Parent.
Robert A. Chiappetta Treasurer Treasurer of Parent. Prior to
December 1998, Controller of
Griffin Pipe Products Co.
division of Parent.
Byron D. Speice Vice President Vice President of Parent. Prior
to January 1999, President of
Diamond Chain Company division
of Parent. Prior to October
1995, Senior Vice President of
Operations of Diamond Chain
Company division of Parent.
</TABLE>
A-1
<PAGE>
DIRECTORS AND EXECUTIVE OFFICERS OF TRACK ACQUISITION INCORPORATED
<TABLE>
<CAPTION>
Present Principal Occupation or
Name and Employment and
Citizenship Office(s) Five-year Employment History
----------- --------- -------------------------------
<C> <C> <S>
Arthur W. Goetschel Chairman; President Chairman, President and Chief
Executive Officer of Parent;
Prior to May 1999, President
of Parent. Prior to November
1997, Vice President of
Parent. Prior to 1995,
President of Griffin Wheel
Company division of Parent.
Thomas C. Berg Vice President; Secretary; Vice President, General Counsel
Director and Secretary of Parent.
O.J. Sopranos Director Vice President of Parent.
</TABLE>
A-2
<PAGE>
SCHEDULE B
ACQUISITIONS OF SHARES
<TABLE>
<CAPTION>
Average Price per
Date of Purchase Number of Shares Share
---------------- ---------------- -----------------
<S> <C> <C>
May 6, 1999 100 $28.00
</TABLE>
B-1
<PAGE>
SCHEDULE C
VARLEN CORPORATION
STOCKHOLDER RIGHTS PLAN
Summary of Rights
On June 17, 1996, the Board of Directors of the Company declared a dividend
of one preferred share purchase right (a "Right") for each outstanding share
of common stock, par value $.10 per share, of the Company (the "Common
Stock"). The dividend was payable at the close of business on July 15, 1996 to
the stockholders of record on July 1, 1996 (the "Record Date"). Each Right
entitles the registered holder to purchase from the Company one one-thousandth
of a share of Series A Junior Participating Preferred Stock, par value $1.00
per share, of the Company (the "Preferred Stock") at an adjusted price of
$72.00 per one one-thousandth of a share of Preferred Stock (the "Purchase
Price"), subject to further adjustment. The description and terms of the
Rights are set forth in a Rights Agreement dated as of June 17, 1996, as
amended (the "Rights Agreement"), between the Company and Harris Trust and
Savings Bank, as Rights Agent (the "Rights Agent").
Until the earlier to occur of (i) 10 days following a public announcement
that a person or group of affiliated or associated persons (with certain
exceptions, an "Acquiring Person") has acquired beneficial ownership of 15% or
more of the outstanding shares of Common Stock or (ii) 10 business days (or
such later date as may be determined by action of the Board of Directors prior
to such time as any person or group of affiliated persons becomes an Acquiring
Person) following the commencement of, or announcement of an intention to
make, a tender offer or exchange offer the consummation of which would result
in the beneficial ownership by a person or group of 15% or more of the
outstanding shares of Common Stock (the earlier of such dates being called the
"Distribution Date"), the Rights will be evidenced, with respect to any of the
Common Stock certificates outstanding as of the Record Date, by such Common
Stock certificate together with a copy of the Summary of Rights.
The Rights Agreement provides that, until the Distribution Date (or earlier
expiration of the Rights), the Rights will be transferred with and only with
the Common Stock. Until the Distribution Date (or earlier expiration of the
Rights), new Common Stock certificates issued after the Record Date upon
transfer or new issuances of Common Stock will contain a notation
incorporating the Rights Agreement by reference. Until the Distribution Date
(or earlier expiration of the Rights), the surrender for transfer of any
certificates for shares of Common Stock outstanding as of the Record Date,
even without such notation or a copy of the Summary of Rights, will also
constitute the transfer of the Rights associated with the shares of Common
Stock represented by such certificate. As soon as practicable following the
Distribution Date, separate certificates evidencing the Rights (the "Right
Certificates") will be mailed to holders of record of the Common Stock as of
the close of business on the Distribution Date and such separate Right
Certificates alone will evidence the Rights.
The Rights are not exercisable until the Distribution Date. The Rights will
expire on June 16, 2006 (the "Final Expiration Date"), unless the Final
Expiration Date is advanced or extended or unless the Rights are earlier
redeemed or exchanged by the Company, in each case as described below.
The Purchase Price payable, and the number of shares of Preferred Stock or
other securities or property issuable, upon exercise of the Rights is subject
to adjustment from time to time to prevent dilution (i) in the event of a
stock dividend on, or a subdivision, combination or reclassification of, the
Preferred Stock, (ii) upon the grant to holders of the Preferred Stock of
certain rights or warrants to subscribe for or purchase Preferred
C-1
<PAGE>
Stock at a price, or securities convertible into Preferred Stock with a
conversion price, less than the then-current market price of the Preferred
Stock or (iii) upon the distribution to holders of the Preferred Stock of
evidences of indebtedness or assets (excluding regular periodic cash dividends
or dividends payable in Preferred Stock) or of subscription rights or warrants
(other than those referred to above).
The number of outstanding Rights is subject to adjustment in the event of a
stock dividend on the Common Stock payable in shares of Common Stock or
subdivisions, consolidations or combinations of the Common Stock occurring, in
any such case, prior to the Distribution Date.
Shares of Preferred Stock purchasable upon exercise of the Rights will not
be redeemable. Each share of Preferred Stock will be entitled, when, as and if
declared, to a minimum preferential quarterly dividend payment of $100 per
share but will be entitled to an aggregate dividend of 1,000 times the
dividend declared per share of Common Stock. In the event of liquidation,
dissolution or winding up of the Company, the holders of the Preferred Stock
will be entitled to a minimum preferential payment of $100 per share (plus any
accrued but unpaid dividends) but will be entitled to an aggregate payment of
1,000 times the payment made per share of Common Stock. Each share of
Preferred Stock will have 1,000 votes, voting together with the Common Stock.
Finally, in the event of any merger, consolidation or other transaction in
which outstanding shares of Common Stock are converted or exchanged, each
share of Preferred Stock will be entitled to receive 1,000 times the amount
received per share of Common Stock. These rights are protected by customary
antidilution provisions.
Because of the nature of the Preferred Stock's dividend, liquidation and
voting rights, the value of the one one-thousandth interest in a share of
Preferred Stock purchasable upon exercise of each Right should approximate the
value of one share of Common Stock.
In the event that any person or group of affiliated or associated persons
becomes an Acquiring Person, each holder of a Right, other than Rights
beneficially owned by the Acquiring Person (which will thereupon become void),
will thereafter have the right to receive upon exercise of a Right that number
of shares of Common Stock having a market value of two times the exercise
price of the Right.
In the event that, after a person or group has become an Acquiring Person,
the Company is acquired in a merger or other business combination transaction
or 50% or more of its consolidated assets or earning power are sold, proper
provisions will be made so that each holder of a Right (other than Rights
beneficially owned by an Acquiring Person which will have become void) will
thereafter have the right to receive upon the exercise of a Right that number
of shares of common stock of the person with whom the Company has engaged in
the foregoing transaction (or its parent) that at the time of such transaction
have a market value of two times the exercise price of the Right.
At any time after any person or group becomes an Acquiring Person and prior
to the earlier of one of the events described in the previous paragraph or the
acquisition by such Acquiring Person of 50% or more of the outstanding shares
of Common Stock, the Board of Directors of the Company may exchange the Rights
(other than Rights owned by such Acquiring Person which will have become
void), in whole or in part, for shares of Common Stock or Preferred Stock (or
a series of the Company's preferred stock having equivalent rights,
preferences and privileges), at an exchange ratio of one share of Common
Stock, or a fractional share of Preferred Stock (or other preferred stock)
equivalent in value thereto, per Right.
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
such Purchase Price. No fractional shares of Preferred Stock or Common Stock
will be issued (other than fractions of Preferred Stock which are integral
multiples of one one-thousandth of a share of Preferred Stock, which may, at
the election of the Company, be evidenced by depositary receipts), and in lieu
thereof an adjustment in cash will be made based on the current market price
of the Preferred Stock or the Common Stock.
At any time prior to the time an Acquiring Person becomes such, the Board
of Directors of the Company may redeem the Rights in whole, but not in part,
at a price of $.01 per Right (the "Redemption Price"). The
C-2
<PAGE>
redemption of the Rights may be made effective at such time, on such basis and
with such conditions as the Board of Directors in its sole discretion may
establish. Immediately upon any redemption of the Rights, the right to
exercise the Rights will terminate and the only right of the holders of Rights
will be to receive the Redemption Price.
For so long as the Rights are then redeemable, the Company may, except with
respect to the redemption price, amend the Rights Agreement in any manner.
After the Rights are no longer redeemable, the Company may, except with
respect to the redemption price, amend the Rights Agreement in any manner that
does not adversely affect the interests of holders of the Rights.
Until a Right is exercised or exchanged, the holder thereof, as such, will
have no rights as a stockholder of the Company, including, without limitation,
the right to vote or to receive dividends.
The foregoing is a summary of certain principal terms of the Rights and is
qualified in its entirety by reference to the detailed terms of the Rights
Agreement as amended. The foregoing is based upon the Company's public filings
with the SEC.
C-3
<PAGE>
Manually signed facsimile copies of the Letter of Transmittal will be
accepted. The Letter of Transmittal, certificates for Shares and any other
required documents should be sent or delivered by each stockholder of the
Company or such stockholder's broker, dealer, commercial bank, trust company or
other nominee to the Depositary at one of its addresses set forth below.
The Depositary for the Offer is:
CITIBANK, N.A.
By Hand: By Mail: By Overnight Courier:
Citibank, N.A. Citibank, N.A. Citibank, N.A.
Corporate Trust Window P.O. Box 685 915 Broadway, 5th Floor
111 Wall Street, 5th Old Chelsea Station New York, New York 10010
Floor New York, New York 10113
New York, New York
10043
Facsimile For Eligible Institutions: (212) 505-2248
To Confirm Facsimile Only: (800) 270-0808
Questions and requests for assistance or for additional copies of the Offer
to Purchase and the related Letter of Transmittal, and other tender offer
materials, may be directed to the Information Agent or the Dealer Manager at
their respective telephone numbers and locations listed below. Stockholders may
also contact their broker, dealer, commercial bank, trust company or other
nominee for assistance concerning the Offer.
The Information Agent for the Offer is:
INNISFREE M&A INCORPORATED
501 Madison Avenue, 20th Floor
New York, New York 10022
Banks and Brokers Call Collect (212) 750-5833
All Others Call Toll Free (888) 750-5834
The Dealer Manager for the Offer is:
SALOMON SMITH BARNEY
Seven World Trade Center
New York, New York 10048
<PAGE>
EXHIBIT (a)(2)
Letter of Transmittal
to Tender Shares of Common Stock
(Including the Associated Preferred Share Purchase Rights)
of
Varlen Corporation
Pursuant to the Offer to Purchase
Dated May 24, 1999
at
$35.00 Net Per Share
by
Track Acquisition Incorporated
a wholly owned subsidiary of
Amsted Industries Incorporated
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON MONDAY, JUNE 21, 1999, UNLESS THE OFFER IS EXTENDED.
The Depositary for the Offer is:
CITIBANK, N.A.
By Hand: By Mail: By Overnight Courier:
Citibank, N.A. Citibank, N.A. Citibank, N.A.
Corporate Trust Window P.O. Box 685 915 Broadway, 5th
111 Wall Street, 5th Old Chelsea Station Floor
Floor New York, New York New York, New York
New York, New York 10113 10010
10043
Facsimile For Eligible Institutions: (212) 505-2248
To Confirm Facsimile Only: (800) 270-0808
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET
FORTH ABOVE DOES NOT CONSTITUTE A VALID DELIVERY.
