<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
SCHEDULE 14D-1
TENDER OFFER STATEMENT PURSUANT TO SECTION 14(D)(1)
OF THE SECURITIES EXCHANGE ACT OF 1934
and
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
----------------
PINKERTON'S, INC.
(Name of Subject Company)
SECURITAS AB
SECURITAS ACQUISITION CORP.
(Bidders)
----------------
COMMON STOCK, PAR VALUE $0.001 PER SHARE (AND ASSOCIATED PURCHASE RIGHTS)
(Title of Class of Securities)
----------------
723429 10 6
(CUSIP Number of Class of Securities)
----------------
MR. THOMAS BERGLUND
SECURITAS AB
SECURITAS ACQUISITION CORP.
70 LINDHAGENSPLAN, P.O. BOX 12307
S-102 28 STOCKHOLM, SWEDEN
TELEPHONE: 46 8 657 74 00
(Name, Address and Telephone Number of Person
authorized to Receive Notices and Communications
on Behalf of the Bidder)
WITH A COPY TO:
STEVEN J. GARTNER, ESQ.
WILLKIE FARR & GALLAGHER
787 SEVENTH AVENUE
NEW YORK, NEW YORK 10019-6099
TELEPHONE: (212) 728-8000
CALCULATION OF FILING FEE
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TRANSACTION VALUATION* $421,044,417 AMOUNT OF FILING FEE $84,209
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* Estimated for purposes of calculating the amount of the filing fee only. The
filing fee calculation assumes the purchase of (i) 12,246,631 shares of common
stock, $0.001 par value per share (the "Company Common Stock"), of
Pinkerton's, Inc. (the "Company"), including the associated rights to purchase
Series A Junior Participating Preferred Stock issued pursuant to the Rights
Agreement, dated as of July 12, 1991, as amended, by and between the Company
and The Bank of New York, as successor rights agent (the "Rights" and,
together with the Company Common Stock, the "Shares") at a price of $29.00 per
Share in cash, without interest, and (ii) 2,272,142 shares of Company Common
Stock subject to issuance upon the exercise of outstanding options to purchase
Shares. The amount of the filing fee calculated in accordance with Regulation
240.0-11 of the Securities Exchange Act of 1934 equals 1/50th of one percent
of the value of the transaction.
[_]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 the date of its filing.
Amount Previously Paid: Not applicable. Filing Party: Not applicable.
Form or Registration No.: Not applicable. Date Filed: Not applicable.
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<PAGE>
SCHEDULE 14D-1 AND 13D
CUSIP NO. 723429 10 6
1. NAMES OF REPORTING PERSONS. I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
Securitas Acquisition Corp.
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a)[_]
(b)[_]
3. SEC USE ONLY
4. SOURCE OF FUNDS
AF
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEM 2(e) OR 2(f) [_]
6. CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
7. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
0
8. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES CERTAIN SHARES [_]
9. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
0%
10. TYPE OF REPORTING PERSON
CO
2
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SCHEDULE 14D-1 AND 13D
CUSIP NO. 723429 10 6
1. NAMES OF REPORTING PERSONS. I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
Securitas AB
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a)[_]
(b)[_]
3. SEC USE ONLY
4. SOURCE OF FUNDS
BK
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEM 2(e) OR 2(f) [_]
6.CITIZENSHIP OR PLACE OF ORGANIZATION
Sweden
7.AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
6,137,616
8.CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES CERTAIN SHARES [_]
9.PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
41.8%
10.TYPE OF REPORTING PERSON
CO
3
<PAGE>
TENDER OFFER
This Tender Offer Statement on Schedule 14D-1 (this "Statement") relates to
the offer by Securitas Acquisition Corp., a Delaware corporation
("Purchaser"), to purchase all of the outstanding shares of common stock, par
value $0.001 per share (the "Company Common Stock"), including the associated
rights to purchase Series A Junior Participating Preferred Stock issued
pursuant to the Rights Agreement, dated as of July 12, 1991, as amended, by
and between the Company and The Bank of New York, as successor rights agent
(the "Rights" and, together with the Company Common Stock, the "Shares"), of
Pinkerton's, Inc., a Delaware corporation (the "Company"), at $29.00 per
Share, net to the seller in cash, without interest, upon the terms and subject
to the conditions set forth in the Offer to Purchase dated February 26, 1999
(the "Offer to Purchase"), a copy of which is attached hereto as Exhibit
(a)(1), and in the related Letter of Transmittal, a copy of which is attached
hereto as Exhibit (a)(2) (which, as amended or supplemented from time to time,
together constitute the "Offer").
This Statement also constitutes a Statement on Schedule 13D of each of
Purchaser and Securitas (defined below) with respect to an irrevocable option
granted by the Company to Securitas to purchase up to 2,437,079 shares of
Company Common Stock at $29.00 per share and options granted by certain
stockholders of the Company, who beneficially own 3,700,537 Shares in the
aggregate, to purchase all of such stockholders' Shares at the higher of
$29.00 per share or the highest price paid by Purchaser pursuant to the Offer.
Such options can only be exercised in certain circumstances described in
Section 11 of the Offer to Purchase. Securitas may be deemed to beneficially
own such shares.
Purchaser is indirectly wholly owned by Securitas AB, a corporation
organized under the laws of Sweden ("Securitas"), and was formed solely to
effect the Offer and the transactions contemplated thereby.
ITEM 1. SECURITY AND SUBJECT COMPANY
(a) The name of the subject company is Pinkerton's, Inc., and the address of
its principal executive offices is 4330 Park Terrace Drive, Westlake Village,
California 91361. The telephone number of the Company at such location is
(818) 706-6800.
(b) The class of securities to which this Statement relates is the Company
Common Stock and the Rights. As of February 19, 1999, there were 12,246,631
shares of Company Common Stock issued and outstanding and 2,272,142 shares of
Company Common Stock issuable pursuant to the exercise of outstanding options
to purchase Company Common Stock. Purchaser is seeking to purchase all of the
Shares at a purchase price of $29.00 per Share, net to the seller in cash. The
information set forth in the "INTRODUCTION" of the Offer to Purchase is
incorporated herein by reference.
(c) The information set forth in "Section 6--Price Range of the Shares;
Dividends" of the Offer to Purchase is incorporated herein by reference.
ITEM 2. IDENTITY AND BACKGROUND
(a)-(d), (g) This Statement is being filed by Purchaser and Securitas. The
information set forth in the "INTRODUCTION" and "Section 9--Certain
Information Concerning Purchaser and Securitas" 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 Purchaser and Securitas, and the name of any
corporation or other organization in which such occupations, positions,
offices and employments are or were carried on are set forth in Schedule I to
the Offer to Purchase and incorporated herein by reference.
(e)-(f) During the last five years, none of Purchaser, Securitas nor, to the
best knowledge of Purchaser and Securitas, any of the persons or entities
listed in Schedule I to the Offer to Purchase (i) has been convicted in a
criminal proceeding (excluding traffic violations or similar misdemeanors) or
(ii) was a party to a civil proceeding of a judicial or administrative body of
competent jurisdiction as a result of which any such person
4
<PAGE>
was or is subject to a judgment, decree or final order enjoining future
violations of, or prohibiting or mandating activities subject to, federal or
state securities laws or finding any violation of such laws.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY
(a)(1) Other than the transactions described in Item 3(b) below, none of
Purchaser, Securitas nor, to the best knowledge of Purchaser and Securitas,
any of the persons or entities listed in Schedule I to the Offer to Purchase
has entered into any transaction with the Company, or any of the Company's
affiliates which are corporations, since the commencement of the Company's
third full fiscal year preceding the date of this Statement, the aggregate
amount of which was equal to or greater than one percent of the consolidated
revenues of the Company for (i) the fiscal year in which such transaction
occurred or (ii) the portion of the current fiscal year which has occurred if
the transaction occurred in such year.
(a)(2) Other than the transactions described in Item 3(b) below, none of
Purchaser, Securitas nor, to the best knowledge of Purchaser and Securitas,
any of the persons or entities listed in Schedule I to the Offer to Purchase
has entered into any transaction since the commencement of the Company's third
full fiscal year preceding the date of this Statement with the executive
officers, directors or affiliates of the Company which are not corporations,
in which the aggregate amount involved in such transaction or in a series of
similar transactions, including all periodic installments in the case of any
lease or other agreement providing for periodic payments or installments,
exceeded $40,000.
(b) The information set forth in the "INTRODUCTION," "Section 9--Certain
Information Concerning Purchaser and Securitas," "Section 11--Background of
the Offer; Purpose of the Offer and the Merger; the Merger Agreement and
Certain Other Agreements" and "Section 12--Plans for the Company; Other
Matters" of the Offer to Purchase is incorporated herein by reference.
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
(a)-(b) The information set forth in the "INTRODUCTION" and "Section 10--
Source and Amount of Funds" of the Offer to Purchase is incorporated herein by
reference.
(c) Not applicable.
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDERS
(a)-(e) The information set forth in the "INTRODUCTION," "Section 11--
Background of the Offer; Purpose of the Offer and the Merger; The Merger
Agreement and Certain Other Agreements" and "Section 12-- Plans for the
Company; Other Matters" of the Offer to Purchase is incorporated herein by
reference.
(f)-(g) The information set forth in the "INTRODUCTION" and "Section 7--
Effect of the Offer on the Market for the Shares; Stock Listing; Exchange Act
Registration; Margin Regulations" 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 the "INTRODUCTION," "Section 9--Certain
Information Concerning Purchaser and Securitas" and "Section 11--Background of
the Offer; Purpose of the Offer and the Merger; The Merger Agreement and
Certain Other Agreements" of the Offer to Purchase is incorporated herein by
reference.
5
<PAGE>
ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO THE SUBJECT COMPANY'S SECURITIES
The information set forth in the "INTRODUCTION," "Section 9--Certain
Information Concerning Purchaser and Securitas," "Section 10--Source and
Amount of Funds," "Section 11--Background of the Offer; Purpose of the Offer
and the Merger; The Merger Agreement and Certain Other Agreements,"
"Section 12--Plans for the Company; Other Matters" and "Section 16--Fees and
Expenses" of the Offer to Purchase is incorporated herein by reference.
ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED
The information set forth in "Section 16--Fees and Expenses" of the Offer to
Purchase is incorporated herein by reference.
ITEM 9.FINANCIAL STATEMENTS OF CERTAIN BIDDERS
The information set forth in "Section 9--Certain Information Concerning
Purchaser and Securitas" of the Offer to Purchase is incorporated herein by
reference.
ITEM 10. ADDITIONAL INFORMATION
(a) Except as disclosed in Items 3 and 7 above, there are no present or
proposed material contracts, arrangements, understandings or relationships
between Purchaser, Securitas, or to the best knowledge of Purchaser and
Securitas, any of the persons or entities listed in Schedule I to the Offer to
Purchase, and the Company or any of its executive officers, directors,
controlling persons or subsidiaries.
(b)-(c) The information set forth in the "INTRODUCTION," "Section 14--
Conditions to the Offer" and "Section 15--Certain Legal Matters" of the Offer
to Purchase is incorporated herein by reference.
(d) The information set forth in "Section 7--Effect of the Offer on the
Market for the Shares Stock Listing; Exchange Act Registration; Margin
Regulations" and "Section 15--Certain Legal Matters" of the Offer to Purchase
is incorporated herein by reference.
(e) None.
(f) The information set forth in the Offer to Purchase and the Letter of
Transmittal, copies of which are attached hereto as Exhibits (a)(1) and
(a)(2), respectively, to the extent not otherwise incorporated herein by
reference, is incorporated herein by reference.
ITEM 11. MATERIALS TO BE FILED AS EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
-------
<C> <S>
(a)(1) Offer to Purchase, dated February 26, 1999.
(a)(2) Letter of Transmittal.
(a)(3) Notice of Guaranteed Delivery.
(a)(4) Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other
Nominees.
(a)(5) Letter to Clients for use by Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees.
(a)(6) Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
(a)(7) Press Release of Securitas, dated February 22, 1999.
(a)(8) Summary Advertisement.
</TABLE>
6
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<TABLE>
<CAPTION>
EXHIBIT
-------
<C> <S>
(b) Loan Agreement, dated as of February 18, 1999, between Securitas,
Deutsche Bank AG, Deutsche Bank Luxembourg S.A. and the Banks listed on
Schedule 1 thereto.
(c)(1) Agreement and Plan of Merger, dated as of February 19, 1999, by and
among the Company, Securitas and Purchaser.
(c)(2) Stockholders Agreement, dated as of February 19, 1999, by and among
Purchaser, Securitas and certain stockholders of the Company.
(c)(3) Stock Option Agreement, dated as of February 19, 1999, by and between
Securitas and the Company.
(c)(4) Employment Agreement, dated February 19, 1999, by and among the
Company, Securitas and Denis R. Brown.
(c)(5) Employment Agreement, dated February 19, 1999, by and among the
Company, Securitas and C. Michael Carter.
(c)(6) Employment Agreement, dated February 19, 1999, by and among the
Company, Securitas and James P. McCloskey.
(c)(7) Employment Agreement, dated as of February 19, 1999, by and among the
Company, Securitas and Don W. Walker.
(c)(8) Termination Agreement, dated as of February 19, 1999, by and among the
Company, Securitas and Thomas W. Wathen.
(c)(9) Confidentiality Agreement, dated September 3, 1998, by and between
Securitas and the Company.
(d) None.
(e) Not Applicable.
(f) None.
</TABLE>
7
<PAGE>
SIGNATURE
After due inquiry and to the best of its knowledge and belief, the
undersigned certify that the information set forth in this statement is true,
complete and correct.
Dated: February 26, 1999
SECURITAS ACQUISITION CORP.
By: /s/ Thomas Berglund
------------------------------
Name: Thomas Berglund
Title: President
SECURITAS AB
By: /s/ Thomas Berglund
-----------------------------
Name: Thomas Berglund
Title: President and CEO
8
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
SEQUENTIAL
EXHIBIT PAGE NO.
------- ----------
<C> <S> <C>
(a)(1) Offer to Purchase, dated February 26, 1999.
(a)(2) Letter of Transmittal.
(a)(3) Notice of Guaranteed Delivery.
(a)(4) Letter to Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees.
(a)(5) Letter to Clients for use by Brokers, Dealers, Commercial
Banks, Trust Companies and Other Nominees.
(a)(6) Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9.
(a)(7) Press Release of Securitas dated February 22, 1999.
(a)(8) Summary Advertisement.
(b) Loan Agreement, dated as of February 18, 1999, between
Securitas, Deutsche Bank AG, Deutsche Bank Luxembourg S.A.
and the Banks listed on schedule 1 thereto.
(c)(1) Agreement and Plan of Merger, dated as of February 19,
1999, by and among the Company, Securitas and Purchaser.
(c)(2) Stockholders Agreement, dated as of February 19, 1999, by
and among Purchaser, Securitas and certain stockholders of
the Company.
(c)(3) Stock Option Agreement, dated as of February 19, 1999, by
and between Securitas and the Company.
(c)(4) Employment Agreement, dated February 19, 1999, by and
among the Company, Securitas and Denis R. Brown.
(c)(5) Employment Agreement, dated February 19, 1999, by and
among the Company, Securitas and C. Michael Carter.
(c)(6) Employment Agreement, dated February 19, 1999, by and
among the Company, Securitas and James P. McCloskey.
(c)(7) Employment Agreement, dated February 19, 1999, by and
among the Company, Securitas and Don W. Walker.
(c)(8) Termination Agreement, dated as of February 19, 1999, by
and among the Company, Securitas and Thomas W. Wathen.
(c)(9) Confidentiality Agreement, dated September 3, 1998, by and
between Securitas and the Company.
(d) None.
(e) Not Applicable.
(f) None.
</TABLE>
9
<PAGE>
EXHIBIT 99.(a)(1)
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
PURCHASE RIGHTS)
OF
PINKERTON'S, INC.
AT
$29.00 NET PER SHARE
BY
SECURITAS ACQUISITION CORP.
AN INDIRECT WHOLLY OWNED SUBSIDIARY OF
SECURITAS AB
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON THURSDAY, MARCH 25, 1999, UNLESS THE OFFER IS EXTENDED.
THE OFFER IS BEING MADE PURSUANT TO AN AGREEMENT AND PLAN OF MERGER, DATED
AS OF FEBRUARY 19, 1999 (THE "MERGER AGREEMENT"), BY AND AMONG PINKERTON'S,
INC. (THE "COMPANY"), SECURITAS AB ("SECURITAS") AND SECURITAS ACQUISITION
CORP. ("PURCHASER"). THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY
APPROVED THE MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY,
INCLUDING THE OFFER AND THE MERGER, AND HAS UNANIMOUSLY DETERMINED THAT THE
OFFER AND THE MERGER ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE COMPANY'S
STOCKHOLDERS AND UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS ACCEPT THE OFFER
AND TENDER THEIR SHARES PURSUANT TO THE OFFER.
----------------
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER THAT NUMBER OF
SHARES WHICH REPRESENTS AT LEAST A MAJORITY OF THE NUMBER OF SHARES
OUTSTANDING ON A FULLY DILUTED BASIS. THE OFFER ALSO IS SUBJECT TO THE OTHER
CONDITIONS SET FORTH IN THIS OFFER TO PURCHASE. SEE SECTION 14 OF THIS OFFER
TO PURCHASE.
----------------
IMPORTANT
Any stockholder desiring to tender all or any portion of such stockholder's
Shares (as defined herein) should either (i) complete and sign the enclosed
Letter of Transmittal (or a facsimile thereof) in accordance with the
Instructions in the Letter of Transmittal, have such stockholder's signature
thereon guaranteed (if required by Instruction 1 to the Letter of
Transmittal), mail or deliver the Letter of Transmittal (or a facsimile
thereof) and any other required documents to the Depositary (as defined
herein) and either deliver the certificates for such Shares to the Depositary
or tender such Shares pursuant to the procedure for book-entry transfer set
forth in Section 3 of this Offer to Purchase or (ii) request such
stockholder's broker, dealer, commercial bank, trust company or other nominee
to effect the transaction for such stockholder. Any stockholder whose Shares
are 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 to tender such Shares.
Any stockholder who desires to tender Shares and whose certificates
evidencing such Shares are not immediately available, or who cannot comply
with the procedures for book-entry transfer on a timely basis, or who cannot
deliver all required documents to the Depositary prior to the expiration of
the Offer, may tender such Shares by following the procedures for guaranteed
delivery set forth in Section 3 of this Offer to Purchase.
Questions and requests for assistance may be directed to the Information
Agent (as defined herein) at its address and telephone number set forth on the
back cover of this Offer to Purchase. Requests for additional copies of this
Offer to Purchase, the Letter of Transmittal, the Notice of Guaranteed
Delivery and other tender offer materials may be directed to the Information
Agent or brokers, dealers, commercial banks or trust companies.
----------------
THE INFORMATION AGENT FOR THE OFFER IS:
[LOGO]
February 26, 1999
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
INTRODUCTION............................................................... 1
THE OFFER.................................................................. 4
1.Terms of the Offer..................................................... 4
2.Acceptance for Payment and Payment..................................... 6
3.Procedures for Tendering Shares........................................ 6
4.Withdrawal Rights...................................................... 9
5.Certain U.S. Federal Income Tax Consequences........................... 9
6.Price Range of the Shares; Dividends................................... 10
7.Effect of the Offer on the Market for the Shares; Stock Listing;
Exchange Act Registration; Margin Regulations....................... 11
8.Certain Information Concerning the Company............................. 12
9.Certain Information Concerning Purchaser and Securitas................. 14
10.Source and Amount of Funds............................................ 16
11.Background of the Offer; Purpose of the Offer and the Merger; the
Merger Agreement and Certain Other Agreements....................... 17
12.Plans for the Company; Other Matters.................................. 35
13.Dividends and Distributions........................................... 37
14.Conditions to the Offer............................................... 37
15.Certain Legal Matters................................................. 39
16.Fees and Expenses..................................................... 42
17.Miscellaneous ........................................................ 42
</TABLE>
SCHEDULE I--Information Concerning Directors And Executive Officers of
Purchaser and Securitas
i
<PAGE>
TO THE HOLDERS OF COMMON STOCK OF
PINKERTON'S, INC.:
INTRODUCTION
Securitas Acquisition Corp., a Delaware corporation ("Purchaser"), hereby
offers to purchase all outstanding shares of common stock, par value $0.001
per share (the "Company Common Stock"), including the associated rights to
purchase Series A Junior Participating Preferred Stock issued under the Rights
Agreement (as defined below) (the "Rights" and, together with the Company
Common Stock, the "Shares"), of Pinkerton's, Inc., a Delaware corporation (the
"Company"), at a price of $29.00 per Share or such higher price as may be paid
in the Offer (the "Per Share Amount"), 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, as amended or supplemented from time
to time, collectively constitute the "Offer").
Purchaser was formed in connection with the Offer and the transactions
contemplated thereby. Purchaser is indirectly wholly owned by Securitas AB, a
corporation organized under the laws of Sweden ("Securitas"). For information
concerning Purchaser and Securitas, see Section 9 and Schedule I.
Tendering stockholders of record who tender Shares directly will not be
obligated to pay brokerage fees or commissions or, except as set forth in
Instruction 6 of the Letter of Transmittal, stock transfer taxes on the
purchase of Shares by Purchaser pursuant to the Offer. Stockholders who hold
their Shares through a bank or broker should check with such institution as to
whether they charge any service fees. Purchaser will pay all fees and expenses
of IBJ Whitehall Bank & Trust Company, which is acting as the Depositary (in
such capacity, the "Depositary"), and MacKenzie Partners, Inc., which is
acting as Information Agent (in such capacity, the "Information Agent"),
incurred in connection with the Offer and in accordance with the terms of the
agreements entered into between Purchaser and each such person. See Section
16.
THE BOARD OF DIRECTORS OF THE COMPANY (THE "BOARD OF DIRECTORS") HAS
UNANIMOUSLY APPROVED THE MERGER AGREEMENT (AS DEFINED BELOW) AND THE
TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE OFFER AND THE MERGER (AS
DEFINED BELOW), AND HAS UNANIMOUSLY DETERMINED THAT THE OFFER AND THE MERGER
ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE COMPANY'S STOCKHOLDERS AND
UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR
SHARES PURSUANT TO THE OFFER.
Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ"), exclusive
financial advisor to the Company, has delivered to the Board of Directors its
written opinion, dated February 19, 1999 (the "Financial Advisor Opinion"), to
the effect that, as of such date and based upon and subject to certain
assumptions, matters and limitations stated therein, the price per share, in
cash, to be received by the holders of Shares pursuant to the Merger Agreement
is fair, from a financial point of view, to such holders. A copy of the
Financial Advisor Opinion is attached as an exhibit to the Company's
Solicitation/Recommendation Statement on Schedule 14D-9 (the "Schedule 14D-
9"), which has been filed by the Company with the Securities and Exchange
Commission (the "SEC") in connection with the Offer and which is being mailed
to holders of Shares herewith. Holders of Shares are urged to, and should,
read the Financial Advisor Opinion carefully and in its entirety.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER A NUMBER OF
SHARES WHICH REPRESENTS AT LEAST A MAJORITY OF THE TOTAL NUMBER OF SHARES
OUTSTANDING ON A FULLY DILUTED BASIS (THE "MINIMUM CONDITION"). THE OFFER ALSO
IS SUBJECT TO THE OTHER CONDITIONS SET FORTH IN THIS OFFER TO PURCHASE. SEE
SECTION 14. As used in this Offer to Purchase, "fully diluted basis" takes
into account the exercise or conversion of all outstanding options and other
rights and securities exercisable into Shares. The Company has represented and
warranted to Purchaser that, as of February 19, 1999, there were 12,246,631
shares of Company Common Stock issued and outstanding and
1
<PAGE>
2,272,142 shares of Company Common Stock issuable pursuant to the exercise of
outstanding options to purchase Company Common Stock ("Options"). The Merger
Agreement provides, among other things, that the Company will not, except as
expressly contemplated by the Merger Agreement or as set forth therein, issue
any additional Shares (other than Shares issued upon the exercise of Options
outstanding on the date of the Merger Agreement). See Section 11. Based on the
foregoing and assuming the issuance of 2,272,142 Shares issuable upon the
exercise of outstanding Options, Purchaser believes that the Minimum Condition
will be satisfied if 7,259,387 Shares are validly tendered and not withdrawn
prior to the Expiration Date (as defined below).
As an inducement and condition to Securitas' and Purchaser's entering into
the Merger Agreement, concurrently with the execution and delivery of the
Merger Agreement, the Company entered into a stock option agreement with
Securitas, dated as of February 19, 1999 (the "Stock Option Agreement"),
pursuant to which, among other things, the Company has granted Securitas an
option to purchase up to 2,437,079 shares of Company Common Stock at $29.00
per share (the "Company Option"). The Company Option only can be exercised
under certain circumstances described herein. See Section 11.
As an additional inducement and condition to Securitas' and Purchaser's
entering into the Merger Agreement, concurrently with the execution and
delivery of the Merger Agreement, The Thomas W. Wathen Charitable Remainder
Unitrust 1999, The Wathen 1999 Annuity Trust and The Thomas W. Wathen
Foundation, who beneficially own 3,700,537 Shares in the aggregate, entered
into a Stockholders Agreement, dated as of February 19, 1999 (the
"Stockholders Agreement"), with Securitas and Purchaser. Pursuant to the
Stockholders Agreement, each such stockholder has, among other things, agreed
to tender its Shares in the Offer, granted to Securitas a proxy with respect
to the voting of such Shares and granted to Securitas an option to purchase
such Shares. See Section 11.
Contemporaneously with the execution and delivery of the Merger Agreement,
the Company and Securitas have entered into new employment agreements with
certain senior executive officers of the Company (the "New Employment
Agreements"). These New Employment Agreements are more fully described in
Section 11. In addition, the Company, Securitas and Thomas W. Wathen, the
Chairman of the Board of Directors, have entered into a Termination Agreement
providing for the termination of Mr. Wathen's consulting and other
arrangements with the Company (the "Termination Agreement"). The Termination
Agreement is more fully described in Section 11.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of February 19, 1999 (the "Merger Agreement"), by and among the Company,
Securitas and Purchaser. Pursuant to the Merger Agreement and the Delaware
General Corporation Law ("Delaware Law"), as promptly as practicable after the
completion of the Offer and satisfaction or waiver, if permissible, of all
conditions, including the purchase of Shares pursuant to the Offer (sometimes
referred to herein as the "consummation" of the Offer) and the approval and
adoption of the Merger Agreement by the stockholders of the Company (if
required by applicable law), Purchaser will be merged with and into the
Company (the "Merger") and the Company will be the surviving corporation in
the Merger (the "Surviving Corporation"). At the effective time of the Merger
(the "Effective Time"), each share of Company Common Stock issued and
outstanding immediately before the Effective Time other than any Shares (i)
held in the treasury of the Company and each Share owned by Securitas or any
direct or indirect wholly owned subsidiary of Securitas or of the Company
immediately before the Effective Time or (ii) held by a holder who has
demanded and perfected such holder's demand for appraisal of such holder's
Shares in accordance with Delaware Law and as of the Effective Time has
neither effectively withdrawn nor lost such holder's right to such appraisal,
will be canceled and extinguished and be converted into the right to receive
the Per Share Amount in cash payable to the holder, without interest, upon the
surrender of the certificate representing such Share. The Merger Agreement is
more fully described in Section 11.
The Merger Agreement provides that, promptly upon the purchase by Purchaser
of any Shares pursuant to the Offer, and from time to time thereafter as
Shares are acquired by Purchaser, Securitas is entitled to designate such
number of directors, rounded up to the next whole number, on the Board of
Directors as will give Securitas representation of the Board of Directors
equal to at least that number of directors which equals the product of the
total number of directors on the Board of Directors (giving effect to the
directors appointed or elected pursuant to this sentence and including current
directors serving as officers of the Company) multiplied by the
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percentage that the aggregate number of Shares beneficially owned by Securitas
or any affiliate of Securitas bears to the number of Shares outstanding. At
each such time, the Company will cause (i) each committee of the Board of
Directors, (ii) if requested by Securitas, the board of directors of each of
the Subsidiaries and (iii) if requested by Securitas, each committee of such
board, to include persons designated by Securitas constituting the same
percentage of each such committee or board as Securitas' designees constitute
on the Board of Directors. The Company will, upon request by Securitas,
promptly increase the size of the Board of Directors or exercise its best
efforts to secure the resignations of such number of directors as is necessary
to enable Securitas' designees to be elected to the Board of Directors in
accordance with the terms of the Merger Agreement and will cause Securitas'
designees to be so elected. In the event that Securitas' designees are
appointed or elected to the Board of Directors, until the Effective Time (x)
Denis R. Brown may continue to serve as a director of the Company and (y) the
Board of Directors shall have at least three (3) directors who were directors
on February 19, 1999 and who are neither officers of the Company nor
designees, stockholders, affiliates or associates (within the meaning of the
federal securities laws) of Securitas (such directors, the "Independent
Directors"). Following the time directors designated by Securitas constitute a
majority of the Board of Directors and prior to the Effective Time, the
affirmative vote of a majority of the Independent Directors shall be required
for certain actions, specifically described in the Merger Agreement, related
to the Offer, Merger and the Merger Agreement. See Section 11.
Consummation of the Merger is conditioned upon, among other things, the
approval and adoption by the requisite vote of stockholders of the Company of
the Merger Agreement and the Merger, if required by applicable law, the
Company's Restated Certificate of Incorporation (the "Restated Certificate of
Incorporation") or the Company's Amended and Restated Bylaws (the "Bylaws").
See Section 11. Under the applicable Delaware Law and pursuant to the Restated
Certificate of Incorporation and the Bylaws, the affirmative vote of the
holders of a majority of the outstanding Shares of any class or series of the
Company's capital stock is necessary to approve the Merger Agreement and the
Merger at a meeting of the Company's stockholders. If the Minimum Condition is
satisfied and Purchaser purchases at least a majority of the outstanding
Shares in the Offer, Purchaser will be able to effect the Merger without the
affirmative vote of any other stockholder. See Section 12. The Merger
Agreement is more fully described in Section 11.
Under Section 253 of Delaware Law, if a corporation owns at least 90% of the
outstanding shares of each class of a subsidiary corporation, the corporation
holding such stock may merge such subsidiary into itself, or itself into such
subsidiary, without any action or vote on the part of the board of directors
or the stockholders of such other corporation (a "short-form merger"). In the
event that Purchaser acquires in the aggregate at least 90% of the outstanding
Shares pursuant to the Offer or otherwise, then, at the election of Purchaser,
a short-form merger could be effected without any further approval of the
Board of Directors or the stockholders of the Company. In the Merger
Agreement, Securitas, Purchaser and the Company have agreed that,
notwithstanding that all conditions to the Offer are satisfied or waived as of
the scheduled Expiration Date, Purchaser may extend the Offer up to ten (10)
business days if the Shares tendered pursuant to the Offer are less than 90%
of the then issued and outstanding Shares on a fully diluted basis; provided,
however, that the Expiration Date of the Offer may not be extended beyond June
30, 1999 without the consent of the Company. Securitas and Purchaser have
agreed that if all of the conditions to the Offer are not satisfied on any
scheduled expiration date, then, if all such conditions are reasonably capable
of being satisfied prior to June 30, 1999, Purchaser will extend the Offer
from time to time (each such individual extension not to exceed 10 business
days after the previously scheduled Expiration Date) until such conditions are
satisfied or waived; provided, however, that Purchaser will not be required to
extend the Offer beyond June 30, 1999. If Purchaser does not own 90% of the
outstanding Shares following consummation of the Offer (whether or not
extended), Purchaser may seek to purchase additional shares in the open market
or otherwise in order to reach the 90% threshold and employ a short-form
merger. The per share consideration paid for any Shares so acquired in open
market purchases may be greater or less than the Per Share Amount. Purchaser
presently intends to effect a short-form merger, if permitted to do so under
Delaware Law, pursuant to which Purchaser will be merged with and into the
Company. See Section 12.
The Company has distributed one Right for each outstanding share of Company
Common Stock pursuant to the Rights Agreement, dated as of July 21, 1991, by
and between the Company and The Bank of New York, as successor rights agent
(the "Rights Agreement"). The Company has represented in the Merger Agreement
that
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the execution and delivery of the Amendment to Rights Agreement, dated as of
February 19, 1999 (the "Rights Agreement Amendment"), by and between the
Company and The Bank of New York has been duly authorized and executed by the
Company, and as a result of such amendment, (a) neither the Merger Agreement,
the Stock Option Agreement or the Stockholders Agreement nor any of the
transactions contemplated thereby, including the Offer and the Merger, will
result in the occurrence of a "Distribution Date" (as defined in the Rights
Agreement) or otherwise cause the Rights to become exercisable by the holders
thereof and (b) the Rights will automatically on and as of the Effective Time
be void and of no further force or effect.
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION AND SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE
WITH RESPECT TO THE OFFER.
THE OFFER
1.TERMS OF THE OFFER
Upon the terms and subject to the conditions of the Offer (including, if the
Offer is extended or amended, the terms and conditions of any extension or
amendment), Purchaser will accept for payment and pay for all Shares validly
tendered prior to the Expiration Date, and not withdrawn in accordance with
Section 4. The term "Expiration Date" means 12:00 Midnight, New York City
time, on Thursday, March 25, 1999, unless and until Securitas or Purchaser, in
accordance with the terms of the Merger Agreement, extends the period of time
during which the Offer is open, in which event the term "Expiration Date" will
mean the latest time and date at which the Offer, as so extended by Securitas
or Purchaser, expires. The Merger Agreement provides that if at the expiration
date of the Offer, the conditions to the Offer are not satisfied or earlier
waived, Securitas may, from time to time extend the expiration date of the
Offer until the date such conditions are satisfied or earlier waived and
Securitas becomes obligated to accept for payment and pay for Shares tendered
pursuant to the Offer; provided, however, that the expiration date of the
Offer may not be extended beyond June 30, 1999 without the consent of the
Company. Securitas and Purchaser have also agreed that if the conditions to
the Offer are not satisfied on any scheduled expiration date, then, if all
such conditions are reasonably capable of being satisfied prior to June 30,
1999, Purchaser will extend the Offer from time to time (each extension not to
exceed ten (10) business days after the previously scheduled expiration date)
until such conditions are satisfied or waived; provided, however, that
Purchaser shall not be required to extend the Offer beyond June 30, 1999.
According to the Merger Agreement, Purchaser will not be required to accept
for payment or, subject to any applicable rules and regulations of the SEC,
including applicable rules and regulations of the SEC relating to Purchaser's
obligation to pay for or return tendered Shares promptly after termination or
withdrawal of the Offer, pay for, and (subject to any such rules or
regulations) may delay the acceptance for payment of any tendered Shares and
(except as provided in the Merger Agreement) amend or terminate the Offer as
to any Shares not then paid for if (i) the Minimum Condition is not satisfied,
or (ii) any applicable waiting period under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), has not expired or been
terminated prior to the expiration of the Offer or all approvals of and
consents to the Merger Agreement, the Stock Option Agreement and the
Stockholders Agreement and the transactions contemplated thereby that are
required under applicable foreign antitrust or competition laws have not been
obtained prior to the expiration of the Offer or be in full force and effect
at such expiration or (iii) at any time after the date of the Merger Agreement
and before the time of payment for any such Shares (whether or not any Shares
have theretofore been accepted for payment or paid for pursuant to the Offer)
the conditions listed in Section 14 occur and continue or exist. The Merger
Agreement provides that without the prior written consent of the Company,
Securitas will not (i) decrease the Per Share Amount or change the form of
consideration payable in the Offer, (ii) decrease the number of Shares sought,
(iii) amend or waive satisfaction of the Minimum Condition, (iv) impose
additional conditions to the Offer, (v) amend any one or more of the
conditions listed in Section 14 to broaden the scope of such condition or
conditions or (vi) amend any other term of the Offer in any manner adverse to
the holders of Shares.
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Upon the terms and subject to the conditions of the Offer, Purchaser will
accept for payment and purchase, as soon as permitted under the terms of the
Offer, all Shares validly tendered and not withdrawn prior to the Expiration
Date. However, if on such Expiration Date, the conditions for the Offer are
satisfied or earlier waived but the number of Shares that have been validly
tendered and not withdrawn pursuant to the Offer represents less than 90% of
the then issued and outstanding Shares on a fully diluted basis, Purchaser
may, without the consent of the Company, extend the Expiration Date for up to
ten (10) business days. As used in this Offer to Purchase, "business day" has
the meaning set forth in Rule 14d-1 under the Securities Exchange Act of 1934
(the "Exchange Act").
Any extension, amendment or termination of the Offer will be followed as
promptly as practicable by public announcement thereof, the 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
in accordance with Rules 14d-4(c), 14d-6(d) and 14e-l(d) under the Exchange
Act. Without limiting the obligation of Purchaser under such Rules or the
manner in which Purchaser may choose to make any public announcement,
Purchaser currently intends to make announcements by issuing a press release
to the Dow Jones News Service. UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID ON
THE PER SHARE AMOUNT, REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY DELAY IN
MAKING SUCH PAYMENT.
If Purchaser extends the Offer, or if Purchaser (whether before or after its
acceptance for payment of Shares) is delayed in its purchase of, or payment
for, Shares or is unable to pay for Shares pursuant to the Offer for any
reason, then, without prejudice to Purchaser's rights under the Offer, the
Depositary may retain tendered Shares on behalf of Purchaser, and such Shares
may not be withdrawn except to the extent tendering stockholders are entitled
to withdrawal rights as described in Section 4. However, the ability of
Purchaser to delay the payment for Shares which Purchaser has accepted for
payment is limited by Rule 14e-1(c) under the Exchange Act, which requires
that a bidder pay the consideration offered or return the securities deposited
by, or on behalf of, holders of securities promptly after the termination or
withdrawal of the Offer.
If Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer or waives a material condition of the Offer,
Purchaser will disseminate additional tender offer materials and extend the
Offer to the extent required by Rules 14d-4(c), 14d-6(d) and 14e-1 under the
Exchange Act. The minimum period during which the Offer must remain open
following material changes in the terms of the Offer or information concerning
the Offer, other than a change in price or a change in percentage of
securities sought, will depend upon the facts and circumstances then existing,
including the relative materiality of the changed terms or information. In a
public release (Release No. 34-24296, April 3, 1987), the SEC has stated its
view that an offer must remain open for a minimum period of time following a
material change in the terms of the Offer and that waiver of a material
condition, such as the Minimum Condition, is a material change in the terms of
the Offer. The release states that an offer should remain open for a minimum
of five (5) business days from the date a material change is first published,
or sent or given to security holders and that, if material changes are made
with respect to information not materially less significant than the offer
price and the number of shares being sought, a minimum of ten (10) business
days may be required to allow adequate dissemination and investor response.
The requirement to extend the Offer runs concurrently with the twenty (20)
business day period which the Offer is required to be open under all
circumstances, not consecutively therewith. As such, the requirement to extend
the Offer will not apply to the extent that the number of business days
remaining between the occurrence of the change and the then-scheduled
Expiration Date equals or exceeds the minimum extension period that would be
required because of such amendment. If, prior to the Expiration Date,
Purchaser increases the consideration offered to holders of Shares pursuant to
the Offer, such increased consideration will be paid to all holders whose
Shares are purchased in the Offer whether or not such Shares were tendered
prior to such increase.
The Company has provided Purchaser with the Company's stockholder lists and
security position listings for the purpose of disseminating the Offer to
holders of Shares. This Offer to Purchase and the related Letter of
Transmittal will be mailed to record holders of Shares and will be furnished
to brokers, dealers, banks and similar persons whose names, or the names of
whose nominees, appear on the stockholder lists or, if applicable, who are
listed as participants in a clearing agency's security position listing, for
subsequent transmittal to beneficial owners of Shares.
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2.ACCEPTANCE FOR PAYMENT AND PAYMENT
Upon the terms and subject to the conditions of the Offer (including, if the
Offer is extended or amended, the terms and conditions of any extension or
amendment), Purchaser will accept for payment and will pay for, as soon as
practicable after the Expiration Date, all Shares validly tendered prior to
the Expiration Date and not properly withdrawn in accordance with Section 4.
For purposes of the Offer, Purchaser will be deemed to have accepted for
payment, and thereby purchased, Shares properly tendered to Purchaser and not
withdrawn, if, as and when Purchaser gives oral or written notice to the
Depositary of Purchaser's acceptance for payment of such Shares. 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
tendering stockholders for the purpose of receiving payment from Purchaser and
transmitting payment to tendering stockholders. 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 a
timely Book-Entry Confirmation (as defined below) with respect thereto), (ii)
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 below) and (iii) any other
documents required by the Letter of Transmittal. Accordingly, payment may be
made to tendering stockholders at different times if delivery of the Shares
and other required documents occur at different times. The per share
consideration paid to any holder of Shares pursuant to the Offer will be the
highest per share consideration paid to any other holder of such Shares
pursuant to the Offer. UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID ON THE PER
SHARE AMOUNT, REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY DELAY IN MAKING
SUCH PAYMENT.
Purchaser expressly reserves the right, in its sole discretion, to delay
acceptance for payment of, or payment for, Shares in order to comply in whole
or in part with any applicable law. If Purchaser is delayed in its acceptance
for payment of, or payment for, Shares or is unable to accept for payment or
pay for Shares pursuant to the Offer for any reason, then, without prejudice
to Purchaser's rights under the Offer (including such rights as are set forth
in Sections 1 and 14) (but subject to compliance with Rule 14e-l(c) under the
Exchange Act), the Depositary may, nevertheless, on behalf of Purchaser,
retain tendered Shares, and such Shares may not be withdrawn except to the
extent tendering stockholders are entitled to exercise, and duly exercise,
withdrawal rights as described in Section 4.
If any tendered Shares are not purchased pursuant to the Offer for any
reason, or if certificates are submitted representing more Shares than are
tendered, certificates evidencing Shares not tendered or not accepted for
purchase will be returned to the tendering stockholder, or such other person
as the tendering stockholder shall specify in the Letter of Transmittal, as
promptly as practicable following the expiration, termination or withdrawal of
the Offer. In the case of Shares delivered by book-entry transfer into the
Depositary's account at the Book-Entry Transfer Facility (as defined below)
pursuant to the procedures set forth in Section 3, such Shares will be
credited to such account maintained at the Book-Entry Transfer Facility as the
tendering stockholder specifies in the Letter of Transmittal, as promptly as
practicable following the expiration, termination or withdrawal of the Offer.
If no such instructions are given with respect to Shares delivered by book-
entry transfer, any such Shares not tendered or not purchased will be returned
by crediting the account at the Book-Entry Transfer Facility designated in the
Letter of Transmittal as the account from which such Shares were delivered.
Purchaser reserves the right to transfer or assign, in whole or, from time
to time, in part, to one or more of its affiliates, the right to purchase
Shares tendered pursuant to the Offer, but any such transfer or assignment
will not relieve Purchaser of its obligations under the Offer and will in no
way prejudice the rights of tendering stockholders to receive payment for
Shares validly tendered and accepted for payment pursuant to the Offer.
3.PROCEDURES FOR TENDERING SHARES
VALID TENDER. For Shares to be validly tendered pursuant to the Offer,
either (i) a properly completed and duly executed Letter of Transmittal (or
facsimile thereof), together with any required signature guarantees, or in the
case of a book-entry transfer, an Agent's Message, and any other required
documents, must be received by the Depositary at one of its addresses set
forth on the back cover of this Offer to Purchase prior to the Expiration Date
and either certificates evidencing tendered Shares must be received by the
Depositary at one of such
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addresses or such Shares must be delivered to the Depositary pursuant to the
procedures for book-entry transfer set forth below and a Book-Entry
Confirmation must be received by the Depositary, in each case prior to the
Expiration Date, or (ii) the tendering stockholder must comply with the
guaranteed delivery procedures described below.
BOOK-ENTRY TRANSFER. The Depositary will establish an account with respect
to the Shares at The Depository Trust Company (the "Book-Entry Transfer
Facility") for purposes of the Offer within two (2) 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
delivery of Shares by causing the Book-Entry Transfer Facility to transfer
such Shares into the Depositary's account in accordance with such Book-Entry
Transfer Facility's procedures for such transfer. However, although delivery
of Shares may be effected through book-entry transfer into the Depositary's
account at the Book-Entry Transfer Facility, the Letter of Transmittal (or
facsimile thereof), properly completed and duly executed, with any required
signature guarantees, or an Agent's Message, 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 prior
to the Expiration Date, or the tendering stockholder must comply with the
guaranteed delivery procedures described below. The confirmation of a book-
entry transfer of Shares into the Depositary's account at the Book-Entry
Transfer Facility as described above is referred to herein as a "Book-Entry
Confirmation." DELIVERY OF THE LETTER OF TRANSMITTAL AND ANY OTHER REQUIRED
DOCUMENTS TO THE BOOK-ENTRY TRANSFER FACILITY WILL NOT CONSTITUTE DELIVERY TO
THE DEPOSITARY.
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 such Book-Entry Transfer Facility
has received an express acknowledgment from the participant in such Book-Entry
Transfer Facility tendering the Shares that such participant has received and
agrees to be bound by the terms of the Letter of Transmittal and that
Purchaser may enforce such agreement against such participant.
THE METHOD OF DELIVERY OF SHARES, 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, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED,
PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE
ALLOWED TO ENSURE TIMELY DELIVERY.
SIGNATURE GUARANTEES. No signature guarantee is required on the Letter of
Transmittal (i) if the Letter of Transmittal is signed by the registered
holder(s) (which term, for purposes of this Section, includes any participant
in the Book-Entry Transfer Facility's systems whose name appears on a security
position listing as the owner of the Shares) of Shares tendered therewith and
such registered holder has not completed either the box entitled "Special
Delivery Instructions" or the box entitled "Special Payment Instructions" on
the Letter of Transmittal or (ii) if such Shares are tendered for the account
of a financial institution (including most commercial banks, savings and loan
associations and brokerage houses) that is a participant in the Security
Transfer Agents Medallion Program, the New York Stock Exchange Medallion
Signature Guarantee Program or the Stock Exchange Medallion Program (each, an
"Eligible Institution" and, collectively, "Eligible Institutions"). In all
other cases, all signatures on Letters of Transmittal must be guaranteed by an
Eligible Institution. See Instructions 1 and 5 to the Letter of Transmittal.
If the certificates for Shares are registered in the name of a person other
than the signer of the Letter of Transmittal, or if payment is to be made, or
certificates for Shares not tendered or not accepted for payment are to be
returned, to a person other than the registered holder of the certificates
surrendered, then the tendered certificates for such Shares 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 aforesaid. See Instruction 5 to the Letter of Transmittal.
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GUARANTEED DELIVERY. If a stockholder desires to tender Shares pursuant to
the Offer and such stockholder's certificates for Shares are not immediately
available or the procedures for book-entry transfer cannot be completed on a
timely basis or time will not permit all required documents to reach the
Depositary prior to the Expiration Date, such stockholder's tender may be
effected if all the following conditions are met:
(i) such tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed Delivery,
substantially in the form provided by Purchaser, is received by the
Depositary, as provided below, prior to the Expiration Date; and
(iii) the certificates for (or a Book-Entry Confirmation with respect to)
such Shares, together with a properly completed and duly executed
Letter of Transmittal (or facsimile thereof), with any required
signature guarantees, or, in the case of a book-entry transfer, an
Agent's Message, and any other required documents, are received by
the Depositary within three (3) trading days after the date of
execution of such Notice of Guaranteed Delivery. A "trading day" is
any day on which the New York Stock Exchange, Inc. (the "NYSE") is
open for business.
The Notice of Guaranteed Delivery may be delivered by hand to the Depositary
or transmitted by telegram, facsimile transmission or mailed to the Depositary
and must include a guarantee by an Eligible Institution in the form set forth
in such Notice of Guaranteed Delivery.
The valid tender of Shares pursuant to one of the procedures described above
will constitute a binding agreement between the tendering stockholder and
Purchaser upon the terms and subject to the conditions of the Offer.
APPOINTMENT. By executing the Letter of Transmittal as set forth above
(including delivery through an Agent's Message), the tendering stockholder
will irrevocably appoint designees of Purchaser as such stockholder's
attorneys-in-fact and proxies in the manner set forth in the Letter of
Transmittal, each with full power of substitution, to the full extent of such
stockholder's rights with respect to the Shares tendered by such stockholder
and accepted for payment by Purchaser and with respect to any and all non-cash
dividends, distributions, rights, other Shares or other securities issued or
issuable in respect of such Shares on or after February 19, 1999
(collectively, "Distributions"). All such proxies will be considered coupled
with an interest in the tendered Shares. Such appointment will be effective
if, as and when, and only to the extent that, Purchaser accepts for payment
Shares tendered by such stockholder as provided herein. All such powers of
attorney and proxies will be irrevocable and will be deemed granted in
consideration of the acceptance for payment by Purchaser of Shares tendered in
accordance with the terms of the Offer. Upon such appointment, all prior
powers of attorney, proxies and consents given by such stockholder with
respect to such Shares (and any and all Distributions) will, without further
action, be revoked and no subsequent powers of attorney, proxies, consents or
revocations may be given by such stockholder (and, if given, will not be
deemed effective). The designees of Purchaser will thereby be empowered to
exercise all voting and other rights with respect to such Shares (and any and
all Distributions), including, without limitation, in respect of any annual or
special meeting of the Company's stockholders (and any adjournment or
postponement thereof), actions by written consent in lieu of any such meeting
or otherwise, as each such attorney-in-fact and proxy or his substitute deems
in his sole discretion, proper. Purchaser reserves the right to require that,
in order for Shares to be deemed validly tendered, immediately upon
Purchaser's acceptance for payment of such Shares, Purchaser must be able to
exercise full voting, consent and other rights with respect to such Shares
(and any and all Distributions), including voting at any meeting of
stockholders.
DETERMINATION OF VALIDITY. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance for payment of any
tender of Shares will be determined by Purchaser, in its sole discretion,
which determination will be final and binding. Purchaser reserves the absolute
right to reject any or all tenders of any Shares determined by it not to be in
proper form or the acceptance for payment of which, or payment for which, may,
in the opinion of Purchaser's counsel, be unlawful. Purchaser also reserves
the absolute right, in its sole discretion, subject to the provisions of the
Merger Agreement, to waive any defect or irregularity in any tender of Shares
of any particular stockholder, whether or not similar defects or
irregularities are waived in the case of
8
<PAGE>
other stockholders. No tender of Shares will be deemed to have been validly
made until all defects or irregularities relating thereto have been cured or
waived. None of Purchaser, the Depositary, the Information Agent or any other
person will be under any duty to give notification of any defects or
irregularities in tenders or incur any liability for failure to give any such
notification. Subject to the terms of the Merger Agreement, Purchaser's
interpretation of the terms and conditions of the Offer in this regard
(including the Letter of Transmittal and the instructions thereto) will be
final and binding.
BACKUP WITHHOLDING. Under the "backup withholding" provisions of federal
income tax law, unless a tendering registered holder, or its assignee (in
either case, the "Payee"), satisfies the conditions described in Instruction
10 of the Letter of Transmittal or is otherwise exempt, the cash payable as a
result of the Offer may be subject to backup withholding tax at a rate of 31%
of the gross proceeds. To prevent backup withholding, each Payee should
complete and sign the Substitute Form W-9 provided in the Letter of
Transmittal. See Instruction 10 to the Letter of Transmittal.
4.WITHDRAWAL RIGHTS
Except as otherwise provided in this Section 4 or as provided by applicable
law, tenders of Shares are irrevocable. Shares tendered pursuant to the Offer
may be withdrawn pursuant to the procedures set forth below at any time prior
to the Expiration Date and, unless theretofore accepted for payment and paid
for by Purchaser pursuant to the offer, may also be withdrawn at any time
after April 26, 1999.
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 who tendered
the Shares to be withdrawn, the number of Shares to be withdrawn and the name
of the registered holder of the Shares to be withdrawn, if different from the
name of the person who tendered the Shares. If certificates evidencing Shares
to be withdrawn have been delivered or otherwise identified to the Depositary,
then, prior to the physical release of such certificates, the serial numbers
shown on such certificates must be submitted to the Depositary and, unless
such Shares have been tendered by an Eligible Institution, the signatures on
the notice of withdrawal must be guaranteed by an Eligible Institution. If
Shares have been delivered pursuant to the procedures for book-entry transfer
as set forth in Section 3, any notice of withdrawal must also specify the name
and number of the account at the Book-Entry Transfer Facility to be credited
with the withdrawn Shares and otherwise comply with such Book-Entry Transfer
Facility's procedures.
Withdrawals of tendered Shares may not be rescinded, and any Shares
withdrawn will thereafter be deemed not validly tendered for purposes of the
Offer. However, withdrawn Shares may be retendered by again following one of
the procedures described in Section 3 at any time prior to the Expiration
Date.
All questions as to the form and validity (including time of receipt) of
notices of withdrawal will be determined by Purchaser, in its sole discretion,
which determination will be final and binding. None of Purchaser, the
Depositary, the Information Agent or any other person will be under any duty
to give notification of any defects or irregularities in any notice of
withdrawal or incur any liability for failure to give any such notification.
5.CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES
The following is a general summary of certain United States federal income
tax consequences of the Offer and the Merger relevant to a beneficial holder
of Shares whose Shares are tendered and accepted for payment pursuant to the
Offer or whose Shares are converted to cash in the Merger (a "Holder"). The
discussion is based on the Internal Revenue Code of 1986, as amended (the
"Code"), regulations issued thereunder, judicial decisions and administrative
rulings, all of which are subject to change, possibly with retroactive effect.
The following does not address the United States federal income tax
consequences to all categories of Holders that may be subject to special rules
(e.g., Holders who acquired their Shares pursuant to the exercise of employee
stock options or other compensation arrangements with the Company, Holders who
perfect their appraisal rights under Delaware Law, foreign Holders, insurance
companies, tax-exempt organizations, dealers in securities and persons who
have acquired the Shares as part of a straddle, hedge, conversion transaction
or other integrated investment), nor does it address the federal income tax
consequences to persons who do not hold the Shares as "capital assets" within
the meaning of Section 1221 of the Code (generally, property held for
investment).
9
<PAGE>
The receipt of cash for Shares pursuant to the Offer or the Merger will be a
taxable transaction for United States federal income tax purposes and may also
be a taxable transaction under applicable state, local and foreign income and
other tax laws. In general, a Holder who sells Shares pursuant to the Offer or
receives cash in exchange for Shares pursuant to the Merger will recognize
gain or loss for federal income tax purposes equal to the difference, if any,
between the amount of cash received and the Holder's adjusted tax basis in the
Shares sold pursuant to the Offer or surrendered for cash pursuant to the
Merger. Gain or loss will be determined separately for each block of Shares
(i.e., Shares acquired at the same cost in a single transaction) tendered
pursuant to the Offer or surrendered for cash pursuant to the Merger. Such
gain or loss will be long-term capital gain or loss if the Holder has held the
Shares for more than one (1) year at the time of the consummation of the Offer
or the Merger. Under recently adopted amendments to the Code, capital gains
recognized by an individual investor (or an estate or certain trusts) upon a
disposition of a Share that has been held for more than one year generally
will be subject to a maximum tax rate of 20% or, in the case of a Share that
has been held for one (1) year or less, will be subject to tax at ordinary
income rates. Certain limitations apply to the use of capital losses.
HOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS REGARDING THE U.S. FEDERAL,
STATE, LOCAL AND FOREIGN INCOME AND OTHER TAX CONSEQUENCES OF THE OFFER AND
THE MERGER.
6.PRICE RANGE OF THE SHARES; DIVIDENDS
The Shares are traded on the NYSE under the symbol "PKT." The following
table sets forth, for each of the fiscal quarters indicated, the high and low
reported closing sales price per Share on the NYSE based on the Company's
Annual Report on Form 10-K for the year ended December 26, 1997, with respect
to the periods occurring in 1997 and as reported publicly thereafter.
<TABLE>
<CAPTION>
COMMON STOCK
-------------
HIGH LOW
------ ------
<S> <C> <C>
Fiscal Year Ended December 26, 1997
First Quarter.................................................. $18.67 $16.25
Second Quarter................................................. 20.42 16.83
Third Quarter(1)............................................... 23.31 20.00
Fourth Quarter................................................. 24.19 21.25
Fiscal Year Ended December 25, 1998
First Quarter.................................................. $23.81 $22.13
Second Quarter................................................. 23.94 18.68
Third Quarter.................................................. 21.00 13.06
Fourth Quarter................................................. 21.50 12.75
Fiscal Year Ending December 31, 1999
First Quarter (through February 25, 1999)...................... $28.63 $16.87
</TABLE>
- --------
(1) Effective August 27, 1997, a three-for-two stock split was accomplished by
means of a stock dividend whereby one new share was distributed for each
two shares held. All per Share amounts have been adjusted accordingly.
On February 19, 1999, the last full trading day prior to the public
announcement of the execution of the Merger Agreement, the closing sales price
per Share, as reported on the NYSE, was $16.87. On February 25, 1999, the last
full trading day prior to the commencement of the Offer, the closing sales
price per Share, as reported on the NYSE, was $28.56. STOCKHOLDERS ARE URGED
TO OBTAIN A CURRENT MARKET QUOTATION FOR THE SHARES.
The Company did not declare or pay any cash dividends during any of the
periods indicated in the above table. In addition, under the terms of the
Merger Agreement, the Company is not permitted to declare or pay dividends
with respect to the Shares.
10
<PAGE>
7. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES; STOCK LISTING; EXCHANGE
ACT REGISTRATION; MARGIN REGULATIONS
MARKET FOR THE SHARES. The purchase of Shares by Purchaser pursuant to the
Offer will reduce the number of holders of Shares and the number of Shares
that might otherwise trade publicly and, depending upon the number of Shares
so purchased, could adversely affect the liquidity and market value of the
remaining Shares held by the public.
STOCK LISTING. The Company Common Stock is listed on the NYSE. After
consummation of the Offer and depending upon the aggregate market value and
the per Share price of any Shares not purchased pursuant to the Offer, the
Shares may no longer meet the requirements for continued listing on NYSE.
According to the NYSE's published guidelines, the NYSE would consider
delisting the Shares if, among other things: (i) the number of total
stockholders falls below 400; (ii) the number of record holders of at least
100 Shares should fall below 1,200; (iii) the number of publicly held Shares
(exclusive of holdings of officers and directors of the Company and their
immediate families and other concentrated holdings of 10% or more ("Excluded
Holdings")) should fall below 600,000; or (iv) the aggregate market value of
such publicly held Shares (exclusive of Excluded Holdings) should fall below
$8 million. If as a result of the purchase of Shares pursuant to the Offer,
Shares no longer meet the requirements of the NYSE for continued listing and
the listing of the Shares is discontinued, the market for the Shares could be
adversely affected. According to the Company, as of March 4, 1998, there were
approximately 255 holders of record of Company Common Stock and, as of
February 19, 1999, there were 12,246,631 shares of Company Common Stock
outstanding.
If the NYSE were to delist the Shares, it is possible that the Shares would
continue to trade on other securities exchanges or in the over-the-counter
market and that price quotations would be reported by such exchanges or
through the Nasdaq Stock Market or other sources. The extent of the public
market for such and the availability of such quotations would depend, however,
upon such factors as the number of stockholders and/or the aggregate market
value of such securities remaining at such time, the interest in maintaining a
market in the Shares on the part of securities firms, the possible termination
of registration under the Exchange Act as described below, and other factors.
Purchaser cannot predict whether the reduction in the number of Shares that
might otherwise trade publicly would have an adverse or beneficial effect on
the market price for, or marketability of, the Shares or whether it would
cause future market prices to be greater or lesser than the Per Share Amount.
EXCHANGE ACT REGISTRATION. The Shares are currently registered under the
Exchange Act. Registration of the Shares under the Exchange Act may be
terminated upon application of the Company to the SEC if the Shares are
neither listed on a national securities exchange nor held by 300 or more
holders of record. Termination of registration of the Shares under the
Exchange Act would substantially 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 no longer applicable to the Company,
such as the short swing profit recovery provisions of Section 16(b), the
requirement of furnishing a proxy statement pursuant to Section 14(a) in
connection with stockholders' meetings and the related requirement of
furnishing an annual report to stockholders and the requirements of Rule 13e-3
under the Exchange Act with respect to "going private" transactions.
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 or Rule 144A promulgated under the Securities Act of 1933, as
amended (the "Securities Act"), may be impaired or eliminated. If registration
of the Shares under the Exchange Act were terminated, such Shares would no
longer be "margin securities" or be eligible for continued listing on any
stock exchange. Purchaser may seek to cause the Company to apply for
termination of registration of the Shares under the Exchange Act as soon after
completion of the Offer as the requirements of such termination are met.
MARGIN REGULATIONS. The Shares presently are "margin securities" under the
regulations of the Board of Governors of the Federal Reserve System (the
"Federal Reserve Board"), which status has the effect, among other things, of
allowing brokers to extend credit on the collateral of such securities.
Depending upon factors similar to those described above regarding listing and
market quotations, it is possible that, following the Offer, the Shares would
no longer constitute "margin securities" for the purposes of the margin
regulations of the Federal Reserve Board and therefore could no longer be used
as collateral for loans made by brokers.
11
<PAGE>
8.CERTAIN INFORMATION CONCERNING THE COMPANY
GENERAL. The information concerning the Company contained in this Offer to
Purchase, including that set forth below under the caption "Selected Financial
Information," has been furnished by the Company or has been taken from or
based upon publicly available documents and records on file with the SEC and
other public sources. Neither Purchaser, Securitas nor the Information Agent
assumes responsibility for the accuracy or completeness of the information
concerning the Company 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 Purchaser, Securitas or the Information Agent.
The Company is a major worldwide provider of contract security and security-
related services. The Company is a Delaware corporation with its principal
executive offices at 4330 Park Terrace Drive, Westlake Village, California
91361. The telephone number of the Company at such offices is (818) 706-6800.
SELECTED FINANCIAL INFORMATION. Set forth below is certain consolidated
financial information with respect to the Company, excerpted or derived from
the Company's Annual Report on Form 10-K for the fiscal years ended December
26, 1997 and December 27, 1996, as filed with the SEC pursuant to the Exchange
Act. The consolidated financial information with respect to the Company, for
the year ended December 25, 1998, was derived from a press release issued by
the Company on February 22, 1999 and will be included in the Company's year
end audited results but has not yet been filed with the SEC. The Company will
file such financial information with the SEC in the Company's Annual Report on
Form 10-K for the fiscal year ended December 25, 1998.
More comprehensive financial information is included in such reports and in
other documents filed by the Company with the SEC. The following summary is
qualified in its entirety by reference to such reports and other documents and
all of the financial information (including any related notes) contained
therein. Such reports, documents and financial information may be inspected
and copies may be obtained from the SEC in the manner set forth below.
12
<PAGE>
PINKERTON'S, INC.
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE DATA)
Operating Statement Data:
<TABLE>
<CAPTION>
DECEMBER 25, DECEMBER 26, DECEMBER 27,
1998(1) 1997 1996
YEAR ENDED ------------ ------------ ------------
(UNAUDITED)
<S> <C> <C> <C>
Service revenues........................ $1,009,097 $1,001,889 $906,247
Cost of services........................ 888,004 877,016 791,877
Gross profit............................ 121,093 124,873 114,370
Operating expenses...................... 95,986 89,039 81,256
Amortization of intangible assets....... 7,850 9,397 9,335
Write-down of long-lived assets and
other special charges.................. 9,853 -- --
Operating profit (loss)................. 7,404 26,437 23,779
Interest expense, net................... 1,744 2,897 2,253
Other income............................ -- -- (1,962)
Income (loss) before income taxes....... 5,660 23,540 23,488
Provision for income taxes.............. 6,123 8,807 11,038
Net income (loss)(2).................... (463) 14,733 12,450
Basic earnings (loss) per
share(2)(3)(4)......................... (.04) 1.17 .99
Diluted earnings (loss) per
share(2)(3)(4)......................... (.04) 1.12 .97
Balance Sheet Data:
<CAPTION>
1998 1997 1996
AT FISCAL YEAR END ------------ ------------ ------------
<S> <C> <C> <C>
Working capital(5)...................... $ 68,495 $ 86,599 $104,459
Total assets............................ 331,090 324,196 315,281
Current maturities of long-term debt.... 8,575 8,575 8,575
Long-term debt, less current maturities. 25,695 25,019 37,313
Total stockholders' equity(6)........... 135,809 143,629 130,381
Book value per common share(4)(7)....... 10.86 10.96 10.19
</TABLE>
- --------
(1) Amounts as of, and for the period ended, December 25, 1998 will be
reflected in the Company audited financial statements, to be filed with
the SEC in the Company's Annual Report on Form 10-K no later than March
25, 1999.
(2) Includes $9.8 million charge for write-down of long-lived assets in the
year ended December 25 , 1998.
(3) The earnings per share amounts reflect the application of Statement of
Financial Accounting Standards No. 128, "Earnings per Share," for all
periods presented.
(4) Effective August 27, 1997, a three-for-two stock split was accomplished by
means of a stock dividend whereby one new share was distributed for each
two shares held. All per share amounts have been adjusted accordingly.
(5) Working capital includes the effect of the acquisition of WKD Security
GmbH on January 1, 1997, for $22.4 million in cash. The Company borrowed
$11.6 million in December 1996 under its revolving line of credit, and
paid the balance of the acquisition price of $10.8 million from its
general funds in January 1997.
(6) No cash dividends were declared during the years presented.
(7) Book value per common share has been calculated based upon weighted
average common shares and dilutive potential common shares outstanding
during each year.
CERTAIN COMPANY PROJECTIONS. In the course of discussions giving rise to the
Merger Agreement, representatives of the Company furnished representatives of
Securitas with certain business and financial information that was not
publicly available, including certain financial projections for fiscal years
1999, 2000
13
<PAGE>
and 2001 (the "Company Projections"). The Company Projections were prepared
solely for the Company's internal purposes and were not prepared for
publication or with a view to complying with the published guidelines of the
SEC regarding projections or with the American Institute of Certified Public
Accountants Guide for Prospective Financial Statements, and such information
is being included in this Offer to Purchase solely because it was furnished to
Securitas in connection with the discussions giving rise to the Merger
Agreement. The independent accountants of the Company have neither examined
nor compiled the prospective financial information set forth below and,
accordingly, do not express an opinion or any other form of assurance with
respect thereto. The reports of such independent accountants incorporated by
reference in this Offer to Purchase relate to the historical financial
information of the Company and do not extend to the prospective financial
information and should not be read to do so.
THE COMPANY PROJECTIONS SET FORTH BELOW NECESSARILY REFLECT NUMEROUS
ASSUMPTIONS WITH RESPECT TO GENERAL BUSINESS AND ECONOMIC CONDITIONS AND OTHER
MATTERS, MANY OF WHICH ARE INHERENTLY UNCERTAIN OR BEYOND THE COMPANY'S OR
SECURITAS' CONTROL, AND DO NOT TAKE INTO ACCOUNT ANY CHANGES IN THE COMPANY'S
OPERATIONS OR CAPITAL STRUCTURE WHICH MAY RESULT FROM THE OFFER AND THE
MERGER. IT IS NOT POSSIBLE TO PREDICT WHETHER THE ASSUMPTIONS MADE IN
PREPARING THE PROJECTED FINANCIAL INFORMATION WILL BE VALID, AND ACTUAL
RESULTS MAY PROVE TO BE MATERIALLY HIGHER OR LOWER THAN THOSE CONTAINED IN THE
PROJECTIONS. IN ADDITION TO THE SPECIFIC ASSUMPTIONS RELATING TO SUCH
PROJECTIONS SET FORTH BELOW, CERTAIN OTHER INFORMATION PERTINENT TO THE
COMPANY PROJECTIONS WAS FURNISHED BY THE COMPANY. THE INCLUSION OF THIS
INFORMATION SHOULD NOT BE REGARDED AS AN INDICATION THAT THE COMPANY,
SECURITAS OR ANYONE ELSE WHO RECEIVED THIS INFORMATION CONSIDERED IT A
RELIABLE PREDICTOR OF FUTURE EVENTS, AND THIS INFORMATION SHOULD NOT BE RELIED
ON AS SUCH. NONE OF SECURITAS, PURCHASER, THE COMPANY OR ANY OF THEIR
RESPECTIVE REPRESENTATIVES ASSUMES ANY RESPONSIBILITY FOR THE VALIDITY,
REASONABLENESS, OR COMPLETENESS OF THE PROJECTED FINANCIAL INFORMATION, AND
THE COMPANY HAS MADE NO REPRESENTATION TO SECURITAS OR PURCHASER REGARDING
SUCH INFORMATION.
<TABLE>
<CAPTION>
1999 2000 2001
-------- -------- --------
(AMOUNTS IN MILLIONS)
<S> <C> <C> <C>
Service Revenues..................................... $1,113.4 $1,224.7 $1,347.2
Earnings Before Interest, Taxes and Amortization..... $ 41.4 $ 46.8 $ 52.85
Income Before Income Taxes........................... $ 29.3 $ 32.8 $ 36.75
Net Income........................................... $ 16.1 $ 18.0 $ 20.2
</TABLE>
The major assumptions made by the Company with respect to the Company
Projections and conveyed to Parent were: (i) that service revenues will
increase during the period at an annual rate of approximately 10%, half of
which increase will come from acquisitions; (ii) that net income will increase
during the period at an annual rate of approximately 12%; and (iii) that the
Company will have an effective annual tax rate of 45% during the period.
AVAILABLE INFORMATION. The Company is subject to the informational filing
requirements of the Exchange Act and, in accordance therewith, is obligated to
file reports, proxy statements and other information with the SEC relating to
its business, financial condition and other matters. Information as of
particular dates concerning the Company's directors and officers, their
remuneration, options granted to them, the principal holders of the Company's
securities and any material interests of such persons in transactions with the
Company is required to be disclosed in proxy statements distributed to the
Company's stockholders and filed with the SEC. Such reports, proxy statements
and other information should be available for inspection at the public
reference facilities of the SEC at 450 Fifth Street, N.W., Washington, D.C.
20549, and at the regional offices of the SEC located at Seven World Trade
Center, Suite 1300, New York, NY 10048 and Citicorp Center, 500 West Madison
Street, Suite 1400, Chicago, IL 60661. Copies of such information should be
obtainable by mail, upon payment of the SEC's customary charges, by writing to
the SEC's principal office at 450 Fifth Street, N.W., Washington, D.C. 20549.
The SEC also maintains a website on the Internet at http://www.sec.gov that
contains reports, proxy statements and other information relating to the
Company which have been filed via the SEC's EDGAR System.
9.CERTAIN INFORMATION CONCERNING PURCHASER AND SECURITAS
GENERAL. Purchaser is a newly formed Delaware corporation organized solely
to effect the Offer and the Merger. Purchaser has not carried on any
significant activities other than in connection with the Offer and the
14
<PAGE>
Merger. Until immediately prior to the time Purchaser purchases Shares
pursuant to the Offer, it is not anticipated that Purchaser will have any
significant assets or liabilities or engage in any significant activities
other than those incident to its formation and capitalization and the
transactions contemplated by the Offer and the Merger. Purchaser is indirectly
wholly owned by Securitas.
Securitas is the leading security company in Europe and operates in sixteen
(16) European countries. Securitas and its subsidiaries provide guard
services, alarm systems, and cash in transit services for large and small
companies, banks, retailers and individuals. The principal offices of
Purchaser and Securitas are located at Lindhagensplan 70, P.O. Box 12307,
SE-102 28 Stockholm, Sweden. The telephone number of Purchaser and Securitas
at such location is 46-8-657 74 00. For certain information concerning the
executive officers and directors of Purchaser and Securitas, see Schedule I.
SELECTED FINANCIAL INFORMATION. Securitas' total sales for the years ended
December 1997 and December 1998 were SEK 10.8 billion and SEK 13.7 billion,
respectively. Using the exchange rate for Swedish Kronas into U.S. Dollars
based upon the noon buying rate on December 31, 1998 for cable transfers in
foreign securities as certified for customs purposes by the Federal Reserve
Bank in New York City (the "Noon Buying Rate"), the total sales for 1997 and
1998 were approximately $1.3 billion and $1.7 billion, respectively. The net
income of Securitas for the years ended December 1997 and December 1998 was
SEK 445.9 million and SEK 521.5 million, respectively, or approximately
$55.0 million and $64.4 million, respectively, for 1997 and 1998 using the
Noon Buying Rate. The Noon Buying Rate on December 31, 1998 was
SEK8.1030=U.S.$1.00.
Securitas prepares its financial statements in accordance with Swedish
generally accepted accounting principles, which differ in certain respects
from the United States generally accepted accounting principles. However,
Securitas believes that such differences are not material to a decision by a
stockholder of the Company whether to sell, transfer or hold any Shares, since
such differences would not affect the ability of Securitas to provide the
necessary funds to pay for the Shares to be acquired pursuant to the Offer and
the Merger. Moreover, Securitas believes that additional financial information
about its financial condition is not material to a decision by a stockholder
of the Company whether to sell, transfer or hold any Shares.
Except as set forth in this Offer to Purchase, none of Purchaser, Securitas
or their respective affiliates, nor, to the best knowledge of Purchaser,
Securitas and their respective affiliates, any of the persons listed on
Schedule I, nor any associate or majority owned subsidiary of any of the
foregoing, beneficially owns or has a right to acquire any Shares, and neither
Purchaser, Securitas, nor, to the best knowledge of Purchaser, Securitas or
their respective affiliates, any of the persons or entities referred to above,
nor any of the respective executive officers, directors or subsidiaries of any
of the foregoing, has effected any transaction in the Shares during the past
sixty (60) days.
Except as set forth in the following paragraph and as otherwise set forth in
this Offer to Purchase, neither Purchaser nor Securitas 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 securities of the Company, joint ventures, loan or option
arrangements, puts or calls, guarantees of loans, guarantees against loss or
the giving or withholding of proxies.
Pursuant to the Stock Option Agreement, Securitas and Purchaser may be
deemed to beneficially own 2,437,079 Shares issuable upon exercise of the
Company Option. These Shares would represent approximately 19.9% of the total
currently outstanding Shares. In addition, pursuant to the Stockholders
Agreement, Securitas may be deemed to beneficially own 3,700,537 Shares
deliverable upon exercise of the options granted thereunder. These Shares
represent approximately 30.2% of the total currently outstanding Shares. If
Securitas exercised the Company Option and the options under the Stockholder
Agreements, it would beneficially own approximately 41.8% of the Shares then
outstanding.
Except as set forth in this Offer to Purchase, none of Purchaser, Securitas
or their respective affiliates, nor, to the best knowledge of Purchaser,
Securitas and their respective affiliates, any of the persons listed on
15
<PAGE>
Schedule I, 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 transfer or voting of any securities of the Company,
finder's fees, joint ventures, loan or option arrangements, put or calls,
guarantees of profits, division of profits or loss, or the giving or
withholding of proxies. Except as set forth in this Offer to Purchase, none of
Purchaser, Securitas or their respective affiliates, nor, to the best
knowledge of Purchaser, Securitas and their respective affiliates, any of the
persons listed on Schedule I, has had, since December 30, 1995, any business
relationships or transactions with the Company or any of its executive
officers, directors or affiliates that would require reporting under the rules
or regulations of the SEC applicable to the Offer. Except as set forth in this
Offer to Purchase, since December 30, 1995, there have been no contacts,
negotiations or transactions between Purchaser, Securitas or their respective
affiliates, or, to the best knowledge of Purchaser, Securitas and their
respective affiliates, any of the persons listed on Schedule I, on the one
hand, and the Company or its affiliates, on the other hand, concerning a
merger, consolidation or acquisition, tender offer or other acquisition of
securities, election of directors or a sale or other transfer of a material
amount of assets.
AVAILABLE INFORMATION. Neither Purchaser nor Securitas is subject to the
information requirements of the Exchange Act and, accordingly, do not file
reports or other information with the SEC under the Exchange Act relating to
its business, financial position, results of operations or other matters.
However, Purchaser and Securitas have filed a Schedule 14D-1 and exhibits
thereto with the SEC in connection with the Offer and the Merger.
10.SOURCE AND AMOUNT OF FUNDS
The Purchaser estimates that the total amount of funds required to purchase
all of the outstanding Shares pursuant to the Offer and the Merger and to pay
related expenses will be approximately $395 million. The Purchaser intends to
obtain these funds by way of a combination of debt and equity contributions
from Securitas or its subsidiaries. The consummation of the Offer and the
Merger are not subject to any condition that Securitas or the Purchaser obtain
any requisite financing.
Securitas expects to obtain the funds necessary to enable Purchaser to
purchase all of the outstanding Shares and to pay related expenses from
multicurrency revolving credit loans (each a "Loan") pursuant to a $440
million unsecured revolving credit facility provided by Deutsche Bank AG, as
Arranger (the "Arranger"), Deutsche Bank Luxembourg S.A., as Facility Agent
(the "Facility Agent"), and the financial institutions party thereto (the
"Banks"). Pursuant to a Loan Agreement, dated February 18, 1999, among
Securitas, the Arranger, the Facility Agent and the Banks (the "Loan
Agreement"), the Banks have committed to grant to Securitas a multicurrency
revolving credit facility under which the Banks will make Loans in Dollars,
Euros or Optional Currencies (as such terms are defined in the Loan Agreement)
up to an aggregate amount not to exceed $440 million. The Loans will be
provided to Securitas on the terms and conditions set forth in the Loan
Agreement. The Loans will not be secured nor guaranteed by Securitas'
subsidiaries.
The following is a summary of certain portions of the Loan Agreement and is
qualified in its entirety by reference to the Loan Agreement, a copy of which
has been filed with the SEC as an exhibit to the Schedule 14D-1 and may be
obtained in the manner described in Section 9.
The Loan Agreement provides that the borrowings thereunder are subject to
certain conditions precedent, including, among other things, (i) there not
having been a material adverse change in the business or financial condition
of Securitas or in the consolidated financial condition of Securitas and its
subsidiaries since December 31, 1998 and (ii) there not being (1) a Default or
Termination Event (as each term is defined in the Loan Agreement) outstanding
or reasonably likely to result from making any Loan or (2) any other event
outstanding which constitutes a default under any document which is binding on
Securitas or its subsidiaries or any asset of Securitas or its subsidiaries to
an extent or in a manner which is reasonably likely to have a material adverse
effect on the business, assets, financial condition or operations of Securitas
or its subsidiaries or the ability of Securitas to perform its obligations
under the Loan Agreement and ancillary documents (the "Finance Documents").
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REPRESENTATIONS AND WARRANTIES. The Loan Agreement provides for customary
representations, including representations and warranties as to (i) the due
incorporation and organization of Securitas and its power to own assets and
carry on business as it is currently being conducted, (ii) Securitas' power to
enter into and perform its obligations under the Finance Documents, (iii) the
enforceability of the Finance Documents, (iv) the absence of conflicts related
to the execution of and performance by Securitas of the Finance Documents, (v)
the absence of defaults under the Finance Documents or other agreements to
which Securitas is a party, (vi) any required regulatory approvals and third
party consents, (vii) the audited consolidated financial statements of
Securitas, (viii) pending litigation, (ix) obligations under ERISA, and (x)
compliance with certain laws of the United States.
INTEREST AND INTEREST RATES. The rate of interest on each Loan for its
Interest Period (as defined below) is the rate per annum determined by the
Facility Agent to be the aggregate of (i) .30% per annum and (ii) the
applicable LIBOR, or, in the case of a Loan in Euros, EURO-LIBOR, or, in the
case of a Loan in SEK, STIBOR.
Securitas will repay each Loan in full on the last day of its Interest
Period. "Interest Period" is (as selected by Securitas) one (1), two (2) or
three (3) months or such other period as may be agreed between Securitas and
the Banks for a Loan, subject to certain adjustments. Unless the Facility
Agent otherwise agrees, no more that eight (8) Interest Periods of one (1)
month's duration may be selected in any calendar year.
AVAILABILITY. Borrowings may be made by written notice from Securitas to the
Facility Agent not later than three (3) business days before the proposed
borrowing (or, in the case of the first Loan only, two (2) business days.)
VOLUNTARY AND MANDATORY PREPAYMENT AND REDUCTION OF COMMITMENTS. Subject to
certain conditions, Securitas may, by giving not less than five (5) business
days' prior notice to the Facility Agent, prepay any Loan in whole or, subject
to certain other conditions, in part. Securitas must repay the Loans with the
net proceed of the equity offering by Securitas. The total commitment of $440
million will be canceled automatically by an amount equal to the amount of
such net proceeds.
MATURITY. The Loans mature nine months from the date of the Loan Agreement,
subject to an extension, which can be exercised by Securitas, of up to two
years.
Subject to market and economic conditions, Securitas currently intends to
refinance the Loans with an equity financing to European investors. The exact
terms and timing of such financing have not yet been finalized. While the
foregoing represents the current intention of Purchaser and Securitas with
respect to financial arrangements for the funds necessary to consummate the
Offer and the Merger, such financial arrangements may change depending upon
such factors as Securitas and Purchaser may deem appropriate.
11. BACKGROUND OF THE OFFER; PURPOSE OF THE OFFER AND THE MERGER; THE MERGER
AGREEMENT AND CERTAIN OTHER AGREEMENTS
CONTACTS WITH THE COMPANY; BACKGROUND OF THE OFFER. Management of the
Company and Securitas have been acquainted with one another for a number of
years and have had, from time to time, discussions concerning the respective
businesses and strategies of their companies.
Since 1995, Denis R. Brown, President and Chief Executive Officer of the
Company, has attended meetings of the Ligue Internationale Des Societes De
Surveillance, headquartered in Berne, Switzerland (the "Ligue"). While at
these meetings, Mr. Brown was introduced to and became acquainted with Thomas
Berglund, President and Chief Executive Officer of Securitas.
Mr. Berglund, Melker Schorling, Chairman of Securitas, and other members of
the board of directors of the Ligue visited the Company, which was hosting the
Ligue board meeting in the USA on March 9, 1998. During this time, Mr. Brown
and the Company representatives gave the Ligue board a presentation on the US
security
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market, and on the Company, and the parties talked about possible future
collaboration to meet the needs of the Company's customers in Europe.
Following these initial meetings, Mr. Berglund invited Mr. Brown to come to
Sweden with a view to discussing the security services business and assessing
whether there might be any mutual interest in the Company and Securitas
working together in the future. On June 13, 1998, Mr. Brown, C. Michael
Carter, Executive Vice President, General Counsel and Corporate Secretary of
the Company, and James P. McCloskey, Executive Vice President and Chief
Financial Officer of the Company, met with Mr. Berglund, Hakan Winberg,
Executive Vice President and Chief Financial Officer, Amund Skarholt,
Executive Vice President, and Juan Vallejo, Country Manager Sweden of
Securitas, in Stockholm, Sweden.
After the June meeting, there were occasional telephone conversations
between Mr. Brown and Mr. Berglund regarding a possible working relationship
and discussions among representatives of both companies regarding possible
support of the needs of the Company's customers in Europe.
On September 3, 1998, the Company and Securitas executed a Mutual
Confidentiality Agreement (the "Confidentiality Agreement"), which provided
for the exchange of confidential and non-public information between the two
companies so as to enable both parties to evaluate their interest in
discussing a possible transaction involving the two companies.
Following the entry into the Confidentiality Agreement, Mr. Brown invited
Mr. Berglund and Mr. Winberg to come to visit the Company's headquarters so as
to enable them to become better acquainted with the Company's operations and
personnel. On September 10 and 11, 1998, Messrs. Berglund and Winberg met with
Mr. Brown, Mr. Carter, Mr. McCloskey and Don W. Walker, Executive Vice
President, The Americas, of the Company.
On October 30, 1998, Mr. Berglund, Mr. Brown and Mr. Carter met in London to
talk further about a future working relationship. On the same date, Mr.
Berglund, Mr. Brown and Mr. Carter discussed with Larry G. Woelk, Vice
President, International Operations of the Company, possible support of the
needs of the Company's customers in Europe.
After the October meeting, there were occasional telephone conversations
between Mr. Brown and Mr. Berglund regarding a possible working relationship
and discussions among representatives of both companies regarding possible
support of the Company's customer needs in Europe.
On December 14 and 15, 1998, Mr. Berglund met with Mr. Brown in California.
During these meetings, Mr. Berglund advised Mr. Brown that Securitas would be
interested in exploring the possibility of acquiring the Company.
At a meeting of the Company's Board of Directors on December 17, 1998, there
was a discussion of the developments concerning Securitas. At this meeting,
the Board of Directors approved the engagement of financial and legal advisors
to assist in connection with a possible transaction. Following the meeting,
Mr. Brown had a telephone conference with Mr. Berglund during which Mr. Brown
advised Mr. Berglund that the Board of Directors had approved the Company's
management continuing discussions with Securitas regarding a possible
transaction.
After the December conversation, there were occasional other telephone
conversations between Mr. Brown and Mr. Berglund regarding a possible
transaction and discussions among representatives of both companies regarding
possible support of the needs of the Company's customers in Europe.
On January 8, 1999, the Board of Directors received a further report
concerning the progress of discussions with Securitas and a proposed timetable
for due diligence procedures and negotiations to determine if an acceptable
agreement could be achieved. At the meeting, the Board of Directors received
presentations from the Company's financial and legal advisors (DLJ and Gibson,
Dunn & Crutcher LLP, respectively) and considered Securitas' request for
exclusivity in negotiating with the Company. The Board of Directors concluded
that under
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the circumstances it would be in the best interests of the Company to proceed
with Securitas on an exclusive basis, subject to the ability of the Board of
Directors to conduct discussions with others if required by their fiduciary
duties.
On January 15, 1999, the Company entered into an agreement pursuant to which
it agreed, subject to certain conditions (including a "fiduciary out"), to
enter into exclusive negotiations with Securitas for a period of time so as to
enable both parties to determine whether to proceed with a transaction
involving the two companies.
On January 16, 1999, Mr. Brown and Mr. Berglund had a dinner meeting. On
January 17 through 19, 1999, Messrs. Berglund and Winberg, together with
Securitas' advisors and other representatives, met with Messrs. Brown, Carter,
McCloskey and Walker, together with the Company's advisors and other
representatives, in order to commence Securitas' due diligence of the Company.
The due diligence process continued thereafter.
On January 29, 1999, Mr. Brown and other Company representatives met with
Mr. Berglund and other Securitas representatives to discuss the results of the
due diligence process and to continue their discussions regarding a possible
transaction.
On February 5, 1999, Mr. Berglund and an advisor had a telephone conference
call with Mr. Brown relating to the terms and conditions of the proposed
management agreements for the senior executives of the Company.
On February 8, 1999, Mr. Berglund had a telephone conference with Mr. Brown
during which Mr. Berglund advised Mr. Brown that Securitas' board of directors
had approved proceeding with the negotiation of a transaction with the
Company.
From February 8 through February 18, 1999, representatives of Securitas,
together with its legal counsel, Willkie Farr & Gallagher, and representatives
of the Company, together with its legal counsel, met in person and
communicated by telephone to discuss various aspects of the transaction.
During this time, drafts of the Merger Agreement, the Stock Option Agreement,
the Stockholders Agreement and the Termination Agreement were distributed,
reviewed and negotiated, and representatives of Securitas continued the due
diligence investigation of the Company. In addition, during this time, Messrs.
Brown, Carter, McCloskey and Walker and their separate counsel negotiated the
terms of the New Employment Agreements with Securitas and its counsel.
On February 19, 1999, the Board of Directors approved the transaction and
contemplated agreements, and, following the meeting of the Board of Directors,
Securitas, Purchaser and the Company executed and delivered the Merger
Agreement, and the parties thereto executed the Stockholders Agreement, the
Stock Option Agreement, the Termination Agreement and the New Employment
Agreements.
On February 26, 1999, Purchaser commenced the Offer.
PURPOSE OF THE OFFER AND THE MERGER. The purpose of the Offer and the Merger
is to enable Purchaser to acquire control of, and the entire equity interest
in, the Company. The Offer is being made pursuant to the Merger Agreement and
is intended to increase the likelihood that the Merger will be effected. The
purpose of the Merger is to acquire all of the outstanding Shares not
purchased pursuant to the Offer.
Stockholders of the Company who sell their Shares in the Offer will cease to
have any equity interest in the Company and any right to participate in its
earnings and future growth. If the Merger is consummated, non-tendering
stockholders will no longer have an equity interest in the Company and instead
will have only the right to receive cash consideration pursuant to the Merger
Agreement or to exercise statutory appraisal rights under Section 262 of
Delaware Law. See Section 12. Similarly, after selling their Shares in the
Offer or the subsequent Merger, stockholders of the Company will not bear the
risk of any decrease in the value of the Company.
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MERGER AGREEMENT. The following is a summary of certain portions of the
Merger Agreement and is qualified in its entirety by reference to the Merger
Agreement, a copy of which has been filed with the SEC as an exhibit to the
Schedule 14D-1. The Merger Agreement may be examined and copies may be
obtained at the places and in the manner set forth in Section 9 of this Offer
to Purchase.
The Offer. The Merger Agreement provides that without the prior written
consent of the Company, Securitas shall not (i) decrease the Per Share Amount
or change the form of consideration payable in the Offer, (ii) decrease the
number of Shares sought, (iii) amend or waive satisfaction of the Minimum
Condition, (iv) impose additional conditions to the Offer, (v) amend any one
or more of the conditions listed in Section 14 to broaden the scope of such
condition or conditions or (vi) amend any other term of the Offer in any
manner adverse to the holders of Shares. Upon the terms and subject to the
conditions of the Offer, Purchaser will accept for payment and purchase, as
soon as permitted under the terms of the Offer, all Shares validly tendered
and not withdrawn prior to the expiration of the Offer. Purchaser agrees that
it will not terminate or withdraw the Offer or extend the expiration date of
the Offer unless at the expiration date of the Offer the conditions to the
Offer shall not have been satisfied or earlier waived. If at the expiration
date of the Offer, the conditions to the Offer shall not have been satisfied
or earlier waived, Securitas may, from time to time extend the expiration date
of the Offer until the date such conditions are satisfied or earlier waived
and Securitas becomes obligated to accept for payment and pay for Shares
tendered pursuant to the Offer; provided, however, that the Expiration Date
may not be extended beyond June 30, 1999 without the consent of the Company.
