<PAGE>
SAFETY-KLEEN CORP.
ONE BRINCKMAN WAY
ELGIN, ILLINOIS 60123-7857
INFORMATION STATEMENT PURSUANT TO
SECTION 14(F) OF THE SECURITIES
EXCHANGE ACT OF 1934 AND RULE 14F-1 THEREUNDER
MARCH 26, 1998
This Information Statement is being mailed on or about March 27, 1998; it is
related to Amendment No. 29 to Safety-Kleen's Solicitation/Recommendation
Statement on Schedule 14D-9 (the "Schedule 14D-9"), which Amendment No. 29 was
mailed to shareholders on or about March 18, 1998. You are receiving this
Information Statement in connection with the possible election of persons
designated by Laidlaw Environmental Services, Inc. ("LLE") to a majority of
the seats on the Board of Directors of Safety-Kleen (the "Board"). You are
urged to read this Information Statement carefully. You are not, however,
required to take any action. Capitalized terms used and not otherwise defined
herein shall have the meaning set forth in the Schedule 14D-9.
The Revised LLE Offer, made pursuant to the LLE Merger Agreement, is
scheduled to expire at Midnight on March 31, 1998, New York City time. Upon
the expiration of the Revised LLE Offer, if all conditions of the Revised LLE
Offer have been satisfied or waived, it is contemplated that the Offeror, an
LLE subsidiary, will purchase all Shares validly tendered pursuant to the
Revised LLE Offer and not withdrawn. The consummation of the Revised LLE Offer
pursuant to the terms of the LLE Merger Agreement would result in a change of
control of Safety-Kleen.
The information contained in this Information Statement concerning LLE and
the Offeror has been furnished to Safety-Kleen by LLE and the Offeror, and
Safety-Kleen assumes no responsibility for the accuracy or completeness of
such information.
BOARD OF DIRECTORS
GENERAL
The Shares are the only class of voting stock of Safety-Kleen outstanding
and each Share is entitled to one noncumulative vote. As of February 28, 1998,
there were 59,930,589 Shares issued and outstanding. The Board currently
consists of eight members, and there are currently no vacancies; the size and
composition of the Board are subject to certain contractual commitments set
forth in the LLE Merger Agreement. See "BOARD OF DIRECTORS--Right to Designate
Directors." The Board of Directors currently is divided into three classes.
The term of three directors expires in 1998, with three current directors
continuing in office until 1999, and another two current directors continuing
until 2000. Each director of Safety-Kleen holds office until such director's
successor is elected and qualified or until such directors earlier resignation
or removal.
RIGHT TO DESIGNATE DIRECTORS
Safety-Kleen has agreed in the LLE Merger Agreement that, promptly following
the purchase of Shares by LLE and Offeror pursuant to the Revised LLE Offer
(representing at least two-thirds of the outstanding Shares on a fully diluted
basis, assuming exercise of all outstanding options and other securities
exercisable for Shares), LLE shall be entitled to designate at its option, up
to that number of directors, rounded to the nearest whole number, of Safety-
Kleen's Board of Directors as will make the percentage of Safety-Kleen's
directors designated by LLE (the "LLE Designees") approximately equal to the
aggregate voting power of the Shares held by LLE. This will be accomplished
either by increasing the size of the Board or, at LLE's election, requesting
resignations of incumbent directors. Safety-Kleen's obligation to cause
designees of LLE to be elected or appointed to the Board of Directors of
Safety-Kleen is subject to Rule 14f-1.
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THE LLE DESIGNEES
LLE has advised Safety-Kleen that the LLE Designees will be selected by LLE
from among the persons described in the following table.
<TABLE>
<CAPTION>
AGE, BUSINESS EXPERIENCE AND OTHER
NAME AND BUSINESS ADDRESS DIRECTORSHIPS
------------------------- ----------------------------------
<C> <S>
Kenneth W. Winger Age 59. President and Chief Executive
Laidlaw Environmental Services, Inc. Officer of LLE, since May 1997;
1301 Gervais Street, Suite 300 President, Chief Operating Officer and
Columbia, SC 29201 Sole Director of Laidlaw Environmental
Services (U.S.), Inc. from July 1995 to
May 1997; Executive Vice President for
Business Development of Laidlaw Waste
Systems, Ltd. from January 1995 until
July 1995; Senior Vice President for
Corporate Development of Laidlaw Inc.
from May 1991 until December 1994.
Director of LLE and ViroGroup, Inc.
James R. Bullock Age 53. Chief Executive Officer and
Laidlaw Inc. President of Laidlaw, Inc. since October
3221 North Service Road 1993; for more than a year prior thereto,
Burlington, Ontario L7R 3Y8 President and Chief Executive Officer of
Canada Cadillac Fairview Corporation Limited.
Director of LLE, Laidlaw Inc. and Imasco
Limited.