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
This Letter of Transmittal is to be used either if certificates are to be
forwarded herewith or, unless an Agent's Message (as defined in Section 3 of
the Offer to Purchase (as defined below)) is utilized, if delivery is to be
made by book-entry transfer to the Depositary's account at The Depository
Trust Company (the "Book-Entry Transfer Facility"), pursuant to the procedures
set forth in Section 3 of the Offer to Purchase. Stockholders who deliver
Shares by book-entry transfer are referred to herein as "Book-Entry
Stockholders" and other stockholders are referred to herein as "Certificate
Stockholders." Stockholders whose certificates for Shares are not immediately
available or who cannot comply with the procedure for book-entry transfer on a
timely basis, or who cannot deliver all required documents to the Depositary
prior to the Expiration Date (as defined in Section 1 of the Offer to
Purchase), may tender their Shares in accordance with the guaranteed delivery
procedure set forth in Section 3 of the Offer to Purchase. See Instruction 2.
DELIVERY OF DOCUMENTS TO THE BOOK-ENTRY TRANSFER FACILITY DOES NOT CONSTITUTE
DELIVERY TO THE DEPOSITARY.
<PAGE>
DESCRIPTION OF SHARES TENDERED
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
Shares
Tendered
Name(s) and Address(es) of Registered Owner(s) (Attach
(Please fill additional
in if blank, exactly as name(s) appear(s) on list if
certificate(s)) necessary)
</TABLE>
<TABLE>
- -----------------------------------------------------------------------------------------------
<CAPTION>
<S> <C> <C> <C>
Share Total Number Number of
Certificate of Shares Shares
Number(s)* Represented by Tendered**
Share
Certificate*
-------------------------------------------------------
-------------------------------------------------------
-------------------------------------------------------
-------------------------------------------------------
-------------------------------------------------------
Total Shares:
- -----------------------------------------------------------------------------------------------
</TABLE>
* Need not be completed by Book-Entry Stockholders.
** Unless otherwise indicated, it will be assumed that all Shares described
above are being tendered. See Instruction 4.
[_] CHECK HERE IF CERTIFICATE HAS BEEN LOST OR MUTILATED. SEE SECTION 11.
[_] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER
MADE TO THE ACCOUNT MAINTAINED BY THE DEPOSITARY WITH A BOOK-ENTRY TRANSFER
FACILITY AND COMPLETE THE FOLLOWING (ONLY FINANCIAL INSTITUTIONS THAT ARE
PARTICIPANTS IN THE SYSTEM OF ANY BOOK-ENTRY TRANSFER FACILITY MAY DELIVER
SHARES BY BOOK-ENTRY TRANSFER):
Name of Tendering Institution _______________________________________________
If delivered by book-entry transfer, check box: [_]
Account Number ______________________________________________________________
Transaction Code Number _____________________________________________________
[_] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY, ENCLOSE A PHOTOCOPY
OF SUCH NOTICE OF GUARANTEED DELIVERY AND COMPLETE THE FOLLOWING:
Name(s) of Registered Owner(s) ________________________________________________
Date of Execution of Notice of Guaranteed Delivery ____________________________
Name of Institution which Guaranteed Delivery _________________________________
If delivered by book-entry transfer, check box: [_]
Account Number ________________________________________________________________
Transaction Code Number _______________________________________________________
NOTE: SIGNATURES MUST BE PROVIDED BELOW.
2
<PAGE>
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
The undersigned hereby tenders to Track Acquisition Incorporated, a
Delaware corporation (the "Purchaser") and a wholly owned subsidiary of Amsted
Industries Incorporated, a Delaware corporation ("Parent"), the above-
described shares, 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"), of Varlen Corporation, a Delaware corporation
(the "Company"), pursuant to the Offer to Purchase, dated May 24, 1999 (the
"Offer to Purchase"), all of the outstanding Shares at a price of $35.00 per
Share, net to the seller in cash, upon the terms and subject to the conditions
set forth in the Offer to Purchase, receipt of which is hereby acknowledged,
and in this Letter of Transmittal (which, together with the Offer to Purchase,
constitute the "Offer"). The undersigned understands that the Purchaser
reserves the right to transfer or assign, from time to time, in whole or in
part, to one or more of its affiliates, the right to purchase the Shares
tendered herewith.
On the terms and subject to the conditions of the Offer (including the
conditions set forth in Section 13 of the Offer to Purchase and, if the Offer
is extended or amended, the terms and conditions of such extension or
amendment), subject to, and effective upon, acceptance for payment of, and
payment for, the Shares tendered herewith in accordance with the terms of the
Offer, the undersigned hereby sells, assigns and transfers to, or upon the
order of, the Purchaser, all right, title and interest in and to all of the
Shares being tendered hereby and any and all cash dividends, distributions,
rights, other Shares or other securities issued or issuable in respect of such
Shares on or after May 24, 1999 (collectively, the "Distributions"), and
appoints Citibank, N.A. (the "Depositary") the true and lawful agent and
attorney-in-fact of the undersigned with respect to such Shares (and any
Distributions) with full power of substitution (such power of attorney being
deemed to be an irrevocable power coupled with an interest) to the fullest
extent of such stockholder's rights with respect to such Shares (and any
Distributions) (a) to deliver such Share Certificates (as defined herein) (and
any Distributions) or transfer ownership of such Shares (and any
Distributions) on the account books maintained by the Book-Entry Transfer
Facility, together in either such case with all accompanying evidences of
transfer and authenticity, to or upon the order of the Purchaser, (b) to
present such Shares (and any Distributions) for transfer on the books of the
Company and (c) to receive all benefits and otherwise exercise all rights of
beneficial ownership of such Shares (and any Distributions), all in accordance
with the terms and the conditions of the Offer.
The undersigned hereby irrevocably appoints the designees of the Purchaser,
and each of them, the attorneys-in-fact and proxies of the undersigned, each
with full power of substitution, to the full extent of such stockholder's
rights with respect to the Shares tendered hereby which have been accepted for
payment by the Purchaser and with respect to any Distributions. The designees
of the Purchaser will, with respect to the Shares (and any associated
Distributions) for which the appointment is effective, be empowered to
exercise all voting and any other rights of such stockholder, as they, in
their sole discretion, may deem proper at any annual, special or adjourned
meeting of the Company's stockholders, by written consent in lieu of any such
meeting or otherwise. This proxy and power of attorney shall be irrevocable
and coupled with an interest in the tendered Shares. Such appointment is
effective when, and only to the extent that, the Purchaser deposits the
payment for such Shares with the Depositary. Upon the effectiveness of such
appointment, without further action, all prior powers of attorney, proxies and
consents given by the undersigned with respect to such Shares (and any
associated Distributions) will be revoked, and no subsequent powers of
attorney, proxies, consents or revocations may be given (and, if given, will
not be deemed effective). The Purchaser reserves the right to require that, in
order for Shares to be deemed validly tendered, immediately upon the
Purchaser's payment for such Shares, the Purchaser must be able to exercise
full voting rights with respect to such Shares (and any associated
Distributions), including voting at any meeting of stockholders.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, sell, assign and transfer the Shares (and
any Distributions) tendered hereby and, when the same are accepted for payment
by the Purchaser, the Purchaser will acquire good, marketable and unencumbered
title thereto, free and clear of all liens, restrictions, charges and
encumbrances, and the same will not be subject to any adverse claim. The
undersigned will, upon request, execute and deliver any additional documents
deemed by the Depositary or the Purchaser to be necessary or desirable to
complete the sale, assignment and transfer of the Shares (and any
Distributions) tendered hereby. In addition, the undersigned shall promptly
remit and transfer to the Depositary for the account of the Purchaser any and
all Distributions in respect of the Shares tendered hereby, accompanied by
appropriate documentation of transfer; and, pending such remittance or
3
<PAGE>
appropriate assurance thereof, the Purchaser shall be entitled to all rights
and privileges as owner of any such Distributions and may withhold the entire
purchase price or deduct from the purchase price the amount or value thereof,
as determined by the Purchaser in its sole discretion.
All authority conferred or agreed to be conferred pursuant to this Letter
of Transmittal shall not be affected by, and shall survive, the death or
incapacity of the undersigned and any obligation of the undersigned hereunder
shall be binding upon the heirs, personal representatives, successors and
assigns of the undersigned. Except as stated in the Offer to Purchase, this
tender is irrevocable.
The undersigned understands that the valid tender of Shares pursuant to one
of the procedures described in Section 3 of the Offer to Purchase will
constitute a binding agreement between the undersigned and the Purchaser upon
the terms and subject to the conditions of the Offer. The undersigned
recognizes that under certain circumstances set forth in the Offer to
Purchase, Purchaser may not be required to accept for payment any of the
Shares tendered hereby.
Unless otherwise indicated herein under "Special Payment Instructions,"
please issue the check for the purchase price and return any certificates for
Shares not tendered or accepted for payment in the name(s) of the registered
owner(s) appearing under "Description of Shares Tendered." Similarly, unless
otherwise indicated under "Special Delivery Instructions," please mail the
check for the purchase price and return any certificates for Shares not
tendered or accepted for payment (and accompanying documents, as appropriate)
to the address(es) of the registered owner(s) appearing under "Description of
Shares Tendered." In the event that both the Special Delivery Instructions and
the Special Payment Instructions are completed, please issue the check for the
purchase price and issue any certificates for Shares not tendered or accepted
for payment (and any accompanying documents, as appropriate) in the name of,
and deliver such check and return such certificates (and any accompanying
documents, as appropriate) to, the person or persons so indicated. The
undersigned recognizes that the Purchaser has no obligation pursuant to the
Special Payment Instructions to transfer any Shares from the name of the
registered owner thereof if the Purchaser does not accept for payment any of
the Shares so tendered.
SPECIAL PAYMENT INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS
(See Instructions 1, 5, 6 and 7) (See Instructions 5 and 7)
To be completed ONLY if To be completed ONLY if
certificate(s) for Shares not certificate(s) for Shares not
tendered or not accepted for tendered or not accepted for
payment and the check for the payment and the check for the
purchase price of Shares accepted purchase price of Shares accepted
for payment are to be issued in the for payment are to be sent to
name of someone other than the someone other than the undersigned,
undersigned. or to the undersigned at an address
other than that above.
Issue: [_] Check [_] Certificate(s)
to: Deliver: [_] Check [_] Certificate(s)
to:
Name: ______________________________
(Please Print) Name: ______________________________
(Please Print)
Address: ___________________________
------------------------------------ Address: ___________________________
(Include Zip Code) ------------------------------------
------------------------------------ (Include Zip Code)
(Tax Identification or Social
Security No.)
4
<PAGE>
IMPORTANT
SIGN HERE
(Also Complete Substitute Form W-9 Below)
(Signature(s) of Holder(s))
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Dated , 1999
(Must be signed by registered owner(s) exactly as name(s) appear(s) on stock
certificate(s) or on a security position listing or by person(s) authorized to
become registered owner(s) by certificates and documents transmitted herewith.
If signature is by trustees, executors, administrators, guardians, attorneys-
in-fact, officers of corporations or others acting in a fiduciary or
representative capacity, please set forth full title and see Instruction 5.)
(Please Type or Print)
Name(s) ________________________________________________________________________
- --------------------------------------------------------------------------------
Address ________________________________________________________________________
- --------------------------------------------------------------------------------
(Include Zip Code)
Capacity (Full Title) __________________________________________________________
Area Code and Telephone Number _________________________________________________
Tax Identification or Social Security Number ___________________________________
Guarantee of Signature(s)
(See Instructions 1 and 5)
Authorized Signature ___________________________________________________________
Name ___________________________________________________________________________
Address ________________________________________________________________________
- --------------------------------------------------------------------------------
(Include Zip Code)
Full Title and Name of Firm ____________________________________________________
Dated , 1999
5
<PAGE>
INSTRUCTIONS
Forming Part of the Terms and Conditions of the Offer
1. Guarantee of Signatures. Except as otherwise provided below, all
signatures on this Letter of Transmittal must be guaranteed by a financial
institution (including most commercial banks, savings and loan associations
and brokerage houses) which is a participant in the Securities Transfer Agents
Medallion Program or an "eligible guarantor institution," as such term is
defined in Rule 17Ad-15 under the Securities Exchange Act of 1934, as amended
(an "Eligible Institution"). Signatures on this Letter of Transmittal need not
be guaranteed (a) if this Letter of Transmittal is signed by the registered
owners (which term, for purposes of this document, includes any participant in
the Book-Entry Transfer Facility's system whose name appears on a security
position listing as the owner of the Shares) of Shares tendered herewith and
such registered owner has not completed the box entitled "Special Payment
Instructions" or the box entitled "Special Delivery Instructions" on this
Letter of Transmittal or (b) if such Shares are tendered for the account of an
Eligible Institution. See Instruction 5 of this Letter of Transmittal.