Securitas and Purchaser have also agreed that if all of the conditions to the
Offer are not satisfied on any scheduled expiration date, then if all such
conditions are reasonably capable of being satisfied prior to June 30, 1999,
Purchaser will extend the Offer from time to time (each extension not to
exceed ten (10) business days) until such conditions are satisfied or waived;
provided, however, that Purchaser shall not be required to extend the Offer
beyond June 30, 1999. Notwithstanding the foregoing, Purchaser may, without
the consent of the Company, (i) extend the expiration date of the Offer (as it
may be extended) for any period required by applicable rules and regulations
of the SEC in connection with an increase in the consideration to be paid
pursuant to the Offer and (ii) extend the expiration date of the Offer (as it
may be extended) for up to ten business days, if on such expiration date the
conditions for the Offer set forth in Section 14 of this Offer to Purchase
shall have been satisfied or earlier waived, but the number of Shares that
have been validly tendered and not withdrawn represents less than 90% of the
then issued and outstanding Shares on a fully diluted basis; provided,
however, that the Expiration Date may not be extended beyond June 30, 1999
without the consent of the Company.
The Merger. Following the consummation of the Offer, the Merger Agreement
provides that, subject to the terms and conditions thereof, at the Effective
Time and subject to and upon the terms and conditions of the Merger Agreement
and Delaware Law, Purchaser shall be merged with and into the Company, the
separate corporate existence of Purchaser shall cease, and the Company shall
continue as the Surviving Corporation.
The respective obligations of Purchaser, on the one hand, and the Company,
on the other hand, to effect the Merger are subject to the satisfaction on or
prior to the Effective Time of each of the following conditions, unless such
failure of any such conditions is a result of a breach of either party's
material obligations under the Merger Agreement: (i) Purchaser shall have
made, or caused to be made, the Offer and shall have purchased, or caused to
be purchased, Shares pursuant to the Offer, (ii) the Merger and the Merger
Agreement shall have been approved and adopted by the requisite vote of the
stockholders of the Company, if required by Delaware Law, (iii) no statute,
rule, regulation, judgment, writ, decree, order or injunction shall have been
promulgated, enacted, entered or enforced by any Governmental Entity (as
defined in the Merger Agreement) which has the effect of making illegal or
directly or indirectly restraining, prohibiting or restricting the
consummation of the Merger and (iv) any waiting period applicable to the
Merger under the HSR Act shall have expired or have been terminated and all
approvals of and consents to the Merger required under applicable foreign
antitrust or competition laws shall have been obtained and be in full force
and effect.
At the Effective Time (i) each share of Company Common Stock issued and
outstanding immediately before the Effective Time (other than each share of
Company Common Stock held in the treasury of the Company and each Share owned
by Securitas or any direct or indirect wholly owned subsidiary of Securitas or
of the Company immediately before the Effective Time or any Shares which are
held by a stockholder who has demanded and
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perfected such stockholder's demand for appraisal of such stockholder's Shares
in accordance with Delaware Law) shall be canceled and converted into the
right to receive the Per Share Amount paid pursuant to the Offer, without
interest, upon the surrender of the certificate representing such Share in
accordance with the Merger Agreement and (ii) each share of common stock, $.01
par value, of Purchaser issued and outstanding immediately before the
Effective Time will thereafter represent one validly issued, fully paid and
nonassessable share of common stock, $.01 par value, of the Surviving
Corporation. For purposes of the Merger Agreement, "Subsidiary" means any
corporation or other legal entity of which the Company (either alone or
through or together with any other Subsidiary) owns, directly or indirectly,
more than 50% of the stock or other equity interests the holders of which are
generally entitled to vote for the election of the board of directors or other
governing body of such corporation or other legal entity.
The Company's Board of Directors. The Merger Agreement provides that
promptly upon the purchase by Purchaser of any Shares pursuant to the Offer,
and from time to time thereafter as Shares are acquired by Purchaser,
Securitas shall be entitled to designate such number of directors, rounded up
to the next whole number, on the Board of Directors as will give Securitas,
subject to compliance with Section 14(f) of the Exchange Act representation on
the Board of Directors equal to at least that number of directors which equals
the product of the total number of directors on the Board of Directors (giving
effect to the directors appointed or elected pursuant to this sentence and
including current directors serving as officers of the Company) multiplied by
the percentage that the aggregate number of Shares beneficially owned by
Securitas or any affiliate of Securitas (including such Shares as are accepted
for payment pursuant to the Offer, but excluding Shares held by the Company or
any of its Subsidiaries) bears to the number of Shares outstanding. At each
such time, the Company will also cause (i) each committee of the Board of
Directors, (ii) if requested by Securitas, the board of directors of each of
the Subsidiaries and (iii) if requested by Securitas, each committee of such
board to include persons designated by Securitas constituting the same
percentage of each such committee or board as Securitas' designees constitute
on the Board of Directors. The Company shall, upon request by Securitas,
promptly increase the size of the Board of Directors or exercise its best
efforts to secure the resignations of such number of directors as is necessary
to enable Securitas' designees to be elected to the Board of Directors in
accordance with the terms of the Merger Agreement and shall cause Securitas'
designees to be so elected; provided, however, that, in the event that
Securitas' designees are appointed or elected to the Board of Directors, until
the Effective Time (x) Denis R. Brown may continue to serve as a director of
the Company and (y) the Board of Directors shall have at least three (3)
Independent Directors; provided further, that if at any time or from time to
time fewer than three Independent Directors remain, the other directors shall
elect to the Board of Directors such number of persons who shall be neither
officers of the Company nor designees, shareholders, affiliates or associates
of Securitas so that the total of such persons and remaining Independent
Directors serving on the Board of Directors is at least three. Any such person
elected to the Board of Directors pursuant to the second proviso of the
preceding sentence shall be deemed to be an Independent Director for purposes
of the Merger Agreement. Subject to applicable law, the Company shall promptly
take all action necessary pursuant to Section 14(f) of the Exchange Act and
Rule 14f-1 promulgated thereunder in order to fulfill its obligations under
the Merger Agreement and shall include in the Schedule 14D-9 mailed to
stockholders promptly after the commencement of the Offer (or an amendment
thereof or an information statement pursuant to Rule 14f-1 if Securitas has
not theretofore designated directors) such information with respect to the
Company and its officers and directors as is required under Section 14(f) and
Rule 14f-1 in order to fulfill its obligations under the Merger Agreement.
Securitas will supply the Company any information with respect to itself and
its nominees, officers, directors and affiliates required by Section 14(f) and
Rule 14f-1. Notwithstanding anything in the Merger Agreement to the contrary,
following the time directors designated by Securitas constitute a majority of
the Board of Directors and prior to the Effective Time, the affirmative vote
of a majority of the Independent Directors shall be required to (i) amend or
terminate on behalf of the Company the Merger Agreement, the Stock Option
Agreement or the Termination Agreement, (ii) exercise or waive any of the
Company's rights or remedies thereunder, (iii) extend the time for performance
of Securitas' or Purchaser's obligations thereunder or (iv) take any other
action required to be taken by the Board of Directors thereunder.
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Stockholders' Meeting. Pursuant to the Merger Agreement, following the
consummation of the Offer, the Company shall promptly take all action
necessary in accordance with Delaware Law and the Restated Certificate of
Incorporation and the By-Laws to convene the Company stockholders' meeting, if
such meeting is required. The stockholder vote required for approval of the
Merger will be no greater than that set forth in Delaware Law. The Company
shall use its best efforts to solicit from stockholders of the Company proxies
in favor of the Merger and shall take all other action necessary or, in the
reasonable opinion of Securitas, advisable to secure any vote of stockholders
required by Delaware Law to effect the Merger. Notwithstanding the foregoing,
if Purchaser or any other subsidiary of Securitas shall acquire at least 90%
of the outstanding Shares on a fully diluted basis, and provided that the
conditions to the Merger shall have been satisfied or waived, the Company
shall, at the request of Securitas, take all necessary and appropriate action
to cause the Merger to become effective as soon as practicable after such
acquisition, without the approval of the stockholders of the Company, in
accordance with Section 253 of Delaware Law. As promptly as practicable after
the consummation of the Offer and if required by the Exchange Act, the Company
shall prepare and file with the SEC, and shall use all reasonable efforts to
have cleared by the SEC, and promptly thereafter shall mail to stockholders
the proxy statement or information statement (such proxy statement or
information statement, as amended or supplemented, is herein referred to as
the "Proxy Statement"). The Proxy Statement shall contain the recommendation
of the Board of Directors that the Company's stockholders approve the Merger
Agreement and the Merger.
Stock Plans. Pursuant to the Merger Agreement, the Company will take all
actions necessary to provide that, upon consummation of the Merger (i) each
then outstanding Option granted under any of the Company's stock option plans
referred to in the Merger Agreement, each as amended (collectively, the
"Option Plans") and any and all other outstanding options, stock warrants and
stock rights granted pursuant to such stock option plans or otherwise, and in
each case whether or not then exercisable or vested, shall be canceled and
(ii) in consideration of such cancellation, the Company shall pay to each such
holder of an Option an amount in respect thereof equal to the product of (A)
the excess, if any, of the Per Share Amount over the exercise price thereof
and (B) the number of Shares subject thereto (such payment to be net of
applicable withholding taxes). The Company may elect at any time prior to the
consummation of the Offer to have the foregoing actions take effect, with
respect to some or all of the Options, upon consummation of the Offer, in
which case the Company shall provide written notice of such action to
Securitas. If the Company so elects and if, upon consummation of the Offer,
Purchaser shall have acquired at least 90% of the outstanding Shares,
Securitas shall as promptly as practicable following such consummation provide
the Company with the funds necessary to satisfy its obligations as described
above. Except as permitted under the Merger Agreement or as otherwise agreed
to by Securitas and the Company, the Company shall cause the Option Plans to
terminate as of the Effective Time and the provisions in any other plan,
program or arrangement, providing for the issuance or grant by the Company or
any of its Subsidiaries of any interest in respect of the capital stock of the
Company or any of its Subsidiaries shall be deleted as of the Effective Time.
The Company has represented in the Merger Agreement that all the Option Plans
provide that the Company can take the actions to effect the foregoing without
obtaining the consent of any holders of Options.
Interim Operations; Covenants. The Company has agreed in the Merger
Agreement that from the date of the Merger Agreement to the Effective Time,
except as expressly contemplated by the Merger Agreement, the Company shall,
and shall cause each of the Subsidiaries, to (i) carry on its respective
businesses in the ordinary course, (ii) use all reasonable efforts to preserve
intact its current business organizations and keep available the services of
its current officers and key employees, (iii) use all reasonable efforts to
preserve its relationships with customers, suppliers and other Persons (as
defined below) with which it has business dealings, (iv) use all reasonable
efforts to comply in all material respects with all laws and regulations
applicable to it or any of its properties, assets or business and (v) use all
reasonable efforts to maintain in full force and effect all the Company
Permits (as defined in the Merger Agreement) necessary for such business;
provided, however, that the foregoing shall not prevent the Company from
borrowing under its existing credit agreement to satisfy any of its
obligations under the Merger Agreement with respect to outstanding Options.
The Merger Agreement provides that, without limiting the generality of the
foregoing, except as expressly contemplated by the Merger Agreement, the
Company shall not, and shall cause each of the Subsidiaries not to:
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(a) amend the Restated Certificate of Incorporation or the By-Laws or
similar organizational documents or change the number of directors
constituting its entire board of directors;
(b) (i)(A) declare, set aside or pay any dividend or other distribution
payable in cash, stock or property with respect to its capital stock,
except that a wholly owned Subsidiary may declare and pay a dividend or
make advances to its parent or the Company or (B) redeem, purchase or
otherwise acquire, directly or indirectly, any of its capital stock or
other securities; (ii) issue, sell, pledge, dispose of or encumber any
(A) additional shares of its capital stock, (B) securities convertible
into or exchangeable for, or options, warrants, calls, commitments or
rights of any kind to acquire, any shares of its capital stock, or (C)
of its other securities, other than Shares issued upon the exercise of
Options outstanding on the date of the Merger Agreement in accordance
with the Option Plans as in effect on the date of the Merger Agreement;
or (iii) split, combine or reclassify any of its outstanding capital
stock;
(c) acquire or agree to acquire (A) by merging or consolidating with, or by
purchasing a substantial portion of the assets of, or by any other
manner, any business or any corporation, partnership, joint venture,
association or other business organization or division thereof
(including entities which are Subsidiaries) or (B) any assets,
including real estate, except, with respect to both of clause (A) and
(B) above, (x) purchases of inventory, equipment and supplies in the
ordinary course of business consistent with past practice and (y) other
purchases in the ordinary course of business consistent with past
practice in an amount not involving more than $5.0 million for
acquisitions in the United States and Canada and $2.0 million for
acquisitions outside the United States and Canada;
(d) authorize or make any single capital expenditures in the aggregate in
excess of $13.1 million;
(e) except in the ordinary course of business, amend or terminate any
Company Material Contract (as defined in the Merger Agreement), or
waive, release or assign any material rights or claims thereunder;
(f) transfer, lease, license, sell, mortgage, pledge, dispose of, or
encumber any property or assets other than (i) excess or obsolete
assets or (ii) in the ordinary course of business and consistent with
past practice;
(g) (i) enter into any employment or severance agreement with or, except in
accordance with the existing policies of the Company, grant any
severance or termination pay to any officer or director of the Company
or any Subsidiary; or (ii) hire or agree to hire any new or additional
officers;
(h) except as required to comply with applicable law, (A) adopt, enter
into, terminate, amend or increase the amount or accelerate the payment
or vesting of any benefit or award or amount payable under any Company
Employee Benefit Plan (as defined in the Merger Agreement) or other
arrangement for the current or future benefit or welfare of any
director, officer, former employee or, other than in the ordinary
course of business consistent with past practice, current employee, (B)
increase in any manner the compensation or fringe benefits of, or pay
any bonus to, any director, officer or, other than in the ordinary
course of business consistent with past practice, employee, (C) other
than benefits accrued through February 19, 1999 and other than in the
ordinary course of business for employees other than officers or
directors of the Company, pay any benefit not provided for under any
Company Employee Benefit Plan, (D) other than bonuses earned through
February 19, 1999 and other than in the ordinary course of business for
employees other than officers and directors, grant any awards under any
bonus, incentive, performance or other compensation plan or arrangement
or Company Employee Benefit Plan; provided that there shall be no grant
or award to any director, officer or employee of stock options, stock
appreciation rights, stock based or stock related awards, performance
units or restricted stock, or any removal of existing restrictions in
any Company Employee Benefit Plans or agreements or awards made
thereunder or (E) take any action to fund or in any other way secure
the payment of compensation or benefits under any employee plan,
agreement, contract or arrangement or Company Employee Benefit Plan;
(i) (i) except in connection with any acquisition permitted pursuant to the
Merger Agreement or to satisfy its obligations to holders of Options
pursuant to the Merger Agreement, incur or assume any long-term debt,
or except in the ordinary course of business in amounts consistent with
past practice, incur or assume any short-term indebtedness; (ii) incur
or modify any material indebtedness or other liability;
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(iii) assume, guarantee, endorse or otherwise become liable or
responsible (whether directly, contingently or otherwise) for the
obligations of any other Person, except in the ordinary course of
business and consistent with past practice; or (iv) except for advances
or prepayments in the ordinary course of business in amounts consistent
with past practice, make any loans, advances or capital contributions
to, or investments in, any other Person (other than to wholly owned
Subsidiaries or customary loans or advances to employees in accordance
with past practice);
(j) change of the accounting methods used by it unless required by
generally accepted accounting principles;
(k) other than in the ordinary course of business consistent with past
practice, make any Tax (as defined in the Merger Agreement) election or
settle or compromise any Tax liability;
(l) (i) settle or compromise any claim, litigation or other legal
proceeding, other than in the ordinary course of business consistent
with past practice in an amount not involving more than $1,000,000 or
(ii) pay, discharge or satisfy any other claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction of (A)
any such other claims, liabilities or obligations, in the ordinary
course of business and consistent with past practice, or (B) of any
such other claims, liabilities or obligations reflected or reserved
against in, or contemplated by, the consolidated financial statements
(or the notes thereto) of the Company;
(m) except in the ordinary course of business consistent with past
practice, waive the benefits of, or agree to modify in any manner, any
confidentiality, standstill or similar agreement to which the Company
or any Subsidiary is a party;
(n) permit any insurance policy naming the Company or any Subsidiary as a
beneficiary or a loss payable payee to be canceled or terminated
without notice to Securitas, except in the ordinary course of business
and consistent with past practice or in connection with replacing such
policy with a policy providing comparable coverage;
(o) take or omit to take any action which would make any of the
representations or warranties of the Company contained in the Merger
Agreement untrue and incorrect in any material respect as of the date
when made if such action had then been taken or omitted, or would
result in any of the conditions set forth in this Section 14 of this
Offer to Purchase or the conditions of the Merger not being satisfied;
or
(p) enter into an agreement, contract, commitment or arrangement to do any
of the foregoing, or to authorize, recommend, propose or announce an
intention to do any of the foregoing.
"Person" is defined in the Merger Agreement as an individual, corporation,
partnership, association, trust or any unincorporated organization.
No Solicitation. Pursuant to the Merger Agreement, the Company has agreed
that it shall not, nor shall it permit or authorize any of the Subsidiaries or
any officer, director, employee, agent or representative of the Company or any
of the Subsidiaries (collectively, the "Company Representatives") to, (i)
solicit or initiate, or encourage, directly or indirectly, any inquiries
regarding or the submission of, any Takeover Proposal (as defined below), (ii)
participate in any discussions or negotiations regarding, or furnish to any
Person any information or data with respect to, or take any other action to
knowingly facilitate the making of any proposal that constitutes any Takeover
Proposal or (iii) enter into any agreement with respect to any Takeover
Proposal or approve or resolve to approve any Takeover Proposal; provided,
however, nothing contained in the Merger Agreement shall prohibit the Company
or the Board of Directors from (A) taking and disclosing to the Company's
stockholders a position with respect to a tender or exchange offer by a third
party pursuant to Rules 14d-9 and 14e-2 promulgated under the Exchange Act or
(B) making such disclosure to the Company's stockholders as, in the good faith
judgment of the Board of Directors, after receiving advice from outside
counsel, is required under applicable law, provided that the Company may not,
except as permitted by the Merger Agreement, withdraw or modify, or propose to
withdraw or modify, its approval or recommendation of the Merger Agreement or
the
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Stock Option Agreement or the transactions contemplated thereby, including the
Offer or the Merger, or Securitas' acquisition of Shares pursuant to the
Stockholders Agreement or approve or recommend, or propose to approve or
recommend any Takeover Proposal, or enter into any agreement with respect to
any Takeover Proposal. Upon execution of the Merger Agreement, the Company
shall, and it shall cause the Company Representatives to, immediately cease
any existing activities, discussions or negotiations with any parties
conducted with respect to any Takeover Proposal, and it shall promptly request
that each Person who has executed a confidentiality agreement in connection
with such Person's consideration of a Takeover Proposal return all
confidential information furnished to such Person by or on behalf of the
Company. Notwithstanding the foregoing, prior to the time of acceptance of
Shares for payment pursuant to the Offer, the Company may furnish information
concerning its business, properties or assets to any Person or group pursuant
to confidentiality agreements with terms and conditions similar to the
Confidentiality Agreement (provided that such confidentiality agreements may
not include any provision granting any such Person or group an exclusive right
to negotiate with the Company), and may negotiate and participate in
discussions and negotiations with such Person or group concerning a Takeover
Proposal if: (x) such Person or group has submitted a Superior Proposal (as
defined below); and (y) the Board of Directors determines in good faith, based
upon advice of outside counsel, that such action is required to discharge the
Board of Director's fiduciary duties to the Company's stockholders under
Delaware law.
The Company has further agreed to promptly notify Securitas of the existence
of any proposal, discussion, negotiation or inquiry received by the Company
with respect to any Takeover Proposal, and the Company will immediately
communicate to Securitas the material terms of any proposal, discussion,
negotiation or inquiry which it may receive (and will promptly provide to
Securitas copies of any written proposal received by the Company in connection
therewith). The Company has also agreed to promptly provide to Securitas any
non-public information concerning the Company provided to any other Person
which was not previously provided to Securitas. The Company has also agreed to
keep Securitas fully informed of the status and material terms of any such
Takeover Proposal.
Except as set forth below, neither the Board of Directors nor any committee
thereof shall (i) withdraw or modify, or propose to withdraw or modify, in a
manner adverse to Securitas or Purchaser, the approval or recommendation by
the Board of Directors or any such committee of the Merger Agreement, the
Offer or the Merger, (ii) approve or recommend, or propose to approve or
recommend, any Takeover Proposal or (iii) enter into any agreement with
respect to any Takeover Proposal. Notwithstanding the foregoing, prior to the
time of acceptance for payment of Shares pursuant to the Offer, the Board of
Directors may withdraw or modify its approval or recommendation of the Merger
Agreement, the Offer or the Merger, approve or recommend a Superior Proposal,
or enter into an agreement with respect to a Superior Proposal, in each case
if (A) the Company shall have received a Superior Proposal, (B) the Board of
Directors shall have determined in good faith, based upon advice of outside
counsel, that such action is required to discharge the Board of Director's
fiduciary duties to the Company's stockholders under Delaware law, (C) at
least five (5) business days shall have passed following Securitas' receipt of
written notice from the Company advising Securitas that the Board of Directors
has received such a Superior Proposal which it intends to accept, specifying
the material terms and conditions of such Superior Proposal, identifying the
Person making such Superior Proposal, but only if the Company shall have
caused its financial and legal advisors to negotiate in good faith with
Securitas to make such adjustments to the terms and conditions of the Merger
Agreement as would enable the Company to proceed with the transactions
contemplated therein on such adjusted terms and (D) concurrently with taking
such action the Company shall pay the Termination Fee (as defined below) and
Expenses (as defined below) as provided in the Merger Agreement (whether or
not the Merger Agreement shall be terminated); provided, however, that in no
event shall the Company be obligated to pay more than $2.5 million in
Expenses.
A "Superior Proposal" means an unsolicited bona fide written proposal by a
Third Party (defined as any Person or group other than Securitas, Purchaser or
any affiliate thereof) to acquire, directly or indirectly, for consideration
consisting solely of cash and/or securities, more than 50% of the Shares then
outstanding or all or substantially all of the assets of the Company, and (i)
otherwise on terms which the Board of Directors
25
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determines in good faith to be more favorable to the Company's stockholders
than the Offer and the Merger (based in part on a written opinion of the
Company's independent financial advisor that the value of the consideration
provided for in such proposal exceeds the value of the consideration provided
for in the Offer and the Merger), (ii) for which financing, to the extent
required, is then committed or, in the good faith judgment of the Board of
Directors, is reasonably available and (iii) which, in the good faith
reasonable judgment of the Board of Directors, is reasonably likely to be
consummated without undue delay. A "Takeover Proposal" means any inquiry,
proposal or offer, whether in writing or otherwise, from a Third Party to
acquire beneficial ownership (as defined under Rule 13(d) of the Exchange Act)
of all or substantially all of the assets of the Company or any of its
Subsidiaries or 20% or more of any class of equity securities of the Company
or any of the Subsidiaries pursuant to a merger, consolidation or other
business combination, sale of shares of capital stock, sale of assets, tender
offer, exchange offer or similar transaction, including any single or multi-
step transaction or series of related transactions.
Indemnification and Insurance. Under the Merger Agreement, the Company has
agreed, to the fullest extent permitted under applicable law and regardless of
whether the Merger becomes effective, to indemnify and hold harmless, and
after the Effective Time, Securitas and the Surviving Corporation have agreed
for a period of six (6) years following the Effective Time, to the fullest
extent permitted under applicable law, to indemnify and hold harmless, each
director, officer, employee, fiduciary and agent of the Company or any
Subsidiary and their respective subsidiaries and affiliates including, without
limitation, officers and directors serving as such on the date of the Merger
Agreement (collectively, the "Indemnified Parties") against any costs or
expenses (including reasonable attorneys' fees), judgments, fines, losses,
claims, damages, liabilities and amounts paid in settlement in connection with
any claim, action, suit, proceeding or investigation arising out of or
pertaining to any of the transactions contemplated thereby, including without
limitation liabilities arising under the Securities Act or the Exchange Act in
connection with the Offer or the Merger, and in the event of any such claim,
action, suit, proceeding or investigation (whether arising before or after the
Effective Time), (i) the Company or, after the Effective Time, Securitas and
the Surviving Corporation shall pay as incurred the reasonable fees and
expenses of counsel selected by the Indemnified Parties, which counsel shall
be reasonably satisfactory to the Company or the Surviving Corporation,
promptly as statements therefor are received, and (ii) the Company, Securitas
and the Surviving Corporation will cooperate in the defense of any such
matter; provided, however, that neither the Company nor Securitas or the
Surviving Corporation shall be liable for any settlement effected without its
prior written consent (which consent shall not be unreasonably withheld); and
provided, further, that neither the Company nor Securitas or the Surviving
Corporation shall be obliged to pay the fees and disbursements of more than
one counsel for all Indemnified Parties in any single action except to the
extent that, in the opinion of counsel for the Indemnified Parties, two (2) or
more of such Indemnified Parties have conflicting interests in the outcome of
such action. Securitas and Purchaser agree that any claims for indemnification
as to which they have received written notice prior to the sixth anniversary
of the Effective Time shall survive, whether or not such claims shall have
been finally adjudicated or settled. For six (6) years after the Effective
Time, the Surviving Corporation shall maintain or obtain officers' and
directors' liability insurance (which may be a part of Securitas' insurance
policy) covering the Indemnified Parties who are currently covered by the
Company's officers and directors liability insurance policy on terms not less
favorable than those in effect on the date of the Merger Agreement in terms of
coverage and amounts; provided, however, that if the aggregate annual premiums
for such insurance at any time during such period exceed the per annum rate of
premium paid by the Company for such insurance as of the date of the Merger
Agreement, then the Surviving Corporation shall provide the maximum coverage
that will then be available at an annual premium equal to such per annum rate
as of the date of the Merger Agreement. The Surviving Corporation shall
continue in effect the indemnification provisions currently provided by the
Restated Certificate of Incorporation and the By-Laws of the Company for a
period of not less than six (6) years following the Effective Time. The
provision listed above shall survive the consummation of the Merger and any
termination of the Merger Agreement. Notwithstanding any other provision under
the Merger Agreement, the provisions listed above are intended to be for the
benefit of and to grant third-party rights to Indemnified Parties whether or
not parties to the Merger Agreement, and each of the Indemnified Parties shall
be entitled to enforce the covenants contained above.
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Representations and Warranties. Pursuant to the Merger Agreement, the
Company has made customary representations and warranties to Securitas and
Purchaser with respect to, among other things, its organization and
qualification, capitalization, authority relative to the Merger Agreement and
the Stock Option Agreement, potential conflicts of interest, public filings,
financial statements, the absence of any material adverse effect on the
Company since December 26, 1997, litigation, employee benefit plans, real
property, intellectual property, insurance, environmental matters, material
contracts, conduct of business, tax matters, labor relations, transactions
with affiliates, offer documents and proxy statement, brokers, inapplicability
of Section 203 of Delaware Law and Article TWELFTH of the Restated Certificate
of Incorporation, the Rights Agreement and Year 2000 compliance.
Termination; Fees. The Merger Agreement may be terminated and the Merger may
be abandoned at any time prior to the Effective Time, whether before or after
approval of matters presented in connection with the Merger by the
stockholders of the Company: (a) by the mutual written consent of Securitas
and the Company; (b) by either of Securitas or the Company if any Governmental
Entity shall have issued an order, decree or ruling or taken any other action
(which order, decree or ruling or other action each party to the Merger
Agreement will use its reasonable best efforts to have vacated or reversed),
in each case permanently restraining, enjoining or otherwise prohibiting the
transactions contemplated by the Merger Agreement and such order, decree,
ruling or other action shall have become final and non-appealable; (c) by the
Company if (i) the Company has approved a Superior Proposal, provided the
Company has complied with Section 5.2(b) of the Merger Agreement and that it
makes simultaneous payment of the Expenses and the Termination Fee; or (ii)
Securitas or Purchaser shall have terminated the Offer or the Offer expires
without Securitas or Purchaser, as the case may be, purchasing any Shares
pursuant thereto; provided that the Company may not terminate the Merger
Agreement under this provision if the Company is in material breach of the
Merger Agreement; or (iii) Securitas, Purchaser or any of their affiliates
shall have failed to commence the Offer on or prior to five (5) business days
following the date of the initial public announcement of the Offer; provided
that the Company may not terminate the Merger Agreement under this provision
if the Company is in material breach of the Merger Agreement; or (iv)
Securitas or Purchaser shall have breached in any material respect any of its
representations, warranties, covenants or other agreements contained in the
Merger Agreement which breach or failure to perform is incapable of being
cured or has not been cured by the earlier of (x) ten (10) business days
following written notice thereof to Securitas from the Company and (y) the
scheduled expiration of the Offer; or (v) the Offer shall not have expired or
been terminated on or before June 30, 1999; provided that the Company may not
terminate the Merger Agreement under this provision if the Company is in
material breach of the Merger Agreement; or (d) by Securitas or Purchaser if
(i) prior to the purchase of the Shares pursuant to the Offer, the Board of
Directors shall have withdrawn, or modified or changed in a manner adverse to
Securitas or Purchaser its approval or recommendation of the Offer, the Merger
Agreement, the Merger, the Stock Option Agreement or the Stockholders
Agreement or shall have approved a Takeover Proposal; provided, that neither
Securitas nor Purchaser shall be entitled to terminate the Merger Agreement
under this provision solely as a result of the Company or the Board of
Directors making such disclosure to the Company's stockholders as, in good
faith judgment of the Board of Directors, after receiving advice from outside
counsel, is required under applicable law; or (ii) Securitas or Purchaser
shall have terminated the Offer without Securitas or Purchaser purchasing any
Shares thereunder; provided that Securitas or Purchaser may not terminate the
Merger Agreement under this provision if Securitas or Purchaser is in material
breach of the Merger Agreement; or (iii) due to an occurrence that if
occurring after the commencement of the Offer would result in a failure to
satisfy any of the conditions of the Offer, Securitas, Purchaser, or any of
their affiliates shall have failed to commence the Offer on or prior to five
(5) business days following the date of the initial public announcement of the
Offer; or (iv) (A) any Person or "group" (as defined in Section 13(d)(3) of
the Exchange Act), other than Securitas, Purchaser or their affiliates or any
group of which any of them is a member shall have acquired beneficial
ownership (as determined pursuant to Rule 13d-3 promulgated under the Exchange
Act) of 25% or more of the Shares, or (B) the Board of Directors shall have
taken any action, including amending the Rights Agreement or waiving Section
203 of the Delaware Law or Article TWELFTH of the Restated Certificate, to
enable any Person to acquire beneficial ownership of 15% or more of the
Shares; or (v) the Company, or any of the Company Representatives, shall: (A)
solicit or initiate, or encourage, directly or indirectly, any inquiries
regarding or the submission of, any Takeover Proposal or
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(B) participate in any discussions or negotiations regarding, or furnish to
any Person any information or data with respect to, or take any other action
to knowingly facilitate the making of any proposal that constitutes, or may
reasonably be expected to lead to, any Takeover Proposal, regardless of
whether such action is permitted by the Merger Agreement; or (vi) the Company
shall have breached in any material respect any of its representations,
warranties, covenants or other agreements contained in the Merger Agreement
which breach or failure to perform is incapable of being cured or has not been
cured by the earlier of (x) ten (10) business days following written notice
thereof to the Company from Securitas and (y) the scheduled expiration of the
Offer; or (vii) the Offer shall not have expired or been terminated on or
before June 30, 1999; provided that Securitas or Purchaser may not terminate
the Merger Agreement under this provision if Securitas or Purchaser is in
material breach of the Merger Agreement.
In accordance with the Merger Agreement, in the event of termination of the
Merger Agreement by either the Company or Securitas or Purchaser, the Merger
Agreement shall forthwith become void and have no effect, without any
liability or obligation on the part of Securitas, Purchaser or the Company,
other than as set forth in "--Termination Fees" and as provided in Section 6.8
and Section 9.1 of the Merger Agreement and except that nothing in the Merger
Agreement shall relieve any party for breach of any of its representations,
warranties, covenants or agreements set forth in the Merger Agreement. Any
damages arising out of any such breach shall be reduced by the amount of any
fees or expenses paid as described below. If (x) Securitas or Purchaser
terminates the Merger Agreement pursuant to clause (d)(i), (d)(iv)(B) or
(d)(v) of the preceding paragraph or (y) the Company terminates the Merger
Agreement pursuant to clause (c)(i) of the preceding paragraph, then in each
case, the Company shall pay, or cause to be paid to Securitas, at the time of
termination, an amount equal to $7.5 million (the "Termination Fee") plus an
amount equal to Securitas' and Purchaser's actual and reasonably documented
out-of-pocket expenses incurred by Securitas or Purchaser in connection with
the Offer, the Merger, the Merger Agreement and the consummation of the
transactions contemplated thereby, including, without limitation, the fees and
expenses of Securitas' counsel and accountants as well as all fees and
expenses payable to all banks, investment banking firms, and other financial
institutions and Persons and their respective agents and counsel incurred in
connection with acting as Securitas' or Purchaser's financial advisor with
respect to, or arranging or committing to provide or providing any financing
for, the transactions contemplated thereby (the "Expenses"), provided,
however, that in no event shall the Company be obligated to pay more than $2.5
million in Expenses. In addition, if the Merger Agreement is terminated by
Securitas pursuant to clause (d)(ii), (d)(iv)(A) or (d)(vii) of the preceding
paragraph or by the Company pursuant to clause (c)(ii) or (c)(v) of the
preceding paragraph and at the time of such termination, Securitas is not in
material breach of the Merger Agreement and the Minimum Condition has not been
satisfied, then if the Company shall thereafter, within twelve (12) months
after a termination pursuant to any of such provisions, enter into an
agreement with respect to a Takeover Proposal that provides for the payment of
consideration with a value of $29.00 or more per Share to be acquired, the
Company shall pay the Termination Fee and the Expenses concurrently with
entering into any such agreement; provided, however, that in no event shall
the Company be obligated to pay more than $2.5 million in Expenses.
STOCK OPTION AGREEMENT. The following is a summary of certain portions of
the Stock Option Agreement and is qualified in its entirety by reference to
the Stock Option Agreement, a copy of which has been filed with the SEC as an
exhibit to the Schedule 14D-1. The Stock Option Agreement may be examined and
copies may be obtained at the places and in the manner set forth in Section 9
of this Offer to Purchase.
As a condition and inducement to Securitas' entering into the Merger
Agreement, concurrently with the execution and delivery of the Merger
Agreement, Securitas and the Company entered into the Stock Option Agreement,
pursuant to which, among another things, the Company has granted Securitas the
irrevocable Company Option to purchase up to 2,437,079 Shares at a cash
purchase price per Share of $29.00 (the "Purchase Price"), provided, however,
that in no event shall the number of Shares for which the Company Option is
exercisable exceed 19.9% of the Company's issued and outstanding shares of
Company Common Stock. The Stock Option Agreement will terminate, and the
Company Option will expire, on the earliest of (i) the Effective Time; and
(ii) sixty (60) days after (x) the Merger Agreement becomes terminable under
circumstances which would entitle Securitas to receive the Termination Fee
pursuant to the first sentence of Section 8.2(b) of the
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Merger Agreement or (y) Securitas becomes entitled to receive the Termination
Fee pursuant to the second sentence of Section 8.2(b) of the Merger Agreement
(the date referred to in clause (ii) being hereinafter referred to as the
"Option Termination Date") and, provided that, if the Company Option cannot be
exercised or the Shares cannot be delivered to Securitas upon such exercise
because the following conditions have not yet been satisfied: (A) no
preliminary or permanent injunction or other order issued by any federal or
state court of competent jurisdiction in the United States prohibiting the
delivery of the Shares shall be in effect (B) any applicable waiting periods
under the HSR Act shall have expired or been terminated or (C) any approvals
and consents required to be obtained prior to the delivery of the Shares under
applicable foreign antitrust or competition laws shall have been obtained and
be in full force and effect the Option Termination Date shall be extended
until thirty (30) days after such impediment to exercise or delivery has been
removed.
The Company Option may be exercised if (i) the Merger Agreement becomes
terminable under circumstances which would entitle Securitas to receive the
Termination Fee pursuant to the first sentence of Section 8.2(b) of the Merger
Agreement or (ii) Securitas becomes entitled to receive the Termination Fee
pursuant to the second sentence of Section 8.2(b) of the Merger Agreement.
In the event Securitas wishes to exercise the Company Option, Securitas
shall send a written notice to the Company (the "Stock Exercise Notice")
specifying a date (subject to the HSR Act and approvals and consents under
applicable foreign antitrust or competition laws) not later than ten (10)
business days and not earlier than three (3) business days following the date
such notice is given for the closing of such purchase. In the event of any
change in the number of issued and outstanding shares of Company Common Stock
by reason of any stock dividend, stock split, split-up, recapitalization,
merger or other change in the corporate or capital structure of the Company,
the number of Shares subject to the Company Option and the purchase price per
Share shall be appropriately adjusted to restore Securitas to its rights
thereunder, including its right to purchase Shares representing 19.9% of the
capital stock of the Company entitled to vote generally for the election of
the directors of the Company which is issued and outstanding immediately prior
to the exercise of the Company Option at an aggregate purchase price equal to
the Purchase Price multiplied by number of shares initially subject to the
Company Option.
If at any time Securitas is entitled to exercise the Company Option,
Securitas may elect, in lieu of exercising the Company Option, to send a
written notice to the Company (the "Cash Exercise Notice") specifying a date
not later than twenty (20) business days and not earlier than ten (10)
business days following the date such notice is given on which date the
Company shall pay to Securitas an amount in cash equal to the Spread (as
hereinafter defined) multiplied by all or such portion of the Shares subject
to the Company Option as Securitas shall specify. As used herein "Spread"
shall mean the excess, if any, over the Purchase Price of the higher of (x) if
applicable, the highest price per share of Company Common Stock (including any
brokerage commissions, transfer taxes and soliciting dealers' fees) paid or
proposed to be paid by any person pursuant to a Takeover Proposal giving rise
to an event described in Section 2(d) of the Stock Option Agreement (the
"Alternative Purchase Price") or (y) the closing price of the shares of
Company Common Stock on the NYSE Composite Tape on the last trading day
immediately prior to the date of the Cash Exercise Notice (the "Closing
Price"). If the Alternative Purchase Price includes any property other than
cash, the Alternative Purchase Price shall be the sum of (i) the fixed cash
amount, if any, included in the Alternative Purchase Price plus (ii) the fair
market value of such property other than cash included in the Alternative
Purchase Price. If such other property consists of securities with an existing
public trading market, the average of the closing prices (or the average of
the closing bid and asked prices if closing prices are unavailable) for such
securities in their principal public trading market on the five (5) trading
days ending five (5) days prior to the date of the Cash Exercise Notice shall
be deemed to equal the fair market value of such property. If such other
property consists of something other than cash or securities with an existing
public trading market and, as of the payment date for the Spread, agreement on
the value of such other property has not been reached, the Alternative
Purchase Price shall be deemed to equal the Closing Price. Upon exercise of
its right to receive cash as described above, the obligations of the Company
to deliver Shares pursuant under the Stock Option Agreement shall be
terminated with respect to such number of Shares for which Securitas shall
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have elected to be paid the Spread. As used in the Stock Option Agreement,
"person" has the meaning specified in Sections 3(a)(9) and 13(d)(3) of the
Exchange Act.
Notwithstanding any other provision of the Stock Option Agreement, in no
event shall Securitas' Total Profit (as defined below) exceed $15 million and,
if it otherwise would exceed such amount, Securitas, at its sole election,
shall either (a) reduce the number of shares of Company Common Stock required
to be delivered by the Company pursuant to the Company Option, (b) deliver to
the Company for cancellation Shares previously purchased by Securitas, (c)
reduce the cash payable to Securitas pursuant to the Cash Exercise Notice, (d)
pay cash or other consideration to the Company or (e) undertake any
combination thereof, so that Securitas' Total Profit shall not exceed $15
million after taking into account the foregoing actions. Notwithstanding any
other provision of the Stock Option Agreement, the Company Option may not be
exercised for a number of Shares as would, as of the date of the Stock
Exercise Notice, result in a Notional Total Profit (as defined below) of more
than $15 million and, if exercise of the Company Option otherwise would exceed
such amount, Securitas, at its discretion, may increase the Purchase Price for
that number of Shares set forth in the Stock Exercise Notice so that the
Notional Total Profit shall not exceed $15 million; provided, that nothing in
this sentence shall restrict any exercise of the Company Option permitted
thereby on any subsequent date at the Purchase Price.
As used in the Stock Option Agreement, the term "Notional Total Profit" with
respect to any number of Shares as to which Securitas may propose to exercise
the Company Option shall be the Total Profit determined as of the date of the
Stock Exercise Notice assuming that the Company Option were exercised on such
date for such number of Shares and assuming that such Shares, together with
all other Shares held by the Grantee and its affiliates as of such date, were
sold for cash at the closing market price for the Company Common Stock as of
the close of business on the preceding trading day (less customary brokerage
commissions). As used herein, the term "Total Profit" shall mean the aggregate
amount (before taxes) of the following: (i) the amount of cash received by
Securitas with respect to the Termination Fee and pursuant to the Cash
Exercise Notice and (ii) (x) the net cash amounts received by Securitas
pursuant to any sale of Shares (or any other securities into which such Shares
are converted or exchanged) to any unaffiliated party within one (1) year
after the closing date of the Company Option, less (y) Securitas' purchase
price for such Shares.
In the Stock Option Agreement, the Company has granted to Securitas
registration rights with respect to the Shares issuable upon exercise of the
Company Option.
STOCKHOLDERS AGREEMENT. The following is a summary of certain portions of
the Stockholders Agreement and is qualified in its entirety by reference to
the Stockholders Agreement, a copy of which has been filed with the SEC as an
exhibit to the Schedule 14D-1. The Stockholders Agreement may be examined and
copies may be obtained at the places and in the manner set forth in Section 9
of this Offer to Purchase.
As a condition and inducement to Securitas and Purchaser entering into the
Merger Agreement, concurrently with the execution and delivery of the Merger
Agreement, Securitas and Purchaser entered into the Stockholders Agreement
with The Thomas W. Wathen Charitable Remainder Unitrust 1999, The Wathen 1999
Annuity Trust and The Thomas W. Wathen Foundation (the "Stockholders") who
beneficially own 3,700,537 Shares in the aggregate. Pursuant to the
Stockholders Agreement, the Stockholders have agreed to validly tender
pursuant to the Offer all Shares owned by them, representing approximately
30.2% of the outstanding Shares, as well as any Shares acquired by them after
the date of the Stockholders Agreement, and not thereafter withdraw such
tender.
In addition, the Stockholders have agreed that, during the Term (as defined
below), at any meeting of the Company's stockholders, however called, and in
any action by consent of the stockholders of the Company, each Stockholder
shall vote its Shares (i) in favor of the Merger and the Merger Agreement (as
amended from time to time), (ii) against any Takeover Proposal and against any
proposal for action or agreement that would result in a breach of any
covenant, representation or warranty or any other obligation or agreement of
the Company under the Merger Agreement or which is reasonably likely to result
in any of the conditions of the Company's obligations under the Merger
Agreement not being fulfilled, any change in the directors of the Company, any
change in the present capitalization of the Company or any amendment to the
Restated Certificate of Incorporation or By-Laws, any other material change in
the Company's corporate structure or business, or any other action which in
the case of each of the matters referred to in this clause (ii) could
reasonably be expected
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to impede, interfere with, delay, postpone or materially adversely affect the
transactions contemplated by the Merger Agreement or the likelihood of such
transactions being consummated and (iii) in favor of any other matter
necessary for consummation of the transactions contemplated by the Merger
Agreement which is considered at any such meeting of stockholders or in such
consent, and in connection therewith to execute any documents which are
necessary or appropriate in order to effectuate the foregoing, including the
ability for Purchaser or its nominees to vote such Shares directly. For
purposes of the Stockholders Agreement, "Term" means the term from the date of
the Stockholders Agreement until the earliest to occur of (x) termination of
the Stockholders Agreement, (y) the expiration of the Stock Option with
respect to such Stockholder's Shares and (z) the closing of any exercise of
such Stock Option.
Under the Stockholders Agreement, in order to induce Securitas and Purchaser
to enter into the Merger Agreement, each Stockholder granted to Securitas or
Purchaser, as Securitas may designate, an irrevocable option (each such
option, a "Stock Option") to purchase all, but not in any part or less than
all, of such Stockholder's Shares (in such context, the "Option Shares") at a
purchase price per share equal to the higher of (i) the Per Share Amount and
(ii) if the Offer is consummated, the highest price paid by Purchaser pursuant
to the Offer (the "Exercise Price"). Each Stock Option may be exercised if (i)
the Merger Agreement becomes terminable under circumstances that would entitle
Securitas to receive the Termination Fee pursuant to the first sentence of
Section 8.2(b) of the Merger Agreement, (ii) the Offer is consummated but (due
to failure by the Stockholder who has granted such Stock Option to tender
validly and not withdraw) Purchaser has not accepted for payment or paid for
all such Stockholder's Shares or (iii) Securitas becomes entitled to receive
the Termination Fee pursuant to the second sentence of Section 8.2(b) of the
Merger Agreement.
Each Stock Option (i) shall become exercisable, in whole but not in part, on
the date on which the first event referred to in the preceding paragraph shall
occur or, if later, the date on which (A) all waiting periods under the HSR
Act required for the purchase of the Option Shares upon such exercise shall
have expired or been waived and all approvals of and consents to such purchase
required under applicable foreign antitrust and competition laws shall have
been obtained and be in full force and effect and (B) there shall not be in
effect any preliminary or final injunction or other order issued by any court
or governmental, administrative or regulatory agency or authority prohibiting
the exercise of such Stock Option pursuant to the Stockholders Agreement, and
(ii) shall remain exercisable until the date which is sixty (60) days
following the first such date on which such Stock Option becomes exercisable
pursuant to clause (i) of this paragraph.
Under the Stockholders Agreement, in the event (i) the Shares are acquired
by Securitas or any of its affiliates upon exercise of the Stock Option or
pursuant to the Offer and (ii) within one (1) year of the date of such
acquisition Securitas or any of its affiliates acquires 20% or more of the
outstanding shares of Company Common Stock from the Company's stockholders
(whether by means of a new tender offer, open-market purchases, merger or
otherwise), then the Stockholders shall be entitled to receive, in respect of
each Share, the excess, if any, of the highest price paid by Securitas or any
of its affiliates for such shares over the Exercise Price.
Also, in the event the Stock Option is exercised and Securitas sells the
Option Shares within one year of the date of such exercise, Securitas shall
pay the Stockholders, in respect of each Option Share, an amount equal to the
net proceeds received by Securitas in respect of such sale, less the sum of
(i) the Exercise Price plus (ii) any additional amounts paid pursuant to the
preceding paragraph. In the event the Stock Option is exercised and Securitas
sells the Option Shares after the first anniversary but before the second
anniversary of such exercise, Securitas shall pay the Stockholders, in respect
of each Option Share, an amount equal to 50% of the net proceeds received by
Securitas in respect of such sale, less the sum of (i) the Exercise Price plus
(ii) any additional amounts paid pursuant to the preceding paragraph. Under
the Stockholders Agreement, the provisions of this paragraph shall be void and
of no further force or effect if Securitas acquires 100% of the Company Common
Stock pursuant to the Merger Agreement or otherwise.
Each of the Stockholders has constituted and appointed Purchaser and
Securitas, or any nominee of Purchaser and Securitas, with full power of
substitution and resubstitution, at any time during the Term, as its
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true and lawful attorney and proxy (its "Proxy") for and in its name, place
and stead, to demand that the Secretary of the Company call a special meeting
of the stockholders of the Company for the purpose of considering the Merger
and the Merger Agreement, any Takeover Proposal and the transactions
contemplated by the Merger Agreement (if permitted under the Restated
Certificate of Incorporation or By-Laws) and to vote each of such Shares as
its Proxy, at every annual, special, adjourned or postponed meeting of the
stockholders of the Company, including the right to sign its name (as
stockholder) to any consent, certificate or other document relating to the
Company that Delaware Law may permit or require as provided under the
Stockholders Agreement.
Except as contemplated by the Stockholders Agreement and the Merger
Agreement, each Stockholder has agreed during the Term not to (i) transfer
(which term shall include, without limitation, any sale, assignment, gift,
pledge, hypothecation or other disposition), or consent to any transfer of,
any or all of such Stockholder's Shares or any interest therein, or create or
permit to exist any Encumbrance (as defined in the Stockholders Agreement) on
such Shares, (ii) enter into any contract, option or other agreement or
understanding with respect to any transfer of any or all of such shares or any
interest therein, (iii) grant any proxy, power-of-attorney or other
authorization in or with respect to such Shares, (iv) deposit such Shares into
a voting trust or enter into a voting agreement or arrangement with respect to
such Shares, or (v) take any other action that would in any way restrict,
limit or interfere with the performance of its obligations thereunder or the
transactions contemplated thereby or by the Merger Agreement. During the Term,
each Stockholder has agreed not to, and has agreed not to permit or authorize
any of its officers, directors, employees, agents or representatives
(collectively, the "Representatives") to, (i) solicit or initiate, or
encourage, directly or indirectly, any inquiries regarding or the submission
of, any Takeover Proposal, (ii) participate in any discussions or negotiations
regarding, or furnish to any Person any information or data with respect to,
or take any other action to knowingly facilitate the making of any proposal
that constitutes, or may reasonably be expected to lead to, any Takeover
Proposal or (iii) enter into any agreement with respect to any Takeover
Proposal or approve or resolve to approve any Takeover Proposal. Upon
execution of the Stockholders Agreement, each Stockholder has agreed to, and
has agreed to cause its Representatives to, immediately cease any existing
activities, discussions or negotiations with any parties conducted theretofore
with respect to any of the foregoing.
The Stockholders Agreement provides that each Stockholder will promptly
notify Securitas of the existence of any proposal, discussion, negotiation or
inquiry received by such Stockholder, and each Stockholder will immediately
communicate to Securitas the terms of any proposal, discussion, negotiation or
inquiry which it may receive (and will promptly provide to Securitas copies of
any written materials received by it in connection with such proposal,
discussion, negotiation or inquiry) and the identity of the person making such
proposal or inquiry or engaging in such discussion or negotiation.
Notwithstanding any provision discussed above to the contrary, if any
Stockholder or any of its Representatives is a member of the Board of
Directors, such member of the Board of Directors may take actions in such
capacity to the extent permitted by Section 5.2 of the Merger Agreement.
The Stockholders Agreement contains various customary representations and
warranties of the parties thereto including, without limitation,
representations and warranties by each of the Stockholders as to due
authorization, the absence of any failure to make required filings and
consents, the absence of conflicts with trust agreements and other similar
documents and contracts and title to its Shares. The Stockholders Agreement
will terminate and be of no force and effect (i) by written mutual consent of
the parties or (ii) automatically and without any required action of the
parties upon the Effective Time. No such termination of the Stockholders
Agreement shall relieve any party from any liability for any breach of the
Stockholders Agreement prior to termination. Securitas will indemnify each
Stockholder against all claims, action, suit, proceeding or investigation,
losses, damages, liabilities (or actions in respect thereof), costs and
expenses (including reasonable fees and expenses of counsel) arising out of or
based upon the execution or delivery of the Stockholders Agreement or the
performance by such Stockholder of its obligations thereunder.
NEW EMPLOYMENT AGREEMENTS. The following is a summary of certain portions of
the New Employment Agreements with certain of the Company's senior executive
officers that will become effective as of the Effective Date (defined in the
New Employment Agreements as the time that the Purchaser or Securitas
purchases any of
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the Shares pursuant to the Offer) and is qualified in its entirety by
reference to the New Employment Agreements, copies of which have been filed
with the SEC as exhibits to the Schedule 14D-1. The New Employment Agreements
may be examined and copies may be obtained at the places and in the manner set
forth in Section 9 of this Offer to Purchase.
In connection with the Merger Agreement, each of Denis R. Brown, the
Company's President and Chief Executive Officer, C. Michael Carter, Executive
Vice President, General Counsel and Corporate Secretary of the Company, James
P. McCloskey, Executive Vice President and Chief Financial Officer of the
Company, and Don W. Walker, Executive Vice President, The Americas, of the
Company, has entered into a New Employment Agreement with the Company, a
subsidiary of the Company and Securitas. See the Information Statement
pursuant to Section 14(f) of the Exchange Act, attached to the Schedule 14D-9
as Annex A, for a description of the existing employment agreements.
Mr. Brown's New Employment Agreement provides for a three year term
beginning at the Effective Date. Mr. Brown will be employed as the Company's
President and Chief Executive Officer and will receive an annual base salary
of $705,495, to be reviewed annually. In addition to his base salary, for
fiscal year 1999, Mr. Brown is eligible to receive annual incentive
compensation determined in accordance with the Company's 1999 Annual Incentive
Compensation Program. For subsequent fiscal years, Mr. Brown will be eligible
to participate in a new annual incentive program to be developed by Securitas,
with a target bonus equal to 60% of base salary and a maximum annual bonus
opportunity equal to 200% of his target annual bonus. For all fiscal years
after a subsequent Change in Control (as defined in Mr. Brown's New Employment
Agreement), Mr. Brown will be entitled to receive no less than his target
bonus. For fiscal years 1999 through 2001, Mr. Brown is eligible to receive
long-term incentive compensation with an aggregate target equal to $1,800,000,
and a maximum long-term incentive bonus for such fiscal years equal to 150% of
his aggregate target amount. In the event of a subsequent Change in Control,
Mr. Brown will be entitled to receive no less than his target long-term
incentive bonus for fiscal years 1999 through 2001. At the Effective Date, Mr.
Brown's existing benefits under the Company's Supplemental Retirement Income
Plan, as amended (the "SRIP"), becomes 100% vested and accrued. The SRIP
entitles Mr. Brown to payments equal to 52.5% of his Final Average Monthly
Compensation (as defined in the SRIP) (which Final Average Monthly
Compensation is subject to a floor) for a minimum of fifteen (15) years
commencing upon his Normal Retirement Age in the Normal Benefit Form (as each
such term is defined in the SRIP). The Company will continue to provide
Mr. Brown with $3,000,000 of life insurance during the term of the agreement,
with an annual Company-paid premium not to exceed $10,000. If Mr. Brown is
involuntarily terminated without Cause (as defined in Mr. Brown's New
Employment Agreement), he will receive a lump-sum cash payment equal to the
sum of (x) his base salary plus target annual incentive compensation for the
balance of the term of the agreement plus (y) his target long-term incentive
compensation for fiscal years 1999 through 2001. If Mr. Brown's employment is
terminated for Good Reason (as defined in Mr. Brown's New Employment
Agreement), he receives the same benefits as if he were terminated without
Cause, except that, his annual and long-term incentive compensation payable
will be calculated on the basis of actual performance. In the event Mr.
Brown's employment is terminated as a result of incapacity, he is entitled to
the same benefits as if he had been terminated by the Company without Cause,
reduced by any disability payments provided by the Company. If Mr. Brown's New
Employment Agreement is terminated within twenty-four (24) months of the
Effective Date either by the Company without Cause, by Mr. Brown under certain
circumstances constituting Good Reason, or in the event that the Company or
Securitas takes any action which would constitute Good Reason, but for which
Mr. Brown does not terminate his employment, Mr. Brown is entitled to receive
a gross-up payment to reimburse him for any and all excise tax liability under
Sections 280G or 4999 of the Code. Mr. Brown's New Employment Agreement
contains a covenant not to compete with the Company or interfere with its
business relationships for one year following the end of the term of the
agreement.
The New Employment Agreements for Messrs. Carter, McCloskey and Walker (each
an "Executive Officer") provide for a three year term beginning at the
Effective Date. Mr. Carter will be employed as the Company's Executive Vice
President, Mr. McCloskey will be employed as the Company's Executive Vice
President and Chief Financial Officer, and Mr. Walker will be employed as the
Company's Executive Vice
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President, Operations. The New Employment Agreements for Messrs. Carter,
McCloskey and Walker provide for an annual base salary of $351,797, $321,435,
and $373,252, respectively, to be reviewed annually. In addition to his base
salary, for fiscal year 1999, each Executive Officer is eligible to receive
annual incentive compensation determined in accordance with the Company's 1999
Annual Incentive Program. For subsequent fiscal years, each Executive Officer
will be eligible to participate in a new annual incentive program to be
developed by Securitas, with a target bonus equal to 45% of base salary and a
maximum annual bonus opportunity equal to 200% of his target annual bonus. For
all fiscal years after a subsequent Change in Control (as defined in each
Executive Officer's New Employment Agreement), each Executive Officer will be
entitled to receive no less than his target bonus. For fiscal years 1999
through 2001, Messrs. Carter, McCloskey and Walker are eligible to receive
long-term incentive compensation with an aggregate target equal to $792,000,
$723,000, and $840,000, respectively, and a maximum long-term incentive bonus
for such fiscal years equal to 150% of his target amount. In the event of a
subsequent Change in Control, each Executive Officer will be entitled to
receive no less than his target long-term incentive bonus for fiscal years
1999 through 2001. At the Effective Date, each Executive Officer's existing
benefits under the SRIP becomes 100% vested and accrued. The SRIP entitles
each Executive Officer to payments equal to 52.5% of his Final Average Monthly
Compensation (as defined in the SRIP) (which Final Average Monthly
Compensation is subject to certain floors for each Executive Officer,
respectively) for a minimum of fifteen (15) years commencing upon his Normal
Retirement Age in the Normal Benefit Form (as each such term is defined in the
SRIP). The Company will continue to provide each Executive Officer with
$1,500,000 of life insurance during the term of the agreement, with an annual
Company-paid premium not to exceed $5,000. If an Executive Officer is
involuntarily terminated without Cause (as defined in each Executive Officer's
New Employment Agreement), he will receive a lump-sum cash payment equal to
the sum of (x) his base salary plus target annual incentive compensation for
the balance of the term of the agreement plus (y) his target long-term
incentive compensation for fiscal years 1999 through 2001. If an Executive
Officer's employment is terminated for Good Reason (as defined in each
Executive Officer's New Employment Agreement), he receives the same benefits
as if he were terminated without Cause, except that, his annual and long-term
incentive compensation payable will be calculated on the basis of actual
performance. In the event an Executive Officer's employment is terminated as a
result of incapacity, he is entitled to the same benefits as if he had been
terminated by the Company without Cause, reduced by any disability payments
provided by the Company. If an Executive Officer's New Employment Agreement is
terminated within twenty-four (24) months of the Effective Date either by the
Company without Cause, by an Executive Officer under certain circumstances
constituting Good Reason, or in the event that the Company or Securitas takes
any action which would constitute Good Reason, but for which the Executive
Officer does not terminate his employment, the Executive Officer is entitled
to receive a gross-up payment to reimburse him for any and all excise tax
liability under Sections 280G or 4999 of the Code. Each Executive Officer's
New Employment Agreement contains a covenant not to compete with the Company
or interfere with its business relationships for one year following the end of
the term of the agreement.
TERMINATION AGREEMENT. The following is a summary of certain portions of the
Termination Agreement the Company has entered into with Securitas and Thomas
W. Wathen, the Chairman of the Board of Directors, and is qualified in its
entirety by reference to the Termination Agreement, a copy of which has been
filed with the SEC as an exhibit to the Schedule 14D-1. The Termination
Agreement may be examined and copies may be obtained at the places and in the
manner set forth in Section 9 of this Offer to Purchase.
Pursuant to the terms of the Termination Agreement, effective on the date on
which the Offer is consummated, the Personal Services Agreement currently in
effect between the Company and Mr. Wathen (the "Services Agreement") will be
terminated. From and after that date, the Company will continue to pay to Mr.
Wathen the pension of $300,000 per annum which he currently receives under the
Services Agreement, on substantially the terms currently in effect. In
addition, the Company will continue to provide Mr. Wathen will health benefits
on substantially the terms currently provided.
As part of the Termination Agreement, Mr. Wathen will continue to hold the
title "Chairman Emeritus" of the Company. Effective upon consummation of the
Offer, Mr. Wathen will resign from the Board of Directors.
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CONFIDENTIALITY AGREEMENT. The following is a summary of certain portions of
the Confidentiality Agreement and is qualified in its entirety by reference to
the Confidentiality Agreement, a copy of which has been filed with the SEC as
an exhibit to the Schedule 14D-1. The Confidentiality Agreement may be
examined and copies may be obtained at the places and in the manner set forth
in Section 9 of this Offer to Purchase.
As a condition to the furnishing by Securitas or the Company (the
"Provider") of information ("Information") to the other (the "Recipient"),
each of Securitas and the Company has agreed, among other things, that the
Recipient will keep such Information confidential and will not use the
Information in any way detrimental to the Provider and will not use the
Information other than in connection with the evaluation of the potential
transaction between Securitas and the Company (the "Evaluation").
"Information" does not include information which (i) becomes generally
available to the public other than as a result of a disclosure by the Provider
or its directors, officers, employees, agents or advisors, (ii) becomes
available to the Recipient on a non-confidential basis from a source other
than the Provider or its advisers, provided that such source is not known to
be bound by a confidentiality agreement with or other obligation of secrecy
with the Provider or (iii) is independently developed by the Recipient or is
already in the possession of the Recipient, provided that such information is
not known by the Recipient to be subject to another confidentiality agreement
with the Provider.
The Confidentiality Agreement provides that for a period of two years from
the date of the Confidentiality Agreement, each of Securitas and the Company
agrees that neither it nor any of its affiliates will, without the prior
written approval of the board of directors of the other, with respect to the
other (including subsidiaries) (i) acquire or offer to acquire beneficial
ownership of any equity securities, options or other rights to acquire
securities or any assets, (ii) offer to enter any acquisition or other
business combination transaction, (iii) make or seek to advise or influence
any person with respect to the voting of any voting securities, (iv) act to
seek to control or influence the board of directors or policies, (v)
participate in or encourage the formation of a control group which seeks to do
any of the foregoing, (vi) propose, publicly announce or request any of the
foregoing or (vi) advise, assist or encourage any person in connection with
the foregoing.
12.PLANS FOR THE COMPANY; OTHER MATTERS
PLANS FOR THE COMPANY. If, as and to the extent that Securitas acquires
control of the Company, Securitas intends to conduct a detailed review of the
Company and its assets, corporate structure, capitalization, operations,
properties, policies, management and personnel and to consider and determine
what, if any, changes would be desirable in light of the circumstances which
then exist. Such changes could include, among other things, changes in the
Company's business, corporate structure, capitalization, management or
dividend policy. Securitas intends to combine the Company's subsidiaries
operating in the United Kingdom, Germany, France, Portugal, Slovakia, and
Czech Republic with Securitas' European operations.
Assuming the Minimum Condition is satisfied and Purchaser purchases Shares
pursuant to the Offer, Securitas intends promptly to exercise its rights under
the Merger Agreement to obtain majority representation on, and control of, the
Board of Directors. The Merger Agreement provides that, upon the purchase of
and payment for any Shares by Purchaser or any of its subsidiaries pursuant to
the Offer, Securitas will be entitled to designate such number of directors,
rounded up to the next whole number, on the Board of Directors equal to at
least that number of directors which equals the product of the total number of
directors on the Board of Directors (giving effect to the directors appointed
or elected pursuant to this sentence and including current directors serving
as officers of the Company) multiplied by the percentage that the aggregate
number of Shares beneficially owned by Securitas or any affiliate of Securitas
bears to the number of Shares outstanding. See Section 11. The Merger
Agreement provides that the directors of Purchaser and the officers of the
Company immediately before the Effective Time of the Merger will be the
initial directors and officers, respectively, of the Surviving Corporation, in
each case until their successors are elected or appointed and qualified.
Purchaser, Securitas or an affiliate of Purchaser or Securitas may,
following the consummation or termination of the Offer, seek to acquire
additional Shares through open market purchases, privately negotiated
transactions, a tender offer or exchange offer or otherwise, upon such terms
and at such prices as it shall determine, which may be more or less than the
Per Share Amount. Purchaser, Securitas and their respective affiliates also
reserve the right to dispose of any or all Shares acquired by them, subject to
the terms of the Merger Agreement.
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Except as disclosed in this Offer to Purchase, and except as may be effected
in connection with the integration of operations referred to above, neither
Purchaser nor Securitas has any present plans or proposals that would result
in an extraordinary corporate transaction, such as a merger, reorganization,
liquidation, relocation of operations, or sale or transfer of a material
amount of assets, involving the Company or any of its Subsidiaries, or any
material changes in the Company's capitalization, corporate structure,
business or composition of its management or the Board of Directors.
STOCKHOLDER APPROVAL. Under Delaware Law, the approval of the Board of
Directors and the affirmative vote of the holders of a majority of the
outstanding Shares are required to adopt and approve the Merger Agreement and
the transactions contemplated thereby. The Company has represented in the
Merger Agreement that the execution and delivery of the Merger Agreement, the
Stock Option Agreement and the Stockholders Agreement by the Company and the
consummation by the Company of the transactions contemplated by the Merger
Agreement, the Stock Option Agreement and the Stockholders Agreement have been
duly authorized by all necessary corporate action on the part of the Company,
subject to the approval of the Merger by the Company's stockholders in
accordance with Delaware Law. In addition, the Company has represented that
the affirmative vote of the holders of a majority of the outstanding Shares is
the only vote of the holders of any class or series of the Company's capital
stock which is necessary to approve the Merger Agreement and the transactions
contemplated thereby, including the Merger. Therefore, unless the Merger is
consummated pursuant to the short-form merger provisions under Delaware Law
described below (in which case no further corporate action by the stockholders
of the Company will be required to complete the Merger), the only remaining
required corporate action of the Company will be the approval of the Merger
Agreement and the transactions contemplated thereby by the affirmative vote of
the holders of a majority of the Shares. In the event that Purchaser and its
subsidiaries acquire in the aggregate at least a majority of the Shares
entitled to vote on the approval of the Merger and the Merger Agreement, they
would have the ability to effect the Merger without the affirmative votes of
any other stockholders.
SHORT-FORM MERGER. Section 253 of Delaware Law provides that, if a
corporation owns at least 90% of the outstanding shares of each class of
another corporation, the corporation holding such stock may merge itself into
such corporation without any action or vote on the part of the board of
directors or the stockholders of such other corporation (a "short-form
merger"). In the event that Purchaser and its subsidiaries acquire in the
aggregate at least 90% of the outstanding Shares, pursuant to the Offer or
otherwise, then, at the election of Purchaser, a short-form merger could be
effected without any approval of the Board of Directors or the stockholders of
the Company, subject to compliance with the provisions of Section 253 of
Delaware Law. In the Merger Agreement, the Company, Securitas and Purchaser
have agreed that, notwithstanding that all conditions to the Offer are
satisfied or waived as of the scheduled Expiration Date, Purchaser may extend
the expiration date of the Offer (as it may be extended) for up to ten (10)
business days, if on such expiration date the conditions for the Offer set
forth in Section 14 of this Offer to Purchase shall have been satisfied or
earlier waived, but the number of Shares that have been validly tendered and
not withdrawn represents less than 90% of the then issued and outstanding
Shares on a fully diluted basis. If Purchaser does not own 90% of the
outstanding Shares following consummation of the Offer, Purchaser may seek to
purchase additional Shares in the open market or otherwise in order to reach
the 90% threshold and employ a short-form merger. The per share consideration
paid for any Shares so acquired may be greater or less than the Per Share
Amount. Purchaser presently intends to effect a short-form merger if permitted
to do so under Delaware Law.
APPRAISAL RIGHTS. Holders of Shares do not have appraisal rights in
connection with the Offer. However, if the Merger is consummated, holders of
Shares at the Effective Time will have certain rights pursuant to the
provisions of Section 262 of Delaware Law including the right to dissent and
demand appraisal of, and to receive payment in cash of the fair value of,
their Shares. Under Section 262 of Delaware Law, dissenting stockholders of
the Company who comply with the applicable statutory procedures will be
entitled to receive a judicial determination of the fair value of their Shares
(exclusive of any element of value arising from the accomplishment or
expectation of the Merger) and to receive payment of such fair value in cash,
together with a fair rate of interest thereon, if any. Any such judicial
determination of the fair value of the Shares could be based
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upon factors other than, or in addition to, the price per Share to be paid in
the Merger or the market value of the Shares. The value so determined could be
more or less than the price per Share to be paid in the Merger.
THE FOREGOING SUMMARY OF THE RIGHTS OF DISSENTING STOCKHOLDERS UNDER
DELAWARE LAW DOES NOT PURPORT TO BE A COMPLETE STATEMENT OF THE PROCEDURES TO
BE FOLLOWED BY STOCKHOLDERS DESIRING TO EXERCISE ANY APPRAISAL RIGHTS
AVAILABLE UNDER DELAWARE LAW. THE PRESERVATION AND EXERCISE OF APPRAISAL
RIGHTS REQUIRE STRICT ADHERENCE TO THE APPLICABLE PROVISIONS OF DELAWARE LAW.
RULE 13E-3. The SEC has adopted Rule 13e-3 under the Exchange Act which is
applicable to certain "going private" transactions and which may under certain
circumstances be applicable to the Merger or another business combination
following the purchase of Shares pursuant to the Offer in which Purchaser
seeks to acquire the remaining Shares not held by it. Purchaser believes,
however, that Rule 13e-3 will not be applicable to the Merger because it is
anticipated that the Merger would be effected within one (1) year following
consummation of the Offer and in the Merger stockholders would receive the
same price per Share as paid in the Offer. If Rule 13e-3 were applicable to
the Merger, it would require, among other things, that certain financial
information concerning the Company, and certain information relating to the
fairness of the proposed transaction and the consideration offered to minority
stockholders in such a transaction, be filed with the SEC and disclosed to
minority stockholders prior to consummation of the transaction.
13.DIVIDENDS AND DISTRIBUTIONS
As described above, the Merger Agreement provides that, until the Effective
Time, except as expressly set forth in or contemplated by the Merger
Agreement, the Company will not: (i)(A) declare, set aside or pay any dividend
or other distribution payable in cash, stock or property with respect to its
capital stock, except that a wholly owned Subsidiary may declare and pay a
dividend or make advances to its parent or the Company or (B) redeem, purchase
or otherwise acquire, directly or indirectly, any of its capital stock or
other securities; (ii) issue, sell, pledge, dispose of or encumber any (A)
additional shares of its capital stock, (B) securities convertible into or
exchangeable for, or options, warrants, calls, commitments or rights of any
kind to acquire, any shares of its capital stock, or (C) of its other
securities, other than Shares issued upon the exercise of Options outstanding
on the date of the Merger Agreement in accordance with the Option Plans as in
effect on the date of the Merger Agreement; or (iii) split, combine or
reclassify any of its outstanding capital stock.
14.CONDITIONS TO THE OFFER
Notwithstanding any other provision of the Offer, Purchaser will not be
required to accept for payment or, subject to any applicable rules and
regulations of the SEC, including Rule 14e-1(c) promulgated under the Exchange
Act (relating to Purchaser's obligation to pay for or return tendered Shares
promptly after termination or withdrawal of the Offer), pay for, and (subject
to any such rules or regulations) may delay the acceptance for payment of any
tendered Shares and (except as provided in the Merger Agreement) amend or
terminate the Offer as to any Shares not then paid for if (i) the Minimum
Condition shall not have been satisfied, (ii) any applicable waiting period
under the HSR Act shall not have expired or been terminated prior to the
expiration of the Offer or all approvals of and consents to the Merger
Agreement, the Stock Option Agreement and the Stockholders Agreement and the
transactions contemplated thereby that are required under applicable foreign
antitrust or competition laws shall not have been obtained prior to the
expiration of the Offer or be in full force and effect at such expiration or
(iii) at any time after the date of the Merger Agreement and before the time
of acceptance for payment of any such Shares (whether or not any Shares have
theretofore been accepted for payment or paid for pursuant to the Offer), any
of the following conditions exists:
(a) there shall be an injunction or other order, decree, judgment or ruling
issued by a Governmental Entity of competent jurisdiction or a statute,
rule, regulation, executive order or other action shall have been
enacted, promulgated or taken by a Governmental Entity of competent
jurisdiction which in any such
37
<PAGE>
case (i) restrains or prohibits the making or consummation of the Offer
or the consummation of the Merger or the performance of the other
transactions contemplated by the Merger Agreement, the Stock Option
Agreement or the Stockholders Agreement, (ii) prohibits or restricts the
ownership or operation by Securitas (or any of its affiliates or
subsidiaries) of any portion of its or the Company's business or assets
which is material to the business of all such entities taken as a whole,
or compels Securitas (or any of its affiliates or subsidiaries) to
dispose of or hold separate any portion of its or the Company's business
or assets which is material to the business of all such entities taken
as a whole, (iii) imposes material limitations on the ability of
Securitas effectively to acquire or to hold or to exercise full rights
of ownership of the Shares, including, without limitation, the right to
vote the Shares purchased by Securitas on all matters properly presented
to the stockholders of the Company or (iv) imposes any material
limitations on the ability of Securitas or any of their respective
affiliates or subsidiaries effectively to control in any material
respect the business and operations of the Company and its subsidiaries;
or
(b) the Merger Agreement shall have been terminated by the Company or
Securitas in accordance with its terms or any event shall have occurred
which gives Securitas or Purchaser the right to terminate the Merger
Agreement or not consummate the Merger; or
(c) there shall have occurred any event that, individually or when
considered together with any other matter, has had or is reasonably
likely to have a Material Adverse Effect (as defined below); provided
that, for purposes of this clause (c), any adverse effect that is
caused by conditions affecting the economy or financial markets
generally or results from the announcement of the transactions
contemplated by the Merger Agreement shall not be taken into account in
determining whether there has been a Material Adverse Effect; or
(d) any of the representations and warranties of the Company set forth in
the Merger Agreement that are qualified by reference to materiality or
a Material Adverse Effect shall not be true and correct, or any such
representations and warranties that are not so qualified shall not be
true and correct in any respect that is reasonably likely to have a
Material Adverse Effect, in each case as if such representations and
warranties were made at the time of such determination; provided that,
for purposes of this clause (d), any adverse effect that is caused by
conditions affecting the economy or financial markets generally or
results from the announcement of the transactions contemplated by the
Merger Agreement shall not be taken into account in determining whether
there has been a Material Adverse Effect; or
(e) the Company shall have failed to perform in any material respect any
obligation or to comply in any material respect with any agreement or
covenant of the Company to be performed or complied with by it under
the Merger Agreement; or
(f) there shall have occurred (i) any general suspension of, or limitation
on prices for, trading in securities on any national securities
exchange or the over-the-counter market, (other than a shortening of
trading hours or any coordinated trading halt for less than 24 hours
triggered solely as a result of a specified increase or decrease in a
market index), (ii) a declaration of a banking moratorium or any
suspension of payments in respect of banks in the United States or
Sweden, (iii) any material limitation (whether or not mandatory) by an
government or Governmental Entity, on the extension of credit by banks
or other lending institutions, (iv) a commencement of a war or armed
hostilities or other national calamity directly involving the United
States or Sweden, (v) any decline of at least 20% in the Standard &
Poor's 500 Index from the levels thereof as of the last trading day
immediately preceding the date of the Merger Agreement or (vi) in the
case of any of the foregoing existing at the time of the execution of
the Merger Agreement, a material acceleration or worsening thereof; or
(g) the Board of Directors (i) shall have withdrawn, or modified or changed
in a manner adverse to Securitas or Purchaser (including by amendment
of the Schedule 14D-9) its approval or recommendation of the Merger
Agreement, the Stock Option Agreement or the Stockholders Agreement or
the transactions contemplated thereby, including the Offer or the
Merger, (ii) shall have recommended a Takeover Proposal or (iii) shall
have adopted any resolution to effect any of the
38
<PAGE>
foregoing; provided, that the foregoing shall not apply solely as a
result of the Company or the Board of Directors making such disclosure
to the Company's stockholders as, in good faith judgment of the Board of
Directors, after receiving advice from outside counsel, is required
under applicable law; or
(h) any Person or "group" (as defined in Section 13(d)(3) of the Exchange
Act), other than Securitas, Purchaser or their affiliates or any group
of which any of them is a member, shall have acquired beneficial
ownership (as determined pursuant to Rule 13d-3 promulgated under the
Exchange Act) of 25% or more of the Shares, or the Board of Directors
shall have taken any action, including amending the Rights Agreement or
waiving Section 203 of the Delaware Law or Article TWELFTH of the
Restated Certificate, to enable any Person to acquire beneficial
ownership of 15% or more of the Shares; or
(i) any party to the Stockholders Agreement other than Purchaser and
Securitas shall have breached or failed to perform any of its
agreements under such agreement or breached any of its representations
and warranties in such agreement or any such agreement shall not be
valid, binding and enforceable, except for such breaches or failures or
failures to be valid, binding and enforceable that do not materially
and adversely affect the benefits expected to be received by Securitas
and Purchaser under the Merger Agreement or the Stockholders Agreement;
which, in the reasonable judgment of Securitas with respect to each and every
matter referred to above and regardless of the circumstances giving rise to
any such condition, makes it inadvisable to proceed with the Offer or with
such acceptance for payment of or payment for Shares or to proceed with the
Merger.
Under the Merger Agreement, the foregoing conditions are for the sole
benefit of Securitas and may be asserted by Purchaser regardless of the
circumstances (including any action or inaction by Purchaser) giving rise to
any such conditions and, subject to the terms of the Merger Agreement, may be
waived by Purchaser in whole or in part at any time and from time to time, in
each case, in the exercise of the good faith judgment of Purchaser and subject
to the terms of the Merger Agreement. The failure by 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.
For purposes of the Merger Agreement, "Material Adverse Effect" means any
change in or effect on the business of the Company or any of the Subsidiaries
that is or is reasonably likely to be materially adverse to the business,
operations, properties (including intangible properties), condition (financial
or otherwise), assets or, liabilities of the Company and the Subsidiaries
taken as a whole.
15.CERTAIN LEGAL MATTERS
GENERAL. Except as described in this Section 15, based on information
provided by the Company, none of the Company, Purchaser, or Securitas is aware
of any license or regulatory permit that appears to be material to the
business of the Company and its Subsidiaries, taken as a whole, that might be
adversely affected by the acquisition of Shares by Purchaser pursuant to the
Offer, the Merger or otherwise, or, except as set forth above, of any approval
or other action by any Governmental Entity that would be required prior to the
acquisition of Shares by Purchaser pursuant to the Offer, the Merger or
otherwise. Should any such approval or other action be required, Purchaser
presently contemplates that such approval or other action will be sought,
except as described below under "State Antitakeover Statutes." While, except
as otherwise described in this Offer to Purchase, Purchaser does not presently
intend to delay the acceptance for payment of, or payment for, Shares tendered
pursuant to the Offer pending the outcome of any such matter, there can be no
assurance that any such approval or other action, if needed, would be obtained
or would be obtained without substantial conditions or that failure to obtain
any such approval or other action might not result in consequences adverse to
the Company's business or that certain parts of the Company's business might
not have to be disposed of, or other substantial conditions complied with, in
the event that such approvals were not obtained or such other actions were not
taken or in order to obtain any such approval or other action. If certain
types of adverse action are taken with respect to the matters discussed below,
Purchaser could decline to accept for payment, or pay for, any Shares
tendered. See Section 14 for certain conditions to the Offer, including
conditions with respect to governmental actions.
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<PAGE>
STATE ANTITAKEOVER STATUTES. Section 203 of the Delaware Law, in general,
prohibits a Delaware corporation, such as the Company, from engaging in a
"Business Combination" (defined as a variety of transactions, including
mergers) with an "Interested Stockholder" (defined generally as a person that
is the beneficial owner of 15% or more of the outstanding voting stock of the
subject corporation) for a period of three years following the date that such
person became an Interested Stockholder unless, prior to the date such person
became an Interested Stockholder, the board of directors of the corporation
approved either the Business Combination or the transaction that resulted in
the stockholder becoming an Interested Stockholder. The provisions of Section
203 of Delaware Law are not applicable to any of the transactions contemplated
by the Merger Agreement, because the Merger Agreement and the transactions
contemplated thereby were approved by the Board of Directors prior to the
execution thereof.
A number of states have adopted laws and regulations that purport to apply
to attempts to acquire corporations that are incorporated in such states, or
whose business operations have substantial economic effects in such states, or
which have substantial assets, security holders, employees, principal
executive offices or principal places of business in such states. In Edgar v.
MITE Corp., the Supreme Court of the United States (the "Supreme Court")
invalidated on constitutional grounds the Illinois Business Takeover statute,
which, as a matter of state securities law, made certain corporate
acquisitions more difficult. However, in 1987, in CTS Corp. v. Dynamics Corp.
of America, the Supreme Court held that the State of Indiana may, as a matter
of corporate law and, in particular, with respect to those aspects of
corporate law concerning corporate governance, constitutionally disqualify a
potential acquirer from voting on the affairs of a target corporation without
the prior approval of the remaining stockholders. The state law before the
Supreme Court was by its terms applicable only to corporations that had a
substantial number of stockholders in the state and were incorporated there.
Purchaser does not believe that the antitakeover laws and regulations of any
state other than the State of Delaware will by their terms apply to the Offer,
and, except as set forth above with respect to Section 203 of Delaware Law,
Purchaser has not attempted to comply with any state antitakeover statute or
regulation. Purchaser reserves the right to challenge the applicability or
validity of any state law purportedly applicable to the Offer and nothing in
this Offer to Purchase or any action taken in connection with the Offer is
intended as a waiver of such right. If it is asserted that any state
antitakeover statute is applicable to the Offer and an appropriate court does
not determine that it is inapplicable or invalid as applied to the Offer,
Purchaser might be required to file certain information with, or to receive
approvals from, the relevant state authorities, and Purchaser might be unable
to accept for payment or pay for Shares tendered pursuant to the Offer or may
be delayed in consummating the Offer. In such case, Purchaser may not be
obligated to accept for payment, or pay for, any Shares tendered pursuant to
the Offer. See Section 14.
ANTITRUST. The Offer and the Merger are subject to the HSR Act, which
provides that certain acquisition transactions may not be consummated unless
certain information has been furnished to the Antitrust Division of the
Department of Justice (the "DOJ") and the Federal Trade Commission (the "FTC")
and certain waiting period requirements have been satisfied.
Pursuant to the requirements of the HSR Act, Securitas and Purchaser expect
to file their Notification and Report Forms with respect to the Offer and
Merger with the DOJ and the FTC on or about February 26, 1999. As a result,
assuming such filings are made on February 26, 1999, the waiting period under
the HSR Act with respect to the Offer is scheduled to expire at 11:59 p.m.,
New York City time, on March 12, 1999 (the fifteenth day after such filings
are made), unless early termination of the waiting period is granted. However,
the DOJ or the FTC may extend the waiting period by requesting additional
information or documentary material from Securitas or the Company. If such a
request is made, such waiting period will expire at 11:59 p.m., New York City
time, on the tenth day after substantial compliance by Securitas and the
Company with such request. Only one extension of the waiting period pursuant
to a request for additional information is authorized by the HSR Act.
Thereafter, such waiting period may be extended only by court order or with
the consent of Securitas. In practice, complying with a request for additional
information or material can take a significant amount of time. In addition, if
the DOJ or the FTC raises substantive issues in connection with a proposed
transaction and since
40
<PAGE>
the parties frequently engage in negotiations with the relevant governmental
agency concerning possible means of addressing those issues, the parties may
agree to delay consummation of the transaction while such negotiations
continue. Purchaser will not accept for payment Shares tendered pursuant to
the Offer unless and until the waiting period requirements imposed by the HSR
Act with respect to the Offer have been satisfied. See Section 14.
The FTC and the DOJ frequently scrutinize the legality under the Antitrust
Laws (as defined below) of transactions such as Purchaser's acquisition of
Shares pursuant to the Offer and the Merger. At any time before or after
Purchaser's acquisition of Shares, the DOJ 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 otherwise seeking divestiture of Shares acquired by Purchaser or
divestiture of substantial assets of Purchaser or its subsidiaries. Private
parties, as well as state governments, may also bring legal action under the
Antitrust Laws under certain circumstances. Based upon an examination of
information provided by the Company relating to the businesses in which
Securitas and the Company are engaged, Purchaser and Securitas believe that
the acquisition of Shares by Purchaser will not violate the Antitrust Laws.
Nevertheless, there can be no assurance that a challenge to the Offer or other
acquisition of Shares by Purchaser on antitrust grounds will not be made or,
if such a challenge is made, of the result. See Section 14 for certain
conditions to the Offer, including conditions with respect to litigation and
certain government actions.
As used in this Offer to Purchase, "Antitrust Laws" shall mean and include
the Sherman Act, as amended, the Clayton Act, as amended, the HSR Act, the
Federal Trade Commission Act, as amended, and all other Federal and state
statutes, rules, regulations, orders, decrees, administrative and judicial
doctrines, and other laws of the United States that are designed or intended
to prohibit, restrict or regulate actions having the purpose or effect of
monopolization or restraint of trade.
FOREIGN REGULATION. Under German laws and regulations relating to monopolies
and competition, certain acquisition transactions may not be consummated in
Germany unless certain information has been furnished to the Federal Cartel
Office (the "FCO") and certain waiting period requirements have been satisfied
without the issuance by the FCO of an order to refrain. The purchase of Shares
by Purchaser pursuant to the Offer and the consummation of the Merger may be
subject to such requirements. Under such laws, the FCO has one month from the
time of filing of such information with the FCO to advise the parties of its
intention to investigate the Offer and the Merger, in which case the FCO has
four months from the date of filing in which to take steps to oppose the Offer
and the Merger. On February 22, 1999, Securitas filed the required
notification with the FCO and requested early termination of the one-month
waiting period. On February 25, 1999, Purchaser was advised that the FCO had
granted early termination of the waiting period.
Under Portuguese laws and regulations relating to monopolies and
competition, certain acquisition transactions may not be consummated in
Portugal unless certain information has been furnished to the General Office
of Trade and Competition (the "DGCC") and certain waiting period requirements
have been satisfied without the issuance by the Minister in Charge of Trade
(the "MCT") of an order to refrain. The purchase of Shares by Purchaser
pursuant to the Offer and the consummation of the Merger may (due to combined
market shares of Securitas and the Company) be subject to such requirements.
Under such laws, the DGCC has forty (40) days from the time of filing of such
information with the DGCC to deliver the case to the MCT. The MCT has fifty
(50) days from the time of filing to tacitly approve the Merger or to request
an opinion of the Competition Council (the "CC"). If an opinion is requested,
the CC must issue an opinion on the Merger and the Offer within thirty (30)
days from the receipt of the request, and the MCT must make a decision within
fifteen (15) days after receipt of the opinion of the CC. These delays can be
suspended if DGCC requires further information. On February 24, 1999,
Securitas filed the required notification with the DGCC and requested early
termination of the waiting periods. However, there can be no assurance that
the MCT will not investigate or oppose the transaction or that early
termination of the waiting period will be granted.
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<PAGE>
Section 721 of the Defense Production Act of 1950 (50 U.S.C. App. 2170), as
amended (also known, and defined herein, as the "Exon-Florio" provision)
authorizes the President to "suspend or prohibit" any foreign acquisition,
merger, or takeover of a U.S. corporation that is determined to "threaten the
national security of the United States." To assist in making this
determination, Exon-Florio provides for the President or his designee to
receive written notice of an acquisition. Such notice is voluntary, and is
filed with the President's designee, the Committee on Foreign Investment in
the United States ("CFIUS"). Once CFIUS has received a complete notification,
CFIUS undertakes a review of the notified transaction. Within thirty (30) days
of receipt of such notice CFIUS must determine whether to undertake an
"investigation" of the transaction. A CFIUS investigation must end within
forty-five (45) days, and the President must determine whether to take action
with respect to the transaction within fifteen (15) days thereafter. While
Securitas intends to provide timely notice of the Offer and the Merger to
CFIUS, neither Securitas nor Purchaser believes there is any basis for CFIUS
to investigate the Offer or the Merger. However, there can be no assurance
that CFIUS will not investigate the transaction.
FEDERAL RESERVE BOARD REGULATIONS. Regulations U and X (the "Margin
Regulations") of the Federal Reserve Board restrict the extension or
maintenance of credit for the purpose of buying or carrying margin stock,
including the Shares, if the credit is secured directly or indirectly by
margin stock. Such secured credit may not be extended or maintained in an
amount that exceeds the maximum loan value of all the direct and indirect
collateral securing the credit, including margin stock and other collateral.
The Offer will be funded by an unsecured loan. Accordingly, the Margin
Regulations will not apply to the funding of the Offer.
16.FEES AND EXPENSES
Purchaser and Securitas have retained MacKenzie Partners, Inc. to serve as
the Information Agent and IBJ Whitehall Bank & Trust Company to serve as the
Depositary in connection with the Offer. The Information Agent may contact
holders of Shares by personal interview, mail, telephone, telex, telegraph and
other methods of electronic communication and may request brokers, dealers,
commercial banks, trust companies and other nominees to forward the Offer
materials to beneficial holders. The Information Agent and the Depositary will
each receive reasonable and customary compensation for their services, be
reimbursed for certain reasonable out-of-pocket expenses and be indemnified
against certain liabilities in connection with their services, including
certain liabilities and expenses under the federal securities laws.
Except as set forth above, neither Purchaser nor Securitas will pay any fees
or commissions to any broker or dealer or other person or entity in connection
with the solicitation of tenders of Shares pursuant to the Offer. Brokers,
dealers, banks and trust companies will be reimbursed by Purchaser or
Securitas for customary mailing and handling expenses incurred by them in
forwarding the Offer materials to their customers.
17.MISCELLANEOUS
Neither Purchaser nor Securitas is aware of any state where the making of
the offer is prohibited by administrative or judicial action pursuant to any
valid state statute. If Purchaser or Securitas become aware of any valid state
statute prohibiting the making of the Offer or the acceptance of the Shares
pursuant thereto, Purchaser or Securitas will make a good faith effort to
comply with such statute or seek to have such statute declared inapplicable to
the Offer. If, after such good faith effort, Purchaser cannot comply with such
state statute, the Offer will not be made to (nor will tenders be accepted
from or on behalf of) holders of Shares in such state.
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<PAGE>
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION ON BEHALF OF PURCHASER OR SECURITAS NOT CONTAINED HEREIN OR IN
THE LETTER OF TRANSMITTAL AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.