John W. Rollins, Jr. Age 55. President and Chief Operating
Rollins Truck Leasing Corp. Officer and a director of Rollins Truck
2200 Concord Pike Leasing Co. and Chairman of the Board of
One Rollins Plaza Matlack Systems, Inc. (each for more than
Wilmington, DE 19803 five years); Senior Vice Chairman of the
Board of Rollins Environmental Services,
Inc., from 1988 until May 15, 1997.
Director of LLE and Dover Downs
Entertainment, Inc.
David E. Thomas, Jr. Age 40. Senior Managing Director and Head
Raymond James & of the Investment Banking Group of
Associates, Inc. Raymond James & Associates, Inc. since
880 Carillon Parkway July 1996; Managing Director of Raymond
St. Petersburg, FL 33716 James & Associates, Inc., from 1991 until
July 1996. Director of LLE and Reynolds,
Smith and Hills, Inc.
James L. Wareham Age 58. President of AK Steel Corporation
AK Steel Corporation since March 1997; Chief Executive Officer
703 Curtis Street of Wheeling-Pittsburgh Steel Corporation
Middleton, OH 45043 from 1992 until 1996. Director of LLE.
Grover C. Wrenn Age 55. Chairman and Chief Executive
4 Wolfe Street Officer of Better Health Network, Inc.
Alexandria, VA 22314 since June 1996; Chief Executive Officer
of EnSys Environmental Products, Inc.
from April 1995 through December 1996;
President and Chief Executive Officer of
Applied Bioscience International from
1991 through March 1995. Director of LLE,
Strategic Diagnostics, Inc. and
Pharmakinetics Laboratories, Inc.
Leslie W. Haworth Age 54. Senior Vice President and Chief
Laidlaw Inc. Financial Officer of Laidlaw Inc. for
3221 North Service Road more than five years. Director of LLE.
Burlington, Ontario L7R 3Y8
Canada
</TABLE>
Each such person is a citizen of the United States except Messrs. Bullock,
Winger and Haworth. LLE has advised Safety-Kleen that each of the persons
listed in the table above has consented to act as a director, and that none of
such persons has during the last five years been convicted in a criminal
proceeding (excluding traffic violations and similar misdemeanors) or was a
party to a civil proceeding of a judicial or administrative body of
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competent jurisdiction and as a result of such proceeding was, or is, subject
to a judgment, decree or final order enjoining future violations of, or
prohibiting activities subject to, federal or state securities laws or finding
any violation of such laws. LLE has also advised Safety-Kleen that none of the
persons listed in the table above is a director of, or holds any position
with, Safety-Kleen, and that none of such persons beneficially owns any equity
securities, or rights to acquire any equity securities, of Safety-Kleen or,
except for the LLE Merger Agreement, has been involved in any transactions
with Safety-Kleen or any of its directors, executive officers or affiliates
which are required to be disclosed pursuant to the rules and regulations of
the SEC, except that Mr. Thomas' firm in the ordinary course of business holds
Shares in street name for the benefit of customers, with respect to which Mr.
Thomas disclaims beneficial ownership. The election of the LLE Designees will
be accomplished at a meeting or by written consent of the Board.
CURRENT BOARD OF DIRECTORS
Safety-Kleen's current directors are:
CLASS OF 2000
Director since 1986
RICHARD T. FARMER Age 63
Mr. Farmer has been Chairman of Cintas Corporation, a uniform manufacturer
and supplier, since 1968. Mr. Farmer was also Chief Executive Officer from
1968 until August 1, 1995. He has been employed by that company since 1957. He
is also a director of Fifth Third Bancorp, Cincinnati, Ohio. Mr. Farmer is
Chairman of the Board Affairs and Nominating Committee and a member of the
Compensation Committee.
Director since 1981
PAUL D. SCHRAGE Age 63
Mr. Schrage has been Senior Executive Vice President and Chief Marketing
Officer of McDonald's Corporation, a restaurant franchisor and operator, since
1984 and has been employed by that company since 1967. He is also a director
of McDonald's Corporation, Oak Brook, Illinois and Wolverine Worldwide, Inc.,
Rockford, Michigan. Mr. Schrage is the Chairman of the Audit Committee and a
member of the Board Affairs and Nominating Committee and the Environmental
Committee.
CLASS OF 1999
Director since 1968
DONALD W. BRINCKMAN Age 67
Mr. Brinckman was named Chief Executive Officer of Safety-Kleen on August 8,
1997, a position he previously held from 1968 to December 31, 1994. He served
as President of Safety-Kleen from 1968 to August 1990, and from December 1991
to May 1993. Mr. Brinckman was appointed Chairman of Safety-Kleen's Board of
Directors in August 1990. Mr. Brinckman is also a director of Paychex, Inc.,
Rochester, New York and Snap-On Incorporated, Kenosha, Wisconsin. Mr.
Brinckman is Chairman of the Executive Committee and is a member of the
Environmental Committee.