2. Delivery of Letter of Transmittal and Certificates or Book-Entry
Confirmations. This Letter of Transmittal is to be used either if certificates
are to be forwarded herewith or if tenders are to be made pursuant to the
procedures for tender by book-entry transfer set forth in Section 3 of the
Offer to Purchase. Certificates for all physically tendered Shares ("Share
Certificates"), or confirmation of any book-entry transfer into the
Depositary's account at the Book-Entry Transfer Facility of Shares tendered by
book-entry transfer, as well as this Letter of Transmittal properly completed
and duly executed with any required signature guarantees, and any other
documents required by this Letter of Transmittal, must be received by the
Depositary at one of its addresses set forth herein on or prior to the
Expiration Date (as defined in the Offer to Purchase).
Stockholders whose certificates for Shares are not immediately available or
who cannot deliver all other required documents to the Depositary on or prior
to the Expiration Date or who cannot comply with the procedures for book-entry
transfer on a timely basis may nevertheless tender their Shares by properly
completing and duly executing a Notice of Guaranteed Delivery pursuant to the
guaranteed delivery procedure set forth in Section 3 of the Offer to Purchase.
Pursuant to such procedure: (i) such tender must be made by or through an
Eligible Institution; (ii) a properly completed and duly executed Notice of
Guaranteed Delivery substantially in the form provided by the Purchaser must
be received by the Depositary prior to the Expiration Date; and (iii) Share
Certificates or confirmation of any book-entry transfer into the Depositary's
account at a Depository Institution of Shares tendered by book-entry transfer,
as well as a Letter of Transmittal, properly completed and duly executed with
any required signature guarantees (or, in the case of a book-entry transfer,
an Agent's Message), and all other documents required by this Letter of
Transmittal, must be received by the Depositary within three Nasdaq National
Market trading days after the date of execution of such Notice of Guaranteed
Delivery.
If Share Certificates are forwarded separately to the Depositary, a
properly completed and duly executed Letter of Transmittal must accompany each
such delivery.
The method of delivery of Share Certificates and all other required
documents, including delivery through any Book-Entry Transfer Facility, is at
the election and risk of the tendering stockholder. The delivery will be
deemed made only when actually received by the Depositary (including, in the
case of a Book-Entry Transfer, by Book-Entry confirmation). If such delivery
is by mail, it is recommended that such certificates and documents be sent by
registered mail, properly insured, with return receipt requested. In all
cases, sufficient time should be allowed to ensure timely delivery.
No alternative, conditional or contingent tenders will be accepted and no
fractional Shares will be purchased. All tendering stockholders, by execution
of this Letter of Transmittal (or facsimile thereof), waive any right to
receive any notice of the acceptance of their Shares for payment.
3. Inadequate Space. If the space provided herein is inadequate, the
certificate numbers and the number of Shares should be listed on a separate
schedule attached hereto.
4. Partial Tenders (Applicable to Certificate Stockholders Only). If fewer
than all the Shares evidenced by any certificate submitted are to be tendered,
fill in the number of Shares which are to be tendered in the box entitled
"Number of Shares Tendered." In such cases, new certificate(s) for the
remainder of the Shares that were evidenced by the old
6
<PAGE>
certificate(s) will be sent to the registered owner, unless otherwise provided
in the appropriate box on this Letter of Transmittal, as soon as practicable
after the Expiration Date. All Shares represented by certificates delivered to
the Depositary will be deemed to have been tendered unless otherwise
indicated.
5. Signatures on Letter of Transmittal; Stock Powers and Endorsements. If
this Letter of Transmittal is signed by the registered owners of the Shares
tendered hereby, the signature must correspond with the names as written on
the face of the certificates without alteration, enlargement or any other
change whatsoever.
If any of the Shares tendered hereby are owned of record by two or more
joint owners, all such owners must sign this Letter of Transmittal.
If any of the tendered Shares are registered in different names on several
certificates, it will be necessary to complete, sign and submit as many
separate Letters of Transmittal as there are different registrations of
certificates.
If this Letter of Transmittal or any certificates or stock powers are
signed by trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations or others acting in a fiduciary or representative
capacity, such persons should so indicate when signing, and proper evidence
satisfactory to the Parent of their authority so to act must be submitted.
If this Letter of Transmittal is signed by the registered owner(s) of the
Shares listed and transmitted hereby, no endorsements of certificates or
separate stock powers are required unless payment is to be made to, or
certificates for Shares not tendered or accepted for payment are to be issued
in the name of, a person other than the registered owner(s). Signatures on
such certificates or stock powers must be guaranteed by an Eligible
Institution.
If this Letter of Transmittal is signed by a person other than the
registered owner of the certificates(s) listed, the certificate(s) must be
endorsed or accompanied by the appropriate stock powers, in either case signed
exactly as the name or names of the registered owner or holders appears on the
certificate(s). Signatures on such certificates or stock powers must be
guaranteed by an Eligible Institution.
6. Stock Transfer Taxes. The Purchaser will pay any stock transfer taxes
with respect to the transfer and sale of Shares to it or its order pursuant to
the Offer. If, however, payment of the purchase price is to be made to, or (in
the circumstances permitted hereby) if certificates for Shares not tendered or
accepted for payment are to be registered in the name of, any person other
than the registered owner, or if tendered certificates are registered in the
name of any person other than the person(s) signing this Letter of
Transmittal, the amount of any stock transfer taxes (whether imposed on the
registered owner or such person) payable on account of the transfer to such
person will be deducted from the purchase price if satisfactory evidence of
the payment of such taxes, or exemption therefrom, is not submitted.
EXCEPT AS PROVIDED IN THIS INSTRUCTION 6, IT WILL NOT BE NECESSARY FOR
TRANSFER TAX STAMPS TO BE AFFIXED TO THE CERTIFICATES LISTED IN THIS LETTER OF
TRANSMITTAL.
7. Special Payment and Delivery Instructions. If a check is to be issued in
the name of, and certificates for Shares not tendered or accepted for payment
are to be issued or returned to, a person other than the signer of this Letter
of Transmittal or if a check and such certificates are to be mailed to a
person other than the signer of this Letter of Transmittal or to an address
other than that shown above, the appropriate boxes on this Letter of
Transmittal should be completed.
8. Requests for Assistance or Additional Copies. Questions and requests for
assistance or for additional copies of the Offer to Purchase, the Letter of
Transmittal and the Notice of Guaranteed Delivery, may be directed to the
Information Agent or the Dealer Manager at their respective telephone numbers
and locations set forth below. You may also contact your broker, dealer,
commercial bank, trust company or other nominee for assistance concerning the
Offer.
9. Substitute Form W-9. Each tendering stockholder is required to provide
the Depositary with a correct Taxpayer Identification Number ("TIN"),
generally the stockholder's social security or federal employer identification
number, on Substitute Form W-9 below. Failure to provide the information on
the form may subject the tendering stockholder to 31% federal income tax
backup withholding on the payment of the purchase price. The box in Part 3 of
the form may be checked
7
<PAGE>
if the tendering stockholder has not been issued a TIN and has applied for a
TIN or intends to apply for a TIN in the near future. If the box in Part 3 is
checked and the Depositary is not provided with a TIN within 60 days, the
Depositary will withhold 31% of all payments of the purchase price thereafter
until a TIN is provided to the Depositary.
10. Waiver of Conditions. The conditions of the Offer may be waived by the
Purchaser (subject to certain limitations), in whole or in part, at any time
or from time to time, in the Purchaser's sole discretion.
11. Lost or Destroyed Certificates. If any Certificate(s) representing
Shares has been lost or destroyed, the holders should promptly notify the
Company's Transfer Agent. The holders will then be instructed as to the
procedure to be followed in order to replace the Certificate(s). This Letter
of Transmittal and related documents cannot be processed until the procedures
for replacing lost or destroyed Certificates have been followed.
IMPORTANT: THIS LETTER OF TRANSMITTAL OR A MANUALLY SIGNED FACSIMILE
THEREOF (TOGETHER WITH SHARE CERTIFICATES OR CONFIRMATION OF BOOK-ENTRY
TRANSFER AND ALL OTHER REQUIRED DOCUMENTS) OR THE NOTICE OF GUARANTEED
DELIVERY MUST BE RECEIVED BY THE DEPOSITARY PRIOR TO THE EXPIRATION DATE.
Important Tax Information
Under the federal income tax law, a stockholder whose tendered Shares are
accepted for purchase is required by law to provide the Depositary (as payer)
with such stockholder's correct TIN on Substitute Form W-9 below and to
certify that such TIN is correct (or that such stockholder is awaiting a TIN)
or otherwise establish a basis for exemption from backup withholding. If such
stockholder is an individual, the TIN is his or her social security number. If
a stockholder fails to provide a TIN to the Depositary, such stockholder may
be subject to a $50 penalty imposed by the Internal Revenue Service. In
addition, payments that are made to such stockholder with respect to Shares
purchased pursuant to the Offer may be subject to backup withholding of 31%
(see below).
Certain stockholders (including, among others, all corporations and certain
foreign individuals) are not subject to these backup withholding and reporting
requirements. In order for a foreign individual to qualify as an exempt
recipient, that stockholder must generally submit a Form W-8, signed under
penalties of perjury, attesting to that individual's exempt status. A Form W-8
can be obtained from the Depositary. See the enclosed Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9 for
additional instructions.
If backup withholding applies, the Depositary is required to withhold 31%
of any payments made to the stockholder or payee. Backup withholding is not an
additional tax. Rather, the tax liability of persons subject to backup
withholding will be reduced by the amount of tax withheld. If withholding
results in an overpayment of taxes, a refund may be obtained from the Internal
Revenue Service.
The box in Part 3 of the Substitute Form W-9 may be checked if the
tendering stockholder has not been issued a TIN and has applied for a TIN or
intends to apply for a TIN in the near future. If the box in Part 3 is
checked, the stockholder or other payee must also complete the Certification
of Awaiting Taxpayer Identification Number below in order to avoid backup
withholding. If a stockholder's TIN is provided to the Depositary within 60
days of the date of the Substitute Form W-9, payment will be made to such
stockholder without the imposition of backup withholding. If a stockholder's
TIN is not provided to the Depositary within such 60-day period, the
Depositary will make such payment, subject to backup withholding.
Purpose of Substitute Form W-9
To prevent backup withholding on payments made to a stockholder whose
tendered Shares are accepted for purchase, the stockholder is required to
notify the Depositary of its correct TIN by completing Substitute Form W-9
certifying that the TIN provided on such Form is correct (or that such
stockholder is awaiting a TIN, in which case the stockholder should check the
box in Part 3 of the Substitute Form W-9) and that (A) such stockholder is
exempt from backup withholding, (B) such stockholder has not been notified by
the Internal Revenue Service that such stockholder is subject to backup
withholding
8
<PAGE>
as a result of failure to report all interest or dividends or (C) the Internal
Revenue Service has notified the stockholder that the stockholder is no longer
subject to backup withholding. The stockholder must sign and date the
Substitute Form W-9 where indicated, certifying that the information on such
Form is correct.
Alternatively, a stockholder that qualifies as an exempt recipient (other
than a stockholder required to complete Form W-8 as described above) should
write "Exempt" in Part 1 of the Substitute Form W-9, enter its correct TIN and
sign and date such Form where indicated.