Purchaser and Securitas have filed with the SEC the Schedule 14D-1 pursuant
to Rule 14d-3 under the Exchange Act, together with exhibits, furnishing
certain additional information with respect to the Offer. In addition, the
Company has filed with the SEC the Schedule 14D-9 pursuant to Rule 14d-9 under
the Exchange Act, setting forth its recommendation with respect to the Offer
and the reasons for its recommendation and furnishing certain additional
related information. Such Schedules and any amendments thereto, including
exhibits, should be available for inspection and copies should be obtainable
in the same manner set forth in Section 9 of this Offer to Purchase (except
that such material will not be available at the regional offices of the SEC).
SECURITAS ACQUISITION CORP.
February 26, 1999
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<PAGE>
SCHEDULE I
INFORMATION CONCERNING DIRECTORS AND EXECUTIVE OFFICERS
OF PURCHASER AND SECURITAS
1. SECURITAS ACQUISITION CORP. The following table sets forth the name and
present principal occupation or employment, and material occupations,
positions, offices or employments for the past five years, of each director
and executive officer of Purchaser. Unless otherwise indicated, each such
person is a citizen of Sweden and the business address of each such person is
c/o Securitas Acquisition Corp., Lindhagensplan 70, P.O. Box 12307 SE-102 28
Stockholm, Sweden. Unless otherwise indicated, each occupation set forth
opposite an individual's name refers to positions held with Purchaser.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
---------------------------- -------------------------------------------------------------------------------------------------
<C> <S>
Thomas F. Berglund.......... Mr. Berglund has been President and a member of the board of directors since February 1999. Mr.
Berglund has been President, Chief Executive Officer and a member of the board of directors of
Securitas since 1993.
Hakan Winberg............... Mr. Winberg has been Vice President and a member of the board of directors since February 1999.
Mr. Winberg has been Executive Vice President of Securitas since 1995 and Chief Financial Officer
of Securitas since 1985.
2. SECURITAS AB. The following table sets forth the name and present
principal occupation or employment, and material occupations, positions,
offices or employments for the past five years, of each director and executive
officer of Securitas. Unless otherwise indicated, each such person is a citizen
of Sweden and the business address of each such person is c/o Securitas AB,
Lindhagensplan 70, P.O. Box 12307 SE-102 28 Stockholm, Sweden. Unless otherwise
indicated, each occupation set forth opposite an individual's name refers to
positions held with Securitas.
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
---------------------------- -------------------------------------------------------------------------------------------------
<C> <S>
Thomas F. Berglund.......... Mr. Berglund has been President, Chief Executive Officer and a member of the board of directors
since 1993.
Carl G. Bertil Breitkruez... Mr. Breitkruez has been a member of the board of directors since 1998. Additionally, since 1998,
he has been a guard with Securitas Bevakning AB and a member of the Swedish Transport Worker's
Union. He has also held the position of guard at Securitas Response AB from 1997 to 1998,
Securitas Stockholm AB from 1995 to 1996, and Svensk Bevaknings Tjanst AB from 1990 to 1995. Mr.
Breitkruez's business address is P.O. Box 10229, Stockholm, Sweden.
Amund Skarholt.............. Mr. Skarholt, a Norwegian citizen, has been Executive Vice President since 1994. He held the
position of Country Manager at Securitas A/S from 1991 to 1994.
Hakan Winberg............... Mr. Winberg has been Executive Vice President since 1995 and Chief Financial Officer since 1985.
</TABLE>
44
<PAGE>
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
---------------------------- -------------------------------------------------------------------------------------------------
<C> <S>
Gustaf A.S. Douglas......... Mr. Douglas has been a member of the board of directors since 1985 and Vice Chairman since 1993.
From 1985 to 1992, he was Chairman. He is also Chairman of the board of directors of Investment
AB Latour, SakI AB, Fagerhult AB and Stockholm Chamber of Commerce, Vice Chairman of the board of
directors of Swedish Television, and a board member of Pharmacia & UpJohn Inc., Assa Abloy AB and
Munksjo AB. He has served as a board member of Skanska AB, Hasselfors AB, HQ and Oresund AB. His
business address is Forvaltnings AB Wasatornet, P.O. Box 7031, 10386 Stockholm, Sweden.
Phileppe Foriel-Destezet.... Mr. Destezet has been a member of the board of directors since 1998. Additionally, he has been
the Chairman of the board of directors of Nescofin UK Ltd since 1998. Mr. Destezet is a French
citizen with UK residence, and his business address is 29 Rutland Gate, London SW71PD, U.K.
B. Anders Frick............. Mr. Frick has been a member of the board of directors since 1985. He is also a board member of
Expanda AB, Fagerhult AB, Getinge Industrier AB, Humkgarden Fastigheter AB, Lifco AB, Nordbanken,
Sweco AB and ProstaLund AB. He has served as the President and CEO of Arjo AB from 1985 to 1994.
His business address is Chemin de Montlellaz, F-74290 Veyrier du Lac, France.
Anna Camilla Henricsson..... Ms. Henricsson has been a member of the board of directors since 1993. She is a guard with
Securitas Varde AB and a member of the Swedish Transport Workers' Union. Her business address is
P.O. Box 12516, 10229 Stockholm, Sweden.
Dr. Wilhelm Heilmann........ Dr. Heilmann has been a member of the board of directors since 1998. From 1968 to 1994, he was
the Senior Vice President of VEBA AG. Dr. Heilmann is a German citizen, and his business address
is Raab Karcher AG Veba Immobilien Management, Postfach 103152, 45131 Essen, Germany.
Ulf Jarnefjord.............. Mr. Jarnefjord, a Swedish resident, is an Intervention Guard at Securitas Bevakning AB. His
business addresss is Securitas Bevakning AB, Box 65, 40121 Goteborg, Sweden.
Rune Lindblad............... Mr. Lindblad has been a member of the board of directors since 1995. He is also a service
technician with Securitas Larm AB, a member of the Swedish Electricians' Union. His business
address is Lindhagensplan 70, Stockholm, Sweden.
R. L. Berthold Lindqvist.... Mr. Lindqvist has been a member of the board of directors since 1994. He is also Chairman of the
board of directors of Munters AB and a board member of Trelleborg AB, Pharmacia & Upjohn Inc. AB,
PLM AB, and Gambro AB. He served as President and CEO of Gambro AB from 1984 to 1998. His
business address is Gamlegardsvagen 50, 21620 Malmo, Sweden.
</TABLE>
45
<PAGE>
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
---------------------------- -------------------------------------------------------------------------------------------------
<C> <S>
C. Fredrik O. Palmstierna... Mr. Palmstierna has been a member of the board of directors since 1992. From 1985 to 1992, he was
deputy member of the board of directors. He is also Chairman of the board of directors of Svenska
Tempus AB, and a board member of BPA, Fagerhult AB, Investment AB Latour, Almedahls, and
Hultafors. He is a board member of Hagstromer & Qviberg. His business address is SakI AB, P.O.
Box 7158, 10388 Stockholm, Sweden.
Melker Y. G. Schorling...... Mr. Schorling has been Chairman of the board of directors since 1993. From 1987 to 1992, he was
President and CEO. He is Vice Chairman of Assa Abloy AB, and a board member of Cardo AB, Hennes &
Mauritz AB and the Federation of Swedish Industries. From 1993 to 1997, he was President and CEO
of Skanska AB and Chairman and Vice Chairman of Scancem AB. Mr. Schorling also has served as
Chairman of Skanska AB from 1997 to 1998 and JM Byggands & Fastighets AB from 1993 to 1998.
Carl F. W. Douglas.......... Mr. Douglas has been a deputy member of the board of directors since 1992. He is currently an
Analyst for the Swedish Ministry of Defense. He is also a board member of SakI AB, PM-Luft AB and
Specma AB. His business address is Rydboholm, S-18494 Akersberga, Sweden.
Bjorn Magne Drewa........... Mr. Drewa has been a Field Engineer with Securitas Bevakning AB, since 1979 and a deputy member
of the board of directors since 1996. His business address is Securitas Bevakning AB, P.O. Box
12516, 10229 Stockholm, Sweden.
</TABLE>
46
<PAGE>
Facsimile copies of the Letter of Transmittal, properly completed and duly
executed, 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 his broker, dealer, commercial bank, trust
company or other nominee to the Depositary, at the applicable address set
forth below:
THE DEPOSITARY FOR THE OFFER IS:
IBJ WHITEHALL BANK & TRUST COMPANY
Telephone Number:
(212) 858-2103
BY MAIL: BY FACSIMILE: BY HAND OR OVERNIGHT
DELIVERY:
P.O. Box 84 (212) 858-2611 One State Street
Bowling Green Station Attn: Reorganization New York, New York 10004
New York, New York Operations Attn: Securities
10274-0084 Department Processing Window
Attn: Reorganization Subcellar One, (SC-1)
Operations
Department
Confirm Facsimile by Telephone: (212) 858-2103
Any questions or requests for assistance or additional copies of this Offer
to Purchase, the Letter of Transmittal, the Notice of Guaranteed Delivery and
the other tender offer materials may be directed to the Information Agent at
the address and telephone number set forth 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:
[LOGO]
156 FIFTH AVENUE
NEW YORK, NEW YORK 10010
(212) 929-5500 (CALL COLLECT)
OR
CALL TOLL-FREE: (800) 322-2885
----------------
<PAGE>
EXHIBIT 99.(a)(2)
LETTER OF TRANSMITTAL
TO TENDER SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
PURCHASE RIGHTS)
OF
PINKERTON'S, INC.
PURSUANT TO THE OFFER TO PURCHASE
DATED FEBRUARY 26, 1999
OF
SECURITAS ACQUISITION CORP.
AN INDIRECT WHOLLY OWNED SUBSIDIARY
OF
SECURITAS AB
----------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON THURSDAY, MARCH 25, 1999, UNLESS THE OFFER IS EXTENDED.
----------------------------------------------------------------------------
THE DEPOSITARY FOR THE OFFER IS:
IBJ WHITEHALL BANK & TRUST COMPANY
TELEPHONE NUMBER: (212) 858-2103
BY MAIL: BY FACSIMILE: BY HAND OR OVERNIGHT
DELIVERY:
P.O. Box 84 (212) 858-2611 One State Street
Bowling Green Station Attn: Reorganization New York, New York 10004
New York, New York 10274- Operations Department Attn: Securities
0084 Processing Window
Attn: Reorganization Subcellar One, (SC-1)
Operations Department
(For Eligible Institutions Only)
Confirm Facsimile by Telephone: (212) 858-2103
DESCRIPTION OF SHARES TENDERED
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
NAME(S) AND ADDRESS(ES) OF REGISTERED
HOLDER(S)
(PLEASE FILL IN, IF BLANK, AS
NAME(S) APPEAR(S) ON SHARE SHARES TENDERED
CERTIFICATE(S)) (ATTACH ADDITIONAL LIST IF NECESSARY)
- --------------------------------------------------------------------------------
TOTAL NUMBER
OF SHARES
CERTIFICATE REPRESENTED BY NUMBER OF SHARES
NUMBER(S) (1) CERTIFICATE(S) (1) TENDERED (2)
-------------------------------------------------
<S> <C> <C>
-------------------------------------------------
-------------------------------------------------
-------------------------------------------------
-------------------------------------------------
TOTAL SHARES:
-------------------------------------------------
</TABLE>
(1) Need not be completed by Book-Entry Stockholders.
(2) Unless otherwise indicated, it will be assumed that all Shares
represented by Share Certificates delivered to the Depositary are being
tendered hereby. See Instruction 4.
- -------------------------------------------------------------------------------
NOTE: SIGNATURES MUST BE PROVIDED BELOW.
<PAGE>
Stockholders whose certificates for Shares are not immediately available or
who cannot deliver either the certificates for, or a Book-Entry Confirmation
(as defined in Section 3 of the Offer to Purchase) with respect to, their
Shares and all other documents required hereby to the Depositary prior to the
Expiration Date (as defined in Section 1 of the Offer to Purchase) must tender
their Shares pursuant to the guaranteed delivery procedures set forth in
Section 3 of the Offer to Purchase. See Instruction 2. DELIVERY OF DOCUMENTS
TO THE BOOK-ENTRY TRANSFER FACILITY WILL NOT CONSTITUTE DELIVERY TO THE
DEPOSITARY.
[_] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER TO
THE DEPOSITARY'S ACCOUNT AT THE BOOK-ENTRY TRANSFER FACILITY AND COMPLETE
THE FOLLOWING (ONLY PARTICIPANTS IN THE BOOK-ENTRY TRANSFER FACILITY MAY
DELIVER SHARES BY BOOK-ENTRY TRANSFER):
Name of Tendering Institution ______________________________________________
Account Number __________________ Transaction Code Number __________________
[_] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE
FOLLOWING:
Name(s) of Registered Owner(s) _____________________________________________
Window Ticket Number (if any) ______________________________________________
Date of Execution of Notice of Guaranteed Delivery _________________________
Name of Institution that Guaranteed Delivery _______________________________
If delivered by Book-Entry Transfer, check box: [_]
Account Number _____________________________________________________________
Transaction Code Number ____________________________________________________
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE, OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TO A NUMBER OTHER THAN AS
SET FORTH ABOVE, WILL NOT CONSTITUTE A VALID DELIVERY TO
THE DEPOSITARY.
THE INSTRUCTIONS CONTAINED WITHIN THIS LETTER OF TRANSMITTAL SHOULD
BE READ CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
This Letter of Transmittal is to be used by stockholders of Pinkerton's,
Inc. if certificates for Shares (as such term is defined below) are to be
forwarded herewith or, unless an Agent's Message (as defined in Instruction 2
below) is utilized, if delivery of Shares is to be made by book-entry transfer
to an account maintained by the Depositary at the Book-Entry Transfer Facility
(as defined in and 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 who
deliver Shares are referred to herein as "Certificate Stockholders."
<PAGE>
PLEASE READ THE INSTRUCTIONS SET FORTH IN THIS LETTER OF TRANSMITTAL
CAREFULLY.
Ladies and Gentlemen:
The undersigned hereby tenders to Securitas Acquisition Corp., a Delaware
corporation ("Purchaser") and an indirect wholly owned subsidiary of Securitas
AB, a corporation organized under the laws of Sweden ("Securitas"), the above
described shares of common stock, par value $0.001 per share (the "Company
Common Stock"), including the associated rights to purchase Series A Junior
Participating Preferred Stock (the "Rights" and, together with the Company
Common Stock, the "Shares"), of Pinkerton's, Inc., a Delaware corporation (the
"Company"), pursuant to Purchaser's offer to purchase all of the outstanding
Shares at a price of $29.00 per Share, net to the seller in cash, without
interest thereon (the "Per Share Amount"), upon the terms and subject to the
conditions set forth in the Offer to Purchase, dated February 26, 1999, and in
this Letter of Transmittal (which, together with any amendments or supplements
thereto or hereto, collectively constitute the "Offer"). The Offer is being
made pursuant to an Agreement and Plan of Merger, dated as of February 19,
1999 (the "Merger Agreement"), by and among the Company, Securitas and
Purchaser. The undersigned understands that Purchaser reserves the right to
transfer or assign, in whole at any time, or in part from time to time, to one
or more of its affiliates, the right to purchase all or any portion of the
Shares tendered pursuant to the Offer, but any such transfer or assignment
will not relieve Purchaser of its obligations under the Offer and will in no
way prejudice the rights of tendering stockholders to receive payment for
Shares validly tendered and accepted for payment pursuant to the Offer.
Receipt of the Offer is hereby acknowledged.
The Company has distributed one Right for each outstanding share of Company
Common Stock pursuant to the Rights Agreement (as defined in the Offer to
Purchase). The Rights are currently evidenced by and trade with certificates
evidencing the Company Common Stock. The Company has taken such action so as
to make the Rights Agreement inapplicable to Purchaser and its affiliates and
associates in connection with the transactions contemplated by the Merger
Agreement and terminate upon consummation of the transactions contemplated by
the Merger Agreement.
Upon the terms and subject to the conditions of the Offer (and if the Offer
is extended or amended, the terms of any 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, Purchaser all
right, title and interest in and to all the Shares that are being tendered
hereby (and any and all non-cash dividends, distributions, rights, other
Shares or other securities issued or issuable in respect thereof on or after
February 19, 1999 (collectively, "Distributions")) and irrevocably constitutes
and appoints the Depositary the true and lawful agent and attorney-in-fact of
the undersigned with respect to such Shares (and all Distributions), with full
power of substitution (such power of attorney being deemed to be an
irrevocable power coupled with an interest), to (i) deliver certificates for
such Shares (and any and all Distributions), or transfer ownership of such
Shares (and any and all Distributions) on the account books maintained by the
Book-Entry Transfer Facility, together, in any such case, with all
accompanying evidences of transfer and authenticity, to or upon the order of
Purchaser, (ii) present such Shares (and any and all Distributions) for
transfer on the books of the Company, and (iii) receive all benefits and
otherwise exercise all rights of beneficial ownership of such Shares (and any
and all Distributions), all in accordance with the terms of the Offer.
By executing this Letter of Transmittal, the undersigned hereby irrevocably
appoints Thomas Berglund and Hakan Winberg in their respective capacities as
officers of Purchaser, and any individual who shall thereafter succeed to any
such office of Purchaser, and each of them, the attorneys-in-fact and proxies
of the undersigned, each with full power of substitution, to vote at any
annual or special meeting of the Company's stockholders or any adjournment or
postponement thereof or otherwise in such manner as each such attorney-in-fact
and proxy or his substitute shall in his sole discretion deem proper with
respect to, to execute any written consent concerning any matter as each such
attorney-in-fact and proxy or his substitute shall in his sole discretion deem
proper with respect to, and otherwise to act as each such attorney-in-fact and
proxy or his substitute shall in his sole discretion deem proper with respect
to, all of the Shares (and any and all Distributions) tendered hereby and
<PAGE>
accepted for payment by Purchaser. This appointment will be effective if and
when, and only to the extent that, Purchaser accepts such Shares for payment
pursuant to the Offer. This power of attorney and proxy are irrevocable and
are granted in consideration of the acceptance for payment of such Shares in
accordance with the terms of the Offer. Such acceptance for payment shall,
without further action, revoke any prior powers of attorney and proxies
granted by the undersigned at any time with respect to such Shares (and any
and all Distributions), and no subsequent powers of attorney, proxies,
consents or revocations may be given by the undersigned with respect thereto
(and, if given, will not be deemed effective). Purchaser reserves the right to
require that, in order for Shares or other securities to be deemed validly
tendered, immediately upon Purchaser's acceptance for payment of such Shares,
Purchaser must be able to exercise full voting, consent and other rights with
respect to such Shares (and any and all Distributions), including voting at
any meeting of the Company's stockholders.
The undersigned hereby represents and warrants that the undersigned has full
power and authority to tender, sell, assign and transfer the Shares tendered
hereby and all Distributions, that the undersigned owns the Shares tendered
hereby within the meaning of Rule 14e-4 promulgated under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), that the tender of the
tendered Shares complies with Rule 14e-4 under the Exchange Act, and that when
the same are accepted for payment by Purchaser, Purchaser will acquire good,
marketable and unencumbered title thereto and to all Distributions, free and
clear of all liens, restrictions, charges and encumbrances, and the same will
not be subject to any adverse claims. The undersigned will, upon request,
execute and deliver any additional documents deemed by the Depositary or
Purchaser to be necessary or desirable to complete the sale, assignment and
transfer of the Shares tendered hereby and all Distributions. In addition, the
undersigned shall remit and transfer promptly to the Depositary for the
account of Purchaser all Distributions in respect of the Shares tendered
hereby, accompanied by appropriate documentation of transfer, and, pending
such remittance and transfer or appropriate assurance thereof, Purchaser shall
be entitled to all rights and privileges as owner of each such Distribution
and may withhold the entire purchase price of the Shares tendered hereby or
deduct from such purchase price the amount or value of such Distribution as
determined by Purchaser in its sole discretion.
All authority herein conferred or agreed to be conferred shall survive the
death or incapacity of the undersigned, and any obligation of the undersigned
hereunder shall be binding upon the heirs, executors, administrators, personal
representatives, trustees in bankruptcy, 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 any
one of the procedures described in Section 3 of the Offer to Purchase and in
the Instructions hereto will constitute a binding agreement between the
undersigned and Purchaser upon the terms and subject to the conditions of the
Offer (and if the Offer is extended or amended, the terms or conditions of any
such extension or amendment). Without limiting the foregoing, if the price to
be paid in the Offer is amended in accordance with the terms of the Merger
Agreement, the price to be paid to the undersigned will be the amended price
notwithstanding the fact that a different price is stated in this Letter of
Transmittal. 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 under "Special Payment Instructions," please
issue the check for the purchase price of all Shares purchased and/or return
any certificates for Shares not tendered or accepted for payment in the
name(s) of the registered holder(s) appearing above under "Description of
Shares Tendered." Similarly, unless otherwise indicated under "Special
Delivery Instructions," please mail the check for the purchase price of all
Shares purchased and/or return any certificates for Shares not tendered or not
accepted for payment (and any accompanying documents, as appropriate) to the
address(es) of the registered holder(s) appearing above under "Description of
Shares Tendered." In the event that the boxes entitled "Special Payment
Instructions" and "Special Delivery Instructions" are both completed, please
issue the check for the purchase price of all Shares purchased and/or return
any certificates evidencing Shares not tendered or not accepted for payment
(and any accompanying documents, as appropriate) in the name(s) of, and
deliver such check and/or return any such certificates (and any accompanying
documents, as appropriate) to, the person(s) so indicated. Unless otherwise
<PAGE>
indicated herein in the box entitled "Special Payment Instructions," please
credit any Shares tendered herewith by book-entry transfer that are not
accepted for payment by crediting the account at the Book-Entry Transfer
Facility designated above. The undersigned recognizes that Purchaser has no
obligation, pursuant to the "Special Payment Instructions," to transfer any
Shares from the name of the registered holder thereof if Purchaser does not
accept for payment any of the Shares so tendered.
[_] CHECK HERE IF ANY OF THE CERTIFICATES REPRESENTING SHARES THAT YOU OWN HAVE
BEEN LOST, DESTROYED OR STOLEN AND SEE INSTRUCTION 11.
Number of Shares represented by lost, destroyed or stolen certificates: ______
SPECIAL PAYMENT INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7) (SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if the To be completed ONLY if
check for the purchase price of certificates for Shares not
Shares accepted for payment is to tendered or not accepted for
be issued in the name of someone payment and/or the check for the
other than the undersigned, if purchase price of Shares accepted
certificates for Shares not for payment is to be sent to
tendered or not accepted for someone other than the undersigned
payment are to be issued in the or to the undersigned at an
name of someone other than the address other than that shown
undersigned or if Shares tendered under "Description of Shares
hereby and delivered by book-entry Tendered."
transfer that are not accepted for
payment are to be returned by
credit to an account maintained at
a Book-Entry Transfer Facility
other than the account indicated
above.
Issue check and/or Share Mail check and/or Share
certificate(s) to: certificates to:
Name ______________________________ Name _____________________________
(Please Print) (Please Print)
Address ___________________________ Address __________________________
- ----------------------------------- ----------------------------------
(Include Zip Code) (Include Zip Code)
- ----------------------------------- ----------------------------------
Taxpayer Identification or Social (Taxpayer Identification or Social
Security Number) Security Number)
(See Substitute Form W-9) (See Substitute Form W-9)
[_] Credit Shares delivered by
book-entry transfer and not
purchased to the Book-Entry
Transfer Facility account.
- -----------------------------------
(Account Number)
<PAGE>
SIGN HERE
(ALSO COMPLETE SUBSTITUTE
FORM W-9 BELOW)
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
(Signature(s) of Stockholder(s))
Dated: , 1999
(Must be signed by registered holder(s) exactly as name(s) appear(s) on
the Share certificate(s) or on a security position listing or by person(s)
authorized to become registered holder(s) by certificates and documents
transmitted herewith. If signature is by trustee, executor, administrator,
guardian, attorney-in-fact, officer of a corporation or other person acting
in a fiduciary or representative capacity, please provide the following
information and see Instruction 5.)
Name(s) _____________________________________________________________________
-----------------------------------------------------------------------------
(Please Print)
Name of Firm ________________________________________________________________
Capacity (full title) _______________________________________________________
(See Instruction 5)
Address _____________________________________________________________________
-----------------------------------------------------------------------------
(Include Zip Code)
Area Code and Telephone Number ______________________________________________
Taxpayer Identification or Social Security Number ___________________________
(See Substitute Form W-9)
GUARANTEE OF SIGNATURE(S)
(SEE INSTRUCTIONS 1 AND 5)
Authorized Signature ________________________________________________________
Name(s) _____________________________________________________________________
(Please Print)
Title _______________________________________________________________________
Name of Firm ________________________________________________________________
Address _____________________________________________________________________
-----------------------------------------------------------------------------
(Include Zip Code)
Area Code and Telephone Number ______________________________________________
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. GUARANTEE OF SIGNATURES
No signature guarantee is required on this Letter of Transmittal (a) if this
Letter of Transmittal is signed by the registered holder(s) (which term, for
purposes of this Section, includes any participant in any of the Book-Entry
Transfer Facility's systems whose name appears on a security position listing
as the owner of the Shares) of Shares tendered herewith, unless such
registered holder(s) has completed either 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 a
financial institution (including most commercial banks, savings and loan
associations and brokerage houses) that is a participant in the Security
Transfer Agents Medallion Program, the New York Stock Exchange Medallion
Signature Guarantee Program or the Stock Exchange Medallion Program (each, an
"Eligible Institution"). In all other cases, all signatures on this Letter of
Transmittal must be guaranteed by an Eligible Institution. See Instruction 5.
2. DELIVERY OF LETTER OF TRANSMITTAL AND SHARES; GUARANTEED DELIVERY PROCEDURES
This Letter of Transmittal is to be completed by stockholders of the Company
either if Share certificates are to be forwarded herewith or, unless an
Agent's Message is utilized, if delivery of Shares is to be made by book-entry
transfer pursuant to the procedures set forth herein and in Section 3 of the
Offer to Purchase. For a stockholder validly to tender Shares pursuant to the
Offer, either (a) a properly completed and duly executed Letter of Transmittal
(or facsimile thereof), together with any required signature guarantees or an
Agent's Message (in connection with book-entry transfer) and any other
required documents, must be received by the Depositary at one of its addresses
set forth herein prior to the Expiration Date and either (i) certificates for
tendered Shares must be received by the Depositary at one of such addresses
prior to the Expiration Date or (ii) Shares must be delivered pursuant to the
procedures for book-entry transfer set forth herein and in Section 3 of the
Offer to Purchase and a Book-Entry Confirmation must be received by the
Depositary prior to the Expiration Date or (b) the tendering stockholder must
comply with the guaranteed delivery procedures set forth herein and in Section
3 of the Offer to Purchase.
Stockholders whose certificates for Shares are not immediately available or
who cannot deliver their certificates and all other required documents to the
Depositary prior to the Expiration Date or who cannot comply with the book-
entry transfer procedures on a timely basis may tender their Shares by
properly completing and duly executing the Notice of Guaranteed Delivery
pursuant to the guaranteed delivery procedure set forth herein and in Section
3 of the Offer to Purchase.
Pursuant to such guaranteed delivery procedures, (i) such tender must be
made by or through an Eligible Institution, (ii) a properly completed and duly
executed Notice of Guaranteed Delivery, substantially in the form provided by
Purchaser, must be received by the Depositary prior to the Expiration Date and
(iii) the certificates for all tendered Shares, in proper form for transfer
(or a Book-Entry Confirmation with respect to all tendered Shares), together
with a properly completed and duly executed Letter of Transmittal (or a
facsimile thereof), with any required signature guarantees, or, in the case of
a book-entry transfer, an Agent's Message, and any other required documents
must be received by the Depositary within three trading days after the date of
execution of such Notice of Guaranteed Delivery. A "trading day" is any day on
which the New York Stock Exchange is open for business.
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 such Book-Entry Transfer Facility
has received an express acknowledgment from the participant in such Book-Entry
Transfer Facility tendering the Shares, that such participant has received and
agrees to be bound by the terms of the Letter of Transmittal and that
Purchaser may enforce such agreement against the participant.
The signatures on this Letter of Transmittal cover the Shares tendered
hereby.
<PAGE>
THE METHOD OF DELIVERY OF THE SHARES, THIS 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. THE 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, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED,
PROPERLY INSURED, IS RECOMMENDED. 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 executing
this Letter of Transmittal (or facsimile thereof), waive any right to receive
any notice of acceptance of their Shares for payment.
3. INADEQUATE SPACE
If the space provided herein under "Description of Shares Tendered" is
inadequate, the number of Shares tendered and the Share certificate numbers
with respect to such Shares should be listed on a separate signed schedule
attached hereto.
4. PARTIAL TENDERS
(Not applicable to stockholders who tender by book-entry transfer.) If fewer
than all the Shares evidenced by any Share certificate delivered to the
Depositary herewith are to be tendered hereby, fill in the number of Shares
that are to be tendered in the box entitled "Number of Shares Tendered." In
any such case, new certificate(s) for the remainder of the Shares that were
evidenced by the old certificates will be sent to the registered holder,
unless otherwise provided in the appropriate box on this Letter of
Transmittal, as soon as practicable after the Expiration Date or the
termination of the Offer. 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 holder(s) of the
Shares tendered hereby, the signature(s) must correspond with the name(s) as
written on the face of the certificate(s) without alteration, enlargement or
any change whatsoever.
If any of the Shares tendered hereby are held 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 Share certificate or stock power is
signed by a trustee, executor, administrator, guardian, attorney-in-fact,
officer of a corporation or other person acting in a fiduciary or
representative capacity, such person should so indicate when signing, and
proper evidence satisfactory to Purchaser of the authority of such person so
to act must be submitted.
If this Letter of Transmittal is signed by the registered holder(s) of the
Shares listed and transmitted hereby, no endorsements of Share certificates or
separate stock powers are required unless payment or certificates for Shares
not tendered or not accepted for payment are to be issued in the name of a
person other than the registered holder(s). Signatures on any such Share
certificates or stock powers must be guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the Shares evidenced by certificates listed and
transmitted hereby, the Share certificates must be endorsed or accompanied by
<PAGE>
appropriate stock powers, in either case signed exactly as the name(s) of the
registered holder(s) appear(s) on the Share certificates. Signature(s) on any
such Share certificates or stock powers must be guaranteed by an Eligible
Institution.
6. STOCK TRANSFER TAXES
Except as otherwise provided in this Instruction 6, Purchaser will pay all
stock transfer taxes with respect to the transfer and sale of any Shares to it
or its order pursuant to the Offer. If, however, payment of the purchase price
of any Shares purchased is to be made to, or if certificates for Shares not
tendered or not accepted for payment are to be registered in the name of, any
person other than the registered holder(s), or if tendered certificates are
registered in the name of any person other than the person(s) signing this
Letter of Transmittal, the amount of any stock transfer taxes (whether imposed
on the registered holder(s) or such other person) payable on account of the
transfer to such other person will be deducted from the purchase price of such
Shares purchased unless evidence satisfactory to Purchaser of the payment of
such taxes, or exemption therefrom, is submitted.
Except as provided in this Instruction 6, it will not be necessary for
transfer tax stamps to be affixed to the Share certificates evidencing the
Shares tendered hereby.
7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS
If a check for the purchase price of any Shares accepted for payment is to
be issued in the name of, and/or Share certificates for Shares not accepted
for payment or not tendered are to be issued in the name of and/or returned
to, a person other than the signer of this Letter of Transmittal or if a check
is to be sent, and/or such certificates are to be returned, 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. Any stockholder(s) delivering Shares by book-entry transfer may
request that Shares not purchased be credited to such account maintained at
the Book-Entry Transfer Facility as such stockholder(s) may designate in the
box entitled "Special Payment Instructions." If no such instructions are
given, any such Shares not purchased will be returned by crediting the account
at the Book-Entry Transfer Facility designated above as the account from which
such Shares were delivered.
8. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES
Questions and requests for assistance or additional copies of the Offer to
Purchase, this Letter of Transmittal, the Notice of Guaranteed Delivery and
the Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9 may be directed to the Information Agent at its address
and phone number set forth below, or from brokers, dealers, commercial banks
or trust companies.
9. WAIVER OF CONDITIONS
Subject to the Merger Agreement, Purchaser reserves the absolute right in
its sole discretion to waive, at any time or from time to time, any of the
specified conditions of the Offer, in whole or in part, in the case of any
Shares tendered.
10. 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 Substitute
Form W-9 in this Letter of Transmittal and certify, under penalties of
perjury, that such TIN is correct and that such stockholder is not subject to
backup withholding.
Backup withholding is not an additional income tax. Rather, the amount of
the backup withholding can be credited against the federal income tax
liability of the person subject to the backup withholding, provided that
<PAGE>
the required information is given to the Internal Revenue Service. If backup
withholding results in an overpayment of tax, a refund can be obtained by the
stockholder upon filing an income tax return.
The stockholder is required to give the Depositary the TIN (i.e., social
security number or employer identification number) of the record owner of the
Shares. If the Shares are held 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.
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 Certificate of Awaiting
Taxpayer Identification Number below in order to avoid backup withholding.
Notwithstanding that the box in Part 3 is checked and the Certificate of
Awaiting Taxpayer Identification Number is completed, the Depositary will
withhold 31% on all payments made prior to the time a properly certified TIN
is provided to the Depositary. However, such amounts will be refunded to such
stockholder if a TIN is provided to the Depositary within 60 days.
Certain stockholders (including, among others, all corporations and certain
foreign individuals and entities) are not subject to backup withholding.
Noncorporate 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 the
enclosed "Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9" for more instructions.
11. LOST, DESTROYED OR STOLEN SHARE CERTIFICATES
If any certificate(s) representing Shares has been lost, destroyed or
stolen, the stockholder should promptly notify the Depositary by checking the
box immediately preceding the special payment/special delivery instructions
and indicating the number of Shares lost. The stockholder will then be
instructed as to the steps that must be taken in order to replace the Share
certificate(s). This Letter of Transmittal and related documents cannot be
processed until the procedures for replacing lost, destroyed or stolen Share
certificates have been followed.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR FACSIMILE HEREOF) TOGETHER WITH
ANY REQUIRED SIGNATURE GUARANTEES, OR, IN THE CASE OF A BOOK-ENTRY TRANSFER,
AN AGENT'S MESSAGE, AND ANY OTHER REQUIRED DOCUMENTS, MUST BE RECEIVED BY THE
DEPOSITARY PRIOR TO THE EXPIRATION DATE AND EITHER CERTIFICATES FOR TENDERED
SHARES MUST BE RECEIVED BY THE DEPOSITARY OR SHARES MUST BE DELIVERED PURSUANT
TO THE PROCEDURES FOR BOOK-ENTRY TRANSFER, IN EACH CASE PRIOR TO THE
EXPIRATION DATE, OR THE TENDERING STOCKHOLDER MUST COMPLY WITH THE PROCEDURES
FOR GUARANTEED DELIVERY.
IMPORTANT TAX INFORMATION
Under Federal income tax law, a stockholder whose tendered Shares are
accepted for payment is required to provide the Depositary (as payer) with
such stockholder's correct taxpayer identification number on Substitute Form
W-9 below. If such stockholder is an individual, the taxpayer identification
number is his social security number. If a tendering stockholder is subject to
backup withholding, such stockholder must cross out item (2) of the
Certification box on the Substitute Form W-9. If the Depositary is not
provided with the correct taxpayer identification number, the 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.
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
<PAGE>
exempt recipient, that stockholder must submit a statement, signed under
penalties of perjury, attesting to that individual's exempt status. Such
statements can be obtained from the Depositary. Exempt stockholders, other
than foreign individuals, should furnish their TIN, write "Exempt" on the face
of the Substitute Form W-9 below, and sign, date and return the Substitute
Form W-9 to 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. 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.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup withholding on payments that are made to a stockholder
with respect to Shares purchased pursuant to the Offer, the stockholder is
required to notify the Depositary of such stockholder's correct taxpayer
identification number by completing the form contained herein certifying that
the taxpayer identification number provided on Substitute Form W-9 is correct
(or that such stockholder is awaiting a taxpayer identification number).
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. 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. If the tendering stockholder has not been issued a TIN and
has applied for a number or intends to apply for a number in the near future,
such stockholder should write "Applied For" in the space provided for in the
TIN in Part 1, and sign and date the Substitute Form W-9. If "Applied For" is
written in Part I and the Depositary is not provided with a TIN within 60
days, the Depositary will withhold 31% on all payments of the purchase price
until a TIN is provided to the Depositary.
<PAGE>
- -------------------------------------------------------------------------------
PAYER'S NAME: IBJ WHITEHALL BANK & TRUST COMPANY
- -------------------------------------------------------------------------------
SUBSTITUTE
PART I--PLEASE PROVIDE Social Security Number
FORM W-9 YOUR TIN IN THE BOX AT (If awaiting TIN write
RIGHT AND CERTIFY BY "Applied For")
SIGNING AND DATING BELOW
Department of Treasury -------------------------
Internal
Revenue Service Payers Employer Identification
Request Number
for Tax Identification (If awaiting TIN write
Number (TIN) "Applied For")
-------------------------
- --------------------------------------------------------------------------------
PART 2--CERTIFICATE--Under penalties of perjury, I certify that:(1) The
number shown on this form is my correct Taxpayer Identification Number (or I
am waiting for a number to be issued for me), and (2) I am not subject to
backup withholding because: (a) I am exempt from backup withholding, or (b)
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 (c) the IRS has notified me that I am no longer
subject to backup withholding.
CERTIFICATION INSTRUCTIONS--You must cross out item (2) above if you have
been notified by the IRS that you are currently subject to backup
withholding because of under-reporting interest or dividends on your tax
returns. However, if after being notified by the IRS that you are subject to
backup withholding, you receive another notification from the IRS that you
are no longer subject to backup withholding, do not cross out such item (2).
(Also see instructions in the enclosed Guidelines.)
Signature: _________________________________ Date: __________________________
- --------------------------------------------------------------------------------
PART 3--AWAITING TIN [_]
- --------------------------------------------------------------------------------
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 (1) 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
(2) I intend to mail or deliver an application in the near future. I
understand that if I do not provide a Taxpayer Identification Number to the
Depositary by the time of payment, 31% of all reportable payments made to me
thereafter will be withheld, but that such amounts will be refunded to me if
I provide a certified Taxpayer Identification Number to the Depositary
within 60 days.
Signature: _________________________________ Date: __________________________
<PAGE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP
WITHHOLDING OF 31% OF ANY CASH 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
DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN
PART 3 OF THE SUBSTITUTE FORM W-9.
Questions and requests for assistance or additional copies of the Offer to
Purchase, this Letter of Transmittal and other tender offer materials may be
directed to the Information Agent at its address and telephone number set
forth below:
THE INFORMATION AGENT FOR THE OFFER IS:
[LOGO]
156 FIFTH AVENUE
NEW YORK, NEW YORK 10010
(212) 929-5500 (CALL COLLECT)
OR
CALL TOLL-FREE (800) 322-2885
<PAGE>
EXHIBIT 99.(a)(3)
NOTICE OF GUARANTEED DELIVERY
FOR
TENDER OF SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
PURCHASE RIGHTS)
OF
PINKERTON'S, INC.
TO
SECURITAS ACQUISITION CORP.
AN INDIRECT WHOLLY OWNED SUBSIDIARY
OF
SECURITAS AB
(NOT TO BE USED FOR SIGNATURE GUARANTEES)
This Notice of Guaranteed Delivery, or a form substantially equivalent
hereto, must be used to accept the Offer (as defined below) if certificates
representing shares of common stock, par value $0.001 per share (the "Company
Common Stock"), including the associated rights to purchase Series A Junior
Participating Preferred Stock (the "Rights" and, together with the Company
Common Stock, the "Shares"), of Pinkerton's, Inc., a Delaware corporation, are
not immediately available, if the procedure for book-entry transfer cannot be
completed prior to the Expiration Date (as defined in Section 1 of the Offer
to Purchase), or if time will not permit all required documents to reach the
Depositary prior to the Expiration Date. Such form may be delivered by hand,
transmitted by facsimile transmission or mailed to the Depositary. See Section
3 of the Offer to Purchase.
THE DEPOSITARY FOR THE OFFER IS:
IBJ WHITEHALL BANK & TRUST COMPANY
Telephone Number: (212) 858-2103
BY MAIL: BY FACSIMILE: BY HAND OR OVERNIGHT
DELIVERY:
P.O. Box 84 (212) 858-2611 One State Street
Bowling Green Station Attn: Reorganization New York, New York 10004
New York, New York Operations Attn: Securities
10274-0084 Department Processing Window
Attn: Reorganization Subcellar One, (SC-1)
Operations
Department
(For Eligible Institutions Only)
Confirm Facsimile by Telephone: (212) 858-2103
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS
SET FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE NUMBER OTHER
THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
<PAGE>
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.
Ladies and Gentlemen:
The undersigned hereby tenders to Securitas Acquisition Corp., a Delaware
corporation ("Purchaser") and an indirect wholly owned subsidiary of Securitas
AB, a corporation organized under the laws of Sweden, upon the terms and
subject to the conditions set forth in the Offer to Purchase, dated February
26, 1999, and the related Letter of Transmittal, receipt of which is hereby
acknowledged, the number of shares set forth below of the common stock, par
value $0.001 per share (the "Company Common Stock"), including the associated
preferred stock purchase rights (the "Rights" and, together with the Company
Common Stock, the "Shares"), of Pinkerton's, Inc., a Delaware corporation,
pursuant to the guaranteed delivery procedures set forth in Section 3 of the
Offer to Purchase.
-----------------------------------------------------------------------------
Number of Shares: _________________ Name(s) of Record Holder(s): ______
----------------------------------- -----------------------------------
----------------------------------- -----------------------------------
Certificate Nos. (if available): __ (Please Print)
----------------------------------- Address(es): ______________________
Check box if Shares will be -----------------------------------
tendered by (Zip Code)
book-entry transfer: [_]
Area Code and Tel. No.: ___________
Account Number: ___________________
Signature(s): _____________________
Dated: ______________________, 1999
-----------------------------------
- -------------------------------------------------------------------------------
2
<PAGE>
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEES)
The undersigned, a participant in the Security Transfer Agents Medallion
Program, the New York Stock Exchange Medallion Signature Guarantee Program or
the Stock Exchange Medallion Program, guarantees to deliver to the Depositary
either certificates representing the Shares tendered hereby, in proper form
for transfer, or confirmation of book-entry transfer of such Shares into the
Depositary's accounts maintained at one of the Book-Entry Transfer Facilities
(as defined in the Offer to Purchase), in each case with delivery of a
properly completed and duly executed Letter of Transmittal (or facsimile
thereof), with any required signature guarantees, or an Agent's Message, and
any other documents required by the Letter of Transmittal, within three (3)
trading days (as defined in the Offer to Purchase) after the date hereof.
The Eligible Institution that completes this form must communicate the
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
----------------------------------- Name: _____________________________
Address: Please Print
----------------------------------- Title: ____________________________
Zip Code
Dated: ____________________, 1999
Area Code and Tel. No.: ___________
-----------------------------------------------------------------------------
NOTE: DO NOT SEND CERTIFICATES FOR SHARES WITH THIS NOTICE. CERTIFICATES
SHOULD BE SENT ONLY WITH YOUR LETTER OF TRANSMITTAL.
3
<PAGE>
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
PURCHASE RIGHTS)
OF
PINKERTON'S, INC.
BY
SECURITAS ACQUISITION CORP.
AN INDIRECT WHOLLY OWNED SUBSIDIARY
OF
SECURITAS AB
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON THURSDAY, MARCH 25, 1999, UNLESS THE OFFER IS EXTENDED.
February 26, 1999
To Brokers, Dealers, Commercial Banks,
Trust Companies And Other Nominees:
We have been appointed by Securitas Acquisition Corp. ("Purchaser"), a
Delaware corporation and an indirect wholly owned subsidiary of Securitas AB,
a corporation organized under the laws of Sweden, to act as Information Agent
in connection with Purchaser's offer to purchase all outstanding shares of
common stock, par value $0.001 per share (the "Company Common Stock"),
including the associated rights to purchase Series A Junior Participating
Preferred Stock (the "Rights" and, together with the Company Common Stock, the
"Shares"), of Pinkerton's, Inc., a Delaware corporation (the "Company"), at
$29.00 per Share, net to the seller in cash, upon the terms and subject to the
conditions set forth in the Offer to Purchase, dated February 26, 1999 (the
"Offer to Purchase"), and in the related Letter of Transmittal (which,
together with any amendments or supplements thereto, constitute the "Offer")
enclosed herewith. Please furnish copies of the enclosed materials to those of
your clients for whose accounts you hold Shares registered in your name or in
the name of your nominee.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION DATE OF THE OFFER (AS
DEFINED IN THE OFFER TO PURCHASE) THAT NUMBER OF SHARES WHICH REPRESENTS AT
LEAST A MAJORITY OF THE TOTAL NUMBER OF SHARES OUTSTANDING ON A FULLY DILUTED
BASIS ON THE DATE SHARES ARE ACCEPTED FOR PAYMENT. THE OFFER ALSO IS SUBJECT
TO THE OTHER CONDITIONS SET FORTH IN THE OFFER TO PURCHASE. SEE SECTION 14 OF
THE OFFER TO PURCHASE.
For your information and for forwarding to your clients for whom you hold
Shares registered in your name or in the name of your nominee, we are
enclosing the following documents:
1. Offer to Purchase, dated February 26, 1999;
2. Letter of Transmittal for your use in accepting the Offer and tendering
Shares and for the information of your clients. Facsimile copies of the
Letter of Transmittal may be used to tender Shares;
<PAGE>
3. Notice of Guaranteed Delivery to be used to accept the Offer if
certificates for Shares and all other required documents cannot be
delivered to IBJ Whitehall Bank & Trust Company (the "Depositary"), or
if the procedures for book-entry transfer cannot be completed on a
timely basis, prior to the expiration of the Offer;
4. A letter which may be sent to your clients for whose accounts you hold
Shares registered in your name or in the name of your nominee, with
space provided for obtaining such clients' instructions with regard to
the Offer;
5. A letter to stockholders of the Company from Denis R. Brown, President,
Chief Executive Officer and Director of the Company, together with a
Solicitation/Recommendation Statement on Schedule 14D-9, dated February
26, 1999, which has been filed by the Company with the Securities and
Exchange Commission;
6. Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9; and
7. A return envelope addressed to the Depositary.
Upon the terms and subject to the conditions of the Offer (including, if the
Offer is extended or amended, the terms and conditions of any such extension
or amendment), Purchaser will accept for payment and pay for Shares which are
validly tendered prior to the Expiration Date and not theretofore properly
withdrawn when, as and if Purchaser gives oral or written notice to the
Depositary of Purchaser's acceptance of such Shares for payment pursuant to
the Offer. Payment for Shares purchased pursuant to the Offer will in all
cases be made only after timely receipt by the Depositary of (i) certificates
for such Shares, or timely confirmation of a book-entry transfer of such
Shares into the Depositary's account maintained at one of the Book-Entry
Transfer Facilities (as defined in the Offer to Purchase), pursuant to the
procedures described in Section 3 of the Offer to Purchase, (ii) a properly
completed and duly executed Letter of Transmittal (or a properly completed and
manually signed facsimile thereof) or an Agent's Message (as defined in the
Offer to Purchase) in connection with a book-entry transfer and (iii) all
other documents required by the Letter of Transmittal.
Purchaser will not pay any fees or commissions to any broker or dealer or
other person (other than the Depositary and the Information Agent as described
in the Offer to Purchase) for soliciting tenders of Shares pursuant to the
Offer. Purchaser will, however, upon request, reimburse brokers, dealers,
commercial banks and trust companies for customary mailing and handling costs
incurred by them in forwarding the enclosed materials to their customers.
Purchaser will pay or cause to be paid all stock transfer taxes applicable
to its purchase of Shares pursuant to the Offer, subject to Instruction 6 of
the Letter of Transmittal.
WE URGE YOU TO CONTACT YOUR CLIENTS AS PROMPTLY AS POSSIBLE. PLEASE NOTE
THAT THE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON THURSDAY, MARCH 25, 1999, UNLESS THE OFFER IS EXTENDED.
In order to take advantage of the Offer, a duly executed and properly
completed Letter of Transmittal (or facsimile thereof), with any required
signature guarantees, or an Agent's Message in connection with a book-entry
transfer of Shares, and any other required documents, should be sent to the
Depositary, and certificates representing the tendered Shares should be
delivered or such Shares should be tendered by book-entry transfer, all in
accordance with the Instructions set forth in the Letter of Transmittal and in
the Offer to Purchase.
If holders of Shares wish to tender, but it is impracticable for them to
forward their certificates or other required documents or to complete the
procedures for delivery by book-entry transfer prior to the Expiration Date of
the Offer, a tender may be effected by following the guaranteed delivery
procedures specified in Section 3 of the Offer to Purchase.
2
<PAGE>
Any inquiries you may have with respect to the Offer should be addressed to
the Information Agent, and additional copies of the enclosed materials may be
obtained from the Information Agent at the respective addresses and telephone
numbers set forth on the back cover of the Offer to Purchase.
Very truly yours,
MACKENZIE PARTNERS, INC.
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU
THE AGENT OF PURCHASER, THE COMPANY, THE INFORMATION AGENT, THE DEPOSITARY, OR
ANY AFFILIATE OF ANY OF THE FOREGOING, OR AUTHORIZE YOU OR ANY OTHER PERSON TO
USE ANY DOCUMENT OR MAKE ANY STATEMENT ON BEHALF OF ANY OF THEM IN CONNECTION
WITH THE OFFER, OTHER THAN THE DOCUMENTS ENCLOSED HEREWITH AND THE STATEMENTS
CONTAINED THEREIN.
3
<PAGE>
EXHIBIT 99.(a)(5)
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
PURCHASE RIGHTS)
OF
PINKERTON'S, INC.
AT
$29.00 NET PER SHARE
BY
SECURITAS ACQUISITION CORP.
AN INDIRECT WHOLLY OWNED SUBSIDIARY
OF
SECURITAS AB
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON THURSDAY, MARCH 25, 1999, UNLESS THE OFFER IS EXTENDED.
February 26, 1999
To Our Clients:
Enclosed for your consideration are the Offer to Purchase, dated February
26, 1999, and the related Letter of Transmittal (which, together with any
amendments or supplements thereto, constitute the "Offer") in connection with
the offer by Securitas Acquisition Corp. ("Purchaser"), a Delaware corporation
and an indirect wholly owned subsidiary of Securitas AB, a corporation
organized under the laws of Sweden, to purchase for cash all outstanding
shares of common stock, par value $0.001 per share (the "Company Common
Stock"), including the associated rights to purchase Series A Junior
Participating Preferred Stock (the "Rights" and, together with the Company
Common Stock, the "Shares"), of Pinkerton's, Inc., a Delaware corporation (the
"Company"). We are the holder of record of Shares held 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 enclosed Letter of Transmittal is furnished
to you for your information only and cannot be used by you to tender Shares
held by us for your account.
We request instructions as to whether you wish us to tender any or all of
the Shares held by us for your account, upon the terms and subject to the
conditions set forth in the Offer.
Your attention is invited to the following:
1. The offer price is $29.00 per Share, net to you in cash without
interest.
2. The Offer is being made for all outstanding Shares.
3. The Board of Directors of the Company has unanimously approved the
Merger Agreement (as defined in the Offer to Purchase) and the
transactions contemplated thereby, including the Offer and the Merger
(as defined in the Offer to Purchase), and has unanimously determined
that the Offer and the Merger are fair to, and in the best interests of,
the Company's stockholders and unanimously recommends that the
stockholders accept the Offer and tender their Shares pursuant to the
Offer.
4. The Offer and withdrawal rights expire at 12:00 Midnight, New York City
time, on March 25, 1999, unless the Offer is extended.
<PAGE>
5. The Offer is conditioned upon, among other things, there being validly
tendered and not withdrawn prior to the Expiration Date of the Offer (as
defined in the Offer to Purchase) that number of Shares which represents
at least a majority of the Shares outstanding on a fully diluted basis
on the date Shares are accepted for payment. The Offer is also subject
to the other conditions set forth in the Offer to Purchase. See Section
14 of the Offer to Purchase.
6. Any stock transfer taxes applicable to the sale of Shares to Purchaser
pursuant to the Offer will be paid by Purchaser, except as otherwise
provided in Instruction 6 of the Letter of Transmittal.
Purchaser is not aware of any state in which the making of the Offer is
prohibited by administrative or judicial action pursuant to any valid state
statute. In any jurisdiction in which the securities, blue sky or other laws
require the Offer to be made by a licensed broker or dealer, the Offer will be
deemed to be made on behalf of Purchaser by one or more registered brokers or
dealers licensed under the laws of such jurisdiction.
If you wish to have us tender any or all of your Shares, please so instruct
us by completing, executing and returning to us the instruction form set forth
on the reverse side of this letter. An envelope to return your instructions to
us is enclosed. If you authorize the tender of your Shares, all such Shares
will be tendered unless otherwise specified on the reverse side of this
letter. Your instructions should be forwarded to us in ample time to permit us
to submit a tender on your behalf prior to the expiration of the Offer.
2
<PAGE>
INSTRUCTIONS WITH RESPECT TO THE OFFER TO PURCHASE FOR CASH
ALL OF THE OUTSTANDING SHARES OF COMMON STOCK
OF
PINKERTON'S, INC.
The undersigned acknowledge(s) receipt of your letter and the enclosed Offer
to Purchase, dated February 26, 1999, and the related Letter of Transmittal
(which, together with any amendments or supplements thereto, constitute the
"Offer") in connection with the offer by Securitas Acquisition Corp., a
Delaware corporation and an indirect wholly owned subsidiary of Securitas AB,
a corporation organized under the laws of Sweden, to purchase all outstanding
shares of common stock, par value $0.001 per share (the "Common Stock"),
including the associated preferred stock purchase rights (the "Rights" and,
together with the Common Stock, the "Shares"), of Pinkerton's, Inc., a
Delaware corporation.
This will instruct you to tender the number of Shares indicated below (or if
no number is indicated below, all Shares) held by you for the account of the
undersigned, upon the terms and subject to the conditions set forth in the
Offer.
Number of Shares to be Tendered:
___________________ Shares*
Dated: _____________ , 1999 -----------------------------------
-----------------------------------
Signature(s)
-----------------------------------
-----------------------------------
Print name(s)
-----------------------------------
Address(es)
-----------------------------------
Area Code and telephone number
-----------------------------------
Tax ID or social security number
- --------
* Unless otherwise indicated, it will be assumed that all Shares held by us
for your account are to be tendered.
3
<PAGE>
EXHIBIT 99.(a)(6)
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE 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>
FOR THIS TYPE OF ACCOUNT: GIVE THE NAME AND SOCIAL SECURITY NUMBER OF:
- ------------------------- --------------------------------------------
<S> <C>
1. An individual's account The individual
2. Two or more individuals The actual owner of the account or, if combined
(joint account) funds, any one of the individuals(1)
3. Husband and wife (joint The actual owner of the account or, if joint funds,
account) 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 the minor is the only contributor,
account) the minor(3)
6. Account in the name of The ward, minor, or incompetent person(4)
guardian or committee
for a designated ward,
minor, or incompetent
person
7. a. The usual revocable The grantor trustee(3)
savings trust
account (grantor is
also trustee)
b. So called trust The actual owner(3)
account that is not a
legal or valid trust
under State law
<CAPTION>
FOR THIS TYPE OF ACCOUNT: GIVE THE NAME AND EMPLOYER IDENTIFICATION NUMBER OF:
- ------------------------- ----------------------------------------------------
<S> <C>
8. Sole proprietorship The owner(5)
account
9. A valid trust, estate, Legal entity (Do not furnish the identifying number
or pension trust of the personal representative or trustee unless the
legal entity itself is not designated in the
account title.)(3)
10. Corporate account The corporation
11. Religious, charitable, The organization
or educational
organization account
12. Partnership account The partnership
held 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.
(2) Circle the minor's name and furnish the minor's social security number.
(3) List first and circle the name of the legal trust, estate, or pension
trust.
(4) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
(5) Show the name of the owner.
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 a 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:
(1) A corporation.
(2) A financial institution.
(3) An organization exempt from tax under section 501(a) or an individual
retirement plan.
(4) The United States or any agency or instrumentality thereof.
(5) A State, the District of Columbia, a possession of the United States,
or any subdivision or instrumentality thereof.
(6) A foreign government, a political subdivision of a foreign government,
or any agency or instrumentality thereof.
(7) An international organization or any agency, or instrumentality
thereof.
(8) A registered dealer in securities or commodities registered in the U.S.
or a possession of the U.S.
(9) A real estate investment trust.
(10) A common trust fund operated by a bank under section 584(a).
(11) An exempt charitable remainder trust, or a non-exempt trust described
in section 4947(a)(1).
(12) An entity registered at all times under the Investment Company Act of
1940.
(13) 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 in foreign organizations.
Exempt payees described above should file 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
withholding. For details, see the regulations under sections 6041, 6041A(a),
6045, and 6050A.
PRIVACY ACT NOTICE--Section 6109 requires most recipients of dividend,
interest, or other payments to give taxpayer identification numbers to payers
who must report the payments to IRS. IRS uses the numbers for identification
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 subject
to a penalty of $50 for each such failure unless your failure is due to
reasonable cause and not to willful neglect.
(2) FAILURE TO REPORT CERTAIN DIVIDEND AND INTEREST PAYMENTS--If you fail to
include any portion of an includible payment for interest, dividends, or
patronage dividends in gross income, such failure will be treated as being
due to negligence and will be subject to a penalty of 5% on any portion of
an under-payment attributable to that failure unless there is clear and
convincing evidence to the contrary.
(3) 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 $500.
(4) CRIMINAL PENALTY FOR FALSIFYING INFORMATION--Falsifying certifications or
affirmations may subject you to criminal penalties including fines and/or
imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE
SERVICE.
<PAGE>
EXHIBIT 99.(a)(7)
[LOGO]
Press Release from Securitas AB
- --------------------------------------------------------------------------------
February 22, 1999
Securitas and Pinkerton to Form World Leader in Security
[_] Securitas has agreed to acquire Pinkerton Inc in the US, which had total
annual sales in 1998 of about SEK 8 billion (US$ 1 billion), for a
consideration of SEK 3 billion (US$ 384 million).
[_] The new group is expected to have combined annual sales of SEK 27 billion
(US$ 3.5 billion) and will have operations in more than 30 countries and
114,000 employees.
[_] The acquisition is expected to affect the earnings of the Securitas group
positively in 1999.
Securitas (SSE: SECU) and Pinkerton Inc (NYSE: PKT) have signed a definitive
merger agreement for Securitas to acquire all of the outstanding shares of
Pinkerton. Pursuant to the agreement, Securitas will pay US$ 29 per share for
each outstanding share of Pinkerton common stock, for an aggregate consideration
of approximately US$ 384 million. Pinkerton currently has approximately 12.2
million shares of common stock and options corresponding to 2.3 million shares
of common stock outstanding. The average share price over last month has been
US$ 20.
The transaction will be a cash tender offer followed by a cash merger to acquire
any shares not previously tendered. As a result of the transaction, Pinkerton
will become a wholly owned subsidiary of Securitas AB. The transaction has been
unanimously recommended by the Boards of Directors of Pinkerton and Securitas.
The main shareholder of Pinkerton, Mr. Thomas Wathen, chairman of Pinkerton, who
holds 30.6 percent of the shares of Pinkerton has committed to sell his shares
to Securitas at the offer price.
Securitas expects to commence its cash tender offer later this week. The cash
tender offer is subject to Securitas receiving at least a majority of the fully
diluted shares of Pinkerton, as well as receipt of required regulatory
approvals.
[LETTERHEAD OF SECURITAS AB APPEARS HERE]
<PAGE>
[LOGO]
Pinkerton
Pinkerton, which was founded 149 years ago by Allan Pinkerton, is the second
largest operator in the US Guard services industry with an estimated market
share of 6 percent and has 250 offices and 48,000 employees throughout the
United States, Canada, Mexico, Europe and Asia. The company has about 5,000
clients to which it offers guard services, alarm installation and monitoring and
security consulting and investigative services. The company has more than 85
percent of the US Fortune 1000 companies as clients.
In 1998, Pinkerton's total annual sales were about US$ 1 billion (SEK 8 billion)
with an operating margin of approximately 3 percent. Operating capital employed
as of December 31, 1998, amounted to US$ 88 million (SEK 686 million), goodwill
to US$ 71 million (SEK 554 million), net debt to US$ 23 million (SEK 179
million) and equity to US$ 136 million (SEK 1,061 million).
Guard services accounted for 87 percent of total sales or US$ 875 million (SEK
6,825 million) in 1998. Services are provided to customers in the industrial,
financial, retail, hospital and government sectors in the form of permanent or
temporary uniformed officers, special event services, emergency services, patrol
and inspection services, alarm response and security escort.
Alarms include design, installation and maintenance of electronic security
systems (e.g. access control, CCTV, fire and burglar alarms). It also includes
alarm monitoring with central station, remote video verification, remote access
control and building control, and alarm response with patrol dispatch. Alarms
accounted for 8 percent of total sales or US$ 78 million (SEK 608 million) in
1998. Pinkerton started to enter into alarms in 1995 and has since then acquired
eight regional companies in the US and today has a national coverage.
Security consulting and investigations accounted for 5 percent of sales or US$
56 million (SEK 437 million) in 1998. Pinkerton is the world's second largest
investigation firm. Its services include intellectual property and
counterfeiting investigations, corporate due diligence and internal fraud
investigations, personal protection and employee screening. Pinkerton's
consulting practice provides risk assessments, crises and incident management
and international terrorism studies.
Pinkerton's stock was first listed on the Nasdaq National Market in 1990 and
began trading on the New York Stock Exchange in 1996. The main shareholder, with
30.6 percent of the outstanding stock, is Thomas Wathen, who is also the
chairman of the board. Other main owners are mainly institutional.
Securitas
Securitas is the leading European Security Company and operates in sixteen
European countries. Annual sales in 1998 amounted to SEK 13.7 billion (US$ 1.8
billion). Including full year effect of acquisitions made during 1998, the pro
forma combined sales would have amounted to approximately SEK 18 billion (US$
2.3 billion) on a full year basis. The number of employees is more than 66,000.
Guard services account for 66 percent of sales, Cash In Transit 16 percent,
Alarms 15 percent and Home alarms, Securitas Direct, for 3 percent of adjusted
1998 sales, adjusted for full year effect of acquisitions made 1998.
Securitas has an estimated 9 percent share of the overall European security
market and France with 24 percent of sales, Germany with 19 percent of sales and
Sweden with 16 percent of sales are the largest countries of operation.
[LETTERHEAD OF SECURITAS AB APPEARS HERE]
<PAGE>
[LOGO]
Acquisitions and organic growth have increased sales by an average of 22 percent
per annum during the last ten-year period. Over the same period the result
before tax has increased by 30 percent per annum on average.
Securitas has been listed on the Stockholm Stock Exchange since 1991.
The New Securitas
The merger will create the world's leading Security Company with operations in
more than 30 countries and 114.000 employees worldwide. The group is expected to
have annual consolidated group sales of some SEK 27 billion (US$ 3.5 billion).
The security service industry in North America accounts for more than 40 percent
of the global market for security services and the North American market has
experienced an annual growth of 7-9 percent organically during the last years.
Pinkerton - number two in the market - has a market share of approximately 3
percent of the total market and 6 percent of the guarding market. The Pinkerton
name will be kept as trading name outside Europe in the market place.
Together with Securitas' market share of 9 percent in the European market the
new group is expected to have approximately 5 percent of the global security
market. The largest operations will be in the US with approximately 24 percent
of group sales followed by France 17 percent, Germany 15 percent and Sweden 11
percent.
Thomas Berglund, President and Chief Executive Officer of Securitas said: "The
merger is a milestone for the security industry. We have spent ten years
building a strong and comprehensive European platform and Europe still offers a
huge potential for further growth and improved profitability. This step provides
a strong second platform from which to replicate the significant growth we have
experienced in Europe over the last ten years."
Denis R. Brown, Pinkerton's President and Chief Executive Officer said: "This
combination of two powerful security leaders will provide corporations with
access to an even stronger network of security services. We are finding that US
corporations, in particular, are seeking to consolidate their security with
fewer providers in order to create more integrated, well planned security
environments for their assets. With combined resources, we will be able to
continuously strengthen both the quality of our services and operational
efficiencies that should enhance the Company's growth and earnings in the years
ahead."
In the short term, synergies are expected from integrating Pinkerton's European
operations in Germany, UK, Portugal and Czech Republic with Securitas existing
operations as well as from reducing head office costs in Los Angeles by
delisting the company. Thus the acquisition is expected to have a positive
impact on the earnings as well as free cash flow of the Securitas Group in 1999.
In the long term, organic growth as well as growth by acquisitions in the US, in
combination with increased margins, are expected to contribute substantially to
a continued good development for Securitas.
Denis R. Brown will become chairman and Chief Executive Officer of Pinkerton's
operations except for
[LETTERHEAD OF SECURITAS AB APPEARS HERE]
<PAGE>
[LOGO]
operations in Europe, which will be integrated with Securitas. He will also be
nominated for election in April 1999 to the Board of Directors of Securitas.
Financing
Securitas has received a commitment from Deutsche Bank to provide a revolving
credit facility of up to US$ 440 million to finance the cash tender offer and
associated costs and expenses.
Proposed new issue
In order to ensure Securitas a platform for further expansion in Europe and the
United States, the Board of Directors of Securitas intends to propose to the
Annual General Meeting, on April 15th 1999, in Securitas AB that a non-pre-
emptive new issue of shares should be made. The size of the issue is proposed to
be approximately SEK 3 billions and is intended to be placed with international
institutional investors at the prevailing market price. Deutsche Bank has been
appointed as adviser and global book runner for the transaction.
Time Schedule
February 22 Information meeting in London at 1 p.m. GMT at The Savoy Hotel,
Strand, London WC2R 0EU
February 23 Information meeting in Stockholm at 08.30 a.m. CET at Securitas,
Lindhagensplan 70, 102 28 Stockholm
February 25 Tender offer commences in US
March 25 End of tender offer period
April 2 Closing of acquisition if acceptance
April 15 Annual General Meeting and approval of the proposed new issue
[LETTERHEAD OF SECURITAS AB APPEARS HERE]
<PAGE>
[LOGO]
Further information can be obtained from Thomas Berglund, President and CEO,
Amund Skarholt, Executive Vice President and COO, Hakan Winberg, Executive Vice
President and Chief Financial Officer, and Camilla Weiner, Manager Investor
Relations, telephone +46 8 657 74 00.
[LETTERHEAD OF SECURITAS AB APPEARS HERE]
<PAGE>
EXHIBIT 99.(a)(8)
This announcement is neither an offer to purchase nor a solicitation of an offer
to sell Shares (as defined below). The Offer (as defined below) is made solely
by the Offer to Purchase, dated February 26, 1999, and the related Letter of
Transmittal, 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 Securitas Acquisition Corp. by one or more registered brokers or
dealers that are licensed under the laws of such jurisdiction.
NOTICE OF OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
PURCHASE RIGHTS)
OF
PINKERTON'S, INC.
AT
$29.00 NET PER SHARE IN CASH
BY
SECURITAS ACQUISITION CORP.
AN INDIRECT WHOLLY OWNED SUBSIDIARY OF
SECURITAS AB
Securitas Acquisition Corp., a Delaware corporation ("Purchaser") and an
indirect wholly owned subsidiary of Securitas AB, a corporation organized under
the laws of Sweden ("Securitas"), is offering to purchase all outstanding
shares of Common Stock, par value $0.001 per share (the "Company Common Stock"),
of Pinkerton's, Inc., a Delaware corporation (the "Company"), and the associated
rights to purchase Series A Junior Participating Preferred Stock (the "Rights"
and, together with the Company Common Stock, the "Shares") issued pursuant to
the Rights Agreement, dated as of July 21, 1991, as amended, between the Company
and The Bank of New York, as successor rights agent (as the same may be amended,
the "Rights Agreement"), at a purchase price of $29.00 per Share, net to the
seller in cash, without interest thereon, upon the terms and subject to the
conditions set forth in the Offer to Purchase, dated February 26, 1999 (the
"Offer to Purchase"), and in the related Letter of Transmittal (which, together
with any amendments and supplements thereto, collectively constitute the
"Offer").
- -------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON THURSDAY, MARCH 25, 1999, UNLESS THE OFFER IS EXTENDED.
- ------------------------------------------------------------------------------
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED THE MERGER
AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE OFFER AND THE
MERGER, AND HAS UNANIMOUSLY DETERMINED THAT THE OFFER AND THE MERGER ARE FAIR
TO, AND IN THE BEST INTERESTS OF, THE COMPANY'S STOCKHOLDERS AND UNANIMOUSLY
RECOMMENDS THAT THE STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES
PURSUANT TO THE OFFER.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER THAT NUMBER OF
SHARES WHICH REPRESENTS AT LEAST A MAJORITY OF THE TOTAL NUMBER OF SHARES
OUTSTANDING ON A FULLY DILUTED BASIS ON THE DATE THE SHARES ARE ACCEPTED FOR
PAYMENT. THE OFFER ALSO IS SUBJECT TO THE OTHER CONDITIONS SET FORTH IN THE
OFFER TO PURCHASE. SEE THE INTRODUCTION AND SECTIONS 1, 14 AND 15 OF THE OFFER
TO PURCHASE. As used herein, "fully diluted basis" takes into account the
exercise of all outstanding options and other rights and securities exercisable
into Shares.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of February 19, 1999, by and among the Company, Securitas and Purchaser (the
"Merger Agreement"), pursuant to which, following the consummation of the Offer
and the satisfaction of certain conditions, Purchaser will be merged with and
into the Company (the "Merger"), with the Company continuing as the surviving
corporation. On the effective date of the Merger, each outstanding Share (other
than Shares held in the treasury of the Company, Shares owned by Securitas or
any direct or indirect wholly owned subsidiary of Securitas or of the Company
and Shares, if any, held by stockholders who perfect their appraisal rights
under Delaware law) will, by virtue of the Merger and without any action by the
holder thereof, be converted into the right to receive an amount equal to $29.00
in cash without interest thereon.
As an inducement and condition to Securitas' and Purchaser's entering into
the Merger Agreement, the Company has entered into a Stock Option Agreement,
dated as of February 19, 1999, with Securitas, pursuant to which, among other
things, the Company has granted Securitas an option to purchase up to 2,437,079
shares of Company Common Stock at $29.00 per share (the "Company Option"). The
Company Option only can be exercised under certain circumstances described in
Section 11 of the Offer to Purchase.
As an additional inducement and condition to Securitas' and Purchaser's
entering into the Merger Agreement, certain stockholders of the Company, who
beneficially own 3,700,537 Shares in the aggregate, have entered into a
Stockholders Agreement, dated as of February 19, 1999 (the "Stockholders
Agreement"), with Purchaser and Securitas. Pursuant to the Stockholders
Agreement, each stockholder has, among other things, agreed to tender its Shares
in the Offer, granted to Securitas a proxy with respect to voting of such Shares
and granted to Securitas an option to purchase such Shares. The Stockholders
Agreement is further described in Section 11 of the Offer to Purchase.
For purposes of the Offer, Purchaser will be deemed to have accepted for
payment, and thereby purchased, Shares validly tendered and not withdrawn as, if
and when Purchaser gives oral or written notice to IBJ Whitehall Bank & Trust
Company, as depositary (the "Depositary"), of Purchaser's acceptance of such
Shares for payment pursuant to the Offer. In all cases, upon the terms and
subject to the conditions of the Offer, payment for Shares purchased pursuant to
the Offer will be made by deposit of the purchase price therefor with the
Depositary, which will act as agent for tendering stockholders for the purpose
of receiving payment from Purchaser and transmitting payment to validly
tendering stockholders. In all cases, payment for Shares purchased pursuant to
the Offer will be made only after timely receipt by the Depositary of (i)
certificates for such Shares (or a timely Book-Entry Confirmation (as defined in
the Offer to Purchase) with respect thereto), (ii) the Letter of Transmittal (or
a facsimile thereof), properly completed and duly executed, with any required
signature guarantees or an Agent's Message (as defined in the Offer to Purchase)
in connection with a book-entry transfer and (iii) any other documents required
by the Letter of Transmittal. The per share consideration paid to any holder of
Shares pursuant to the Offer will be the highest per share consideration paid to
any other holder of such Shares pursuant to the Offer. UNDER NO CIRCUMSTANCES
WILL INTEREST ON THE PURCHASE PRICE FOR SHARES BE PAID BY PURCHASER, REGARDLESS
OF ANY EXTENSION OF THE OFFER OR ANY DELAY IN MAKING SUCH PAYMENT.
Subject to the terms and conditions of the Merger Agreement, Purchaser
expressly reserves the right, in its sole discretion, at any time and from time
to time, to extend the period during which the Offer is open for any reason,
including the existence of any of the conditions specified in Section 14 of the
Offer to Purchase, by giving oral or written notice of such extension to the
Depositary. Any such extension will be followed as promptly as practicable by
public announcement thereof, and such announcement will be made no later than
9:00 a.m., New York City time, on the next business day after the previously
scheduled Expiration Date (as defined in the Offer to Purchase).
Tenders of Shares made pursuant to the Offer are irrevocable, except that
Shares tendered pursuant to the Offer may be withdrawn at any time on or prior
to the Expiration Date and, unless theretofore accepted for payment as provided
in the Offer to Purchase, may also be withdrawn at any time after April 26,
1999. In order 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 who
tendered the Shares to be withdrawn, the number of Shares to be withdrawn and
the name of the registered holder of the Shares to be withdrawn, if different
the name of the person who tendered the Shares. If certificates evidencing
Shares to be withdrawn have been delivered or otherwise identified to the
Depositary, then, prior to physical release of such certificates, the serial
numbers shown on such certificates must be submitted to the Depositary and the
signature on the notice of withdrawal must be guaranteed by a financial
institution (including most commercial banks, savings and loan associations and
brokerage houses) that is a participant in the Security Transfer Agents
Medallion Program, the New York Stock Exchange Medallion Signature Guarantee
Program or the Stock Exchange Medallion Program (an "Eligible Institution"),
except in the case of Shares tendered for the account of an Eligible
Institution. If Shares have been tendered pursuant to the procedures for
book-entry transfer 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 appropriate
Book-Entry Transfer Facility (as defined in the Offer to Purchase) to be
credited with the withdrawn Shares and otherwise comply with such Book-Entry
Transfer Facility's procedures, in which case a notice of withdrawal will be
effective if delivered to the Depositary by any method of delivery described in
this paragraph. All questions as to the form and validity (including time of
receipt) of notices of withdrawal will be determined by Purchaser, in its sole
discretion, whose determination shall be final and binding. Any Shares properly
withdrawn will be deemed not validly tendered for purposes of the Offer, but may
be tendered at any subsequent time prior to the Expiration Date by following any
of the procedures described in Section 3 of the Offer to Purchase.
The information required to be disclosed by Rule 14d-6(e)(1)(vii) of the
General Rules and Regulations under the Securities Exchange Act of 1934 is
contained in the Offer to Purchase and is incorporated herein by reference.
The Company has provided Purchaser with the Company's stockholder lists and
security position listings for the purpose of disseminating the Offer to holders
of Shares. The Offer to Purchase and the related Letter of Transmittal and, if
required, other relevant materials will be mailed to record holders of Shares
and will be furnished to brokers, dealers, commercial banks, trust companies and
similar persons whose names, or the names of whose nominees, appear on the
stockholder list or, if applicable, who are listed as participants in a clearing
agency's security position listing for subsequent transmittal to beneficial
owners of Shares.
THE OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION 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 at its telephone number listed below. Requests for copies of the Offer to
Purchase, the related Letter of Transmittal and all other tender offer materials
may be directed to the Information Agent or brokers, dealers, commercial banks
and trust companies, and copies will be furnished promptly at Purchaser's
expense. Neither Purchaser nor Securitas will pay any fees or commissions (other
than to the Information Agent) for soliciting tenders of Shares pursuant to the
Offer.
The Information Agent for the Offer is:
[LOGO]
MacKenzie Partners, Inc.
156 Fifth Avenue
New York, New York 10010
(212) 929-5500 (Call Collect)
or
CALL TOLL-FREE (800) 322-2885
February 26, 1999
<PAGE>
EXHIBIT 99.(b)
AGREEMENT
DATED 18th February, 1999
US$440,000,000
MULTICURRENCY REVOLVING CREDIT
FACILITY
for
SECURITAS AB (publ)
as Company
ARRANGED BY
DEUTSCHE BANK AG
as Arranger
and
DEUTSCHE BANK LUXEMBOURG S.A.
as Facility Agent
and
OTHERS
as Banks
ALLEN & OVERY
London
PG:69973.5
<PAGE>
<TABLE>
<CAPTION>
INDEX
Clause Page
<C> <S> <C>
1. Interpretation.................................................. 1
2. The Facility.................................................... 11
3. Purpose......................................................... 12
4. Conditions Precedent............................................ 12
5. Drawdown........................................................ 13
6. Repayment....................................................... 14
7. Prepayment and Cancellation..................................... 14
8. Interest Periods................................................ 16
9. Interest........................................................ 17
10. Selection of Currencies......................................... 18
11. Amount of Loans Denominated in Dollars or Optional Currencies... 19
12. Payments........................................................ 19
13. Taxes........................................................... 21
14. Market Disruption............................................... 22
15. Increased Costs................................................. 24
16. Illegality...................................................... 25
17. Mitigation...................................................... 25
18. Representations and Warranties.................................. 25
19. Undertakings.................................................... 29
20. Default......................................................... 37
21. The Facility Agent and the Arranger............................. 41
22. Fees............................................................ 45
23. Expenses........................................................ 46
24. Stamp Duties.................................................... 46
25. Indemnities..................................................... 47
26. Evidence and Calculations....................................... 48
27. Amendments and Waivers.......................................... 48
28. Changes to the Parties.......................................... 49
29. Disclosure of Information....................................... 51
30. Set-Off......................................................... 52
31. Pro Rata Sharing................................................ 52
32. Severability.................................................... 53
33. Counterparts.................................................... 53
34. Notices......................................................... 54
35. Language........................................................ 55
36. Jurisdiction.................................................... 55
37. Governing Law................................................... 56
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Schedules
<C> <S> <C>
1. Banks and Commitments............................................. 57
2. Conditions Precedent Documents.................................... 58
3. Form of Request................................................... 60
4. Form of Novation Certificate...................................... 61
Signatories............................................................. 62
</TABLE>
<PAGE>
THIS FACILITY AGREEMENT is dated 18th February, 1999 between:
(1) SECURITAS AB (publ) (the "Company");
(2) DEUTSCHE BANK AG as arranger (the "Arranger");
(3) THE FINANCIAL INSTITUTIONS listed in Schedule 1 as banks (the
"Banks"); and
(4) DEUTSCHE BANK LUXEMBOURG S.A. as facility agent (the "Facility
Agent").
IT IS AGREED as follows:
1. INTERPRETATION
1.1 Definitions
In this Agreement:
"Acquisition"
means the acquisition by the Company of at least a majority of the
outstanding shares of common stock in the Target.
"Affiliate"
means a subsidiary or a holding company (in each case as defined in
section 736 of the Companies Act 1985 of England and Wales as amended)
of a Bank or any other subsidiary of that holding company.
"Agent's Fee Letter"
means the letter dated the date of this Agreement between the Facility
Agent and the Company setting out the amount of the agency fee
referred to in Clause 22.3 (Agent's fee).
"Arsredovisningslagen"
means the Swedish accounting Act known as Arsredovisningslagen Act
(1995:1554).
"Bokforingslagen"
means the Swedish accounting Act known as Bokforingslagen (1976:125).
"Business Day"
means a day (other than a Saturday or a Sunday):
(a) in relation to a transaction involving any payment in Dollars, on
which banks are open for general business in New York; or
(b) in relation to a transaction involving any payment in an Optional
Currency, on which banks are open for general business in the
principal financial centre of the country of that currency; or
<PAGE>
2
(c) in relation to a transaction involving payments or rate fixing
relating to Euros, a TARGET Day; and
(d) in all other respects, on which banks are open for general
business in London, Luxembourg, New York and Stockholm.
"Code"
means the United States Internal Revenue Code of 1986, as amended and
any rule or regulation issued thereunder from time to time in effect.
"Commitment"
means:
(a) in relation to a Bank which is a Bank on the date of this
Agreement, the amount in Dollars set opposite its name in Schedule
1; or
(b) in relation to any other Bank, the amount of Commitment acquired
by it under Clause 28 (Changes to the Parties), to the extent not
cancelled, reduced or transferred under this Agreement.
"Compliance Certificate"
has the meaning given to it in Clause 19.2(e) (Financial information).
"Controlled Group"
means all members of a controlled group of corporations and all trades
or businesses (whether or not incorporated) under common control
which, together with the Company, are treated as a single employer
under Section 414(b) or (c) of the Code.
"Default"
means an Event of Default or an event which, with the giving of
notice, lapse of time, determination of materiality or fulfilment of
any other applicable condition (or any combination of the foregoing),
might constitute an Event of Default.
"Dollars" and "$"
means the lawful currency for the time being of the United States of
America.
"Drawdown Date"
means the date of the advance of a Loan.
"Equity Offering"
means the equity offering by the Company in connection with the
Acquisition.
<PAGE>
3
"ERISA"
means the U.S. Employee Retirement Income Security Act of 1974, as
amended, and any rule or regulation issued thereunder from time to
time in effect.
"Euro" "EUR" and "E"
means the single currency of the Participating Member States.
"EURO-LIBOR"
means in relation to any Loan in Euros:
(a) the applicable Screen Rate; or
(b) if no Screen Rate is available for the relevant period, the
arithmetic mean of the rates (rounded upwards to five decimal
places) as supplied to the Facility Agent at its request quoted
by the Reference Banks to prime banks in the European interbank
market,
at or about 11.00 a.m. on the applicable Rate Fixing Day for the
offering of deposits in Euros for a period comparable to the
Interest Period of the relevant Loan.
"Event of Default"
means an event specified as such in Clause 20.1 (Events of Default).
"Extension Option Fee"
means the fee to be agreed between the Arranger, the Banks and the
Company for the extension of the original Repayment Date.
"Facility Agent's Spot Rate of Exchange"
means the Facility Agent's spot rate of exchange for the purchase of
Euros or the relevant Optional Currency in the European foreign
exchange market with Dollars at or about 11.00 a.m. on a particular
day.
"Facility Office"
means the office(s) notified by a Bank to the Facility Agent:
(a) on or before the date it becomes a Bank; or
(b) by not less than five Business Days' notice,
as the office(s) through which it will perform all or any of its
obligations under this Agreement.
<PAGE>
4
"Fee Letter"
means the Up-front Fee Letter or the Agent's Fee Letter.
"Finance Documents"
means this Agreement, any document effecting any amendment to this
Agreement, the Fee Letters or any other document designated as such by
the Facility Agent and the Company.
"Finance Party"
means a Bank, the Arranger, or the Facility Agent.
"Financial Indebtedness"
means (without double counting) any indebtedness in respect of:
(a) moneys borrowed or any debit balance;
(b) any debenture, bond, note, loan stock or other security;
(c) any acceptance credit;
(d) receivables sold or discounted (otherwise than on a non-recourse
basis);
(e) the acquisition cost of any asset to the extent payable before or
after the time of acquisition or possession by the party liable
where the advance or deferred payment is arranged primarily as a
method of raising finance or financing the acquisition of that
asset;
(f) any lease entered into primarily as a method of raising finance or
financing the acquisition of the asset leased;
(g) for the purposes of Clause 20.6 (Cross-default) only, any currency
or interest swap or exchange or any cap or collar arrangement or
any other hedging transaction;
(h) any commitment for, or underwriting of, any indebtedness of a type
referred to in paragraphs (a) to (g) (inclusive) above; and
(i) any guarantee, indemnity or similar assurance against financial
loss of any person.
"Gearing Ratio"
has the meaning given to it in Clause 19.13(a) (Financial covenants).
"Group"
means the Company and its Subsidiaries.
"Holding Company"
has the meaning ascribed to it in Section 736 of the Companies Act
1985.
<PAGE>
5
"Interest Period"
means each period determined in accordance with Clause 8 (Interest
Periods).
"LIBOR"
means:
(a) the applicable Screen Rate; or
(b) if no Screen Rate is available for the relevant currency and
period or in the case of Sterling, the arithmetic mean (rounded
upward to five decimal places) of the rates, as supplied to the
Facility Agent at its request, quoted by the Reference Banks to
prime banks in the London interbank market,
at or about 11.00 a.m. on the applicable Rate Fixing Day for the
offering of deposits in the currency of the relevant Loan for a
period comparable to the Interest Period of the relevant Loan.
"Loan"
means, subject to Clauses 8 (Interest Periods) and 10 (Selection of
Currencies), the principal amount of each borrowing by the Company
under this Agreement or the principal amount outstanding of that
borrowing.
"Majority Banks"
means, at any time, Banks:
(a) whose participations in the Loans then outstanding aggregate more
than 66 2/3 per cent. of all the Loans then outstanding; or
(b) if there are no Loans then outstanding, whose Commitments then
aggregate more than 66 2/3 per cent. of the Total Commitments; or
(c) if there are no Loans outstanding and the Total Commitments have
then been reduced to zero, whose Commitments aggregated more than
66 2/3 per cent. of the Total Commitments immediately before the
reduction.
"Margin"
means, for the period from the date of this Agreement until the
Repayment Date the rate of 0.30% (thirty hundredths of one per cent.)
per annum.
"Margin Stock"
has the meaning provided in Regulation U.
<PAGE>
6
"Multi Employer Plan"
means a "multi employer plan" as defined in Section 4001(a)(3) of
ERISA to which the Company or any member of the Controlled Group has,
or has at any time within the preceding five years, had an obligation
to contribute.
"Net Proceeds"
means the amount of the proceeds of the Equity Offering after
deduction of all reasonable costs, fees and expenses incurred in
connection with the Equity Offering.
"Novation Certificate"
has the meaning given to it in Clause 28.3 (Procedure for novations).
"Optional Currency"
means any currency (other than Dollars and Euros and for the avoidance
of doubt including national currency units of a Participating Member
State) which is for the time being freely transferable and convertible
into Dollars and Euros and deposits of which are readily available in
the European interbank market.
"Original Accounts"
means the audited consolidated accounts of the Company for the year
ended 31st December, 1997.
"Original Dollar Amount"
in relation to a Loan, means:
(a) if that Loan is denominated in Dollars, the amount of that Loan;
or
(b) the principal amount of a Loan denominated in Euros or an Optional
Currency, translated into Dollars on the basis of the Facility
Agent's Spot Rate of Exchange on the third Business Day before
drawdown of such Loan.
"Participating Member State"
means a member state of the European Communities that adopts the Euro
as its currency in accordance with legislation of the European Union
relating to European Economic and Monetary Union.
"Party"
means a party to this Agreement.
"PBGC"
means the Pension Benefit Guaranty Corporation.
<PAGE>
7
"Plan"
means an "employee benefit plan" (as defined in Section 3(3) of
ERISA) which either:
(a) is maintained, or contributed to, by any member of the Controlled
Group for employees of any member of the Controlled Group; or
(b) has at any time within the preceding five years been maintained,
or contributed to, by any person which was at such time a member
of the Controlled Group for employees of any person which was at
such time a member of the Controlled Group.
"Rate Fixing Day"
means the second Business Day before the Drawdown Date for that Loan
or in the case of rate fixing in relation to Sterling the Drawdown
Date or in the case of rate fixing in relation to the first Loan only
(if such Loan is not a Sterling Loan), the first Business Day before
the Drawdown Date.
"Reference Accounting Requirements"
means the Swedish Accounting Requirements applicable to and used in
the Original Accounts.
"Reference Banks"
means subject to Clause 28.4 (Reference Banks):
(a) in respect of STIBOR three Banks to be agreed upon between the
Facility Agent, the relevant Bank and the Company; and
(b) in all other respects Deutsche Bank Luxembourg S.A. and two other
Banks to be agreed upon between the Facility Agent, the relevant
Bank and the Company.
"Regulations, T, U and X"
means, respectively, regulations, T, U and X of the Board of Governors
of the Federal Reserve System of the United States (or any successor).
"Relevant Stock Exchange"
means any recognised international stock exchange upon which the
Company's equity or debt securities are listed at the relevant time.
"Repayment Date"
means, unless such date is extended pursuant to Clause 2.5 (Extension
of Repayment Date), nine months from the date of this Agreement.
"Reportable Event"
means a reportable event as defined in Section 4043 of ERISA and the
regulations issued under such section with respect to a Plan,
excluding, however, such events as to which the
<PAGE>
8
PBGC by regulation waived the requirement of Section 4043(a) of ERISA
that it be notified within 30 days of the occurrence of such event,
provided, however, that a failure to meet the minimum funding standard
of Section 412 of the Code and of Section 302 of ERISA shall be a
Reportable Event regardless of the issuance of any such waiver of the
notice requirement in accordance with either Section 4043(a) of ERISA
or Section 412(d) of the Code.
"Request"
means a request made by the Company for a Loan, substantially in the
form of Schedule 3.
"Reuters Screen"
means the relevant page on the Reuters service (or such other service
or page as may replace that service or page for the purpose of
displaying the relevant offered rate).
"Screen Rate"
means:
(a) in relation to LIBOR and EURO-LIBOR, the rate per annum of the
offered quotation for deposits in the relevant currency for the
relevant period displayed on Reuters Screen "LIBOR 01" or "LIBOR
02" page (as the case may be);and
(b) in relation to STIBOR the rate per annum of the offered quotation
for deposits in SEK for the relevant period displayed on Reuters
Screen "SIOR" page.
"Security Interest"
means any mortgage, pledge, lien, charge, assignment, hypothecation or
security interest or any other agreement or arrangement having the
effect of conferring security.
"SEK"
means the lawful currency for the time being of the Kingdom of Sweden.
"Sterling"
means the lawful currency for the time being of the United Kingdom.
"STIBOR"
means:
(a) the applicable Screen Rate; or
(b) if no Screen Rate is available for the relevant currency and
period, the arithmetic mean (rounded upward to five decimal
places) of the rates, as supplied to the Facility Agent at its
request, quoted by the Reference Banks to prime banks in the
Swedish interbank market,
at or about 11.00 a.m. Stockholm time on the applicable Rate Fixing
Day for the offering of deposits in SEK for a period comparable to the
Interest Period of the relevant Loan.
<PAGE>
9
"Subsidiary"
means a subsidiary within the meaning of the Swedish Companies Act
(1975:1385).
"Swedish Accounting Requirements"
means:
(a) Bokforingslagen and Arsredovisningslagen;
(b) the accounting requirements contained in the Swedish Companies Act
(1975:1385); and
(c) accounting principles and practices generally accepted in Sweden,
as the same are from time to time in force or applied.
"Target"
means Pinkerton's Inc., Westlake Village, California, USA.
"TARGET"
means the Trans-European Automated Real-time Gross Settlement
Express Transfer System.
"TARGET Day"
means a day on which payments in Euros are settled in the TARGET
system.
"Termination Event"
means any of the events set out in Clauses 7.5 (Unlawfulness) and 7.6
(Ownership of the Company).
"Total Assets"
means the value of the total assets which are shown in
the most recent published consolidated accounts of the Company.
"Total Commitments"
means the aggregate for the time being of the Commitments of all the
Banks, being US$440,000,000 as at the date of this Agreement.
"United States"
means the United States of America.
<PAGE>
10
"Up-front Fee Letter"
means the letter dated the date of this Agreement between the Arranger
and the Company setting out, inter alia, the amount of the Up-Front
fee referred to in Clause 22.1 (Up-Front fee).
1.2 Construction
(a) In this Agreement, unless the contrary intention appears, a
reference to:
(i) "assets" includes present and future properties, revenues
and rights of every description;
an "authorisation" includes an authorisation, consent, approval,
resolution, licence, exemption, filing and registration;
a "month" or a period of "months" is a reference to a period
starting on one day in a calendar month and ending on the
numerically corresponding day in the relevant later calendar
month, except that if there is no numerically corresponding day in
that later month, that period shall end on the last Business Day
in that calendar month; and
a "person" includes any person, company, partnership, association,
government, state agency or other entity;
a "regulation" includes any regulation, rule, official directive,
request or guideline (whether or not having the force of law) of
any governmental body, agency, department or regulatory, self-
regulatory or other authority or organisation;
(ii) a provision of law is a reference to that provision as amended or
re-enacted;
(iii) a Clause or a Schedule is a reference to a clause of or a schedule
to this Agreement;
(iv) a person includes its successors, transferees and assigns;
(v) a Finance Document or another document is a reference to that
Finance Document or other document as amended, novated or
supplemented;
(vi) words importing the singular shall include the plural and vice
versa; and
(vii) a time of day is a reference to London time.
(b) Unless the contrary intention appears, a term used in any other Finance
Document or in any Novation Certificate or in any notice given under or
in connection with any Finance Document has the same meaning in that
Finance Document, Novation Certificate or notice as in this Agreement.
(c) The index to and the headings in this Agreement are for convenience only
and are to be ignored in construing this Agreement.
<PAGE>
11
2. THE FACILITY
2.1 Facility
(a) Subject to the terms of this Agreement, the Banks grant to the
Company a committed multicurrency revolving credit facility under which the
Banks will make Loans in Dollars, Euros or Optional Currencies up to an
aggregate Original Dollar Amount not exceeding the Total Commitments.
(b) No Bank is obliged to participate in Loans in an aggregate Original Dollar
Amount exceeding its Commitment.
2.2 Number and frequency of Loans
Up to two Loans may be made on the same Drawdown Date. Subject to this, no
Request may specify a Drawdown Date which is within five Business Days of
another Drawdown Date, and no more than five Loans may be outstanding at
the same time.
2.3 Nature of a Finance Party's rights and obligations
(a) The obligations of a Finance Party under the Finance Documents
are several. Failure of a Finance Party to carry out its obligations under
the Finance Documents shall not relieve any other Party of any of its
obligations under the Finance Documents. No Finance Party shall be
responsible for the obligations of any other Finance Party under the
Finance Documents.
(b) The rights of a Finance Party under the Finance Documents are divided
rights. A Finance Party may, except as otherwise stated in the Finance
Documents, separately enforce those rights.
2.4 Change of Currency
(a) Unless otherwise prohibited by law, if more than one currency or currency
unit are at the same time recognised by the central bank of any country as
the lawful currency of that country, then:
(i) any reference in the Finance Documents to, and any obligations arising
under the Finance Documents in, the currency of that country shall be
translated into, or paid in, the currency or currency unit of that
country designated by the Facility Agent after consultation with the
Company and, if, in its sole discretion, the Facility Agent deems that
it is reasonably practicable to do so, with the Banks; and
(ii) any translation from one currency or currency unit to another shall be
at the official rate of exchange recognised by the central bank for
the conversion of that currency or currency unit into the other
rounded up or down by the Facility Agent (acting reasonably)., after
consultation with the Company and, if, in its sole discretion, the
Facility Agent deems that it is reasonably practicable to do so, with
the Banks, rounded up or down by the Facility Agent acting reasonably.
(b) If a change in any currency of a country occurs, this Agreement will be
amended to the extent the Facility Agent acting reasonably specifies to be
necessary, after consultation with the Company and, if, in its sole
discretion, the Facility Agent deems that it is reasonably practicable to
do so, with the Banks, to reflect the change in currency and to put the
Banks
<PAGE>
12
and the Company in the same position so far as possible, that they
would have been in if no change in currency had occurred.
2.5 Extension of Repayment Date
Pursuant to a written request by the Company (such request to be received
by the Facility Agent no later than the date falling six months after the
date of this Agreement) and provided that no Default and/or Termination
Event is subsisting, the Banks upon agreement between all of the Banks
(acting through the Facility Agent) and the Company as to the rate of
Margin, agency fee, and/or Extension Option Fee and/or any other fees
payable (for the purposes of this Clause only (the "Fees")) will extend the
original Repayment Date by an additional period of not more than twenty
four months. Any Fees agreed pursuant to this Clause will reflect the
market rate (if any) for such Fees at the time of agreeing such Fees. The
Facility Agent shall notify the Company and the Banks in writing of any
such extension of the original Repayment Date pursuant to this Clause.
3. PURPOSE
The Company shall apply each Loan towards the Acquisition and its general
corporate purposes. Without affecting the obligations of the Company in any
way, no Finance Party is bound to monitor or verify the application of any
Loan.
4. CONDITIONS PRECEDENT
4.1 Documentary conditions precedent
The obligations of each Finance Party to the Company under this Agreement
are subject to the condition precedent that the Facility Agent has notified
the Company and the Banks that it has received all of the documents set out
in Schedule 2 in form and substance satisfactory to the Facility Agent. The
Facility Agent agrees to use reasonable endeavours to give such
notification promptly upon receipt of all such documents.
4.2 Further conditions precedent
The obligations of each Bank to advance any amount under Clauses 5.3
(Advance of Loan) or Clause 11 (Amount of Loans denominated in Dollars or
Optional Currencies) are subject to further conditions precedent that on
both the date of the Request (if applicable) and the date on which the
relevant amount is to be advanced:
(a) the representations and warranties in Clause 18 (Representations and
Warranties) to be repeated on those dates are correct and will be
correct immediately after the advance; and
(b) no Default or Termination Event is outstanding or is, in the opinion of the
Facility Agent, reasonably likely to result from the advance or, in the
case of a Termination Event, to affect the advance.
<PAGE>
13
5. DRAWDOWN
5.1 Commitment Period
(a) The Company may borrow a Loan if the Facility Agent receives, not
later than 10.00 a.m. (or in the case of the first Loan only, 11.00 a.m.
(Luxembourg time)) three Business Days (or in the case of the first Loan
only, two Business Days) before the proposed Drawdown Date, a duly
completed Request. The undrawn amount of the Total Commitments shall
automatically be cancelled at close of business in London on the Repayment
Date.
(b) Each Request is irrevocable and the Company is bound to borrow in
accordance with that Request.
5.2 Completion of Requests
A Request will not be regarded as having been duly completed unless:
(a) the Drawdown Date is a Business Day which falls on or before the
date falling one month prior to the Repayment Date;
(b) if the currency selected is Dollars, the Original Dollar Amount of the
Loan is a minimum of US$100,000,000 and, if more, an integral multiple
of US$40,000,000, or the balance of the undrawn Total Commitments;
(c) if the currency selected is Euros or an Optional Currency, the amount
of the Loan requested is an integral multiple of 40,000,000 of the
largest currency unit of that Optional Currency but at least the
equivalent of US$100,000,000 (based on the Agent's Spot Rate of
Exchange on the Business Day before the relevant Rate Fixing Day) or
the balance of the undrawn Total Commitments;
(d) the currency selected is Dollars, Euros or an Optional Currency
and otherwise complies with Clause 10 (Selection of Currencies);
(e) the Interest Period selected complies with Clause 8 (Interest
Periods); and
(f) the payment instructions comply with Clause 12 (Payments).
Subject to Clause 2.2 (Number and frequency of Loans), unless the Facility
Agent otherwise agrees, each Request must specify one Loan only, although
the Company may, subject to the other terms of this Agreement, deliver more
than one Request on any one day.
5.3 Advance of Loan
The Facility Agent shall promptly notify each Bank of the details of the
requested Loan. Subject to the terms of this Agreement, each Bank shall on
the proposed Drawdown Date make available to the Facility Agent the amount
of its participation in the Loan. The amount of a Bank's participation in a
Loan will be the proportion which its Commitment bears to the Total
Commitments on the proposed Drawdown Date.
<PAGE>
14
5.4 Reduction of Total Commitments
No Loan may be drawn under the Facility which would , when taken together
with the other Loans outstanding on its proposed Drawdown Date and which
have Interest Periods extending beyond that date for reduction of the Total
Commitments, render the aggregate amounts of Loans outstanding in excess of
the Total Commitments (as reduced) on that date for reduction.
6. REPAYMENT
The Company shall repay each Loan in full on the last day of its
Interest Period.
7. PREPAYMENT AND CANCELLATION
7.1 Mandatory Prepayment
The Company shall on the date for the receipt of subscription monies in
respect of the shares stipulated in the offering circular (or any
equivalent document) relating to the Equity Offering apply the Net Proceeds
of the Equity Offering in prepayment of the Loans. The Total Commitments
shall automatically be cancelled by an amount equal to the amount of such
Net Proceeds.
7.2 Voluntary prepayment
Subject to Clause 25.2 (Other financial indemnities), the Company may, by
giving not less than 5 Business Days' prior notice to the Facility Agent,
prepay any Loan in whole or in part (but, if in part, in a minimum of an
Original Dollar Amount of $40,000,000 and an integral multiple of an
Original Dollar Amount of $20,000,000) on any Business Day.
7.3 Voluntary cancellation
The Company may, by giving not less than 30 days' prior notice to the
Facility Agent, cancel in whole or in part the undrawn amount of the Total
Commitments (but, if in part, a minimum of $40,000,000 and, if more, in
integral multiples of $20,000,000). Any such cancellation shall reduce the
Commitment of each Bank pro rata.
7.4 Additional right of prepayment and cancellation
If:
(a) the Company is required to pay to a Bank any additional amount
under Clause 13 (Taxes); or
(b) the Company is required to pay to a Bank any amount under Clause
15 (Increased Costs);
then, without prejudice to the obligations of the Company under those Clauses,
the Company may, whilst the circumstances continue, serve a notice of prepayment
and cancellation on that Bank through the Facility Agent. On the date falling
five Business Days after the date of service of the notice:
<PAGE>
15
(i) the Company shall prepay that Bank's participation in all the Loans
together with all other amounts payable by the Company to that Bank
under this Agreement; and
(ii) that Bank's Commitment shall be cancelled.
7.5 Unlawfulness
If it is or becomes unlawful for the Company to perform any of its
obligations under the Finance Documents (and for so long as the same is
continuing), the Facility Agent may, and shall if so directed by the
Majority Banks, by notice to the Company:
(a) cancel the Total Commitments, whereupon the Total Commitments
shall be immediately cancelled; and/or
(b) demand that all or part of the Loans, together with accrued interest,
and all other amounts accrued under this Agreement be immediately due
and payable, whereupon they shall become immediately due and payable;
and/or
(c) demand that all or part of the Loans be payable on demand,
whereupon they shall immediately become payable on demand.
7.6 Ownership of the Company
(a) If:
(i) the Company ceases to be a public company; and/or
(ii) any person (other than those persons whose names appear on page 11 of
the Original Accounts and who at 31st December, 1997 owned, whether
directly or indirectly, more than 5 per cent. of the issued shares of
the Company) or group of persons who pursuant to an agreement or
understanding (whether formal or informal) actively co-operate
through the acquisition by any of them of shares in the Company and
obtain control of the Company, and "control" for this purpose means
the power to direct the management of the Company through the
ownership of shares giving more than 50 per cent. of the voting power
in relation to the shares of the Company,
the Company shall immediately notify the Banks, through the Facility Agent,
of that occurrence. The Banks shall take no further action in respect of
the events referred to above for a period of 30 days commencing on the date
that the Banks receive or are deemed to have received notice of the same.
The Company may not deliver a Request during any such 30 day period.
(b) Upon the expiry of the 30 day period the Facility Agent shall if
so directed by the Majority Banks, by notice to the Company:
(i) cancel the Total Commitments, whereupon the Total Commitments shall be
immediately cancelled; and/or
(ii) demand that all or part of the Loans, together with accrued
interest, and all other amounts accrued under this Agreement be
immediately due and payable, whereupon they shall become immediately
due and payable; and/or
<PAGE>
16
(iii) demand that all or part of the Loans be payable on
demand, whereupon they shall immediately become payable on demand.
(c) Nothing in paragraph (a) shall be construed as limiting the rights of the
Banks under Clause 20.16 (Acceleration) in respect of any Event of Default
which occurs before, during or after that 30 day period.
7.7 Miscellaneous provisions
(a) Any notice of prepayment and/or cancellation under this Agreement
is irrevocable. The Facility Agent shall notify the Banks promptly of
receipt of any such notice.
(b) All prepayments under this Agreement shall be made together with
accrued interest on the amount prepaid.
(c) No prepayment or cancellation is permitted except in accordance
with the express terms of this Agreement.
(d) Subject to the terms of this Agreement, any amount of a Loan repaid prior
to the Repayment Date under Clause 6 (Repayment) may be reborrowed. No
amount of the Total Commitments cancelled under this Agreement may
subsequently be reinstated.
8. INTEREST PERIODS
8.1 Selection
(a) The Company may select an Interest Period of one, two or three months, or
such other period as may be agreed between the Company and all the Banks,
for a Loan in the relevant Request. Subject to the following provisions of
this Clause 8, each Interest Period will be of the duration so selected.
(b) Unless the Facility Agent (after consultation with the Banks) otherwise
agrees, no more than eight Interest Periods of one month's duration may be
selected in any calendar year.
8.2 Non-Business Days
If an Interest Period would otherwise end on a day which is not a Business
Day, that Interest Period shall instead end on the next Business Day in
that calendar month (if there is one) or the preceding Business Day (if
there is not).
8.3 Overrunning of Repayment Date
If an Interest Period in respect of a Loan would otherwise overrun the
Repayment Date, it shall be shortened so that it ends on the Repayment
Date.
8.4 Other adjustments
The Facility Agent (after prior consultation with the Banks) and the
Company may enter into such other arrangements as they may agree for the
adjustment of Interest Periods and the consolidation and/or splitting of
Loans.
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8.5 Notification
The Facility Agent shall notify the Company and the Banks of the
duration of each Interest Period promptly after ascertaining its duration.
9. INTEREST
9.1 Interest rate
The rate of interest on each Loan for its Interest Period is the rate
per annum determined by the Facility Agent to be the aggregate of:
(a) the Margin; and
(b) the applicable LIBOR or, in the case of a Loan in Euros, EURO-
LIBOR or in the case of a Loan in SEK, STIBOR.
9.2 Due dates
Except as otherwise provided in this Agreement, accrued interest on each
Loan is payable by the Company on the last day of each Interest Period for
that Loan.
9.3 Default interest
(a) If the Company fails to pay any amount payable by it under this Agreement,
it shall forthwith on demand by the Facility Agent pay interest on the
overdue amount from the due date up to the date of actual payment, both
before and after judgment, at a rate (the "default rate") determined by
the Facility Agent to be 1.5 per cent. per annum above the higher of:
(i) the rate applicable to the overdue amount under Clause 9.1 (Interest
rate) immediately before the due date (if of principal); and
(ii) the rate which would have been payable if the overdue
amount had, during the period of non-payment, constituted a Loan in
the currency of the overdue amount for such successive Interest
Periods of such duration as the Facility Agent may determine (each a
"Designated Interest Period").
(b) The default rate will be determined by the Facility Agent on each
Business Day or two Business Days before the first day of the relevant
Designated Interest Period, as appropriate.
(c) If the Reference Banks notify the Facility Agent that deposits
in the currency of the overdue amount are not at the relevant time being
made available by the Reference Banks to leading banks in the relevant
interbank market, the default rate payable to each Bank will be determined
by reference to the cost of funds to that Bank from whatever sources it
may reasonably select (which it shall notify promptly to the Facility
Agent).
(d) Default interest will be compounded at the end of each Designated
Interest Period.
9.4 Notification
The Facility Agent shall promptly notify the Company and each Bank of
the determination of a rate of interest under this Agreement.
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18
10. SELECTION OF CURRENCIES
10.1 Availability of Optional Currencies
The Company may not request that a Loan be denominated in an Optional
Currency unless the Facility Agent has notified the Company in each
particular case that the Facility Agent has asked each Bank whether, and
each Bank has confirmed to the Facility Agent that, the Optional Currency
is readily available to it and freely transferable in the European foreign
exchange and the relevant interbank market.
10.2 Selection
(a) The Company may select the currency of a Loan for an Interest Period in
the relevant Request.
(b) Each part of a Loan which is to be denominated in a different
currency from any other part of that Loan shall be deemed to be a separate
Loan.
(c) The Company may not choose a currency (including for the
avoidance of doubt Dollars and Euros) if as a result the Loans outstanding
at any time would be denominated in more than three currencies.
(d) The Facility Agent shall notify each Bank of the proposed
currency or currencies of each Loan promptly after it is ascertained.
10.3 Revocation of currency
Notwithstanding Clause 10.1 (Availability of Optional Currencies) and
without prejudice to Clause 14 (Market Disruption) or Clause 16
(Illegality), if before 9.00 a.m. on the second Business Day before the
commencement of an Interest Period, the Facility Agent receives notice
from a Bank that:
(a) it is impracticable (in that Bank's reasonable opinion) for that Bank
to fund or make its participation in the Loan in the relevant
Optional Currency during that Interest Period in the ordinary course
of business in the relevant interbank market; or
(b) the advance or use of the proposed Optional Currency might
contravene any law or regulation,
the Facility Agent shall give notice to the Company and to the Banks to
that effect before 10.00 a.m. on that day. In this event:
(i) in the case of the drawdown of a Loan, the Company and the
Banks may agree that the drawdown shall not be made; and
(ii) in the absence of such agreement and in any other case, the Loan
shall be denominated, at the option of the Company, in Dollars or
Euros s during that Interest Period.
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19
11. Amount of Loans Denominated in Dollars or Optional Currencies
11.1 Drawdowns
If a Loan is to be drawn down in Euros or an Optional Currency, the amount
of each Bank's participation in that Loan will be determined by converting
into that currency the Bank's participation in the Original Dollar Amount
of that Loan on the basis of the Facility Agent's Spot Rate of Exchange
three Business Days before its Drawdown Date.
11.2 Notification
The Facility Agent shall notify the Banks and the Company of Euros and
Optional Currency amounts (and the applicable Facility Agent's Spot Rate
of Exchange) promptly after they are ascertained.
12. PAYMENTS
12.1 Place
All payments by the Company or a Bank under this Agreement shall be made
to the Facility Agent to its account at such office or bank as it may
notify to the Company or Bank for this purpose and in the absence of such
notification, such office or bank:
(a) in the principal financial centre of the relevant currency; or
(b) in the case of Euros, in the principal financial centre of a
Participating Member State or London.
12.2 Funds
Payments under this Agreement to the Facility Agent shall be made for
value on the due date at such times and in such funds as the Facility
Agent may specify to the Party concerned as being customary at the time
for the settlement of transactions in the relevant currency in the place
for payment.
12.3 Distribution
(a) Each payment received by the Facility Agent under this Agreement for
another Party shall, subject to paragraphs (b) and (c) below, be made
available by the Facility Agent to that Party by payment (on the date and
in the currency and funds of receipt) to its account with such office or
bank in the principal financial centre of the country of the relevant
currency or in the case of payments in Euros the principal financial
centre of a Participating Member State or London, in each case, as it may
notify to the Facility Agent for this purpose by not less than five
Business Days' prior notice.
(b) The Facility Agent may apply any amount received by it for the Company in
or towards payment (on the date and in the currency and funds of receipt)
of any amount due from the Company under this Agreement or in or towards
the purchase of any amount of any currency to be so applied.
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20
(c) Where a sum is to be paid to the Facility Agent under this Agreement for
another Party, the Facility Agent is not obliged to pay that sum to that
Party until it has established that it has actually received that sum. The
Facility Agent may, however, assume that the sum has been paid to it in
accordance with this Agreement, and, in reliance on that assumption, make
available to that Party a corresponding amount. If the sum has not been
made available but the Facility Agent has paid a corresponding amount to
another Party, that Party shall forthwith on demand by the Facility Agent
refund the corresponding amount together with interest on that amount from
the date of payment to the date of receipt, calculated at a rate
reasonably determined by the Facility Agent to reflect its cost of funds.
12.4 Currency
(a) A repayment or prepayment of a Loan or any part of a Loan is payable in
the currency in which the Loan is denominated on its due date.
(b) Interest is payable in the currency in which the relevant amount
in respect of which it is payable is denominated.
(c) Amounts payable in respect of costs, expenses and taxes and the like are
payable in the currency in which they are incurred.
(d) Any other amount payable under this Agreement is, except as otherwise
provided in this Agreement, payable in Dollars.
12.5 Set-off and counterclaim
All payments made by the Company under this Agreement shall be made in
full without set-off or counterclaim.
12.6 Non-Business Days
(a) If a payment under this Agreement is due on a day which is not a
Business Day, the due date for that payment shall instead be the next
Business Day in the same calendar month (if there is one) or the preceding
Business Day (if there is not).
(b) During any extension of the due date for payment of any principal
under this Agreement interest is payable on that principal at the rate
payable on the original due date.
12.7 Partial payments
(a) If the Facility Agent receives a payment insufficient to
discharge all the amounts then due and payable by the Company under this
Agreement, the Facility Agent shall apply that payment towards the
obligations of the Company under this Agreement in the following order:
(i) first, in or towards payment pro rata of any unpaid fees,
costs and expenses of the Facility Agent under this Agreement;
(ii) secondly, in or towards payment pro rata of any commitment
fee due but unpaid under this Agreement;
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21
(iii) thirdly, in or towards payment pro rata of any accrued interest due
but unpaid under this Agreement;
(iv) fourthly, in or towards payment pro rata of any principal
due but unpaid under this Agreement; and
(v) fifthly, in or towards payment pro rata of any sum (other
than principal or interest) due but unpaid under this Agreement.
(b) The Facility Agent shall, if so directed by all the Banks, vary
the order set out in paragraphs (a)(ii) to (v) above.
(c) Paragraphs (a) and (b) above shall override any appropriation
made by the Company.
13. TAXES
13.1 Gross-up
All payments by the Company under the Finance Documents shall be made
without any deduction or withholding and free and clear of and without
deduction or withholding for or on account of any taxes, except to the
extent that the Company is required by law to make payment subject to any
taxes. If any tax or amounts in respect of tax must be deducted or
withheld, or any other deductions or withholdings must be made, from any
amounts payable or paid by the Company, or paid or payable by the Facility
Agent to a Bank, under the Finance Documents, the Company, subject to
Clause 13.5 (Banks' failure to notify), shall pay such additional amounts
as may be necessary to ensure that the relevant Bank receives a net amount
equal to the full amount which it would have received had payment not been
made subject to tax or other deduction or withholding.
13.2 Tax receipts
All taxes required by law to be deducted or withheld by the Company from
any amounts paid or payable under the Finance Documents shall be paid by
the Company when due and the Company shall, as soon as practicable after
the payment is made, deliver to the Facility Agent for the relevant Bank
evidence satisfactory to that Bank (including all relevant tax receipts)
that the payment has been duly remitted to the appropriate authority.
13.3 Tax credits
(a) If, following the payment by the Company of any additional amounts under
Clause 13.1 (Gross-up), the Facility Agent or any Bank shall determine
that it has received or been granted a credit against or remission for any
taxes payable by it and which is allocable by the Facility Agent or that
Bank to a withholding or deduction in respect of a payment under this
Agreement, the Facility Agent or such Bank shall reimburse the Company
with such amount as the Facility Agent or such Bank shall in its absolute
discretion certify to be the proportion of such credit or remission (if
any) as will leave the Facility Agent or such Bank (after such
reimbursement) in no worse position than it would have been in had the
relevant deduction or withholding not been made. Such reimbursement shall
be made as soon as reasonably practicable after the Facility Agent or such
Bank (as the case may be) shall have made any such determination.
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22
(b) Nothing in this Agreement shall:
(i) require the Facility Agent or any Bank to disclose to the
Company any details of its tax affairs;
(ii) interfere with the right of the Facility Agent or any Bank
to arrange its tax affairs in whatever manner it thinks fit; or
(iii) require the Facility Agent or any Bank to claim relief in
respect of any payment under Clause 13.1.
13.4 Tax confirmation by Banks
Each Bank hereby confirms (on the date hereof, or, in the case of a Bank
which becomes a party to this Agreement pursuant to a transfer or
assignment, on the date on which the relevant transfer or assignment
becomes effective) that either:
(a) it is not resident for tax purposes in the United Kingdom and is
beneficially entitled to the principal and interest payable to it
under this Agreement; or
(b) it is a bank as defined in Section 840A of the Income and Corporation
Taxes Act 1988 and is beneficially entitled to the principal and
interest payable to it under this Agreement,
and each Bank agrees to notify the Facility Agent and the Company if there
is any change in its position from that set out above.
13.5 Banks' failure to notify
The Company shall not be required to pay increased amounts under Clause
13.1 (Gross-up) if a Bank no longer falls within Clause 13.4(a) or 13.4(b)
(Tax confirmation by Banks) on either a Drawdown Date or on a day a Loan
is repaid and fails to notify the Company.
14. MARKET DISRUPTION
14.1 Absence of quotations
If EURO-LIBOR, LIBOR or STIBOR (whichever being relevant being the
"Applicable Rate") falls to be determined by reference to the Reference
Banks but a Reference Bank does not supply an offered rate by 11.30 a.m.
on the second Business Day before an Interest Period, the Applicable Rate
shall, subject to Clause 14.2 (Market disruption), be determined on the
basis of the quotations of the remaining Reference Banks.
14.2 Market disruption
If:
(a) the Applicable Rate, is to be determined by reference to the Reference
Banks but no, or only one, Reference Bank supplies a rate by 11.30
a.m. on the second Business Day before the relevant Interest Period
for the purposes of determining the Applicable Rate or the Facility
Agent otherwise determines that adequate and fair means do not exist
for ascertaining the Applicable Rate; or
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23
(b) the Facility Agent receives notification from Banks whose
participations in a Loan exceed 35 per cent. of that Loan that, in
their opinion:
(i) matching deposits may not be available to them in the relevant
interbank market in the ordinary course of business to fund their
participations in that Loan for the relevant Interest Period; or
(ii) the cost to them of obtaining matching deposits in the relevant
interbank market would be in excess of the Applicable Rate, as
appropriate, for the relevant Interest Period,
the Facility Agent shall promptly notify the Company and the Banks of
the fact and that this Clause 14 is in operation.
14.3 Options
(a) After notification under Clause 14.2 (Market disruption) and
notwithstanding any other provision of this Agreement the Company may by
notice to the Facility Agent, to be received not later than 1 p.m. two
Business Days before the proposed Drawdown Date for that Loan:
(i) revoke the Request for that Loan; or
(ii) request that the Loan be made in Euros or Dollars and if Clause 14.2
(Market disruption) does not apply at that time to Loans denominated
in Euros or Dollars, as the case may be, the relevant Loan shall be
made in Euros or Dollars, as the case may be, and the Drawdown Date
for the Loan shall (aa) if the Loan is to be made in Euros, be the
Drawdown Date stated in the Request, or (bb) if the Loan is to be
made in Dollars, be the Business Day following the Drawdown Date
stated in the Request; or
(iii) request that the Loan be made in the requested currency
and agree to pay the cost certified by each Bank as being the cost to
that Bank, expressed as a percentage rate per annum, of funding
(whether in the currency of that Loan or otherwise) its participation
in that Loan from whatever sources it may reasonably select in which
case the cost so certified plus the Margin shall be the rate of
interest applicable to the certifying Bank's participation in that
Loan for its Interest Period, be binding on the Company and the
certifying Bank and treated as part of this Agreement; or
(iv) require the Facility Agent to enter into negotiations for a period of
not more than 30 days with a view to agreeing an alternative basis
for determining the rate of interest and/or funding applicable to
that Loan and/or any other Loans denominated or to be denominated in
the currency of the affected Loans.
(b) Each Bank shall endeavour to obtain funds at favourable rates, but
without liability for failing to do so.
<PAGE>
24
15. INCREASED COSTS
15.1 Increased costs
(a) Subject to Clause 15.3 (Exceptions), the Company shall forthwith
on demand by a Finance Party pay to the Facility Agent for that Finance
Party the amount of any increased cost incurred by it as a result of any
change in or introduction of, or any change in the interpretation or
application of, any law or regulation (including any compliance in respect
thereof) occurring after the date of this Agreement, including any law or
regulation relating to taxation, reserve asset, special deposit, cash
ratio, liquidity or capital adequacy requirements or any other form of
banking or monetary control.
(b) In this Agreement, "increased cost" means:
(i) an additional cost incurred by a Finance Party as a result
of it having entered into, or performing, maintaining or funding its
obligations under, this Agreement; or
(ii) that portion of an additional cost incurred by a Finance
Party in making, funding or maintaining all or any advances comprised
in a class of advances formed by or including its participations in
the Loans made or to be made under this Agreement as is attributable
to it making, funding or maintaining those participations; or
(iii) a reduction in any amount payable to a Finance Party or
the effective return to a Finance Party under this Agreement or that
portion of a reduction in the effective return to a Finance Party on
its capital as is attributable to this Agreement and/or the
transactions contemplated by this Agreement; or
(iv) the amount of any payment made by a Finance Party, or the
amount of any interest or other return foregone by a Finance Party,
calculated by reference to any amounts received or receivable by that
Finance Party from the Facility Agent or the Company under this
Agreement.
15.2 Holding Companies
Subject to Clause 15.3 (Exceptions), the Company shall forthwith on demand
by a Finance Party pay to the Holding Company of that Finance Party the
amount of any increased cost incurred by that Holding Company (and not by
such Finance Party) which would, if it had been incurred by that Finance
Party, have been an increased cost the amount of which the Company would
have been required to pay the Finance Party on demand by it under Clause
15.1 (Increased costs).
15.3 Exceptions
Clause 15.1 (Increased costs) does not apply to any increased cost:
(a) compensated for by the operation of Clause 13 (Taxes); or
(b) attributable to any change in the rate of tax, or change in the
basis of calculating, on overall net income of a Bank or its Holding
Company (or the overall net income of a division or branch of a Bank
or its Holding Company) imposed in the jurisdiction in which its
principal office or Facility Office is situate; or
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25
(c) resulting from compliance with the matters set out in the statement
of the Basle Committee on Banking Regulations and Supervisory
Practices dated July 1988 and entitled "International Convergence of
Capital Measurements and Capital Standards", unless it results from
any change after the date of this Agreement in, or in the
interpretation of or application of, those matters as contemplated
on the date of this Agreement.
16. ILLEGALITY
If it becomes unlawful in any jurisdiction for a Bank to give effect to
any of its obligations as contemplated by this Agreement or to fund or
maintain its participation in any Loan, then:
(a) that Bank may notify the Company through the Facility Agent
accordingly; and
(b) on the date of notification under paragraph (a) above:
(i) the Company shall prepay that Bank's participation in all the
Loans together with all other amounts payable by the Company to
that Bank under this Agreement; and
(ii) the Bank's Commitment shall forthwith be cancelled.
17. MITIGATION
If, in respect of any Bank, circumstances arise which would or would
upon the giving of notice result in:
(a) the Company being required to pay to or for the account of a Bank
any additional amounts pursuant to Clause 13.1 (Gross-up) or 15.1
(Increased costs); or
(b) the Company being obliged to prepay that Bank's participation in all
Loans and that Bank's Commitment being cancelled under Clause 16
(Illegality),
then, without in any way limiting, reducing or otherwise qualifying the
obligations of the Company under Clauses 13 (Taxes), 15 (Increased Costs)
or 16 (Illegality), such Bank shall promptly notify the Company and that
Bank shall endeavour to take such steps as may be reasonably open to it
to mitigate or remove those circumstances or the effect of those
circumstances, including (without limitation) the transfer of its
Facility Office to another jurisdiction, the restructuring of its
participation in the facility or the transfer of its rights and
obligations under this Agreement to another bank or financial institution
unless, in the reasonable opinion of that Bank, such steps might be
prejudicial in any way to the Bank.
18. REPRESENTATIONS AND WARRANTIES
18.1 Representations and warranties
The Company makes the representations and warranties set out in this
Clause 18 to each Finance Party.
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26
18.2 Status
(a) It is a limited liability public company, duly incorporated and
validly existing under the laws of the Kingdom of Sweden; and
(b) each member of the Group has the power to own its assets and
carry on its business as it is currently being conducted.
18.3 Powers and authority
It has the power to enter into and perform, and has taken all necessary
action to authorise the entry into, performance and delivery of the
Finance Documents and the documentation relating to the Acquisition to
which it is or will be a party and the transactions contemplated by those
Finance Documents and the Acquisition.
18.4 Legal validity
Subject to the qualifications as to matters of law set out in any
relevant legal opinion referred to in Schedule 2, each Finance Document
and each document relating to the Acquisition to which it is or will be a
party constitutes, or when executed in accordance with its terms will
constitute, its legal, valid and binding obligation enforceable in
accordance with its terms.
18.5 Non-conflict
The entry into and performance by it of, and the transactions
contemplated by the Finance Documents (which shall, for the avoidance of
doubt, include the Acquisition) do not and will not:
(a) conflict with any present law or regulation or judicial or
official order; or
(b) conflict with the constitutional documents of any member of the
Group; or
(c) conflict with any document which is binding upon any member of
the Group or any asset of any member of the Group.
18.6 No default
(a) No Default or Termination Event is outstanding or is reasonably
likely to result from the making of any Loan; and
(b) no other event is outstanding which constitutes (or with the giving of
notice, lapse of time, determination of materiality or the fulfilment of
any other applicable condition or any combination of the foregoing, might
constitute) a default under any document which is binding on any member
of the Group or any asset of any member of the Group to an extent or in a
manner which is reasonably likely to have a material adverse effect on
the business, assets, financial condition or operations of any member of
the Group or the ability of the Company to perform its obligations under
the Finance Documents.
18.7 Authorisations
(a) All authorisations, notices or filings (to or with any competent
authority) required in connection with the entry into, performance,
validity and enforceability of, and the
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27
transactions contemplated by, the Finance Documents or for the
consummation of the Acquisition (including, without limitation, the pre-
merger notification requirements under the Hart-Scott-Rodino Antitrust
Improvements Act, 1976 (as amended) as well as any requirements under EC
and/or Swedish and/or any other applicable national competition law) have
been (or will be at the time of making the first Request) obtained or
effected (as appropriate) and are (or will be at the time of making the
first Request) in full force and effect.
(b) All applicable waiting periods in connection with the Acquisition
(including, without limitation, the pre-merger notification requirements
under the Hart-Scott-Rodino Antitrust Improvements Act, 1976 (as amended)
as well as the relevant requirements, if any, under EC and/or Swedish
and/or other applicable national competition law) and the other
transactions contemplated therein have expired without any action having
been taken by any competent authority restraining, preventing or imposing
materially adverse conditions upon the Acquisition.
18.8 Accounts
Its audited consolidated accounts most recently delivered to the Facility
Agent (which, at the date of this Agreement, are the Original Accounts)
and its consolidated accounts most recently delivered to the Facility
Agent in accordance with paragraphs (a), (b) and (c) of Clause 19.2
(Financial information):
(a) have been prepared in accordance with Swedish Accounting
Requirements; and
(b) fairly represent its consolidated financial condition as at the
date to which they were drawn up,
and there has been no material adverse change in its consolidated
financial condition since the date to which those accounts were drawn up.
18.9 Litigation
No litigation, arbitration or administrative proceedings are current or,
to its knowledge, pending or threatened, which might, if adversely
determined, have a material adverse effect on the business, assets,
financial condition or operations of any member of the Group or the Target
or on the ability of the Company to perform its obligations under the
Finance Documents.
18.10 ERISA
(a) Each member of the Controlled Group has fulfilled its obligations
under the minimum funding standards of ERISA and the Code with respect to
each Plan to which such minimum funding standards apply.
(b) Each member of the Controlled Group is, in all material respects,
in compliance with the applicable provisions of ERISA, the Code and any
other applicable United States Federal or State law with respect to each
Plan.
(c) Each Plan (other than any Multi Employer Plan) complies in all
material respects with all applicable requirements of law and regulations.
No Reportable Event has occurred with respect to any Plan, and no steps
have been taken to reorganise or terminate any Plan or
<PAGE>
28
declare any Multi Employer Plan insolvent, or by the Company or any member
of the Controlled Group to effect a complete or partial withdrawal from
any Multi Employer Plan.
(d) No member of the Controlled Group has:
(i) sought a waiver of the minimum funding standard under
Section 412 of the Code in respect of any Plan;
(ii) failed to make any contribution or payment to any Plan, or
made any amendment to any Plan, and no other event, transaction or
condition has occurred which has resulted or could reasonably be
expected to result in the imposition of a lien or the posting of a
bond or other security under ERISA or the Code;
(iii) incurred any material, actual liability under Title I or Title IV of
ERISA which remains unsatisfied other than a liability to the PBGC
for premiums under Section 4007 of ERISA; or
(iv) no member of the Controlled Group would incur any material liability
to or with respect to any Plan or Multi Employer Plan in the event of
termination of all such Plans and the complete withdrawal from all
such Multi Employer Plans.
18.11 US Matters
(a) Neither the Company nor any of its Subsidiaries is an "investment
company" or a company "controlled" by an "investment company" under the
United States Investment Company Act of 1940, as amended.
(b) None of the transactions contemplated in this Agreement (including,
without limitation, the borrowings hereunder and the use of the proceeds
thereof) will violate or result in a violation of Section 7 of the
Securities Exchange Act of 1934 (or any regulations issued pursuant
thereto, including, without limitation, Regulations T, U and X) it being
agreed that the Company may use the proceeds of any Loan to purchase
Margin Stock in compliance with Regulations T, U and X, so long as at the
time of the making of any such Loan, and after giving effect thereto, not
more than 25% of the value of the assets of the Company or of the Group
that are subject to the provisions of Clause 19.8 (Negative pledge),
Clause 19.9 (Transactions similar to security) or Clause 19.10 (Disposals)
shall constitute Margin Stock.
(c) Neither the Company nor any of its Subsidiaries is a "holding
company", or a "subsidiary company" of a "holding company" or an
"affiliate" of a "holding company" or of a "subsidiary company" of a
"holding company", within the meaning of the United States Public Utility
Holding Company Act of 1935.
18.12 Times for making representations and warranties
The representations and warranties set out in this Clause 18 are made by
the Company on the date of this Agreement and are deemed to be repeated by
the Company on the date of each Request and the first day of each Interest
Period with reference to the facts and circumstances then existing.
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29
19. UNDERTAKINGS
19.1 Duration
The undertakings in this Clause 19 remain in force from the date of this
Agreement for so long as any amount is or may be outstanding under this
Agreement or any Commitment is in force.
19.2 Financial information
The Company shall supply to the Facility Agent in sufficient copies
for all the Banks:
(a) as soon as the same are available, and in any event within 120 days
of the end of each of its financial years (or any shorter period for
which its audited accounts are prepared), its audited accounts and
the audited consolidated accounts of the Group for that financial
year or period, as the case may be;
(b) as soon as the same are available, and in any event within 60 days of
the end of the first six month period of each financial year, its
interim consolidated accounts for such period;
(c) as soon as the same are available, and in any event within 60 days of
the end of the period to which they relate, its consolidated accounts
for each of its financial quarters (if published);
(d) together with the accounts specified in paragraph (a) above, a
certificate signed by its auditors setting out in reasonable detail
computations establishing compliance with Clause 19.13 (Financial
covenants); and
(e) together with the interim accounts specified in paragraphs (b) and
(c) above, or, if no such accounts are published in relation to
paragraph (c), within the same time period for delivery as specified
therein, a certificate signed by two of its senior officers (a
"Compliance Certificate") setting out in reasonable detail
computations establishing compliance with Clause 19.13 (Financial
covenants).
Nothing in this Clause obliges the Company to provide any information to
any Finance Party which the Company is prevented from so doing by reason
of any rule of the Stockholm Stock Exchange or any other Relevant Stock
Exchange without giving that information to all its shareholders at the
same time.
19.3 Information - miscellaneous
The Company shall supply to the Facility Agent:
(a) all documents despatched by it to its shareholders (or any class of
them) or creditors (or any class of them) at the same time as they
are despatched;
(b) promptly upon becoming aware of them, details of any litigation,
arbitration or administrative proceedings which are current,
threatened or pending, and which is reasonably likely to have a
material adverse effect on the business, assets, financial condition
or operations of the Company or the Group taken as a whole or on the
ability of the Company to perform its obligations under this
Agreement;
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30
(c) if any member of the Controlled Group:
(i) gives or is required to give notice to the PBGC of any Reportable
Event with respect to any Plan which might constitute grounds for
a termination of that Plan under Title IV of ERISA, or knows that
the plan administrator of any Plan has given notice of that
Reportable Event, a copy of the notice of that Reportable Event
given or required to be given to the PBGC;
(ii) receives notice of complete or partial withdrawal liability under
Title IV of ERISA or notice that any Multi Employer Plan is in
reorganization, is insolvent or has been terminated, a copy of
that notice;
(iii) receives notice from the PBGC under Title IV of ERISA of an intent
to terminate, impose liability (other than for premiums under
Section 4007 of ERISA) in respect of, or appoint a trustee to
administer, any Plan, a copy of that notice;
(iv) applies for a waiver of the minimum funding standard under
Section 412 of the Code, a copy of that application;
(v) gives notice of intent to terminate any Plan under Section 4041(c)
of ERISA, a copy of that notice and any other information filed
with the PBGC;
(vi) gives notice of withdrawal from any Plan pursuant to Section 4063
of ERISA, a copy of that notice; or
(vii) fails to make any payment or contribution to any Plan or makes any
amendment to any Plan which has resulted or could result in the
imposition of a Security Interest or the posting of a bond or
other security, a certificate of the chief financial officer or
the chief accounting officer of the Companysetting forth details
of that occurrence and action, if any, which the Company or
applicable member of the Controlled Group is required or proposes
to take; and
(d) promptly, such further information in the possession or control of
any member of the Group regarding its business, assets, financial
condition and operations as any of the Banks, through the Facility
Agent, may reasonably request,
in sufficient copies for all of the Banks. Nothing in this Clause
obliges the Company to provide any information to any Finance Party
which the Company is prevented from so doing by reason of any rule of
the Stockholm Stock Exchange or any other Relevant Stock Exchange
without giving that information to all its shareholders at the same
time.
19.4 Notification of Default
The Company shall notify the Facility Agent of any Default or
Termination Event (and the steps, if any, being taken to remedy it)
promptly upon its occurrence.
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31
19.5 Compliance certificates
The Company shall supply to the Facility Agent:
(a) together with any of the accounts specified in Clause 19.2(a)
(Financial information); and
(b) promptly at any other time, if the Facility Agent (on behalf of
any Bank) so requests (acting reasonably),
a certificate signed by two of its senior officers on its behalf
certifying that no Default or Termination Event is outstanding or, if a
Default or Termination Event is outstanding, specifying the Default or
Termination Event and the steps, if any, being taken to remedy it.
19.6 Authorisations
The Company shall promptly:
(a) obtain, maintain and comply with the terms of; and
(b) supply certified copies to the Facility Agent of,
any authorisation required under any law or regulation to enable it to
perform its obligations under, or for the validity or enforceability of,
any Finance Document.
19.7 Pari passu ranking
The Company shall procure that its obligations under this Agreement do
and will rank at least pari passu with all its other present and future
unsecured and unsubordinated obligations, except for obligations which
are mandatorily preferred by Swedish law applying to companies generally.
19.8 Negative pledge
(a) Except with the prior written consent of the Majority Banks the
Company shall not, and shall procure that no other member of the Group
will, create or permit to subsist any Security Interest on any of its
assets.
(b) Paragraph (a) does not apply to:
(i) any lien arising by operation of law and in the ordinary course of
business and securing amounts not more than 30 days overdue;
(ii) any Security Interest existing at the time of acquisition on or
over any asset acquired by a member of the Group after the date of
this Agreement which was not created in contemplation of or in
connection with that acquisition, provided that the principal,
capital or nominal amount secured by any such Security Interest and
outstanding at the time of acquisition may not be increased;
(iii) in the case of any company which becomes a Subsidiary of the
Company after the date of this Agreement, any Security Interest
existing on or over its assets when it
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32
becomes a Subsidiary of the Company which was not created in
contemplation of or in connection with it becoming a Subsidiary,
provided that:
(A) the principal, capital or nominal amount secured by any such
Security Interest and outstanding when the relevant company
becomes a Subsidiary is not increased; and
(B) no amount is secured by any such Security Interest which
is not secured by the relevant Security Interest when the
relevant company becomes a Subsidiary;
(iv) any Security Interest (the "new Security Interest") created in
substitution for any Security Interest referred to in paragraphs (ii)
and (iii), provided that the new Security Interest subsists over the
same asset(s) as had been secured by the Security Interest which it
replaced and the principal, capital or nominal amount secured by the
new Security Interest does not exceed the amount permitted to be
secured by the Security Interest which it replaced;
(v) any Security Interest created in connection with an acquisition by a
member of the Group as a means of obtaining a deferred payment of the
purchase price provided that the principal, capital or nominal amount
secured by the Security Interest does not exceed the outstanding
amount of the deferred purchase price at any time; and
(vi) Security Interests (other than those permitted by sub-paragraphs
(i)-(v) above) created by the Group securing indebtedness to persons
outside the Group not exceeding, when taken together with the
aggregate value of financing raised or the amount involved in the
financing of an asset in transactions described in Clause 19.9
(Transactions similar to security), an aggregate of the higher of (A)
SEK300,000,000 (or its equivalent in other currencies) or (B) 7 per
cent. of Total Assets.
For the avoidance of doubt, the term Security Interest shall not be
construed as including an unsecured guarantee or similar surety.
19.9 Transactions similar to security
Except with the prior written consent of the Majority Banks the Company
shall not and the Company shall procure that no other member of the Group
will:
(a) sell, transfer or otherwise dispose of any of its assets on terms
whereby it is or may be leased to or re-acquired or acquired by a
member of the Group or any of its related entities; or
(b) sell, transfer or otherwise dispose of any of its receivables on
recourse terms, except for the discounting of bills or notes in the
ordinary course of trading;
in each case, in circumstances where the transaction is entered into
primarily as a method of raising finance or financing the acquisition of
an asset, save where the aggregate of (a) financing raised or the amount
involved in the financing of the acquisition of an asset in transactions
described in this Clause 19.9 (Transactions similar to security) and (b)
the Security Interests permitted by Clause 19.8(vi) (Negative pledge),
does not exceed the higher
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33
of (A) SEK300,000,000 (or its equivalent in other currencies) or (B) 7
per cent. of Total Assets.
For the avoidance of doubt, a transaction which involves the sale of any
leasehold or freehold property or land by a member of the Group for
market value which is then leased back by a member of the Group or any of
its related entities for a market rent, which is not a transaction
entered into primarily as a method of raising finance or a means of
financing the acquisition of that leasehold or freehold property or land,
shall not be construed as being included in this Clause 19.9.
19.10 Disposals
(a) Except with the prior written consent of the Majority Banks, the Company
shall not and the Company shall procure that no other member of the Group
will, either in a single transaction or a series of transactions, whether
related or not and whether voluntarily or involuntarily, sell, transfer,
grant or lease or otherwise dispose of any part of its assets.
(b) Paragraph (a) above does not apply to:
(i) any disposal for fair market value made in the ordinary
course of business of the disposing entity;
(ii) any disposal of assets on arm's length terms in exchange for other
assets equal or superior as to type, market value and quality where
that disposal does not have a material adverse effect on the
business, assets, financial condition or operations of the Company
or the Group taken as a whole;
(iii) any disposal of obsolete assets, or assets which are no longer
required for the purpose of the business of the relevant member of
the Group, in each case on normal commercial terms on an arm's
length basis; and
(iv) any disposal of assets for fair market value where the book value
of the assets disposed of, when aggregated with all other disposals
of assets by any member of the Group (other than those listed in
sub-paragraphs (i) to (iii) above) does not exceed 20 per cent. of
Total Assets.
19.11 Borrowings
(a) The Company shall procure that, except with the prior written consent of
the Majority Banks, none of its Subsidiaries will incur any Financial
Indebtedness or maintain any account or arrangement relating to
Financial Indebtedness with any bank or other institution providing
banking services.
(b) Paragraph (a) above does not apply to:
(i) Financial Indebtedness owing by a Subsidiary of the Company
to another member of the Group; or
(ii) Total Borrowings (as defined in Clause 19.13 (Financial covenants))
(other than that referred to in sub-paragraph (i) above) of
Subsidiaries of the Company not exceeding in aggregate the higher
of (A) SEK500,000,000 (or its equivalent in other currencies)
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34
or (B) 50 per cent. of Total Consolidated Borrowings (as defined in
Clause 19.13 (Financial covenants)) at that time.
19.12 Change of business
The Company shall procure that, except with the prior written consent of
the Majority Banks, no substantial change is made to the general nature
or scope of the business of the Company or the Group from that carried on
at the date of this Agreement.
19.13 Financial covenants
(a) In this Clause 19.13:
"Accounts Date"
means the date as at which the audited consolidated accounts, or interim
six month consolidated accounts or quarterly consolidated accounts (if
published) of the Company on which the relevant calculation is based were
prepared.
"Gearing Ratio"
means the ratio of Net Interest Bearing Debt to Net Worth.
"Interest Payable"
means, with respect to any period, all interest, acceptance commission
and any other continuing, regular or periodic costs and expenses in the
nature of interest (whether paid, payable or capitalised) incurred by the
Group in effecting, servicing or maintaining Total Consolidated
Borrowings during that period.
"Net Interest Bearing Debt"
means Total Consolidated Borrowings less liquid funds (including, without
limitation, cash and bank balances and short-term investments), as
reflected in the relevant consolidated accounts.
"Net Worth"
means the value (as at the relevant Accounts Date) of total shareholders'
equity as reflected in the relevant consolidated accounts.
"Operating Income"
means, with respect to any period, the consolidated operating income
before amortisation of goodwill, plus financial income, of the Group for
that period.
"Reference Date"
means, in each year, the last day of each of the Company's financial
quarters, if quarterly consolidated accounts are published, or otherwise
the date as at which the audited consolidated accounts and the interim
six month consolidated accounts are prepared.
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35
"Total Borrowings"
means, in respect of any member of the Group, at any time the aggregate
(without double counting) of the following:
(i) the outstanding principal amount of any moneys borrowed by that
member of the Group and any outstanding overdraft debit balance of
that member of the Group;
(ii) the outstanding principal amount of any debenture, bond,
note, loan stock or other security of that member of the Group;
(iii) the outstanding principal amount of any acceptance under any
acceptance credit opened by a bank or other financial institution
in favour of that member of the Group;
(iv) the outstanding principal amount of all moneys owing to that
member of the Group in connection with the sale or discounting of
receivables (otherwise than on a non-recourse basis);
(v) the outstanding principal amount of any indebtedness of that
member of the Group arising from any advance or deferred payment
agreements arranged primarily as a method of raising finance or
financing the acquisition of an asset;
(vi) the capitalised element of indebtedness of that member of the Group
in respect of a lease entered into primarily as a method of raising
finance or financing the acquisition of the asset leased;
(vii) any fixed or minimum premium payable on the repayment or redemption
of any instrument referred to in sub-paragraph (ii) above; and
(viii) the outstanding principal amount of any indebtedness of any person
of a type referred to in sub-paragraphs (i) - (vii) above which is
the subject of a guarantee, indemnity and/or other form of
assurance against financial loss given by that member of the Group.
"Total Consolidated Borrowings"
means at any time the aggregate (without double counting) of the Total
Borrowings of each member of the Group.
(b) (i) All the terms used in paragraph (a) above are to be calculated in
accordance with the Reference Accounting Requirements.
(ii) If there is a dispute as to any interpretation of or computation
for paragraph (a) above, the interpretation or computation of the
Facility Agent acting on behalf of the Majority Banks prevails.
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36
(c) The Company shall procure that:
(i) as at the end of the 12 month period ending on each Reference Date,
the ratio of Operating Income for that 12 month period to Interest
Payable during the same period is not less than 3.0 to 1; and
(ii) the Gearing Ratio is less than 1.35:1 at all times.
(d) If any consolidated accounts of the Company delivered to the
Facility Agent under Clause 19.2(a), (b) or (c) (Financial information)
have not been prepared in accordance with the Reference Accounting
Requirements or there is a change in the presentation or method of
calculation of the Company's accounts then either:
(i) the Company shall deliver to the Facility Agent, at the same
time as those accounts, either:
(A) a certificate of its auditors confirming to the satisfaction of
the Facility Agent that the accounting principles and practices
applied do not result in any different result of the calculation
of any of the terms used in paragraph (a) above from that which
would have resulted if the Reference Accounting Requirements or
the same form of presentation or method of calculation had been
applied; or
(B) a certificate of its auditors setting out in reasonable detail
and in a form satisfactory to the Facility Agent details of all
adjustments which need to be made to the relevant consolidated
accounts of the Company in order to bring them into line with the
Reference Accounting Requirements or the same form of
presentation or method of calculation; or
(ii) if the Company requests, the Company and the Facility Agent (on
behalf of and after consultation with the Banks) shall enter into
negotiations for a period not exceeding 30 days with a view to
agreeing such amendments to the provisions of this Clause 19.13 as
are necessary to give the Finance Parties comparable protection to
that contemplated at the date of this Agreement and:
(A) if such amendments are agreed by the Company, the Facility Agent
and the Majority Banks within that period, those amendments
shall take effect in accordance with Clause 27 (Amendments and
Waivers); or
(B) if such amendments are not agreed within that period, the
Company shall:
(1) within 30 days after the end of that period; and
(2) at the same time as all subsequent consolidated accounts of
the Company to be delivered to the Facility Agent under
Clause 19.2(a), (b) or (c) (Financial information),
deliver to the Facility Agent a certificate of the Company's
auditors to the effect set out in sub-paragraph (i)(B) above.
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37
19.14 ERISA Undertaking
The Company will procure that no member of the Controlled Group will:
(a) fail to make payment when due of all amounts due as a
contribution to any Plan;
(b) engage in any transaction in connection with which the Company or
any member of the Controlled Group could be subjected to either a
civil penalty assessed pursuant to Section 502(i) of ERISA, a tax
imposed by Section 4975 of the Code or breach of fiduciary duty
liability damages; or
(c) amend, terminate or withdraw from any Plan or Multi Employer
Plan,
if the failure to make such payment or such penalty, tax or liability or
such amendment, termination or withdrawal, as the case may be, would,
individually or in the aggregate, have a material adverse effect on the
ability of the Company to perform their obligations under the Finance
Documents.
19.15 Acquisition
(a) The Acquisition will be made in compliance with all applicable laws
and regulations.
(b) The Company shall procure that it has either before or not more than five
Business Days after the first Drawdown Date acquired more than 50% of the
shares of common stock of the Target.
20. DEFAULT
20.1 Events of Default
Each of the events set out in Clauses 20.2 (Non-payment) to 20.15 (ERISA
Event of Default) (inclusive) is an Event of Default (whether or not
caused by any reason whatsoever outside the control of the Company or any
other person).
20.2 Non-payment
The Company does not pay on the due date any amount payable by it under
the Finance Documents at the place at and in the currency in which it is
expressed to be payable and the failure to pay (if due to administrative
or technical reasons) continues unremedied for three Business Days.
20.3 Breach of key obligations
The Company does not comply with any provision of Clause 19.8 (Negative
pledge), 19.9 (Transactions similar to security), 19.10 (Disposals),
19.12 (Change of business), 19.13 (Financial covenants) or 19.15
(Acquisition).
20.4 Breach of other obligations
The Company does not comply with any provision of Clause 19
(Undertakings) (other than those referred to in Clause 20.3 (Breach of
key obligations)), Clause 3 (Purpose), Clause 13.2 (Tax receipts), Clause
36.2 (Service of process), or with any other material provision (other
<PAGE>
38
than those referred to in Clause 20.2 (Non-payment)) of the Finance
Documents and such non-compliance, if in the reasonable opinion of the
Facility Agent (acting on behalf of the Banks), it is capable of remedy,
is not remedied within the earlier of 20 days after the Facility Agent
has given notice to the Company or the Company has become aware of such
non-compliance.
20.5 Misrepresentation
Any representation or warranty contained in Clause 18 (Representations
and Warranties) or any other material representation, warranty or
statement made or deemed to be repeated in or in connection with any
Finance Document or in any document delivered by or on behalf of the
Company under or in connection with any Finance Document is incorrect
when made or deemed to be repeated.
20.6 Cross-default
(a) Any Financial Indebtedness of a member of the Group is not paid when due
or within any grace period applicable under the original terms of the
agreement governing such Financial Indebtedness; or
(b) an event of default howsoever described (or any event which with the
giving of notice, lapse of time, determination of materiality or
fulfilment of any other applicable condition or any combination of the
foregoing would constitute such an event of default) occurs under any
document relating to Financial Indebtedness of a member of the Group; or
(c) any Financial Indebtedness of a member of the Group becomes prematurely
due and payable or is placed on demand as a result of an event of default
(howsoever described) under the document relating to that Financial
Indebtedness; or
(d) any commitment for, or underwriting of, any Financial Indebtedness of a
member of the Group is cancelled or suspended as a result of an event of
default (howsoever described) under the document relating to that
Financial Indebtedness; or
(e) any Security Interest securing Financial Indebtedness over any
asset of a member of the Group becomes enforceable,
provided that there shall be no Event of Default where the aggregate
Financial Indebtedness referred to in paragraphs (a) to (e) (inclusive)
above is less than SEK85,000,000 (or its equivalent in other currencies).
20.7 Insolvency
(a) A member of the Group is, or is deemed for the purposes of any law to be,
unable to pay its debts as they fall due or insolvent, or admits
inability to pay its debts as they fall due; or
(b) a member of the Group suspends making payments on all or any class of its
debts or announces an intention to do so, or a moratorium is declared in
respect of any of its indebtedness; or
(c) a member of the Group, by reason of financial difficulties, begins
negotiations with one or more of its creditors with a view to avoiding,
or in expectation of, insolvency or other serious financial difficulties.
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39
20.8 Insolvency proceedings
(a) Any step (including petition, proposal or convening a meeting) is taken
with a view to a composition, assignment or arrangement with any
creditors of any member of the Group (other than proceedings or steps
which are frivolous, vexatious and/or are being contested by the relevant
member of the Group in good faith and by appropriate means); or
(b) a meeting of a member of the Group is convened for the purpose of
considering any resolution for (or to petition for) its winding-up or its
administration or any such resolution is passed (other than proceedings
or steps which are frivolous, vexatious and/or are being contested by the
relevant member of the Group in good faith and by appropriate means); or
(c) any person presents a petition for the winding-up or for the
administration of any member of the Group (other than a petition
presented on grounds which are frivolous, vexatious and/or are being
contested by the relevant member of the Group in good faith and by
appropriate means); or
(d) any order for the winding-up or administration of any member of the Group
is made; or
(e) any other step is taken with a view to the rehabilitation,
administration, custodianship, liquidation, winding-up or dissolution of
any member of the Group or any other insolvency proceedings involving any
member of the Group (other than proceedings or steps which are frivolous,
vexatious and/or are being contested by the relevant member of the Group
in good faith and by appropriate means),
other than (i) a solvent liquidation of a member of the Group other than
the Company or (ii) in connection with a voluntary amalgamation or
reconstruction of a member of the Group (other than the Company) effected
in either case with the prior written consent of the Majority Banks (such
consent not to be unreasonably withheld).
20.9 Appointment of receivers and managers
(a) Any liquidator, trustee in bankruptcy, judicial custodian, compulsory
manager, receiver, administrative receiver, administrator or the like is
appointed in respect of any member of the Group (other than, in the case
of a liquidator, a solvent member of the Group other than the Company) or
any part of its assets, unless the value of assets in respect of which
such appointment is made is less than SEK50,000,000 (or its equivalent in
other currencies); or
(b) the directors of any member of the Group (other than, in the case of a
liquidator, a solvent member of the Group other than the Company) request
the appointment of a liquidator, trustee in bankruptcy, judicial
custodian, compulsory manager, receiver, administrative receiver,
administrator or the like; or
(c) any other steps are taken to enforce any Security Interest over any part
of the assets of any member of the Group (other than steps which are
frivolous, vexatious and/or are being contested by the relevant member of
the Group in good faith and by appropriate means), unless the value of
assets in respect of which such steps are taken is less than
SEK50,000,000 (or its equivalent in other currencies).
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40
20.10 Creditors' process
Any attachment, sequestration, distress or execution affects any asset of
any member of the Group and is not stayed or discharged within 14 days.
20.11 Analogous proceedings
There occurs, in relation to any member of the Group, any event anywhere
which, in the opinion of the Majority Banks, appears to correspond with
those mentioned in Clauses 20.7 (Insolvency) to 20.10 (Creditors'
process) (inclusive).
20.12 Cessation of business
Any member of the Group ceases, or threatens to cease, to carry on all or
a substantial part of its business other than a member of the Group whose
business is not substantial in the context of the business of the Company
or the Group as a whole.
20.13 Litigation
Any litigation or arbitration is commenced which might, if adversely
determined, have a material adverse effect on the ability of the Company
to perform its obligations under the Finance Documents or on the
business, assets, financial condition or operations of the Company or of
the Group taken as a whole.
20.14 Material adverse change
Any event or series of events occurs which in the reasonable opinion of
the Majority Banks, might have a material and adverse effect on the
ability of the Company to perform its obligations under the Finance
Documents or on the business, assets, financial condition or operations
of the Company or of the Group taken as a whole.
20.15 ERISA Event of Default
(a) Any member of the Controlled Group fails to pay when due any amount which
it is required to pay under Title IV of ERISA (including, without
limitation, the amount of any contributions required under any Plan or to
meet the minimum funding standard set forth in ERISA with respect to the
Plans) and such amount or such amount when aggregated with any other such
amounts, exceeds U.S.$1,000,000;
(b) notice of intent to terminate a Plan is filed under Title IV of ERISA by
any member of the Controlled Group, any Plan administrator or any
combination of the foregoing if that termination, together with any such
terminations, results in an aggregate unfunded liability in excess of
U.S.$1,000,000;
(c) the PBGC institutes proceedings under Title IV or ERISA to terminate, to
impose liability (other than for premiums under Section 4007 of ERISA) in
an amount in excess of U.S.$1,000,000 in respect of, or to cause a
trustee to be appointed to administer, any one or more Plans;
(d) there occurs any event, series of events or condition by reason of which
the PBGC would be entitled to obtain a decree adjudicating that any one
or more Plans must be terminated, which
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41
could reasonably be expected to result in an aggregate liability of the
members of the Controlled Group in excess of US$1,000,000; or
(e) there occurs a complete or partial withdrawal from, or a default (within
the meaning of Section 4219(c)(5) of ERISA) with respect to, one or more
Multi Employer Plans which could cause one or more members of the
Controlled Group to incur a current payment obligation in excess of
U.S$1,000,000.
20.16 Acceleration
On and at any time after the occurrence of an Event of Default, and (save
in the case of any repeated occurrence of any event described in Clause
20.2 (Non-payment)) so long as the same is continuing, the Facility Agent
may, and shall if so directed by the Majority Banks, by notice to the
Company:
(a) cancel the Total Commitments, whereupon the Total Commitments
shall be immediately cancelled; and/or
(b) demand that all or part of the Loans, together with accrued interest,
and all other amounts accrued under this Agreement be immediately due
and payable, whereupon they shall become immediately due and payable;
and/or
(c) demand that all or part of the Loans be payable on demand,
whereupon they shall immediately become payable on demand.
21. THE FACILITY AGENT AND THE ARRANGER
21.1 Appointment and duties of the Facility Agent
Each Finance Party (other than the Facility Agent) irrevocably appoints
the Facility Agent to act as its agent under and in connection with the
Finance Documents, and irrevocably authorises the Facility Agent on its
behalf to perform the duties and to exercise the rights, powers and
discretions that are specifically delegated to it under or in connection
with the Finance Documents, together with any other incidental rights,
powers and discretions. The Facility Agent has only those duties which
are expressly specified in this Agreement and those duties are solely of
a mechanical and administrative nature.
21.2 Role of the Arranger
Except as specifically provided in this Agreement, the Arranger has no
obligations of any kind to any other Party under or in connection with
any Finance Document.
21.3 Relationship
The relationship between the Facility Agent and the other Finance Parties
is that of agent and principal only. Nothing in this Agreement
constitutes the Facility Agent as trustee or fiduciary for any other
Party or any other person and the Facility Agent need not hold in trust
any moneys paid to it for a Party or be liable to account for interest on
those moneys.
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42
21.4 Majority Banks' directions
The Facility Agent will be fully protected if it acts in accordance with
the instructions of the Majority Banks in connection with the exercise of
any right, power or discretion or any matter not expressly provided for
in the Finance Documents. Any such instructions given by the Majority
Banks will be binding on all the Banks and will be carried out by the
Facility Agent (unless, in good faith, it considers that any action so
required of it would be contrary to any law or (unless the Facility Agent
is indemnified to its satisfaction by the Banks) would otherwise involve
it in any liability to any third party). In the absence of such
instructions, the Facility Agent may act as it considers to be in the
best interests of all the Banks. Notwithstanding the above, the Facility
Agent may not take any legal action or proceeding in the name of any Bank
without the prior written consent of that Bank.
21.5 Delegation
The Facility Agent may act under the Finance Documents through its
personnel and agents.
21.6 Delegation
The Facility Agent is not responsible to any other Party for:
(a) the execution, genuineness, validity, enforceability or
sufficiency of any Finance Document or any other document;
(b) the collectability of amounts payable under any Finance Document;
or
(c) the accuracy of any statements (whether written or oral) made in
or in connection with any Finance Document.
21.7 Default
(a) The Facility Agent is not obliged to monitor or enquire as to whether or
not a Default or Termination Event has occurred. The Facility Agent will
be deemed not to have knowledge of the occurrence of a Default or
Termination Event unless and until its agency group in Luxembourg have
actual knowledge or the Facility Agent receives notice from a Party
referring to this Agreement, describing the Default or Termination Event
and stating that the event is a Default or Termination Event, whereupon
it shall promptly notify the Banks.
(b) The Facility Agent may require the receipt of security satisfactory to it
from any other Finance Party, whether by way of payment in advance or
otherwise, against any liability or loss which it will or may incur in
taking any proceedings or action arising out of or in connection with any
Finance Document before it commences those proceedings or takes that
action.
21.8 Exoneration
(a) Without limiting paragraph (b) below, the Facility Agent will not be
liable to any other Party for any action taken or not taken by it under
or in connection with any Finance Document, unless directly caused by its
negligence or wilful misconduct.
(b) No Party may take any proceedings against any officer, employee or agent
of the Facility Agent in respect of any claim it might have against the
Facility Agent or in respect of any act
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43
or omission of any kind (including negligence or wilful misconduct) by
that officer, employee or agent in relation to any Finance Document.
21.9 Reliance
The Facility Agent may:
(a) rely on any notice or document believed by it to be genuine and
correct and to have been signed by, or with the authority of, the
proper person;
(b) rely on any statement made by a director or employee of any person
regarding any matters which may reasonably be assumed to be within
his knowledge or within his power to verify; and
(c) engage, pay for and rely on legal or other professional advisers
selected by it (including those in the Agent's employment and those
representing a Party other than the Facility Agent).
21.10 Credit approval and appraisal
Without affecting the responsibility of the Company for information
supplied by it or on its behalf in connection with any Finance Document,
each Bank confirms that it:
(a) has made its own independent investigation and assessment of the
financial condition and affairs of the Company and its related
entities in connection with its participation in this Agreement and
has not relied exclusively on any information provided to it by the
Facility Agent in connection with any Finance Document; and
(b) will continue to make its own independent appraisal of the
creditworthiness of the Company and its related entities while any
amount is or may be outstanding under the Finance Documents or any
Commitment is in force.
21.11 Information
(a) The Facility Agent shall use reasonable endeavours to forward promptly to
the person concerned the original or a copy of any document which is
delivered to the Facility Agent by a Party for that person.
(b) The Facility Agent shall promptly supply a Bank with a copy of each
document received by the Facility Agent under Clause 4 (Conditions
Precedent) upon the request and at the expense of that Bank.
(c) Except where this Agreement specifically provides otherwise, the Facility
Agent is not obliged to review or check the accuracy or completeness of
any document it forwards to another Party.
(d) Except as provided above, the Facility Agent has no duty:
(i) either initially or on a continuing basis to provide any Bank with
any credit or other information concerning the financial condition or
affairs of the Company or of its related entities, whether coming
into its possession before, on or after the date of this Agreement;
or
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44
(ii) unless specifically requested to do so by a Bank in
accordance with this Agreement, to request any certificates or
other documents from the Company.
21.12 The Facility Agent and the Arranger individually
(a) If it is also a Bank, each of the Facility Agent and the Arranger have
the same rights and powers under this Agreement as any other Bank and may
exercise those rights and powers as though they were not the Facility
Agent or the Arranger.
(b) Each of the Facility Agent and the Arranger may:
(i) carry on any business with the Company or its related
entities;
(ii) act as agent or trustee for, or in relation to any
financing involving, the Company or its related entities; and
(iii) retain any profits or remuneration in connection with
their activities under this Agreement or in relation to any of the
foregoing.
21.13 Indemnities
(a) Without limiting the liability of the Company under the Finance
Documents, each Bank shall forthwith on demand indemnify the Facility
Agent for that Bank's proportion of any liability or loss incurred by the
Facility Agent in any way relating to or arising out of its acting as
Facility Agent, except to the extent that the liability or loss arises
directly from the Facility Agent's negligence or wilful misconduct.
(b) A Bank's proportion of the liability set out in paragraph (a) above will
be the proportion which its participation in the Loans (if any) bears to
all the Loans on the date of the demand. If, however, there are no Loans
outstanding on the date of demand, then the proportion will be the
proportion which its Commitments bears to the Total Commitments at the
date of demand or, if the Total Commitments have then been cancelled,
bore to the Total Commitments immediately before being cancelled.
21.14 Compliance
(a) The Facility Agent may refrain from doing anything which would, in its
reasonable opinion, constitute a breach of any law or regulation or be
otherwise actionable at the suit of any person, and may do anything
which, in its opinion, is necessary or desirable to comply with any law
or regulation of any jurisdiction.
(b) Without limiting paragraph (a) above, the Facility Agent need not
disclose any information relating to the Company or any of its related
entities if the disclosure would, in the reasonable opinion of the
Facility Agent, constitute a breach of any law or regulation or any duty
of secrecy or confidentiality or be otherwise actionable at the suit of
any person.
21.15 Resignation of the Facility Agent
Notwithstanding its irrevocable appointment, the Facility Agent may
resign by giving notice to the Banks and the Company, in which case the
Facility Agent may forthwith appoint one
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45
of its Affiliates as successor Facility Agent or, failing that, the
Majority Banks may appoint a Bank as successor Facility Agent.
(b) If the appointment of a successor Facility Agent is to be made by the
Majority Banks but they have not, within 30 days after notice of
resignation, appointed a successor Facility Agent which accepts the
appointment, the Facility Agent may appoint any Bank as successor
Facility Agent.
(c) The resignation of the Facility Agent and the appointment of any
successor Facility Agent will both become effective only upon the
successor Facility Agent notifying all the Parties that it accepts its
appointment. On giving the notification, the successor Facility Agent
will succeed to the position of the Facility Agent and the term "Facility
Agent" will mean the successor Facility Agent.
(d) The retiring Facility Agent shall, at its own cost, make available to the
successor Facility Agent such documents and records and provide such
assistance as the successor Facility Agent may reasonably request for the
purposes of performing its functions as the Facility Agent under this
Agreement.
(e) Upon its resignation becoming effective, this Clause 21 shall continue to
benefit the retiring Facility Agent in respect of any action taken or not
taken by it under or in connection with the Finance Documents while it
was the Facility Agent.
(f) If required to do so by the Majority Banks, the Facility Agent
shall resign in accordance with paragraph (a), in which case the Majority
Banks may appoint a Bank as successor Facility Agent.
21.16 Banks
The Facility Agent may treat each Bank as a Bank, entitled to payments
under this Agreement and as acting through its Facility Office(s) until
it has received not less than five Business Days' prior notice from that
Bank to the contrary.
21.17 Security
Each of the Banks represents to the Facility Agent and each of the other
Banks that in good faith it is not relying, either directly or
indirectly, on any Margin Stock as security in the extension or
maintenance of the credit provided for in this Agreement.
22. FEES
22.1 Up-Front fee
The Company shall pay to the Facility Agent for the Arranger a up-front
fee in the amount and on the date agreed in, and in accordance with the
terms of, the Up-front Fee Letter.
22.2 Commitment fee
(a) The Company shall pay to the Facility Agent for each Bank a commitment
fee on the undrawn, uncancelled amount of that Bank's Commitment during
the period from the date of this Agreement up to and including the
Repayment Date at a rate equal to fifty percent of the Margin. For this
purpose, Loans are taken at their Original Dollar Amount.
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46
(b) Accrued commitment fee is payable quarterly in arrear from the date of
this Agreement and on the earlier of the Repayment Date and the date of
full cancellation of the Total Commitments. Accrued commitment fee is
also payable to the Facility Agent for a Bank on the cancelled amount of
its Commitment at the time the cancellation takes effect.
22.3 Agent's fee
The Company shall pay to the Facility Agent for its own account an agency
fee in the amount and on the date agreed in the Agent's Fee Letter.
22.4 VAT
Any fee referred to in this Clause 22 is exclusive of any value added tax
or any other tax which might be chargeable in connection with that fee.
If any value added tax or other tax is so chargeable, it shall be paid by
the Company at the same time as it pays the relevant fee.
23. EXPENSES
23.1 Initial and special costs
The Company shall forthwith on demand pay the Facility Agent and the
Arranger the amount of all reasonable costs and expenses (including legal
fees) incurred by any of them in connection with:
(a) the negotiation, preparation, printing and execution of:
(i) this Agreement and any other documents referred to in this
Agreement; and
(ii) any other Finance Document executed after the date of this
Agreement;
(b) any amendment, waiver, consent or suspension of rights (or any
proposal for any of the foregoing) requested by or on behalf of the
Company and relating to a Finance Document or a document referred to
in any Finance Document; and
(c) any other matter not of an ordinary administrative nature arising
out of or in connection with a Finance Document.
23.2 Enforcement costs
The Company shall forthwith on demand pay to each Finance Party the
amount of all costs and expenses (including legal fees) properly incurred
by it:
(a) in connection with the enforcement of, or the preservation of any
rights under, any Finance Document; or
(b) in investigating any Default or Termination Event.
24. STAMP DUTIES
The Company shall pay and forthwith on demand indemnify each Finance
Party against any liability it incurs in respect of, any stamp,
registration and similar tax which is or becomes
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47
payable in connection with the entry into, performance or enforcement of
any Finance Document.
25. INDEMNITIES
25.1 Currency indemnity
(a) If a Finance Party receives an amount in respect of the Company's
liability under the Finance Documents or if that liability is converted
into a claim, proof, judgment or order in a currency other than the
currency (the "contractual currency") in which the amount is expressed to
be payable under the relevant Finance Document:
(i) the Company shall indemnify that Finance Party as an independent
obligation against any loss or liability arising out of or as a
result of the conversion;
(ii) if the amount received by that Finance Party, when converted into
the contractual currency at a market rate in the usual course of its
business is less than the amount owed in the contractual currency,
the Company shall forthwith on demand pay to that Finance Party an
amount in the contractual currency equal to the deficit; and
(iii) the Company shall pay to the Finance Party concerned forthwith on
demand any exchange costs and taxes payable in connection with any
such conversion.
(b) The Company waives any right it may have in any jurisdiction to pay any
amount under the Finance Documents in a currency other than that in which
it is expressed to be payable.
25.2 Other financial indemnities
The Company shall forthwith on receipt of a demand setting out reasonable
details of the relevant loss or liability indemnify each Finance Party
against any loss or liability which that Finance Party incurs as a
consequence of:
(a) the occurrence of any Default or Termination Event;
(b) the operation of Clause 20.16 (Acceleration);
(c) the operation of Clause 2.4 (Change of Currency) where such loss or
liability is incurred by the Finance Party as a direct consequence
of it being a party to a Finance Document and would not have been so
incurred by such Finance Party if it had not been such a party;
(d) any payment of principal or an overdue amount being received from
any source otherwise than on the last day of a relevant Interest
Period or Designated Interest Period (as defined in Clause 9.3
(Default interest)) relative to the amount so received; or
(e) (other than by reason of negligence or default by such Finance
Party) a Loan not being made after the Company has delivered a
Request or a Loan (or part of a Loan) not being prepaid in
accordance with a notice of prepayment.
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48
The Company's liability in each case includes any loss of margin or other
loss or expense on account of funds borrowed, contracted for or utilised
to fund any amount payable under any Finance Document, any amount repaid
or prepaid or any Loan.
25.3 Offer indemnity
The Company will indemnify each Finance Party and each of their
respective Affiliates and directors, officers, agents and employees
(each, an "Indemnified Person") against all losses, claims, damages,
liabilities, charges and related expenses incurred, if any, as a result
of the making available of credit facilities under this Agreement in
connection with the making of the offer by the Company for the shares in
the Target or the implementation of the Acquisition except to the extent
that the same results from the Indemnified Person's negligence or wilful
default.
26. EVIDENCE AND CALCULATIONS
26.1 Accounts
Accounts maintained by a Finance Party in connection with this
Agreement are prima facie evidence of the matters to which they relate.
26.2 Certificates and determinations
Any certification or determination by a Finance Party of a rate or amount
under this Agreement is, in the absence of manifest error, prima facie
evidence of the matters to which it relates.
26.3 Calculations
Interest and the fees payable under Clause 22.2 (Commitment fee) accrue
from day to day and are calculated on the basis of the actual number of
days elapsed and a year of 360 days or where market practice otherwise
dictates, 365 days.
27. AMENDMENTS AND WAIVERS
27.1 Procedure
(a) Subject to Clause 27.2 (Exceptions), any term of the Finance Documents
may be amended or waived with the agreement of the Company and the
Majority Banks (or if such amendment or waiver affects the rights and
obligations of the Facility Agent in its capacity as such, with the
agreement of the Company, the Majority Banks and the Facility Agent). The
Facility Agent may effect, on behalf of the Finance Parties, any
amendment or waiver to which the Banks (or, if only the agreement of the
Majority Banks is required, the Majority Banks) have agreed.
(b) The Facility Agent shall promptly notify the other Parties of any
amendment or waiver effected under paragraph (a) above, and any such
amendment or waiver shall be binding on all the Parties.
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49
27.2 Exceptions
An amendment or waiver which relates to:
(a) the definition of "Majority Banks" in Clause 1.1 (Definitions);
(b) an extension of the date for, or a decrease in an amount or a
change in the currency of, any payment under the Finance Documents;
(c) an alteration in the rate of interest or commitment fee payable
under this Agreement;
(d) an increase in a Bank's Commitment or the Total Commitments;
(e) a term of a Finance Document which expressly requires the consent
of each Bank;
(f) Clause 31 (Pro Rata Sharing) or this Clause 27;
(g) Clause 28.1 (Transfers by the Company); or
(h) Clause 2.3 (Nature of Finance Party's Rights and Obligations),
may not be effected without the consent of each Bank.
27.3 Waivers and remedies cumulative
The rights of each Finance Party under the Finance Documents:
(a) may be exercised as often as necessary;
(b) are cumulative and not exclusive of its rights under the general
law; and
(c) may be waived only in writing and specifically.
Delay in exercising, partial exercise or non-exercise of any such right
is not a waiver of that right.
28. CHANGES TO THE PARTIES
28.1 Transfers by the Company
The Company may not assign, transfer, novate or dispose of any of, or
any interest in, its rights and/or obligations under this Agreement.
28.2 Transfers by Banks
(a) A Bank (the "Existing Bank") may, subject to Clause 28.4 (Reference
Banks), at any time without the consent of the Company, assign, transfer
or novate all or any part of its Commitment and/or any of its rights
and/or obligations under this Agreement to another person (the "New
Bank"). Any partial assignment, transfer or novation must be in a minimum
amount of US$10,000,000 or the whole of that Bank's Commitment if less.
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50
(b) A transfer of obligations will be effective only if either:
(i) the obligations are novated in accordance with Clause 28.3
(Procedure for novations); or
(ii) the New Bank confirms to the Facility Agent and the Company that it
undertakes to be bound by the terms of this Agreement as a Bank in
form and substance satisfactory to the Facility Agent. On the
transfer becoming effective in this manner, the Existing Bank shall
be relieved of its obligations under this Agreement to the extent
that they are transferred to the New Bank.
(c) Nothing in this Agreement restricts the ability of a Bank to sub-contract
an obligation if that Bank remains liable under this Agreement for that
obligation.
(d) On each occasion an Existing Bank assigns, transfers or novates any of
its rights and/or obligations under this Agreement, the New Bank shall,
on the date the assignment, transfer and/or novation takes effect, pay to
the Facility Agent (unless waived by the Facility Agent) for its own
account a fee of $1,000.
(e) An Existing Bank is not responsible to a New Bank for:
(i) the execution, genuineness, validity, enforceability or
sufficiency of any Finance Document or any other document;
(ii) the collectability of amounts payable under any Finance
document; or
(iii) the accuracy of any statements (whether written or oral)
made in or in connection with any Finance Document.
(f) Each New Bank confirms to the Existing Bank and the other Finance
Parties that it:
(i) has made its own independent investigation and assessment of
the financial condition and affairs of the Company and its related
entities in connection with its participation in this Agreement and
has not relied exclusively on any information provided to it by the
Existing Bank in connection with any Finance Document; and
(ii) will continue to make its own independent appraisal of the
creditworthiness of the Company and its related entities while any
amount is or may be outstanding under this Agreement or any
Commitment is in force.
(g) Nothing in any Finance Document obliges an Existing Bank to:
(i) accept a re-transfer from a New Bank of any of the rights and/or
obligations assigned, transferred or novated under this Clause; or
(ii) support any losses incurred by the New Bank by reason of the non-
performance by the Company of its obligations under this Agreement
or otherwise.
(h) Any reference in this Agreement to a Bank includes a New Bank but
excludes a Bank if no amount is or may be owed to or by it under this
Agreement and its Commitment has been cancelled or reduced to nil.
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51
28.3 Procedure for novations
(a) A novation is effected if:
(i) the Existing Bank and the New Bank deliver to the Facility
Agent a duly completed certificate, substantially in the form of
Schedule 4 (a "Novation Certificate"); and
(ii) the Facility Agent executes it.
(b) Each Party (other than the Existing Bank and the New Bank)
irrevocably authorises the Facility Agent to execute any duly completed
Novation Certificate on its behalf.
(c) To the extent that they are expressed to be the subject of the
novation in the Novation Certificate:
(i) the Existing Bank and the other Parties (the "existing Parties")
will be released from their obligations to each other (the
"discharged obligations");
(ii) the New Bank and the existing Parties will assume obligations
towards each other which differ from the discharged obligations
only insofar as they are owed to or assumed by the New Bank instead
of the Existing Bank;
(iii) the rights of the Existing Bank against the existing Parties and
vice versa (the "discharged rights") will be cancelled; and
(iv) the New Bank and the existing Parties will acquire rights against
each other which differ from the discharged rights only insofar as
they are exercisable by or against the New Bank instead of the
Existing Bank,
all on the date of execution of the Novation Certificate by the Facility
Agent or, if later, the date specified in the Novation Certificate.
28.4 Reference Banks
If a Reference Bank (or, if a Reference Bank is not a Bank, the Bank of
which it is an Affiliate) ceases to be a Bank, the Facility Agent shall
(in consultation with the Company) appoint another Bank or an Affiliate
of a Bank to replace that Reference Bank.
29. DISCLOSURE OF INFORMATION
Each Finance Party shall keep confidential any and all information made
available to it by the Company pursuant to or in connection with the
Finance Documents, save for information:
(a) which at the relevant time is in the public domain; or
(b) which, after such information has been made available to any
Finance Party, becomes generally available to third parties by
publication or otherwise through no breach of this Clause 29
(Disclosure of Information) by such Finance Party; or
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52
(c) which was lawfully in the possession of such Finance Party or its
advisers prior to such disclosure (as evidenced by the relevant
Finance Party's written records or the written records of such
Finance Party's advisers) and which was not acquired directly or
indirectly from the Company; or
(d) the disclosure of which is required by law or any competent
regulatory body or which is necessitated by any legal proceeding or
audit requirement; or
(e) the disclosure of which is made to an Affiliate of such Finance
Party in circumstances where it is such Finance Party's usual
practice to make such disclosure or where such disclosure is
required as part of such Finance Party's management or reporting
policies or where such disclosure is in the reasonable opinion of
such Finance Party required to protect its position, or to assist in
the recovery of amounts, hereunder; or
(f) the disclosure of which is made to any person with whom it is
proposing to enter, or has entered, into any kind of transfer,
participation or other agreement in relation to this Agreement; or
(g) which is disclosed by such Finance Party to its professional
advisers; or
(h) which is disclosed to another party to this Agreement.
30. SET-OFF
A Finance Party may set off any amount due and owed by the Company under
this Agreement (to the extent beneficially owned by that Finance Party)
against any obligation (whether or not matured) owed by that Finance
Party to the Company, regardless of the place of payment, booking branch
or currency of either obligation. If the obligations are in different
currencies, the Finance Party may convert either obligation at a market
rate of exchange in its usual course of business for the purpose of the
set-off.
31. PRO RATA SHARING
31.1 Redistribution
If any amount owing by the Company under this Agreement to a Finance
Party is discharged by payment, set-off or any other manner other than
through the Facility Agent in accordance with Clause 12 (Payments) (a
"recovery"), then:
(a) the relevant Finance Party (the "recovering Finance Party") shall,
within three Business Days, notify details of the recovery to the
Facility Agent;
(b) the Facility Agent shall determine whether the recovery is in excess
of the amount which the recovering Finance Party would have received
had the recovery been received by the Facility Agent and distributed
in accordance with Clause 12 (Payments);
(c) subject to Clause 31.3 (Exception), the recovering Finance Party
shall within three Business Days of demand by the Facility Agent pay
to the Facility Agent an amount (the "redistribution") equal to the
excess;
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53
(d) the Facility Agent shall treat the redistribution as if it were a
payment by the Company under Clause 12 (Payments) and shall pay the
redistribution to the Finance Parties (other than the recovering
Finance Party) in accordance with Clause 12.7 (Partial payments);
and
(e) after payment of the full redistribution, the recovering Finance
Party will be subrogated to the portion of the claims paid under
paragraph (d) above and the Company will owe the recovering Finance
Party a debt which is equal to the redistribution, immediately
payable and of the type originally discharged.
31.2 Reversal of distribution
If under Clause 31.1 (Redistribution):
(a) a recovering Finance Party must subsequently return a recovery, or
an amount measured by reference to a recovery, to the Company; and
(b) the recovering Finance Party has paid a redistribution in
relation to that recovery,
each Finance Party shall, within three Business Days of demand by the
recovering Finance Party through the Facility Agent, reimburse the
recovering Finance Party all or the appropriate portion of the
redistribution paid to that Finance Party together with interest on the
amount to be returned by that Finance Party for the period whilst it
held the redistribution. Thereupon, the subrogation in Clause 31.1(e)
(Redistribution) will operate in reverse to the extent of the
reimbursement.
31.3 Exception
(a) A recovering Finance Party need not pay a redistribution to the extent
that it would not, after the payment, have a valid claim against the
Company concerned in the amount of the redistribution pursuant to Clause
31.1(e) (Redistribution).
(b) A Finance Party is not entitled to participate in a redistribution if
the redistribution results from the proceeds of a judicial enforcement
order obtained by the recovering Finance Party and the other Finance
Party had adequate notice of and opportunity to participate in the
proceedings concerned but did not do so.
32. SEVERABILITY
If a provision of any Finance Document is or becomes illegal, invalid
or unenforceable in any jurisdiction, that shall not affect:
(a) the validity or enforceability in that jurisdiction of any other
provision of the Finance Documents; or
(b) the validity or enforceability in other jurisdictions of that or
any other provision of the Finance Documents.
33. COUNTERPARTS
This Agreement may be executed in any number of counterparts, and this
has the same effect as if the signatures on the counterparts were on a
single copy of this Agreement.
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54
34. NOTICES
34.1 Giving of notices
All notices or other communications under or in connection with this
Agreement shall be given in writing or by telex or facsimile. Any such
notice will be deemed to be given as follows:
(a) if in writing, when delivered;
(b) if by telex, when despatched, but only if, at the time of
transmission, the correct answerback appears at the start and at the
end of the sender's copy of the notice; and
(c) if by facsimile, when received.
However, a notice given in accordance with the above but received on a
non-working day or after business hours in the place of receipt will only
be deemed to be given on the next working day in that place.
34.2 Addresses for notices
(a) The address, telex number and facsimile number of each Party (other than
the Facility Agent) for all notices under or in connection with this
Agreement are:
(i) those notified by that Party for this purpose to the
Facility Agent on or before the date it becomes a Party; or
(ii) any other notified by that Party for this purpose to the
Facility Agent by not less than five Business Days' notice.