What Number to Give the Depositary
The stockholder is required to give the Depositary the social security
number or employer identification number of the record owner of the Shares or
of the last transferee appearing on the transfers attached to, or endorsed on,
the Shares. If the Shares are in more than one name or are not in the name of
the actual owner, consult the enclosed Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9 for additional guidance
on which number to report.
TO BE COMPLETED BY ALL TENDERING STOCKHOLDERS
(See Instruction 9)
PAYER: [ ]
- -------------------------------------------------------------------------------
Part 1--PLEASE PROVIDE Social security number or
YOUR Employer identification
number
SUBSTITUTE TIN IN THE BOX AT RIGHT
AND
FORM W-9 CERTIFY BY SIGNING AND
DATING BELOW ---------------------------
Part 2--Certification--Under penalties of perjury, I
certify that:
Department of the
Treasury ---------------------------------------------------------
(1) The number shown on this form is my correct
Internal Revenue Taxpayer Identification Number (or I am waiting for a
Service number to be issued to me); and
(2) I am not subject to backup withholding either
because (i) I am exempt from backup withholding, (ii)
I have not been notified by the Internal Revenue
Service (the "IRS") that I am subject to backup
withholding as a result of a failure to report all
interest or dividends, or (iii) the IRS has notified
me that I am no longer subject to backup withholding.
Payer's Request for
Taxpayer
Identification
Number (TIN) Part 3
---------------------------------------------------------
Awaiting
Certification Instructions--You must TIN [_]
cross out item (2) in Part 2 above if
you have been notified by the IRS that
you are subject to backup withholding
because of under-reporting 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 stating that
you are no longer subject to backup
withholding, do not cross out item
(2).
SIGNATURE DATE
NAME (Please Print) ___________________
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP
WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER.
PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER
IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL INFORMATION.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN PART 3
OF SUBSTITUTE FORM W-9.
9
<PAGE>
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 (i) I
have mailed or delivered an application to receive a taxpayer
identification number to the appropriate Internal Revenue Service
Center or Social Security Administration Office, or (ii) I intend to
mail or deliver an application in the near future. I understand that
if I do not provide a taxpayer identification number within 60 days,
31% of all reportable payments made to me thereafter will be withheld
until I provide a taxpayer identification number to the Depositary.
Signature.................................... Date...................
Name (Please Print)...................................................
Manually signed facsimile copies of the Letter of Transmittal will be
accepted. The Letter of Transmittal, certificates for Shares and any other
required documents should be sent or delivered by each stockholder of the
Company or such stockholder's broker, dealer, commercial bank, trust company
or other nominee to the Depositary at one of its addresses set forth below.
The Depositary for the Offer is:
CITIBANK, N.A.
By Hand: By Mail: By Overnight Courier:
Citibank, N.A. Citibank, N.A. Citibank, N.A.
Corporate Trust Window P.O. Box 685 915 Broadway, 5th Floor
111 Wall Street, 5th Old Chelsea Station New York, New York 10010
Floor New York, New York 10113
New York, New York
10043
Facsimile For Eligible Institutions: (212) 505-2248
To Confirm Facsimile Only: (800) 270-0808
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE TO A NUMBER OTHER THAN
AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY TO THE DEPOSITARY.
Questions and requests for assistance or for additional copies of this
Letter of Transmittal, the Offer to Purchase and the Notice of Guaranteed
Delivery may be directed to the Information Agent or the Dealer Manager at
their respective telephone numbers and locations listed below. You may also
contact your broker, dealer, commercial bank, trust company or other nominee
for assistance concerning the Offer.
The Information Agent for the Offer is:
INNISFREE M&A INCORPORATED
501 Madison Avenue, 20th Floor
New York, New York 10022
Banks and Brokers Call Collect (212) 750-5833
All Others Call Toll Free (888) 750-5834
The Dealer Manager for the Offer is:
SALOMON SMITH BARNEY
Seven World Trade Center
New York, New York 10048
10
<PAGE>
Exhibit (a)(3)
Salomon Smith Barney
Seven World Trade Center
New York, New York 10048
Offer to Purchase for Cash
All of the Shares of Common Stock
(Including the Associated Preferred Share Purchase Rights)
of
Varlen Corporation
at
$35.00 Net Per Share
by
Track Acquisition Incorporated
a wholly owned subsidiary of
Amsted Industries Incorporated
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON MONDAY, JUNE 21, 1999, UNLESS THE OFFER IS EXTENDED.
May 24, 1999
To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
We have been engaged by Track Acquisition Incorporated, a Delaware
corporation (the "Purchaser") and a wholly owned subsidiary of Amsted
Industries Incorporated, a Delaware corporation ("Parent"), to act as Dealer
Manager in connection with the Purchaser's offer to purchase all outstanding
shares of 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"), of Varlen Corporation, a
Delaware corporation (the "Company"), at $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 the related Letter of Transmittal (which,
together with any amendments or supplements thereto, collectively constitute
the "Offer"). Please furnish copies of the enclosed materials to those of your
clients for whom you hold Shares registered in your name or in the name of
your nominee.
Enclosed herewith are the following documents:
1. Offer to Purchase, dated May 24, 1999;
2. Letter of Transmittal to be used by stockholders of the Company in
accepting the Offer;
3. A printed form of letter that may be sent to your clients for whose
account you hold Shares in your name or in the name of your nominee, with
space provided for obtaining such clients' instructions with regard to the
Offer;
4. Notice of Guaranteed Delivery;
5. Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9; and
6. Return envelope addressed to Citibank, N.A., P.O. Box 685, Old
Chelsea Station, New York, New York 10113, the Depositary.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (I) THERE BEING VALIDLY
TENDERED PRIOR TO THE EXPIRATION OF THE OFFER AND NOT WITHDRAWN A
<PAGE>
NUMBER OF SHARES WHICH, TOGETHER WITH THE SHARES BENEFICIALLY OWNED BY THE
PURCHASER AND ITS AFFILIATES, WILL CONSTITUTE AT LEAST A MAJORITY OF THE
OUTSTANDING SHARES ON A FULLY DILUTED BASIS AS OF THE DATE THE SHARES ARE
ACCEPTED FOR PAYMENT PURSUANT TO THE OFFER; (II) THE RIGHTS HAVING BEEN
REDEEMED BY THE COMPANY'S BOARD OF DIRECTORS, OR THE PURCHASER OTHERWISE BEING
SATISFIED IN ITS SOLE DISCRETION THAT THE RIGHTS ARE OTHERWISE INVALID OR
INAPPLICABLE TO THE TRANSACTIONS CONTEMPLATED HEREIN; (III) THE ACQUISITION OF
SHARES PURSUANT TO THE OFFER BEING APPROVED PURSUANT TO SECTION 203 OF THE
DELAWARE GENERAL CORPORATION LAW OR THE PURCHASER BEING SATISFIED IN ITS SOLE
DISCRETION THAT THE PROVISIONS OF SECTION 203 RESTRICTING CERTAIN BUSINESS
COMBINATIONS ARE INVALID OR INAPPLICABLE TO THE ACQUISITION OF SHARES PURSUANT
TO THE OFFER AND THE PROPOSED MERGER (BY ACTION OF THE COMPANY'S BOARD OF
DIRECTORS, THE ACQUISITION OF A SUFFICIENT NUMBER OF SHARES OR OTHERWISE); AND
(IV) ANY WAITING PERIOD UNDER THE HART-SCOTT-RODINO ANTITRUST IMPROVEMENTS ACT
OF 1976, AS AMENDED, AND THE REGULATIONS THEREUNDER AND UNDER ANY LAWS OF
FOREIGN JURISDICTIONS THAT ARE APPLICABLE TO THE PURCHASE OF SHARES PURSUANT
TO THE OFFER HAVING EXPIRED OR BEEN TERMINATED. THE OFFER IS ALSO SUBJECT TO
CERTAIN OTHER CONDITIONS DESCRIBED IN SECTION 13 OF THE OFFER TO PURCHASE. THE
OFFER IS NOT CONDITIONED UPON PARENT OR THE PURCHASER OBTAINING FINANCING.
We urge you to contact your clients promptly. Please note that the Offer
and withdrawal rights will expire at 12:00 Midnight, New York City time, on
Monday, June 21, 1999, unless the Offer is extended.
In all cases, payment for Shares accepted for payment pursuant to the Offer
will be made only after timely receipt by the Depositary of (i) certificates
for such Shares or timely confirmation of the book-entry transfer of such
Shares into the Depositary's account at the Book-Entry Transfer Facility (as
defined in the Offer to Purchase) pursuant to the procedures set forth in
Section 3 of the Offer to Purchase, (ii) the Letter of Transmittal (or a
manually signed facsimile thereof), properly completed and duly executed, with
any required signature guarantees (or, in the case of a book-entry transfer,
an Agent's Message (as defined in the Offer to Purchase)) and (iii) any other
documents required by such Letter of Transmittal. UNDER NO CIRCUMSTANCES WILL
INTEREST BE PAID ON THE PURCHASE PRICE FOR SHARES, REGARDLESS OF ANY EXTENSION
OF THE OFFER OR ANY DELAY IN MAKING SUCH PAYMENT PURSUANT TO THE OFFER.
Neither Parent nor the Purchaser will pay any fees or commissions to any
broker or dealer or other person (other than the Depositary, the Information
Agent and the Dealer Manager, as disclosed in the Offer to Purchase) in
connection with the solicitation of tenders of Shares pursuant to the Offer.
You will be reimbursed upon request for customary mailing and handling
expenses incurred by you in forwarding the enclosed offering materials to your
clients.
Questions and requests for assistance may be directed to the Information
Agent or the Dealer Manager at their respective addresses and telephone
numbers set forth on the back cover of the enclosed Offer to Purchase.
Requests for additional copies of the enclosed materials may be directed to
the Information Agent or the Dealer Manager or to brokers, dealers, commercial
banks or trust companies.
Very truly yours,
Salomon Smith Barney
<PAGE>
Exhibit (a)(4)
Offer to Purchase for Cash
All of the Shares of Common Stock
(Including the Associated Preferred Share Purchase Rights)
of
Varlen Corporation
at
$35.00 Net Per Share
by
Track Acquisition Incorporated
a wholly owned subsidiary of
Amsted Industries Incorporated
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON MONDAY, JUNE 21, 1999, UNLESS THE OFFER IS EXTENDED.
To Our Clients:
Enclosed for your consideration is an Offer to Purchase, dated May 24, 1999
(the "Offer to Purchase"), and the related Letter of Transmittal (which,
together with any amendments or supplements thereto, collectively constitute
the "Offer") relating to the offer by Track Acquisition Incorporated, a
Delaware corporation (the "Purchaser") and a wholly owned subsidiary of Amsted
Industries Incorporated, a Delaware corporation ("Parent"), to purchase for
cash, all of the outstanding shares of common stock, par value $.10 per share
(the "Common Stock"), including the associated preferred share purchase rights
(the "Rights"), of Varlen Corporation, a Delaware corporation (the "Company")
(the Common Stock and the Rights together are referred to herein as the
"Shares"), on the terms and subject to the conditions set forth in the Offer.
WE ARE (OR OUR NOMINEE IS) THE HOLDER OF RECORD OF SHARES HELD BY US FOR
YOUR ACCOUNT. A TENDER OF SUCH SHARES CAN BE MADE ONLY BY US AS THE HOLDER OF
RECORD AND PURSUANT TO YOUR INSTRUCTIONS. THE LETTER OF TRANSMITTAL IS
FURNISHED TO YOU FOR YOUR INFORMATION ONLY AND CANNOT BE USED TO TENDER SHARES
HELD BY US FOR YOUR ACCOUNT.
We request instructions as to whether you wish to tender any of or all the
Shares held by us for your account, pursuant to the terms and conditions set
forth in the Offer.
Your attention is directed to the following:
1. The Offer price is $35.00 per Share, net to the seller in cash,
without interest thereon, upon the terms and subject to the conditions of
the Offer.
2. The Offer is being made for all of the outstanding Shares.
3. The Offer is conditioned upon, among other things, (i) there being
validly tendered prior to the expiration of the Offer a number of Shares
which, together with the Shares beneficially owned by the Purchaser and its
affiliates, will constitute at least a majority of the outstanding Shares
on a fully diluted basis as of the date the Shares are accepted for payment
pursuant to the Offer; (ii) the Rights having been redeemed by the
Company's Board of Directors, or the Purchaser otherwise being satisfied in
its sole discretion that the Rights are otherwise invalid or inapplicable
to the transactions contemplated herein
<PAGE>
(iii) the acquisition of Shares pursuant to the Offer being approved
pursuant to Section 203 of the Delaware General Corporation Law or the
Purchaser being satisfied in its sole discretion that the provisions of
Section 203 restricting certain business combinations are invalid or
inapplicable to the acquisition of Shares pursuant to the Offer and the
Proposed Merger (as defined in the Offer to Purchase) (by action of the
Company's Board of Directors, the acquisition of a sufficient number of
Shares or otherwise); and (iv) any waiting period under the Hart-Scott-
Rodino Antitrust Improvements Act of 1976, as amended, and the regulations
thereunder and under any laws of foreign jurisdictions that are applicable
to the purchase of Shares pursuant to the Offer having expired or been
terminated. The Offer is also subject to certain other conditions described
in Section 13 of the Offer to Purchase. The Offer is not conditioned upon
Parent or the Purchaser obtaining financing.
4. THE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON MONDAY, JUNE 21, 1999, UNLESS THE OFFER IS EXTENDED BY THE
PURCHASER (THE "EXPIRATION DATE").
5. Any stock transfer taxes applicable to a sale of Shares to the
Purchaser will be borne by the Purchaser, except as otherwise provided in
Instruction 6 of the Letter of Transmittal.
6. Tendering stockholders will not be obligated to pay brokerage fees or
commissions to Salomon Smith Barney Inc. (the "Dealer Manager"), Citibank,
N.A. (the "Depositary"), or Innisfree M&A Incorporated as the Information
Agent or, except as set forth in Instruction 6 of the Letter of
Transmittal, transfer taxes on the purchase of Shares by Purchaser pursuant
to the Offer. However, federal income tax backup withholding at a rate of
31% may be required, unless an exemption in provided or unless the required
taxpayer identification information is provided. See Instruction 9 of the
Letter of Transmittal.
Your instructions to us should be forwarded promptly to permit us to submit
a tender on your behalf prior to the Expiration Date.
If you wish to have us tender any of or all of the Shares held by us for
your account, please so instruct us by completing, executing, detaching and
returning to us the instruction form on the detachable part hereof. Your
instructions should be forwarded to us in ample time to permit us to submit a
tender on your behalf prior to the Expiration Date.
In all cases, payment for Shares accepted for payment pursuant to the Offer
will be made only after timely receipt by the Depositary, of (a) certificates
for (or a timely Book-Entry Confirmation (as defined in the Offer to Purchase)
with respect to) such Shares, (b) a Letter of Transmittal, properly completed
and duly executed, with any required signature guarantees, or, in the case of
a book-entry transfer effected pursuant to the procedure set forth in Section
3 of the Offer to Purchase, an Agent's Message (as defined in the Offer to
Purchase) , and (c) any other documents required by the Letter of Transmittal.
Accordingly, tendering stockholders may be paid at different times depending
upon when certificates for Shares or Book-Entry Confirmations with respect to
Shares are actually received by the Depositary. UNDER NO CIRCUMSTANCES WILL
INTEREST BE PAID ON THE PURCHASE PRICE FOR SHARES, REGARDLESS OF ANY EXTENSION
OF THE OFFER OR ANY DELAY IN MAKING PAYMENT PURSUANT TO THE OFFER.
The Offer is not being made to, nor will tenders be accepted from, or on
behalf of, holders of Shares in any jurisdiction in which the making or
acceptance of the Offer would not be in compliance with the laws of such
jurisdiction. In any jurisdiction where the securities or blue sky laws
require the Offer to be made by a licensed broker or dealer, the Offer will be
deemed made on behalf of the Purchaser by the Dealer Manager or one or more
registered brokers or dealers that are licensed under the laws of such
jurisdiction. An envelope in which to return your instructions to us is
enclosed. If you authorize tender of your Shares, all such Shares will be
tendered unless otherwise indicated in such instruction form. Please forward
your instructions to us as soon as possible to allow us ample time to tender
Shares on your behalf prior to the expiration of the Offer.
<PAGE>
Instructions with Respect to the Offer to Purchase for Cash
All of the Outstanding Shares of Common Stock
(Including the Associated Preferred Share Purchase Rights)
of
Varlen Corporation
The undersigned acknowledge(s) receipt of your letter, the Offer to
Purchase dated May 24, 1999 (the "Offer to Purchase"), and the related Letter
of Transmittal relating to the offer by Track Acquisition Incorporated, a
Delaware corporation and a wholly owned subsidiary of Amsted Industries
Incorporated, a Delaware corporation, to purchase for $35.00, net to the
seller in cash, all outstanding shares of common stock, par value $.10 per
share (the "Common Stock"), including the associated preferred share purchase
rights (the "Rights"), of Varlen Corporation, a Delaware corporation. The
Common Stock and the Rights together are referred to herein as the "Shares."
This will instruct you to tender the number of Shares indicated below held
by you for the account of the undersigned, on the terms and subject to the
conditions set forth in the Offer to Purchase and the related Letter of
Transmittal.
Number of Shares to be Tendered:* SIGN HERE
----------------------------------
_______________ Shares ----------------------------------
Name(s) __________________________
----------------------------------
Dated: ________, 1999 (Please print name(s) and
address(es))
- ------------------------------------------- Address(s) _______________________
Taxpayer Identification ----------------------------------
No. or Social Security No.
Daytime Area Code and Tel. No. ___
- ---------------------
*UNLESS OTHERWISE INDICATED, IT WILL BE ASSUMED THAT ALL YOUR SHARES ARE TO BE
TENDERED.
<PAGE>
EXHIBIT (a)(5)
Press Release, dated May 18, 1999
AMSTED TO COMMENCE $35-PER-SHARE CASH TENDER OFFER FOR VARLEN
COMBINATION WOULD CREATE $2 BILLION TRANSPORTATION EQUIPMENT LEADER.
CHICAGO, May 18, 1999--AMSTED Industries Incorporated, a leading
manufacturer of products for the rail, truck and auto components industries,
today announced that it intends to commence a tender offer for all of the
outstanding shares of Varlen Corporation (Nasdaq: VRLN) at $35 per share in
cash. AMSTED has secured a financing commitment from Citibank, N.A. as agent
and Salomon Smith Barney as arranger to complete the transaction, which is
valued at approximately $700 million, including assumed debt. Salomon Smith
Barney is also AMSTED's financial advisor on the transaction.
The tender offer was approved by AMSTED's Board of Directors and will
commence in the next five business days. The tender offer will be subject to
the removal of Varlen's rights plan, the waiver of Delaware anti-takeover
provisions and customary conditions. The offer will also be conditioned on the
tender of a majority of Varlen's shares.
The all-cash price, which is above Varlen's all-time high, represents
immediate liquidity to shareholders, a 35% premium over Monday's closing price
of $25 15/16 per share and a 50% premium over the last 60-day per-share
average. Varlen's 60-day trading average of $23.37 is little changed from its
two-year average of $22.68.
AMSTED's Chairman, President and Chief Executive Officer, Arthur W.
Goetschel, said, "We are announcing this offer because our requests for
friendly discussions over the last two weeks were repeatedly denied by
Varlen's management and Board of Directors."
"There are compelling reasons to bring these two companies together," Mr.
Goetschel added. "Both companies participate in the rail, truck and auto
component industries, which are all consolidating. We are providing a platform
for the businesses to expand more rapidly and an attractive premium to
Varlen's shareholders."
Varlen, which is based in Naperville, Illinois, is a manufacturer of
engineered transportation products for the rail, truck and auto component
industries. It posted annual revenues last year of approximately $650 million.
AMSTED Industries, which is based in Chicago, is a diversified manufacturer
of products for the rail, construction and building and general industrial
markets and, like Varlen, a leading manufacturer of products for the rail,
truck and auto component industries. The Company, which has annual revenues of
approximately $1.3 billion, manufactures its products in 32 plants worldwide
and is one of the largest 100% employee-owned companies in the country.
"Although AMSTED and Varlen do not compete directly, over 90% of Varlen's
business portfolio fits with AMSTED's businesses, which is extraordinary
considering the diversity of the markets served by both companies. The
combined company would be a leader in every significant market that it
serves," Mr. Goetschel said. "We manufacture complementary products serving
the rail, truck and auto markets, and the two companies share a decentralized
approach to managing businesses. We firmly believe that these factors make
this combination an excellent strategic fit for both companies, their
customers, employees and shareholders.
"AMSTED and Varlen would provide customer solutions unmatched in the rail,
truck and auto industries while building substantial shareholder value. We
believe that our proposal is in the best interests of both companies'
shareholders," said Mr. Goetschel.
<PAGE>
"It continues to be our objective to conclude a negotiated transaction with
Varlen, but we are determined that this process go forward now," Mr. Goetschel
added.
This news release does not constitute an offer to purchase any securities,
nor solicitation of a proxy, consent or authorization for or with respect to a
meeting of the shareholders of AMSTED Industries Incorporated or Varlen
Corporation or any action in lieu of a meeting. Any solicitations will be made
only pursuant to separate materials in compliance with the requirements of
applicable federal and state securities laws.
<PAGE>
EXHIBIT (a)(6)
Press Release, dated May 24, 1999
AMSTED COMMENCES $35-PER-SHARE CASH TENDER OFFER FOR VARLEN.
CHICAGO, May 24, 1999--AMSTED Industries Incorporated, a leading
manufacturer of products for the rail, truck and auto components industries,
today announced that it has commenced its previously announced cash tender
offer to purchase all outstanding shares of Varlen Corporation (Nasdaq:VRLN)
at $35 per share. The transaction, including the assumption of debt, is valued
at approximately $700 million.
The tender offer is subject to certain conditions, including the removal of
Varlen's rights plan and the waiver of Delaware anti-takeover provisions. The
offer, which is scheduled to expire on June 21, 1999, is also conditioned on
the tender of a majority of Varlen's shares.
AMSTED has already obtained a financing commitment to complete the
transaction from Citigroup with Salomon Smith Barney acting as arranger.
On May 18, 1999, AMSTED announced its intention to acquire Varlen for $35
per share in cash, a premium at the time of 35% over the previous day's
closing price and 50% over the last 60-day per-share average.
"We have decided to begin the tender offer process after our repeated
requests for friendly negotiations with Varlen's management and Board of
Directors were denied," said Arthur W. Goetschel, AMSTED's Chairman, President
and Chief Executive Officer. "The combination of AMSTED and Varlen is an
excellent strategic fit because the two companies do not compete directly but
serve the same markets. We would be a leading supplier in the rail, truck and
auto components industries."
The complete terms and conditions of the offer are set forth in AMSTED's
Offer to Purchase, which was filed with the Securities and Exchange Commission
today as an exhibit to its Schedule 14D-1 and will be mailed to Varlen's
security holders this week.
AMSTED Industries, which is based in Chicago, is a diversified manufacturer
of products for the rail, construction and building and general industrial
markets and, like Varlen, a leading manufacturer of products for the rail,
truck and auto component industries. The Company, which has annual revenues of
approximately $1.3 billion, manufactures its products in 32 plants worldwide
and is one of the largest 100% employee-owned companies in the country.