(b) The address, telex number and facsimile number of the Facility
Agent are:
Deutsche Bank Luxembourg S.A.
2, Boulevard Konrad Adenauer
L-1115 Luxembourg
Telex: 00 352 421 22 295/284
Facsimile: 00 352 421 22 287
For the attention of: Loan Department
or such other as the Facility Agent may notify to the other Parties by
not less than five Business Days' notice.
(c) All notices from or to the Company shall be sent through the
Facility Agent.
(d) The Facility Agent shall, promptly upon request from any Party, give to
that Party the address, telex number or facsimile number of any other
Party applicable at the time for the purposes of this Clause.
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55
35. LANGUAGE
(a) Any notice given under or in connection with any Finance Document
shall be in English.
(b) All other documents provided under or in connection with any
Finance Document shall be:
(i) in English; or
(ii) if not in English, accompanied by a certified English translation
and, in this case, the English translation shall prevail unless the
document is a statutory or other official document.
36. JURISDICTION
36.1 Submission
For the benefit of each Finance Party, the Company agrees that the courts
of England have jurisdiction to settle any disputes in connection with
any Finance Document and accordingly submits to the non-exclusive
jurisdiction of the English courts.
36.2 Service of process
Without prejudice to any other mode of service, the Company:
(a) irrevocably appoints Trusec Limited, 35 Basinghall Street, London
EC2V 5DB as its agent for service of process relating to any
proceedings before the English courts in connection with any Finance
Document;
(b) agrees that failure by a process agent to notify the Company of
the process will not invalidate the proceedings concerned; and
(c) consents to the service of process relating to any such proceedings
by prepaid posting of a copy of the process to its address for the
time being applying under Clause 34.2 (Addresses for notices).
36.3 Forum convenience and enforcement abroad
The Company:
(a) waives objection to the English courts on grounds of inconvenient
forum or otherwise as regards proceedings in connection with a
Finance Document; and
(b) agrees that a judgment or order, other than an interim judgment or
order, of an English court in connection with a Finance Document is
conclusive and binding on it and may be enforced against it in the
courts of any other jurisdiction in accordance with the laws and
procedures of that jurisdiction.
36.4 Non-exclusivity
Nothing in this Clause 36 limits the right of a Finance Party to bring
proceedings against the Company in connection with any Finance Document:
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56
(a) in any other court of competent jurisdiction; or
(b) concurrently in more than one jurisdiction.
37. GOVERNING LAW
This Agreement is governed by English law.
This Agreement has been entered into on the date stated at the
beginning of this Agreement.
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57
SCHEDULE 1
BANKS AND COMMITMENTS
Banks Commitments
US$
Deutsche Bank Luxembourg S.A. 440,000,000
Total Commitments US$440,000,000
--------------
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SCHEDULE 2
CONDITIONS PRECEDENT DOCUMENTS
1. A copy of the Articles of Association of the Company.
2. A copy of a resolution of the board of directors of the Company:
(a) approving the terms of, and the transactions contemplated by, this
Agreement and resolving that it execute this Agreement;
(b) authorising a specified person or persons to execute on its behalf
this Agreement; and
(c) authorising a specified person or persons, on its behalf, to sign
and/or despatch all other documents and notices to be signed and/or
despatched by it under or in connection with this Agreement;
3. A specimen of the signature of each person authorised by the resolution
referred to in paragraph 2 above.
4. A certificate of registration for the Company not older than three months
issued by the Swedish Patent and Registration Office and certified by an
authorised signatory of the Company to be a true copy.
5. A certificate of an authorised signatory of the Company certifying that
each copy document specified in this Schedule 2 (save for paragraphs 1 and
8) is correct, complete and in full force and effect as at a date no
earlier than the date of this Agreement.
6. A copy of any other authorisation or other document, opinion or assurance
which the Facility Agent considers to be necessary in connection with the
entry into and performance of, and the transactions contemplated by, this
Agreement or for the validity and enforceability of this Agreement.
7. Evidence of the acceptance by the process agent referred to in Clause 36.2
(Service of process) of its appointment under that Clause.
8. (a) A legal opinion of Mannheimer Swartling Advokatbyra AB legal
advisers in Sweden to the Company, addressed to the Finance Parties.
(b) A legal opinion of Willkie Farr & Gallagher, legal advisers in New
York to the Company, addressed to the Finance Parties to the effect
that the use of proceeds of the Loan in connection with the
Acquisition and the terms and provisions of this Agreement do not
violate the margin regulations or any other United States federal or
New Yorklaw or regulation.
(c) A legal opinion of Advokatfirman Vinge, legal advisers in Sweden to
the Facility Agent, addressed to the Finance Parties.
(d) A legal opinion of Allen & Overy, legal advisers in England to the
Facility Agent, addressed to the Finance Parties.
<PAGE>
59
9. A certificate of an authorised signatory of the Company addressed to the
Facility Agent for the benefit of the Finance Parties certifying that no
material adverse change in the business or financial condition of the
Company has occurred since 31st December, 1998 nor in the consolidated
financial condition of the Group since that date.
10. Evidence satisfactory to the Facility Agent that the representation
given by the Company in Clause 18.7 (Authorisations) is true and correct.
<PAGE>
60
SCHEDULE 3
FORM OF REQUEST
To: DEUTSCHE BANK LUXEMBOURG S.A. as Facility Agent
From: SECURITAS AB (publ)
Date: [ ]
SECURITAS AB (publ)
US$440,000,000 facility agreement dated 18th February, 1999
1. We wish to borrow a Loan as follows:
(a) Drawdown Date: [ ]
(b) Principal Amount: [ ];
(c) Currency: [ ];
(d) Interest Period: [ ];
(e) Payment instructions: [ ].
2. We confirm that each condition specified in Clause 4.2 (Further
conditions precedent) is satisfied on the date of this Request.
By:
SECURITAS AB (publ)
Authorised signatory
<PAGE>
61
SCHEDULE 4
FORM OF NOVATION CERTIFICATE
To: DEUTSCHE BANK LUXEMBOURG S.A. as Facility Agent
From: [THE EXISTING BANK] and [THE NEW BANK] Date: [ ]
SECURITAS AB (publ)
US$440,000,000 facility agreement dated 18th February, 1999
We refer to Clause 28.3 (Procedure for novations).
1. We [ ] (the "Existing Bank") and [ ]
(the "New Bank") agree to the Existing Bank and the New Bank novating all the
Existing Bank's rights and obligations referred to in the Schedule in
accordance with Clause 28.3 (Procedure for novations).
2. The specified date for the purposes of Clause 28.3(c) is [date of
novation].
3. The Facility Office and address for notices of the New Bank for the
purposes of Clause 34.2 (Addresses for notices) are set out in the Schedule.
4. This Novation Certificate is governed by English law.
5. This Novation Certificate shall be treated for all purposes as part of
the Agreement.
THE SCHEDULE
Rights and obligations to be novated
[Details of the rights and obligations of the Existing Bank to be novated].
[Existing Bank] [New Bank]
By: By:
Date: Date:
[New Bank]
[Facility Office Address for notices]
DEUTSCHE BANK LUXEMBOURG S.A.
By:
Date:
<PAGE>
62
SIGNATORIES
Company
SECURITAS AB (publ)
By: /s/ Olof Bengtsson
Arranger
DEUTSCHE BANK AG
By: /s/ Fritz Kropatscheck /s/ Lothar Schlichting
Facility Agent
DEUTSCHE BANK LUXEMBOURG S.A.
By: /s/ Lothar Schlichting
Banks
DEUTSCHE BANK LUXEMBOURG S.A.
By: /s/ Lothar Schlichting
<PAGE>
EXHIBIT 99.(c)(1)
EXECUTION COPY
================================================================================
PINKERTON'S, INC.
SECURITAS AB
and
SECURITAS ACQUISITION CORP.
==============================
AGREEMENT AND PLAN OF MERGER
===============================
===============================
Dated as of February 19, 1999
===============================
================================================================================
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I. THE TENDER OFFER.............................................. 2
SECTION 1.1. The Offer.............................................. 2
SECTION 1.2. Company Action......................................... 5
SECTION 1.3. Directors.............................................. 6
ARTICLE II. THE MERGER................................................... 8
SECTION 2.1. The Merger............................................. 8
SECTION 2.2. Effective Time......................................... 8
SECTION 2.3. Effect of the Merger................................... 8
SECTION 2.4. Subsequent Actions..................................... 8
SECTION 2.5. Certificate of Incorporation; By-Laws;
Directors and Officers................................ 9
SECTION 2.6. Conversion of Securities............................... 9
SECTION 2.7. Dissenting Shares...................................... 10
SECTION 2.8. Surrender of Shares; Stock Transfer Books.............. 11
SECTION 2.9. Stock Plans............................................ 12
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF THE PARENT
AND PURCHASER............................................... 13
SECTION 3.1. Corporate Organization................................. 13
SECTION 3.2. Authority Relative to this Agreement................... 13
SECTION 3.3. No Conflict; Required Filings and
Consents.............................................. 14
SECTION 3.4. Financing Arrangements................................. 15
SECTION 3.5. No Prior Activities.................................... 15
SECTION 3.6. Brokers................................................ 15
SECTION 3.7. Offer Documents; Proxy Statement....................... 15
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF THE COMPANY................ 16
SECTION 4.1. Organization and Qualification;
Subsidiaries.......................................... 16
SECTION 4.2. Capitalization......................................... 17
SECTION 4.3. Authority Relative to this Agreement and............... 18
</TABLE>
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<PAGE>
<TABLE>
<S> <C>
SECTION 4.4. No Conflict; Required Filings and........................ 19
SECTION 4.5. SEC Filings; Financial Statements........................ 20
SECTION 4.6. Absence of Certain Changes or Events..................... 21
SECTION 4.7. Litigation............................................... 22
SECTION 4.8. Employee Benefit Plans................................... 23
SECTION 4.9. Properties............................................... 26
SECTION 4.10. Intellectual Property.................................... 27
SECTION 4.11. Insurance................................................ 27
SECTION 4.12. Environmental............................................ 27
SECTION 4.13. Material Contracts....................................... 29
SECTION 4.14. Conduct of Business...................................... 31
SECTION 4.15. Taxes.................................................... 31
SECTION 4.16. Labor Relations.......................................... 35
SECTION 4.17. Transactions with Affiliates............................. 35
SECTION 4.18. Offer Documents; Proxy Statement......................... 35
SECTION 4.19. Brokers.................................................. 36
SECTION 4.20. Control Share Acquisition................................ 36
SECTION 4.21. Rights Agreement Amendment............................... 37
SECTION 4.22. Y2K Compliance........................................... 37
ARTICLE V. CONDUCT OF BUSINESS PENDING THE MERGER.......................... 37
SECTION 5.1. Conduct of Business by the Company
Pending the Closing...................................... 37
SECTION 5.2. No Solicitation.......................................... 40
ARTICLE VI. ADDITIONAL AGREEMENTS.......................................... 43
SECTION 6.1. Proxy Statement.......................................... 43
SECTION 6.2. Meeting of Stockholders of the Company................... 43
SECTION 6.3. Compliance with Law...................................... 44
SECTION 6.4. Notification of Certain Matters.......................... 44
SECTION 6.5. Access to Information.................................... 44
SECTION 6.6. Public Announcements..................................... 44
SECTION 6.7. Reasonable Efforts; Cooperation.......................... 45
SECTION 6.8. Agreement to Defend and Indemnify........................ 45
</TABLE>
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<PAGE>
<TABLE>
<S> <C>
SECTION 6.9. State Takeover Laws.................................... 47
ARTICLE VII. CONDITIONS OF MERGER........................................ 47
SECTION 7.1. Conditions for Each Party's Obligations
to Effect the Merger................................... 47
SECTION 7.2. Conditions for Obligations of Parent and
Purchaser.............................................. 47
ARTICLE VIII. TERMINATION, AMENDMENT AND WAIVER.......................... 48
SECTION 8.1. Termination............................................ 48
SECTION 8.2. Effect of Termination.................................. 50
ARTICLE IX. GENERAL PROVISIONS........................................... 51
SECTION 9.1. Non-Survival of Representations,
Warranties and Agreements.............................. 51
SECTION 9.2. Notices................................................ 51
SECTION 9.3. Expenses............................................... 52
SECTION 9.4. Certain Definitions.................................... 52
SECTION 9.5. Headings............................................... 53
SECTION 9.6. Severability........................................... 53
SECTION 9.7. Entire Agreement; No Third-Party
Beneficiaries.......................................... 53
SECTION 9.8. Assignment............................................. 53
SECTION 9.9. Governing Law.......................................... 53
SECTION 9.10. Amendment.............................................. 54
SECTION 9.11. Waiver................................................. 54
SECTION 9.12. Schedules.............................................. 54
SECTION 9.13. Counterparts........................................... 54
</TABLE>
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<PAGE>
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of February 19, 1999 (the
"Agreement"), among Pinkerton's, Inc., a Delaware corporation (the "Company"),
Securitas AB, a Swedish corporation ("Parent"), and Securitas Acquisition Corp.,
a Delaware corporation and an indirect wholly owned subsidiary of Parent
("Purchaser").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Boards of Directors of the Company, Parent and Purchaser
have each determined that it is in the best interests of their respective
stockholders for Purchaser to acquire the Company upon the terms and subject to
the conditions set forth herein; and
WHEREAS, in furtherance thereof, it is proposed that Purchaser will
make a cash tender offer (the "Offer") to acquire all shares of the issued and
outstanding common stock, $.001 par value (the "Shares"), of the Company (the
"Company Common Stock"), including the associated rights (the "Rights") to
purchase Series A Junior Participating Preferred Stock issued under the Rights
Agreement, dated as of July 12, 1991 (the "Rights Agreement"), between the
Company and The Bank of New York, as successor rights agent, for $ 29.00 per
share of Company Common Stock or such higher price as may be paid in the Offer
(the "Per Share Amount"), net to the seller in cash; and
WHEREAS, also in furtherance of such acquisition, the Boards of
Directors of the Company, Purchaser and Parent have each approved the merger
(the "Merger") of Purchaser with and into the Company following the Offer in
accordance with the General Corporation Law of the State of Delaware ("Delaware
Law") and upon the terms and subject to the conditions set forth herein; and
WHEREAS, it is also proposed in connection with such acquisition that,
upon the terms and subject to the conditions set forth herein, upon consummation
of the Merger, (i) each then outstanding Option (as defined below), whether or
not then exercisable or vested, shall be canceled and (ii) in consideration of
such cancellation, the Company shall pay to each such holder of an Option an
amount in respect thereof equal to the product of (A) the excess, if any, of the
Per Share Amount over the exercise price thereof and (B) the number of Shares
subject thereto (such payment to be net of applicable withholding taxes); and
WHEREAS, as an inducement and a condition to Parent's and Purchaser's
entering into this Agreement, contemporaneously with the execution and delivery
of this Agreement, (i) the Company has entered into a stock option agreement
with Parent (the "Company Stock Option Agreement"), pursuant to which the
<PAGE>
Company has granted to Parent an option to purchase Shares upon the terms and
subject to conditions set forth in the Company Stock Option Agreement and (ii)
certain stockholders of the Company have entered into a Stockholders Agreement
with Parent and Purchaser (the "Stockholders Agreement"), pursuant to which each
such stockholder has, among other things, agreed to tender its Shares in the
Offer, granted to Parent a proxy with respect to the voting of such Shares and
granted to Parent an option to purchase such Shares, in each case upon the terms
and subject to the conditions set forth in the Stockholders Agreement; and
WHEREAS, as an inducement to Parent's and Purchaser's entering into
this Agreement, contemporaneously with the execution and delivery of this
Agreement the Company and the Parent have entered into employment agreements
with certain senior executive officers of the Company (the "Employment
Agreements"); and
WHEREAS, the Board of Directors of the Company (the "Board of
Directors") has approved this Agreement, the Company Stock Option Agreement and
Parent's acquisition of Shares pursuant to the Stockholders Agreement and has
determined that the consideration to be paid for each Share in the Offer and the
Merger is fair to the holders of such Shares and to recommend that the holders
of such Shares accept the Offer and approve this Agreement and the transactions
contemplated hereby.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, and intending to be legally bound
hereby, the Company, Parent and Purchaser hereby agree as follows:
ARTICLE I.
THE TENDER OFFER
SECTION 1.1. The Offer.
---------
(a) Provided that this Agreement shall not have been terminated in
accordance with Section 8.1 hereof and none of the events set forth in Annex I
hereto shall have occurred and be existing, Parent shall cause Purchaser to
commence and Purchaser shall commence (within the meaning of Rule 14d-2 under
the Securities Exchange Act of 1934 (the "Exchange Act") the Offer as promptly
as practicable, but in no event later than five business days following the
execution of this Agreement. The obligation of Parent and Purchaser to accept
for payment any Shares tendered shall be subject to the satisfaction of those
conditions set forth in Annex I. Parent expressly reserves the right from time
to time, subject to Sections 1(b) and 1(d) hereof, to waive any such condition,
to increase the Per Share Amount, or to make any
- 2 -
<PAGE>
other changes in the terms and conditions of the Offer. The Per Share Amount
shall be net to the seller in cash, subject to reduction only for any applicable
Federal back-up withholding or stock transfer taxes payable by the seller. The
Company agrees that no Shares held by the Company or any of its Subsidiaries (as
hereinafter defined) will be tendered pursuant to the Offer.
(b) Without the prior written consent of the Company, Parent shall
not (i) decrease the Per Share Amount or change the form of consideration
payable in the Offer, (ii) decrease the number of Shares sought, (iii) amend or
waive satisfaction of the Minimum Condition (as defined in Annex I), (iv) impose
additional conditions to the Offer, (v) amend any one or more of the conditions
set forth in Annex I to broaden the scope of such condition or conditions or
(vi) amend any other term of the Offer in any manner adverse to the holders of
Shares. Upon the terms and subject to the conditions of the Offer, Purchaser
will accept for payment and purchase, as soon as permitted under the terms of
the Offer, all Shares validly tendered and not withdrawn prior to the expiration
of the Offer.
(c) The Offer shall be made by means of an offer to purchase (the
"Offer to Purchase") having only the conditions set forth in Annex I hereto. As
soon as practicable on the date the Offer is commenced, Parent and Purchaser
shall file with the Securities and Exchange Commission (the "SEC") a Tender
Offer Statement on Schedule 14D-1 (together with all amendments and supplements
thereto, the "Schedule 14D-1") with respect to the Offer that will comply in all
material respects with the provisions of such Schedule 14D-1 and all applicable
Federal securities laws, and will contain (including as an exhibit) or
incorporate by reference the Offer to Purchase and forms of the related letter
of transmittal and summary advertisement (which documents, together with any
supplements or amendments thereto, and any other SEC schedule or form which is
filed in connection with the Offer and related transactions, are referred to
collectively herein as the "Offer Documents"). Parent and Purchaser agree
promptly to correct the Schedule 14D-1 or the Offer Documents if and to the
extent that it shall have become false or misleading in any material respect
(and the Company, with respect to written information supplied by it
specifically for use in the Schedule 14D-1 or the Offer Documents, shall
promptly notify Parent of any required corrections of such information and shall
cooperate with Parent and Purchaser with respect to correcting such information)
and to supplement the information provided by it specifically for use in the
Schedule 14D-1 or the Offer Documents to include any information that shall
become necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading, and Parent and
Purchaser further agree to take all steps necessary to cause the Schedule 14D-1,
as so corrected or supplemented, to be filed with the SEC and the Offer
Documents,
- 3 -
<PAGE>
as so corrected or supplemented, to be disseminated to holders of Shares, in
each case as and to the extent required by applicable Federal securities laws.
The Company and its counsel shall be given a reasonable opportunity to review
and comment on any Offer Documents before they are filed with the SEC. Parent
and Purchaser shall provide the Company in writing with any comments Parent,
Purchaser or their counsel may receive from the SEC or its staff with respect to
the Offer Documents promptly after receipt of such comments.
(d) The Offer to Purchase shall provide for an initial expiration
date of 20 business days (as defined in Rule 14d-1 under the Exchange Act) from
the date of commencement. Purchaser agrees that it shall not terminate or
withdraw the Offer or extend the expiration date of the Offer unless at the
expiration date of the Offer the conditions to the Offer described in Annex I
hereto shall not have been satisfied or earlier waived. If at the expiration
date of the Offer, the conditions to the Offer described in Annex I hereto shall
not have been satisfied or earlier waived, Parent may, from time to time extend
the expiration date of the Offer until the date such conditions are satisfied or
earlier waived and Parent becomes obligated to accept for payment and pay for
Shares tendered pursuant to the Offer; provided, however, that the expiration
-------- -------
date of the Offer may not be extended beyond June 30, 1999 without the consent
of the Company. Notwithstanding the foregoing, Purchaser may, without the
consent of the Company, (i) extend the expiration date of the Offer (as it may
be extended) for any period required by applicable rules and regulations of the
SEC in connection with an increase in the consideration to be paid pursuant to
the Offer and (ii) extend the expiration date of the Offer (as it may be
extended) for up to ten business days, if on such expiration date the conditions
for the Offer described on Annex I hereto shall have been satisfied or earlier
waived, but the number of Shares that have been validly tendered and not
withdrawn represents less than 90 percent of the then issued and outstanding
Shares on a fully diluted basis; provided, however, that the expiration date of
-------- -------
the Offer may not be extended beyond June 30, 1999 without the consent of the
Company. Parent and Purchaser agree that if all of the conditions to the Offer
set forth on Annex A are not satisfied on any scheduled expiration date, then if
all such conditions are reasonably capable of being satisfied prior to June 30,
1999, Purchaser shall extend the Offer from time to time (each such individual
extension not to exceed 10 Business Days after the previously scheduled
expiration date) until such conditions are satisfied or waived; provided,
however, that Purchaser shall not be required to extend the Offer beyond June
30, 1999.
- 4 -
<PAGE>
SECTION 1.2. Company Action.
--------------
(a) The Company hereby approves of and consents to the Offer and
represents and warrants that the Board of Directors, at a meeting duly called
and held on February 19, 1999, at which all of the Directors were present, duly
and unanimously: (i) approved and adopted this Agreement and the Company Stock
Option Agreement and the transactions contemplated hereby and thereby, including
the Offer, the Merger, the Employment Agreements and Parent's acquisition of
Shares pursuant to the Stockholders Agreement; (ii) recommended that the
stockholders of the Company accept the Offer, tender their Shares pursuant to
the Offer and approve this Agreement and the transactions contemplated hereby,
including the Merger; (iii) determined that this Agreement and the transactions
contemplated hereby, including the Offer and the Merger, are fair to and in the
best interests of the stockholders of the Company; (iv) took all action
necessary to render the limitations on business combinations contained in
Section 203 of Delaware Law and the Company's Restated Certificate of
Incorporation (the "Restated Certificate") inapplicable to this Agreement, the
Company Stock Option Agreement, the Stockholders Agreement and the transactions
contemplated hereby and thereby; and (v) approved an amendment to the Rights
Agreement, in the form of Exhibit 1.2 hereto (the "Rights Agreement Amendment"),
providing that (A) neither this Agreement, the Company Stock Option Agreement or
the Stockholders Agreement nor any of the transactions contemplated hereby or
thereby, including the Offer and the Merger, will result in the occurrence of a
"Distribution Date" (as such term is defined in the Rights Agreement) or
otherwise cause the Rights to become exercisable by the holders thereof and (B)
the Rights shall automatically on and as of the Effective Time (as hereinafter
defined) be void and of no further force or effect. The Company further
represents and warrants that (x) Donaldson, Lufkin & Jenrette Securities
Corporation ("DLJ") has rendered to the Board of Directors a written opinion,
dated as of February 19, 1999, to the effect that, subject to the assumptions
and limitations set forth therein, $29.00 in cash per Share to be received by
the stockholders of the Company pursuant to the Offer and the Merger is fair to
such stockholders from a financial point of view and (y) a true and correct copy
of such opinion has been delivered to Parent.
(b) The Company hereby agrees to file with the SEC, as promptly as
practicable after the filing by Parent and Purchaser of the Schedule 14D-1 with
respect to the Offer, a Tender Offer Solicitation/Recommendation Statement on
Schedule 14D-9 (together with any amendments or supplements thereto, the
"Schedule 14D-9") that (i) will comply in all material respects with the
provisions of all applicable Federal securities laws and (ii) will include the
opinion of DLJ referred to in Section 1.2(a) hereof. The Company agrees to mail
such Schedule 14D-9 to the stockholders of the Company along with the Offer
Documents promptly after the
- 5 -
<PAGE>
commencement of the Offer. The Schedule 14D-9 and the Offer Documents shall
contain the recommendations of the Board of Directors described in Section
1.2(a) hereof. The Company agrees promptly to correct the Schedule 14D-9 if and
to the extent that it shall become false or misleading in any material respect
(and each of Parent and Purchaser, with respect to written information supplied
by it specifically for use in the Schedule 14D-9, shall promptly notify the
Company of any required corrections of such information and cooperate with the
Company with respect to correcting such information) and to supplement the
information contained in the Schedule 14D-9 to include any information that
shall become necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading, and the Company shall
take all steps necessary to cause the Schedule 14D-9 as so corrected to be filed
with the SEC and disseminated to the Company's stockholders to the extent
required by applicable Federal securities laws. Parent and its counsel shall be
given a reasonable opportunity to review and comment on the Schedule 14D-9
before it is filed with the SEC. The Company shall provide Parent and Purchaser
in writing with any comments the Company or its counsel may receive from the SEC
or its staff with respect to the Schedule 14D-9 promptly after receipt of such
comments.
(c) In connection with the Offer, the Company shall promptly upon
execution of this Agreement furnish Parent with mailing labels containing the
names and addresses of all record holders of Shares, non-objecting beneficial
owners list and security position listings of Shares held in stock depositories,
each as of a recent date, and shall promptly furnish Parent with such additional
information, including updated lists of stockholders, mailing labels and
security position listings, and such other information and assistance as Parent
or its agents may reasonably request for the purpose of communicating the Offer
to the record and beneficial holders of Shares.
SECTION 1.3. Directors. Promptly upon the purchase by Purchaser
---------
of any Shares pursuant to the Offer, and from time to time thereafter as Shares
are acquired by Purchaser, Parent shall be entitled to designate such number of
directors, rounded up to the next whole number, on the Board of Directors as
will give Parent, subject to compliance with Section 14(f) of the Exchange Act,
representation on the Board of Directors equal to at least that number of
directors which equals the product of the total number of directors on the Board
of Directors (giving effect to the directors appointed or elected pursuant to
this sentence and including current directors serving as officers of the
Company) multiplied by the percentage that the aggregate number of Shares
beneficially owned by Parent or any affiliate of Parent (including for purposes
of this Section 1.3 such Shares as are accepted for payment pursuant to the
Offer, but excluding Shares held by the Company or any of its Subsidiaries)
bears to the
- 6 -
<PAGE>
number of Shares outstanding. At each such time, the Company will also cause (i)
each committee of the Board of Directors, (ii) if requested by Parent, the board
of directors of each of the Subsidiaries and (iii) if requested by Parent, each
committee of such board to include persons designated by Parent constituting the
same percentage of each such committee or board as Parent's designees constitute
on the Board of Directors. The Company shall, upon request by Parent, promptly
increase the size of the Board of Directors or exercise its best efforts to
secure the resignations of such number of directors as is necessary to enable
Parent's designees to be elected to the Board of Directors in accordance with
the terms of this Section 1.3 and shall cause Parent's designees to be so
elected; provided, however, that, in the event that Parent's designees are
-------- -------
appointed or elected to the Board of Directors, until the Effective Time (as
defined in Section 2.2 hereof) (x) Denis R. Brown may continue to serve as a
director of the Company and (y) the Board of Directors shall have at least three
directors who are directors on the date hereof and who are neither officers of
the Company nor designees, stockholders, affiliates or associates (within the
meaning of the Federal securities laws) of Parent (such directors, the
"Independent Directors"); provided further, that if at any time or from time to
-------- -------
time fewer than three Independent Directors remain, the other directors shall
elect to the Board of Directors such number of persons who shall be neither
officers of the Company nor designees, shareholders, affiliates or associates of
Parent so that the total of such persons and remaining Independent Directors
serving on the Board of Directors is at least three. Any such person elected to
the Board of Directors pursuant to the second proviso of the preceding sentence
shall be deemed to be an Independent Director for purposes of this Agreement.
Subject to applicable law, the Company shall promptly take all action necessary
pursuant to Section 14(f) of the Exchange Act and Rule 14f-1 promulgated
thereunder in order to fulfill its obligations under this Section 1.3 and shall
include in the Schedule 14D-9 mailed to stockholders promptly after the
commencement of the Offer (or an amendment thereof or an information statement
pursuant to Rule 14f-1 if Parent has not theretofore designated directors) such
information with respect to the Company and its officers and directors as is
required under Section 14(f) and Rule 14f-1 in order to fulfill its obligations
under this Section 1.3. Parent will supply the Company any information with
respect to itself and its nominees, officers, directors and affiliates required
by Section 14(f) and Rule 14f-1. Notwithstanding anything in this Agreement to
the contrary, following the time directors designated by Parent constitute a
majority of the Board of Directors and prior to the Effective Time, the
affirmative vote of a majority of the Independent Directors shall be required to
(i) amend or terminate on behalf of the Company this Agreement, the Company
Stock Option Agreement or the Termination Agreement, dated as of the date
hereof, among the Company, Parent and Thomas W. Wathen (ii)
- 7 -
<PAGE>
exercise or waive any of the Company's rights or remedies hereunder or
thereunder, (iii) extend the time for performance of Parent's or Purchaser's
obligations hereunder or thereunder or (iv) take any other action required to be
taken by the Board of Directors hereunder or thereunder.
ARTICLE II.
THE MERGER
SECTION 2.1. The Merger. At the Effective Time (as defined in
----------
Section 2.2) and subject to and upon the terms and conditions of this Agreement
and Delaware Law, Purchaser shall be merged with and into the Company, the
separate corporate existence of Purchaser shall cease, and the Company shall
continue as the surviving corporation. The Company as the surviving corporation
after the Merger hereinafter sometimes is referred to as the "Surviving
Corporation."
SECTION 2.2. Effective Time. As promptly as practicable after
--------------
the satisfaction or waiver of the conditions set forth in Article VII, the
-----------
parties hereto shall cause the Merger to be consummated by filing a Certificate
of Merger, or, if applicable, a Certificate of Ownership and Merger, with the
Secretary of State of the State of Delaware, in such form as required by, and
executed in accordance with the relevant provisions of, Delaware Law (the time
of such filing being the "Effective Time").
SECTION 2.3. Effect of the Merger. At the Effective Time, the
--------------------
effect of the Merger shall be as provided in the applicable provisions of
Delaware Law. Without limiting the generality of the foregoing, and subject
thereto, at the Effective Time all the property, rights, privileges, powers and
franchises of the Company and Purchaser shall vest in the Surviving Corporation,
and all debts, liabilities and duties of the Company and Purchaser shall become
the debts, liabilities and duties of the Surviving Corporation.
SECTION 2.4. Subsequent Actions. If, at any time after the
------------------
Effective Time, the Surviving Corporation shall consider or be advised that any
deeds, bills of sale, assignments, assurances or any other actions or things are
necessary or desirable to vest, perfect or confirm of record or otherwise in the
Surviving Corporation its right, title or interest in, to or under any of the
rights, properties or assets of either of the Company or Purchaser acquired or
to be acquired by the Surviving Corporation as a result of, or in connection
with, the Merger or otherwise to carry out this Agreement, the officers and
directors of the Surviving Corporation shall be authorized to execute and
deliver, in the name and on behalf of
- 8 -
<PAGE>
either the Company or Purchaser, all such deeds, bills of sale, assignments and
assurances and to take and do, in the name and on behalf of each of such
corporations or otherwise, all such other actions and things as may be necessary
or desirable to vest, perfect or confirm any and all right, title and interest
in, to and under such rights, properties or assets in the Surviving Corporation
or otherwise to carry out this Agreement.
SECTION 2.5. Certificate of Incorporation; By-Laws; Directors and
----------------------------------------------------
Officers.
--------
(a) Unless otherwise determined by Parent before the Effective
Time, at the Effective Time the Certificate of Incorporation of Purchaser, as in
effect immediately before the Effective Time, shall be the Certificate of
Incorporation of the Surviving Corporation until thereafter amended as provided
by law and such Certificate of Incorporation; provided, however, that Article
-------- -------
One of the Certificate of Incorporation of the Surviving Corporation shall be
amended to read as follows: "FIRST: The name of the corporation is Pinkerton's,
Inc."
(b) The By-Laws of Purchaser, as in effect immediately before the
Effective Time, shall be the By-Laws of the Surviving Corporation until
thereafter amended as provided by law, the Certificate of Incorporation of the
Surviving Corporation and such By-Laws.
(c) The directors of Purchaser immediately before the Effective
Time will be the initial directors of the Surviving Corporation, and the
officers of the Company immediately before the Effective Time will be the
initial officers of the Surviving Corporation, in each case until their
successors are elected or appointed and qualified. If, at the Effective Time, a
vacancy shall exist on the Board of Directors or in any office of the Surviving
Corporation, such vacancy may thereafter be filled in the manner provided by
law.
SECTION 2.6. Conversion of Securities. At the Effective Time, by
------------------------
virtue of the Merger and without any action on the part of Purchaser, the
Company or the holder of any of the following securities:
(a) Each share of Company Common Stock issued and outstanding
immediately before the Effective Time (other than any Shares to be canceled
pursuant to Section 2.6(b) and any Dissenting Shares (as defined in Section
2.7(a)) shall be canceled and extinguished and be converted into the right to
receive the Per Share Amount in cash payable to the holder thereof, without
interest, upon surrender of the certificate representing such Share. Each
holder of a certificate representing any such Shares shall cease to have any
rights with respect thereto, except the right to receive the Per Share
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<PAGE>
Amount, without interest, upon the surrender of such certificate in accordance
with Section 2.8 hereof.
(b) Each share of Company Common Stock held in the treasury of the
Company and each Share owned by Parent or any direct or indirect wholly owned
subsidiary of Parent or of the Company immediately before the Effective Time
shall be canceled and extinguished and no payment or other consideration shall
be made with respect thereto.
(c) Each share of common stock, $.0l par value, of Purchaser issued
and outstanding immediately before the Effective Time shall thereafter represent
one validly issued, fully paid and nonassessable share of common stock, $.0l par
value, of the Surviving Corporation.
SECTION 2.7. Dissenting Shares.
-----------------
(a) Notwithstanding any provision of this Agreement to the
contrary, any Shares held by a holder who has demanded and perfected such
holder's demand for appraisal of such holder's Shares in accordance with
Delaware Law (including but not limited to Section 262 thereof) and as of the
Effective Time has neither effectively withdrawn nor lost his right to such
appraisal ("Dissenting Shares"), shall not be converted into or represent a
right to receive cash pursuant to Section 2.6, but the holder thereof shall be
entitled to only such rights as are granted by Delaware Law.
(b) Notwithstanding the provisions of subsection (a) of this
Section, if any holder of Shares who demands appraisal of such holder's Shares
under Delaware Law shall effectively withdraw or lose (through failure to
perfect or otherwise) his right to appraisal, then as of the Effective Time or
the occurrence of such event, whichever later occurs, such holder's Shares shall
automatically be converted into and represent only the right to receive cash as
provided in Section 2.6(a), without interest thereon, upon surrender of the
certificate or certificates representing such Shares.
(c) The Company shall give Parent (i) prompt notice of any written
demands for appraisal or payment of the fair value of any Shares, withdrawals of
such demands, and any other instruments served pursuant to Delaware Law received
by the Company and (ii) the opportunity to direct all negotiations and
proceedings with respect to demands for appraisal under Delaware Law. The
Company shall not voluntarily make any payment with respect to any demands for
appraisal and shall not, except with the prior written consent of Parent, settle
or offer to settle any such demands.
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<PAGE>
SECTION 2.8. Surrender of Shares; Stock Transfer Books.
-----------------------------------------
(a) Before the Effective Time, the Company shall designate a bank
or trust company to act as agent for the holders of Shares (the "Exchange
Agent") to receive the funds necessary to make the payments contemplated by
Section 2.6. Parent shall, from time to time, deposit, or cause to be deposited,
in trust with the Exchange Agent for the benefit of holders of Shares funds in
amounts and at times necessary for the payments under Section 2.8(b) to which
such holders shall be entitled at the Effective Time pursuant to Section 2.6.
Such funds shall be invested by the Exchange Agent as directed by Parent. Any
net profits resulting from, or interest or income produced by, such investments
shall be payable as directed by Parent.
(b) Each holder of a certificate or certificates representing any
Shares canceled upon the Merger pursuant to Section 2.6(a) may thereafter
surrender such certificate or certificates to the Exchange Agent, as agent for
such holder, to effect the surrender of such certificate or certificates on such
holder's behalf for a period ending six months after the Effective Time.
Purchaser agrees that promptly after the Effective Time it shall cause the
distribution to holders of record of Shares as of the Effective Time of
appropriate materials to facilitate such surrender. Upon the surrender of
certificates representing the Shares, Parent shall cause the Exchange Agent to
pay the holder of such certificates in exchange therefor cash in an amount equal
to the Per Share Amount multiplied by the number of Shares represented by such
certificate. Until so surrendered, each such certificate (other than
certificates representing Dissenting Shares and certificates representing Shares
held by Parent or in the treasury of the Company) shall represent solely the
right to receive the aggregate Per Share Amount relating thereto.
(c) If payment of cash in respect of canceled Shares is to be made
to a Person other than the Person in whose name a surrendered certificate or
instrument is registered, it shall be a condition to such payment that the
certificate or instrument so surrendered shall be properly endorsed or shall be
otherwise in proper form for transfer and that the Person requesting such
payment shall have paid any transfer and other taxes required by reason of such
payment in a name other than that of the registered holder of the certificate or
instrument surrendered or shall have established to the satisfaction of Parent
or the Exchange Agent that such tax either has been paid or is not payable.
(d) At the Effective Time, the stock transfer books of the Company
shall be closed and there shall not be any further registration of transfers of
shares of any shares of capital
- 11 -
<PAGE>
stock thereafter on the records of the Company. If, after the Effective Time,
certificates for Shares are presented to the Surviving Corporation, they shall
be canceled and exchanged for cash as provided in Section 2.6(a). No interest
shall accrue or be paid on any cash payable upon the surrender of a certificate
or certificates which immediately before the Effective Time represented
outstanding Shares.
(e) Promptly following the date which is six months after the
Effective Time, the Exchange Agent shall deliver to Parent all cash,
certificates and other documents in its possession relating to the transactions
contemplated hereby, and the Exchange Agent's duties shall terminate.
Thereafter, each holder of a certificate representing Shares (other than
certificates representing Dissenting Shares and certificates representing Shares
held by Parent or in the treasury of the Company) may surrender such certificate
to Parent and (subject to applicable abandoned property, escheat and similar
laws) receive in consideration thereof the aggregate Per Share Amount relating
thereto, without any interest or dividends thereon.
(f) The Per Share Amount paid in the Merger shall be net to the
holder of Shares in cash, subject to reduction only for any applicable federal
back-up withholding or, as set forth in Section 2.8(c), stock transfer taxes
payable by such holder.
SECTION 2.9. Stock Plans.
-----------
(a) The Company shall take all actions necessary to provide that,
upon consummation of the Merger, (i) each then outstanding option to purchase
shares of Company Common Stock (the "Options") granted under any of the
Company's stock option plans referred to in Section 4.2, each as amended
(collectively, the "Option Plans), and any and all other outstanding options,
stock warrants and stock rights granted pursuant to such stock option plans or
otherwise, and in each case, whether or not then exercisable or vested, shall be
canceled and (ii) in consideration of such cancellation, the Company shall pay
to each such holder of an Option an amount in respect thereof equal to the
product of (A) the excess, if any, of the Per Share Amount over the exercise
price thereof and (B) the number of Shares subject thereto (such payment to be
net of applicable withholding taxes). The Company may elect at any time prior
to the consummation of the Offer to have the foregoing actions take effect, with
respect to some or all the Options, upon consummation of the Offer, in which
case the Company shall provide written notice of such action to Parent. If the
Company so elects and if, upon consummation of the Offer, Purchaser shall have
acquired at least 90 percent of the outstanding Shares, Parent shall as promptly
as practicable following such
- 12 -
<PAGE>
consummation provide the Company with the funds necessary to satisfy its
obligations under this Section 2.9(a).
(b) Except as provided herein or as otherwise agreed to by the
parties, the Company shall cause the Option Plans to terminate as of the
Effective Time and the provisions in any other plan, program or arrangement,
providing for the issuance or grant by the Company or any of its subsidiaries of
any interest in respect of the capital stock of the Company or any of its
Subsidiaries shall be deleted as of the Effective Time.
(c) The Company represents and warrants that all the Option Plans
provide that the Company can take the actions described in Section 2.9(a)
without obtaining the consent of any holders of Options.
(d) Prior to the Effective Time, the Board of Directors shall take
all commercially reasonable action to terminate the Company's Employee Stock
Purchase Plan and to return all shares of stock and cash accumulated in each
participant's account to such participants.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF THE
PARENT AND PURCHASER
Parent and Purchaser, jointly and severally, represent and warrant to
the Company as follows:
SECTION 3.1. Corporate Organization. Each of Parent and
----------------------
Purchaser is a corporation duly organized and validly existing and, in the case
of Purchaser, in good standing under the laws of the jurisdiction of its
incorporation, and has the requisite corporate power and authority and any
necessary governmental authority and approvals to own, operate or lease the
properties that it purports to own, operate or lease and to carry on its
business as it is now being conducted.
SECTION 3.2. Authority Relative to this Agreement. Parent and
------------------------------------
Purchaser have the necessary corporate power and authority to enter into this
Agreement and to carry out their obligations hereunder. The execution and
delivery of this Agreement by Parent and Purchaser and the consummation by
Parent and Purchaser of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of Parent and Purchaser
and no other corporate proceeding is necessary for the execution and delivery of
this Agreement by Parent or Purchaser, the performance by Parent or Purchaser of
their respective obligations hereunder and the consummation by Parent or
Purchaser of the transactions contemplated hereby.
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<PAGE>
This Agreement has been duly executed and delivered by Parent and Purchaser and
constitutes a legal, valid and binding obligation of each such corporation,
enforceable against each of them in accordance with its terms.
SECTION 3.3. No Conflict; Required Filings and Consents.
------------------------------------------
(a) The execution and delivery of this Agreement by Parent and
Purchaser do not, and the performance of this Agreement by Parent and Purchaser
will not, (i) conflict with or violate any law, regulation, court order,
judgment or decree applicable to Parent or Purchaser or by which any of their
property is bound or affected, (ii) violate or conflict with either the
Certificate of Incorporation or By-Laws or other organizational documents of
either Parent or Purchaser, or (iii) result in any breach of or constitute a
default (or an event which with notice or lapse of time or both would become a
default) under, or give to others any rights of termination or cancellation of,
or result in the creation of any liens, security interests, pledges, agreements,
claims, charges or encumbrances of any nature whatsoever ("Encumbrances"), on
any of the property or assets of Parent or Purchaser pursuant to, any contract,
instrument, permit, license or franchise to which Parent or Purchaser is a party
or by which Parent or Purchaser or any of its property is bound or affected,
except for, in the case of clauses (i) and (iii), conflicts, violations,
breaches or defaults which would not prevent or materially delay the
consummation of any of the transactions contemplated by this Agreement.
(b) Except for (i) applicable requirements, if any, of the Exchange
Act, (ii) the pre-merger notification requirements of the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), (iii) the filing
and recordation of appropriate merger documents as required by Delaware Law,
(iv) filings as may be required by any applicable "blue sky" laws, and (v) any
filings required under applicable foreign antitrust or competition laws and (vi)
any filings with the Department of the Treasury under its regulations pertaining
to mergers, acquisitions and takeovers by foreign persons, neither Parent nor
Purchaser is required to submit any notice, report or other filing with any
federal, state or local government or any court, administrative or regulatory
agency or commission or other governmental authority or agency, domestic or
foreign (a "Governmental Entity"), in connection with the execution, delivery or
performance of this Agreement or the consummation of the transactions
contemplated hereby. No waiver, consent, approval or authorization of any
Governmental Entity, is required to be obtained or made by either Parent or
Purchaser in connection with its execution, delivery or performance of this
Agreement, except (A) as set forth in Schedule 3.3 or (B) where
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<PAGE>
the failure to obtain such waivers, consents, approvals or authorizations would
not, individually or in the aggregate, prevent or materially delay the
consummation of the transactions contemplated by this Agreement.
SECTION 3.4. Financing Arrangements. Parent has or will have
----------------------
funds available to it sufficient (i) to enable Purchaser to purchase the Shares
in accordance with the terms of this Agreement and (ii) to pay (A) the amount to
which holders of Shares become entitled upon consummation of the Merger, (B) the
amount, if any, that Parent may become obligated hereunder to pay with respect
to the cancellation of Options and (C) the fees and expenses it will incur in
connection therewith. Upon consummation of the Offer in accordance with the
terms hereof, Parent will make such funds available to Purchaser as are
necessary to enable Purchaser to fulfill its obligations hereunder.
SECTION 3.5. No Prior Activities. Except for obligations or
-------------------
liabilities incurred in connection with its incorporation or organization or the
negotiation and consummation of this Agreement and the transactions contemplated
hereby (including any financing), Purchaser has not incurred any obligations or
liabilities, and has not engaged in any business or activities of any type or
kind whatsoever or entered into any agreements or arrangements with any Person
or entity.
SECTION 3.6. Brokers. No broker, finder or investment banker is
-------
entitled to any brokerage, finder's or other fee or commission in connection
with the transactions contemplated by this Agreement based upon arrangements
made by and on behalf of Parent or Purchaser.
SECTION 3.7. Offer Documents; Proxy Statement. None of the
--------------------------------
information supplied by Parent, its officers, directors, representatives, agents
or employees (the "Parent Information"), for inclusion in the Proxy Statement
(as defined in Section 4.18), or in any amendments thereof or supplements
thereto, will, on the date the Proxy Statement is first mailed to stockholders,
at the time of the Company Stockholders' Meeting (as defined in Section 4.18) or
at the Effective Time, contain any statement which, at such time and in light of
the circumstances under which it will be made, will be false or misleading with
respect to any material fact, or will omit to state any material fact necessary
in order to make the statements therein not false or misleading or necessary to
correct any statement in any earlier communication with respect to the
solicitation of proxies for the Company Stockholders' Meeting which has become
false or misleading. Neither the Offer Documents nor any amendments thereof or
supplements thereto will, at any time the Offer Documents or any such amendments
or supplements are filed with
- 15 -
<PAGE>
the SEC or first published, sent or given to the Company's stockholders, contain
any untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading. Notwithstanding the foregoing,
Parent and Purchaser do not make any representation or warranty with respect to
any information that has been supplied by the Company or its accountants,
counsel or other authorized representatives for use in any of the foregoing
documents. The Offer Documents and any amendments or supplements thereto will
comply as to form in all material respects with the provisions of the Exchange
Act and the rules and regulations thereunder.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent and Purchaser as
follows:
SECTION 4.1. Organization and Qualification; Subsidiaries. Each
--------------------------------------------
of the Company and its Subsidiaries (defined below in this Section 4.1) is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation (to the extent applicable), and has the
requisite corporate power and authority and any necessary governmental authority
and approvals to own, operate or lease the properties that it purports to own,
operate or lease and to carry on its business as it is now being conducted, and,
in the case of the Company and each of the Subsidiaries incorporated under the
laws of a state within the United States (each, a "Domestic Subsidiary"), is
duly qualified or licensed as a foreign corporation to do business and is in
good standing in each jurisdiction where the character of its properties owned,
operated or leased or the nature of its activities makes such qualification or
licensing necessary, except for such failure which, when taken together with all
other such failures, would not have a Material Adverse Effect (as defined below
in this Section 4.1). For purposes of this Agreement, "Subsidiary" means any
corporation or other legal entity of which the Company (either alone or through
or together with any other Subsidiary) owns, directly or indirectly, more than
50% of the stock or other equity interests the holders of which are generally
entitled to vote for the election of the board of directors or other governing
body of such corporation or other legal entity. For purposes of this Agreement,
"Material Adverse Effect" means any change in or effect on the business of the
Company or any of the Subsidiaries that is or is reasonably likely to be
materially adverse to the business, operations, properties (including intangible
properties), condition (financial or otherwise), assets or liabilities of the
Company and the Subsidiaries taken
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<PAGE>
as a whole. A true and complete list of all the Subsidiaries, together with the
jurisdiction of incorporation or organization of each Subsidiary and the
percentage of each Subsidiary's outstanding capital stock owned by the Company
or another Subsidiary, is set forth in Schedule 4.1 hereto.
SECTION 4.2. Capitalization.
--------------
(a) The authorized capital stock of the Company consists of: (i)
100,000,000 shares of Company Common Stock; (ii) 1,000 shares of 8% Class A
cumulative preferred stock, par value $100 per share ("Class A Preferred
Stock"); (iii) 47,000 shares of 8% Class B cumulative preferred stock, par value
$100 per share ("Class B Preferred Stock"); (iv) 20,000 shares of 11% Class C
cumulative preferred stock, par value $100 ("Class C Preferred Stock") and; (v)
5,000,000 shares of preferred stock, par value $.001 per share ("Designated
Preferred Stock"), of which 200,000 shares have been designated Series A Junior
Participating Preferred Stock. As of the date hereof, (A) 12,663,031 shares of
Company Common Stock were issued, of which 12,246,631 shares were issued and
outstanding and 416,400 shares were held by the Company as treasury shares and
all of which were duly authorized, validly issued, fully paid and nonassessable
and not subject to preemptive rights, (B) no shares of Class A Preferred Stock,
Class B Preferred Stock, Class C Preferred Stock or Designated Preferred Stock
were issued and outstanding, (C) 831,139 shares of Company Common Stock were
reserved for issuance upon the exercise of outstanding Options under the
Company's 1990 Stock Option Plan, (D) 1,441,003 shares of Company Common Stock
were reserved for issuance upon the exercise of outstanding Options under the
1995 Pinkerton's, Inc. Performance and Equity Incentive Plan and (E) 200,000
shares of Series A Junior Participating Preferred Stock were reserved for
issuance upon the exercise of the Rights. Except as set forth in Schedule
4.2(a) or in this Section 4.2(a): (x) there are no other options, calls,
warrants or rights, agreements, arrangements or commitments of any character
obligating the Company or any of the Subsidiaries to issue, deliver or sell any
shares of capital stock of or other equity interests in the Company or any of
the Subsidiaries; (y) there are no bonds, debentures, notes or other
indebtedness of the Company having the right to vote (or convertible into, or
exchangeable for, securities having the right to vote) on any matters on which
stockholders of the Company may vote; and (z) there are no stockholders
agreements, voting trusts or other agreements or understandings to which the
Company is a party or by which it is bound relating to the voting, registration
or disposition of any shares of the capital stock of the Company (including any
such agreements or understandings that may limit in any way the solicitation of
proxies by or on behalf of the Company from, or the casting of votes by, the
stockholders of the Company with respect to the Merger) or granting to any
person or group of persons the right
- 17 -
<PAGE>
to elect, or to designate or nominate for election, a director to the Board of
Directors. Except as set forth in Schedule 4.2(a), there are no programs in
place or outstanding contractual obligations of the Company or any of the
Subsidiaries (1) to repurchase, redeem otherwise acquire any shares of capital
stock of the Company or (2) to vote or to dispose of any shares of the capital
stock of any of the Subsidiaries.
(b) All the outstanding capital stock of each of the Subsidiaries
is duly authorized, validly issued, fully paid and nonassessable and not subject
to preemptive rights and, except as set forth in Schedule 4.1, is owned by the
Company or a Subsidiary free and clear of any Encumbrance, except for
Encumbrances that do not, individually or in the aggregate, materially interfere
with the ownership, business or operations of the Company and such Subsidiary.
There are no existing options, calls, warrants or other rights relating to the
acquisition of issued or unissued capital stock or other equity interests or
securities of any Subsidiary. Except (i) for the Subsidiaries, (ii) as set forth
in Schedule 4.2(b) and (iii) with respect to such interests that individually
have a fair market value of less than $1.0 million and in the aggregate have a
fair market value of less than $1.5 million, the Company does not directly or
indirectly own any equity or similar interest in, or any interest convertible
into or exchangeable or exercisable for, any equity or similar interest in any
other corporation, partnership, joint venture or other business association or
entity. Except as set forth in Schedule 4.2(b) and with respect to commitments
that are individually less than $500,000 and in the aggregate are less than $1.5
million, neither the Company nor any Subsidiary is under any current or
prospective obligation to make a capital contribution or investment in or loan
to, or to assume any liability or obligation of, any corporation, partnership,
joint venture or the business association or entity other than a wholly owned
Subsidiary.
SECTION 4.3. Authority Relative to this Agreement and the Company
----------------------------------------------------
Stock Option Agreement. The Company has the necessary corporate power and
- ----------------------
authority to enter into this Agreement and the Company Stock Option Agreement
and, subject, in the case of this Agreement, to obtaining any necessary
stockholder approval of the Merger, to carry out its obligations hereunder and
thereunder. The execution and delivery of this Agreement and the Company Stock
Option Agreement by the Company and the consummation by the Company of the
transactions contemplated hereby and thereby have been duly authorized by all
necessary corporate action on the part of the Company, subject to the approval
of the Merger by the Company's stockholders in accordance with Delaware Law.
Each of this Agreement and the Company Stock Option Agreement has been duly
executed and delivered by the Company and constitutes a legal, valid and binding
obligation of the Company, enforceable against it in
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<PAGE>
accordance with its terms. The affirmative vote of the holders of a majority of
all the shares of Company Common Stock entitled to vote approving this Agreement
is the only vote of the holders of any class or series of the Company's capital
stock necessary to approve this Agreement and the Company Stock Option Agreement
and the transactions contemplated hereby and thereby; provided, however, that no
-------- -------
such vote shall be required if the Merger is subject to Section 253 of Delaware
Law.
SECTION 4.4. No Conflict; Required Filings and
----------------------------------
Consents.
--------
(a) Except as set forth in Schedule 4.4 hereto, the execution and
delivery of this Agreement and the Company Stock Option Agreement by the Company
do not, and the performance of such agreements by the Company will not, (i)
conflict with or violate any law, regulation, court order, judgment or decree
applicable to the Company or any of the Subsidiaries or by which its or any of
their property is bound or affected, (ii) violate or conflict with the
Certificate of Incorporation or By-Laws or equivalent organizational documents
of the Company or any Domestic Subsidiary, or (iii) result in any breach of or
constitute a default (or an event which with notice or lapse of time of both
would become a default) under, or result in any, or give rise to any rights of
termination, cancellation or acceleration of any obligations or any loss of any
material benefit under or, result in the creation of an Encumbrance on any of
the properties or assets of the Company or any of the Subsidiaries pursuant to,
any agreement, contract, instrument, permit, license or franchise to which the
Company or any of the Subsidiaries is a party or by which the Company or any of
the Subsidiaries or its or any of their property is bound or affected, except
for, in the case of clauses (i) and (iii), conflicts, violations, breaches or
defaults which, individually or in the aggregate, would not be reasonably likely
to (x) have a Material Adverse Effect, (y) impair, in any material respect, the
ability of the Company to perform its obligations under this Agreement or the
Company Stock Option Agreement or (z) prevent or materially delay the
consummation of the transactions contemplated by this Agreement or the Company
Stock Option Agreement.
(b) Except for (i) applicable requirements, if any, of the Exchange
Act, (ii) the pre-merger notification requirements of the HSR Act, (iii) the
filing and recordation of appropriate merger or other documents as required by
Delaware Law, (iv) filings as may be required by any "blue sky" laws of various
states and (v) any filings required under applicable foreign antitrust or
competition laws, the Company and each of the Subsidiaries are not required to
submit any notice, report or other filing with any Governmental Entity, in
connection with the execution, delivery or performance of this Agreement or the
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<PAGE>
Company Stock Option Agreement or the consummation of the transactions
contemplated hereby or thereby. No waiver, consent, approval or authorization
of any Governmental Entity, is required to be obtained or made by the Company in
connection with its execution, delivery or performance of this Agreement or the
Company Stock Option Agreement or the consummation of the transactions
contemplated hereby or thereby, except where the failure to obtain such waivers,
consents, approvals or authorizations would not, individually or in the
aggregate, be reasonably likely to (x) have a Material Adverse Effect, (y)
impair, in any material respect, the ability of the Company to perform its
obligations under this Agreement or the Company Stock Option Agreement or (z)
prevent or materially delay the consummation of the transactions contemplated by
this Agreement or the Stock Option Agreement.
SECTION 4.5. SEC Filings; Financial Statements.
---------------------------------
(a) The Company has filed all forms, reports and documents required
to be filed with the SEC since December 29, 1995, its (i) Annual Reports on Form
10-K for the fiscal years ended December 26, 1997 and December 27, 1996,
respectively, (ii) Quarterly Reports on Form 10-Q for the fiscal quarters ended
March 20, 1998, June 12, 1998 and September 4, 1998, (iii) all proxy statements
relating to the Company's meetings of stockholders (whether annual or special)
held since December 29, 1995 and (iv) all other reports or registration
statements filed by the Company with the SEC since December 29, 1995
(collectively, the "SEC Reports"). The SEC Reports (i) were prepared in
accordance in all material respects with the requirements of the Securities Act
of 1933, as amended (the "Securities Act"), or the Exchange Act, as the case may
be, and (ii) did not at the time they were filed contain any untrue statement of
a material fact or omit to state a material fact required to be stated therein
or necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. None of the
Subsidiaries is required to file any statements or reports with the SEC pursuant
to Sections 13(a) or 15(d) of the Exchange Act.
(b) The consolidated financial statements contained in the SEC
Reports were prepared in accordance with generally accepted accounting
principles applied on a consistent basis throughout the periods involved (except
as may be indicated in the notes thereto) and fairly presented the consolidated
financial position of the Company and the Subsidiaries as at the respective
dates thereof and the consolidated results of operations and changes in
financial position of the Company and the Subsidiaries for the periods
indicated, except that the unaudited interim financial statements were or are
subject to normal and recurring year-end adjustments (which in the aggregate are
not material in amount).
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(c) Except as (i) set forth in Schedule 4.5(c), (ii) disclosed in
any SEC Report filed prior to the date of this Agreement or (iii) incurred in
the ordinary course of business consistent with past practice, and except for
obligations incurred in connection with the transactions contemplated by this
Agreement, neither the Company nor any of the Subsidiaries has any liabilities
or obligations of any nature (whether accrued, absolute, contingent or
otherwise) which, individually or in the aggregate, would have a Material
Adverse Effect.
SECTION 4.6. Absence of Certain Changes or Events. Except as
------------------------------------
expressly permitted by this Agreement or as set forth in Schedule 4.6 hereto or
in the SEC Reports, since December 26, 1997, the business of the Company and the
Subsidiaries has been conducted in the ordinary course consistent with past
practice and there has not been:
(a) any Material Adverse Effect; provided, that (i) any adverse
effect that is caused by conditions affecting the economy or security markets
generally shall not be taken into account in determining whether there has been
a Material Adverse Effect and (ii) any adverse effect that is caused by
conditions affecting the primary industry in which the Company currently
competes shall not be taken into account in determining whether there has been a
Material Adverse Effect;
(b) any damage, destruction or loss (whether or not covered by
insurance) with respect to any of the assets of the Company or any of the
Subsidiaries having a Material Adverse Effect;
(c) any redemption or other acquisition of Company Common Stock by
the Company or any of the Subsidiaries or any declaration or payment of any
dividend or other distribution in cash, stock or property with respect to
Company Common Stock, except for purchases heretofore made pursuant to the terms
of the Company's employee benefit plans;
(d) any change by the Company in accounting methods, principles or
practices used in preparing the Company's consolidated financial statements;
(e) any revaluation by the Company of any asset (including, without
limitation, any writing down of the value of inventory or writing off of notes
or accounts receivable), other than in the ordinary course of business
consistent with past practice;
(f) any entry by the Company or any Subsidiary into any commitment
or transaction material to the Company and the Subsidiaries taken as a whole,
other than commitments or
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transactions entered into in the ordinary course of business consistent with
past practice;
(g) any material increase in or establishment of any bonus,
insurance, severance, deferred compensation, pension, retirement, profit
sharing, stock option (including, without limitation, the granting of stock
options, stock appreciation rights, performance awards or restricted stock
awards) stock purchase or other employee benefit plan, or any material other
increase in the compensation payable or to become payable to any directors,
officers or key employees of the Company or any Subsidiary, except in the
ordinary course of business consistent with past practice;
(h) any entry by the Company or any Subsidiary into any employment,
consulting, severance, termination or indemnification agreement (i) with any
employee of a Subsidiary that provides for annual payments of more than $200,000
and a term of one year or more or (ii) with any director or officer of the
Company;
(i) (i) any settlement or compromise by the Company or any
Subsidiary of any claim, litigation or other legal proceeding, other than in the
ordinary course of business consistent with past practice in an amount not
involving more than $250,000 or (ii) any payment, discharge or satisfaction by
the Company or any Subsidiary of any other claims, liabilities or obligations
(absolute, accrued, asserted or unasserted, contingent or otherwise), other than
(A) in the ordinary course of business and consistent with past practice or (B)
with respect to any other such claims, liabilities or obligations reflected or
reserved against in, or contemplated by, the consolidated financial statements
(or the notes thereto) of the Company; or
(j) any agreement, in writing or otherwise, by the Company or any
Subsidiary to take any of the actions described in this Section 4.6, except as
expressly contemplated by this Agreement.
SECTION 4.7. Litigation. Except as disclosed in the SEC Reports
----------
or in Schedule 4.7 hereto, there are no claims, actions, suits, proceedings or
investigations pending or, to the knowledge of the Company, threatened against
the Company or any of the Subsidiaries, or any properties or rights of the
Company or any of the Subsidiaries, before any Governmental Entity or arbitrator
which are reasonably likely to have a Material Adverse Effect. As of the date
hereof, except for orders or decrees that are generally applicable to all
Persons engaged in businesses similar to those of the Company and the
Subsidiaries, neither the Company nor any of the Subsidiaries nor any of their
property is subject to any order, judgment, injunction or decree that
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materially interferes with the business or operations of the Company or any such
Subsidiary.
SECTION 4.8. Employee Benefit Plans.
----------------------
(a) (i) Schedule 4.8(a) sets forth a list that is complete in all
material respects of all "employee benefit plans", as defined in Section 3(3) of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), and
all other employee benefit or executive compensation arrangements, perquisite
programs or payroll practices, including, without limitation, any such
arrangements or payroll practices providing severance pay, sick leave, vacation
pay, salary continuation for disability, retirement benefits, deferred
compensation, bonus pay, incentive pay, stock options (including those held by
Directors, employees, and consultants), hospitalization insurance, medical
insurance, life insurance, scholarships or tuition reimbursements, that are
maintained by the Company, any Subsidiary or any entity within the same
"controlled group" as the Company or Subsidiary, within the meaning of Section
4001(a)(14) of ERISA (a "Company ERISA Affiliate") or to which the Company, any
Subsidiary or Company ERISA Affiliate is obligated to contribute thereunder for
current or former employees of the Company, any Subsidiary or Company ERISA
Affiliate (the "Company Employee Benefit Plans"); provided, that the foregoing
--------
representation is given only as to the best knowledge of the Company's senior
management in respect of any Foreign Subsidiary.
(ii) Schedule 4.8(a)(ii) sets forth with respect to each Option that
is outstanding under the Option Plans as of the date hereof, the name of the
holder of such Option, the number of shares of Company Common Stock subject to
such Option and the exercise price per share of such Option.
(b) Except as set forth in Schedule 4.8(b), none of the Company
Employee Benefit Plans include a "multiemployer plan", as defined in Section
4001(a)(3) of ERISA (the "Company Multiemployer Plan") with respect to which the
Company or any ERISA Affiliate has a material contribution obligation. Neither
the Company, any Subsidiary nor any Company ERISA Affiliate has withdrawn in a
complete or partial withdrawal from any Company Multiemployer Plan that has or
would result in material liability to the Company or an ERISA Affiliate, nor has
any of them incurred any material liability due to the termination or
reorganization of a Company Multiemployer Plan. The aggregate withdrawal
liability from each of such Company Multiemployer Plans would not be material,
individually or in the aggregate, to the Company as of the date hereof.
(c) None of the Company Employee Benefit Plans is a "single
employer plan", as defined in Section 4001(a)(15) of
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ERISA, that is subject to Title IV of ERISA. Neither the Company, any Subsidiary
nor any Company ERISA Affiliate has incurred any outstanding material liability
under Section 4062 of ERISA to the Pension Benefit Guaranty Corporation or to a
trustee appointed under Section 4042 of ERISA. Neither the Company, any
Subsidiary nor any Company ERISA Affiliate has engaged in any transaction
described in Section 4069 of ERISA. Except as set forth in Schedule 4.8(c),
neither the Company nor any Subsidiary maintains, or is required, either
currently or in the future, to provide material medical benefits to employees,
former employees or retirees after their termination of employment, other than
pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985.
(d) Each Company Employee Benefit Plan that is intended to qualify
under Section 401 of Internal Revenue Code of 1986, as amended (the "Code"), and
each trust maintained pursuant thereto and intended to be exempt from federal
income taxation under Section 501 of the Code has been determined by the IRS to
be so exempt, and, to the Company's knowledge, nothing has occurred with respect
to the operation of any such Company Employee Benefit Plan that would cause the
loss of such qualification or exemption or the imposition of any material
liability, penalty or tax under ERISA or the Code.
(e) Except to the extent that the failure to satisfy this
representation would not result in material liability to the Company or an ERISA
Affiliate, all required contributions (including all employer contributions and
employee salary reduction contributions) under any of the Company Employee
Benefit Plans have been timely made to any funds or trusts established
thereunder.
(f) There has been no material violation of ERISA or the Code with
respect to the filing of applicable reports, documents and notices regarding the
Company Employee Benefit Plans with the Secretary of Labor or the Secretary of
the Treasury or the furnishing of required reports, documents or notices to the
participants or beneficiaries of the Company Employee Benefit Plans.
(g) None of the Company, the Subsidiaries, the officers of the
Company or any of the Subsidiaries or the Company Employee Benefits Plans which
are subject to ERISA, any trusts created thereunder or any trustee or
administrator thereof, has engaged in a "prohibited transaction" (as such term
is defined in Section 406 of ERISA or Section 4975 of the Code) or any other
breach of fiduciary responsibility that could subject the Company, any of the
Subsidiaries or any officer of the Company or any of the Subsidiaries to any
material tax or penalty on prohibited transactions imposed by such Section 4975
or to any material liability under Section 502(i) or (1) of ERISA.
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<PAGE>
(h) The aggregate liability for benefits accrued and the aggregate
accumulated benefit obligation under the Company's Supplemental Retirement
Income Plan, as amended (the "SRIP"), are $16,480,941 and $23,371,182,
respectively, determined as of December 31, 1998 and on the basis of the
actuarial assumptions set forth in the most recent actuarial valuation for the
SRIP, a true and complete copy of which is attached as Schedule 4.8(h). The
Company has currently in force Company-owned life insurance policies having an
aggregate cash value of $14,744,782 and an aggregate death benefit of
$70,837,147, the aggregate annual premiums for which are $2,055,940.
(i) Neither the Company nor any of the Subsidiaries is a party to
any contract, agreement or other arrangement which could result in the payment
of amounts that could be nondeductible by reason of Section 162(m) of the Code.
(j) True, correct and complete copies of the following documents,
with respect to each of the Company Employee Benefit Plans, have been delivered
or made available to Parent by the Company: (i) all Company Employee Benefit
Plans and related trust documents, and amendments thereto; (ii) the most recent
Forms 5500 and (iii) summary plan descriptions.
(k) There are no pending actions, claims or lawsuits which have
been asserted, instituted or, to the Company's knowledge, threatened, against
the Company Employee Benefit Plans, the assets of any of the trusts under such
plans or the plan sponsor or the plan administrator, or against any fiduciary of
the Company Employee Benefit Plans with respect to the operation of such plans
(other than routine benefit claims) that could subject the Company or any ERISA
Affiliate to any material liability.
(l) All Company Employee Benefit Plans subject to ERISA or the Code
have been maintained and administered, in all material respects, in accordance
with their terms and with all provisions of ERISA and the Code, respectively,
(including rules and regulations thereunder) and other applicable federal and
state laws and regulations and all employees required to be included as
participants by the terms of such plans have been properly included.
(m) To the best knowledge of the Company's senior management, with
respect to each Company Employee Benefit Plan not subject to United States law
(a "Company Foreign Benefit Plan"): (i) the fair market value of the assets of
each funded Company Foreign Benefit Plan, the liability of each insurer for any
Company Foreign Benefit Plan funded through insurance or the book reserve
established for any Company Foreign Benefit Plan, together with any accrued
contributions, is sufficient to procure or provide for the accrued benefit
obligations, as of the
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<PAGE>
Effective Time, with respect to all current and former participants in such plan
according to the actuarial assumptions and valuations most recently used to
determine employer contributions to such Company Foreign Benefit Plan and no
transaction contemplated by this Agreement shall cause such assets or insurance
obligations or book reserve to be less than such benefit obligations; (ii) each
Company Foreign Benefit Plan is in material compliance with applicable law; and
(iii) each Company Foreign Benefit Plan required to be registered with a
regulatory agency or authority has been registered and has been maintained in
good standing with such agency or authority.
SECTION 4.9. PROPERTIES
----------
(a) Each of the Company and the Subsidiaries has good and
marketable title to, or a valid leasehold interest in, all its properties and
assets, free and clear of all Encumbrances, except as set forth in Schedule
4.9(a) and for Encumbrances that do not have a Material Adverse Effect.
(b) Schedule 4.9(b) sets forth a true and complete list of each
parcel of real property owned by the Company or any Subsidiary with a fair
market value in excess of $1,000,000. Schedule 4.9(b) sets forth a true and
complete list of each lease or sublease relating to Leased Real Property (as
defined below) that involves annual expenditures by the Company or any
Subsidiary of $250,000 or more (collectively, the "Company Material Leases").
(c) Except as set forth in Schedule 4.9(c), to the best knowledge
of the Company's senior management, there is no material violation of any law,
ordinance or regulation (including, without limitation, any building, planning
or zoning law, ordinance or regulation) relating to any of the real property or
interests in real property leased by the Company or any Subsidiary (the "Leased
Real Property").
(d) With respect to each of the Company Material Leases, (i) such
lease or sublease is legal, valid, binding, enforceable and in full force and
effect, (ii) except as otherwise set forth in Schedule 4.9(d), such lease or
sublease will not cease to be legal, valid, binding, enforceable and in full
force and effect on terms identical to those currently in effect as a result of
the consummation of the transactions contemplated by this Agreement or the
Company Stock Option Agreement, nor will the consummation of such transactions
constitute a breach or default under such lease or sublease or otherwise give
the landlord a right to terminate such lease or sublease and (iii) neither the
Company nor any Subsidiary knows of, or has given or received notice of, any
violation or default thereunder (nor, to the knowledge of the Company, does
there exist any condition which with the passage of time or the giving
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<PAGE>
of notice or both would result in such a violation or default thereunder),
except for, in the case of clause (iii), violations or defaults that would not,
individually or in the aggregate, have a Material Adverse Effect.
SECTION 4.10. Intellectual Property. Except as set forth in
---------------------
Schedule 4.10, each of the Company and the Subsidiaries owns, or is licensed or
otherwise possesses rights to use all patents, trademarks and service marks
(registered or unregistered), trade names, domain names, computer software and
copyrights and applications and registrations therefor, in each case, which are
material to the conduct of the business of the Company and the Subsidiaries,
taken as a whole (collectively, the "Intellectual Property Rights"). Except as
set forth in Schedule 4.10, there are neither any outstanding nor, to the
Company's knowledge, threatened disputes or disagreements with respect to any of
the Intellectual Property Rights.
SECTION 4.11. Insurance. Schedule 4.11 sets forth a true and
---------
complete list of all insurance policies carried by, or covering the Company and
the Subsidiaries with respect to their businesses, assets and properties and
with respect to which records are maintained at the Company's principal
executive offices, together with, in respect of each such policy, the name of
the insurer, the policy number, the type of policy, the amount of coverage and
the deductible. The Company and the Subsidiaries maintain insurance policies
against all risks of a character and in such amounts as are usually insured
against by similarly situated companies in the same or similar businesses. Each
insurance policy set forth on Schedule 4.11 is in full force and effect and all
premiums due thereon have been paid in full.
SECTION 4.12. Environmental. Except as set forth in Schedule 4.12:
-------------
(a) The Company and the Subsidiaries are and have been in
compliance with all applicable Environmental Laws, have obtained all
Environmental Permits and are in compliance with their requirements, and have
resolved all past non-compliance with Environmental Laws and Environmental
Permits without any pending, on-going or future obligation, cost or liability,
except where the failure to do so would not, individually or in the aggregate,
have a Material Adverse Effect.
(b) Neither the Company nor any of the Subsidiaries has (i) placed,
held, located, released, transported or disposed of any Hazardous Substances on,
under, from or at any of the Company's or any of the Subsidiaries' properties or
any other properties, other than in a manner that could not, in all such cases
taken individually or in the aggregate, reasonably be expected to result in a
Material Adverse Effect, (ii) any knowledge of the presence or threat of release
of any Hazardous
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<PAGE>
Substances on, under or at any of the Company's or any of the Subsidiaries'
properties or any other property but arising from the Company's or any of the
Subsidiaries' current or former properties or operations, other than in a manner
that could not reasonably be expected to result in a Material Adverse Effect, or
(iii) received any written notice (A) of any violation of or liability under any
Environmental Laws, (B) of the institution or pendency of any suit, action,
claim, proceeding or investigation by any Governmental Entity or any third party
in connection with any such violation or liability, (C) requiring the response
to or remediation of Hazardous Substances at or arising from any of the
Company's or any of the Subsidiaries' current or former properties or operations
or any other properties, (D) alleging noncompliance by the Company or any of the
Subsidiaries with the terms of any Environmental Permit in any manner reasonably
likely to require material expenditures or to result in material liability or
(E) demanding payment for, response to or remediation of Hazardous Substances at
or arising from any of the Company's or any of the Subsidiaries' current or
former properties or operations or any other properties, except where any such
payment would not, individually or in the aggregate, have a Material Adverse
Effect;
(c) No Environmental Law imposes any obligation upon the Company or
the Subsidiaries arising out of or as a condition to any transaction
contemplated by this Agreement, the Company Stock Option Agreement or the
Stockholders Agreement, including any requirement to modify or to transfer any
permit or license, any requirement to file any notice or other submission with
any Governmental Entity, the placement of any notice, acknowledgment or covenant
in any land records, or the modification of or provision of notice under any
agreement, consent order or consent decree. No Encumbrance has been placed upon
any of the Company's or the Subsidiaries' properties under any Environmental
Law;
(d) The Company and the Subsidiaries have, to the best knowledge of
the Company's senior management, provided Parent with copies of any
environmental assessment or audit report (including all records maintained for
required environmental compliance) or other similar studies or analyses in the
possession of the Company or the Subsidiaries relating to any real property
currently or formerly owned, leased or occupied by the Company or the
Subsidiaries.
(e) As used in this Agreement, the following terms have the
meanings set forth below:
(i) "Environmental Law" means any law, now or hereafter in
effect and as amended, and any judicial or administrative interpretation
thereof, including any judicial or administrative order, consent decree or
judgment, relating to pollution or protection of the
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<PAGE>
environment, health or safety or natural resources, including, without
limitation, those relating to the use, handling, transportation, treatment,
storage, disposal, release or discharge of Hazardous Substances.
(ii) "Environmental Permit" means any permit, approval,
identification number, license or other authorization required under any
applicable Environmental Law.
(iii) "Hazardous Substances" means (a) petroleum and petroleum
products, by-products or breakdown products, radioactive materials,
asbestos-containing materials and polychlorinated biphenyls, and (b) any
other chemicals, materials or substances regulated as toxic or hazardous or
as a pollutant, contaminant or waste under any applicable Environmental
Law.
SECTION 4.13. Material Contracts.
------------------
(a) Except as set forth in the SEC Reports or Schedule 4.13,
neither the Company nor any of the Subsidiaries is a party to or bound by:
(i) any "material contract" (as such term is defined in Item
601(b)(10) of Regulation S-K of the SEC);
(ii) any contract or agreement for the purchase of materials
or personal property from any supplier or for the furnishing of services to
the Company or any Subsidiary that involves or is likely to involve future
aggregate payments by the Company or any of the Subsidiaries of $5,000,000
or more;
(iii) any contract or agreement for the sale, license or lease
(as lessor) by the Company or any Subsidiary of services, materials,
products, supplies or other assets, owned or leased by the Company or the
Subsidiaries, that involves or is likely to involve future aggregate
payments to the Company or any of the Subsidiaries of $5,000,000 or more;
(iv) any contract, agreement or instrument relating to or
evidencing indebtedness for borrowed money of the Company or any Subsidiary
in the amount of $200,000 or more;
(v) any non-competition agreement or any other agreement or
obligation which purports to limit in any material respect the manner in
which, or the localities in which, the business of the Company or the
Subsidiaries may be conducted;
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(vi) any agreement with any present or former affiliates of
the Company;
(vii) any voting or other agreement governing how any Shares
shall be voted;
(viii) any agreement with any stockholders of the Company; or
(ix) any contract or other agreement which would prohibit or
materially delay the consummation of the Merger or any of the transactions
contemplated by this Agreement or the Company Stock Option Agreement.
The foregoing contracts and agreements to which the Company or any Subsidiary
are parties or are bound are collectively referred to herein as "Company
Material Contracts."
(b) Each Company Material Contract is valid and binding on the
Company (or, to the extent a Subsidiary is a party, such Subsidiary) and is in
full force and effect, and the Company and each Subsidiary have performed all
obligations required to be performed by them to date under each Company Material
Contract and each other contract and agreement to which the Company or any
Subsidiary is party or bound (collectively, the "Other Contracts"), except where
such noncompliance, individually or in the aggregate, would not have a Material
Adverse Effect. Neither the Company nor any Subsidiary knows of, or has given
or received notice of, any violation or default under (nor, to the knowledge of
the Company, does there exist any condition which with the passage of time or
the giving of notice or both would result in such a violation or default under)
any Company Material Contract or Other Contract, except where such violations or
defaults, individually or in the aggregate, would not have a Material Adverse
Effect.
(c) Except as disclosed in the SEC Reports or in Schedule 4.13 or
as expressly provided for in this Agreement, neither the Company nor any of the
Subsidiaries is a party to any (i) employment or consulting agreement (A) with
any employee of or consultant to the Company or any Domestic Subsidiary that
cannot be terminated on sixty days' or less notice, or (B) with any employee of
or consultant to any Subsidiary other than a Domestic Subsidiary (a "Foreign
Subsidiary") that cannot be terminated on one year's or less notice and provides
for annual payments of $200,000 or more, (ii) agreement with any officer of the
Company, any Domestic Subsidiary or, to the best knowledge of senior management
of the Company, any Foreign Subsidiary, the benefits of which are contingent or
vest, or the terms of which are materially altered, upon the occurrence of a
transaction involving the Company or any the Subsidiaries of the nature
contemplated by this Agreement or the Company Stock Option
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Agreement, (iii) agreement with respect to any officer of the Company, any
Domestic Subsidiaries or, to the best knowledge of senior management of the
Company, any Foreign Subsidiary, providing any term of employment or
compensation guarantee or (iv) stock or stock purchase plan, any of the benefits
of which will be increased, or the vesting of the benefits of which will be
accelerated, by the occurrence of any of the transactions contemplated by this
Agreement or the Company Stock Option Agreement or the value of any of the
benefits of which will be calculated on the basis of any of such transactions.
SECTION 4.14. Conduct of Business.
-------------------
(a) Except as set forth in Schedule 4.14, the business and
operations of the Company and the Subsidiaries are not being conducted in
default or violation of any term, condition or provision of (i) their respective
Certificates of Incorporation or By-Laws or similar organizational documents, or
(ii) any note, bond, mortgage, indenture, contract, agreement, lease or other
instrument or agreement of any kind to which the Company or any of the
Subsidiaries is now a party or by which the Company or any of the Subsidiaries
or any of their respective properties or assets may be bound, except, with
respect to the foregoing clause (ii), defaults or violations that would not,
individually or in the aggregate, have a Material Adverse Effect.
(b) Except as set forth in Schedule 4.14, the business and
operations of the Company and the Subsidiaries have been, and are being,
conducted in compliance with all Federal, state, local and foreign statutes,
laws, ordinances, rules, regulations, judgments, decrees, orders, concessions,
grants, franchises, permits, licenses and other governmental authorizations and
approvals applicable to the Company or any of the Subsidiaries, except for
failures to so comply that would not, individually or in the aggregate, have a
Material Adverse Effect.
(c) The Company and the Subsidiaries have in effect all franchises,
permits, licenses, and other governmental authorizations and approvals
(collectively, the "Company Permits") necessary to own, lease or operate their
properties and assets and to carry on their businesses, except where the failure
to have any such Company Permits would not, individually or in the aggregate,
have a Material Adverse Effect, and no proceedings are pending or, to the
knowledge of the Company, threatened, to revoke or limit any such Company
Permit.
SECTION 4.15. Taxes.
-----
(a) Except for Tax Returns the failure to file which, when taken
together with all other such failures, has not had and is not reasonably likely
to have a Material Adverse Effect, all Tax Returns (as defined below) by or on
behalf of the Company or
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any Subsidiary or any affiliated, combined or unitary group of which the Company
or any Subsidiary is or was a member have been duly and timely filed (giving
effect to all timely obtained extensions) with the appropriate taxing
authorities and were, in all material respects, true, complete and correct.
(b) Except for Taxes the failure to pay which, when taken together
with all other such failures, has not had and is not reasonably likely to have a
Material Adverse Effect, the Company and each Subsidiary has paid or will have
had paid to the appropriate taxing authority on its behalf, within the time and
in the manner prescribed by law, all Taxes (as defined below) for which it is
liable.
(c) The Company and each Subsidiary has established on its books
and records adequate reserves for the payment of all Taxes for which it is
liable which are not yet due and payable, and with respect to any such Taxes
which have been proposed, assessed or asserted against them, except for Taxes
the failure to pay which, when taken together with all other such failures, is
not reasonably likely to have a Material Adverse Effect.
(d) The Company and each Subsidiary has complied in all material
respects with all applicable laws, rules and regulations relating to the payment
and withholding of Taxes for which it is liable (including, without limitation,
withholding of such Taxes pursuant to sections 1441 and 1442 of the Code or
similar provisions under any state, local or foreign laws), and has, within the
time and in the manner prescribed by law, withheld and paid over to the
appropriate taxing authorities all amounts required to be so withheld and paid
over under all applicable domestic and foreign laws.
(e) Neither the Company nor any Subsidiary has requested any
extension of time within which to file any material Tax Return in respect of any
taxable year, which Tax Return has not since been filed, other than in the
ordinary course of business consistent with the Company's past practices.
(f) Other than in the ordinary course of business consistent with
the Company's past practices, there are no outstanding waivers or comparable
consents that have been given by the Company or any Subsidiary or with respect
to any Tax Return of the Company or any Subsidiary regarding the application of
any statute of limitations with respect to any Taxes or Tax Returns of the
Company or any such Subsidiary.
(g) No United States federal, state, local or foreign audits,
investigations, other administrative proceedings or court proceedings are
presently pending against the Company or any Subsidiary with regard to any Taxes
or Tax Returns of the Company or any Subsidiary, except for such audits,
investigations or proceedings, which, when taken together with all other such
audits, investigations or
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proceedings that are pending or threatened, have not had and are not reasonably
likely to have a Material Adverse Effect, and no notification other than in the
ordinary course of business has been received by the Company or any Subsidiary
of the Company that such an audit, investigation or other proceeding is pending
or threatened.
(h) Other than in the ordinary course of business consistent with
the Company's past practices, no power of attorney or similar document which is
currently in force has been granted by the Company or any Subsidiary with
respect to any matter relating to Taxes.
(i) No property of the Company or any Subsidiary is property that
the Subsidiary or any party to this transaction is or will be required to treat
as being owned by another person pursuant to the provisions of section 168(f)(8)
of the Internal Revenue Code of 1954, as amended, as in effect prior to the
enactment of the Tax Reform Act of 1986 or is "tax-exempt use property" within
the meaning of section 168 of the Code.
(j) Neither the Company nor any Subsidiary has any material amount
of income which is includible in computing the taxable income of a United States
person (as determined under section 7701 of the Code) under section 951 of the
Code.
(k) The Company and each Subsidiary (i) are members of an
affiliated group of corporations within the meaning of section 1504(a) of the
Code; and such affiliated group filed a consolidated return with respect to
United States federal income taxes and (ii) neither the Company nor any
Subsidiary has liability for the Taxes of any person (other than members of the
affiliated group described in clause (i) of this Section 4.15(k)) under Treasury
Regulations section 1.1502-6 (or a similar or corresponding provision of state,
local, or foreign law);
(l) Except as set forth in Schedule 4.15, there are no material
Encumbrances for Taxes upon the assets or properties of the Company or any
Subsidiary except for statutory Encumbrances for Taxes not yet due.
(m) Neither the Company or any Subsidiary is bound by or has an
obligation to make any payments to a third party under any Tax sharing
agreement, Tax indemnification agreement or similar contract or arrangement
(including any agreement, contract or arrangement providing for the sharing or
ceding of credits or losses) or has a potential liability or obligation to any
third party as a result of or pursuant to any such agreement, contract,
arrangement or commitment.
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<PAGE>
(n) Except as set forth in Schedule 4.15, neither the Company nor any
Subsidiary is a party to any agreement, plan, contract or arrangement that would
result, individually or in the aggregate, in the payment of any "excess
parachute payments" within the meaning of section 280G of the Code or similar
provision or other law.
(o) Other than in the ordinary course of business consistent with the
Company's past practices, no closing agreement pursuant to section 7121 of the
Code (or any predecessor provision) or any similar provision of any state, local
or foreign law has been entered into by or on behalf of the Company or any
Subsidiary.
(p) To the best knowledge of senior management of the Company after due
inquiry of the persons responsible for such matters, no jurisdiction where the
Company or any Subsidiary has not filed a Tax Return has made a claim in writing
that the Company or such Subsidiary is required to file a Tax Return in such
jurisdiction.
(q) Neither the Company nor any Subsidiary has an overall foreign loss (as
defined in section 904 of the Code and allocated under Treasury Regulation
section 1.1502-9) as of the end of the Company's most recent taxable year. For
all prior periods for which the statute of limitations has not expired, through
the Closing, the Company and each Subsidiary have not and will not take any
action or engage in any transaction including, without limitation, causing the
Company or any Subsidiary to incur additional liabilities and/or additional
expenses (other than (i) any actions or transaction made in the ordinary course
of business, or (ii) any transactions contemplated by this Agreement) that would
create an overall foreign loss allocable to the Company or any Subsidiary under
Treasury Regulation section 1.1502-9.
(r) No QEF elections (as defined in section 1295 of the Code) have been
filed by or on behalf of the Company or any Subsidiary.
(s) For purposes of this Agreement, "Taxes" shall mean all taxes, charges,
fees, levies or other assessments, including, without limitation, all net
income, gross income, gross receipts, sales, use, ad valorem, goods and
-- -------
services, capital, transfer, franchise, profits, license, withholding, payroll,
employment, employer health, excise, severance, stamp, occupation, real and
personal property, social security, estimated, recording, gift, value assessed,
windfall profits or other taxes, customs duties, fees, assessments or charges of
any kind whatsoever, whether computed on a separate, consolidated, unitary,
combined or other basis, together with any interest, fines, penalties, additions
to tax or other additional amounts
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<PAGE>
imposed by any taxing authority (domestic or foreign). For purposes of this
Agreement, "Tax Return" shall mean any return, declaration, report, estimate,
information or other document (including any documents, statements or schedules
attached thereto) required to be filed with any federal, state, local or foreign
tax authority with respect to Taxes.
SECTION 4.16. Labor Relations. Except as set forth in the SEC Reports
---------------
or Schedule 4.16: (i) each of the Company and the Subsidiaries is, and has at
all times been in compliance with all applicable laws, rules, regulations and
orders respecting employment and employment practices, terms and conditions of
employment, wages, hours or work and occupational safety and health, and is not
engaged in any unfair labor practices as defined in the National Labor Relations
Act or other applicable law, except where the failure to so comply or the
failure to refrain from engaging in such practices would not, individually or in
the aggregate, have a Material Adverse Effect; (ii) to the best knowledge of the
Company's senior management, there is no strike, lockout or material labor
grievance, slowdown, stoppage or arbitration pending or threatened against or
affecting the Company or any of the Subsidiaries; (iii) to the best knowledge of
the Company's senior management, neither the Company nor any of the Subsidiaries
is a party to or bound by any collective bargaining or similar agreement with
any union or other labor organization or is engaged in any labor negotiations
with any labor union; (iv) to the best knowledge of the Company's senior
management, there are no proceedings pending between the Company and any of the
Subsidiaries or any of their respective employees before any federal or state
agency other than with respect to workers compensation claims and other claims
arising in the ordinary course of business; and (v) to the best knowledge of the
Company's senior management, there are no activities or proceedings of any labor
union to organize any non-union employees of the Company or any of the
Subsidiaries.
SECTION 4.17. Transactions with Affiliates. Except as disclosed in
----------------------------
Schedule 4.17, no present or former affiliate of the Company has, or since
December 26, 1997 has had (i) any interest in any property (whether real,
personal or mixed and whether tangible or intangible) used in or pertaining to
any of the businesses of the Company or any of the Subsidiaries or (ii) material
business dealings or a material financial interest in any transaction with the
Company or any of the Subsidiaries (other than compensation and benefits
received in the ordinary course of business as an employee or director of the
Company or any of the Subsidiaries).