<PAGE>
Exhibit (a)(7)
This announcement is neither an offer to purchase nor a solicitation of an
offer to sell Shares (as defined below). The Offer (as defined below) is
made solely by the Offer to Purchase dated May 24, 1999 and the related
Letter of Transmittal and any amendments or supplements thereto, and is
being made to all holders of Shares. The Offer is not being made to
(nor will tenders be accepted from or on behalf of) holders of Shares
in any jurisdiction in which the making of the Offer or the
acceptance thereof would not be in compliance with the laws of such
jurisdiction. In any jurisdiction where the securities, blue sky
or other laws require the Offer to be made by a licensed broker
or dealer, the Offer shall be deemed to be made on behalf of
Track Acquisition Incorporated by Salomon Smith Barney Inc.
(the "Dealer Manager") or one or more registered brokers or
dealers that are licensed under the laws of such
jurisdiction.
Notice of Offer to Purchase for Cash
All of the Outstanding Shares of Common Stock
(Including the Associated Preferred Share Purchase Rights)
of
Varlen Corporation
at
$35.00 Net Per Share
by
Track Acquisition Incorporated
a wholly owned subsidiary of
Amsted Industries Incorporated
Track Acquisition Incorporated, a Delaware corporation (the "Purchaser")
and a wholly owned subsidiary of Amsted Industries Incorporated, a Delaware
corporation ("Parent"), is offering to purchase all of the outstanding shares
of Common Stock, par value $.10 per share (the "Common Stock"), of Varlen
Corporation, a Delaware corporation (the "Company"), including the associated
preferred share purchase rights (the "Rights") issued pursuant to the Rights
Agreement, dated as of June 17, 1996, as amended (the "Rights Agreement"),
between the Company and Harris Trust and Savings Bank, as Rights Agent (the
Common Stock and the Rights together are referred to herein as the "Shares"),
at $35.00 per Share, net to the seller in cash, upon the terms and subject to
the conditions set forth in the Offer to Purchase and in the related Letter of
Transmittal (which, together with any amendments or supplements thereto,
collectively constitute the "Offer"). Tendering stockholders who have Shares
registered in their name and who tender directly to Citibank, N.A. (the
"Depositary") will not be obligated to pay brokerage fees or commissions or,
subject to Instruction 6 of the Letter of Transmittal, transfer taxes on the
purchase of Shares by the Purchaser pursuant to the Offer.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON MONDAY, JUNE 21, 1999, UNLESS THE OFFER IS EXTENDED.
The purpose of the Offer is to acquire for cash as many outstanding Shares
as possible as a first step in acquiring the entire equity interest in the
Company. The Purchaser currently intends, as soon as practicable upon
consummation of the Offer, to propose and seek to have the Company effect a
merger or some similar business combination (the "Proposed Merger") between
the Company and the Purchaser or an affiliate thereof, pursuant to which each
then outstanding Share (other than Shares held by the Company in treasury, or
owned by Parent, the Purchaser or any other direct or indirect wholly owned
subsidiary of Parent, or Shares, if any, that are held by stockholders who are
entitled to and who properly exercise dissenters' rights under Delaware law)
would be converted pursuant to the terms of the Proposed Merger into the right
to receive an amount in cash equal to the
<PAGE>
per Share price paid pursuant to the Offer, without interest. Parent and the
Purchaser are seeking to negotiate with the Company with respect to the
acquisition of the Company by Parent. The Purchaser reserves the right to
amend the Offer upon entering into a merger agreement with the Company.
The Offer is conditioned upon, among other things, (i) there being validly
tendered prior to the expiration of the Offer and not withdrawn a number of
Shares which, together with the Shares beneficially owned by the Purchaser and
its affiliates, will constitute at least a majority of the outstanding Shares
on a fully diluted basis as of the date the Shares are accepted for payment
pursuant to the Offer; (ii) the Rights having been redeemed by the Company's
Board of Directors, or the Purchaser otherwise being satisfied in its sole
discretion that Rights are otherwise invalid or inapplicable to the
transactions contemplated in the Offer to Purchase; (iii) the acquisition of
Shares pursuant to the Offer being approved pursuant to Section 203 of the
Delaware General Corporation Law or the Purchaser being satisfied in its sole
discretion that the provisions of Section 203 restricting certain business
combinations are invalid or inapplicable to the acquisition of Shares pursuant
to the Offer and the Proposed Merger (by action of the Company's Board of
Directors, the acquisition of a sufficient number of Shares or otherwise); and
(iv) any waiting period under the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended, and the regulations thereunder and under any laws of
foreign jurisdictions that are applicable to the purchase of Shares pursuant
to the Offer having expired or been terminated. The Offer is also subject to
certain other conditions described in Section 13 of the Offer to Purchase. The
Offer is not conditioned upon Parent or the Purchaser obtaining financing.
For purposes of the Offer, the Purchaser will be deemed to have accepted
for payment Shares validly tendered and not withdrawn as, if and when the
Purchaser gives oral or written notice to the Depositary of its acceptance for
payment of such Shares pursuant to the Offer. Payment for Shares accepted for
payment pursuant to the Offer will be made by deposit of the purchase price
therefor with the Depositary, which will act as agent for the tendering
stockholders for the purpose of receiving payments from the Purchaser and
transmitting such payments to the tendering stockholders. Under no
circumstances will interest on the purchase price for Shares be paid,
regardless of any delay in making such payment.
In all cases, payment for Shares accepted for payment pursuant to the Offer
will be made only after timely receipt by the Depositary of (a) certificates
for (or a timely Book-Entry Confirmation (as defined in the Offer to Purchase)
with respect to) such Shares and, if the Distribution Date under the Rights
Agreement occurs, certificates for (or a timely Book-Entry Confirmation, if
available, with respect to) the associated Rights (unless the Purchaser elects
to make payment for such Shares pending receipt of the certificates for, or a
Book-Entry Confirmation with respect to, such Rights as described above), (b)
a Letter of Transmittal (or facsimile thereof), properly completed and duly
executed, with any required signature guarantees (or, in the case of a book-
entry transfer, an Agent's Message (as defined in the Offer to Purchase) in
lieu of the Letter of Transmittal) and (c) any other documents required by the
Letter of Transmittal. Accordingly, tendering stockholders may be paid at
different times depending upon when certificates for Shares (or Rights) or
Book-Entry Confirmations with respect to Shares (or Rights, if available) are
actually received by the Depositary.
Subject to the applicable rules and regulations of the Securities and
Exchange Commission, the Purchaser expressly reserves the right, in its sole
discretion, at any time or from time to time, to extend the period of time
during which the Offer is open by giving oral or written notice of such
extension to the Depositary and by making a public announcement thereof.
Subject to applicable regulations of the Securities and Exchange Commission,
the Purchaser also reserves the right, in its sole discretion, at any time or
from time to time, (i) to delay acceptance for payment of or (regardless of
whether such Shares were theretofore accepted for payment) payment for any
tendered Shares, or to terminate or amend the Offer as to any Shares not then
paid for, if any of the conditions set forth in Section 13 of the Offer to
Purchase are not satisfied and (ii) to waive any condition by giving oral or
written notice of such delay, termination, amendment or waiver to the
Depositary by making a public announcement thereof. Any extension, delay,
termination, amendment or waiver of the Offer will be followed as promptly as
practicable by public announcement thereof, such announcement in the case of
an
<PAGE>
extension to be issued no later than 9:00 A.M., New York City time, on the
next business day after the previously scheduled Expiration Date. During any
such extension, all Shares previously tendered and not withdrawn will remain
subject to the Offer, subject to the right of a tendering stockholder to
withdraw such stockholder's Shares.
Tenders of Shares made pursuant to the Offer are irrevocable except that
Shares tendered pursuant to the Offer may be withdrawn at any time prior to
12:00 Midnight New York City time, on Monday, June 21, 1999 (the "Expiration
Date") and, unless theretofore accepted for payment by the Purchaser pursuant
to the Offer, may also be withdrawn at any time after July 22, 1999 (or such
later date as may apply in case the Offer is extended).
For a withdrawal to be effective, a written, telegraphic or facsimile
transmission notice of withdrawal must be timely received by the Depositary at
one of its addresses set forth on the back cover of the Offer to Purchase. Any
such notice of withdrawal must specify the name of the person having tendered
the Shares to be withdrawn, the number of Shares to be withdrawn and the names
in which the certificate(s) evidencing the Shares to be withdrawn are
registered, if different from that of the person who tendered such Shares. The
signature(s) on the notice of withdrawal must be guaranteed by an Eligible
Institution (as defined in the Offer to Purchase), unless such Shares have
been tendered for the account of any Eligible Institution. If Shares have been
tendered pursuant to the procedures for book-entry tender as set forth in
Section 3 of the Offer to Purchase, any notice of withdrawal must specify the
name and number of the account at the Book-Entry Transfer Facility (as defined
in the Offer to Purchase) to be credited with the withdrawn Shares. If
certificates for Shares to be withdrawn have been delivered or otherwise
identified to the Depositary, the name of the registered holder and the serial
numbers of the particular certificates evidencing the Shares to be withdrawn
must also be furnished to the Depositary as aforesaid prior to the physical
release of such certificates. None of Parent, the Purchaser, the Dealer
Manager, the Depositary, the Information Agent, or any other person will be
under any duty to give notification of any defects or irregularities in any
notice of withdrawal or incur any liability for failure to give such
notification. Withdrawals of tender for Shares may not be rescinded, and any
Shares properly withdrawn will be deemed not to have been validly tendered for
purposes of the Offer. However, withdrawn Shares may be retendered by
following one of the procedures described in Section 3 of the Offer to
Purchase at any time prior to the Expiration Date.
The information required to be disclosed by paragraph (e)(l)(vii) of Rule
14d-6 of the General Rules and Regulations under the Securities Exchange Act
of 1934, as amended, is contained in the Offer to Purchase and is incorporated
herein by reference.
A request is being made to the Company for the use of the Company's
stockholder list and security position listings for the purpose of
disseminating the Offer to stockholders. Upon compliance by the Company with
such request, the Offer to Purchase and the related Letter of Transmittal will
be mailed to record holders of Shares and will be furnished to brokers, banks
and similar persons whose names, or the names of whose nominees, appear on the
stockholder list or, if applicable, who are listed as participants in a
clearing agency's security position listing for subsequent transmittal to
beneficial owners of Shares.
The Offer to Purchase and the Letter of the Transmittal contain important
information which should be read carefully before any decision is made with
respect to the Offer.
Questions and requests for assistance may be directed to the Information
Agent or to the Dealer Manager at their respective addresses and telephone
numbers set forth below. Requests for additional copies of the Offer to
Purchase, the related Letter of Transmittal and other tender offer materials
may be directed to the Information Agent, the Dealer Manager or to brokers,
dealers, commercial banks or trust companies. Such additional copies will be
furnished at the Purchaser's expense. All questions as to the form and
validity (including time of receipt) of any notice of withdrawal will be
determined by the Purchaser, in its sole discretion, which determination shall
be final and binding. The Purchaser will not pay any fees or commissions to
any broker or dealer or any other person (other than the Dealer Manager) for
soliciting tenders of Shares pursuant to the Offer.
<PAGE>
The Information Agent for the Offer is:
Innisfree M&A Incorporated
501 Madison Avenue, 20th Floor
New York, New York 10022
Banks and Brokers Call Collect (212) 750-5833
All Others Call Toll Free (888) 750-5834
The Dealer Manager for the Offer is:
Salomon Smith Barney
Seven World Trade Center
New York, New York 10048
<PAGE>
Exhibit (a)(8)
Notice of Guaranteed Delivery
for
Tender of Shares of Common Stock
(Including the Associated Preferred Share Purchase Rights)
of
Varlen Corporation
Pursuant to the Offer to Purchase Dated May 24, 1999
by
Track Acquisition Incorporated
A Wholly Owned Subsidiary of
Amsted Industries Incorporated
As set forth in Section 3 of the Offer to Purchase (as defined below), this
form or one substantially equivalent may be used to accept the Offer (as
defined below) if certificates for shares of common stock, par value $.10 per
share (the "Common Stock"), including the associated preferred share purchase
rights (the "Rights" and, collectively with the Common Stock, the "Shares"),
of Varlen Corporation, a Delaware corporation (the "Company"), are not
immediately available, or if the procedure for book-entry transfer cannot be
complied with on a timely basis, or all required documents cannot be delivered
to the Depositary prior to the Expiration Date (as defined in Section 1 of the
Offer to Purchase). This form may be delivered by hand to the Depositary or
transmitted by telegram, facsimile transmission or mail to the Depositary and
must include a guarantee by an Eligible Institution (as defined in Section 3
of the Offer to Purchase). See Section 3 of the Offer to Purchase.