SECTION 4.18. Offer Documents; Proxy Statement. The Schedule 14D-9
--------------------------------
will comply in all material respects with the Exchange Act and the rules and
regulations thereunder. Neither the Schedule 14D-9 nor any of the information
relating to the
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Company or its affiliates provided by or on behalf of the Company specifically
for inclusion in the Schedule 14D-1 or the Offer Documents will, at the
respective times the Schedule 14D-9, the Schedule 14D-1 and the Offer Documents
or any amendments or supplements thereto are filed with the SEC and are first
published, sent or given to stockholders of the Company, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements made therein, in
light of the circumstances under which they were made, not misleading. No
representation is made by the Company with respect to written information
supplied by Parent or Purchaser specifically for inclusion in the Schedule 14D-
9. The proxy statement to be sent to the stockholders of the Company in
connection with the meeting of the Company's stockholders to consider the Merger
(the "Company Stockholders' Meeting") or the information statement to be sent to
such stockholders, as appropriate (such proxy statement or information
statement, as amended or supplemented, is herein referred to as the "Proxy
Statement"), will comply in all material respects with the applicable
requirements of the Exchange Act and the rules and regulations thereunder except
that no representation or warranty is being made by the Company with respect to
Parent Information. The Proxy Statement will not, at the time the Proxy
Statement (or any amendment or supplement thereto) is filed with the SEC or
first sent to stockholders, at the time of the Company Stockholders Meeting or
at the Effective Time, contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which they
were made, not misleading.
SECTION 4.19. Brokers. No broker, finder or investment banker (other
-------
than DLJ) is entitled to any brokerage, finder's or other fee or commission in
connection with the transactions contemplated by this Agreement based upon
arrangements made by and on behalf of the Company. The Company has heretofore
furnished to Parent true and complete copies of all agreements and other
arrangements between the Company and DLJ.
SECTION 4.20. Control Share Acquisition. The Board of Directors has
-------------------------
approved the Offer, the Merger, this Agreement, the Company Stock Option
Agreement and Parent's acquisition of Shares pursuant to the Stockholders
Agreement, and such approval is sufficient to render inapplicable to the Offer,
the Merger, this Agreement, the Company Stock Option Agreement and the
Stockholders Agreement the limitations on business combinations contained in
Section 203 of Delaware Law and Article TWELFTH of the Restated Certificate. No
other state takeover statute or similar statute or regulation or other
comparable takeover provision of the Restated Certificate or By-Laws applies or
purports to apply to the Offer, the Merger, this Agreement, the
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Company Stock Option Agreement or the Stockholders Agreement or any of the
transactions contemplated by this Agreement, the Company Stock Option Agreement
or the Stockholders Agreement.
SECTION 4.21. Rights Agreement Amendment. The execution and delivery
--------------------------
of the Rights Agreement Amendment by the Company has been duly authorized by all
necessary action under the Rights Agreement and by all necessary corporate
action on behalf of the Company. The Rights Agreement Amendment has been duly
executed and delivered by Company, and as a result of such amendment, (a)
neither this Agreement, the Company Stock Option Agreement or the Stockholders
Agreement nor any of the transactions contemplated hereby or thereby, including
the Offer and the Merger, will result in the occurrence of a "Distribution Date"
or otherwise cause the Rights to become exercisable by the holders thereof and
(b) the Rights shall automatically terminate on and as of the Effective Time be
void and of no further force or effect. The Board of Directors has taken all
action required under the Rights Agreement to ensure that no "Distribution Date"
(as defined in the Rights Agreement) has occurred or will occur with respect to
any acquisition prior to the date hereof of Company Common Stock by any Person
or group of Persons.
SECTION 4.22. Y2K Compliance. The Company has established and is
--------------
implementing an enterprise-wide program to provide (x) that the change of the
year from 1999 to the year 2000 would not have a Material Adverse Effect and (y)
that the impacts of such change on the vendors and customers of the Company and
the Subsidiaries would not have a Material Adverse Effect.
ARTICLE V.
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 5.1. Conduct of Business by the Company Pending the
----------------------------------------------
Closing. From the date of this Agreement to the Effective Time, except as
- -------
expressly contemplated by this Agreement, the Company shall, and shall cause
each of the Subsidiaries, to (i) carry on its respective businesses in the
ordinary course, (ii) use all reasonable efforts to preserve intact its current
business organizations and keep available the services of its current officers
and key employees, (iii) use all reasonable efforts to preserve its
relationships with customers, suppliers and other Persons with which it has
business dealings, (iv) use all reasonable efforts to comply in all material
respects with all laws and regulations applicable to it or any of its
properties, assets or business and (v) use all reasonable efforts to maintain in
full force and effect all the Company Permits necessary for such business;
provided, however, that the foregoing shall not prevent the Company from
borrowing under its
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existing credit agreements to satisfy any of its obligations to holders of
Options under Section 2.9(a) hereof. Without limiting the generality of the
foregoing, except as (x) expressly contemplated by this Agreement or (y) set
forth in Schedule 5.1, the Company shall not, and shall cause each of the
Subsidiaries not to:
(a) amend its Certificate of Incorporation or By-Laws or similar
organizational documents or change the number of directors constituting its
entire board of directors;
(b) (i)(A) declare, set aside or pay any dividend or other
distribution payable in cash, stock or property with respect to its capital
stock, except that a wholly owned Subsidiary may declare and pay a dividend or
make advances to its parent or the Company or (B) redeem, purchase or otherwise
acquire, directly or indirectly, any of its capital stock or other securities;
(ii) issue, sell, pledge, dispose of or encumber any (A) additional shares of
its capital stock, (B) securities convertible into or exchangeable for, or
options, warrants, calls, commitments or rights of any kind to acquire, any
shares of its capital stock, or (C) of its other securities, other than Shares
issued upon the exercise of Options outstanding on the date hereof in accordance
with the Option Plans as in effect on the date hereof; or (iii) split, combine
or reclassify any of its outstanding capital stock;
(c) acquire or agree to acquire (A) by merging or consolidating with,
or by purchasing a substantial portion of the assets of, or by any other manner,
any business or any corporation, partnership, joint venture, association or
other business organization or division thereof (including entities which are
Subsidiaries) or (B) any assets, including real estate, except, with respect to
both of clause (A) and (B) above, (x) purchases of inventory, equipment and
supplies in the ordinary course of business consistent with past practice and
(y) other purchases in the ordinary course of business consistent with past
practice in an amount not involving more than $5.0 million for acquisitions in
the United States and Canada and $2.0 million for acquisitions outside the
United States and Canada;
(d) authorize or make capital expenditures in the aggregate in excess
of $13.1 million;
(e) except in the ordinary course of business, amend or terminate any
Company Material Contract, or waive, release or assign any material rights or
claims thereunder;
(f) transfer, lease, license, sell, mortgage, pledge, dispose of, or
encumber any property or assets other than (i) excess or obsolete assets or (ii)
in the ordinary course of business and consistent with past practice;
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<PAGE>
(g) (i) enter into any employment or severance agreement with or,
except in accordance with the existing policies of the Company, grant any
severance or termination pay to any officer or director of the Company or any
Subsidiary; or (ii) hire or agree to hire any new or additional officers;
(h) except as required to comply with applicable law, (A) adopt,
enter into, terminate, amend or increase the amount or accelerate the payment or
vesting of any benefit or award or amount payable under any Company Employee
Benefit Plan or other arrangement for the current or future benefit or welfare
of any director, officer, former employee or, other than in the ordinary course
of business consistent with past practice, current employee, (B) increase in any
manner the compensation or fringe benefits of, or pay any bonus to, any
director, officer or, other than in the ordinary course of business consistent
with past practice, employee, (C) other than benefits accrued through the date
hereof and other than in the ordinary course of business for employees other
than officers or directors of the Company, pay any benefit not provided for
under any Benefit Plan, (D) other than bonuses earned through the date hereof
and other than in the ordinary course of business for employees other than
officers and directors, grant any awards under any bonus, incentive, performance
or other compensation plan or arrangement or Company Employee Benefit Plan;
provided that there shall be no grant or award to any director, officer or
- --------
employee of stock options, stock appreciation rights, stock based or stock
related awards, performance units or restricted stock, or any removal of
existing restrictions in any Company Employee Benefit Plans or agreements or
awards made thereunder or (E) take any action to fund or in any other way secure
the payment of compensation or benefits under any employee plan, agreement,
contract or arrangement or Company Employee Benefit Plan;
(i) (i) except in connection with any acquisition permitted pursuant
to this Section 5.1 or to satisfy its obligations to holders of Options pursuant
to Section 2.9(a) hereof, incur or assume any long-term debt, or except in the
ordinary course of business in amounts consistent with past practice, incur or
assume any short-term indebtedness; (ii) incur or modify any material
indebtedness or other liability; (iii) assume, guarantee, endorse or otherwise
become liable or responsible (whether directly, contingently or otherwise) for
the obligations of any other Person, except in the ordinary course of business
and consistent with past practice; or (iv) except for advances or prepayments in
the ordinary course of business in amounts consistent with past practice, make
any loans, advances or capital contributions to, or investments in, any other
Person (other than to wholly owned Subsidiaries or customary loans or advances
to employees in accordance with past practice);
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<PAGE>
(j) change of the accounting methods used by it unless
required by generally accepted accounting principles;
(k) other than in the ordinary course of business consistent with
past practice, make any Tax election or settle or compromise any Tax liability;
(l) (i) settle or compromise any claim, litigation or other legal
proceeding, other than in the ordinary course of business consistent with past
practice in an amount not involving more than $1,000,000 or (ii) pay, discharge
or satisfy any other claims, liabilities or obligations (absolute, accrued,
asserted or unasserted, contingent or otherwise), other than the payment,
discharge or satisfaction of (A) any such other claims, liabilities or
obligations, in the ordinary course of business and consistent with past
practice, or (B) of any such other claims, liabilities or obligations reflected
or reserved against in, or contemplated by, the consolidated financial
statements (or the notes thereto) of the Company;
(m) except in the ordinary course of business consistent with past
practice, waive the benefits of, or agree to modify in any manner, any
confidentiality, standstill or similar agreement to which the Company or any
Subsidiary is a party;
(n) permit any insurance policy naming the Company or any Subsidiary
as a beneficiary or a loss payable payee to be canceled or terminated without
notice to Parent, except in the ordinary course of business and consistent with
past practice or in connection with replacing such policy with a policy
providing comparable coverage;
(o) take or omit to take any action which would make any of the
representations or warranties of the Company contained in this Agreement untrue
and incorrect in any material respect as of the date when made if such action
had then been taken or omitted, or would result in any of the conditions set
forth in Annex I hereto or the conditions set forth in Article VII hereof not
being satisfied; or
(p) enter into an agreement, contract, commitment or arrangement to
do any of the foregoing, or to authorize, recommend, propose or announce an
intention to do any of the foregoing.
SECTION 5.2. No Solicitation.
---------------
(a) The Company shall not, nor shall it permit or authorize any of the
Subsidiaries or any officer, director, employee, agent or representative of the
Company or any of the Subsidiaries (collectively, the "Company Representatives")
to, (i) solicit or initiate, or encourage, directly or indirectly,
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<PAGE>
any inquiries regarding or the submission of, any Takeover Proposal (as defined
below), (ii) participate in any discussions or negotiations regarding, or
furnish to any Person any information or data with respect to, or take any other
action to knowingly facilitate the making of any proposal that constitutes any
Takeover Proposal or (iii) enter into any agreement with respect to any Takeover
Proposal or approve or resolve to approve any Takeover Proposal; provided,
--------
however, that nothing contained in this Section 5.2 or any other provision
- -------
hereof shall prohibit the Company or the Board of Directors from (A) taking and
disclosing to the Company's stockholders a position with respect to a tender or
exchange offer by a third party pursuant to Rules 14d-9 and 14e-2 promulgated
under the Exchange Act or (B) making such disclosure to the Company's
stockholders as, in the good faith judgment of the Board of Directors, after
receiving advice from outside counsel, is required under applicable law,
provided that the Company may not, except as permitted by Section 5.2(b),
withdraw or modify, or propose to withdraw or modify, its approval or
recommendation of this Agreement or the Company Stock Option Agreement or the
transactions contemplated hereby or thereby, including the Offer or the Merger,
or Parent's acquisition of Shares pursuant to the Stockholders Agreement, or
approve or recommend, or propose to approve or recommend any Takeover Proposal,
or enter into any agreement with respect to any Takeover Proposal. Upon
execution of this Agreement, the Company shall, and it shall cause the Company
Representatives to, immediately cease any existing activities, discussions or
negotiations with any parties conducted heretofore with respect to any Takeover
Proposal, and it shall promptly request that each Person who has heretofore
executed a confidentiality agreement in connection with such Person's
consideration of a Takeover Proposal return all confidential information
heretofore furnished to such Person by or on behalf of the Company.
Notwithstanding the foregoing, prior to the time of acceptance of Shares for
payment pursuant to the Offer, the Company may furnish information concerning
its business, properties or assets to any Person or group pursuant to
confidentiality agreements with terms and conditions similar to the
Confidentiality Agreement, dated August 27, 1998 (the "Confidentiality
Agreement"), between the Company and Parent (provided that such confidentiality
agreements may not include any provision granting any such Person or group an
exclusive right to negotiate with the Company), and may negotiate and
participate in discussions and negotiations with such Person or group concerning
a Takeover Proposal if: (x) such Person or group has submitted a Superior
Proposal; and (y) the Board of Directors determines in good faith, based upon
advice of outside counsel, that such action is required to discharge the Board
of Director's fiduciary duties to the Company's stockholders under Delaware law.
The Company will promptly notify Parent of the existence of any
proposal, discussion, negotiation or inquiry
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<PAGE>
received by the Company with respect to any Takeover Proposal, and the Company
will immediately communicate to Parent the material terms of any proposal,
discussion, negotiation or inquiry which it may receive (and will promptly
provide to Parent copies of any written proposal received by the Company in
connection therewith). The Company will promptly provide to Parent any non-
public information concerning the Company provided to any other Person which was
not previously provided to Parent. The Company will keep Parent fully informed
of the status and material terms of any such Takeover Proposal.
As used in this Agreement, the following terms have the meanings set
forth below:
"Superior Proposal" means an unsolicited bona fide written proposal by
a Third Party to acquire, directly or indirectly, for consideration consisting
solely of cash and/or securities, more than 50% of the Shares then outstanding
or all or substantially all of the assets of the Company, and (i) otherwise on
terms which the Board of Directors determines in good faith to be more favorable
to the Company's stockholders than the Offer and the Merger (based in part on a
written opinion of the Company's independent financial advisor that the value of
the consideration provided for in such proposal exceeds the value of the
consideration provided for in the Offer and the Merger), (ii) for which
financing, to the extent required, is then committed or, in the good faith
judgment of the Board of Directors, is reasonably available, and (iii) which, in
the good faith judgment of the Board of Directors, is reasonably likely to be
consummated without undue delay.
"Takeover Proposal" means any inquiry, proposal or offer, whether in
writing or otherwise, from a Third Party to acquire beneficial ownership (as
defined under Rule 13(d) of the Exchange Act) of all or substantially all of the
assets of the Company or 20% or more of any class of equity securities of the
Company pursuant to a merger, consolidation or other business combination, sale
of shares of capital stock, sale of assets, tender offer, exchange offer or
similar transaction, including any single or multi-step transaction or series of
related transactions.
"Third Party" means any Person or group other than Parent, Purchaser
or any affiliate thereof.
(b) Except as set forth in this Section 5.2(b), neither the Board of
Directors nor any committee thereof shall (i) withdraw or modify, or propose to
withdraw or modify, in a manner adverse to Parent or Purchaser, the approval or
recommendation by the Board of Directors or any such committee of this
Agreement, the Offer or the Merger, (ii) approve or recommend, or propose to
approve or recommend, any Takeover
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<PAGE>
Proposal or (iii) enter into any agreement with respect to any Takeover
Proposal. Notwithstanding the foregoing, prior to the time of acceptance for
payment of Shares pursuant to the Offer, the Board of Directors may withdraw or
modify its approval or recommendation of this Agreement, the Offer or the
Merger, approve or recommend a Superior Proposal, or enter into an agreement
with respect to a Superior Proposal, in each case if (A) the Company shall have
received a Superior Proposal, (B) the Board of Directors shall have determined
in good faith, based upon advice of outside counsel, that such action is
required to discharge the Board of Director's fiduciary duties to the Company's
stockholders under Delaware law, (C) at least five business days shall have
passed following Parent's receipt of written notice from the Company advising
Parent that the Board of Directors has received such a Superior Proposal which
it intends to accept, specifying the material terms and conditions of such
Superior Proposal, identifying the Person making such Superior Proposal, but
only if the Company shall have caused its financial and legal advisors to
negotiate in good faith with Parent to make such adjustments to the terms and
conditions of this Agreement as would enable the Company to proceed with the
transactions contemplated herein on such adjusted terms and (D) concurrently
with taking such action the Company shall pay the Termination Fee and Expenses
as provided in Section 8.2(b) (whether or not this Agreement shall be
terminated); provided, however, that in no event shall the Company be obligated
-------- -------
to pay more than $2.5 million in Expenses.
ARTICLE VI.
ADDITIONAL AGREEMENTS
SECTION 6.1. Proxy Statement. As promptly as practicable after the
---------------
consummation of the Offer and if required by the Exchange Act or Delaware Law,
the Company shall prepare and file with the SEC, and shall use all reasonable
efforts to have cleared by the SEC, and promptly thereafter shall mail to
stockholders, the Proxy Statement. The Proxy Statement shall contain the
recommendation of the Board of Directors that the Company's stockholders approve
this Agreement and the Merger.
SECTION 6.2. Meeting of Stockholders of the Company. Following the
--------------------------------------
consummation of the Offer, the Company shall promptly take all action necessary
in accordance with Delaware Law and the Restated Certificate and By-Laws to
convene the Company Stockholders' Meeting, if such meeting is required. The
stockholder vote required for approval of the Merger will be no greater than
that set forth in Delaware Law. The Company shall use its best efforts to
solicit from stockholders of the Company proxies in favor of the Merger and
shall take all other action necessary or, in the reasonable opinion of Parent,
advisable to
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<PAGE>
secure any vote of stockholders required by Delaware Law to effect
the Merger. Notwithstanding the foregoing, if Purchaser or any other subsidiary
of Parent shall acquire at least 90 percent of the outstanding Shares on a fully
diluted basis, and provided that the conditions set forth in Article VII shall
have been satisfied or waived, the Company shall, at the request of Parent, take
all necessary and appropriate action to cause the Merger to become effective as
soon as practicable after such acquisition, without the approval of the
stockholders of the Company, in accordance with Section 253 of Delaware Law.
SECTION 6.3. Compliance with Law. Each of the Company, Parent and
-------------------
Purchaser will comply in all material respects with all applicable laws and with
all applicable rules and regulations of any Governmental Entity in connection
with its execution, delivery and performance of this Agreement and the Company
Stock Option Agreement and the transactions contemplated hereby and thereby.
SECTION 6.4. Notification of Certain Matters. The Company shall give
-------------------------------
prompt notice to Parent of (i) the occurrence, or non-occurrence of any event
whose occurrence, or non-occurrence would be likely to cause either (A) any
representation or warranty contained in this Agreement to be untrue or
inaccurate in any respect at any time from the date hereof to the Effective Time
or (B) any condition set forth in Annex I to be unsatisfied in any material
respect at any time from the date hereof to the date Parent purchases Shares
pursuant to the Offer and (ii) any failure of the Company, or any of its
officers, directors, employees or agents, to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by it
hereunder; provided, however, that the delivery of any notice pursuant to this
Section 6.4 shall not limit or otherwise affect the remedies available hereunder
to Parent.
SECTION 6.5. Access to Information. From the date hereof to the
---------------------
Effective Time, the Company shall, and shall cause its Subsidiaries, officers,
directors, employees, auditors and agents to, afford the officers, employees and
agents of Parent and Purchaser reasonable access at all reasonable times to its
officers, employees, agents, properties, offices and other facilities and to all
books and records, and shall promptly furnish Parent and Purchaser with (a) all
financial, operating and other data and information as Parent or Purchaser,
through its officers, employees or agents, may reasonably request and (b) a copy
of each report, schedule and other document filed or received by the Company or
any of the Subsidiaries during such period pursuant to the requirements of
applicable securities laws.
SECTION 6.6. Public Announcements. So long as this Agreement is in
--------------------
effect, Parent and the Company shall consult with
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<PAGE>
each other before issuing any press release or otherwise making any public
statements with respect to the Offer or the Merger and shall not issue, or
permit their affiliates to issue, any such press release or make any such public
statement before such consultation, except as may be required by law.
SECTION 6.7. Reasonable Efforts; Cooperation. Upon the terms and
-------------------------------
subject to the conditions hereof, each of the parties hereto shall use all
reasonable efforts to obtain in a timely manner all necessary waivers, consents
and approvals and to effect all necessary registrations and filings, and to use
all reasonable efforts to take, or cause to be taken, all other actions and to
do, or cause to be done, all other things necessary, proper or advisable to
consummate and make effective as promptly as practicable the transactions
contemplated by this Agreement, including, without limitation, (i) cooperating
in responding to inquiries from, and making presentations to, regulatory
authorities and (ii) defending against and responding to any action, suit,
proceeding, or investigation, whether judicial or administrative, challenging or
relating to this Agreement, the Company Stock Option Agreement or the
Stockholders Agreement or the transactions contemplated hereby or thereby,
including seeking to have any stay or temporary restraining order entered by any
court or other Governmental Entity vacated or reversed.
SECTION 6.8. Agreement to Defend and Indemnify.
---------------------------------
(a) It is understood and agreed that the Company shall, to the
fullest extent permitted under applicable law and regardless of whether the
Merger becomes effective, indemnify and hold harmless, and after the Effective
Time, Parent and the Surviving Corporation shall for a period of six years
following the Effective Time, to the fullest extent permitted under applicable
law, indemnify and hold harmless, each director, officer, employee, fiduciary
and agent of the Company or any Subsidiary and their respective subsidiaries and
affiliates including, without limitation, officers and directors serving as such
on the date hereof (collectively, the "Indemnified Parties") against any costs
or expenses (including reasonable attorneys' fees), judgments, fines, losses,
claims, damages, liabilities and amounts paid in settlement in connection with
any claim, action, suit, proceeding or investigation arising out of or
pertaining to any of the transactions contemplated hereby, including without
limitation liabilities arising under the Securities Act or the Exchange Act in
connection with the Offer or the Merger, and in the event of any such claim,
action, suit, proceeding or investigation (whether arising before or after the
Effective Time), (i) the Company or, after the Effective Time, Parent and the
Surviving Corporation shall pay as incurred the reasonable fees and expenses of
counsel selected by the Indemnified Parties, which counsel shall be reasonably
satisfactory to the Company or
- 45 -
<PAGE>
the Surviving Corporation, promptly as statements therefor are received, and
(ii) the Company, Parent and the Surviving Corporation will cooperate in the
defense of any such matter; provided, however, that neither the Company nor
-------- -------
Parent or the Surviving Corporation shall be liable for any settlement effected
without its prior written consent (which consent shall not be unreasonably
withheld); and provided, further, that neither the Company Parent or the
-------- -------
Surviving Corporation shall be obliged pursuant to this Section 6.8 to pay the
fees and disbursements of more than one counsel for all Indemnified Parties in
any single action except to the extent that, in the opinion of counsel for the
Indemnified Parties, two or more of such Indemnified Parties have conflicting
interests in the outcome of such action. Parent and Purchaser agree that any
claims for indemnification hereunder as to which they have received written
notice prior to the sixth anniversary of the Effective Time shall survive,
whether or not such claims shall have been finally adjudicated or settled. For
six years after the Effective Time, the Surviving Corporation shall maintain or
obtain officers' and directors' liability insurance (which may be part of
Parent's insurance policy) covering the Indemnified Parties who are currently
covered by the Company's officers and directors liability insurance policy on
terms not less favorable than those in effect on the date hereof in terms of
coverage and amounts; provided, however, that if the aggregate annual premiums
-------- -------
for such insurance at any time during such period exceed the per annum rate of
premium paid by the Company for such insurance as of the date of this Agreement,
then the Surviving Corporation shall provide the maximum coverage that will then
be available at an annual premium equal to such per annum rate as of the date of
this Agreement. The Surviving Corporation shall continue in effect the
indemnification provisions currently provided by the Restated Certificate and
By-Laws of the Company for a period of not less than six years following the
Effective Time. This Section 6.8 shall survive the consummation of the Merger.
This covenant shall survive any termination of this Agreement pursuant to
Section 8.1 hereof. Notwithstanding Section 9.7 hereof, this Section 6.8 is
intended to be for the benefit of and to grant third-party rights to Indemnified
Parties whether or not parties to this Agreement, and each of the Indemnified
Parties shall be entitled to enforce the covenants contained herein.
(b) If the Surviving Corporation or any of its successors or assigns
(i) consolidates with or merges into any other Person and shall not be the
continuing or surviving corporation or entity of such consolidation or merger or
(ii) transfers all or substantially all of its properties and assets to any
Person, then and in each such case, proper provision shall be made so that the
successors and assigns of the Surviving Corporation assume the obligations set
forth in this Section 6.8.
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<PAGE>
SECTION 6.9. State Takeover Laws. If any state takeover statute or
-------------------
other similar statute or regulation becomes or is deemed to become applicable to
the Offer, the Merger, this Agreement, the Company Stock Option Agreement or the
Stockholders Agreement or any of the transactions contemplated by this
Agreement, the Company Stock Option Agreement or the Stockholders Agreement, the
Company shall promptly take all action necessary to render such statute or
regulation inapplicable to all of the foregoing.
ARTICLE VII.
CONDITIONS OF MERGER
SECTION 7.1. Conditions for Each Party's Obligations to Effect the
-----------------------------------------------------
Merger. The respective obligations of each party to effect the Merger shall
- ------
be subject to the satisfaction on or prior to the Effective Time of the
following conditions:
(a) Purchaser shall have made, or caused to be made, the Offer and
shall have purchased, or caused to be purchased, the Shares pursuant to the
Offer;
(b) The Merger and this Agreement shall have been approved and
adopted by the requisite vote of the stockholders of the Company, if required by
Delaware Law; and
(c) No statute, rule, regulation, judgment, writ, decree, order or
injunction shall have been promulgated, enacted, entered or enforced, and no
other action shall have been taken, by any Governmental Entity that in any of
the foregoing cases has the effect of making illegal or directly or indirectly
restraining, prohibiting or restricting the consummation of the Merger.
(d) Any waiting period applicable to the Merger under the HSR Act
shall have expired or have been terminated and all approvals of and consents to
the Merger required under applicable foreign antitrust or competition laws shall
have been obtained and be in full force and effect.
SECTION 7.2. Conditions for Obligations of Parent and Purchaser. The
--------------------------------------------------
obligations of Parent and Purchaser to effect the Merger shall be further
subject to the satisfaction on or prior to the Effective Time of the following
additional conditions:
(a) The representations and warranties of the Company set forth in
this Agreement that are qualified by reference to materiality or a Material
Adverse Effect shall be true and correct, and any such representations and
warranties that are not so qualified shall be true and correct except where the
failure to be so true and correct would not be reasonably likely to have
- 47 -
<PAGE>
a Material Adverse Effect, in each case as if such representations and
warranties were made at the Effective Time; provided that, for purposes of this
Section 7.2(a), any adverse effect that is caused by conditions affecting the
economy or financial markets generally or results from the announcement of the
transactions contemplated by this Agreement shall not be taken into account in
determining whether there has been a Material Adverse Effect; and
(b) The Company shall have performed in all material respects all
obligations and complied in all material respects with all agreements and
covenants of the Company to be performed or complied with by it under this
Agreement at or prior to the Effective Time.
ARTICLE VIII.
TERMINATION, AMENDMENT AND WAIVER
SECTION 8.1. Termination. This Agreement may be terminated and the
-----------
Merger may be abandoned at any time prior to the Effective Time, whether before
or after approval of matters presented in connection with the Merger by the
stockholders of the Company:
(a) By the mutual written consent of Parent and the Company;
or
(b) By either of Parent or the Company if any Governmental Entity
shall have issued an order, decree or ruling or taken any other action (which
order, decree or ruling or other action each party hereto shall use its
reasonable best efforts to have vacated or reversed), in each case permanently
restraining, enjoining or otherwise prohibiting the transactions contemplated by
this Agreement and such order, decree, ruling or other action shall have become
final and non-appealable.
(c) By the Company:
(i) if the Company has approved a Superior Proposal in
accordance with Section 5.2(b), provided the Company has complied with all
provisions thereof, including the notice provisions therein, and that it
makes simultaneous payment of the Expenses and the Termination Fee (as
defined below); or
(ii) if Parent or Purchaser shall have terminated the Offer or
the Offer expires without Parent or Purchaser, as the case may be,
purchasing any Shares pursuant thereto; provided that the Company may not
terminate this Agreement
- 48 -
<PAGE>
pursuant to this Section 8.1(c)(ii) if the Company is in material breach of
this Agreement; or
(iii) if Parent, Purchaser or any of their affiliates shall have
failed to commence the Offer on or prior to five business days following
the date of the initial public announcement of the Offer; provided that the
Company may not terminate this Agreement pursuant to this Section
8.1(c)(iii) if the Company is in material breach of this Agreement; or
(iv) if Parent or Purchaser shall have breached in any material
respect any of its representations, warranties, covenants or other
agreements contained in this Agreement which breach or failure to perform
is incapable of being cured or has not been cured by the earlier of (x) ten
business days following written notice thereof to Parent from the Company
and (y) the scheduled expiration of the Offer; or
(v) if the Offer shall not have expired or been terminated on or
before June 30, 1999; provided that the Company may not terminate this
Agreement pursuant to this Section 8.1(c)(v) if the Company is in material
breach of this Agreement.
(d) By Parent or Purchaser:
(i) if prior to the purchase of the Shares pursuant to the
Offer, the Board of Directors shall have withdrawn, or modified or changed
in a manner adverse to Parent or Purchaser its approval or recommendation
of the Offer, this Agreement, the Merger, the Company Stock Option
Agreement or the Stockholders Agreement or shall have approved a Takeover
Proposal; provided, that neither Parent nor Purchaser shall be entitled to
--------
terminate this Agreement pursuant to this Section 8.1(d)(i) solely as a
result of the Company or the Board of Directors making such disclosure to
the Company's stockholders as, in good faith judgment of the Board of
Directors, after receiving advice from outside counsel, is required under
applicable law; or
(ii) if Parent or Purchaser shall have terminated the Offer
without Parent or Purchaser purchasing any Shares thereunder, provided that
Parent or Purchaser may not terminate this Agreement pursuant to this
Section 8.1(d)(ii) if Parent or Purchaser is in material breach of this
Agreement; or
(iii) if, due to an occurrence that if occurring after the
commencement of the Offer would result in a failure to satisfy any of the
conditions set forth in Annex
- 49 -
<PAGE>
I hereto, Parent, Purchaser, or any of their affiliates shall have failed
to commence the Offer on or prior to five business days following the date
of the initial public announcement of the Offer; or
(iv) (A) any Person or "group" (as defined in Section 13(d)(3)
of the Exchange Act), other than Parent, Purchaser or their affiliates or
any group of which any of them is a member shall have acquired beneficial
ownership (as determined pursuant to Rule 13d-3 promulgated under the
Exchange Act) of 25% or more of the Shares, or (B) the Board of Directors
shall have taken any action, including amending the Rights Agreement or
waiving Section 203 of the Delaware Law or Article TWELFTH of the Restated
Certificate, to enable any Person to acquire beneficial ownership of 15% or
more of the Shares; or
(v) if the Company, or any of the Company Representatives, shall
take any of the actions described in clauses (i) or (ii) of Section 5.2(a)
hereof, regardless of whether such action is permitted by this Agreement;
or
(vi) if the Company shall have breached in any material respect
any of its representations, warranties, covenants or other agreements
contained in this Agreement which breach or failure to perform is incapable
of being cured or has not been cured by the earlier of (x) ten business
days following written notice thereof to the Company from Parent and (y)
the scheduled expiration of the Offer; or
(vii) if the Offer shall not have expired or been terminated on
or before June 30, 1999; provided that Parent or Purchaser may not
terminate this Agreement pursuant to this Section 8.1(c)(vii) if the Parent
or Purchaser is in material breach of this Agreement.
SECTION 8.2. Effect of Termination.
---------------------
(a) In the event of termination of this Agreement by either the
Company or Parent or Purchaser as provided in Section 8.1, this Agreement shall
forthwith become void and have no effect, without any liability or obligation on
the part of Parent, Purchaser or the Company, other than the provisions of this
Article VIII and as provided in Section 6.8 and Section 9.1 and except that
nothing herein shall relieve any party for breach of any of its representations,
warranties, covenants or agreements set forth in this Agreement. Any damages
arising out of any such breach shall be reduced by the amount of any fees or
expenses paid pursuant to Section 8.2(b).
- 50 -
<PAGE>
(b) If (x) Parent or Purchaser terminates this Agreement pursuant to
Section 8.1(d)(i), 8.1(d)(iv)(B) or 8.1(v) or (y) the Company terminates this
Agreement pursuant to Section 8.1(c)(i), then in each case, the Company shall
pay, or cause to be paid to Parent, at the time of termination, an amount equal
to $7.5 million (the "Termination Fee") plus an amount equal to Parent's and
Purchaser's actual and reasonably documented out-of-pocket expenses incurred by
Parent or Purchaser in connection with the Offer, the Merger, this Agreement and
the consummation of the transactions contemplated hereby, including, without
limitation, the fees and expenses of Parent's counsel and accountants as well as
all fees and expenses payable to all banks, investment banking firms, and other
financial institutions and Persons and their respective agents and counsel
incurred in connection with acting as Parent's or Purchaser's financial advisor
with respect to, or arranging or committing to provide or providing any
financing for, the transactions contemplated hereby (the "Expenses"); provided,
--------
however, that in no event shall the Company be obligated to pay more than $2.5
- -------
million in Expenses. In addition, if this Agreement is terminated by Parent
pursuant to Section 8.1(d)(ii), 8.1(d)(iv)(A) or 8.1(d)(vii) or by the Company
pursuant to Section 8.1(c)(ii) or 8.1(c)(v) and at the time of such termination,
Parent is not in material breach of this Agreement and the Minimum Condition has
not been satisfied, then if the Company shall thereafter, within 12 months after
a termination pursuant to any of such provisions, enter into an agreement with
respect to a Takeover Proposal that provides for the payment of consideration
with a value of $29.00 or more per Share to be acquired, the Company shall pay
the Termination Fee and the Expenses concurrently with entering into any such
agreement; provided, however, that in no event shall the Company be obligated to
-------- -------
pay more than $2.5 million in Expenses.
ARTICLE IX.
GENERAL PROVISIONS
SECTION 9.1. Non-Survival of Representations, Warranties and
-----------------------------------------------
Agreements. The representations, warranties and agreements in this Agreement
- ----------
shall terminate at the Effective Time or the termination of this Agreement
pursuant to Section 8.1, as the case may be, except as provided in Section 8.2
and except that the agreements set forth in Article II and Section 6.8 shall
survive the Effective Time indefinitely and those set forth in Article VIII and
Section 9.3 shall survive termination indefinitely.
SECTION 9.2. Notices. All notices and other communications given or
-------
made pursuant hereto shall be in writing and shall be deemed to have been duly
given or made (i) as of the date delivered or sent by facsimile if delivered
personally or by
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<PAGE>
facsimile, and (ii) on the third business day after deposit in the U.S. mail, if
mailed by registered or certified mail (postage prepaid, return receipt
requested), in each case to the parties at the following addresses (or at such
other address for a party as shall be specified by like notice, except that
notices of changes of address shall be effective upon receipt):
(a) if to Parent or Purchaser
Securitas AB
Lindhagensplan 70
Stockholm, Sweden
Attention: President
Facsimile: 46 8 657 7071
With a copy to:
Willkie Farr & Gallagher
787 Seventh Avenue
New York, New York 10019
Attention: Steven J. Gartner, Esq.
Facsimile: (212) 728-8111
(b) if to the Company:
Pinkerton's, Inc.
World Support Center
4330 Park Terrace Drive
Westlake Village, CA 91361
Attention: General Counsel
Facsimile: (818) 706-5530
With a copy to:
Gibson, Dunn & Crutcher LLP
333 South Grand Avenue
Los Angeles, California 90071
Attention: Andrew E. Bogen, Esq.
Facsimile: (213) 229-7520
SECTION 9.3. Expenses. Except as expressly set forth in Section
--------
8.2(b), all fees, costs and expenses incurred in connection with this Agreement
and the transactions contemplated hereby shall be paid by the party incurring
such fees, costs and expenses.
SECTION 9.4. Certain Definitions. For purposes of this Agreement, the
-------------------
term:
(a) "affiliate" of a Person means a Person that directly or
indirectly, through one or more intermediaries,
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<PAGE>
controls, is controlled by, or is under common control with, the first mentioned
Person;
(b) "control" (including the terms "controlled by" and "under common
control with") means the possession, direct or indirect, of the power to direct
or cause the direction of the management and policies of a Person, whether
through the ownership of stock, as trustee or executor, by contract or credit
arrangement or otherwise; and
(c) "Person" means an individual, corporation, partnership,
association, trust or any unincorporated organization.
SECTION 9.5. Headings. The headings contained in this Agreement are
--------
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
SECTION 9.6. Severability. If any term or other provision of
------------
this Agreement is invalid, illegal or incapable of being enforced by any rule of
law, or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic or
legal substance of the transactions contemplated hereby is not affected in any
manner adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in an acceptable manner to
the end that transactions contemplated hereby are fulfilled to the maximum
extent possible.
SECTION 9.7. Entire Agreement; No Third-Party Beneficiaries. This
----------------------------------------------
Agreement, the Confidentiality Agreement and the Company Stock Option Agreement
constitute the entire agreement and supersede any and all other prior agreements
and undertakings, both written and oral, among the parties, or any of them, with
respect to the subject matter hereof and, except as otherwise expressly provided
herein, this Agreement is not intended to confer upon any other Person any
rights or remedies hereunder.
SECTION 9.8. Assignment. This Agreement shall not be assigned by
----------
operation of law or otherwise.
SECTION 9.9. Governing Law. This Agreement shall be governed by,
-------------
and construed in accordance with, the laws of the State of Delaware applicable
to contracts executed in and to be performed entirely within that State.
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<PAGE>
SECTION 9.10. Amendment. This Agreement may be amended by the
---------
parties hereto by action taken by Parent and Purchaser, and by action taken by
or on behalf of the Company's Board of Directors at any time before the
Effective Time; provided, however, that, after approval of the Merger by the
-------- -------
stockholders of the Company, no amendment may be made which would reduce the
amount or change the type of consideration into which each Share will be
converted upon consummation of the Merger. This Agreement may not be amended
except by an instrument in writing signed by the parties hereto.
SECTION 9.11. Waiver. At any time before the Effective Time, any party
------
hereto may (a) extend the time for the performance of any of the obligations or
other acts of the other parties hereto, (b) waive any inaccuracies in the
representations and warranties of the other parties hereto contained herein or
in any document delivered pursuant hereto and (c) waive compliance by the other
parties hereto with any of their agreements or conditions contained herein. Any
agreement on the part of a party hereto to any such extension or waiver shall be
valid only as against such party and only if set forth in an instrument in
writing signed by such party. The failure of any party hereto to assert any of
its rights under this Agreement or otherwise shall not constitute a waiver of
those rights.
SECTION 9.12. Schedules. Any fact or item which is disclosed on any
---------
Schedule to this Agreement in such a way as to make its relevance to another
representation or representations made in this Agreement or to the information
called for by another Schedule or Schedules to this Agreement readily apparent
shall be deemed to be an exception to such representation or representations or
to be disclosed on such other Schedule or Schedules, as the case may be,
notwithstanding the omission of a reference or cross reference thereto.
SECTION 9.13. Counterparts. This Agreement may be executed in one or
------------
more counterparts, and by the different parties hereto in separate counterparts,
each of which when executed shall be deemed to be an original but all of which
shall constitute one and the same agreement.
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<PAGE>
IN WITNESS WHEREOF, Parent, Purchaser and the Company have caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
PINKERTON'S, INC.
By: /s/ Denis R. Brown
-------------------------
Name: Denis R. Brown
Title: President and Chief Executive Officer
SECURITAS AB
By: /s/ Thomas Berglund
-------------------------
Name: Thomas Berglund
Title: President and Chief Executive Officer
SECURITAS ACQUISITION CORP.
By: /s/ Thomas Berglund
-------------------------
Name: Thomas Berglund
Title: President
- 55 -
<PAGE>
ANNEX I
Conditions to the Offer. Notwithstanding any other provision of the
-----------------------
Offer, Purchaser shall not be required to accept for payment or, subject to any
applicable rules and regulations of the SEC, including Rule 14e-1(c) promulgated
under the Exchange Act (relating to Parent's obligation to pay for or return
tendered Shares promptly after termination or withdrawal of the Offer), pay for,
and (subject to any such rules or regulations) may delay the acceptance for
payment of any tendered Shares and (except as provided in this Agreement) amend
or terminate the Offer as to any Shares not then paid for if (i) there shall not
have been validly tendered and not withdrawn prior to the expiration of the
Offer a number of shares of Company Common Stock which represents at least a
majority of the number of shares of Company Common Stock outstanding on a fully
diluted basis (the "Minimum Condition") or (ii) any applicable waiting period
under the HSR Act shall not have expired or been terminated prior to the
expiration of the Offer or all approvals of and consents to this Agreement, the
Company Stock Option Agreement and the Stockholders Agreement and the
transactions contemplated hereby and thereby that are required under applicable
foreign antitrust or competition laws shall not have been obtained prior to the
expiration of the Offer or be in full force and effect at such expiration or
(iii) at any time after the date of this Agreement and before the time of
payment for any such Shares (whether or not any Shares have theretofore been
accepted for payment or paid for pursuant to the Offer), any of the following
events shall occur and be continuing or conditions exists:
(a) there shall be an injunction or other order, decree, judgment or
ruling issued by a Governmental Entity of competent jurisdiction or a statute,
rule, regulation, executive order or other action shall have been enacted,
promulgated or taken by a Governmental Entity of competent jurisdiction which in
any such case (i) restrains or prohibits the making or consummation of the Offer
or the consummation of the Merger or the performance of the other transactions
contemplated by this Agreement, the Company Stock Option Agreement or the
Stockholders Agreement, (ii) prohibits or restricts the ownership or operation
by Parent (or any of its affiliates or subsidiaries) of any portion of its or
the Company's business or assets which is material to the business of all such
entities taken as a whole, or compels Parent (or any of its affiliates or
subsidiaries) to dispose of or hold separate any portion of its or the Company's
business or assets which is material to the business of all such entities taken
as a whole, (iii) imposes material limitations on the ability of Parent
effectively to acquire or to hold or to exercise full rights of ownership of the
Shares, including, without limitation, the right to vote the Shares purchased by
Parent on all matters properly presented to the stockholders of the Company or
(iv) imposes any material limitations on the ability of Parent or any of their
respective affiliates or
<PAGE>
subsidiaries effectively to control in any material respect the business and
operations of the Company and its subsidiaries; or
(b) this Agreement shall have been terminated by the Company or
Parent in accordance with its terms or any event shall have occurred which gives
Parent or Purchaser the right to terminate this Agreement or not consummate the
Merger; or
(c) there shall have occurred any event that, individually or when
considered together with any other matter, has or has had a Material Adverse
Effect; provided that, for purposes of this clause (c), any adverse effect that
is caused by conditions affecting the economy or financial markets generally or
results from the announcement of the transactions contemplated by this Agreement
shall not be taken into account in determining whether there has been a Material
Adverse Effect or
(d) any of the representations and warranties of the Company set
forth in this Agreement that are qualified by reference to materiality or a
Material Adverse Effect shall not be true and correct, or any such
representations and warranties that are not so qualified shall not be true and
correct in any respect that is reasonably likely to have a Material Adverse
Effect, in each case as if such representations and warranties were made at the
time of such determination; provided that, for purposes of this clause (d), any
adverse effect that is caused by conditions affecting the economy or financial
markets generally or results from the announcement of the transactions
contemplated by this Agreement shall not be taken into account in determining
whether there has been a Material Adverse Effect; or
(e) the Company shall have failed to perform in any material respect
any obligation or to comply in any material respect with any agreement or
covenant of the Company to be performed or complied with by it under this
Agreement; or
(f) there shall have occurred (i) any general suspension of, or
limitation on prices for, trading in securities on any national securities
exchange or the over-the-counter market (other than a shortening of trading
hours or any coordinated trading halt for less than 24 hours triggered solely as
a result of a specified increase or decrease in a market index), (ii) a
declaration of a banking moratorium or any suspension of payments in respect of
banks in the United States or Sweden, (iii) any material limitation (whether or
not mandatory) by an government or Governmental Entity, on the extension of
credit by banks or other lending institutions, (iv) a commencement of a war or
armed hostilities or other national calamity directly involving the United
States or Sweden, (v) any decline of at least 20 percent in the Standard &
Poor's 500 Index from the levels thereof as of the last trading day immediately
preceding the date of this Agreement or (vi) in the case of any
- 2 -
<PAGE>
of the foregoing existing at the time of the execution of this Agreement, a
material acceleration or worsening thereof; or
(g) the Board of Directors (i) shall have withdrawn, or modified or
changed in a manner adverse to Parent or Purchaser (including by amendment of
the Schedule 14D-9) its approval or recommendation of this Agreement, the
Company Stock Option Agreement or the Stockholders Agreement or the transactions
contemplated hereby or thereby, including the Offer or the Merger, (ii)
recommended a Takeover Proposal or (iii) shall have adopted any resolution to
effect any of the foregoing; provided, that the foregoing shall not apply solely
--------
as a result of the Company or the Board of Directors making such disclosure to
the Company's stockholders as, in good faith judgment of the Board of Directors,
after receiving advice from outside counsel, is required under applicable law;
or
(h) any Person or "group" (as defined in Section 13(d)(3) of the
Exchange Act), other than Parent, Purchaser or their affiliates or any group of
which any of them is a member shall have acquired beneficial ownership (as
determined pursuant to Rule 13d-3 promulgated under the Exchange Act) of 25% or
more of the Shares, or the Board of Directors shall have taken any action,
including amending the Rights Agreement or waiving Section 203 of the Delaware
Law or Article TWELFTH of the Restated Certificate, to enable any Person to
acquire beneficial ownership of 15% or more of the Shares; or
(i) any party to the Stockholders Agreement other than the Purchaser
and Parent shall have breached or failed to perform any of its agreements under
such agreement or breached any of its representations and warranties in such
agreement or any such agreement shall not be valid, binding and enforceable,
except for such breaches or failures or failures to be valid, binding and
enforceable that do not materially and adversely affect the benefits expected to
be received by Parent and Purchaser under this Agreement or the Stockholders
Agreement;
which, in the reasonable judgment of Parent with respect to each and every
matter referred to above and regardless of the circumstances giving rise to any
such condition, makes it inadvisable to proceed with the Offer or with such
acceptance for payment of or payment for Shares or to proceed with the Merger.
The foregoing conditions are for the sole benefit of Parent and may be
asserted by Purchaser regardless of the circumstances (including any action or
inaction by Purchaser) giving rise to any such conditions and, subject to the
terms of the Merger Agreement, may be waived by Purchaser in whole or in part at
any time and from time to time, in each case, in the exercise of the good faith
judgment of Purchaser and subject to the terms of this Agreement. The failure
by Purchaser at any time to exercise
- 3 -
<PAGE>
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.
-4-
<PAGE>
EXHIBIT 99(c)(2)
EXECUTION COPY
STOCKHOLDERS AGREEMENT
STOCKHOLDERS AGREEMENT, dated as of February 19, 1999 (the
"Agreement"), among Securitas AB, a Swedish corporation ("Parent"), Securitas
Acquisition Corp., a Delaware corporation and an indirect wholly owned
subsidiary of Parent ("Purchaser"), and the Stockholders of the Company whose
names appear on Schedule I hereto (collectively, the "Stockholders").
W I T N E S S E T H:
------------- -----
WHEREAS, contemporaneously with the execution and delivery of this
Agreement, Parent, Purchaser and Pinkerton's, Inc., a Delaware corporation (the
"Company"), are entering into an Agreement and Plan of Merger, dated as of the
date hereof (the "Merger Agreement"), which provides for, upon the terms and
subject to the conditions set forth therein, (i) the commencement by Purchaser
of a tender offer (the "Offer") for all of the issued and outstanding shares of
common stock, par value $.001 per share, of the Company (the "Company Common
Stock"), including the associated rights to purchase the Company's Series A
Junior Participating Preferred Stock, at a price per share equal to the Per
Share Amount (as defined in the Merger Agreement), and (ii) the subsequent
merger of Purchaser with and into the Company (the "Merger");
WHEREAS, as of the date hereof, each Stockholder owns (beneficially
and of record) the number of shares of Common Stock set forth the opposite such
Stockholder's name on Schedule I hereto (all such shares and associated rights
so owned and which may hereafter be acquired by such Stockholder prior to the
termination of this Agreement, whether upon the exercise of options or by means
of purchase, dividend, distribution or otherwise, being referred to herein as
such Stockholder's "Shares");
WHEREAS, as a condition to their willingness to enter into the Merger
Agreement, Parent and Purchaser have requested that the Stockholders enter into
this Agreement; and
WHEREAS, in order to induce Parent and Purchaser to enter into the
Merger Agreement, the Stockholders are willing to enter into this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, and intending to be legally bound
hereby, Parent, Purchaser and the Stockholders hereby agree as follows:
<PAGE>
ARTICLE I.
TRANSFER AND VOTING OF SHARES; AND
OTHER COVENANTS OF THE STOCKHOLDERS
SECTION 1.1. Voting of Shares. From the date hereof until the
----------------
earliest to occur of (x) termination of this Agreement pursuant to Section 6.2
hereof, (y) the expiration of the Stock Option with respect to such
Stockholder's Shares and (z) the closing of any exercise of such Stock Option
(the "Term"), at any meeting of the stockholders of the Company, however called,
and in any action by consent of the stockholders of the Company, each
Stockholder shall vote its Shares (i) in favor of the Merger and the Merger
Agreement (as amended from time to time), (ii) against any Takeover Proposal and
against any proposal for action or agreement that would result in a breach of
any covenant, representation or warranty or any other obligation or agreement of
the Company under the Merger Agreement or which is reasonably likely to result
in any of the conditions of the Company's obligations under the Merger Agreement
not being fulfilled, any change in the directors of the Company, any change in
the present capitalization of the Company or any amendment to the Company's
Restated Certificate of Incorporation or By-Laws, any other material change in
the Company's corporate structure or business, or any other action which in the
case of each of the matters referred to in this clause (ii) could reasonably be
expected to impede, interfere with, delay, postpone or materially adversely
affect the transactions contemplated by the Merger Agreement or the likelihood
of such transactions being consummated and (iii) in favor of any other matter
necessary for consummation of the transactions contemplated by the Merger
Agreement which is considered at any such meeting of stockholders or in such
consent, and in connection therewith to execute any documents which are
necessary or appropriate in order to effectuate the foregoing, including the
ability for Purchaser or its nominees to vote such Shares directly.
SECTION 1.2. No Inconsistent Arrangements. Except as contemplated by
----------------------------
this Agreement and the Merger Agreement, each Stockholder shall not during the
Term (i) transfer (which term shall include, without limitation, any sale,
assignment, gift, pledge, hypothecation or other disposition), or consent to any
transfer of, any or all of such Stockholder's Shares or any interest therein, or
create or, except as set forth on Schedule 1.2 hereto, permit to exist any
Encumbrance (as defined below) on such Shares, (ii) enter into any contract,
option or other agreement or understanding with respect to any transfer of any
or all of such shares or any interest therein, (iii) grant any proxy, power-of-
attorney or other authorization in or with respect to such Shares, (iv) deposit
such Shares into a voting trust or enter into a voting agreement or arrangement
with respect to such Shares, or (v) take any other action that would in any way
restrict, limit or interfere with the performance of
-2-
<PAGE>
its obligations hereunder or the transactions contemplated hereby or by the
Merger Agreement.
SECTION 1.3. Proxy. Each Stockholder hereby revokes any and all
-----
prior proxies or powers of attorney in respect of any of such Stockholder's
Shares and constitutes and appoints Purchaser and Parent, or any nominee of
Purchaser and Parent, with full power of substitution and resubstitution, at any
time during the Term, as its true and lawful attorney and proxy (its "Proxy"),
for and in its name, place and stead, to demand that the Secretary of the
Company call a special meeting of the stockholders of the Company for the
purpose of considering any matter referred to in Section 1.1 (if permitted under
the Company's Restated Certificate of Incorporation or By-Laws) and to vote each
of such Shares as its Proxy, at every annual, special, adjourned or postponed
meeting of the stockholders of the Company, including the right to sign its name
(as stockholder) to any consent, certificate or other document relating to the
Company that Delaware Law may permit or require as provided in Section 1.1.
THE FOREGOING PROXY AND POWER OF ATTORNEY ARE IRREVOCABLE AND COUPLED
WITH AN INTEREST THROUGHOUT THE TERM.
SECTION 1.4. Waiver of Appraisal Rights. Each Stockholder hereby
--------------------------
waives any rights of appraisal or rights to dissent from the Merger.
SECTION 1.5. Stop Transfer. Each Stockholder shall not request that
-------------
the Company register the transfer (book-entry or otherwise) of any certificate
or uncertificated interest representing any of such Stockholder's Shares, unless
such transfer is made in compliance with this Agreement (including the
provisions of Article III hereof).
SECTION 1.6. No Solicitation. During the Term, each Stockholder
---------------
shall not, nor shall it permit or authorize any of its officers, directors,
employees, agents or representatives (collectively, the "Representatives") to,
(i) solicit or initiate, or encourage, directly or indirectly, any inquiries
regarding or the submission of, any Takeover Proposal, (ii) participate in any
discussions or negotiations regarding, or furnish to any Person any information
or data with respect to, or take any other action to knowingly facilitate the
making of any proposal that constitutes, or may reasonably be expected to lead
to, any Takeover Proposal or (iii) enter into any agreement with respect to any
Takeover Proposal or approve or resolve to approve any Takeover Proposal. Upon
execution of this Agreement, each Stockholder shall, and it shall cause its
Representatives to, immediately cease any existing activities, discussions or
negotiations with any parties conducted heretofore with respect to any of the
foregoing.
-3-
<PAGE>
Each Stockholder will promptly notify Parent of the existence of any
proposal, discussion, negotiation or inquiry received by such Stockholder, and
each Stockholder will immediately communicate to Parent the terms of any
proposal, discussion, negotiation or inquiry which it may receive (and will
promptly provide to Parent copies of any written materials received by it in
connection with such proposal, discussion, negotiation or inquiry) and the
identity of the Person making such proposal or inquiry or engaging in such
discussion or negotiation. Notwithstanding any provision of this Section 1.6 to
the contrary, if any Stockholder or any of its Representatives is a member of
the Board of Directors, such member of the Board of Directors may take actions
in such capacity to the extent permitted by Section 5.2 of the Merger Agreement.
SECTION 1.7. Indemnification of Stockholders. Parent will indemnify
-------------------------------
each Stockholder against all claims, actions, suits, proceedings or
investigations, losses, damages, liabilities (or actions in respect thereof),
costs and expenses (including reasonable fees and expenses of counsel) arising
out of or based upon the execution or delivery of this Agreement or the
performance by such Stockholder of its obligations hereunder and in the event of
any such claim, action, suit, proceeding or investigation unless Parent shall
have assumed the defense thereof as provided below, (i) Parent shall pay as
incurred the reasonable fees and expenses of counsel selected by the
Stockholder, which counsel shall be reasonably satisfactory to Parent, promptly
as statements therefor are received, and (ii) Parent will cooperate in the
defense of any such matter; provided, however, that Parent shall not be liable
-------- -------
for any settlement effected without its prior written consent (which consent
shall not be unreasonably withheld); and provided, further, that Parent shall
-------- -------
not be obliged pursuant to this Section 1.7 to pay the fees and disbursements of
more than one counsel for all Stockholders in any single action except to the
extent that, in the opinion of counsel for the Stockholders, two or more of such
Stockholders have conflicting interests in the outcome of such action. In the
event any person asserts a claim against a Stockholder for which such
Stockholder intends to seek indemnification hereunder, such Stockholder shall
give prompt notice to Parent, and shall permit Parent to assume the defense of
any such claim or any litigation resulting therefrom with counsel selected by
Parent, which counsel shall be Willkie Farr & Gallagher (unless such firm shall
have a conflict of interest) or other counsel reasonably acceptable to such
Stockholders; provided that such Stockholder may participate in such defense at
its own expense, and provided further that the failure of any Stockholder to
give notice as provided herein shall not relieve Parent of its obligations under
this Section 1.7 except to the extent Parent is materially prejudiced thereby.
Parent shall not, in the defense of any such claim or litigation, except with
the consent of the Stockholder being indemnified, consent to the entry of any
judgment or enter into any settlement which does not include as an unconditional
term thereof the giving by the
-4-
<PAGE>
claimant or plaintiff to such Stockholder of a release from all liability in
respect of such claim or litigation. Each Stockholder shall promptly furnish
such information regarding itself or the claim in question as Parent may
reasonably request and as shall be reasonably required in connection with the
defense of such claim and litigation resulting therefrom.
ARTICLE II.
TENDER OF SHARES
SECTION 2.1. Tender. Each Stockholder shall validly tender (or cause
------
the record owner of such shares to validly tender) such Stockholder's Shares
pursuant to and in accordance with the terms of the Offer, not later than the
fifth business day after commencement of the Offer pursuant to Section 1.1 of
the Merger Agreement and Rule 14d-2 under the Exchange Act, and not thereafter
withdraw such tender. Each Stockholder hereby acknowledges and agrees that
Parent's and Purchaser's obligation to accept for payment and pay for such
Stockholder's Shares in the Offer is subject to the terms and conditions of the
Offer. For all its Shares validly tendered in the Offer and not withdrawn, each
Stockholder will be entitled to receive the highest price paid by Purchaser
pursuant to the Offer.
SECTION 2.2. Certain Warranties. Without limiting the generality or
------------------
effect of any other term or condition of the Offer, the transfer by Stockholder
of the Shares to Purchaser in the Offer shall pass to and unconditionally vest
in Purchaser good and valid title to the Shares, free and clear of all
Encumbrances whatsoever.
SECTION 2.3. Disclosure. Each Stockholder hereby authorizes Parent
----------
and Purchaser to publish and disclose in the Offer Documents and, if approval of
the Company's stockholders is required under applicable law, the Proxy Statement
(including all documents and schedules filed with the SEC), its identity and
ownership of the Company Common Stock and the nature of its commitments,
arrangements and understandings under this Agreement.
ARTICLE III.
OPTION
SECTION 3.1. Option Shares.
-------------
(a) In order to induce Parent and Purchaser to enter into the Merger
Agreement, each Stockholder hereby grants to Parent or Purchaser, as Parent may
designate (the "Optionee"), an irrevocable option (each such option, a "Stock
Option") to purchase all, but not in any part or less than all, of such
Stockholder's Shares (in such context, the "Option Shares") at a
-5-
<PAGE>
purchase price per share equal to the higher of (i) $29.00, and (ii) if the
Offer is consummated, the highest price paid by Purchaser pursuant to the Offer
(the "Exercise Price").
(b) Each Stock Option may be exercised by the Optionee if (i) the
Merger Agreement becomes terminable under circumstances that would entitle
Parent to receive the Termination Fee pursuant to the first sentence of Section
8.2(b) of the Merger Agreement, (ii) the Offer is consummated but (due to
failure by the Stockholder who has granted such Stock Option to tender validly
and not withdraw) Purchaser has not accepted for payment or paid for all such
Stockholder's Shares or (iii) Parent becomes entitled to receive the Termination
Fee pursuant to the second sentence of Section 8.2(b) of the Merger Agreement.
(c) Each Stock Option (i) shall become exercisable, in whole but not
in part, on the date on which the first event referred to in Section 3.1(b)
shall occur or, if later, the date on which (A) all waiting periods under the
HSR Act required for the purchase of the Option Shares upon such exercise shall
have expired or been waived and all approvals of and consents to such purchase
required under applicable foreign antitrust and competition laws shall have been
obtained and be in full force and effect and (B) there shall not be in effect
any preliminary or final injunction or other order issued by any court or
governmental, administrative or regulatory agency or authority prohibiting the
exercise of such Stock Option pursuant to this Agreement, and (ii) shall remain
exercisable until the date which is 60 days following the first such date on
which such Stock Option becomes exercisable pursuant to clause (i) of this
Section 3.1(c).
(d) If the Optionee wishes to exercise a Stock Option it shall, prior
to the expiration thereof, send a written notice to Stockholder identifying the
time and place for the closing of such purchase at least three but not more than
10 business days prior to such closing. On the date of such closing, Parent
shall deliver the Exercise Price multiplied by the total number of Option Shares
being acquired against delivery by Stockholders of all certificates representing
such Option Shares, duly endorsed or accompanied by appropriate instruments of
transfer. Upon such delivery by the Stockholders, good and valid title to such
Option Shares shall pass to and unconditionally vest in Purchaser, free and
clear of all Encumbrances whatsoever.
(e) In the event (i) the Shares are acquired by Parent or any of its
affiliates upon exercise of the Stock Option or pursuant to the Offer and (ii)
within one year of the date of such acquisition Parent or any of its affiliates
acquires 20% or more of the outstanding shares of Company Common Stock from the
Company's stockholders (whether by means of a new tender offer, open-market
purchases, merger or otherwise), then the Stockholders shall be entitled to
receive, in respect of each Share, the excess, if any, of the highest price paid
by the
-6-
<PAGE>
Parent or any of its affiliates for such shares over the Exercise Price.
(f) In the event the Stock Option is exercised and Parent sells the
Option Shares within one year of the date of such exercise, Parent shall pay the
Stockholders, in respect of each Option Share, an amount equal to the net
proceeds received by Parent in respect of such sale, less the sum of (i) the
Exercise Price plus (ii) any additional amounts paid pursuant to Section 3.1(e).
In the event the Stock Option is exercised and Parent sells the Option Shares
after the first anniversary but before the second anniversary of such exercise,
Parent shall pay the Stockholders, in respect of each Option Share, an amount
equal to 50% of the net proceeds received by Parent in respect of such sale,
less the sum of (i) the Exercise Price plus (ii) any additional amounts paid
pursuant to Section 3.1(e). The provisions of this Section 3.1(f) shall be void
and of no further force or effect if Parent acquires 100% of the Company Common
Stock pursuant to the Merger Agreement or otherwise.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS
Each Stockholder hereby represents and warrants to Parent and
Purchaser as follows:
SECTION 4.1. Due Authorization, etc. Such Stockholder has all
----------------------
requisite power and authority to execute, deliver and perform this Agreement, to
appoint Purchaser and Parent as its Proxy and to consummate the transactions
contemplated hereby. The execution, delivery and performance of this Agreement,
the appointment of Purchaser and Parent as Stockholder's Proxy and the
consummation of the transactions contemplated hereby have been duly authorized
by all necessary action on the part of Stockholder. This Agreement has been
duly executed and delivered by or on behalf of such Stockholder and constitutes
a legal, valid and binding obligation of such Stockholder, enforceable against
such Stockholder in accordance with its terms, except as enforcement may be
limited by bankruptcy, insolvency, moratorium or other similar laws and except
that the availability of equitable remedies, including specific performance, is
subject to the discretion of the court before which any proceeding for such
remedy may be brought. There is no beneficiary or holder of a voting trust
certificate or other interest of any trust of which such Stockholder is trustee
whose consent is required for the execution and delivery of this Agreement of
the consummation by such Stockholder of the transactions contemplated hereby.
SECTION 4.2. No Conflicts; Required Filings and Consents.
-------------------------------------------
(a) The execution and delivery of this Agreement by such Stockholder
does not, and the performance of this Agreement
-7-
<PAGE>
by such Stockholder will not, (i) conflict with or violate any trust agreement
or other similar documents relating to any trust of which such Stockholder is
trustee, (ii) conflict with or violate any law applicable to such Stockholder or
by which such Stockholder or any of such Stockholder's properties is bound or
affected or (iii) result in any breach of or constitute a default (or an event
that with notice or lapse of time or both would become a default) under, or give
to others any rights of termination, acceleration or cancellation of, or result
in the creation of a lien or encumbrance on any assets of such Stockholder,
including, without limitation, such Stockholder's Shares, pursuant to, any note,
bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which such Stockholder is a party
or by which such Stockholder or any of such Stockholder's assets is bound or
affected, except, in the case of clauses (ii) and (iii), for any such breaches,
defaults or other occurrences that would not prevent or delay the performance by
such Stockholder of such Stockholder's obligations under this Agreement.
(b) The execution and delivery of this Agreement by such Stockholder
does not, and the performance of this Agreement by such Stockholder will not,
require any consent, approval, authorization or permit of, or filing with or
notification to, any governmental or regulatory authority (other than any
necessary filing under the HSR Act or approvals or consents required under
applicable foreign antitrust or competition laws or the Exchange Act), domestic
or foreign, except where the failure to obtain such consents, approvals,
authorizations or permits, or to make such filings or notifications, would not
prevent or delay the performance by such Stockholder of such Stockholder's
obligations under this Agreement.
SECTION 4.3. Title to Shares. Such Stockholder is the sole record
---------------
and beneficial owner of its Shares, free and clear of any pledge, lien, security
interest, mortgage, charge, claim, equity, option, proxy, voting restriction,
voting trust or agreement, understanding, arrangement, right of first refusal,
limitation on disposition, adverse claim of ownership or use or encumbrance of
any kind ("Encumbrances"), other than as set forth on Schedule 1.2 hereto and
other than restrictions imposed by the securities laws or pursuant to this
Agreement and the Merger Agreement.
SECTION 4.4. No Finder's Fees. No broker, investment banker,
----------------
financial advisor or other person is entitled to any broker's, finder's,
financial advisor's or other similar fee or commission in connection with the
transactions contemplated hereby based upon arrangements made by or on behalf of
such Stockholder. Such Stockholder, on behalf of itself and its affiliates,
hereby acknowledges that it is not entitled to receive any broker's, finder's,
financial advisor's or other similar fee or commission in connection with the
transactions contemplated hereby or by the Merger Agreement.
-8-
<PAGE>
ARTICLE V.
REPRESENTATIONS AND WARRANTIES OF
PARENT AND PURCHASER
Parent and Purchaser hereby, jointly and severally, represent and
warrant to the Stockholders as follows:
SECTION 5.1. Due Organization, Authorization, etc. Purchaser and
------------------------------------
Parent are duly organized, validly existing and in good standing under the laws
of their jurisdiction of incorporation. Purchaser and Parent have all requisite
corporate power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby by
each of Purchaser and Parent have been duly authorized by all necessary
corporate action on the part of Purchaser and Parent, respectively. This
Agreement has been duly executed and delivered by each of Purchaser and Parent
and constitutes a legal, valid and binding obligation of each of Purchaser and
Parent, enforceable against Purchaser and Parent in accordance with its terms,
except as enforcement may be limited by bankruptcy, insolvency, moratorium or
other similar laws and except that the availability of equitable remedies,
including specific performance, is subject to the discretion of the court before
which any proceeding for such remedy may be brought.
SECTION 5.2. Investment Intent. The Optionee is acquiring each Stock
-----------------
Option and, if and when it exercises such Stock Option, will be acquiring the
Option Shares issuable upon the exercise thereof for its own account and not
with a view to distribution or resale in any manner which would be in violation
of the Securities Act.
ARTICLE VI.
MISCELLANEOUS
SECTION 6.1. Definitions. Terms used but not otherwise defined in
-----------
this Agreement have the meanings ascribed to such terms in the Merger Agreement.
SECTION 6.2. Termination. This Agreement shall terminate and be of
-----------
no further force and effect (i) by the written mutual consent of the parties
hereto or (ii) automatically and without any required action of the parties
hereto upon the Effective Time. No such termination of this Agreement shall
relieve any party hereto from any liability for any breach of this Agreement
prior to termination.
SECTION 6.3. Further Assurance. From time to time, at another
-----------------
party's request and without consideration, each party hereto shall execute and
deliver such additional documents and
-9-
<PAGE>
take all such further action as may be necessary or desirable to consummate and
make effective, in the most expeditious manner practicable, the transaction
contemplated by this Agreement.
SECTION 6.4. Certain Events. Each Stockholder agrees that this
--------------
Agreement and such Stockholder's obligations hereunder shall attach to such
Stockholder's Shares and shall be binding upon any person or entity to which
legal or beneficial ownership of such Shares shall pass, whether by operation of
law or otherwise, including, without limitation, such Stockholder's heirs,
guardians, administrators, or successors. Notwithstanding any transfer of
Shares, the transferor shall remain liable for the performance of all its
obligations under this Agreement.
SECTION 6.5. No Waiver. The failure of any party hereto to exercise
---------
any right, power, or remedy provided under this agreement or otherwise available
in respect hereof at law or in equity, or to insist upon compliance by any other
party hereto with its obligations hereunder, any custom or practice of the
parties at variance with the terms hereof shall not constitute a waiver by such
party of its right to exercise any such or other right, power or remedy or to
demand such compliance.
SECTION 6.6. Specific Performance. Each Stockholder acknowledges
--------------------
that if such Stockholder fails to perform any of its obligations under this
Agreement immediate and irreparable harm or injury would be caused to Parent and
Purchaser for which money damages would not be an adequate remedy. In such
event, each Stockholder agrees that each of Parent and Purchaser shall have the
right, in addition to any other rights it may have, to specific performance of
this Agreement. Accordingly, if Parent or Purchaser should institute an action
or proceeding seeking specific enforcement of the provisions hereof, each
Stockholder hereby waives the claim or defense that Parent or Purchaser, as the
case may be, has an adequate remedy at law and hereby agrees not to assert in
any such action or proceeding the claim or defense that such a remedy at law
exists. Each Stockholder further agrees to waive any requirements for the
securing or posting of any bond in connection with obtaining any such equitable
relief.
SECTION 6.7. Notice. All notices and other communications given or
------
made pursuant hereto shall be in writing and shall be deemed to have been duly
given or made (i) as of the date delivered or sent by facsimile if delivered
personally or by facsimile, and (ii) on the third business day after deposit in
the U.S. mail, if mailed by registered or certified mail (postage prepaid,
return receipt requested), in each case to the parties at the following
addresses (or at such other address for a party as shall be specified by like
notice, except that notices of changes of address shall be effective upon
receipt):
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<PAGE>
(a) If to Parent or Purchaser:
Securitas AB
Lindhagensplan 70
Stockholm, Sweden
Attention: President
Facsimile: 46 8 657 7071
With a copies to:
Willkie Farr & Gallagher
787 Seventh Avenue
New York, New York 10019
Attention: Steven J. Gartner, Esq.
Facsimile: (212) 728-8111; and
Pinkerton's, Inc.
World Support Center
4330 Park Terrace Drive
Westlake Village, CA 91361
Attention: General Counsel
Facsimile: (818) 706-5530; and
Gibson, Dunn & Crutcher LLP
333 South Grand Avenue
Los Angeles, California 90071
Attention: Andrew E. Bogen, Esq.
Facsimile: (213) 229-7520
(b) If to a Stockholder, at the address set forth below such
Stockholder's name on Schedule I hereto.
SECTION 6.8. Expenses. Except as otherwise expressly set forth
--------
herein, all fees, costs and expenses incurred in connection with this Agreement
and the transactions contemplated hereby shall be paid by the party incurring
such fees, costs and expenses.
SECTION 6.9. Headings. The headings contained in this Agreement are
--------
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
SECTION 6.10. Severability. If any term or other provision of this
------------
Agreement is invalid, illegal or incapable of being enforced by any rule of law,
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable manner to the
-11-
<PAGE>
end that transactions contemplated hereby are fulfilled to the maximum extent
possible.
SECTION 6.11. Entire Agreement; No Third-Party Beneficiaries. This
----------------------------------------------
Agreement constitutes the entire agreement and supersede any and all other prior
agreements and undertakings, both written and oral, among the parties, or any of
them, with respect to the subject matter hereof, and this Agreement is not
intended to confer upon any other person any rights or remedies hereunder.
SECTION 6.12. Assignment. This Agreement shall not be assigned by
----------
operation of law or otherwise.
SECTION 6.13. Governing Law. This Agreement shall be governed by,
-------------
and construed in accordance with, the laws of the State of Delaware applicable
to contracts executed in and to be performed entirely within that State.
SECTION 6.14. Amendment. This Agreement may not be amended except by
---------
an instrument in writing signed by the parties hereto.
SECTION 6.15. Waiver. Any party hereto may (a) extend the time for
------
the performance of any of the obligations or other acts of the other parties
hereto, (b) waive any inaccuracies in the representations and warranties of the
other parties hereto contained herein or in any document delivered pursuant
hereto and (c) waive compliance by the other parties hereto with any of their
agreements or conditions contained herein. Any agreement on the part of a party
hereto to any such extension or waiver shall be valid only as against such party
and only if set forth in an instrument in writing signed by such party. The
failure of any party hereto to assert any of its rights under this Agreement or
otherwise shall not constitute a waiver of those rights.
SECTION 6.16. Counterparts. This Agreement may be executed in one or
------------
more counterparts, and by the different parties hereto in separate counterparts,
each of which when executed shall be deemed to be an original but all of which
shall constitute one and the same agreement.
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<PAGE>
IN WITNESS WHEREOF, Parent, Purchaser and the Stockholders have caused
this Agreement to be executed as of the date first written above.
SECURITAS AB
By: /s/ Thomas Berglund
------------------------------
Name: Thomas Berglund
Title: President and Chief Executive
Officer
SECURITAS ACQUISITION CORP.
By: /s/ Thomas Berglund
------------------------------
Name: Thomas Berglund
Title: President
/s/ Thomas W. Wathen
----------------------------------
Thomas W. Wathen, as trustee of
THE THOMAS W. WATHEN CHARITABLE
REMAINDER UNITRUST 1999, created
February 10, 1999
/s/ Thomas W. Wathen
----------------------------------
Thomas W. Wathen, as trustee of
THE WATHEN 1999 ANNUITY TRUST,
created February 10, 1999
/s/ Thomas W. Wathen
----------------------------------
Thomas W. Wathen, as trustee of
THE THOMAS W. WATHEN FOUNDATION
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<PAGE>
Schedule I
----------
<TABLE>
<CAPTION>
Number of Shares
----------------
Name and Address of Stockholder Owned
------------------------------- -----
<S> <C>
The Thomas W. Wathen Charitable 3,546,415
Remainder Unitrust 1999
770 Ledo Way
Los Angeles, California 90049
The Wathen 1999 Annuity Trust 135,000
770 Ledo Way
Los Angeles, California 90049
The Thomas W. Wathen Foundation 19,122
770 Ledo Way
Los Angeles, California 90049
</TABLE>
<PAGE>
EXHIBIT 99(c)(3)
EXECUTION COPY
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of February 19, 1999, (the
"Agreement"), between Pinkerton's, Inc., a Delaware corporation (the "Grantor"),
and Securitas AB, a Swedish corporation (the "Grantee").
W I T N E S S E T H:
-------------------
WHEREAS, contemporaneously with the execution and delivery of this
Agreement, the Grantor, the Grantee and Securitas Acquisition Corp., a Delaware
corporation and an indirect wholly owned subsidiary of the Grantee
("Purchaser"), are entering into an Agreement and Plan of Merger, dated as of
the date hereof (the "Merger Agreement"), which provides for, upon the terms and
subject to the conditions set forth therein, (i) the commencement by Purchaser
of a tender offer (the "Offer") for all of the issued and outstanding shares of
common stock, par value $.001 per share, of the Grantor (the "Common Stock"),
including the associated rights to purchase the Company's Series A Junior
Participating Preferred Stock, at a price per share equal to the Per Share
Amount (as defined in the Merger Agreement), and (ii) the subsequent merger of
Purchaser with and into the Grantor (the "Merger");
WHEREAS, as a condition to their willingness to enter into the Merger
Agreement, the Grantee and Purchaser have requested that the Grantor grant to
the Grantee an option to purchase up to 2,437,079 shares of Common Stock, upon
the terms and subject to the conditions herein; and
WHEREAS, in order to induce the Grantee and Purchaser to enter into
the Merger Agreement, the Grantor is willing to grant the Grantee the requested
option.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, and intending to be legally bound
hereby, the Grantee and the Grantor hereby agree as follows:
SECTION 1. The Option; Exercise; Adjustments; Payment of Spread.
----------------------------------------------------
(a) Subject to the other terms and conditions set forth herein, the Grantor
hereby grants to the Grantee an irrevocable option (the "Option") to purchase up
to 2,437,079 shares of Common Stock (the "Shares") at a cash purchase price
equal to $29.00 per share (the "Purchase Price"). The Option may be exercised by
the Grantee, in whole or in part, at any time, or from time to time, following
the occurrence of an event described in Section 2(d) hereof, and prior to the
termination of the Option in accordance with the terms of this Agreement.
<PAGE>
(b) In the event the Grantee wishes to exercise the Option, the Grantee
shall send a written notice to the Grantor (the "Stock Exercise Notice")
specifying a date (subject to the HSR Act (as defined below) and approvals and
consents under applicable foreign antitrust or competition laws) not later than
10 business days and not earlier than three business days following the date
such notice is given for the closing of such purchase. In the event of any
change in the number of issued and outstanding shares of Common Stock by reason
of any stock dividend, stock split, split-up, recapitalization, merger or other
change in the corporate or capital structure of the Grantor, the number of
Shares subject to this Option and the purchase price per Share shall be
appropriately adjusted to restore the Grantee to its rights hereunder, including
its right to purchase Shares representing 19.9% of the capital stock of the
Grantor entitled to vote generally for the election of the directors of the
Grantor which is issued and outstanding immediately prior to the exercise of the
Option at an aggregate purchase price equal to the Purchase Price multiplied by
2,437,079.
(c) If at any time the Option is then exercisable pursuant to the terms of
Section 1(a) hereof, the Grantee may elect, in lieu of exercising the Option to
purchase Shares provided in Section 1(a) hereof, to send a written notice to the
Grantor (the "Cash Exercise Notice") specifying a date not later than 20
business days and not earlier than 10 business days following the date such
notice is given on which date the Grantor shall pay to the Grantee an amount in
cash equal to the Spread (as hereinafter defined) multiplied by all or such
portion of the Shares subject to the Option as the Grantee shall specify. As
used herein "Spread" shall mean the excess, if any, over the Purchase Price of
the higher of (x) if applicable, the highest price per share of Common Stock
(including any brokerage commissions, transfer taxes and soliciting dealers'
fees) paid or proposed to be paid by any person pursuant to a Takeover Proposal
giving rise to an event described in Section 2(d) hereof (the "Alternative
Purchase Price") or (y) the closing price of the shares of Common Stock on the
NYSE Composite Tape on the last trading day immediately prior to the date of the
Cash Exercise Notice (the "Closing Price"). If the Alternative Purchase Price
includes any property other than cash, the Alternative Purchase Price shall be
the sum of (i) the fixed cash amount, if any, included in the Alternative
Purchase Price plus (ii) the fair market value of such property other than cash
included in the Alternative Purchase Price. If such other property consists of
securities with an existing public trading market, the average of the closing
prices (or the average of the closing bid and asked prices if closing prices are
unavailable) for such securities in their principal public trading market on the
five trading days ending five days prior to the date of the Cash Exercise Notice
shall be deemed to equal the fair market value of such property. If such other
property consists of something other than cash or securities with an existing
public trading market and, as of the
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<PAGE>
payment date for the Spread, agreement on the value of such other property has
not been reached, the Alternative Purchase Price shall be deemed to equal the
Closing Price. Upon exercise of its right to receive cash pursuant to this
Section 1(c), the obligations of the Grantor to deliver Shares pursuant to
Section 3 shall be terminated with respect to such number of Shares for which
the Grantee shall have elected to be paid the Spread. As used in this Agreement,
"person" shall have the meaning specified in Sections 3(a)(9) and 13(d)(3) of
the Securities Exchange Act of 1934 (the "Exchange Act").
SECTION 2. Conditions to Delivery of Shares. The Grantor's obligation to
--------------------------------
deliver Shares upon exercise of the Option is subject only to the conditions
that:
(a) No preliminary or permanent injunction or other order issued by any
federal or state court of competent jurisdiction in the United States
prohibiting the delivery of the Shares shall be in effect; and
(b) Any applicable waiting periods under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 (the "HSR Act") shall have expired or been terminated;
and
(c) Any approvals and consents required to be obtained prior to the
delivery of the Shares under applicable foreign antitrust or competition laws
shall have been obtained and be in full force and effect; and
(d) (i) The Merger Agreement shall have become terminable under
circumstances which would entitle the Grantee to receive the Termination Fee (as
defined in the Merger Agreement) pursuant to the first sentence of Section
8.2(b) of the Merger Agreement or (ii) the Grantee shall have become entitled to
receive the Termination Fee pursuant to the second sentence of Section 8.2(b) of
the Merger Agreement.
SECTION 3. The Closing.
-----------
(a) Any closing hereunder shall take place on the date specified by the
Grantee in its Stock Exercise Notice or Cash Exercise Notice, as the case may
be, at 9:00 a.m., local time, at the offices of Willkie Farr & Gallagher, 787
Seventh Avenue, New York, New York 10019, or, if the conditions set forth in
Section 2(a), (b) or (c) have not then been satisfied, on the second business
day following the satisfaction of such conditions, or at such other time and
place as the parties hereto may agree (the "Closing Date"). On the Closing Date,
(i) in the event of a closing pursuant to Section 1(b) hereof, the Grantor will
deliver to the Grantee a certificate or certificates, representing the Shares in
the denominations designated by the Grantee in its Stock Exercise Notice and the
Grantee will purchase such Shares from the Grantor at the price per Share equal
to the Purchase Price or (ii) in the event of a closing pursuant to Section 1(c)
-3-
<PAGE>
the Grantor will deliver to the Grantee cash in an amount determined pursuant to
Section 1(c) hereof. Any payment made by the Grantee to the Grantor, or by the
Grantor to the Grantee, pursuant to this Agreement shall be made by certified or
official bank check or by wire transfer of federal funds to a bank designated by
the party receiving such funds.
(b) The certificates representing the Shares shall bear an appropriate
legend relating to the fact that such Shares have not been registered under the
Securities Act of 1933, as amended (the "Securities Act").
SECTION 4. Representations and Warranties of the Grantor. The Grantor
---------------------------------------------
represents and warrants to the Grantee that the Grantor has taken all necessary
corporate action to authorize and reserve the Shares issuable upon exercise of
the Option and the Shares, when issued and delivered by the Grantor upon
exercise of the Option and paid for by the Grantee as contemplated hereby, will
be duly authorized, validly issued, fully paid and non-assessable and free of
preemptive rights.
SECTION 5. Representations and Warranties of the Grantee. The Grantee
---------------------------------------------
represents and warrants to the Grantor that (a) the execution and delivery of
this Agreement by the Grantee and the consummation by it of the transactions
contemplated hereby have been duly authorized by all necessary corporate action
on the part of the Grantee and this Agreement has been duly executed and
delivered by a duly authorized officer of the Grantee and constitutes a valid
and binding obligation of the Grantee; and (b) the Grantee is acquiring the
Option and, if and when it exercises the Option, will be acquiring the Shares
issuable upon the exercise thereof for its own account and not with a view to
distribution or resale in any manner which would be in violation of the
Securities Act.
SECTION 6. Listing of Shares; Filings; Governmental Consents. Subject to
-------------------------------------------------
applicable law and the rules and regulations of the New York Stock Exchange,
Inc. (the "NYSE"), the Grantor will promptly file an application to list the
Shares on the NYSE and will use its reasonable best efforts to obtain approval
of such listing and to effect all necessary filings by the Grantor under the HSR
Act and obtain all approvals and consents required under applicable foreign
antitrust and competition laws; provided, however, that if the Grantor is unable
to effect such listing on the NYSE by the Closing Date, the Grantor will
nevertheless be obligated to deliver the Shares upon the Closing Date. Each of
the parties hereto will use its reasonable best efforts to obtain consents of
all third parties and governmental authorities, if any, necessary to the
consummation of the transactions contemplated.
SECTION 7. Registration Rights.
-------------------
-4-
<PAGE>
(a) In the event that the Grantee shall desire to sell any of the Shares,
and such sale requires, in the written opinion of counsel to the Grantee, which
opinion shall be reasonably satisfactory to the Grantor and its counsel,
registration of such Shares under the Securities Act, the Grantor will cooperate
with the Grantee and any underwriters in registering such Shares for resale,
including, without limitation, promptly filing a registration statement which
complies with the requirements of applicable federal and state securities laws,
and entering into an underwriting agreement with such underwriters upon such
terms and conditions as are customarily contained in underwriting agreements
with respect to secondary distributions; provided that the Grantor shall not be
required to have declared effective more than two registration statements
hereunder and shall be entitled to delay the filing or effectiveness of any
registration statement for up to 120 days if the offering would, in the judgment
of the Board of Directors of the Grantor, require premature disclosure of any
material corporate development or material transaction involving the Grantor or
interfere with any previously planned securities offering by the Company.
(b) If the Common Stock is registered pursuant to the provisions of this
Section 7, the Grantor agrees (i) to furnish copies of the registration
statement and the prospectus relating to the Shares covered thereby in such
numbers as the Grantee may from time to time reasonably request and (ii) if any
event shall occur as a result of which it becomes necessary to amend or
supplement any registration statement or prospectus, to prepare and file under
the applicable securities laws such amendments and supplements as may be
necessary to keep available for at least 120 days a prospectus covering the
Common Stock meeting the requirements of such securities laws, and to furnish
the Grantee such numbers of copies of the registration statement and prospectus
as amended or supplemented as may reasonably be requested. The Grantor shall
bear the cost of the registration, including, but not limited to, all
registration and filing fees, printing expenses, and fees and disbursements of
counsel and accountants for the Grantor, except that the Grantee shall pay the
fees and disbursements of its counsel, and the underwriting fees and selling
commissions applicable to the shares of Common Stock sold by the Grantee. The
Grantor shall indemnify and hold harmless (i) the Grantee, its affiliates and
its officers and directors and (ii) each underwriter and each person who
controls any underwriter within the meaning of the Securities Act or the
Exchange Act (collectively, the "Underwriters") ((i) and (ii) being referred to
as "Indemnified Parties") against any losses, claims, damages, liabilities or
expenses, to which the Indemnified Parties may become subject, insofar as such
losses, claims, damages, liabilities (or actions in respect thereof) and
expenses arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained or incorporated by reference in any
registration statement filed pursuant to this paragraph, or arise out of or are
based upon the omission or alleged omission to state therein a material fact
-5-
<PAGE>
required to be stated therein or necessary to make the statements therein not
misleading; provided, however, that the Grantor will not be liable in any such
-------- -------
case to the extent that any such loss, liability, claim, damage or expense
arises out of or is based upon an untrue statement or alleged untrue statement
in or omission or alleged omission from any such documents in reliance upon and
in conformity with written information furnished to the Grantor by the
Indemnified Parties expressly for use or incorporation by reference therein.
(c) The Grantee and the Underwriters shall indemnify and hold harmless the
Grantor, its affiliates and its officers and directors against any losses,
claims, damages, liabilities or expenses to which the Grantor, its affiliates
and its officers and directors may become subject, insofar as such losses,
claims, damages, liabilities (or actions in respect thereof) and expenses arise
out of or are based upon any untrue statement of any material fact contained or
incorporated by reference in any registration statement filed pursuant to this
paragraph, or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, in each case to the extent, but only to
the extent, that such untrue statement or alleged untrue statement or omission
or alleged omission was made in reliance upon and in conformity with written
information furnished to the Grantor by the Grantee or the Underwriters, as
applicable, specifically for use or incorporation by reference therein.
SECTION 8. Specific Performance. The Grantor acknowledges that if the
--------------------
Grantor fails to perform any of its obligations under this Agreement immediate
and irreparable harm or injury would be caused to the Grantee for which money
damages would not be an adequate remedy. In such event, the Grantor agrees that
the Grantee shall have the right, in addition to any other rights it may have,
to specific performance of this Agreement. Accordingly, if the Grantee should
institute an action or proceeding seeking specific enforcement of the provisions
hereof, the Grantor hereby waives the claim or defense that the Grantee has an
adequate remedy at law and hereby agrees not to assert in any such action or
proceeding the claim or defense that such a remedy at law exists. The Grantor
further agrees to waive any requirements for the securing or posting of any bond
in connection with obtaining any such equitable relief.
SECTION 9. Notice. All notices and other communications given or made
------
pursuant hereto shall be in writing and shall be deemed to have been duly given
or made (i) as of the date delivered or sent by facsimile if delivered
personally or by facsimile, and (ii) on the third business day after deposit in
the U.S. mail, if mailed by registered or certified mail (postage prepaid,
return receipt requested), in each case to the parties at the following
addresses (or at such other address for a party
-6-
<PAGE>
as shall be specified by like notice, except that notices of changes of address
shall be effective upon receipt):
(a) If to the Grantee:
Securitas AB
Lindhagensplan 70
Stockholm, Sweden
Attention: President
Facsimile: 46 8 657 7071
With a copy to:
Willkie Farr & Gallagher
787 Seventh Avenue
New York, New York 10019
Attention: Steven J. Gartner, Esq.
Facsimile: (212) 728-8111
(b) If to the Grantor:
Pinkerton's, Inc.
World Support Center
4330 Park Terrace Drive
Westlake Village, CA 91361
Attention: General Counsel
Facsimile: (818) 706-5530
With a copy to:
Gibson, Dunn & Crutcher LLP
333 South Grand Avenue
Los Angeles, California 90071
Attention: Andrew E. Bogen, Esq.
Facsimile: (213) 229-7520
SECTION 10. Expenses. Except as otherwise expressly set forth herein or the
--------
Merger Agreement, all fees, costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby shall be paid by the party
incurring such fees, costs and expenses.
SECTION 11. Headings. The headings contained in this Agreement are for
--------
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
SECTION 12. Severability. If any term or other provision of this Agreement
------------
is invalid, illegal or incapable of being enforced by any rule of law, or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any manner adverse to
any party. Upon such determination that any term or other provision is invalid,
illegal or incapable of
-7-
<PAGE>
being enforced, the parties hereto shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible in an acceptable manner to the end that transactions contemplated
hereby are fulfilled to the maximum extent possible.