The Depositary for the Offer is:
CITIBANK, N.A.
By Hand: By Mail: By Overnight Courier:
Citibank, N.A. Citibank, N.A. Citibank, N.A.
Corporate Trust Window P.O. Box 685 915 Broadway, 5th Floor
111 Wall Street, 5th Old Chelsea Station New York, New York 10010
Floor New York, New York 10113
New York, New York 10043
Facsimile For Eligible Institutions: (212) 505-2248
To Confirm Facsimile Only: (800) 270-0808
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS
SET FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE TO A NUMBER
OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY TO THE
DEPOSITARY.
This form is not to be used to guarantee signatures. If a signature on a
Letter of Transmittal is required to be guaranteed by an Eligible Institution
under the instructions thereto, such signature guarantee must appear in the
applicable space provided in the signature box on the Letter of Transmittal.
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to Track Acquisition Incorporated, a Delaware
corporation and a wholly owned subsidiary of Amsted Industries Incorporated, a
Delaware corporation, on the terms and subject to the conditions set forth in
the Offer to Purchase, dated May 24, 1999 (the "Offer to Purchase"), and the
related Letter of Transmittal (which, as amended or supplemented from time to
time, together constitute the "Offer"), receipt of which is hereby
acknowledged, the number of Shares set forth below, all pursuant to the
guaranteed delivery procedures set forth in Section 3 of the Offer to Purchase.
Number of Shares: ___________________
Dated: ______________________________
Certificate Nos.(if available): _____ Name(s) of Record Holder(s): (Please
Print)
CHECK BOX IF SHARES WILL BE TENDERED -------------------------------------
BY BOOK-ENTRY TRANSFER [_] -------------------------------------
Address(es): (Include Zip Code)
Account Number: _____________________ -------------------------------------
-------------------------------------
Daytime Area Code
and Tel. No.: _______________________
Signature(s) ________________________
-------------------------------------
<PAGE>
GUARANTEE
(Not to be Used for Signature Guarantee)
The undersigned, a bank, broker, dealer, credit union, savings association
or other entity which is a member in good standing of the Securities Transfer
Agents Medallion Program or a bank, broker, dealer, credit union, savings
association or other entity which is an "eligible guarantor institution," as
such term is defined in Rule 17Ad-15 under the Securities Exchange Act of
1934, as amended (each of the foregoing constituting an "Eligible
Institution"), guarantees the delivery to the Depositary of the Shares
tendered hereby, in proper form of transfer, or a Book-Entry Confirmation (as
defined in the Offer to Purchase), together with a properly completed and duly
executed Letter of Transmittal, with any required signature guarantees, or an
Agent's Message (as defined in the Offer to Purchase) in the case of a book-
entry delivery, and any other required documents within three Nasdaq National
Market trading days of the date hereof.
The Eligible Institution that completes this form must communicate this
guarantee to the Depositary and must deliver the Letter of Transmittal and
certificates for Shares to the Depositary within the time period shown herein.
Failure to do so could result in a financial loss to such Eligible
Institution.
Name of Firm: _____________________ -----------------------------------
(Authorized Signature)
Address: __________________________ Name: _____________________________
----------------------------------- (Please Print)
Area Code and Telephone Number: ___ Title: ____________________________
Dated: ____________________________
NOTE: DO NOT SEND CERTIFICATES FOR SHARES WITH THIS FORM. CERTIFICATES FOR
SHARES SHOULD BE SENT WITH YOUR LETTER OF TRANSMITTAL.
<PAGE>
EXHIBIT (a)(9)
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
Guidelines for Determining the Proper Identification Number to Give the Payer.
Social Security Numbers have nine digits separated by two hyphens: i.e., 000-
00-0000. Employer Identification Numbers have nine digits separated by only
one hyphen, i.e. 00-0000000. The table below will help determine the number to
give the payer.
- --------------------------------------- ---------------------------------------
<TABLE>
<CAPTION>
Give the
For this type of account: SOCIAL SECURITY
number of--
- -----------------------------------------------
<S> <C>
1. An individual's account The individual
2. Two or more individuals The actual owner
(joint account) of the account
or, if combined
funds, the first
individual on the
account(1)
3. Husband and wife (joint The actual owner
account) of the account
or, if
joint funds,
either person(1)
4. Custodian account of a The minor(2)
minor (Uniform Gift to
Minors Act)
5. Adult and minor (joint The adult or, if
account) the minor is the
only contributor,
the minor(1)
6. Account in the name of The ward, minor,
guardian or committee for a or incompetent
designated ward, minor, or person(3)
incompetent person
7. a. The usual revocable The grantor-
savings trust account trustee(1)
(grantor is also
trustee)
b. So-called trust account The actual
that is not a legal or owner(1)
valid trust under State
law
8. Sole proprietorship The owner(4)
account
</TABLE>
<TABLE>
<CAPTION>
Give the EMPLOYER
For this type of account: IDENTIFICATION
number of --
--------
<S> <C>
9. A valid trust, estate, or The legal entity
pension trust (do not furnish
the identifying
number of the
personal
representative or
trustee unless
the legal entity
itself is not
designated in the
account title)(5)
10. Corporate account The corporation
11. Religious, charitable, or The organization
educational organization
account
12. Partnership account held The partnership
in the name of the business
13. Association, club, or The organization
other tax-exempt
organization
14. A broker or registered The broker or
nominee nominee
15. Account with the The public entity
Department of Agriculture
in the name of a public
entity (such as a State or
local government, school
district, or prison) that
receives agricultural
program payments
</TABLE>
---------------------------------------
(1) List first and circle the name of the person whose number you furnish. If
only one person on a joint account has a Social Security Number, that
person's number must be furnished.
- ---------------------------------------
(2) Circle the minor's name and furnish the minor's Social Security Number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's Social Security Number.
(4) You must show your individual name, but you may also enter your business
or "doing business as" name. You may use either your Social Security
Number or Employer Identification Number (if you have one).
(5) List first and circle the name of the legal trust, estate or pension
trust. (Do not furnish the Taxpayer Identification Number of the personal
representative or trustee unless the legal entity itself is not designated
in the account title.)
Note: If no name is circled when there is more than one name, the number will
be considered to be that of the first name listed.
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
Page 2
Obtaining a Number
If you don't have a TIN or you don't know your number, obtain Internal Revenue
Service Form SS-5, Application for Social Security Number Card or Form SS-4,
Application for Employer Identification Number at your local office of the
Social Security Administration or the Internal Revenue Service and apply for a
number.
Payees Exempt from Backup Withholding
Payees specifically exempted from backup withholding on ALL payments include
the following:
. A corporation.
. A financial institution.
. An organization exempt from tax under Section 501(A) or an individual re-
tirement plan.
. The United States or any agency or instrumentality thereof.
. A state, the District of Columbia, a possession of the United States or
any subdivision or instrumentality thereof.
. A foreign government, a political subdivision of a foreign government, or
any agency or instrumentality thereof. An international organization or
any agency or instrumentality thereof.
. A registered dealer in securities or commodities registered in the U.S. or
a possession of the U.S.
. A real estate investment trust.
. A common trust fund operated by a bank under Section 584(a).
. An exempt charitable remainder trust, or a non-exempt trust described in
Section 4947(a)(1).
. An entity registered at all times under the Investment Company Act of
1940.
. A foreign central bank of issue.
Payments of dividends and patronage dividends not generally subject to backup
withholding include the following:
. Payments to nonresident aliens subject to withholding under Section 1441.
. Payments to partnerships not engaged in a trade or business in the U.S.
and which have at least one nonresident partner.
. Payments of patronage dividends where the amount received is not paid in
money.
. Payments made by certain foreign organizations.
Payments made to a nominee. Payments of interest not generally subject to
backup withholding include the following:
. Payments of interest on obligations issued by individuals.
Note: You may be subject to backup withholding if this interest is $600 or
more and is paid in the course of the payer's trade or business and you have
not provided your correct Taxpayer Identification Number to the payer.
. Payments of tax-exempt interest (including exempt interest dividends under
Section 852).
. Payments described in Section 6049(b)(5) to nonresident aliens.
. Payments on tax-free covenant bonds under Section 1451.
. Payments made by certain foreign organizations.
. Payments made to a nominee.
Exempt payees described above should file Substitute Form W-9 to avoid
possible erroneous backup withholding. FILE THIS FORM WITH THE PAYER. FURNISH
YOUR TAXPAYER IDENTIFICATION NUMBER. WRITE "EXEMPT" ON THE FACE OF THE FORM
AND RETURN IT TO THE PAYER. IF THE PAYMENTS ARE INTEREST, DIVIDENDS, OR
PATRONAGE DIVIDENDS, ALSO SIGN AND DATE THE FORM.
Certain payments other than interest, dividends, and patronage dividends that
are not subject to information reporting are also not subject to backup with-
holding. For details, see sections 6041, 6041A(a), 6045, and 6050A.
Privacy Act Notice.--Section 6109 requires most recipients of dividend, inter-
est or other payments to give Taxpayer Identification Numbers to payers who
must report the payments to the IRS. The IRS uses the numbers for identifica-
tion purposes. Payers must be given the numbers whether or not recipients are
required to file tax returns. Payers must generally withhold 31% of taxable
interest, dividend, and certain other payments to a payee who does not furnish
a Taxpayer Identification Number to a payer. Certain penalties may also apply.
Penalties
(1) Penalty for Failure to Furnish Taxpayer Identification Number.--If you
fail to furnish your Taxpayer Identification Number to a payer, you are sub-
ject to a penalty of $50 for each such failure unless your failure is due to
reasonable cause and not to willful neglect.
(2) Civil Penalty for False Information with Respect To Withholding.--If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(3) Criminal Penalty for Falsifying Information.--Falsifying certifications or
affirmations may subject you to criminal penalties including fines and/or im-
prisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE
SERVICE.
<PAGE>
EXHIBIT (b)
April 29, 1999
AMSTED Industries Incorporated
44th Floor--Boulevard Towers South
205 North Michigan Avenue
Chicago, Illinois 60601
Attention: Mr. Gary B. Montgomery
Vice President and CFO
$900,000,000 Senior Unsecured Credit Facilities
COMMITMENT LETTER
Dear Gary:
Thank you again for giving us a chance to discuss Project Victor with you
over the last few weeks.
You have advised us that AMSTED Industries Incorporated ("AMSTED" or the
"Company"), a Delaware corporation, desires to establish $900,000,000 of
senior unsecured credit facilities (as further described herein, the
"Facilities"), the proceeds of which would be used (i) to finance the
acquisition (the "Acquisition") of Victor Corporation (the "Acquired
Business"), (ii) to refinance (the "Refinancing") all indebtedness outstanding
under the Credit Agreement dated as of July 1, 1997 (the "Existing Credit
Agreement"), among the Company, The First National Bank of Chicago and certain
other lenders, and the Company's existing senior unsecured private placement
debt, (iii) to provide working capital from time to time for the Company and
its subsidiaries; and (iv) for other general corporate purposes. You have
asked Salomon Smith Barney Inc. ("SSB") to act as advisor, lead arranger and
book manager and Citibank, N.A. ("Citibank") to act as Administrative Agent
with respect to the Facilities.
Subject to the terms and conditions described in this letter, in the
attached Fee Letter and the attached Summary of Terms and Conditions (the
"Term Sheet") (collectively, the "Commitment Letter"), SSB and certain of its
affiliates as it deems appropriate (collectively, "Citigroup") is pleased to
inform you of its commitment to provide $900,000,000 of the Facilities.