SECTION 13. Entire Agreement; No Third-Party Beneficiaries. This Agreement
----------------------------------------------
and the Merger Agreement (including the other documents referred to therein)
constitute the entire agreement and supersede any and all other prior agreements
and undertakings, both written and oral, among the parties, or any of them, with
respect to the subject matter hereof, and this Agreement is not intended to
confer upon any other person any rights or remedies hereunder.
SECTION 14. Assignment. This Agreement shall not be assigned by operation
----------
of law or otherwise.
SECTION 15. Governing Law. This Agreement shall be governed by, and
-------------
construed in accordance with, the laws of the State of Delaware applicable to
contracts executed in and to be performed entirely within that State.
SECTION 16. Amendment. This Agreement may not be amended except by an
---------
instrument in writing signed by the parties hereto.
SECTION 17. Waiver. Any party hereto may (a) extend the time for the
------
performance of any of the obligations or other acts of the other parties hereto,
(b) waive any inaccuracies in the representations and warranties of the other
parties hereto contained herein or in any document delivered pursuant hereto and
(c) waive compliance by the other parties hereto with any of their agreements or
conditions contained herein. Any agreement on the part of a party hereto to any
such extension or waiver shall be valid only as against such party and only if
set forth in an instrument in writing signed by such party. The failure of any
party hereto to assert any of its rights under this Agreement or otherwise shall
not constitute a waiver of those rights.
SECTION 18. Counterparts. This Agreement may be executed in one or more
------------
counterparts, and by the different parties hereto in separate counterparts, each
of which when executed shall be deemed to be an original but both of which shall
constitute one and the same agreement.
SECTION 19. Termination. The right to exercise the Option granted pursuant
-----------
to this Agreement shall terminate at the earlier of (i) the Effective Time and
(ii) 60 days after the date on which an event described in Section 2(d) hereof
occurs (the date referred to in clause (ii) being hereinafter referred to as the
"Option Termination Date") and, provided that, if the Option cannot be exercised
or the Shares cannot be delivered to the Grantee upon such exercise because the
conditions set forth in
-8-
<PAGE>
Section 2(a), (b) or (c) hereof have not yet been satisfied, the Option
Termination Date shall be extended until thirty days after such impediment to
exercise or delivery has been removed.
All representations and warranties contained in this Agreement shall
survive delivery of and payment for the Shares.
SECTION 20. Profit Limitation. Notwithstanding any other provision of this
-----------------
Agreement, in no event shall the Grantee's Total Profit (as defined below)
exceed $15.0 million and, if it otherwise would exceed such amount, the Grantee,
at its sole election, shall either (a) reduce the number of shares of Common
Stock required to be delivered by the Grantor pursuant to the Stock Exercise
Notice, (b) deliver to the Grantor for cancellation Shares previously purchased
by the Grantee, (c) reduce the cash payable to the Grantee pursuant to Section
1(c) hereof, (d) pay cash or other consideration to the Grantor or (e) undertake
any combination thereof, so that the Grantee's Total Profit shall not exceed
$15.0 million after taking into account the foregoing actions.
Notwithstanding any other provision of this Agreement, the Option may
not be exercised for a number of Shares as would, as of the date of the Stock
Exercise Notice, result in a Notional Total Profit (as defined below) of more
than $15.0 million and, if exercise of the Option otherwise would exceed such
amount, the Grantee, at its discretion, may increase the Purchase Price for that
number of Shares set forth in the Stock Exercise Notice so that the Notional
Total Profit shall not exceed $15.0 million; provided, that nothing in this
sentence shall restrict any exercise of the Option permitted hereby on any
subsequent date at the Purchase Price set forth in Section 1(a) hereof.
As used herein, the term "Total Profit" shall mean the aggregate
amount (before taxes) of the following: (i) the amount of cash received by the
Grantee with respect to the Termination Fee and pursuant to Section 1(c) hereof
and (ii) (x) the net cash amounts received by the Grantee from any sale of
Shares (or any other securities into which such Shares are converted or
exchanged) to any person unaffiliated with the Grantee within one year after the
Closing Date, less (y) the Grantee's purchase price for such Shares.
As used herein, the term "Notional Total Profit" with respect to any
number of Shares as to which the Grantee may propose to exercise the Option
shall be the Total Profit determined as of the date of the Stock Exercise Notice
assuming that the Option were exercised on such date for such number of Shares
and assuming that such Shares, together with all other Shares held by the
Grantee and its affiliates as of such date, were sold for cash at the closing
market price for the Common Stock as of the close of business on the preceding
trading day (less customary brokerage commissions).
-9-
<PAGE>
SECTION 21. Public Announcements. So long as this Agreement is in effect,
--------------------
the Grantor and the Grantee shall consult with each other before issuing any
press release or otherwise making any public statements with respect to this
Agreement and the transaction contemplated hereby and shall not issue, or permit
their affiliates to issue, any such press release or make any such public
statement before such consultation, except as may be required by law.
-10-
<PAGE>
IN WITNESS WHEREOF, the Grantor and the Grantee have caused this
Agreement to be executed as of the date first written above.
PINKERTON'S, INC.
By: /s/ Denis R. Brown
----------------------
Name: Denis R. Brown
Title: President and Chief Executive
Officer
SECURITAS AB
By: /s/ Thomas Berglund
-------------------
Name: Thomas Berglund
Title: President and Chief Executive
Officer
-11-
<PAGE>
EXHIBIT 99(c)(4)
EXECUTION COPY
EMPLOYMENT AGREEMENT
Employment Agreement (this "Agreement") dated as of February 19, 1999
between Denis R. Brown (the "Executive"), PINKERTON'S INC. and PINKERTON
MANAGEMENT CORPORATION (together the "Company"), and SECURITAS AB (the "Parent
Company").
WHEREAS, the Company and Parent Company desire to employ the Executive
as the Company's President and Chief Executive Officer, and the Executive
desires to accept such employment, for the term and upon the other conditions
set forth below;
WHEREAS, this Agreement shall be effective from and after the
occurrence of the Effective Date, as hereinafter defined in Section 2.4;
NOW, THEREFORE, in consideration of the agreements and covenants
contained herein, the Executive, Company and Parent Company agree as follows:
ARTICLE I.
EMPLOYMENT
Section 1.1. Position; Term; Responsibilities
--------------------------------
The Company shall employ the Executive as its President and Chief
Executive Officer for a term commencing on the Effective Date and ending on the
third anniversary of the Effective Date. The term during which the Executive is
to be employed by the Company under this Agreement is hereinafter referred to as
the "Employment Period." The Executive shall report directly to the Board of
Directors of the Company (the "Board") and to the President and Chief Executive
Officer of the Parent Company. The Executive shall have the responsibility and
authority for the formulation and execution of corporate policy and the
administration of corporate affairs and operations of the Company, and such
other responsibilities and authorities as are customarily exercisable by the
chief executive officer of a major corporation which is a non-public separate
operating entity of a public company. The Parent Company currently contemplates
that the Company will be maintained by the Parent Company as a separate
operating entity responsible for all operations in North America, South America,
Asia and worldwide investigations, subject to changes determined by the Parent
Company in the event of future acquisitions or sales of businesses. The
Executive shall also perform such other executive and administrative duties (not
inconsistent with the positions of president and chief executive officer) on
behalf of the Company, its subsidiaries and affiliates (collectively, the
"Company"), as may from time to
<PAGE>
time be authorized or directed by the President and Chief Executive Officer of
the Parent Company. The Executive shall also serve as a member of Group
Management of the Parent Company during the Employment Period, and the Parent
Company agrees to use its best efforts to cause the Executive to be elected to
serve as a member of the Board of Directors of the Parent Company during the
Employment Period. The Executive agrees to remain employed by the Company in all
such capacities for the Employment Period, subject to all of the covenants and
conditions hereinafter set forth.
Section 1.2. Duties. During the Employment Period, the Executive shall
------
perform faithfully the duties assigned to him hereunder to the best of his
abilities and devote his full and undivided business time and attention to the
transaction of the Company's businesses and to use his best efforts to perform
faithfully and efficiently the responsibilities assigned to him. To the extent
not substantially interfering with the performance of his responsibilities under
this Agreement and to the extent consistent with current Board policy on
February 1, 1999, the Executive may continue to devote time to civic,
professional and charitable activities and continue to serve on the board of
directors of other companies, and shall not engage in any other business
activities except with the prior written approval of the President and Chief
Executive Officer of the Parent Company.
ARTICLE II.
COMPENSATION
Section 2.1. Base Salary. As compensation for the Executive's
-----------
services hereunder, the Company shall pay to the Executive during the Employment
Period an annual salary of $705,495, subject to an agreed normal annual increase
in February, 1999, payable in installments in accordance with the Company's
normal payment schedule for its senior management. The Company shall conduct an
annual review of the Executive's performance and current Base Salary and, in its
discretion, may increase the Executive's annual base salary in any year during
the Employment Period. The Executive's annual salary in effect from time to
time under this Section 2.1 is hereinafter referred to as "Base Salary."
Section 2.2. Annual Incentive Compensation.
-----------------------------
(A) Formula for Determining. In addition to his Base Salary, the
-----------------------
Executive shall be eligible to receive as annual incentive compensation ("Annual
Incentive Compensation"), in respect of each fiscal year of the Company or
portion thereof included within the Employment Period, a cash bonus determined
as follows:
(i) 1999 - The Executive shall be eligible to receive Annual
Incentive Compensation determined in accordance with the
2
<PAGE>
1999 Annual Incentive Program set forth in Appendix A hereto (the "1999 Program.
(ii) Subsequent Fiscal Years - The President and Chief Executive
Officer of the Parent Company, after consultation with the Executive, shall
establish annually an Annual Incentive Compensation program (similar to the 1999
Program) which shall provide the Executive with a target annual bonus
opportunity percentage equal to 60% of his Base Salary and a maximum annual
bonus opportunity percentage equal to 200% of his target annual bonus. The
Executive shall be eligible to receive a pro-rated bonus determined under the
program for the fiscal year in which he terminates employment (based on the
number of days from the beginning of the fiscal year through the date of
termination, divided by 365), which shall be paid at the time such bonuses are
normally payable, based on actual results for the completed fiscal year. The
Executive shall be entitled to receive not less than his target Annual Incentive
Compensation for all fiscal years of the Company during the Employment Period
which end after a future Change in Control (as defined in Section 3.1(B)) of the
Company or the Parent Company.
(B) Time of Payment. The amount of Annual Incentive Compensation
---------------
earned hereunder shall be paid to the Executive as soon as reasonably
practicable following the delivery to the Board of audited financial statements
for the Company with respect to each completed fiscal year of the Company. The
Parent Company shall cause such statements to be prepared as soon as practicable
after the end of the Company's fiscal year, and in any event, the amount, if
any, required to be paid for any year under this Section 2.2 shall be determined
and paid not later than March 15 of the year next following the year for which
the bonus is paid.
Section 2.3. Long-Term Incentive Compensation.
--------------------------------
(A) Formula for Determining. In addition to his Base Salary and
-----------------------
Annual Incentive Compensation, the Executive shall be eligible to receive as
long-term incentive compensation ("Long-Term Incentive Compensation"), in
respect of the Company's fiscal years from 1999 through 2001, a long-term
incentive cash bonus determined in accordance with the Long-Term Incentive
Program set forth in Appendix B hereto. The Long-Term Incentive Program shall
provide the Executive with a target long-term incentive bonus for fiscal years
1999 through 2001 equal to $1,800,000 and a maximum long-term incentive bonus
for such fiscal years equal to 150% of his target amount. The Executive shall
be entitled to receive not less than his target Long-Term Incentive Compensation
for fiscal years 1999 through 2001 if there is a future Change in Control (as
defined in Section 3.1(B)) of the Company or Parent Company prior to December
31, 2001.
(B) Time of Payment. The amount of Long-Term Incentive Compensation
---------------
earned hereunder for fiscal years 1999
3
<PAGE>
through 2001 shall be paid to the Executive as soon as reasonably practicable
following delivery to the Board of audited financial statements for the
Company's fiscal year that ends in December, 2001. The Parent Company shall
cause such statements to be prepared as soon as practicable after the end of the
Company's fiscal year which ends in 2001 and in any event, the amount, if any,
required to be paid under Section 2.3 shall be determined and paid not later
than March 15, 2002.
Section 2.4. Supplemental Retirement Income Plan. The Executive's
-----------------------------------
Benefit under Section 4.1 of the Company's Supplemental Retirement Income Plan,
as amended, and related Appendices I and II, which were furnished to Parent
Company prior to January 23, 1999 (together, the "Retirement Plan"), commencing
upon the Executive's Normal Retirement Age in the Normal Benefit Form, shall be
fifty-two and one-half percent (52.5%) of his Final Average Monthly
Compensation, and such Benefit shall be fully accrued and 100% Vested, effective
upon the Effective Date (as defined below), notwithstanding any contrary
provision of the Retirement Plan or of the Appendices. The Final Average
Monthly Compensation which is used to calculate the Executive's Benefit shall in
no event be less than it would have been if the Executive had terminated
employment on the Effective Date (or not less than $77,233.51). The terms
"Benefit", "Final Average Monthly Compensation", Normal Benefit Form, Normal
Retirement Age and "Vested" shall have the meanings set forth in the Retirement
Plan. The "Effective Date" shall mean the time that the Purchaser or the Parent
purchases any of the Shares of the Company pursuant to the Offer, as such terms
are defined in the Agreement and Plan of Merger among Target (herein the
"Company"), Parent (herein the "Parent Company") and Purchaser (a wholly-owned
subsidiary of the Parent Company) dated as of the same date hereof (the "Merger
Agreement"). Except as provided in this Section 2.4, the Executive's Benefit
shall be calculated and paid in accordance with the terms and conditions of the
Retirement Plan. The Retirement Plan shall automatically be amended to reflect
the provisions of this Section 2.4, effective as of the Effective Date, without
further action of the Company or the Executive.
Section 2.5. Incapacity. If at any time during the Employment Period
----------
the Executive is unable to perform fully his duties hereunder by reasons of
illness, accident or other disability (as confirmed by competent medical
evidence acceptable to a licensed physician selected by the Company)
(hereinafter "incapacity"), during the first six months of such incapacity he
shall be entitled to receive Base Salary and shall continue to be considered as
actively employed for purposes of determining his eligibility for target Annual
and Long-Term Incentive Compensation determined in accordance with Sections 2.1,
2.2 and 2.3. If the Executive shall resume the full performance of his duties
hereunder following any period of incapacity, he shall thereafter be entitled to
receive Base Salary and Annual and Long-Term Incentive Compensation as provided
in Sections 2.1, 2.2
4
<PAGE>
and 2.3. Notwithstanding the foregoing provisions of this Section 2.5, the
amounts payable to the Executive under this Section 2.5 shall be reduced by any
amounts received by the Executive with respect to any such incapacity pursuant
to any insurance policy, plan or other employee benefit provided to the
Executive and paid for or reimbursed by the Company. During any period of
incapacity in which the Executive does not receive Base Salary and Annual
Incentive Compensation, the Company will make available to the Executive until
his 65th Birthday disability benefits payable to the Executive aggregating at
least $300,000 per annum, payable in installments substantially in accordance
with the Company's normal salary payment schedule for its senior management. The
amount of disability benefits payable to the Executive shall be satisfied under
the Company's group disability insurance policy or other individual disability
insurance, if necessary. The Company shall pay the premium on any such
individual disability insurance policy. Any termination of the Executive's
employment during the Employment Period as a result of the Executive's
incapacity which results in his qualification for benefits under the Company's
long-term disability program covering the Executive shall be a qualifying
termination of employment under Section 3.2, and the Executive shall be entitled
to receive the payments specified in Section 3.2, less any disability benefits
provided through Company-provided disability benefits.
Section 2.6. Other Employee Benefits. The Company shall pay
-----------------------
directly, or shall reimburse the Executive for, reasonable expenses up to a
maximum of $4,000 in any year in connection with (i) financial and estate
planning advice and (ii) the preparation of a federal and state income tax
returns. The Company shall also advance the initiation fee (unless heretofore
paid) and pay the annual dues and assessments during the Employment Period for
the Executive's membership in one country club and one luncheon club in the Los
Angles area. The Executive agrees to sell any such membership and to use the
proceeds of such sale (which shall be the only amount reimbursable to the
Company in respect of its advance) to reimburse the Company, as soon as
practicable following the termination of the Employment Period, if the rules of
the club permit the sale of a membership. The Executive may also retain any
such membership and repay the Company the amount of its initial advance for the
initiation fee within 12 months following the termination of the Employment
Period. The Executive shall also be entitled to participate in all employee
benefits plans and to receive all other fringe benefits that are from time to
time made generally available to senior management of the Company, including a
leased automobile (equivalent to his leased automobile as of the date of this
Agreement). The employee benefits made available to the Executive, other than
plans described in Section 2.2 and 2.3 and plans providing for benefits in the
form of, or investments in, Company stock ("Excluded Benefits"), in the
aggregate shall be at least comparable in value to the employee benefits (less
the Excluded Benefits) made
5
<PAGE>
available to the Executive immediately prior to the Effective Date.
In addition to the foregoing, the Company will continue to make
available to the Executive $3,000,000 of life insurance during the Employment
Period. The amount of life insurance coverage shall be satisfied by aggregating
the death benefits payable to the Executive's beneficiary under the Company's
group insurance policy and other individual life insurance. The Company agrees
to pay the annual premium on any such insurance policies up to a maximum of
$10,000 per year during the Employment Period. The Company also agrees to pay
the cost of annual physical exams for the Executive.
Section 2.7. Expense Reimbursements. The Company shall reimburse the
----------------------
Executive for all proper expenses incurred by him in the performance of his
duties hereunder in accordance with the policies and procedures established by
the Company.
ARTICLE III.
TERMINATION OF EMPLOYMENT
Section 3.1. Definition of Certain Terms. As used in this Agreement,
---------------------------
the following terms shall have the respective meanings set forth below:
(A) "Cause" means (1) a material breach by the Executive of those
duties and responsibilities of the Executive which do not differ in any material
respect from the duties and responsibilities of the Executive on the date of
this Agreement (other than as a result of incapacity due to physical or mental
illness) which is demonstrably willful and deliberate on the Executive's part,
which is committed in bad faith or without reasonable belief that such breach is
in the best interests of the Company and which is not remedied in a reasonable
period of time after receipt of written notice from the Company specifying such
breach or (2) the commission by the Executive of a crime involving moral
turpitude.
(B) "Change in Control" of the Company means (i) any sale or transfer
of stock of the Company after which the Parent Company will no longer own,
directly or indirectly, a majority of the combined voting power of outstanding
securities of the Company or (ii) any sale or transfer of a majority of the
assets of the Company, after which the Parent Company will no longer own,
directly or indirectly, a majority of the combined voting power or other voting
interests of the entity to which such assets are transferred. "Change in
Control" of the Parent Company means any acquisition by any individual, entity
or group of securities of the Parent Company which have a majority of the
combined voting power of outstanding securities of the Parent Company.
6
<PAGE>
(C) "Good Reason" means, without the Executive's express written
consent, the occurrence of any of the following events, unless cured by the
Company or the Parent Company within a reasonable period of time after receipt
of written notice from the Executive specifying such breach:
(1) any of (i) the assignment to the Executive of duties which are
materially inconsistent with the Executive's position(s), duties,
responsibilities or status with the Company and Parent Company as described in
Section 1.1, (ii) a material change in the Executive's reporting
responsibilities, titles or offices with the Company and Parent Company as
described in Section 1.1, or (iii) any removal or involuntary termination of the
Executive from the Company otherwise than as expressly permitted by this
Agreement or any failure to elect or re-elect the Executive to any position with
the Company if held by the Executive as of the Effective Date of this Agreement
or if specifically provided for in this Agreement or to use the Parent Company's
best efforts to elect or re-elect the Executive to the Parent Company's Board
of Directors, or to appoint the Executive as a member of the Group Management of
the Parent Company;
(2) a reduction by the Company in the Executive's Base Salary as in
effect on the Effective Date of this Agreement or as the same may be increased
from time to time thereafter;
(3) any requirement of the Company that the Executive (i) be based
anywhere other than at a facility in the same metropolitan area as the facility
where the Executive is located on the Effective Date of this Agreement or (ii)
travel on the Company business to an extent substantially more burdensome than
the level of obligations of the Executive as of the Effective Date of this
Agreement (taking into account the expanded international scope of the
Executive's responsibilities following the Effective Date of this Agreement); or
(4) the failure of the Company to provide the benefits agreed to be
provided under this Agreement.
(D) "Nonqualifying Termination" means a termination of the
Executive's employment (1) by the Company for Cause, (2) by the Executive for
any reason other than a Good Reason, or (3) as a result of the Executive's
death. Any Nonqualifying Termination shall become effective on (i) the date set
forth in a written notice from the Company or the Executive (with respect to
clauses (1) and (2) above) or (ii) the date of the Executive's death (with
respect to clause (3) above). Termination of the Executive's employment during
the Employment Period as result of the Executive's incapacity which results in
his qualification for benefits under the Company's long-term disability program
covering the Executive shall be a qualifying termination of employment under
Section 3.2.
7
<PAGE>
Section 3.2. Qualifying Termination During Employment Period. If
-----------------------------------------------
during the Employment Period the employment of the Executive shall terminate,
other than by reason of a Nonqualifying Termination, the Company shall pay to
the Executive (or the Executive's beneficiary or estate) within 30 days
following the date upon which the Executive's employment is terminated, as
compensation for services rendered to the Company:
(1) a cash amount equal to the sum of the Executive's Base Salary
earned through such date of termination, to the extent not theretofore paid, and
the Executive's Annual Incentive Compensation, to the extent not theretofore
paid, for fiscal years ending prior to the date of termination; and
(2) a lump-sum cash payment in an amount equal to the sum of the
Executive's (x) Base Salary plus target Annual Incentive Compensation for the
balance of the Employment Period (including the target Annual Incentive
Compensation for the entire fiscal year in which the Executive's employment is
terminated, but prorated as described in Section 2.2(A)(ii) with respect to
fiscal year 2002) plus (y) target Long-term Incentive Compensation for fiscal
years 1999 through 2001, each as in effect on such date of termination;
provided, however, that (A) if the Executive's employment is terminated by the
Executive for Good Reason during the Employment Period, the amount, if any,
payable with respect to Annual and Long-Term Incentive Compensation shall be
calculated on the basis of actual performance and paid as soon as practicable
after the Company's performance has been established, (B) if the Executive's
employment is terminated by the Company without Cause during the Employment
Period, the amount payable with respect to Annual and Long-Term Incentive
Compensation shall be based on target Annual Incentive Compensation for the
balance of the Employment Period (including the entire fiscal year in which the
Executive's employment is terminated, but prorated as described in Section
2.2(A)(ii) with respect to fiscal year 2002) and target Long-Term Incentive
Compensation for fiscal years 1999 through 2001, each as in effect on the date
of termination, such amount to be paid in a cash lump sum within 30 days of the
date of termination, and (C) any amount paid pursuant to this Section shall be
paid in lieu of all other severance, salary or bonus continuation, and Annual or
Long-Term Incentive Compensation to be received by the Executive upon
termination of employment of the Executive under any plan, policy or arrangement
of the Company. In addition, the Executive shall be entitled to receive his
fully accrued and 100% Vested Benefit commencing on the date determined under
the Retirement Plan, as provided in Section 2.4, and shall be entitled to
receive other employee benefits, as provided in Section 2.6, for the balance of
the Employment Period.
Section 3.3. Nonqualifying Termination During Employment Period. If
--------------------------------------------------
the Executive's employment is terminated during the Employment Period due to a
Nonqualifying Termination, the Executive shall be entitled to receive his Base
Salary earned
8
<PAGE>
through the date of termination, any Annual Incentive Compensation earned for
the fiscal year preceding the date of termination, to the extent not theretofore
paid, and a pro-rata portion of the Executive's Annual Incentive Compensation
for the fiscal year in which the Executive's employment is terminated, based on
the number of days from the beginning of the fiscal year through the date of
termination, divided by 365, based on the extent to which annual incentive
targets are met, such amount, if any, to be determined and paid not later than
March 15 of the year next following the year for which the Annual Incentive
Compensation was earned, as well as his fully accrued and 100% Vested Benefit
under the Retirement Plan, as provided in Section 2.4.
Section 3.4. Release. All payments due under this Agreement upon
-------
termination of employment shall be subject to execution of a release in the form
of Exhibit A annexed.
ARTICLE IV.
QUALIFYING TERMINATION OF EMPLOYMENT WITHIN 24 MONTHS
FOLLOWING EFFECTIVE DATE
Section 4.1. Termination Within 24 Months Following Effective Date.
-----------------------------------------------------
If, within 24 months following the Effective Date, either (A) the Company or
Parent Company gives a notice of termination of the Executive's employment
without Cause, (B) the employment of the Executive is terminated by the
Executive, other than by (i) a Nonqualifying Termination or (ii) a Termination
----- ----
for Good Reason pursuant to Section 3.1(C)(1)(i) or (ii), after the Company or
the Parent Company has offered to assign the Executive other responsibilities
and to appoint or otherwise permit the Executive to continue his service on the
Board of Directors of the Parent Company (subject to continued election by
shareholders), in each case for the balance of the Employment Period, or (C) the
Company or Parent Company takes any action which would constitute Good Reason,
but the Executive declines to terminate his employment and continues to perform
the services which are assigned to him, and if any payments or benefits which
are payable to the Executive are deemed because of such action by the Company or
Parent Company to constitute "parachute payments" (as defined below), then in
any such event the Company shall pay to the Executive, in addition to amounts
payable under any other provision of this Agreement, the following additional
amounts:
(A) Gross-Up Payments for Excise Taxes. In the event that the
----------------------------------
payments or benefits provided for in this Agreement or otherwise payable to the
Executive (either before or after the date of this Agreement) constitute
"parachute payments" within the meaning of Section 280G of the Internal Revenue
Code of 1986, as amended (the "Code") (or comparable provisions of applicable
state laws) and will be subject to the excise tax imposed by Section 4999 of the
Code (or comparable provisions of applicable state laws), then the Company shall
pay to the Executive or to relevant tax authorities (i) an amount sufficient to
satisfy such
9
<PAGE>
excise tax, and (ii) an additional amount sufficient to pay the excise tax and
all taxes (including, but not limited to, federal and state income and
employment taxes) arising from the payments made by the Company to the Executive
or to relevant tax authorities pursuant to this sentence (collectively, the
"Gross-Up Payments"). All determinations of the Executive's excise tax liability
shall be made in writing by PricewaterhouseCoopers LLP (the "Accountants"). For
purposes of making the calculations required by this Section, the Accountants
may make reasonable assumptions and approximations concerning applicable taxes
and may rely on reasonable, good faith interpretations concerning the
application of Sections 280G and 4999 of the Code (or comparable provisions of
applicable state laws). The Company and the Executive shall furnish to the
Accountants such information and documents as the Accountants may reasonably
request in order to make a determination under this Section. The Company shall
bear all fees and costs the Accountants may reasonably charge or incur in
connection with any calculations contemplated by this Section. The Company
further agrees that, if at any time any tax authority determines that a greater
excise tax liability is due than the amount which is determined by the
Accountants, the Executive shall receive a further payment from the Company, or
the Company shall pay to the relevant tax authorities, an additional amount
sufficient to pay such additional excise tax liability and all taxes (including,
but not limited to, federal and state income and employment taxes) arising from
such further payment. The Executive further agrees that if at any time it is
determined, by IRS ruling or otherwise, that, with regard to tax liabilities
described in this paragraph, less or no tax is due, then the Executive agrees to
cooperate fully with the Company and the Accountants to apply for a refund or to
claim a credit against his other tax liability for any such taxes which were
previously paid and to promptly pay to the Company any such refunds which he
receives or any such credits which he actually utilizes to reduce his other tax
liabilities (net of any additional taxes which are payable by him on account of
receipt of such refund or claim of such credit); and to repay to the Company any
Gross-Up Payments which he received to cover any such taxes which have not yet
been paid (net of any adverse tax effect upon the Executive on account of
receipt of the Gross-Up Payments in one calendar year and refund of such amounts
in a subsequent calendar year); provided that the Company shall hold the
Executive harmless against all costs and expenses incurred in obtaining such
refund or in confirming the right to claim such credit.
ARTICLE V.
INCOMPATIBLE ACTIVITIES, CONFIDENTIAL INFORMATION
Section 5.1. Incompatible Activities. During the Employment Period
-----------------------
and for a period of one year thereafter, the Executive:
10
<PAGE>
(A) shall not engage in any activities, whether as employer,
proprietor, partner, stockholder (other than the holder of less than 5% of the
stock of a corporation the securities of which are traded on a national
securities exchange or the NASDAQ National Market System), director, officer,
employee or otherwise, in competition with (1) the businesses conducted at the
date hereof by the Company or Parent Company or (2) any business in which the
Company or Parent Company is substantially engaged at any time during the
Employment Period;
(B) shall not solicit, directly or indirectly, either alone or
through any person with whom the Executive is affiliated, in competition with
the Company or Parent Company, any person who is a customer of the businesses
conducted by the Company or Parent Company at the date hereof or of any business
in which the Company or Parent Company is substantially engaged at any time
during the Employment Period; and
(C) shall not, directly or indirectly, either alone or through any
person with whom the Executive is affiliated, induce or attempt to persuade any
employee of the Company or Parent Company to terminate his or her employment
relationship in order to enter into competitive employment, or hire any such
person within six months of his termination of employment from the Company.
Section 5.2. Trade Secrets. The Executive shall not, at any time
-------------
during the Employment Period or thereafter, make use of or divulge any trade
secrets or other confidential information of the Company or Parent Company,
except to the extent that such information becomes a matter of public record, is
published in a newspaper, magazine or other periodical available to the general
public, in each case, without unauthorized disclosure by the Executive, or as
the Company may so authorize in writing; and when the Executive shall cease to
be employed by the Company, the Executive shall surrender to the Company all
records and other documents obtained by him or entrusted to him during the
course of his employment hereunder (together with all copies thereof) which
pertain specifically to any of the businesses covered by the covenants in
Section 5.1 or which were paid for by the Company.
Section 5.3. Scope of Covenants; Remedies. The following provisions
----------------------------
shall apply to the covenants of the Executive contained in Sections 5.1 and 5.2;
(A) the covenants contained in Section 5.1 shall apply within all the
territories in which the Company is actively engaged in the conduct of business
during the Employment Period, including, without limitation, the territories in
which customers are then being solicited;
(B) the Executive confirms and acknowledges that (i) he was
represented by counsel of his own choosing during the
11
<PAGE>
negotiation of the limitations set forth in this Article V, (ii) his strict
adherence to the limitations imposed upon him was a material factor in Parent
Company's entering into the Merger Agreement and consummating the transactions
contemplated thereby, and agreeing to pay the Executive the cash and other
compensation called for in this Agreement, (iii) the Company's ability to
maintain continuing relationships with its employees without disruption was a
material factor in Parent Company's entering into the Merger Agreement and
agreeing to consummate the transactions contemplated thereby, (iv) his failure
to adhere to the obligations imposed by this Article V will expose Parent
Company to substantial and irreparable harm. Accordingly, the Executive agrees
that the remedy at law for any breach by him of the covenants and agreements set
forth in this Article V may be inadequate and that in the event of any such
breach, the Company may, in addition to the other remedies that may be available
to it at law, seek injunctive relief prohibiting him (together with all those
persons associated with him) from breach of such covenants and agreements;
(C) each party intends and agrees that if in any action before any
court or agency legally empowered to enforce the covenants contained in Sections
5.1 and 5.2 any term, restriction, covenant or promise contained therein is
found to be unreasonable and accordingly unenforceable, then such term,
restriction, covenant or promise shall be deemed modified to the extent
necessary to make it enforceable by such court or agency; and
(D) the covenants contained in Sections 5.1 and 5.2 shall survive the
conclusion of the Executive's employment by the Company.
ARTICLE VI.
MISCELLANEOUS
Section 6.1. Agreement to Defend and Indemnify; Officers and
-----------------------------------------------
Directors Liability Insurance. The Company shall indemnify, hold harmless and
- -----------------------------
defend the Executive, and shall maintain officers and directors liability
insurance covering the Executive, subject to the provisions and for the period
specified in Section 6.8 of the Merger Agreement (as defined in Section 2.4
hereof). This section 6.1 shall survive the end of the Employment Period and
shall remain in effect for the period specified in Section 6.8 of the Merger
Agreement.
Section 6.2. Services as Officer or Director. Promptly following the
-------------------------------
commencement of, and at all times during, the Employment Period, the Executive
shall be entitled to be nominated for election as a director of the Company. If
elected or appointed, the Executive shall serve as a director of the Company and
as an officer and/or director of all current and future subsidiaries and
affiliates of the Company without any additional compensation for such services.
12
<PAGE>
Section 6.3. Key-Person Insurance. The Executive shall aid the
--------------------
Company in procuring any life, health, accident, disability or other insurance
which the Company should at any time apply for in its own name and at its own
expense to insure the Company's obligations hereunder, by submitting to the
usual and customary medical examinations and by completing, executing and
delivering such applications and other instruments in writing as may be
reasonably required by any insurance company or companies.
Section 6.4. Notices. Any notice or request required or permitted to
-------
be given hereunder shall be in writing and shall be made by hand delivery,
first-class mail (registered or certified, return receipt requested), telecopier
or overnight courier guaranteeing next business day delivery to the relevant
address set forth in the signature blocks below or to any other address
designated by either party by notice similarly given. Each such notice shall be
deemed to have been given, at the time delivered, if personally delivered or
mailed (with sufficient postage prepaid); when receipt is acknowledged, if
telecopied; and the next business day after timely delivery to the courier, if
sent by overnight air courier guaranteeing next business day delivery.
Section 6.5. Assignment and Succession. The rights and obligations
-------------------------
of the Company and Parent Company under this Agreement shall inure to the
benefit of and be binding upon their successors and assigns, and the Executive's
rights and obligations hereunder shall inure to the benefit of and be binding
upon his estate, legal representatives and guardians.
Section 6.6. Headings. The Article, Section, paragraph and
--------
subparagraph headings are for convenience of reference only and shall not define
or limit the provisions hereof.
Section 6.7. Joint Employment; Guaranty by Parent Company.
--------------------------------------------
Pinkerton's Inc. ("Pinkerton") has a wholly owned subsidiary, Pinkerton
Management Corporation (f.k.a. District Security) ("PMC") for the purpose of
employing all of the employees located at Pinkerton world headquarters, and the
Executive shall be jointly employed by Pinkerton and PMC under the terms and
conditions set forth in this Agreement. Pinkerton and PMC shall be jointly and
severally liable for satisfying any obligation that Company may have under this
Agreement. Parent Company irrevocably, absolutely and unconditionally
guarantees to the Executive the full and timely performance of the Company's
financial obligations pursuant to this Agreement. This guaranty is a payment
guaranty and not a guaranty of collection. Parent Company waives any right to
require the Executive to file suit and proceed against the Company.
13
<PAGE>
Section 6.8. Payment of Professional Fees. The Company shall pay the
----------------------------
professional fees incurred by the Executive in connection with entering into
this Agreement.
Section 6.9. Entire Agreement. This Agreement shall be effective
----------------
from and after the Effective Date and sets forth the entire and final agreement
and understanding of the Company, the Parent Company and the Executive and
contains all of the agreements made between them with respect to the subject
matter hereof. As of the Effective Date, this Agreement supersedes any and all
other agreements, either oral or in writing, between the Company and the
Executive with respect to the Executive's provision of services to the Company
and his termination of employment therefrom. No change or modification of this
Agreement shall be valid unless in writing and signed by the Company, the Parent
Company and the Executive. Until this Agreement becomes effective on the
Effective Date, the current employment agreement and arrangements which are in
effect between the Company and the Executive shall remain in full force and
effect.
Section 6.10. Applicable Law and Venue. This Agreement shall at all
------------------------
times be governed by and construed, interpreted and enforced in accordance with
the laws of the State of California without giving effect to its choice of law
rules. The parties agree that the courts of the State of California shall have
jurisdiction over all disputes which arise under this Agreement or otherwise
relate to the employment or termination of employment of the Executive by the
Company and Parent Company. The parties further agree that the courts chosen
for resolution of all such disputes shall be located in Los Angeles County,
California.
Section 6.11. Counterparts. This Agreement may be executed in one or
------------
more counterparts, each of which will be deemed to be an original copy of this
Agreement and all of which, when taken together, will be deemed to constitute
one and the same agreement.
Section 6.12. Waiver of Breach. A waiver by the Company or the
----------------
Parent Company of a breach of any provision of this Agreement by the Executive
shall not operate or be construed as a waiver of any subsequent breach by the
Executive. No waiver shall be valid unless it is in writing and signed by an
authorized officer of each of the Company (other than the Executive) and the
Parent Company.
Section 6.13. Assignment. The Executive acknowledges that the
----------
services he is to render are unique and personal. Accordingly, the Executive
may not assign any of his rights or delegate any of his duties or obligations
under this Agreement. The rights and obligations of the Company under this
Agreement shall inure to the benefit of and shall be binding upon the successors
and assigns of the Company.
14
<PAGE>
Section 6.14. Tax Withholding. All payments under this Agreement
---------------
shall be subject to such deductions or withholdings for all taxes and other
purposes as shall at the time of such payment be required by applicable law.
IN WITNESS WHEREOF, the Company and Parent Company have caused this
Agreement to be signed by their duly authorized officers, and the Executive has
signed this Agreement as of the day and year first above written.
<TABLE>
<CAPTION>
<S> <C>
COMPANY: PINKERTON'S, INC.
World Support Center
4330 Park Terrace Drive
Westlake Village, CA 91361
BY: /s/ C. Michael Carter
-----------------------------
PINKERTON MANAGEMENT CORPORATION
World Support Center
4330 Park Terrace Drive
Westlake Village, CA 91361
BY: /s/ C. Michael Carter
------------------------------
PARENT COMPANY: SECURITAS AB
Box 12307
5-102 28
Stockholm, Sweden
BY: /s/ Thomas Berglund
------------------------------
EXECUTIVE: Denis R. Brown
5857 De Butts Terrace
Malibu, CA 90265
BY: /s/ Denis R. Brown
------------------------------
</TABLE>
15
<PAGE>
EXHIBIT A
SEPARATION AND RELEASE AGREEMENT
This Separation and Release Agreement ("Agreement") is entered into as of
this ___ day of ___________, between [Company] and any successor thereto
(collectively, the "Company") and [Executive] (the "Executive").
The Executive and the Company agree as follows:
1. The employment relationship between the Executive and the Company
terminated on ____________ (the "Termination Date").
2. In accordance with the Employment Agreement between the Company and
Executive dated as of February 19, 1999, as amended (the "Employment
Agreement"), the Company has agreed to pay the Executive certain payments and to
make certain benefits available after the Termination Date, which are listed on
Schedule A annexed hereto.
3. The Company agrees to continue to be bound by Article IV and Sections 6.1
and 6.7 of the Employment Agreement.
4. In consideration of the above, the sufficiency of which the Executive
hereby acknowledges, the Executive, on behalf of the Executive and the
Executive's heirs, executors and assigns, hereby releases and forever discharges
the Company and its, parents, affiliates, subsidiaries, divisions, any and all
current and former directors, officers, employees, agents, and contractors and
their heirs and assigns, and any and all employee pension benefit or welfare
benefit plans of the Company, including current and former trustees and
administrators of such employee pension benefit and welfare benefit plans, from
all claims, charges, or demands, in law or in equity, whether known or unknown,
which may have existed or which may now exist from the beginning of time to the
date of this Agreement, including, without limitation, any claims the Executive
may have arising from or relating to the Executive's employment or termination
from employment with the Company, including a release of any rights or claims
the Executive may have under Title VII of the Civil Rights Act of 1964, as
amended, and the Civil Rights Act of 1991 (which prohibit discrimination in
employment based upon race, color, sex, religion, and national origin); the
Americans with Disabilities Act of 1990, as amended, and the Rehabilitation Act
of 1973 (which prohibit discrimination based upon disability); the Family and
Medical Leave Act of 1993 (which prohibits discrimination based on requesting or
taking a family or medical leave); Section 1981 of the Civil Rights Act of 1866
(which prohibits conspiracies to discriminate); the Employee Retirement Income
Security Act of 1974, as amended (which prohibits discrimination with regard to
benefits); any other federal, state, or local laws against discrimination; or
any other federal, state or local statute, or common law relating to employment,
wages, hours, or any other terms and conditions of
<PAGE>
employment. This includes a release by the Executive of any claims for wrongful
discharge, breach of contract, torts or any other claims in any way related to
the Executive's employment with or resignation or termination from the Company.
This release also includes a release of any claims for age discrimination under
the Age Discrimination in Employment Act of 1967, as amended ("ADEA"). The ADEA
requires that the Executive be advised to consult with an attorney before the
Executive waives any claim under ADEA. In addition, the ADEA provides the
Executive with at least 21 days to decide whether to waive claims under ADEA and
seven days after the Executive signs the Agreement to revoke that waiver. This
release does not release the Company from any obligations due to the Executive
under the Company's Supplemental Retirement Income Plan, as amended by the
Employment Agreement, or under this Agreement.
5. This Agreement is not an admission by either the Executive or the Company
of any wrongdoing or liability.
6. The Executive waives any right to reinstatement or future employment with
the Company following the Executive's separation from the Company on the
Termination Date.
7. The Executive agrees not to engage in any act after execution of the
Separation and Release Agreement that is intended, or may reasonably be expected
to harm the reputation, business, prospects or operations of the Company, its
officers, directors, stockholders or employees, provided this paragraph shall
not extend the limitation on "incompatible activities" which is contained in
Section 5.1 of the Employment Agreement. The Company further agrees that it
will engage in no act which is intended, or may reasonably be expected to harm
the reputation, business or prospects of the Executive. This paragraph shall
not prohibit either party from cooperating with government agencies.
8. The Executive shall continue to be bound by Article V of the Employment
Agreement.
9. The Executive shall promptly return all the Company property in the
Executive's possession, including, but not limited to, the Company keys, credit
cards, cellular phones, computer equipment, software and peripherals and
originals or copies of books, records or other information pertaining to the
Company business.
10. This Agreement shall be governed by and construed in accordance with the
laws of the State of California, without reference to the principles of conflict
of laws. The jurisdiction and venue for any disputes arising under this
Agreement shall be governed by Section 6.10 of the Employment Agreement.
11. This Agreement represents the complete agreement between the Executive
and the Company concerning the subject
-2-
<PAGE>
matter in this Agreement and supersedes all prior agreements or understandings,
written or oral. This Agreement may not be amended or modified otherwise than by
a written agreement executed by the parties hereto or their respective
successors and legal representatives.
12. Each of the sections contained in this Agreement shall be enforceable
independently of every other section in this Agreement, and the invalidity or
nonenforceability of any section shall not invalidate or render unenforceable
any other section contained in this Agreement.
13. It is further understood that for a period of 7 days following the
execution of this Agreement in duplicate originals, the Executive may revoke
this Agreement, and this Agreement shall not become effective or enforceable
until the revocation period has expired. No revocation of this Agreement by the
Executive shall be effective unless the Company has received within the 7-day
revocation period, written notice of any revocation, all moneys received by the
Executive under this Agreement and all originals and copies of this Agreement.
14. This Agreement has been entered into voluntarily and not as a result of
coercion, duress, or undue influence. The Executive acknowledges that the
Executive has read and fully understands the terms of this Agreement and has
been advised to consult with an attorney before executing this Agreement.
Additionally, the Executive acknowledges that the Executive has been afforded
the opportunity of at least 21 days to consider this Agreement.
The parties to this Agreement have executed this Agreement as of the day
and year first written above.
[Company]
By:___________________________________
Name:
Title:
______________________________________
[Executive]
-3-
<PAGE>
EXHIBIT 99(c)(5)
EXECUTION COPY
EMPLOYMENT AGREEMENT
Employment Agreement (this "Agreement") dated as of February 19, 1999
between C. Michael Carter (the "Executive"), PINKERTON'S INC. and PINKERTON
MANAGEMENT CORPORATION (together the "Company"), and SECURITAS AB (the "Parent
Company").
WHEREAS, the Company and Parent Company desire to employ the Executive
as the Company's Executive Vice President, and the Executive desires to accept
such employment, for the term and upon the other conditions set forth below;
WHEREAS, this Agreement shall be effective from and after the
occurrence of the Effective Date, as hereinafter defined in Section 2.4;
NOW, THEREFORE, in consideration of the agreements and covenants
contained herein, the Executive, Company and Parent Company agree as follows:
ARTICLE I.
EMPLOYMENT
Section 1.1. Position; Term; Responsibilities
--------------------------------
The Company shall employ the Executive as its Executive Vice President
for a term commencing on the Effective Date and ending on the third anniversary
of the Effective Date. The term during which the Executive is to be employed by
the Company under this Agreement is hereinafter referred to as the "Employment
Period." The Executive shall report directly to the President and Chief
Executive Officer of the Company. The Parent Company currently contemplates
that the Company will be maintained by the Parent Company as a separate
operating entity responsible for all operations in North America, South America,
Asia and worldwide investigations, subject to changes determined by the Parent
Company in the event of future acquisitions or sales of businesses. The
Executive shall continue to have the principal responsibilities and authorities
in effect on the date of this Agreement (after giving effect to the change in
the Company's status from a public company to a non-public separate operating
entity of a public company), and shall also perform such other executive and
administrative duties on behalf of the Company, its subsidiaries and affiliates
(collectively, the "Company"), as may from time to time be authorized or
directed by the President and Chief Executive Officer of the Company. The
Executive agrees to remain employed by the Company in all such capacities for
the Employment Period, subject to all of the covenants and conditions
hereinafter set forth.
<PAGE>
Section 1.2. Duties. During the Employment Period, the Executive shall
------
perform faithfully the duties assigned to him hereunder to the best of his
abilities and devote his full and undivided business time and attention to the
transaction of the Company's businesses and to use his best efforts to perform
faithfully and efficiently the responsibilities assigned to him. To the extent
not substantially interfering with the performance of his responsibilities under
this Agreement and to the extent consistent with current Board policy on
February 1, 1999, the Executive may continue to devote time to civic,
professional and charitable activities and continue to serve on the board of
directors of other companies, and shall not engage in any other business
activities except with the prior written approval of the President and Chief
Executive Officer of the Parent Company.
ARTICLE II.
COMPENSATION
Section 2.1. Base Salary. As compensation for the Executive's
-----------
services hereunder, the Company shall pay to the Executive during the Employment
Period an annual salary of $351,797, payable in installments in accordance with
the Company's normal payment schedule for its senior management. The Company
shall conduct an annual review of the Executive's performance and current Base
Salary and, in its discretion, may increase the Executive's annual base salary
in any year during the Employment Period. The Executive's annual salary in
effect from time to time under this Section 2.1 is hereinafter referred to as
"Base Salary."
Section 2.2. Annual Incentive Compensation.
-----------------------------
(A) Formula for Determining. In addition to his Base Salary, the
-----------------------
Executive shall be eligible to receive as annual incentive compensation ("Annual
Incentive Compensation"), in respect of each fiscal year of the Company or
portion thereof included within the Employment Period, a cash bonus determined
as follows:
(i) 1999 - The Executive shall be eligible to receive Annual
Incentive Compensation determined in accordance with the 1999 Annual Incentive
Program set forth in Appendix A hereto (the "1999 Program").
(ii) Subsequent Fiscal Years - The President and Chief Executive
Officer of the Parent Company, after consultation with the Chief Executive
Officer of the Company, shall establish annually an Annual Incentive
Compensation program (similar to the 1999 Program) which shall provide the
Executive with a target annual bonus opportunity percentage equal to 45% of his
Base Salary and a maximum annual bonus opportunity percentage equal to 200% of
his target annual bonus. The Executive shall be eligible to receive a pro-rated
bonus determined under the program for the fiscal year in which he terminates
employment (based on the
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<PAGE>
number of days from the beginning of the fiscal year through the date of
termination, divided by 365), which shall be paid at the time such bonuses are
normally payable, based on actual results for the completed fiscal year. The
Executive shall be entitled to receive not less than his target Annual Incentive
Compensation for all fiscal years of the Company during the Employment Period
which end after a future Change in Control (as defined in Section 3.1(B)) of the
Company or the Parent Company.
(B) Time of Payment. The amount of Annual Incentive Compensation
---------------
earned hereunder shall be paid to the Executive as soon as reasonably
practicable following the delivery to the Board of audited financial statements
for the Company with respect to each completed fiscal year of the Company. The
Parent Company shall cause such statements to be prepared as soon as practicable
after the end of the Company's fiscal year, and in any event, the amount, if
any, required to be paid for any year under this Section 2.2 shall be determined
and paid not later than March 15 of the year next following the year for which
the bonus is paid.
Section 2.3. Long-Term Incentive Compensation.
--------------------------------
(A) Formula for Determining. In addition to his Base Salary and
-----------------------
Annual Incentive Compensation, the Executive shall be eligible to receive as
long-term incentive compensation ("Long-Term Incentive Compensation"), in
respect of the Company's fiscal years from 1999 through 2001, a long-term
incentive cash bonus determined in accordance with the Long-Term Incentive
Program set forth in Appendix B hereto. The Long-Term Incentive Program shall
provide the Executive with a target long-term incentive bonus for fiscal years
1999 through 2001 equal to $792,000 and a maximum long-term incentive bonus for
such fiscal years equal to 150% of his target amount. The Executive shall be
entitled to receive not less than his target Long-Term Incentive Compensation
for fiscal years 1999 through 2001 if there is a future Change in Control (as
defined in Section 3.1(B)) of the Company or Parent Company prior to December
31, 2001.
(B) Time of Payment. The amount of Long-Term Incentive Compensation
---------------
earned hereunder for fiscal years 1999 through 2001 shall be paid to the
Executive as soon as reasonably practicable following delivery to the Board of
audited financial statements for the Company's fiscal year that ends in
December, 2001. The Parent Company shall cause such statements to be prepared
as soon as practicable after the end of the Company's fiscal year which ends in
2001 and in any event, the amount, if any, required to be paid under Section 2.3
shall be determined and paid not later than March 15, 2002.
Section 2.4. Supplemental Retirement Income Plan. The Executive's
-----------------------------------
Benefit under Section 4.1 of the Company's Supplemental Retirement Income Plan,
as amended, and related Appendices I and II, which were furnished to Parent
Company prior
3
<PAGE>
to January 23, 1999 (together, the "Retirement Plan"), commencing upon the
Executive's Normal Retirement Age in the Normal Benefit Form, shall be fifty-two
and one-half percent (52.5%) of his Final Average Monthly Compensation, and such
Benefit shall be fully accrued and 100% Vested, effective upon the Effective
Date (as defined below), notwithstanding any contrary provision of the
Retirement Plan or of the Appendices. The Final Average Monthly Compensation
which is used to calculate the Executive's Benefit shall in no event be less
than it would have been if the Executive had terminated employment on the
Effective Date (or not less than $35,077.13). The terms "Benefit", "Final
Average Monthly Compensation", Normal Benefit Form, Normal Retirement Age and
"Vested" shall have the meanings set forth in the Retirement Plan. The
"Effective Date" shall mean the time that the Purchaser or the Parent purchases
any of the Shares of the Company pursuant to the Offer, as such terms are
defined in the Agreement and Plan of Merger among Target (herein the "Company"),
Parent (herein the "Parent Company") and Purchaser (a wholly-owned subsidiary of
the Parent Company) dated as of the same date hereof (the "Merger Agreement").
Except as provided in this Section 2.4, the Executive's Benefit shall be
calculated and paid in accordance with the terms and conditions of the
Retirement Plan. The Retirement Plan shall automatically be amended to reflect
the provisions of this Section 2.4, effective as of the Effective Date, without
further action of the Company or the Executive.
Section 2.5. Incapacity. If at any time during the Employment Period
----------
the Executive is unable to perform fully his duties hereunder by reasons of
illness, accident or other disability (as confirmed by competent medical
evidence acceptable to a licensed physician selected by the Company)
(hereinafter "incapacity"), during the first six months of such incapacity he
shall be entitled to receive Base Salary and shall continue to be considered as
actively employed for purposes of determining his eligibility for target Annual
and Long-Term Incentive Compensation determined in accordance with Sections 2.1,
2.2 and 2.3. If the Executive shall resume the full performance of his duties
hereunder following any period of incapacity, he shall thereafter be entitled to
receive Base Salary and Annual and Long-Term Incentive Compensation as provided
in Sections 2.1, 2.2 and 2.3. Notwithstanding the foregoing provisions of this
Section 2.5, the amounts payable to the Executive under this Section 2.5 shall
be reduced by any amounts received by the Executive with respect to any such
incapacity pursuant to any insurance policy, plan or other employee benefit
provided to the Executive and paid for or reimbursed by the Company. During any
period of incapacity in which the Executive does not receive Base Salary and
Annual Incentive Compensation, the Company will make available to the Executive
until his 65th Birthday disability benefits payable to the Executive aggregating
at least $200,000 per annum, subject to the Company's ability to obtain long-
term disability insurance for the Executive at a standard (i.e., non-rated)
---
premium charge. The Company shall pay the premium on any
4
<PAGE>
such individual disability insurance policy. Any termination of the Executive's
employment during the Employment Period as a result of the Executive's
incapacity which results in his qualification for benefits under the Company's
long-term disability program covering the Executive shall be a qualifying
termination of employment under Section 3.2, and the Executive shall be entitled
to receive the payments specified in Section 3.2, less any disability benefits
provided through Company-provided disability benefits.
Section 2.6. Other Employee Benefits. The Executive shall be
-----------------------
entitled to participate in all employee benefits plans and to receive all fringe
benefits that are from time to time made generally available to senior
management of the Company, including a leased automobile (equivalent to his
leased automobile as of the date of this Agreement). The employee benefits made
available to the Executive, other than plans described in Section 2.2 and 2.3
and plans providing for benefits in the form of, or investments in, Company
stock ("Excluded Benefits"), in the aggregate shall be at least comparable in
value to the employee benefits (less the Excluded Benefits) made available to
the Executive immediately prior to the Effective Date.
In addition to the foregoing, the Company will continue to make
available to the Executive $1,500,000 of life insurance during the Employment
Period. The amount of life insurance coverage shall be satisfied by aggregating
the death benefits payable to the Executive's beneficiary under the Company's
group insurance policy and other individual life insurance. The Company agrees
to pay the annual premium on any such insurance policies up to a maximum of
$5,000 per year during the Employment Period. The Company also agrees to pay
the cost of annual physical exams for the Executive.
Section 2.7. Expense Reimbursements. The Company shall reimburse the
----------------------
Executive for all proper expenses incurred by him in the performance of his
duties hereunder in accordance with the policies and procedures established by
the Company.
ARTICLE III.
TERMINATION OF EMPLOYMENT
Section 3.1. Definition of Certain Terms. As used in this Agreement,
---------------------------
the following terms shall have the respective meanings set forth below:
(A) "Cause" means (1) a material breach by the Executive of those
duties and responsibilities of the Executive which do not differ in any material
respect from the duties and responsibilities of the Executive on the date of
this Agreement (other than as a result of incapacity due to physical or mental
illness) which is demonstrably willful and deliberate on the Executive's part,
which is committed in bad faith or without
5
<PAGE>
reasonable belief that such breach is in the best interests of the Company and
which is not remedied in a reasonable period of time after receipt of written
notice from the Company specifying such breach or (2) the commission by the
Executive of a crime involving moral turpitude.
(B) "Change in Control" of the Company means (i) any sale or transfer
of stock of the Company after which the Parent Company will no longer own,
directly or indirectly, a majority of the combined voting power of outstanding
securities of the Company or (ii) any sale or transfer of a majority of the
assets of the Company, after which the Parent Company will no longer own,
directly or indirectly, a majority of the combined voting power or other voting
interests of the entity to which such assets are transferred. "Change in
Control" of the Parent Company means any acquisition by any individual, entity
or group of securities of the Parent Company which have a majority of the
combined voting power of outstanding securities of the Parent Company.
(C) "Good Reason" means, without the Executive's express written
consent, the occurrence of any of the following events, unless cured by the
Company or the Parent Company within a reasonable period of time after receipt
of written notice from the Executive specifying such breach:
(1) any of (i) the assignment to the Executive of duties which are
materially inconsistent with the Executive's position(s), duties,
responsibilities or status with the Company and Parent Company as described in
Section 1.1, (ii) a material change in the Executive's reporting
responsibilities, titles or offices with the Company and Parent Company as
described in Section 1.1, or (iii) any removal or involuntary termination of the
Executive from the Company otherwise than as expressly permitted by this
Agreement;
(2) a reduction by the Company in the Executive's Base Salary as in
effect on the Effective Date of this Agreement or as the same may be increased
from time to time thereafter;
(3) any requirement of the Company that the Executive (i) be based
anywhere other than at a facility in the same metropolitan area as the facility
where the Executive is located on the Effective Date of this Agreement or (ii)
travel on the Company business to an extent substantially more burdensome than
the level of obligations of the Executive as of the Effective Date of this
Agreement (taking into account the expanded international scope of the
Executive's responsibilities following the Effective Date of this Agreement); or
(4) the failure of the Company to provide the benefits agreed to be
provided under this Agreement.
6
<PAGE>
(D) "Nonqualifying Termination" means a termination of the
Executive's employment (1) by the Company for Cause, (2) by the Executive for
any reason other than a Good Reason, or (3) as a result of the Executive's
death. Any Nonqualifying Termination shall become effective on (i) the date set
forth in a written notice from the Company or the Executive (with respect to
clauses (1) and (2) above) or (ii) the date of the Executive's death (with
respect to clause (3) above). Termination of the Executive's employment during
the Employment Period as result of the Executive's incapacity which results in
his qualification for benefits under the Company's long-term disability program
covering the Executive shall be a qualifying termination of employment under
Section 3.2.
Section 3.2. Qualifying Termination During Employment Period. If
-----------------------------------------------
during the Employment Period the employment of the Executive shall terminate,
other than by reason of a Nonqualifying Termination, the Company shall pay to
the Executive (or the Executive's beneficiary or estate) within 30 days
following the date upon which the Executive's employment is terminated, as
compensation for services rendered to the Company:
(1) a cash amount equal to the sum of the Executive's Base Salary
earned through such date of termination, to the extent not theretofore paid, and
the Executive's Annual Incentive Compensation, to the extent not theretofore
paid, for fiscal years ending prior to the date of termination; and
(2) a lump-sum cash payment in an amount equal to the sum of the
Executive's (x) Base Salary plus target Annual Incentive Compensation for the
balance of the Employment Period (including the target Annual Incentive
Compensation for the entire fiscal year in which the Executive's employment is
terminated, but prorated as described in Section 2.2(A)(ii) with respect to
fiscal year 2002) plus (y) target Long-term Incentive Compensation for fiscal
years 1999 through 2001, each as in effect on such date of termination;
provided, however, that (A) if the Executive's employment is terminated by the
Executive for Good Reason during the Employment Period, the amount, if any,
payable with respect to Annual and Long-Term Incentive Compensation shall be
calculated on the basis of actual performance and paid as soon as practicable
after the Company's performance has been established, (B) if the Executive's
employment is terminated by the Company without Cause during the Employment
Period, the amount payable with respect to Annual and Long-Term Incentive
Compensation shall be based on target Annual Incentive Compensation for the
balance of the Employment Period (including the entire fiscal year in which the
Executive's employment is terminated, but prorated as described in Section
2.2(A)(ii) with respect to fiscal year 2002) and target Long-Term Incentive
Compensation for fiscal years 1999 through 2001, each as in effect on the date
of termination, such amount to be paid in a cash lump sum within 30 days of the
date of termination, and (C) any amount paid pursuant to this Section shall be
paid in
7
<PAGE>
lieu of all other severance, salary or bonus continuation, and Annual or Long-
Term Incentive Compensation to be received by the Executive upon termination of
employment of the Executive under any plan, policy or arrangement of the
Company. In addition, the Executive shall be entitled to receive his fully
accrued and 100% Vested Benefit commencing on the date determined under the
Retirement Plan, as provided in Section 2.4, and shall be entitled to receive
other employee benefits, as provided in Section 2.6, for the balance of the
Employment Period.
Section 3.3. Nonqualifying Termination During Employment Period. If
--------------------------------------------------
the Executive's employment is terminated during the Employment Period due to a
Nonqualifying Termination, the Executive shall be entitled to receive his Base
Salary earned through the date of termination, any Annual Incentive Compensation
earned for the fiscal year preceding the date of termination, to the extent not
theretofore paid, and a pro-rata portion of the Executive's Annual Incentive
Compensation for the fiscal year in which the Executive's employment is
terminated, based on the number of days from the beginning of the fiscal year
through the date of termination, divided by 365, based on the extent to which
annual incentive targets are met, such amount, if any, to be determined and paid
not later than March 15 of the year next following the year for which the Annual
Incentive Compensation was earned, as well as his fully accrued and 100% Vested
Benefit under the Retirement Plan, as provided in Section 2.4.
Section 3.4. Release. All payments due under this Agreement upon
-------
termination of employment shall be subject to execution of a release in the form
of Exhibit A annexed.
ARTICLE IV.
QUALIFYING TERMINATION OF EMPLOYMENT WITHIN 24 MONTHS
FOLLOWING EFFECTIVE DATE
Section 4.1. Termination Within 24 Months Following Effective Date.
-----------------------------------------------------
If, within 24 months following the Effective Date, either (A) the Company or
Parent Company gives a notice of termination of the Executive's employment
without Cause, (B) the employment of the Executive is terminated by the
Executive, other than by (i) a Nonqualifying Termination or (ii) a Termination
----- ----
for Good Reason pursuant to Section 3.1(C)(1)(i) or (ii), after the Company or
the Parent Company has offered (x) to continue to employ the Executive as
Executive Vice President, with future responsibilities for strategic planning or
their equivalent, (y) the continued ability to report to the Chief Executive
Officer of the Company (which may be in addition to reporting to other
appropriate officers of the Parent Company), and (z) to appoint or otherwise
permit the Executive to continue his service on the Board of the Company, in
each case for the balance of the Employment Period, or (C) the Company or Parent
Company takes any action which would constitute Good Reason, but the Executive
declines to terminate his employment and continues to perform the
8
<PAGE>
services which are assigned to him, and if any payments or benefits which are
payable to the Executive are deemed because of such action by the Company or
Parent Company to constitute "parachute payments" (as defined below), then in
any such event the Company shall pay to the Executive, in addition to amounts
payable under any other provision of this Agreement, the following additional
amounts:
(A) Gross-Up Payments for Excise Taxes. In the event that the
----------------------------------
payments or benefits provided for in this Agreement or otherwise payable to the
Executive (either before or after the date of this Agreement) constitute
"parachute payments" within the meaning of Section 280G of the Internal Revenue
Code of 1986, as amended (the "Code") (or comparable provisions of applicable
state laws) and will be subject to the excise tax imposed by Section 4999 of the
Code (or comparable provisions of applicable state laws), then the Company shall
pay to the Executive or to relevant tax authorities (i) an amount sufficient to
satisfy such excise tax, and (ii) an additional amount sufficient to pay the
excise tax and all taxes (including, but not limited to, federal and state
income and employment taxes) arising from the payments made by the Company to
the Executive or to relevant tax authorities pursuant to this sentence
(collectively, the "Gross-Up Payments"). All determinations of the Executive's
excise tax liability shall be made in writing by PricewaterhouseCoopers LLP (the
"Accountants"). For purposes of making the calculations required by this
Section, the Accountants may make reasonable assumptions and approximations
concerning applicable taxes and may rely on reasonable, good faith
interpretations concerning the application of Sections 280G and 4999 of the Code
(or comparable provisions of applicable state laws). The Company and the
Executive shall furnish to the Accountants such information and documents as the
Accountants may reasonably request in order to make a determination under this
Section. The Company shall bear all fees and costs the Accountants may
reasonably charge or incur in connection with any calculations contemplated by
this Section. The Company further agrees that, if at any time any tax authority
determines that a greater excise tax liability is due than the amount which is
determined by the Accountants, the Executive shall receive a further payment
from the Company, or the Company shall pay to the relevant tax authorities, an
additional amount sufficient to pay such additional excise tax liability and all
taxes (including, but not limited to, federal and state income and employment
taxes) arising from such further payment. The Executive further agrees that if
at any time it is determined, by IRS ruling or otherwise, that, with regard to
tax liabilities described in this paragraph, less or no tax is due, then the
Executive agrees to cooperate fully with the Company and the Accountants to
apply for a refund or to claim a credit against his other tax liability for any
such taxes which were previously paid and to promptly pay to the Company any
such refunds which he receives or any such credits which he actually utilizes to
reduce his other tax liabilities (net of any additional taxes which are payable
by him
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<PAGE>
on account of receipt of such refund or claim of such credit); and to repay to
the Company any Gross-Up Payments which he received to cover any such taxes
which have not yet been paid (net of any adverse tax effect upon the Executive
on account of receipt of the Gross-Up Payments in one calendar year and refund
of such amounts in a subsequent calendar year); provided that the Company shall
hold the Executive harmless against all costs and expenses incurred in obtaining
such refund or in confirming the right to claim such credit.
ARTICLE V.
INCOMPATIBLE ACTIVITIES, CONFIDENTIAL INFORMATION
Section 5.1. Incompatible Activities. During the Employment Period
-----------------------
and for a period of one year thereafter, the Executive:
(A) shall not engage in any activities, whether as employer,
proprietor, partner, stockholder (other than the holder of less than 5% of the
stock of a corporation the securities of which are traded on a national
securities exchange or the NASDAQ National Market System), director, officer,
employee or otherwise, in competition with (1) the businesses conducted at the
date hereof by the Company or Parent Company or (2) any business in which the
Company or Parent Company is substantially engaged at any time during the
Employment Period;
(B) shall not solicit, directly or indirectly, either alone or
through any person with whom the Executive is affiliated, in competition with
the Company or Parent Company, any person who is a customer of the businesses
conducted by the Company or Parent Company at the date hereof or of any business
in which the Company or Parent Company is substantially engaged at any time
during the Employment Period; and
(C) shall not, directly or indirectly, either alone or through any
person with whom the Executive is affiliated, induce or attempt to persuade any
employee of the Company or Parent Company to terminate his or her employment
relationship in order to enter into competitive employment, or hire any such
person within six months of his termination of employment from the Company.
Section 5.2. Trade Secrets. The Executive shall not, at any time
-------------
during the Employment Period or thereafter, make use of or divulge any trade
secrets or other confidential information of the Company or Parent Company,
except to the extent that such information becomes a matter of public record, is
published in a newspaper, magazine or other periodical available to the general
public, in each case, without unauthorized disclosure by the Executive, or as
the Company may so authorize in writing; and when the Executive shall cease to
be employed by the Company, the Executive shall surrender to the Company all
records and other documents obtained by him or entrusted to him during the
course
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of his employment hereunder (together with all copies thereof) which pertain
specifically to any of the businesses covered by the covenants in Section 5.1 or
which were paid for by the Company.
Section 5.3. Scope of Covenants; Remedies. The following provisions
----------------------------
shall apply to the covenants of the Executive contained in Sections 5.1 and 5.2;
(A) the covenants contained in Section 5.1 shall apply within all the
territories in which the Company is actively engaged in the conduct of business
during the Employment Period, including, without limitation, the territories in
which customers are then being solicited;
(B) the Executive confirms and acknowledges that (i) he was
represented by counsel of his own choosing during the negotiation of the
limitations set forth in this Article V, (ii) his strict adherence to the
limitations imposed upon him was a material factor in Parent Company's entering
into the Merger Agreement and consummating the transactions contemplated
thereby, and agreeing to pay the Executive the cash and other compensation
called for in this Agreement, (iii) the Company's ability to maintain continuing
relationships with its employees without disruption was a material factor in
Parent Company's entering into the Merger Agreement and agreeing to consummate
the transactions contemplated thereby, (iv) his failure to adhere to the
obligations imposed by this Article V will expose Parent Company to substantial
and irreparable harm. Accordingly, the Executive agrees that the remedy at law
for any breach by him of the covenants and agreements set forth in this Article
V may be inadequate and that in the event of any such breach, the Company may,
in addition to the other remedies that may be available to it at law, seek
injunctive relief prohibiting him (together with all those persons associated
with him) from breach of such covenants and agreements;
(C) each party intends and agrees that if in any action before any
court or agency legally empowered to enforce the covenants contained in Sections
5.1 and 5.2 any term, restriction, covenant or promise contained therein is
found to be unreasonable and accordingly unenforceable, then such term,
restriction, covenant or promise shall be deemed modified to the extent
necessary to make it enforceable by such court or agency; and
(D) the covenants contained in Sections 5.1 and 5.2 shall survive the
conclusion of the Executive's employment by the Company.
11
<PAGE>
ARTICLE VI.
MISCELLANEOUS
Section 6.1. Agreement to Defend and Indemnify; Officers and
-----------------------------------------------
Directors Liability Insurance. The Company shall indemnify, hold harmless and
- -----------------------------
defend the Executive, and shall maintain officers and directors liability
insurance covering the Executive, subject to the provisions and for the period
specified in Section 6.8 of the Merger Agreement (as defined in Section 2.4
hereof). This section 6.1 shall survive the end of the Employment Period and
shall remain in effect for the period specified in Section 6.8 of the Merger
Agreement.
Section 6.2. Services as Officer or Director. Promptly following the
-------------------------------
commencement of, and at all times during, the Employment Period, the Executive
shall be entitled to be nominated for election as a director of the Company. If
elected or appointed, the Executive shall serve as a director of the Company and
as an officer and/or director of all current and future subsidiaries and
affiliates of the Company without any additional compensation for such services.
Section 6.3. Key-Person Insurance. The Executive shall aid the
--------------------
Company in procuring any life, health, accident, disability or other insurance
which the Company should at any time apply for in its own name and at its own
expense to insure the Company's obligations hereunder, by submitting to the
usual and customary medical examinations and by completing, executing and
delivering such applications and other instruments in writing as may be
reasonably required by any insurance company or companies.
Section 6.4. Notices. Any notice or request required or permitted to
-------
be given hereunder shall be in writing and shall be made by hand delivery,
first-class mail (registered or certified, return receipt requested), telecopier
or overnight courier guaranteeing next business day delivery to the relevant
address set forth in the signature blocks below or to any other address
designated by either party by notice similarly given. Each such notice shall be
deemed to have been given, at the time delivered, if personally delivered or
mailed (with sufficient postage prepaid); when receipt is acknowledged, if
telecopied; and the next business day after timely delivery to the courier, if
sent by overnight air courier guaranteeing next business day delivery.
Section 6.5. Assignment and Succession. The rights and obligations
-------------------------
of the Company and Parent Company under this Agreement shall inure to the
benefit of and be binding upon their successors and assigns, and the Executive's
rights and obligations hereunder shall inure to the benefit of and be binding
upon his estate, legal representatives and guardians.
12
<PAGE>
Section 6.6. Headings. The Article, Section, paragraph and
--------
subparagraph headings are for convenience of reference only and shall not define
or limit the provisions hereof.
Section 6.7. Joint Employment; Guaranty by Parent Company.
--------------------------------------------
Pinkerton's Inc. ("Pinkerton") has a wholly owned subsidiary, Pinkerton
Management Corporation (f.k.a. District Security) ("PMC") for the purpose of
employing all of the employees located at Pinkerton world headquarters, and the
Executive shall be jointly employed by Pinkerton and PMC under the terms and
conditions set forth in this Agreement. Pinkerton and PMC shall be jointly and
severally liable for satisfying any obligation that Company may have under this
Agreement. Parent Company irrevocably, absolutely and unconditionally
guarantees to the Executive the full and timely performance of the Company's
financial obligations pursuant to this Agreement. This guaranty is a payment
guaranty and not a guaranty of collection. Parent Company waives any right to
require the Executive to file suit and proceed against the Company.
Section 6.8. Payment of Professional Fees. The Company shall pay the
----------------------------
professional fees incurred by the Executive in connection with entering into
this Agreement.
Section 6.9. Entire Agreement. This Agreement shall be effective
----------------
from and after the Effective Date and sets forth the entire and final agreement
and understanding of the Company, the Parent Company and the Executive and
contains all of the agreements made between them with respect to the subject
matter hereof. As of the Effective Date, this Agreement supersedes any and all
other agreements, either oral or in writing, between the Company and the
Executive with respect to the Executive's provision of services to the Company
and his termination of employment therefrom. No change or modification of this
Agreement shall be valid unless in writing and signed by the Company, the Parent
Company and the Executive. Until this Agreement becomes effective on the
Effective Date, the current employment agreement and arrangements which are in
effect between the Company and the Executive shall remain in full force and
effect.
Section 6.10. Applicable Law and Venue. This Agreement shall at all
------------------------
times be governed by and construed, interpreted and enforced in accordance with
the laws of the State of California without giving effect to its choice of law
rules. The parties agree that the courts of the State of California shall have
jurisdiction over all disputes which arise under this Agreement or otherwise
relate to the employment or termination of employment of the Executive by the
Company and Parent Company. The parties further agree that the courts chosen
for resolution of all such disputes shall be located in Los Angeles County,
California.
13
<PAGE>
Section 6.11. Counterparts. This Agreement may be executed in one or
------------
more counterparts, each of which will be deemed to be an original copy of this
Agreement and all of which, when taken together, will be deemed to constitute
one and the same agreement.
Section 6.12. Waiver of Breach. A waiver by the Company or the
----------------
Parent Company of a breach of any provision of this Agreement by the Executive
shall not operate or be construed as a waiver of any subsequent breach by the
Executive. No waiver shall be valid unless it is in writing and signed by an
authorized officer of each of the Company (other than the Executive) and the
Parent Company.
Section 6.13. Assignment. The Executive acknowledges that the
----------
services he is to render are unique and personal. Accordingly, the Executive
may not assign any of his rights or delegate any of his duties or obligations
under this Agreement. The rights and obligations of the Company under this
Agreement shall inure to the benefit of and shall be binding upon the successors
and assigns of the Company.
Section 6.14. Tax Withholding. All payments under this Agreement
---------------
shall be subject to such deductions or withholdings for all taxes and other
purposes as shall at the time of such payment be required by applicable law.
14
<PAGE>
IN WITNESS WHEREOF, the Company and Parent Company have caused this
Agreement to be signed by their duly authorized officers, and the Executive has
signed this Agreement as of the day and year first above written.
<TABLE>
<CAPTION>
<S> <C>
COMPANY: PINKERTON'S, INC.
World Support Center
4330 Park Terrace Drive
Westlake Village, CA 91361
BY: /s/ Denis R. Brown
----------------------------
PINKERTON MANAGEMENT CORPORATION
World Support Center
4330 Park Terrace Drive
Westlake Village, CA 91361
BY: /s/ Denis R. Brown
----------------------------
PARENT COMPANY: SECURITAS AB
Box 12307
5-102 28
Stockholm, Sweden
BY: /s/ Thomas Berglund
----------------------------
EXECUTIVE: C. Michael Carter
5820 Kanan Dume Road
Malibu, CA 90265
BY:/s/ C. Michael Carter
----------------------------
</TABLE>
15
<PAGE>
EXHIBIT A
SEPARATION AND RELEASE AGREEMENT
This Separation and Release Agreement ("Agreement") is entered into as of
this ___ day of ___________, between [Company] and any successor thereto
(collectively, the "Company") and [Executive] (the "Executive").
The Executive and the Company agree as follows:
1. The employment relationship between the Executive and the Company
terminated on ____________ (the "Termination Date").
2. In accordance with the Employment Agreement between the Company and
Executive dated as of February 19, 1999, as amended (the "Employment
Agreement"), the Company has agreed to pay the Executive certain payments and to
make certain benefits available after the Termination Date, which are listed on
Schedule A annexed hereto.
3. The Company agrees to continue to be bound by Article IV and Sections 6.1
and 6.7 of the Employment Agreement.
4. In consideration of the above, the sufficiency of which the Executive
hereby acknowledges, the Executive, on behalf of the Executive and the
Executive's heirs, executors and assigns, hereby releases and forever discharges
the Company and its, parents, affiliates, subsidiaries, divisions, any and all
current and former directors, officers, employees, agents, and contractors and
their heirs and assigns, and any and all employee pension benefit or welfare
benefit plans of the Company, including current and former trustees and
administrators of such employee pension benefit and welfare benefit plans, from
all claims, charges, or demands, in law or in equity, whether known or unknown,
which may have existed or which may now exist from the beginning of time to the
date of this Agreement, including, without limitation, any claims the Executive
may have arising from or relating to the Executive's employment or termination
from employment with the Company, including a release of any rights or claims
the Executive may have under Title VII of the Civil Rights Act of 1964, as
amended, and the Civil Rights Act of 1991 (which prohibit discrimination in
employment based upon race, color, sex, religion, and national origin); the
Americans with Disabilities Act of 1990, as amended, and the Rehabilitation Act
of 1973 (which prohibit discrimination based upon disability); the Family and
Medical Leave Act of 1993 (which prohibits discrimination based on requesting or
taking a family or medical leave); Section 1981 of the Civil Rights Act of 1866
(which prohibits conspiracies to discriminate); the Employee Retirement Income
Security Act of 1974, as amended (which prohibits discrimination with regard to
benefits); any other federal, state, or local laws against discrimination; or
any other federal, state or local statute, or common law relating to employment,
wages, hours, or any other terms and conditions of
<PAGE>
employment. This includes a release by the Executive of any claims for wrongful
discharge, breach of contract, torts or any other claims in any way related to
the Executive's employment with or resignation or termination from the Company.
This release also includes a release of any claims for age discrimination under
the Age Discrimination in Employment Act of 1967, as amended ("ADEA"). The ADEA
requires that the Executive be advised to consult with an attorney before the
Executive waives any claim under ADEA. In addition, the ADEA provides the
Executive with at least 21 days to decide whether to waive claims under ADEA and
seven days after the Executive signs the Agreement to revoke that waiver. This
release does not release the Company from any obligations due to the Executive
under the Company's Supplemental Retirement Income Plan, as amended by the
Employment Agreement, or under this Agreement.
5. This Agreement is not an admission by either the Executive or the Company
of any wrongdoing or liability.
6. The Executive waives any right to reinstatement or future employment with
the Company following the Executive's separation from the Company on the
Termination Date.
7. The Executive agrees not to engage in any act after execution of the
Separation and Release Agreement that is intended, or may reasonably be expected
to harm the reputation, business, prospects or operations of the Company, its
officers, directors, stockholders or employees, provided this paragraph shall
not extend the limitation on "incompatible activities" which is contained in
Section 5.1 of the Employment Agreement. The Company further agrees that it
will engage in no act which is intended, or may reasonably be expected to harm
the reputation, business or prospects of the Executive. This paragraph shall
not prohibit either party from cooperating with government agencies.
8. The Executive shall continue to be bound by Article V of the Employment
Agreement.
9. The Executive shall promptly return all the Company property in the
Executive's possession, including, but not limited to, the Company keys, credit
cards, cellular phones, computer equipment, software and peripherals and
originals or copies of books, records or other information pertaining to the
Company business.
10. This Agreement shall be governed by and construed in accordance with the
laws of the State of California, without reference to the principles of conflict
of laws. The jurisdiction and venue for any disputes arising under this
Agreement shall be governed by Section 6.10 of the Employment Agreement.
11. This Agreement represents the complete agreement between the Executive
and the Company concerning the subject
-2-
<PAGE>
matter in this Agreement and supersedes all prior agreements or understandings,
written or oral. This Agreement may not be amended or modified otherwise than by
a written agreement executed by the parties hereto or their respective
successors and legal representatives.
12. Each of the sections contained in this Agreement shall be enforceable
independently of every other section in this Agreement, and the invalidity or
nonenforceability of any section shall not invalidate or render unenforceable
any other section contained in this Agreement.
13. It is further understood that for a period of 7 days following the
execution of this Agreement in duplicate originals, the Executive may revoke
this Agreement, and this Agreement shall not become effective or enforceable
until the revocation period has expired. No revocation of this Agreement by the
Executive shall be effective unless the Company has received within the 7-day
revocation period, written notice of any revocation, all moneys received by the
Executive under this Agreement and all originals and copies of this Agreement.
14. This Agreement has been entered into voluntarily and not as a result of
coercion, duress, or undue influence. The Executive acknowledges that the
Executive has read and fully understands the terms of this Agreement and has
been advised to consult with an attorney before executing this Agreement.
Additionally, the Executive acknowledges that the Executive has been afforded
the opportunity of at least 21 days to consider this Agreement.
The parties to this Agreement have executed this Agreement as of the day
and year first written above.
[Company]
By:___________________________________
Name:
Title:
______________________________________
[Executive]
-3-
<PAGE>
EXHIBIT 99(c)(6)
EXECUTION COPY
EMPLOYMENT AGREEMENT
Employment Agreement (this "Agreement") dated as of February 19, 1999
between James P. McCloskey (the "Executive"), PINKERTON'S INC. and PINKERTON
MANAGEMENT CORPORATION (together the "Company"), and SECURITAS AB (the "Parent
Company").
WHEREAS, the Company and Parent Company desire to employ the Executive
as the Company's Executive Vice President and Chief Financial Officer, and the
Executive desires to accept such employment, for the term and upon the other
conditions set forth below;
WHEREAS, this Agreement shall be effective from and after the
occurrence of the Effective Date, as hereinafter defined in Section 2.4;
NOW, THEREFORE, in consideration of the agreements and covenants
contained herein, the Executive, Company and Parent Company agree as follows:
ARTICLE I.
EMPLOYMENT
Section 1.1. Position; Term; Responsibilities
--------------------------------
The Company shall employ the Executive as its Executive Vice President
and Chief Financial Officer for a term commencing on the Effective Date and
ending on the third anniversary of the Effective Date. The term during which
the Executive is to be employed by the Company under this Agreement is
hereinafter referred to as the "Employment Period." The Executive shall report
directly to the President and Chief Executive Officer of the Company. The
Parent Company currently contemplates that the Company will be maintained by the
Parent Company as a separate operating entity responsible for all operations in
North America, South America, Asia and worldwide investigations, subject to
changes determined by the Parent Company in the event of future acquisitions or
sales of businesses. The Executive shall continue to have the principal
responsibilities and authorities in effect on the date of this Agreement (after
giving effect to the change in the Company's status from a public company to a
non-public separate operating entity of a public company), and shall also
perform such other executive and administrative duties on behalf of the Company,
its subsidiaries and affiliates (collectively, the "Company"), as may from time
to time be authorized or directed by the President and Chief Executive Officer
of the Company. The Executive agrees to remain employed by the Company in all
such capacities for the Employment Period,
<PAGE>
subject to all of the covenants and conditions hereinafter set forth.
Section 1.2. Duties. During the Employment Period, the Executive
------
shall perform faithfully the duties assigned to him hereunder to the best of his
abilities and devote his full and undivided business time and attention to the
transaction of the Company's businesses and to use his best efforts to perform
faithfully and efficiently the responsibilities assigned to him. To the extent
not substantially interfering with the performance of his responsibilities under
this Agreement and to the extent consistent with current Board policy on
February 1, 1999, the Executive may continue to devote time to civic,
professional and charitable activities and continue to serve on the board of
directors of other companies, and shall not engage in any other business
activities except with the prior written approval of the President and Chief
Executive Officer of the Parent Company.
ARTICLE II.
COMPENSATION
Section 2.1. Base Salary. As compensation for the Executive's
-----------
services hereunder, the Company shall pay to the Executive during the Employment
Period an annual salary of $321,435, payable in installments in accordance with
the Company's normal payment schedule for its senior management. The Company
shall conduct an annual review of the Executive's performance and current Base
Salary and, in its discretion, may increase the Executive's annual base salary
in any year during the Employment Period. The Executive's annual salary in
effect from time to time under this Section 2.1 is hereinafter referred to as
"Base Salary."
Section 2.2. Annual Incentive Compensation.
-----------------------------
(A) Formula for Determining. In addition to his Base Salary, the
-----------------------
Executive shall be eligible to receive as annual incentive compensation ("Annual
Incentive Compensation"), in respect of each fiscal year of the Company or
portion thereof included within the Employment Period, a cash bonus determined
as follows:
(i) 1999 - The Executive shall be eligible to receive Annual
Incentive Compensation determined in accordance with the 1999 Annual Incentive
Program set forth in Appendix A hereto (the "1999 Program.
(ii) Subsequent Fiscal Years - The President and Chief Executive
Officer of the Parent Company, after consultation with the Chief Executive
Officer of the Company, shall establish annually an Annual Incentive
Compensation program (similar to the 1999 Program) which shall provide the
Executive with a target annual bonus opportunity percentage equal to 45% of his
Base Salary and a maximum annual bonus opportunity percentage equal to
2
<PAGE>
200% of his target annual bonus. The Executive shall be eligible to receive a
pro-rated bonus determined under the program for the fiscal year in which he
terminates employment (based on the number of days from the beginning of the
fiscal year through the date of termination, divided by 365), which shall be
paid at the time such bonuses are normally payable, based on actual results for
the completed fiscal year. The Executive shall be entitled to receive not less
than his target Annual Incentive Compensation for all fiscal years of the
Company during the Employment Period which end after a future Change in Control
(as defined in Section 3.1(B)) of the Company or the Parent Company.
(B) Time of Payment. The amount of Annual Incentive Compensation
---------------
earned hereunder shall be paid to the Executive as soon as reasonably
practicable following the delivery to the Board of audited financial statements
for the Company with respect to each completed fiscal year of the Company. The
Parent Company shall cause such statements to be prepared as soon as practicable
after the end of the Company's fiscal year, and in any event, the amount, if
any, required to be paid for any year under this Section 2.2 shall be determined
and paid not later than March 15 of the year next following the year for which
the bonus is paid.
Section 2.3. Long-Term Incentive Compensation.
--------------------------------
(A) Formula for Determining. In addition to his Base Salary and
-----------------------
Annual Incentive Compensation, the Executive shall be eligible to receive as
long-term incentive compensation ("Long-Term Incentive Compensation"), in
respect of the Company's fiscal years from 1999 through 2001, a long-term
incentive cash bonus determined in accordance with the Long-Term Incentive
Program set forth in Appendix B hereto. The Long-Term Incentive Program shall
provide the Executive with a target long-term incentive bonus for fiscal years
1999 through 2001 equal to $723,000 and a maximum long-term incentive bonus for
such fiscal years equal to 150% of his target amount. The Executive shall be
entitled to receive not less than his target Long-Term Incentive Compensation
for fiscal years 1999 through 2001 if there is a future Change in Control (as
defined in Section 3.1(B)) of the Company or Parent Company prior to December
31, 2001.
(B) Time of Payment. The amount of Long-Term Incentive Compensation
---------------
earned hereunder for fiscal years 1999 through 2001 shall be paid to the
Executive as soon as reasonably practicable following delivery to the Board of
audited financial statements for the Company's fiscal year that ends in
December, 2001. The Parent Company shall cause such statements to be prepared
as soon as practicable after the end of the Company's fiscal year which ends in
2001 and in any event, the amount, if any, required to be paid under Section 2.3
shall be determined and paid not later than March 15, 2002.
3
<PAGE>
Section 2.4. Supplemental Retirement Income Plan. The Executive's
-----------------------------------
Benefit under Section 4.1 of the Company's Supplemental Retirement Income Plan,
as amended, and related Appendices I and II, which were furnished to Parent
Company prior to January 23, 1999 (together, the "Retirement Plan"), commencing
upon the Executive's Normal Retirement Age in the Normal Benefit Form, shall be
fifty-two and one-half percent (52.5%) of his Final Average Monthly
Compensation, and such Benefit shall be fully accrued and 100% Vested, effective
upon the Effective Date (as defined below), notwithstanding any contrary
provision of the Retirement Plan or of the Appendices. The Final Average
Monthly Compensation which is used to calculate the Executive's Benefit shall in
no event be less than it would have been if the Executive had terminated
employment on the Effective Date (or not less than $34,466.79). The terms
"Benefit", "Final Average Monthly Compensation", Normal Benefit Form, Normal
Retirement Age and "Vested" shall have the meanings set forth in the Retirement
Plan. The "Effective Date" shall mean the time that the Purchaser or the Parent
purchases any of the Shares of the Company pursuant to the Offer, as such terms
are defined in the Agreement and Plan of Merger among Target (herein the
"Company"), Parent (herein the "Parent Company") and Purchaser (a wholly-owned
subsidiary of the Parent Company) dated as of the same date hereof (the "Merger
Agreement"). Except as provided in this Section 2.4, the Executive's Benefit
shall be calculated and paid in accordance with the terms and conditions of the
Retirement Plan. The Retirement Plan shall automatically be amended to reflect
the provisions of this Section 2.4, effective as of the Effective Date, without
further action of the Company or the Executive.
Section 2.5. Incapacity. If at any time during the Employment Period
----------
the Executive is unable to perform fully his duties hereunder by reasons of
illness, accident or other disability (as confirmed by competent medical
evidence acceptable to a licensed physician selected by the Company)
(hereinafter "incapacity"), during the first six months of such incapacity he
shall be entitled to receive Base Salary and shall continue to be considered as
actively employed for purposes of determining his eligibility for target Annual
and Long-Term Incentive Compensation determined in accordance with Sections 2.1,
2.2 and 2.3. If the Executive shall resume the full performance of his duties
hereunder following any period of incapacity, he shall thereafter be entitled to
receive Base Salary and Annual and Long-Term Incentive Compensation as provided
in Sections 2.1, 2.2 and 2.3. Notwithstanding the foregoing provisions of this
Section 2.5, the amounts payable to the Executive under this Section 2.5 shall
be reduced by any amounts received by the Executive with respect to any such
incapacity pursuant to any insurance policy, plan or other employee benefit
provided to the Executive and paid for or reimbursed by the Company. During any
period of incapacity in which the Executive does not receive Base Salary and
Annual Incentive Compensation, the Company will make available to the Executive
until his 65th Birthday disability
4
<PAGE>
benefits payable to the Executive aggregating at least $200,000 per annum,
subject to the Company's ability to obtain long-term disability insurance for
the Executive at a standard (i.e., non-rated) premium charge. The Company
---
shall pay the premium on any such individual disability insurance policy. Any
termination of the Executive's employment during the Employment Period as a
result of the Executive's incapacity which results in his qualification for
benefits under the Company's long-term disability program covering the Executive
shall be a qualifying termination of employment under Section 3.2, and the
Executive shall be entitled to receive the payments specified in Section 3.2,
less any disability benefits provided through Company-provided disability
benefits.
Section 2.6. Other Employee Benefits. The Executive shall be
-----------------------
entitled to participate in all employee benefits plans and to receive all fringe
benefits that are from time to time made generally available to senior
management of the Company, including a leased automobile (equivalent to his
leased automobile as of the date of this Agreement). The employee benefits made
available to the Executive, other than plans described in Section 2.2 and 2.3
and plans providing for benefits in the form of, or investments in, Company
stock ("Excluded Benefits"), in the aggregate shall be at least comparable in
value to the employee benefits (less the Excluded Benefits) made available to
the Executive immediately prior to the Effective Date.
In addition to the foregoing, the Company will continue to make
available to the Executive $1,500,000 of life insurance during the Employment
Period. The amount of life insurance coverage shall be satisfied by aggregating
the death benefits payable to the Executive's beneficiary under the Company's
group insurance policy and other individual life insurance. The Company agrees
to pay the annual premium on any such insurance policies up to a maximum of
$5,000 per year during the Employment Period. The Company also agrees to pay
the cost of annual physical exams for the Executive.
Section 2.7. Expense Reimbursements. The Company shall reimburse the
----------------------
Executive for all proper expenses incurred by him in the performance of his
duties hereunder in accordance with the policies and procedures established by
the Company.
ARTICLE III.
TERMINATION OF EMPLOYMENT
Section 3.1. Definition of Certain Terms. As used in this Agreement,
---------------------------
the following terms shall have the respective meanings set forth below:
(A) "Cause" means (1) a material breach by the Executive of those
duties and responsibilities of the Executive which do not differ in any material
respect from the duties and
5
<PAGE>
responsibilities of the Executive on the date of this Agreement (other than as a
result of incapacity due to physical or mental illness) which is demonstrably
willful and deliberate on the Executive's part, which is committed in bad faith
or without reasonable belief that such breach is in the best interests of the
Company and which is not remedied in a reasonable period of time after receipt
of written notice from the Company specifying such breach or (2) the commission
by the Executive of a crime involving moral turpitude.
(B) "Change in Control" of the Company means (i) any sale or transfer
of stock of the Company after which the Parent Company will no longer own,
directly or indirectly, a majority of the combined voting power of outstanding
securities of the Company or (ii) any sale or transfer of a majority of the
assets of the Company, after which the Parent Company will no longer own,
directly or indirectly, a majority of the combined voting power or other voting
interests of the entity to which such assets are transferred. "Change in
Control" of the Parent Company means any acquisition by any individual, entity
or group of securities of the Parent Company which have a majority of the
combined voting power of outstanding securities of the Parent Company.
(C) "Good Reason" means, without the Executive's express written
consent, the occurrence of any of the following events, unless cured by the
Company or the Parent Company within a reasonable period of time after receipt
of written notice from the Executive specifying such breach:
(1) any of (i) the assignment to the Executive of duties which are
materially inconsistent with the Executive's position(s), duties,
responsibilities or status with the Company and Parent Company as described in
Section 1.1, (ii) a material change in the Executive's reporting
responsibilities, titles or offices with the Company and Parent Company as
described in Section 1.1, or (iii) any removal or involuntary termination of the
Executive from the Company otherwise than as expressly permitted by this
Agreement;
(2) a reduction by the Company in the Executive's Base Salary as in
effect on the Effective Date of this Agreement or as the same may be increased
from time to time thereafter;
(3) any requirement of the Company that the Executive (i) be based
anywhere other than at a facility in the same metropolitan area as the facility
where the Executive is located on the Effective Date of this Agreement or (ii)
travel on the Company business to an extent substantially more burdensome than
the level of obligations of the Executive as of the Effective Date of this
Agreement (taking into account the expanded international scope of the
Executive's responsibilities following the Effective Date of this Agreement); or
6
<PAGE>
(4) the failure of the Company to provide the benefits agreed to be
provided under this Agreement.
(D) "Nonqualifying Termination" means a termination of the
Executive's employment (1) by the Company for Cause, (2) by the Executive for
any reason other than a Good Reason, or (3) as a result of the Executive's
death. Any Nonqualifying Termination shall become effective on (i) the date set
forth in a written notice from the Company or the Executive (with respect to
clauses (1) and (2) above) or (ii) the date of the Executive's death (with
respect to clause (3) above). Termination of the Executive's employment during
the Employment Period as result of the Executive's incapacity which results in
his qualification for benefits under the Company's long-term disability program
covering the Executive shall be a qualifying termination of employment under
Section 3.2.
Section 3.2. Qualifying Termination During Employment Period. If
-----------------------------------------------
during the Employment Period the employment of the Executive shall terminate,
other than by reason of a Nonqualifying Termination, the Company shall pay to
the Executive (or the Executive's beneficiary or estate) within 30 days
following the date upon which the Executive's employment is terminated, as
compensation for services rendered to the Company:
(1) a cash amount equal to the sum of the Executive's Base Salary
earned through such date of termination, to the extent not theretofore paid, and
the Executive's Annual Incentive Compensation, to the extent not theretofore
paid, for fiscal years ending prior to the date of termination; and
(2) a lump-sum cash payment in an amount equal to the sum of the
Executive's (x) Base Salary plus target Annual Incentive Compensation for the
balance of the Employment Period (including the target Annual Incentive
Compensation for the entire fiscal year in which the Executive's employment is
terminated, but prorated as described in Section 2.2(A)(ii) with respect to
fiscal year 2002) plus (y) target Long-term Incentive Compensation for fiscal
years 1999 through 2001, each as in effect on such date of termination;
provided, however, that (A) if the Executive's employment is terminated by the
Executive for Good Reason during the Employment Period, the amount, if any,
payable with respect to Annual and Long-Term Incentive Compensation shall be
calculated on the basis of actual performance and paid as soon as practicable
after the Company's performance has been established, (B) if the Executive's
employment is terminated by the Company without Cause during the Employment
Period, the amount payable with respect to Annual and Long-Term Incentive
Compensation shall be based on target Annual Incentive Compensation for the
balance of the Employment Period (including the entire fiscal year in which the
Executive's employment is terminated, but prorated as described in Section
2.2(A)(ii) with respect to fiscal year 2002) and target Long-Term Incentive
Compensation for fiscal years 1999 through 2001, each
7
<PAGE>
as in effect on the date of termination, such amount to be paid in a cash lump
sum within 30 days of the date of termination, and (C) any amount paid pursuant
to this Section shall be paid in lieu of all other severance, salary or bonus
continuation, and Annual or Long-Term Incentive Compensation to be received by
the Executive upon termination of employment of the Executive under any plan,
policy or arrangement of the Company. In addition, the Executive shall be
entitled to receive his fully accrued and 100% Vested Benefit commencing on the
date determined under the Retirement Plan, as provided in Section 2.4, and shall
be entitled to receive other employee benefits, as provided in Section 2.6, for
the balance of the Employment Period.
Section 3.3. Nonqualifying Termination During Employment Period. If
--------------------------------------------------
the Executive's employment is terminated during the Employment Period due to a
Nonqualifying Termination, the Executive shall be entitled to receive his Base
Salary earned through the date of termination, any Annual Incentive Compensation
earned for the fiscal year preceding the date of termination, to the extent not
theretofore paid, and a pro-rata portion of the Executive's Annual Incentive
Compensation for the fiscal year in which the Executive's employment is
terminated, based on the number of days from the beginning of the fiscal year
through the date of termination, divided by 365, based on the extent to which
annual incentive targets are met, such amount, if any, to be determined and paid
not later than March 15 of the year next following the year for which the Annual
Incentive Compensation was earned, as well as his fully accrued and 100% Vested
Benefit under the Retirement Plan, as provided in Section 2.4.
Section 3.4. Release. All payments due under this Agreement upon
-------
termination of employment shall be subject to execution of a release in the form
of Exhibit A annexed.
ARTICLE IV.
QUALIFYING TERMINATION OF EMPLOYMENT WITHIN 24 MONTHS
FOLLOWING EFFECTIVE DATE
Section 4.1. Termination Within 24 Months Following Effective Date.
-----------------------------------------------------
If, within 24 months following the Effective Date, either (A) the Company or
Parent Company gives a notice of termination of the Executive's employment
without Cause, (B) the employment of the Executive is terminated by the
Executive, other than by (i) a Nonqualifying Termination or (ii) a Termination
----- ----
for Good Reason pursuant to Section 3.1(C)(1)(i) or (ii), after the Company or
the Parent Company has offered (x) to continue to employ the Executive as
Executive Vice President, with future responsibilities for strategic planning or
their equivalent, (y) the continued ability to report to the Chief Executive
Officer of the Company (which may be in addition to reporting to other
appropriate officers of the Parent Company), and (z) to appoint or otherwise
permit the Executive to continue his service on the Board of the Company, in
each case for the balance of the
8
<PAGE>
Employment Period, or (C) the Company or Parent Company takes any action which
would constitute Good Reason, but the Executive declines to terminate his
employment and continues to perform the services which are assigned to him, and
if any payments or benefits which are payable to the Executive are deemed
because of such action by the Company or Parent Company to constitute "parachute
payments" (as defined below), then in any such event the Company shall pay to
the Executive, in addition to amounts payable under any other provision of this
Agreement, the following additional amounts:
(A) Gross-Up Payments for Excise Taxes. In the event that the
----------------------------------
payments or benefits provided for in this Agreement or otherwise payable to the
Executive (either before or after the date of this Agreement) constitute
"parachute payments" within the meaning of Section 280G of the Internal Revenue
Code of 1986, as amended (the "Code") (or comparable provisions of applicable
state laws) and will be subject to the excise tax imposed by Section 4999 of the
Code (or comparable provisions of applicable state laws), then the Company shall
pay to the Executive or to relevant tax authorities (i) an amount sufficient to
satisfy such excise tax, and (ii) an additional amount sufficient to pay the
excise tax and all taxes (including, but not limited to, federal and state
income and employment taxes) arising from the payments made by the Company to
the Executive or to relevant tax authorities pursuant to this sentence
(collectively, the "Gross-Up Payments"). All determinations of the Executive's
excise tax liability shall be made in writing by PricewaterhouseCoopers LLP (the
"Accountants"). For purposes of making the calculations required by this
Section, the Accountants may make reasonable assumptions and approximations
concerning applicable taxes and may rely on reasonable, good faith
interpretations concerning the application of Sections 280G and 4999 of the Code
(or comparable provisions of applicable state laws). The Company and the
Executive shall furnish to the Accountants such information and documents as the
Accountants may reasonably request in order to make a determination under this
Section. The Company shall bear all fees and costs the Accountants may
reasonably charge or incur in connection with any calculations contemplated by
this Section. The Company further agrees that, if at any time any tax authority
determines that a greater excise tax liability is due than the amount which is
determined by the Accountants, the Executive shall receive a further payment
from the Company, or the Company shall pay to the relevant tax authorities, an
additional amount sufficient to pay such additional excise tax liability and all
taxes (including, but not limited to, federal and state income and employment
taxes) arising from such further payment. The Executive further agrees that if
at any time it is determined, by IRS ruling or otherwise, that, with regard to
tax liabilities described in this paragraph, less or no tax is due, then the
Executive agrees to cooperate fully with the Company and the Accountants to
apply for a refund or to claim a credit against his other tax liability for any
such taxes which were previously paid and to promptly pay to
9
<PAGE>
the Company any such refunds which he receives or any such credits which he
actually utilizes to reduce his other tax liabilities (net of any additional
taxes which are payable by him on account of receipt of such refund or claim of
such credit); and to repay to the Company any Gross-Up Payments which he
received to cover any such taxes which have not yet been paid (net of any
adverse tax effect upon the Executive on account of receipt of the Gross-Up
Payments in one calendar year and refund of such amounts in a subsequent
calendar year); provided that the Company shall hold the Executive harmless
against all costs and expenses incurred in obtaining such refund or in
confirming the right to claim such credit.
ARTICLE V.
INCOMPATIBLE ACTIVITIES, CONFIDENTIAL INFORMATION
Section 5.1. Incompatible Activities. During the Employment Period
-----------------------
and for a period of one year thereafter, the Executive:
(A) shall not engage in any activities, whether as employer,
proprietor, partner, stockholder (other than the holder of less than 5% of the
stock of a corporation the securities of which are traded on a national
securities exchange or the NASDAQ National Market System), director, officer,
employee or otherwise, in competition with (1) the businesses conducted at the
date hereof by the Company or Parent Company or (2) any business in which the
Company or Parent Company is substantially engaged at any time during the
Employment Period;
(B) shall not solicit, directly or indirectly, either alone or
through any person with whom the Executive is affiliated, in competition with
the Company or Parent Company, any person who is a customer of the businesses
conducted by the Company or Parent Company at the date hereof or of any business
in which the Company or Parent Company is substantially engaged at any time
during the Employment Period; and
(C) shall not, directly or indirectly, either alone or through any
person with whom the Executive is affiliated, induce or attempt to persuade any
employee of the Company or Parent Company to terminate his or her employment
relationship in order to enter into competitive employment, or hire any such
person within six months of his termination of employment from the Company.
Section 5.2. Trade Secrets. The Executive shall not, at any time
-------------
during the Employment Period or thereafter, make use of or divulge any trade
secrets or other confidential information of the Company or Parent Company,
except to the extent that such information becomes a matter of public record, is
published in a newspaper, magazine or other periodical available to the general
public, in each case, without unauthorized disclosure by the Executive, or as
the Company may so authorize in writing; and
10
<PAGE>
when the Executive shall cease to be employed by the Company, the Executive
shall surrender to the Company all records and other documents obtained by him
or entrusted to him during the course of his employment hereunder (together with
all copies thereof) which pertain specifically to any of the businesses covered
by the covenants in Section 5.1 or which were paid for by the Company.
Section 5.3. Scope of Covenants; Remedies. The following provisions
----------------------------
shall apply to the covenants of the Executive contained in Sections 5.1 and 5.2;
(A) the covenants contained in Section 5.1 shall apply within all the
territories in which the Company is actively engaged in the conduct of business
during the Employment Period, including, without limitation, the territories in
which customers are then being solicited;
(B) the Executive confirms and acknowledges that (i) he was
represented by counsel of his own choosing during the negotiation of the
limitations set forth in this Article V, (ii) his strict adherence to the
limitations imposed upon him was a material factor in Parent Company's entering
into the Merger Agreement and consummating the transactions contemplated
thereby, and agreeing to pay the Executive the cash and other compensation
called for in this Agreement, (iii) the Company's ability to maintain continuing
relationships with its employees without disruption was a material factor in
Parent Company's entering into the Merger Agreement and agreeing to consummate
the transactions contemplated thereby, (iv) his failure to adhere to the
obligations imposed by this Article V will expose Parent Company to substantial
and irreparable harm. Accordingly, the Executive agrees that the remedy at law
for any breach by him of the covenants and agreements set forth in this Article
V may be inadequate and that in the event of any such breach, the Company may,
in addition to the other remedies that may be available to it at law, seek
injunctive relief prohibiting him (together with all those persons associated
with him) from breach of such covenants and agreements;
(C) each party intends and agrees that if in any action before any
court or agency legally empowered to enforce the covenants contained in Sections
5.1 and 5.2 any term, restriction, covenant or promise contained therein is
found to be unreasonable and accordingly unenforceable, then such term,
restriction, covenant or promise shall be deemed modified to the extent
necessary to make it enforceable by such court or agency; and
(D) the covenants contained in Sections 5.1 and 5.2 shall survive the
conclusion of the Executive's employment by the Company.
11
<PAGE>
ARTICLE VI.
MISCELLANEOUS
Section 6.1. Agreement to Defend and Indemnify; Officers and
-----------------------------------------------
Directors Liability Insurance. The Company shall indemnify, hold harmless and
- -----------------------------
defend the Executive, and shall maintain officers and directors liability
insurance covering the Executive, subject to the provisions and for the period
specified in Section 6.8 of the Merger Agreement (as defined in Section 2.4
hereof). This section 6.1 shall survive the end of the Employment Period and
shall remain in effect for the period specified in Section 6.8 of the Merger
Agreement.
Section 6.2. Services as Officer or Director. Promptly following the
-------------------------------
commencement of, and at all times during, the Employment Period, the Executive
shall be entitled to be nominated for election as a director of the Company. If
elected or appointed, the Executive shall serve as a director of the Company and
as an officer and/or director of all current and future subsidiaries and
affiliates of the Company without any additional compensation for such services.
Section 6.3. Key-Person Insurance. The Executive shall aid the
--------------------
Company in procuring any life, health, accident, disability or other insurance
which the Company should at any time apply for in its own name and at its own
expense to insure the Company's obligations hereunder, by submitting to the
usual and customary medical examinations and by completing, executing and
delivering such applications and other instruments in writing as may be
reasonably required by any insurance company or companies.
Section 6.4. Notices. Any notice or request required or permitted to
-------
be given hereunder shall be in writing and shall be made by hand delivery,
first-class mail (registered or certified, return receipt requested), telecopier
or overnight courier guaranteeing next business day delivery to the relevant
address set forth in the signature blocks below or to any other address
designated by either party by notice similarly given. Each such notice shall be
deemed to have been given, at the time delivered, if personally delivered or
mailed (with sufficient postage prepaid); when receipt is acknowledged, if
telecopied; and the next business day after timely delivery to the courier, if
sent by overnight air courier guaranteeing next business day delivery.
Section 6.5. Assignment and Succession. The rights and obligations
-------------------------
of the Company and Parent Company under this Agreement shall inure to the
benefit of and be binding upon their successors and assigns, and the Executive's
rights and obligations hereunder shall inure to the benefit of and be binding
upon his estate, legal representatives and guardians.
12
<PAGE>
Section 6.6. Headings. The Article, Section, paragraph and
--------
subparagraph headings are for convenience of reference only and shall not define
or limit the provisions hereof.
Section 6.7. Joint Employment; Guaranty by Parent Company.
--------------------------------------------
Pinkerton's Inc. ("Pinkerton") has a wholly owned subsidiary, Pinkerton
Management Corporation (f.k.a. District Security) ("PMC") for the purpose of
employing all of the employees located at Pinkerton world headquarters, and the
Executive shall be jointly employed by Pinkerton and PMC under the terms and
conditions set forth in this Agreement. Pinkerton and PMC shall be jointly and
severally liable for satisfying any obligation that Company may have under this
Agreement. Parent Company irrevocably, absolutely and unconditionally
guarantees to the Executive the full and timely performance of the Company's
financial obligations pursuant to this Agreement. This guaranty is a payment
guaranty and not a guaranty of collection. Parent Company waives any right to
require the Executive to file suit and proceed against the Company.
Section 6.8. Payment of Professional Fees. The Company shall pay the
----------------------------
professional fees incurred by the Executive in connection with entering into
this Agreement.
Section 6.9. Entire Agreement. This Agreement shall be effective
----------------
from and after the Effective Date and sets forth the entire and final agreement
and understanding of the Company, the Parent Company and the Executive and
contains all of the agreements made between them with respect to the subject
matter hereof. As of the Effective Date, this Agreement supersedes any and all
other agreements, either oral or in writing, between the Company and the
Executive with respect to the Executive's provision of services to the Company
and his termination of employment therefrom. No change or modification of this
Agreement shall be valid unless in writing and signed by the Company, the Parent
Company and the Executive. Until this Agreement becomes effective on the
Effective Date, the current employment agreement and arrangements which are in
effect between the Company and the Executive shall remain in full force and
effect.
Section 6.10. Applicable Law and Venue. This Agreement shall at all
------------------------
times be governed by and construed, interpreted and enforced in accordance with
the laws of the State of California without giving effect to its choice of law
rules. The parties agree that the courts of the State of California shall have
jurisdiction over all disputes which arise under this Agreement or otherwise
relate to the employment or termination of employment of the Executive by the
Company and Parent Company. The parties further agree that the courts chosen
for resolution of all such disputes shall be located in Los Angeles County,
California.
13
<PAGE>
Section 6.11. Counterparts. This Agreement may be executed in one or
------------
more counterparts, each of which will be deemed to be an original copy of this
Agreement and all of which, when taken together, will be deemed to constitute
one and the same agreement.
Section 6.12. Waiver of Breach. A waiver by the Company or the
----------------
Parent Company of a breach of any provision of this Agreement by the Executive
shall not operate or be construed as a waiver of any subsequent breach by the
Executive. No waiver shall be valid unless it is in writing and signed by an
authorized officer of each of the Company (other than the Executive) and the
Parent Company.
Section 6.13. Assignment. The Executive acknowledges that the
----------
services he is to render are unique and personal. Accordingly, the Executive
may not assign any of his rights or delegate any of his duties or obligations
under this Agreement. The rights and obligations of the Company under this
Agreement shall inure to the benefit of and shall be binding upon the successors
and assigns of the Company.
Section 6.14. Tax Withholding. All payments under this Agreement
---------------
shall be subject to such deductions or withholdings for all taxes and other
purposes as shall at the time of such payment be required by applicable law.
14
<PAGE>
IN WITNESS WHEREOF, the Company and Parent Company have caused this
Agreement to be signed by their duly authorized officers, and the Executive has
signed this Agreement as of the day and year first above written.
<TABLE>
<CAPTION>
<S> <C>
COMPANY: PINKERTON'S, INC.
World Support Center
4330 Park Terrace Drive
Westlake Village, CA 91361
BY: /s/ Denis R. Brown
----------------------------
PINKERTON MANAGEMENT CORPORATION
World Support Center
4330 Park Terrace Drive
Westlake Village, CA 91361
BY: /s/ Denis R. Brown
----------------------------
PARENT COMPANY: SECURITAS AB
Box 12307
5-102 28
Stockholm, Sweden
BY: /s/ Thomas Berglund
----------------------------
EXECUTIVE: James P. McCloskey
24983 Lorena Drive
Calabasas, CA 91302
BY: /s/ James P. McCloskey
----------------------------
</TABLE>
15
<PAGE>
EXHIBIT A
SEPARATION AND RELEASE AGREEMENT
This Separation and Release Agreement ("Agreement") is entered into as of
this ___ day of ___________, between [Company] and any successor thereto
(collectively, the "Company") and [Executive] (the "Executive").
The Executive and the Company agree as follows:
1. The employment relationship between the Executive and the Company
terminated on ____________ (the "Termination Date").
2. In accordance with the Employment Agreement between the Company and
Executive dated as of February 19, 1999, as amended (the "Employment
Agreement"), the Company has agreed to pay the Executive certain payments and to
make certain benefits available after the Termination Date, which are listed on
Schedule A annexed hereto.
3. The Company agrees to continue to be bound by Article IV and Sections 6.1
and 6.7 of the Employment Agreement.
4. In consideration of the above, the sufficiency of which the Executive
hereby acknowledges, the Executive, on behalf of the Executive and the
Executive's heirs, executors and assigns, hereby releases and forever discharges
the Company and its, parents, affiliates, subsidiaries, divisions, any and all
current and former directors, officers, employees, agents, and contractors and
their heirs and assigns, and any and all employee pension benefit or welfare
benefit plans of the Company, including current and former trustees and
administrators of such employee pension benefit and welfare benefit plans, from
all claims, charges, or demands, in law or in equity, whether known or unknown,
which may have existed or which may now exist from the beginning of time to the
date of this Agreement, including, without limitation, any claims the Executive
may have arising from or relating to the Executive's employment or termination
from employment with the Company, including a release of any rights or claims
the Executive may have under Title VII of the Civil Rights Act of 1964, as
amended, and the Civil Rights Act of 1991 (which prohibit discrimination in
employment based upon race, color, sex, religion, and national origin); the
Americans with Disabilities Act of 1990, as amended, and the Rehabilitation Act
of 1973 (which prohibit discrimination based upon disability); the Family and
Medical Leave Act of 1993 (which prohibits discrimination based on requesting or
taking a family or medical leave); Section 1981 of the Civil Rights Act of 1866
(which prohibits conspiracies to discriminate); the Employee Retirement Income
Security Act of 1974, as amended (which prohibits discrimination with regard to
benefits); any other federal, state, or local laws against discrimination; or
any other federal, state or local statute, or common law relating to employment,
wages, hours, or any other terms and conditions of
<PAGE>
employment. This includes a release by the Executive of any claims for wrongful
discharge, breach of contract, torts or any other claims in any way related to
the Executive's employment with or resignation or termination from the Company.
This release also includes a release of any claims for age discrimination under
the Age Discrimination in Employment Act of 1967, as amended ("ADEA"). The ADEA
requires that the Executive be advised to consult with an attorney before the
Executive waives any claim under ADEA. In addition, the ADEA provides the
Executive with at least 21 days to decide whether to waive claims under ADEA and
seven days after the Executive signs the Agreement to revoke that waiver. This
release does not release the Company from any obligations due to the Executive
under the Company's Supplemental Retirement Income Plan, as amended by the
Employment Agreement, or under this Agreement.
5. This Agreement is not an admission by either the Executive or the Company
of any wrongdoing or liability.
6. The Executive waives any right to reinstatement or future employment with
the Company following the Executive's separation from the Company on the
Termination Date.
7. The Executive agrees not to engage in any act after execution of the
Separation and Release Agreement that is intended, or may reasonably be expected
to harm the reputation, business, prospects or operations of the Company, its
officers, directors, stockholders or employees, provided this paragraph shall
not extend the limitation on "incompatible activities" which is contained in
Section 5.1 of the Employment Agreement. The Company further agrees that it
will engage in no act which is intended, or may reasonably be expected to harm
the reputation, business or prospects of the Executive. This paragraph shall
not prohibit either party from cooperating with government agencies.
8. The Executive shall continue to be bound by Article V of the Employment
Agreement.
9. The Executive shall promptly return all the Company property in the
Executive's possession, including, but not limited to, the Company keys, credit
cards, cellular phones, computer equipment, software and peripherals and
originals or copies of books, records or other information pertaining to the
Company business.
10. This Agreement shall be governed by and construed in accordance with the
laws of the State of California, without reference to the principles of conflict
of laws. The jurisdiction and venue for any disputes arising under this
Agreement shall be governed by Section 6.10 of the Employment Agreement.
11. This Agreement represents the complete agreement between the Executive
and the Company concerning the subject
-2-
<PAGE>
matter in this Agreement and supersedes all prior agreements or understandings,
written or oral. This Agreement may not be amended or modified otherwise than by
a written agreement executed by the parties hereto or their respective
successors and legal representatives.
12. Each of the sections contained in this Agreement shall be enforceable
independently of every other section in this Agreement, and the invalidity or
nonenforceability of any section shall not invalidate or render unenforceable
any other section contained in this Agreement.
13. It is further understood that for a period of 7 days following the
execution of this Agreement in duplicate originals, the Executive may revoke
this Agreement, and this Agreement shall not become effective or enforceable
until the revocation period has expired. No revocation of this Agreement by the
Executive shall be effective unless the Company has received within the 7-day
revocation period, written notice of any revocation, all moneys received by the
Executive under this Agreement and all originals and copies of this Agreement.
14. This Agreement has been entered into voluntarily and not as a result of
coercion, duress, or undue influence. The Executive acknowledges that the
Executive has read and fully understands the terms of this Agreement and has
been advised to consult with an attorney before executing this Agreement.
Additionally, the Executive acknowledges that the Executive has been afforded
the opportunity of at least 21 days to consider this Agreement.
The parties to this Agreement have executed this Agreement as of the day
and year first written above.
[Company]
By:___________________________________
Name:
Title:
______________________________________
[Executive]
-3-
<PAGE>
EXHIBIT 99(c)(7)
EXECUTION COPY
EMPLOYMENT AGREEMENT
Employment Agreement (this "Agreement") dated as of February 19, 1999
between Don W. Walker (the "Executive"), PINKERTON'S INC. and PINKERTON
MANAGEMENT CORPORATION (together the "Company"), and SECURITAS AB (the "Parent
Company").
WHEREAS, the Company and Parent Company desire to employ the Executive
as the Company's Executive Vice President, Operations, and the Executive desires
to accept such employment, for the term and upon the other conditions set forth
below;
WHEREAS, this Agreement shall be effective from and after the
occurrence of the Effective Date, as hereinafter defined in Section 2.4;
NOW, THEREFORE, in consideration of the agreements and covenants
contained herein, the Executive, Company and Parent Company agree as follows:
ARTICLE I.
EMPLOYMENT
Section 1.1. Position; Term; Responsibilities
--------------------------------
The Company shall employ the Executive as its Executive Vice
President, Operations for a term commencing on the Effective Date and ending on
the third anniversary of the Effective Date. The term during which the
Executive is to be employed by the Company under this Agreement is hereinafter
referred to as the "Employment Period." The Executive shall report directly to
the President and Chief Executive Officer of the Company. The Parent Company
currently contemplates that the Company will be maintained by the Parent Company
as a separate operating entity responsible for all operations in North America,
South America, Asia and worldwide investigations, subject to changes determined
by the Parent Company in the event of future acquisitions or sales of
businesses. The Executive shall continue to have the principal responsibilities
and authorities in effect on the date of this Agreement (after giving effect to
the change in the Company's status from a public company to a non-public
separate operating entity of a public company), and shall also perform such
other executive and administrative duties on behalf of the Company, its
subsidiaries and affiliates (collectively, the "Company"), as may from time to
time be authorized or directed by the President and Chief Executive Officer of
the Company. The Executive shall also serve as a member of Group Management of
the Parent Company during the Employment Period. The Executive agrees to remain
employed by the Company in all such capacities
<PAGE>
for the Employment Period, subject to all of the covenants and conditions
hereinafter set forth.
Section 1.2. Duties. During the Employment Period, the Executive
------
shall perform faithfully the duties assigned to him hereunder to the best of his
abilities and devote his full and undivided business time and attention to the
transaction of the Company's businesses and to use his best efforts to perform
faithfully and efficiently the responsibilities assigned to him. To the extent
not substantially interfering with the performance of his responsibilities under
this Agreement and to the extent consistent with current Board policy on
February 1, 1999, the Executive may continue to devote time to civic,
professional and charitable activities and continue to serve on the board of
directors of other companies, and shall not engage in any other business
activities except with the prior written approval of the President and Chief
Executive Officer of the Parent Company.
ARTICLE II.
COMPENSATION
Section 2.1. Base Salary. As compensation for the Executive's
-----------
services hereunder, the Company shall pay to the Executive during the Employment
Period an annual salary of $373,252, payable in installments in accordance with
the Company's normal payment schedule for its senior management. The Company
shall conduct an annual review of the Executive's performance and current Base
Salary and, in its discretion, may increase the Executive's annual base salary
in any year during the Employment Period. The Executive's annual salary in
effect from time to time under this Section 2.1 is hereinafter referred to as
"Base Salary."
Section 2.2. Annual Incentive Compensation.
-----------------------------
(A) Formula for Determining. In addition to his Base Salary, the
-----------------------
Executive shall be eligible to receive as annual incentive compensation ("Annual
Incentive Compensation"), in respect of each fiscal year of the Company or
portion thereof included within the Employment Period, a cash bonus determined
as follows:
(i) 1999 - The Executive shall be eligible to receive Annual
Incentive Compensation determined in accordance with the 1999 Annual Incentive
Program set forth in Appendix A hereto (the "1999 Program").
(ii) Subsequent Fiscal Years - The President and Chief Executive
Officer of the Parent Company, after consultation with the Chief Executive
Officer of the Company, shall establish annually an Annual Incentive
Compensation program (similar to the 1999 Program) which shall provide the
Executive with a target annual bonus opportunity percentage equal to 45% of his
Base Salary and a maximum annual bonus opportunity percentage equal to
2
<PAGE>
200% of his target annual bonus. The Executive shall be eligible to receive a
pro-rated bonus determined under the program for the fiscal year in which he
terminates employment (based on the number of days from the beginning of the
fiscal year through the date of termination, divided by 365), which shall be
paid at the time such bonuses are normally payable, based on actual results for
the completed fiscal year. The Executive shall be entitled to receive not less
than his target Annual Incentive Compensation for all fiscal years of the
Company during the Employment Period which end after a future Change in Control
(as defined in Section 3.1(B)) of the Company or the Parent Company.
(B) Time of Payment. The amount of Annual Incentive Compensation
---------------
earned hereunder shall be paid to the Executive as soon as reasonably
practicable following the delivery to the Board of audited financial statements
for the Company with respect to each completed fiscal year of the Company. The
Parent Company shall cause such statements to be prepared as soon as practicable
after the end of the Company's fiscal year, and in any event, the amount, if
any, required to be paid for any year under this Section 2.2 shall be determined
and paid not later than March 15 of the year next following the year for which
the bonus is paid.
Section 2.3. Long-Term Incentive Compensation.
--------------------------------
(A) Formula for Determining. In addition to his Base Salary and
-----------------------
Annual Incentive Compensation, the Executive shall be eligible to receive as
long-term incentive compensation ("Long-Term Incentive Compensation"), in
respect of the Company's fiscal years from 1999 through 2001, a long-term
incentive cash bonus determined in accordance with the Long-Term Incentive
Program set forth in Appendix B hereto. The Long-Term Incentive Program shall
provide the Executive with a target long-term incentive bonus for fiscal years
1999 through 2001 equal to $840,000 and a maximum long-term incentive bonus for
such fiscal years equal to 150% of his target amount. The Executive shall be
entitled to receive not less than his target Long-Term Incentive Compensation
for fiscal years 1999 through 2001 if there is a future Change in Control (as
defined in Section 3.1(B)) of the Company or Parent Company prior to December
31, 2001.
(B) Time of Payment. The amount of Long-Term Incentive
---------------
Compensation earned hereunder for fiscal years 1999 through 2001 shall be paid
to the Executive as soon as reasonably practicable following delivery to the
Board of audited financial statements for the Company's fiscal year that ends in
December, 2001. The Parent Company shall cause such statements to be prepared as
soon as practicable after the end of the Company's fiscal year which ends in
2001 and in any event, the amount, if any, required to be paid under Section 2.3
shall be determined and paid not later than March 15, 2002.
3
<PAGE>
Section 2.4. Supplemental Retirement Income Plan. The Executive's
-----------------------------------
Benefit under Section 4.1 of the Company's Supplemental Retirement Income Plan,
as amended, and related Appendices I and II, which were furnished to Parent
Company prior to January 23, 1999 (together, the "Retirement Plan"), commencing
upon the Executive's Normal Retirement Age in the Normal Benefit Form, shall be
fifty-two and one-half percent (52.5%) of his Final Average Monthly
Compensation, and such Benefit shall be fully accrued and 100% Vested, effective
upon the Effective Date (as defined below), notwithstanding any contrary
provision of the Retirement Plan or of the Appendices. The Final Average
Monthly Compensation which is used to calculate the Executive's Benefit shall in
no event be less than it would have been if the Executive had terminated
employment on the Effective Date (or not less than $35,888.23). The terms
"Benefit", "Final Average Monthly Compensation", Normal Benefit Form, Normal
Retirement Age and "Vested" shall have the meanings set forth in the Retirement
Plan. The "Effective Date" shall mean the time that the Purchaser or the Parent
purchases any of the Shares of the Company pursuant to the Offer, as such terms
are defined in the Agreement and Plan of Merger among Target (herein the
"Company"), Parent (herein the "Parent Company") and Purchaser (a wholly-owned
subsidiary of the Parent Company) dated as of the same date hereof (the "Merger
Agreement"). Except as provided in this Section 2.4, the Executive's Benefit
shall be calculated and paid in accordance with the terms and conditions of the
Retirement Plan. The Retirement Plan shall automatically be amended to reflect
the provisions of this Section 2.4, effective as of the Effective Date, without
further action of the Company or the Executive.
Section 2.5. Incapacity. If at any time during the Employment Period
----------
the Executive is unable to perform fully his duties hereunder by reasons of
illness, accident or other disability (as confirmed by competent medical
evidence acceptable to a licensed physician selected by the Company)
(hereinafter "incapacity"), during the first six months of such incapacity he
shall be entitled to receive Base Salary and shall continue to be considered as
actively employed for purposes of determining his eligibility for target Annual
and Long-Term Incentive Compensation determined in accordance with Sections 2.1,
2.2 and 2.3. If the Executive shall resume the full performance of his duties
hereunder following any period of incapacity, he shall thereafter be entitled to
receive Base Salary and Annual and Long-Term Incentive Compensation as provided
in Sections 2.1, 2.2 and 2.3. Notwithstanding the foregoing provisions of this
Section 2.5, the amounts payable to the Executive under this Section 2.5 shall
be reduced by any amounts received by the Executive with respect to any such
incapacity pursuant to any insurance policy, plan or other employee benefit
provided to the Executive and paid for or reimbursed by the Company. During any
period of incapacity in which the Executive does not receive Base Salary and
Annual Incentive Compensation, the Company will make available to the Executive
until his 65th Birthday disability
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benefits payable to the Executive aggregating at least $200,000 per annum,
subject to the Company's ability to obtain long-term disability insurance for
the Executive at a standard (i.e., non-rated) premium charge. The Company shall
pay the premium on any such individual disability insurance policy. Any
termination of the Executive's employment during the Employment Period as a
result of the Executive's incapacity which results in his qualification for
benefits under the Company's long-term disability program covering the Executive
shall be a qualifying termination of employment under Section 3.2, and the
Executive shall be entitled to receive the payments specified in Section 3.2,
less any disability benefits provided through Company-provided disability
benefits.
Section 2.6. Other Employee Benefits. The Executive shall be
-----------------------
entitled to participate in all employee benefits plans and to receive all fringe
benefits that are from time to time made generally available to senior
management of the Company, including a leased automobile (equivalent to his
leased automobile as of the date of this Agreement). The employee benefits made
available to the Executive, other than plans described in Section 2.2 and 2.3
and plans providing for benefits in the form of, or investments in, Company
stock ("Excluded Benefits"), in the aggregate shall be at least comparable in
value to the employee benefits (less the Excluded Benefits) made available to
the Executive immediately prior to the Effective Date.
In addition to the foregoing, the Company will continue to make
available to the Executive $1,500,000 of life insurance during the Employment
Period. The amount of life insurance coverage shall be satisfied by aggregating
the death benefits payable to the Executive's beneficiary under the Company's
group insurance policy and other individual life insurance. The Company agrees
to pay the annual premium on any such insurance policies up to a maximum of
$5,000 per year during the Employment Period. The Company also agrees to pay
the cost of annual physical exams for the Executive.
Section 2.7. Expense Reimbursements. The Company shall reimburse the
----------------------
Executive for all proper expenses incurred by him in the performance of his
duties hereunder in accordance with the policies and procedures established by
the Company.
ARTICLE III.
TERMINATION OF EMPLOYMENT
Section 3.1. Definition of Certain Terms. As used in this Agreement,
---------------------------
the following terms shall have the respective meanings set forth below:
(A) "Cause" means (1) a material breach by the Executive of those
duties and responsibilities of the Executive which do not differ in any material
respect from the duties and
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responsibilities of the Executive on the date of this Agreement (other than as a
result of incapacity due to physical or mental illness) which is demonstrably
willful and deliberate on the Executive's part, which is committed in bad faith
or without reasonable belief that such breach is in the best interests of the
Company and which is not remedied in a reasonable period of time after receipt
of written notice from the Company specifying such breach or (2) the commission
by the Executive of a crime involving moral turpitude.
(B) "Change in Control" of the Company means (i) any sale or
transfer of stock of the Company after which the Parent Company will no longer
own, directly or indirectly, a majority of the combined voting power of
outstanding securities of the Company or (ii) any sale or transfer of a majority
of the assets of the Company, after which the Parent Company will no longer own,
directly or indirectly, a majority of the combined voting power or other voting
interests of the entity to which such assets are transferred. "Change in
Control" of the Parent Company means any acquisition by any individual, entity
or group of securities of the Parent Company which have a majority of the
combined voting power of outstanding securities of the Parent Company.
(C) "Good Reason" means, without the Executive's express written
consent, the occurrence of any of the following events, unless cured by the
Company or the Parent Company within a reasonable period of time after receipt
of written notice from the Executive specifying such breach:
(1) any of (i) the assignment to the Executive of duties which are
materially inconsistent with the Executive's position(s), duties,
responsibilities or status with the Company and Parent Company as described in
Section 1.1, (ii) a material change in the Executive's reporting
responsibilities, titles or offices with the Company and Parent Company as
described in Section 1.1, or (iii) any removal or involuntary termination of the
Executive from the Company otherwise than as expressly permitted by this
Agreement or any failure to appoint the Executive as a member of the Group
Management of the Parent Company;
(2) a reduction by the Company in the Executive's Base Salary as
in effect on the Effective Date of this Agreement or as the same may be
increased from time to time thereafter;
(3) any requirement of the Company that the Executive (i) be based
anywhere other than at a facility in the same metropolitan area as the facility
where the Executive is located on the Effective Date of this Agreement or (ii)
travel on the Company business to an extent substantially more burdensome than
the level of obligations of the Executive as of the Effective Date of this
Agreement (taking into account the expanded
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international scope of the Executive's responsibilities following the Effective
Date of this Agreement); or
(4) the failure of the Company to provide the benefits agreed to
be provided under this Agreement.
(D) "Nonqualifying Termination" means a termination of the
Executive's employment (1) by the Company for Cause, (2) by the Executive for
any reason other than a Good Reason, or (3) as a result of the Executive's
death. Any Nonqualifying Termination shall become effective on (i) the date set
forth in a written notice from the Company or the Executive (with respect to
clauses (1) and (2) above) or (ii) the date of the Executive's death (with
respect to clause (3) above). Termination of the Executive's employment during
the Employment Period as result of the Executive's incapacity which results in
his qualification for benefits under the Company's long-term disability program
covering the Executive shall be a qualifying termination of employment under
Section 3.2.
Section 3.2. Qualifying Termination During Employment Period. If
-----------------------------------------------
during the Employment Period the employment of the Executive shall terminate,
other than by reason of a Nonqualifying Termination, the Company shall pay to
the Executive (or the Executive's beneficiary or estate) within 30 days
following the date upon which the Executive's employment is terminated, as
compensation for services rendered to the Company:
(1) a cash amount equal to the sum of the Executive's Base Salary
earned through such date of termination, to the extent not theretofore paid, and
the Executive's Annual Incentive Compensation, to the extent not theretofore
paid, for fiscal years ending prior to the date of termination; and
(2) a lump-sum cash payment in an amount equal to the sum of the
Executive's (x) Base Salary plus target Annual Incentive Compensation for the
balance of the Employment Period (including the target Annual Incentive
Compensation for the entire fiscal year in which the Executive's employment is
terminated, but prorated as described in Section 2.2(A)(ii) with respect to
fiscal year 2002) plus (y) target Long-term Incentive Compensation for fiscal
years 1999 through 2001, each as in effect on such date of termination;
provided, however, that (A) if the Executive's employment is terminated by the
Executive for Good Reason during the Employment Period, the amount, if any,
payable with respect to Annual and Long-Term Incentive Compensation shall be
calculated on the basis of actual performance and paid as soon as practicable
after the Company's performance has been established, (B) if the Executive's
employment is terminated by the Company without Cause during the Employment
Period, the amount payable with respect to Annual and Long-Term Incentive
Compensation shall be based on target Annual Incentive Compensation for the
balance of the Employment Period (including the entire fiscal year in which the
Executive's
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<PAGE>
employment is terminated, but prorated as described in Section 2.2(A)(ii) with
respect to fiscal year 2002) and target Long-Term Incentive Compensation for
fiscal years 1999 through 2001, each as in effect on the date of termination,
such amount to be paid in a cash lump sum within 30 days of the date of
termination, and (C) any amount paid pursuant to this Section shall be paid in
lieu of all other severance, salary or bonus continuation, and Annual or Long-
Term Incentive Compensation to be received by the Executive upon termination of
employment of the Executive under any plan, policy or arrangement of the
Company. In addition, the Executive shall be entitled to receive his fully
accrued and 100% Vested Benefit commencing on the date determined under the
Retirement Plan, as provided in Section 2.4, and shall be entitled to receive
other employee benefits, as provided in Section 2.6, for the balance of the
Employment Period.
Section 3.3. Nonqualifying Termination During Employment Period. If
--------------------------------------------------
the Executive's employment is terminated during the Employment Period due to a
Nonqualifying Termination, the Executive shall be entitled to receive his Base
Salary earned through the date of termination, any Annual Incentive Compensation
earned for the fiscal year preceding the date of termination, to the extent not
theretofore paid, and a pro-rata portion of the Executive's Annual Incentive
Compensation for the fiscal year in which the Executive's employment is
terminated, based on the number of days from the beginning of the fiscal year
through the date of termination, divided by 365, based on the extent to which
annual incentive targets are met, such amount, if any, to be determined and paid
not later than March 15 of the year next following the year for which the Annual
Incentive Compensation was earned, as well as his fully accrued and 100% Vested
Benefit under the Retirement Plan, as provided in Section 2.4.
Section 3.4. Release. All payments due under this Agreement upon
-------
termination of employment shall be subject to execution of a release in the form
of Exhibit A annexed.
ARTICLE IV.
QUALIFYING TERMINATION OF EMPLOYMENT WITHIN 24 MONTHS
FOLLOWING EFFECTIVE DATE
Section 4.1. Termination Within 24 Months Following Effective Date.
-----------------------------------------------------
If, within 24 months following the Effective Date, either (A) the Company or
Parent Company gives a notice of termination of the Executive's employment
without Cause, (B) the employment of the Executive is terminated by the
Executive, other than by (i) a Nonqualifying Termination or (ii) a Termination
----- ----
for Good Reason pursuant to Section 3.1(C)(1)(i) or (ii) or as a result of
failure to appoint or reappoint the Executive as a member of the Group
Management of the Parent Company pursuant to Section 3.1(C)(l)(iii), after the
Company or the Parent Company has offered (x) to continue to employ the
Executive as Executive Vice President, with future responsibilities for
strategic
8
<PAGE>
planning or their equivalent, (y) the continued ability to report to the Chief
Executive Officer of the Company (which may be in addition to reporting to other
appropriate officers of the Parent Company), and (z) to appoint or otherwise
permit the Executive to continue his service on the Board of the Company, in
each case for the balance of the Employment Period, or (C) the Company or Parent
Company takes any action which would constitute Good Reason, but the Executive
declines to terminate his employment and continues to perform the services which
are assigned to him, and if any payments or benefits which are payable to the
Executive are deemed because of such action by the Company or Parent Company to
constitute "parachute payments" (as defined below), then in any such event the
Company shall pay to the Executive, in addition to amounts payable under any
other provision of this Agreement, the following additional amounts:
(A) Gross-Up Payments for Excise Taxes. In the event that the
----------------------------------
payments or benefits provided for in this Agreement or otherwise payable to the
Executive (either before or after the date of this Agreement) constitute
"parachute payments" within the meaning of Section 280G of the Internal Revenue
Code of 1986, as amended (the "Code") (or comparable provisions of applicable
state laws) and will be subject to the excise tax imposed by Section 4999 of the
Code (or comparable provisions of applicable state laws), then the Company shall
pay to the Executive or to relevant tax authorities (i) an amount sufficient to
satisfy such excise tax, and (ii) an additional amount sufficient to pay the
excise tax and all taxes (including, but not limited to, federal and state
income and employment taxes) arising from the payments made by the Company to
the Executive or to relevant tax authorities pursuant to this sentence
(collectively, the "Gross-Up Payments"). All determinations of the Executive's
excise tax liability shall be made in writing by PricewaterhouseCoopers LLP (the
"Accountants"). For purposes of making the calculations required by this
Section, the Accountants may make reasonable assumptions and approximations
concerning applicable taxes and may rely on reasonable, good faith
interpretations concerning the application of Sections 280G and 4999 of the Code
(or comparable provisions of applicable state laws). The Company and the
Executive shall furnish to the Accountants such information and documents as the
Accountants may reasonably request in order to make a determination under this
Section. The Company shall bear all fees and costs the Accountants may
reasonably charge or incur in connection with any calculations contemplated by
this Section. The Company further agrees that, if at any time any tax authority
determines that a greater excise tax liability is due than the amount which is
determined by the Accountants, the Executive shall receive a further payment
from the Company, or the Company shall pay to the relevant tax authorities, an
additional amount sufficient to pay such additional excise tax liability and all
taxes (including, but not limited to, federal and state income and employment
taxes) arising from such further payment. The Executive further agrees that if
at any time it is determined, by IRS ruling or
9
<PAGE>
otherwise, that, with regard to tax liabilities described in this paragraph,
less or no tax is due, then the Executive agrees to cooperate fully with the
Company and the Accountants to apply for a refund or to claim a credit against
his other tax liability for any such taxes which were previously paid and to
promptly pay to the Company any such refunds which he receives or any such
credits which he actually utilizes to reduce his other tax liabilities (net of
any additional taxes which are payable by him on account of receipt of such
refund or claim of such credit); and to repay to the Company any Gross-Up
Payments which he received to cover any such taxes which have not yet been paid
(net of any adverse tax effect upon the Executive on account of receipt of the
Gross-Up Payments in one calendar year and refund of such amounts in a
subsequent calendar year); provided that the Company shall hold the Executive
harmless against all costs and expenses incurred in obtaining such refund or in
confirming the right to claim such credit.
ARTICLE V.
INCOMPATIBLE ACTIVITIES, CONFIDENTIAL INFORMATION
Section 5.1. Incompatible Activities. During the Employment Period
-----------------------
and for a period of one year thereafter, the Executive:
(A) shall not engage in any activities, whether as employer,
proprietor, partner, stockholder (other than the holder of less than 5% of the
stock of a corporation the securities of which are traded on a national
securities exchange or the NASDAQ National Market System), director, officer,
employee or otherwise, in competition with (1) the businesses conducted at the
date hereof by the Company or Parent Company or (2) any business in which the
Company or Parent Company is substantially engaged at any time during the
Employment Period;
(B) shall not solicit, directly or indirectly, either alone or
through any person with whom the Executive is affiliated, in competition with
the Company or Parent Company, any person who is a customer of the businesses
conducted by the Company or Parent Company at the date hereof or of any business
in which the Company or Parent Company is substantially engaged at any time
during the Employment Period; and
(C) shall not, directly or indirectly, either alone or through any
person with whom the Executive is affiliated, induce or attempt to persuade any
employee of the Company or Parent Company to terminate his or her employment
relationship in order to enter into competitive employment, or hire any such
person within six months of his termination of employment from the Company.
Section 5.2. Trade Secrets. The Executive shall not, at any time
-------------
during the Employment Period or thereafter, make use of or divulge any trade
secrets or other confidential information
10
<PAGE>
of the Company or Parent Company, except to the extent that such information
becomes a matter of public record, is published in a newspaper, magazine or
other periodical available to the general public, in each case, without
unauthorized disclosure by the Executive, or as the Company may so authorize in
writing; and when the Executive shall cease to be employed by the Company, the
Executive shall surrender to the Company all records and other documents
obtained by him or entrusted to him during the course of his employment
hereunder (together with all copies thereof) which pertain specifically to any
of the businesses covered by the covenants in Section 5.1 or which were paid for
by the Company.
Section 5.3. Scope of Covenants; Remedies. The following provisions
----------------------------
shall apply to the covenants of the Executive contained in Sections 5.1 and 5.2;
(A) the covenants contained in Section 5.1 shall apply within all
the territories in which the Company is actively engaged in the conduct of
business during the Employment Period, including, without limitation, the
territories in which customers are then being solicited;
(B) the Executive confirms and acknowledges that (i) he was
represented by counsel of his own choosing during the negotiation of the
limitations set forth in this Article V, (ii) his strict adherence to the
limitations imposed upon him was a material factor in Parent Company's entering
into the Merger Agreement and consummating the transactions contemplated
thereby, and agreeing to pay the Executive the cash and other compensation
called for in this Agreement, (iii) the Company's ability to maintain continuing
relationships with its employees without disruption was a material factor in
Parent Company's entering into the Merger Agreement and agreeing to consummate
the transactions contemplated thereby, (iv) his failure to adhere to the
obligations imposed by this Article V will expose Parent Company to substantial
and irreparable harm. Accordingly, the Executive agrees that the remedy at law
for any breach by him of the covenants and agreements set forth in this Article
V may be inadequate and that in the event of any such breach, the Company may,
in addition to the other remedies that may be available to it at law, seek
injunctive relief prohibiting him (together with all those persons associated
with him) from breach of such covenants and agreements;
(C) each party intends and agrees that if in any action before any
court or agency legally empowered to enforce the covenants contained in Sections
5.1 and 5.2 any term, restriction, covenant or promise contained therein is
found to be unreasonable and accordingly unenforceable, then such term,
restriction, covenant or promise shall be deemed modified to the extent
necessary to make it enforceable by such court or agency; and
11
<PAGE>
(D) the covenants contained in Sections 5.1 and 5.2 shall survive
the conclusion of the Executive's employment by the Company.
ARTICLE VI.
MISCELLANEOUS
Section 6.1. Agreement to Defend and Indemnify; Officers and
-----------------------------------------------
Directors Liability Insurance. The Company shall indemnify, hold harmless and
- -----------------------------
defend the Executive, and shall maintain officers and directors liability
insurance covering the Executive, subject to the provisions and for the period
specified in Section 6.8 of the Merger Agreement (as defined in Section 2.4
hereof). This section 6.1 shall survive the end of the Employment Period and
shall remain in effect for the period specified in Section 6.8 of the Merger
Agreement.
Section 6.2. Services as Officer or Director. Promptly following the
-------------------------------
commencement of, and at all times during, the Employment Period, the Executive
shall be entitled to be nominated for election as a director of the Company. If
elected or appointed, the Executive shall serve as a director of the Company and
as an officer and/or director of all current and future subsidiaries and
affiliates of the Company without any additional compensation for such services.
Section 6.3. Key-Person Insurance. The Executive shall aid the
--------------------
Company in procuring any life, health, accident, disability or other insurance
which the Company should at any time apply for in its own name and at its own
expense to insure the Company's obligations hereunder, by submitting to the
usual and customary medical examinations and by completing, executing and
delivering such applications and other instruments in writing as may be
reasonably required by any insurance company or companies.
Section 6.4. Notices. Any notice or request required or permitted to
-------
be given hereunder shall be in writing and shall be made by hand delivery,
first-class mail (registered or certified, return receipt requested), telecopier
or overnight courier guaranteeing next business day delivery to the relevant
address set forth in the signature blocks below or to any other address
designated by either party by notice similarly given. Each such notice shall be
deemed to have been given, at the time delivered, if personally delivered or
mailed (with sufficient postage prepaid); when receipt is acknowledged, if
telecopied; and the next business day after timely delivery to the courier, if
sent by overnight air courier guaranteeing next business day delivery.
Section 6.5. Assignment and Succession. The rights and obligations
-------------------------
of the Company and Parent Company under this Agreement shall inure to the
benefit of and be binding upon their successors and assigns, and the Executive's
rights and
12
<PAGE>
obligations hereunder shall inure to the benefit of and be binding upon his
estate, legal representatives and guardians.
Section 6.6. Headings. The Article, Section, paragraph and
--------
subparagraph headings are for convenience of reference only and shall not define
or limit the provisions hereof.
Section 6.7. Joint Employment; Guaranty by Parent Company.
--------------------------------------------
Pinkerton's Inc. ("Pinkerton") has a wholly owned subsidiary, Pinkerton
Management Corporation (f.k.a. District Security) ("PMC") for the purpose of
employing all of the employees located at Pinkerton world headquarters, and the
Executive shall be jointly employed by Pinkerton and PMC under the terms and
conditions set forth in this Agreement. Pinkerton and PMC shall be jointly and
severally liable for satisfying any obligation that Company may have under this
Agreement. Parent Company irrevocably, absolutely and unconditionally
guarantees to the Executive the full and timely performance of the Company's
financial obligations pursuant to this Agreement. This guaranty is a payment
guaranty and not a guaranty of collection. Parent Company waives any right to
require the Executive to file suit and proceed against the Company.
Section 6.8. Payment of Professional Fees. The Company shall pay the
----------------------------
professional fees incurred by the Executive in connection with entering into
this Agreement.
Section 6.9. Entire Agreement. This Agreement shall be effective
----------------
from and after the Effective Date and sets forth the entire and final agreement
and understanding of the Company, the Parent Company and the Executive and
contains all of the agreements made between them with respect to the subject
matter hereof. As of the Effective Date, this Agreement supersedes any and all
other agreements, either oral or in writing, between the Company and the
Executive with respect to the Executive's provision of services to the Company
and his termination of employment therefrom. No change or modification of this
Agreement shall be valid unless in writing and signed by the Company, the Parent
Company and the Executive. Until this Agreement becomes effective on the
Effective Date, the current employment agreement and arrangements which are in
effect between the Company and the Executive shall remain in full force and
effect.
Section 6.10. Applicable Law and Venue. This Agreement shall at all
------------------------
times be governed by and construed, interpreted and enforced in accordance with
the laws of the State of California without giving effect to its choice of law
rules. The parties agree that the courts of the State of California shall have
jurisdiction over all disputes which arise under this Agreement or otherwise
relate to the employment or termination of employment of the Executive by the
Company and Parent Company. The parties further agree that the courts chosen
for resolution
13
<PAGE>
of all such disputes shall be located in Los Angeles County, California.
Section 6.11. Counterparts. This Agreement may be executed in one or
------------
more counterparts, each of which will be deemed to be an original copy of this
Agreement and all of which, when taken together, will be deemed to constitute
one and the same agreement.
Section 6.12. Waiver of Breach. A waiver by the Company or the
----------------
Parent Company of a breach of any provision of this Agreement by the Executive
shall not operate or be construed as a waiver of any subsequent breach by the
Executive. No waiver shall be valid unless it is in writing and signed by an
authorized officer of each of the Company (other than the Executive) and the
Parent Company.
Section 6.13. Assignment. The Executive acknowledges that the
----------
services he is to render are unique and personal. Accordingly, the Executive
may not assign any of his rights or delegate any of his duties or obligations
under this Agreement. The rights and obligations of the Company under this
Agreement shall inure to the benefit of and shall be binding upon the successors
and assigns of the Company.
Section 6.14. Tax Withholding. All payments under this Agreement
---------------
shall be subject to such deductions or withholdings for all taxes and other
purposes as shall at the time of such payment be required by applicable law.
14
<PAGE>
IN WITNESS WHEREOF, the Company and Parent Company have caused this
Agreement to be signed by their duly authorized officers, and the Executive has
signed this Agreement as of the day and year first above written.
COMPANY: PINKERTON'S, INC.
World Support Center
4330 Park Terrace Drive
Westlake Village, CA 91361
By: /s/ Denis R. Brown
------------------------------
PINKERTON MANAGEMENT CORPORATION
World Support Center
4330 Park Terrace Drive
Westlake Village, CA 91361
By: /s/ Denis R. Brown
------------------------------
PARENT COMPANY: SECURITAS AB
Box 12307
5-102 28
Stockholm, Sweden
By: /s/ Thomas Berglund
------------------------------
EXECUTIVE: Don W. Walker
2400l Malibu Road
Malibu, CA 90265
By: /s/ Don W. Walker
------------------------------
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<PAGE>
EXHIBIT A
SEPARATION AND RELEASE AGREEMENT
This Separation and Release Agreement ("Agreement") is entered into as of
this ___ day of ___________, between [Company] and any successor thereto
(collectively, the "Company") and [Executive] (the "Executive").
The Executive and the Company agree as follows:
1. The employment relationship between the Executive and the Company
terminated on ____________ (the "Termination Date").
2. In accordance with the Employment Agreement between the Company and
Executive dated as of February 19, 1999, as amended (the "Employment
Agreement"), the Company has agreed to pay the Executive certain payments and to
make certain benefits available after the Termination Date, which are listed on
Schedule A annexed hereto.
3. The Company agrees to continue to be bound by Article IV and Sections 6.1
and 6.7 of the Employment Agreement.
4. In consideration of the above, the sufficiency of which the Executive
hereby acknowledges, the Executive, on behalf of the Executive and the
Executive's heirs, executors and assigns, hereby releases and forever discharges
the Company and its, parents, affiliates, subsidiaries, divisions, any and all
current and former directors, officers, employees, agents, and contractors and
their heirs and assigns, and any and all employee pension benefit or welfare
benefit plans of the Company, including current and former trustees and
administrators of such employee pension benefit and welfare benefit plans, from
all claims, charges, or demands, in law or in equity, whether known or unknown,
which may have existed or which may now exist from the beginning of time to the
date of this Agreement, including, without limitation, any claims the Executive
may have arising from or relating to the Executive's employment or termination
from employment with the Company, including a release of any rights or claims
the Executive may have under Title VII of the Civil Rights Act of 1964, as
amended, and the Civil Rights Act of 1991 (which prohibit discrimination in
employment based upon race, color, sex, religion, and national origin); the
Americans with Disabilities Act of 1990, as amended, and the Rehabilitation Act
of 1973 (which prohibit discrimination based upon disability); the Family and
Medical Leave Act of 1993 (which prohibits discrimination based on requesting or
taking a family or medical leave); Section 1981 of the Civil Rights Act of 1866
(which prohibits conspiracies to discriminate); the Employee Retirement Income
Security Act of 1974, as amended (which prohibits discrimination with regard to
benefits); any other federal, state, or local laws against discrimination; or
any other federal, state or local statute, or common law relating to employment,
wages, hours, or any other terms and conditions of
<PAGE>
employment. This includes a release by the Executive of any claims for wrongful
discharge, breach of contract, torts or any other claims in any way related to
the Executive's employment with or resignation or termination from the Company.
This release also includes a release of any claims for age discrimination under
the Age Discrimination in Employment Act of 1967, as amended ("ADEA"). The ADEA
requires that the Executive be advised to consult with an attorney before the
Executive waives any claim under ADEA. In addition, the ADEA provides the
Executive with at least 21 days to decide whether to waive claims under ADEA and
seven days after the Executive signs the Agreement to revoke that waiver. This
release does not release the Company from any obligations due to the Executive
under the Company's Supplemental Retirement Income Plan, as amended by the
Employment Agreement, or under this Agreement.
5. This Agreement is not an admission by either the Executive or the Company
of any wrongdoing or liability.
6. The Executive waives any right to reinstatement or future employment with
the Company following the Executive's separation from the Company on the
Termination Date.
7. The Executive agrees not to engage in any act after execution of the
Separation and Release Agreement that is intended, or may reasonably be expected
to harm the reputation, business, prospects or operations of the Company, its
officers, directors, stockholders or employees, provided this paragraph shall
not extend the limitation on "incompatible activities" which is contained in
Section 5.1 of the Employment Agreement. The Company further agrees that it
will engage in no act which is intended, or may reasonably be expected to harm
the reputation, business or prospects of the Executive. This paragraph shall
not prohibit either party from cooperating with government agencies.
8. The Executive shall continue to be bound by Article V of the Employment
Agreement.
9. The Executive shall promptly return all the Company property in the
Executive's possession, including, but not limited to, the Company keys, credit
cards, cellular phones, computer equipment, software and peripherals and
originals or copies of books, records or other information pertaining to the
Company business.
10. This Agreement shall be governed by and construed in accordance with the
laws of the State of California, without reference to the principles of conflict
of laws. The jurisdiction and venue for any disputes arising under this
Agreement shall be governed by Section 6.10 of the Employment Agreement.
11. This Agreement represents the complete agreement between the Executive
and the Company concerning the subject
-2-
<PAGE>
matter in this Agreement and supersedes all prior agreements or understandings,
written or oral. This Agreement may not be amended or modified otherwise than by
a written agreement executed by the parties hereto or their respective
successors and legal representatives.
12. Each of the sections contained in this Agreement shall be enforceable
independently of every other section in this Agreement, and the invalidity or
nonenforceability of any section shall not invalidate or render unenforceable
any other section contained in this Agreement.
13. It is further understood that for a period of 7 days following the
execution of this Agreement in duplicate originals, the Executive may revoke
this Agreement, and this Agreement shall not become effective or enforceable
until the revocation period has expired. No revocation of this Agreement by the
Executive shall be effective unless the Company has received within the 7-day
revocation period, written notice of any revocation, all moneys received by the
Executive under this Agreement and all originals and copies of this Agreement.
14. This Agreement has been entered into voluntarily and not as a result of
coercion, duress, or undue influence. The Executive acknowledges that the
Executive has read and fully understands the terms of this Agreement and has
been advised to consult with an attorney before executing this Agreement.
Additionally, the Executive acknowledges that the Executive has been afforded
the opportunity of at least 21 days to consider this Agreement.
The parties to this Agreement have executed this Agreement as of the day
and year first written above.
[Company]
By:___________________________________
Name:
Title:
______________________________________
[Executive]
-3-
<PAGE>
EXHIBIT 99(c)(8)
EXECUTION COPY
TERMINATION AGREEMENT
TERMINATION AGREEMENT, dated as of February 19, 1999 (the
"Agreement"), among Pinkerton's, Inc., a Delaware corporation (the "Company"),
Securitas AB, a Swedish corporation ("Parent"), and Thomas W. Wathen ("Wathen").
W I T N E S S E T H:
------------- -----
WHEREAS, contemporaneously with the execution and delivery of this
Agreement, Parent, Securitas Acquisition Corp., a Delaware corporation and an
indirect wholly owned subsidiary of Parent ("Purchaser"), and the Company are
entering into an Agreement and Plan of Merger, dated as of the date hereof (the
"Merger Agreement"), which provides for, upon the terms and subject to the
conditions set forth therein, (i) the commencement by Purchaser of a tender
offer (the "Offer") for all of the issued and outstanding shares of common
stock, par value $.001 per share, of the Company, including the associated
rights to purchase the Company's Series A Junior Participating Preferred Stock,
at a price per share equal to the Per Share Amount (as defined in the Merger
Agreement), and (ii) the subsequent merger of Purchaser with and into the
Company;
WHEREAS, the Company and Wathen are party to a Personal Services
Agreement, dated February 10, 1994 (the "Services Agreement");
WHEREAS, as a condition to their willingness to enter into the Merger
Agreement, Parent and Purchaser have requested that the Company and Wathen enter
into this Agreement to terminate the Services Agreement; and
WHEREAS, in order to induce Parent and Purchaser to enter into the
Merger Agreement, the Company and Wathen are willing to enter into this
Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, and intending to be legally bound
hereby, the Company, Parent, and Wathen hereby agree as follows:
ARTICLE I.
TERMINATION OF SERVICES AGREEMENT
SECTION 1.1. Termination of Services Agreement. The Services
---------------------------------
Agreement shall be terminated upon the date on which the Offer is consummated
(the "Effective Date"). Upon such termination, the Services Agreement shall
become void and have no effect, without any liability or obligation on the part
of the Company, Wathen or Parent or any affiliate of Parent; provided, however,
-------- -------
that Company shall pay Wathen promptly following the Effective Date the cash
compensation, if any, that had become due
<PAGE>
and payable prior to the Effective Date under Sections 4.01(a) and (b) of the
Services Agreement and remains unpaid at such time. If the Offer is terminated
or expires without any purchases thereunder of any shares of common stock of the
Company by Purchaser or Parent, then this Agreement shall terminate
automatically and shall become void and have no effect without any further
action by the parties hereto, effective as of the date of such termination or
expiration, and the Services Agreement shall continue in full force and effect.
ARTICLE II.
RETIREMENT BENEFIT
SECTION 2.2. Retirement Benefit. From and after the Effective Date,
------------------
the Company shall continue to pay to Wathen the pension of $300,000 per annum
which he currently receives under the Services Agreement, payable in equal
monthly installments, subject to the following provisions:
(a) If Wathen dies before having received an aggregate of one hundred
eighty monthly installments under the Services Agreement and this Agreement, the
monthly installments shall be paid as designated in the Beneficiary Designation
and Election form executed by Wathen in connection with the Company's
Supplemental Retirement Income Plan (the "SERP") until an aggregate of one
hundred eighty installments under the Services Agreement and this Agreement have
been paid to Wathen and his designated beneficiary.
(b) The benefit provided in this Section 2.1 shall continue to be
fully vested, unless Wathen breaches Section 5.1 hereof, in which case, the
Company's obligation to make any future payments under this Section 2.1 shall
lapse.
(c) These payments shall be made under, and in accordance with, the
SERP and Wathen shall be considered a SERP Participant. In applying the SERP,
this Section 2.1 shall apply in lieu of any inconsistent SERP provisions and all
years of Wathen's service for the Company or any predecessor in any capacity
shall be taken into account in determining his rights under the SERP, other than
the amount of his benefit (which shall be determined under this Section 2.1).
(d) The Company shall have the right to withhold federal, state or
local taxes, to the extent, if any, required by law, from any amounts payable
under this Section 2.1.
(e) Parent irrevocably, absolutely and unconditionally guarantees to
Wathen the full and timely performance of the Company's financial obligations
pursuant to this Agreement. This guaranty is a payment guaranty and not a
guaranty of collection. Parent waives any right to require Wathen to file suit
and proceed against the Company.
2
<PAGE>
SECTION 2.2. Health Benefits.
---------------
(a) The Company agrees to extend to Wathen the same health care
programs, if any, it is contemporaneously providing to senior executives and on
the same terms (except that such coverage shall not extend to any spouse or
other family member of Wathen), or to provide substantially comparable health
care benefits on substantially comparable terms. Except as provided in
subsection (d), this coverage shall be provided for the rest of Wathen's life.
(b) For the rest of Wathen's life, the Company shall reimburse Wathen
for the cost of an annual physical examination. Wathen shall cooperate with the
Company in connection with any insurance the Company obtains for the health care
benefits hereunder, including without limitation, submitting to periodic
physical examinations.
(c) To the extent Wathen is eligible for government-provided health
coverage, the Company may reduce the benefits to be provided pursuant to this
Section 2.2 by treating the government-provided health coverage as provided by
the Company, subject to the following:
(i) That coverage cannot be taken into account to the extent, if
any, prohibited by law;
(ii) That coverage can only be taken into account if it is
provided without premium or similar charge to Wathen or if the Company
reimburses Wathen for such premiums or similar charges; and
(d) Benefits under this Section 2.2 shall terminate if Wathen breaches
Section 5.1 hereof (prohibiting competition).
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF WATHEN
Wathen hereby represents and warrants to the Company and Parent as
follows:
SECTION 3.1. Enforceability, etc. This Agreement has been duly
-------------------
executed and delivered by Wathen and constitutes a legal, valid and binding
obligation of Wathen, enforceable against Wathen in accordance with its terms,
except as enforcement may be limited by bankruptcy, insolvency, moratorium or
other similar laws and except that the availability of equitable remedies,
including specific performance, is subject to the discretion of the court before
which any proceeding for such remedy may be brought.
3
<PAGE>
SECTION 3.2. No Conflicts; Required Filings and Consents.
-------------------------------------------
(a) The execution and delivery of this Agreement by Wathen does not,
and the performance of this Agreement by Wathen will not, (i) conflict with or
violate any law applicable to Wathen or by which Wathen or any of Wathen's
properties is bound or affected or (ii) result in any breach of or constitute a
default (or an event that with notice or lapse of time or both would become a
default) under, or give to others any rights of termination, acceleration or
cancellation of, or result in the creation of a lien or encumbrance on any
assets of Wathen, pursuant to any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or obligation
to which Wathen is a party or by which Wathen or any of Wathen's assets is bound
or affected, except, in the case of clauses (i) and (ii), for any such breaches,
defaults or other occurrences that would not prevent or delay the performance by
Wathen of his obligations under this Agreement.
(b) The execution and delivery of this Agreement by Wathen does not,
and the performance of this Agreement by Wathen will not, require any consent,
approval, authorization or permit of, or filing with or notification to, any
governmental or regulatory authority, domestic or foreign, except where the
failure to obtain such consents, approvals, authorizations or permits, or to
make such filings or notifications, would not prevent or delay the performance
by Wathen of such his obligations under this Agreement.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF
THE COMPANY AND PARENT
Each of the Company and Parent hereby severally represents and
warrants to Wathen as follows:
SECTION 4.1. Due Organization, Authorization, etc. It is duly
------------------------------------
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation. It has all requisite corporate power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby by it have been
duly authorized by all necessary corporate action on its part. This Agreement
has been duly executed and delivered by it and constitutes a legal, valid and
binding obligation of it, enforceable against it in accordance with this
Agreement's terms, except as enforcement may be limited by bankruptcy,
insolvency, moratorium or other similar laws and except that the availability of
equitable remedies, including specific performance, is subject to the discretion
of the court before which any proceeding for such remedy may be brought.
4
<PAGE>
ARTICLE V.
NON-COMPETITION AND CONFIDENTIALITY
SECTION 5.1. Competitive Activities. Except to the extent approved
----------------------
by the Board of Directors of the Company prior to the date hereof, while
receiving any payments or benefits pursuant to this Agreement, Wathen shall not,
directly or indirectly, engage or participate in any business that is in
competition in any manner whatsoever with the business of the Company (as
determined in good faith by the Board of Directors of the Company). Nothing
herein shall prevent Wathen from owning up to five percent of any class of
publicly traded securities of any corporation or other entity. Wathen shall hold
all confidential information in trust and confidence for the Company and, except
as may be authorized by the Company in writing, Wathen shall not disclose to any
person any such confidential information. For the purposes of this Agreement,
"confidential information" shall include, but not be limited to, the Company's
business plans, budgets, marketing strategies, costs, profits, customer lists,
preferences and requirements and any other information known by Wathen to be
confidential as long as such information is not publicly disclosed by the
Company.
ARTICLE VI.
RESIGNATIONS
SECTION 6.1. Resignations. Effective upon the Effective Date, Wathen
------------
hereby resigns (i) as a member of the Board of Directors of the Company and as
an officer of the Company, and (ii) as a member of the Board of Directors of any
subsidiary of the Company on which he then serves and as an officer of any such
subsidiary. Wathen shall continue to be "Chairman Emeritus" of the Company,
although Wathen shall not have, nor represent to any third party that he has,
any power or authority to bind the Company.
ARTICLE VII.
RELEASE
SECTION 7.1. Release.
-------
(a) Wathen, for and on behalf of himself and his heirs,
administrators, executors and assigns, does hereby, from and after the Effective
Date, fully and forever release, remise and discharge the Company and Parent and
each of their respective affiliates and each officer, director, employee and
stockholder of the Company and Parent and such affiliates in their capacities as
such (collectively, the "Wathen Released Parties") of and from any and all
claims which he has had, may have had or now has against any Wathen Released
Party for or by reason of any matter, cause or thing whatsoever.
Notwithstanding the foregoing, this
5
<PAGE>
Section 7.1(a) shall not apply to or release any claims (i) arising under this
Agreement, (ii) pursuant to Section 6.8 of the Merger Agreement, (iii) for
indemnification in Wathen's capacity as a director of the Company pursuant to
any indemnification agreement in effect on the date hereof, the Company's
Restated Certificate of Incorporation or By-Laws, or applicable law, (iv) Wathen
may have to receive the Per Share Amount pursuant to the Offer or the Merger
Agreement or the Exercise Price pursuant to the Stockholders Agreement, dated as
of the date hereof, among Parent and certain stockholders of the Company or (v)
relating to options to acquire any shares of common stock of the Company.
(b) Each of the Company and Parent, for and on behalf of itself, its
subsidiaries and its successors and assigns, does hereby, from and after the
Effective Date, fully and forever release, remise and discharge Wathen, his
heirs, administrators, executors and assigns (collectively, the "Company
Released Parties") of and from any and all claims which it has had, may have had
or now has against any Wathen Released Party for or by reason of any matter,
cause or thing whatsoever. Notwithstanding the foregoing, this Section 7.1(b)
shall not apply to or release any claims (i) arising under this Agreement or
(ii) arising under the Stockholders Agreement, dated as of the date hereof,
among Parent and certain stockholders of the Company for whom Wathen serves as
trustee.
(c) For the purposes of this Section 7.1, "claims" shall include any
and all claims, agreements, covenants, warranties, promises, undertakings,
actions, suits, causes of action, obligations, debts, accounts, judgments,
losses and liabilities, of whatsoever kind or nature, in law, equity or
otherwise.
(d) The foregoing provisions are subject to the provisions of Section
1542 of the California Civil Code, to the extent applicable to the parties
hereto.
ARTICLE VIII.
MISCELLANEOUS
SECTION 8.1. Specific Performance. Wathen acknowledges that, if he
--------------------
fails to perform any of his obligations under Section 5.1 hereof, immediate and
irreparable harm or injury would be caused to the Company and Parent for which
money damages would not be an adequate remedy. In such event, Wathen agrees that
each of the Company and Parent shall have the right, in addition to any other
rights it may have, to specific performance of such obligations. Accordingly,
if the Company or Parent should institute an action or proceeding seeking
specific enforcement of such obligations, Wathen hereby waives the claim or
defense that the Company or Parent, as the case may be, has an adequate remedy
at law and hereby agrees not to assert in any such action or proceeding the
claim or defense that such a remedy at law exists.
6
<PAGE>
Wathen further agrees to waive any requirements for the securing or posting of
any bond in connection with obtaining any such equitable relief.
SECTION 8.2. Headings. The headings contained in this Agreement are
--------
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
SECTION 8.3. Severability. If any term or other provision of this
------------
Agreement is invalid, illegal or incapable of being enforced by any rule of law,
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable manner to the end
that transactions contemplated hereby are fulfilled to the maximum extent
possible.
SECTION 8.4. Entire Agreement; No Third-Party Beneficiaries. This
----------------------------------------------
Agreement constitutes the entire agreement and supersede any and all other prior
agreements and undertakings, both written and oral, among the parties, or any of
them, with respect to the subject matter hereof, and this Agreement is not
intended to confer upon any other person any rights or remedies hereunder;
provided, however, that the provisions of Section 2.1 are intended to be for the
- -------- -------
benefit of and enforceable by the person designated by Wathen as his beneficiary
in the Beneficiary Designation and Election form under the SERP.
SECTION 8.5. Assignment. This Agreement shall not be assigned by
----------
operation of law or otherwise.
SECTION 8.6. Governing Law. This Agreement shall be governed by, and
-------------
construed in accordance with, the laws of the State of California applicable to
contracts executed in and to be performed entirely within that State.
SECTION 8.7. Amendment. This Agreement may not be amended except by
---------
an instrument in writing signed by the parties hereto.
SECTION 8.8. Waiver. Any party hereto may (a) extend the time for
------
the performance of any of the obligations or other acts of the other parties
hereto, (b) waive any inaccuracies in the representations and warranties of the
other parties hereto contained herein or in any document delivered pursuant
hereto and (c) waive compliance by the other parties hereto with any of their
agreements or conditions contained herein. Any agreement on the part of a party
hereto to any such extension or waiver
7
<PAGE>
shall be valid only as against such party and only if set forth in an instrument
in writing signed by such party. The failure of any party hereto to assert any
of its rights under this Agreement or otherwise shall not constitute a waiver of
those rights.
SECTION 8.9. Counterparts. This Agreement may be executed in one or
------------
more counterparts, and by the different parties hereto in separate counterparts,
each of which when executed shall be deemed to be an original but all of which
shall constitute one and the same agreement.
8
<PAGE>
IN WITNESS WHEREOF, the Company, Parent and Wathen have caused this
Agreement to be executed as of the date first written above.
PINKERTON'S, INC.
By: /s/ Denis R. Brown
----------------------------
Name: Denis R. Brown
Title: President and Chief Executive Officer
SECURITAS AB
By: /s/ Thomas Berglund
----------------------------
Name: Thomas Berglund
Title: President and Chief Executive Officer
/s/ Thomas W. Wathen
--------------------------------
Thomas W. Wathen
9
<PAGE>
Exhibit 99(c)(9)
August 27, 1998
Thomas Berglund
Securitas AB
Box 12307
S-102 28
Stockholm, Sweden
Re: Mutual Confidentiality Agreement
Dear Thomas:
This is to set forth our agreement concerning the exchange by Securitas AB
("Securitas") and Pinkerton's, Inc. ("Pinkerton") of certain information about
our respective corporations which is either confidential or otherwise not
generally available to the public in connection with the evaluation (the
"Evaluation") of a potential transaction between them. The information so
furnished by or on behalf of Securitas or Pinkerton after the date of this
agreement, and regardless of the manner in which it is furnished, orally or
otherwise, together with analyses, compilations, studies or other documents or
records prepared by our respective Representatives, to the extent that such
analyses, compilations, studies or other documents or records contain or
otherwise reflect or are generated from such information is referred to herein
as the "Information." As used herein, the term "Representatives" refers to the
directors, officers, employees, agents, accountants, attorneys, consultants and
financial advisors of either Securitas or Pinkerton or any of their affiliates
or associates. The person furnishing such Information is referred to herein as
the "Provider" and the person receiving any Information is referred to herein as
the "Recipient". As used herein, (i) the terms "affiliates" and "associates"
will have the meanings given to such terms under Rule 405, as presently in
effect, under the Securities Act of 1933.
The term "Information" does not include information which (i) was or becomes
generally available to the public other than as a result of a disclosure by our
respective Representatives; (ii) was or becomes available to the Recipient on a
non-confidential basis from a source other than the Provider or its
Representatives, providing that such source is not known by the Recipient to be
bound by a confidentiality agreement with the Provider or otherwise prohibited
from transmitting the Information by a contractual, legal or fiduciary
obligation; or (iii) is or was independently developed by the Recipient without
reference to or reliance on the Information or was within the Recipient's
possession prior to the Information being furnished by or on behalf of the
Provider, provided that the source of such Information was not known by the
Recipient to be bound by a confidentiality agreement with the Provider or
otherwise prohibited from transmitting the Information by a contractual, legal
or fiduciary obligation.
As a condition to, and in consideration of, the furnishing by Securitas and
Pinkerton of Information to the other, each of Securitas and Pinkerton agrees as
follows:
<PAGE>
1. Nondisclosure of Information. All Information received by Securitas or
----------------------------
Pinkerton from the other will be kept confidential, will not be used by the
Recipient in any way detrimental to the Provider and will not be used other
than in connection with the Evaluation. Each Recipient will safeguard the
Information received by it from unauthorized disclosure. Either Recipient
may disclose the Information to its Representatives, but only if such
Representatives reasonably need to know the Information in connection with
the Evaluation. Each Recipient will (i) inform its Representatives of the
confidential nature of the Information and of this agreement; (ii) cause
such Representatives to treat the Information confidentially and not to use
it other than in connection with the Evaluation; and (iii) be responsible
for any improper use of the Information by it or any of its Representatives.
Each of Securitas and Pinkerton agrees that it will not, and will cause its
affiliates, associates and Representatives not to, disclose to any person
(a) that the Information has been made available to it; (b) that
investigations, discussions or negotiations are taking or have taken place;
(c) any of the terms, conditions or other facts with respect to any such
possible transaction, including the status thereof; or (d) any other facts
with respect to the discussions between Securitas and Pinkerton. The
information covered by the immediately preceding sentence shall be
considered to be "Information" for purposes of this agreement.
2. Notice Preceding Compelled Disclosure. If either Securitas or Pinkerton, or
-------------------------------------
any of their Representatives, are requested or required by applicable law to
disclose any Information, it will promptly notify the Provider to permit the
Provider to seek a protective order or to take other appropriate action.
Each Recipient will also cooperate in the Provider's efforts to obtain a
protective order or other reasonable assurance that confidential treatment
will be accorded the Information. If, in the absence of a protective order,
either Recipient or any of its Representatives are compelled as a matter of
law to disclose the Information, such Recipient may disclose, but only to
the extent required by applicable law, only the part of the Information as
is required by law to be disclosed; provided that such Recipient shall
notify the Provider in advance of the disclosure and shall exercise
reasonable efforts to obtain an order or reasonable assurance that
confidential treatment shall be accorded such Information.
3. Return or Destruction of Documents. Each Recipient will keep a record in
----------------------------------
reasonable detail of the Information furnished to it and of the location of
the Information. As soon as possible upon the Provider's written request or
upon the termination of the Evaluation, each Recipient will return to the
Provider all written Information which has been provided to it and will
destroy all written documentation prepared by the Recipient or its
Representatives based in whole or in part on any Information; provided,
however, that each Recipient shall be entitled to retain such Information
which has become part of the permanent records of its Board of Directors.
Such destruction or return, as the case may be, will be confirmed in writing
to the Provider. Notwithstanding the return or destruction of any
Information, or documents or material containing or reflecting any
Information, each Recipient will continue to be bound by its obligations of
confidentiality and other obligations hereunder.
4. No Warranty or Accuracy. Each of Securitas and Pinkerton acknowledges that
-----------------------
neither Provider nor its Representatives is making any representation or
warranty as to the accuracy or completeness of any Information. Each
Recipient agrees that neither Provider, nor any
2
<PAGE>
Representative of the Provider will have any liability to the Recipient or
its Representatives resulting from the use of the Information by the
Recipient or its Representatives, except to the extent provided in any
definitive agreement between Securitas and Pinkerton.
5. No Purchase of Securities; Other Actions. Each of Securitas and Pinkerton
----------------------------------------
agrees that for a period of two years from the date of this agreement,
neither it nor any of its affiliates or associates will, in any manner,
alone or in concert with others (whether or not pursuant to any legally
binding agreement or commitment), without the prior written approval of the
Board of Directors of the other (i) acquire, or offer to acquire, directly
or indirectly, record or beneficial ownership of any equity securities of
the other or of any subsidiary of the other; (ii) acquire or offer to
acquire, directly or indirectly, any options or other rights to acquire any
equity securities of the other or of any subsidiary of the other (whether or
not exercisable only after the passage of time or the occurrence of any
event); (iii) acquire or offer to acquire, directly or indirectly, any
assets of the other; (iv) offer to enter into any acquisition or other
business combination transaction relating to the other or to any subsidiary
of the other; (v) make, or in any way participate, directly or indirectly,
in any "solicitation" of "proxies" or "written authorization or consent" (as
such terms are used in the proxy rules of the Securities and Exchange
Commission) to vote, or seek to advise or influence any person with respect
to the voting of any voting securities of the other; (vi) otherwise act,
alone or in concert with others, to seek to control or influence the
management of the Board of Directors or the policies of the other; (vii)
directly or indirectly participate in or encourage the formation of any
"group" (within the meaning of Section 13(d)(3) of the Securities Exchange
Act of 1934) which owns or seeks or offers to acquire record or beneficial
ownership of equity securities of the other (including right to acquire such
securities) or which seeks or offers to affect control of the other or
otherwise seeks or proposes to do any of the acts specified in (i) through
(vi) above; (viii) propose, or publicly announce or otherwise disclose any
request for permission or consent in respect of, any of the foregoing; or
(ix) advise, assist or encourage any other persons in connection with any of
the foregoing. Securitas and Pinkerton also agree during such period not to
(a) request the other (or its directors, officers, employees or agents),
directly or indirectly, to amend or waive any provision of this paragraph
(including this sentence) or (b) take any action which might require the
other to make a public announcement regarding the possibility of a business
combination or merger without the prior written approval of the Board of
Directors of the other as provided above.
Each of Securitas and Pinkerton hereby acknowledges that it is aware, and
that it will advise its Representatives who are informed as to the matters
which are the subject of this agreement, that the United States securities
laws prohibit any person who has received from an issuer material, non-
public information concerning the matters which are the subject of this
agreement from purchasing or selling securities of such issuer or from
communicating such information to any other person under circumstances in
which it is reasonably foreseeable that such person is likely to purchase or
sell such securities.
6. No Solicitations. Except as otherwise provided herein, each of Securitas
----------------
and Pinkerton agrees that without prior approval of the other, neither it
nor any of its Representatives will approach the employees, customers,
suppliers or competitors of the other to discuss any
3
<PAGE>
potential transaction involving the other. Each of Securitas and Pinkerton
also agrees that without the prior approval of the other, neither it nor any
of its Representatives will approach the employees of the other to discuss
any information with respect to the other or its business and neither it nor
its Representatives will receive or try to obtain information from any
employee of the other. Each of Securitas and Pinkerton hereby also agrees
that, for a period of two years from the date hereto, neither it nor any of
its associates or affiliates, directly or indirectly, will solicit to employ
any person who at the time is employed by the other and is an officer, a key
employee who is designated as such in a written communication to the
Recipient or an employee whose name is disclosed in the Information, without
obtaining the prior written consent of the other; provided that nothing
herein shall prohibit Securitas or Pinkerton or their associates or
affiliates from publishing advertisements for employment in any newspaper or
periodical of general circulation or from employing such person who is
solicited in the ordinary course of employment or recruiting efforts so long
as no Information is used in connection therewith.
7. No Obligation with Respect to Transaction. Each of Securitas and Pinkerton
-----------------------------------------
understands and agrees that no contract or agreement providing for a
transaction between them shall be deemed to exist unless and until a
definitive transaction agreement (a "Transaction Agreement") has been
executed and delivered. Each of Securitas and Pinkerton also agrees that
unless and until a Transaction Agreement between them has been executed and
delivered, neither Securitas nor Pinkerton has any legal obligation of any
kind whatsoever with respect to any such transaction by virtue of this
agreement or any other written or oral expression with respect to such
transaction except, in the case of this agreement or any other written
agreement, for the matters specifically agreed to herein or therein.
8. Miscellaneous. No failure or delay in exercising any right, power or
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privilege hereunder will operate as a waiver thereof, nor will any single or
partial exercise thereof preclude any other or further exercise thereof or
the exercise of any right, power or privilege hereunder. This agreement will
be binding on and inure to the benefit of the parties hereto and their
respective successors and assigns. Money damages would not be a sufficient
remedy for any violation of the terms of this agreement and, accordingly,
Securitas and Pinkerton will be entitled to specific performance and
injunctive relief as remedies for any violation by the other. These remedies
will not be exclusive remedies but will be in addition to all other remedies
available to the non-breaching party at law or equity.
9. Law to Govern. This agreement is made pursuant to and to be construed under
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and conclusively deemed for all purposes to be governed by the laws of the
State of California. Any judicial proceeding arising out of this agreement
or any matter related thereto shall be brought in the courts of the State of
California or in the United States District Court governing the City of Los
Angeles. By execution and delivery of this agreement, each party accepts the
jurisdiction of such courts as noted above, and agrees to be bound by any
judgment rendered therein in connection with this agreement. The prevailing
party of any litigation arising out of this agreement shall be entitled to
receive from the losing party all costs and expenses, including the
reasonable counsel fees incurred by the prevailing party.
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<PAGE>
The obligations of Securitas and Pinkerton under this agreement will expire
three (3) years from the date of this agreement.
If the terms hereof are acceptable, please sign and return one copy of this
agreement to evidence your acceptance of and agreement to the foregoing,
whereupon this agreement will become a binding agreement of each of our
respective corporations.
PINKERTON'S, INC.
By: /s/ Denis R. Brown
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Denis R. Brown
President and Chief Executive Officer
Accepted and Agreed
to this 3rd day of
September, 1998
Securitas AB
By: /s/ Thomas Berglund
--------------------
Thomas Berglund
President and Chief Executive Officer
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