Conditions Precedent
The commitment of Citigroup hereunder is subject to: (i) the preparation,
execution and delivery of definitive loan documentation, including a credit
agreement incorporating substantially the terms and conditions outlined in
this Commitment Letter and otherwise satisfactory to us and our counsel; (ii)
the absence of (A) a material adverse change in the business, condition
(financial or otherwise), operations, performance or properties of the Company
and its subsidiaries, including the Acquired Business, taken as a whole, since
1998, or (B) any change in loan syndication, financial or capital market
conditions generally that, in SSB's judgment, could be reasonably expected to
materially impair completion of a Successful Syndication (as defined in the
section captioned "Syndication" below) of the Facilities; (iii) the accuracy
and completeness in all material respects of all representations that you make
to us and all information (in the case of the Acquired Business, to the
Company's knowledge) that you furnish to us (taken as a whole) and your
compliance with the terms of this Commitment Letter; (iv) the payment in full
of all fees, expenses and other amounts payable under this Commitment Letter;
(v) a purchase price for the Acquired Business not to exceed the amount set
forth on Schedule 1 hereto and pro forma total debt to EBITDA not to exceed
3.25x at closing; (vi) nothing shall have come to the attention of Citigroup
that is inconsistent in any material respect with the Pre-Commitment
Information (as defined below) that could be reasonably expected to have a
material adverse effect on the Company and its subsidiaries assuming
consummation of the Acquisition (taken as a whole); and (vii) a closing of the
Facilities on or prior to July 31, 1999.
<PAGE>
Commitment Termination
Citigroup's commitment set forth in this Commitment Letter will terminate
on July 31, 1999, unless (i) the Facilities close on or before such date, or
(ii) prior to July 31, 1999 and in no event earlier than 10 days prior to July
31, 1999, the Company requests that SSB and Citibank extend Citigroup's
commitment for an additional 30 days. Such request for commitment extension
shall not be unreasonably withheld. Prior to such date, this Commitment Letter
may be terminated as provided in the last paragraph of the immediately
following section captioned "Syndication".
Syndication
Citibank reserves the right, prior to or after the execution of definitive
documentation with respect to the Facilities, to syndicate all or a portion of
its commitment to one or more other financial institutions that will become
parties to such definitive documentation pursuant to a syndication to be
managed by SSB (the financial institutions becoming parties to such definitive
documentation being collectively referred to herein the "Lenders"). You
understand that SSB intends to commence syndication efforts promptly after
AMSTED publicly announces the Acquisition, and that it may elect to appoint
one or more syndication agents (which may include Citibank) to direct the
syndication efforts on its behalf.
SSB will act as the lead arranger and book manager with respect to the
Facilities and will manage all aspects of the syndication in consultation with
you, including the timing of all offers to potential Lenders, the acceptance
of commitments, and the determination of the amounts offered and the
compensation provided.
You agree to take all action as SSB may reasonably request to assist it and
you in forming a syndicate acceptable to SSB and you. Your assistance in
forming such syndicate shall include but will not be limited to: (i) making
senior management and representatives of the Company available to participate
in information meetings with potential Lenders at such times and places as SSB
may reasonably request; (ii) using your reasonable efforts to ensure that the
syndication efforts benefit from your bank relationships; and (iii) providing
SSB with all information reasonably deemed necessary by it to successfully
complete the syndication.
To ensure an orderly and effective syndication of the Facilities, you agree
that until the completion of a Successful Syndication (as defined below) or
expiration of this commitment letter, you will not, and will not permit any of
your subsidiaries to, syndicate or issue, attempt to syndicate or issue,
announce or authorize the announcement of the syndication or issuance of, or
engage in discussions concerning the syndication or issuance of, any debt
facility or debt security (including any renewals of any such security but
excluding working capital, debt under existing facilities and other debt
having an outstanding principal amount not in excess of $50 million), without
the prior written consent of SSB.
You agree that Citibank will act as the sole Administrative Agent for the
Facilities and that SSB will act as sole lead arranger and book manager and
that no additional agents, co-agents or arrangers will be appointed, or other
titles conferred, without the consent of SSB and Citibank.
Provided that the aggregate amount of the Facilities remains unchanged, SSB
reserves the right at any time, after consultation with you, to change any or
all of the terms, structure, tenor, or pricing of the Facilities if SSB
determines that such changes are advisable in SSB's judgment, to ensure that
the Facilities are successfully syndicated such that, as a result of such
syndication, the commitment of Citigroup is reduced to $100 million in a
syndication to prospective Lenders (herein defined as a "Successful
Syndication"). Citigroup's commitment is subject to this paragraph.
Fees
In addition to the fees described in Annex I, you agree to pay the fees set
forth in that certain letter of even date herewith (the "Fee Letter"). The
terms of the Fee Letter are an integral part of Citigroup's commitment
hereunder, and constitute part of this Commitment Letter for all purposes
hereof. Each of the fees described in the Fee Letter shall be nonrefundable
when paid.
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<PAGE>
Indemnification
You agree to indemnify and hold harmless SSB, Citibank, Citigroup, each
Lender and each of their affiliates and each of their respective officers,
directors, employees, agents, advisors and representatives (each, an
"Indemnified Party") from and against any and all claims, damages, losses,
liabilities and expenses (including, without limitation, fees and
disbursements of counsel), joint or several, that may be incurred by or
asserted or awarded against any Indemnified Party, in each case arising out of
or in connection with or relating to any investigation, litigation or
proceeding or the preparation of any defense with respect thereto arising out
of or in connection with or relating to this Commitment Letter or the loan
documentation or the transactions contemplated hereby or thereby, or any use
made or proposed to be made with the proceeds of the Facilities, whether or
not such investigation, litigation or proceeding is brought by the Company,
any of its shareholders or creditors, any Indemnified Party or any other
person, or an Indemnified Party is otherwise a party thereto and whether or
not the transactions contemplated hereby are consummated, except to the extent
such claim, damage, loss, liability or expense is found in a final judgment by
a court of competent jurisdiction to have resulted from such Indemnified
Party's breach of contract, gross negligence or willful misconduct.
You agree that no Indemnified Party shall have any liability (whether
direct or indirect, in contract, tort or otherwise) to the Company or any of
its shareholders or creditors for or in connection with the transactions
contemplated hereby, except to the extent such liability is found in a final
non-appealable judgment by a court of competent jurisdiction to have resulted
from such Indemnified Party's breach of contract, gross negligence or willful
misconduct.
Costs and Expenses
In further consideration of the commitment of Citigroup hereunder, and
recognizing that in connection herewith Citigroup is incurring substantial
costs and expenses (including, without limitation, fees and disbursements of
counsel and its syndication agents, filing and recording fees and due
diligence, syndication (including printing, distribution and bank meetings),
transportation, computer, duplication, messenger, appraisal, audit, insurance
and consultant costs and expenses), you hereby agree to pay, or reimburse
Citigroup on demand for, all such reasonable costs and expenses (whether
incurred before or after the date hereof), regardless of whether any of the
transactions contemplated hereby are consummated. You also agree to pay all
reasonable costs and expenses of Citigroup (including, without limitation,
reasonable fees and disbursements of counsel) incurred in connection with the
enforcement of any of its rights and remedies hereunder.
Confidentiality
By accepting delivery of this Commitment Letter, you agree that this
Commitment Letter is for your confidential use only and that neither its
existence nor the terms hereof will be disclosed by you to any person other
than your officers, directors, employees, accountants, attorneys and other
advisors, and than only on a "need to know" basis in connection with the
transactions contemplated hereby and on a confidential basis. Notwithstanding
the foregoing, following your acceptance of the provisions hereof and your
return of an executed counterpart of this Commitment Letter to us as provided
below, (i) you may make public disclosure of the existence and amount of
Citigroup's commitment hereunder and of Citibank's identity as Administrative
Agent, (ii) you may file a copy of this Commitment Letter (other than the Fee
Letter) in any public record in which it is required by law to be filed and
(iii) you may make such other public disclosures of the terms and conditions
hereof as you are required by law, in the opinion of your counsel, to make.
Representations and Warranties of the Company
You represent and warrant that (i) all information (in the case of the
Acquired Business, to the Company's knowledge) that has been or will hereafter
be made available to Citigroup, any Lender or any potential Lender by you or
any of your representatives in connection with the transaction contemplated
hereby (when taken as a
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<PAGE>
whole) is and will be complete and correct in all material respects and does
not and will not contain any untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements contained
therein not misleading in light of the circumstances under which such
statements were or are made and (ii) all financial projections that have been
or will be prepared by you and made available to Citigroup, SSB, any Lender or
any potential Lender have been or will be prepared in good faith based upon
reasonable assumptions at the time made and at the time the related
projections were made available to Citigroup. During the period prior to
termination of this Commitment Letter, you agree to supplement the information
and projections from time to time so that the representations and warranties
contained in this paragraph remain correct.
In issuing this undertaking, Citigroup is relying on the accuracy of the
information furnished to it by or on behalf of the Company and its
subsidiaries (the "Pre-Commitment Information") without independent
verification thereof.
Assignments
The Company may not assign this Commitment Letter or Citigroup's commitment
hereunder without Citicorp's prior written consent, and any attempted
assignment without such consent shall be void.
No Third Party Reliance, Etc.
The agreements of Citigroup hereunder and of any Lender that issues a
commitment to provide financing under the Facilities are made solely for the
benefit of the Company and may not be relied upon or enforced by any other
person. Please note that those matters that are not covered or made clear
herein or in Annex I or in the Fee Letter are subject to mutual agreement of
the parties. The terms and conditions of this undertaking may be modified only
in writing. This letter is not intended to create a fiduciary relationship
among the parties hereto.
Governing Law, Etc.
This Commitment Letter shall be governed by, and construed in accordance
with, the laws of the State of New York. This Commitment Letter sets forth the
entire agreement between the parties with respect to the matters addressed
herein and supersedes all prior communications, written or oral, with respect
thereto. This Commitment Letter may be executed in any number of counterparts,
each of which, when so executed, shall be deemed to be an original and all of
which, taken together, shall constitute one and the same Commitment Letter.
Delivery of an executed counterpart of a signature page to this Commitment
Letter by telecopier shall be as effective as delivery of a manually executed
counterpart of this Commitment Letter. Your obligations under the paragraphs
captioned "Fees", "Indemnification", "Costs and Expenses", "Confidentiality"
and "Representations and Warranties" shall survive the expiration or
termination of this Commitment Letter whether or not the definitive documents
shall be executed and delivered.
Waiver of Jury Trial
Each party hereto irrevocably waives all right to trial by jury in any
action, proceeding or counterclaim (whether based on contract, tort or
otherwise) arising out of or relating to this Commitment Letter or the
transactions contemplated hereby or the actions of Citigroup or SSB in the
negotiation, performance or enforcement hereof.
Please indicate your acceptance of the provisions hereof by signing the
enclosed copy of this Commitment Letter and the Fee Letter and returning them
to Eileen Ogimachi, Managing Director, Citibank, N.A., 399 Park Avenue, 11th
Floor, New York, New York 10043 (fax: (212) 793-3963) at or before 5 p.m. (New
York City time) on June 1, 1999, the time at which the commitment of Citigroup
set forth above (if not so accepted prior thereto) will expire. If you elect
to deliver this Commitment Letter by telecopier, please arrange for the
executed original to follow by next-day courier.
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<PAGE>
Very truly yours,
Salomon Smith Barney Inc.
/s/ Douglas Greeff
By: _________________________________
Title: Attorney in Fact
Citibank, N.A.
/s/ Eileen Ogimachi
By: _________________________________
Title: Attorney in Fact
Salomon Brothers Holding Company
Inc.
/s/ Douglas Greeff
By: _________________________________
Title: Attorney in Fact
ACCEPTED AND AGREED
this 18th day of May, 1999:
Amsted Industries Incorporated
/s/ Gary B. Montgomery
By: _________________________________
Title: Vice President and
Chief Financial Officer
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