Director since 1994
MARCIA E. WILLIAMS Age 51
Ms. Williams was President of Williams & Vanino, Inc., an environmental
management consulting firm from 1991 to August 1997 when that firm merged with
Putnam, Hayes & Bartlett, Inc. where Ms. Williams serves as a Managing
Director. From 1988 until 1991, Ms. Williams was Vice President, Environmental
Policy and Planning for Browning-Ferris Industries, Inc. Between 1970 and 1988
Ms. Williams served in various positions with the United States Environmental
Protection Agency, including Director, Office of Solid Waste and Deputy
Assistant Administrator, Office of Pesticides and Toxic Substances. Ms.
Williams chairs the Environmental Committee.
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Director since 1968
W. GORDON WOOD Age 72
Mr. Wood was Vice President of Safety-Kleen from 1968 until he retired on
March 31, 1985. Mr. Wood is a member of the Audit Committee.
CLASS OF 1998
Director since 1968
RUSSELL A. GWILLIM Age 75
Mr. Gwillim was employed by Chicago Rawhide Manufacturing Company, an oil
seals manufacturer, from 1948 until his retirement in 1984. He served as its
President and Chief Executive Officer from 1969 until his retirement. Mr.
Gwillim was named Chairman Emeritus in August 1990. Prior thereto he was
Chairman of the Board of Directors of Safety-Kleen since 1968. Mr. Gwillim is
the Chairman of the Compensation Committee and a member of the Executive
Committee.
Director since 1979
EDGAR D. JANNOTTA Age 66
Mr. Jannotta has been employed by William Blair & Company, an investment
banking firm, since 1959 and served as Managing Partner from September 1977
through December 1994. Mr. Jannotta was Senior Partner of William Blair &
Company from January 1, 1995 until January 2, 1996, at which time the company
converted from a partnership to a limited liability company and Mr. Jannotta
was named Senior Director. He is also a director of AAR Corp., Elk Grove
Village, Illinois; Aon Corporation, Chicago, Illinois; Bandag, Incorporated,
Muscatine, Iowa; Molex Incorporated, Lisle, Illinois; Oil-Dri Corporation of
America, Chicago, Illinois and Unicom Corporation, Chicago, Illinois. Mr.
Jannotta is a member of the Compensation Committee and the Executive
Committee.
Director Since 1984
KARL G. OTZEN Age 56
Mr. Otzen has been President of Gerhard & Company, a product development
consulting firm, since June 1, 1984. He is also Chairman of Gerhard-Sorenson
Company, a consumer products design and manufacturing firm. Mr. Otzen is a
member of the Audit Committee and the Board Affairs and Nominating Committee.
DIRECTORS COMMITTEES, MEETINGS AND COMPENSATION
BOARD COMMITTEES
The Board of Directors has, pursuant to its powers, designated Compensation,
Board Affairs and Nominating, Audit, Environmental and Executive Committees of
the Board. The committee members have been identified above.
Compensation Committee. The Compensation Committee is responsible for acting
on behalf of the Board of Directors in connection with administering Safety-
Kleen's Management Incentive Plan and Safety-Kleen's stock option plans,
determining compensation of all officers of Safety-Kleen and approving salary
grades of certain management positions. The Compensation Committee met five
times in 1997.
Board Affairs and Nominating Committee. The Board Affairs and Nominating
Committee's role is to identify and recommend qualified candidates to the
Board for election as directors, evaluate the performance, composition and
operation of the Board and its committees and review the Board's corporate
governance practices. The Board Affairs and Nominating Committee will consider
nominations of director candidates by shareholders, submitted in accordance
with Safety-Kleen's bylaws. The bylaws currently require persons
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submitting nominations to provide certain information not less than 60 nor
more than 90 days prior to the annual meeting, and in certain instances,
within 10 days after the date of the annual meeting is announced. The Board
Affairs and Nominating Committee met twice during 1997.
Audit Committee. The primary functions of the Audit Committee are: to
recommend to the Board of Directors the selection of independent auditors; to
review the scope of the independent auditor's examination; to review with the
independent auditors the results of their audits; to review the adequacy of
internal controls with the independent auditors, Safety-Kleen's internal
auditors and certain officers of Safety-Kleen; and to perform such other
duties as shall from time to time be delegated to the Audit Committee by the
Board. The Audit Committee met three times in 1997.
Environmental Committee. The primary function of the Environmental Committee
is to monitor Safety-Kleen's environmental, health, and safety performance and
policies. The Environmental Committee met once in 1997.
Executive Committee. The Executive Committee exercises the powers of the
full Board of Directors with respect to the management of Safety-Kleen's
business where it would be impractical to either convene a special meeting of
the full Board of Directors to deal with any matter or delay action until the
next regular meeting of the Board of Directors. The Executive Committee met
seven times in 1997.
BOARD MEETINGS
In 1997, The Board of Directors met 11 times. During 1997, each incumbent
director attended at least 75%, in the aggregate, of all meetings of the Board
and the committee(s) on which such director served.
BOARD COMPENSATION
Directors who are employees of Safety-Kleen receive no additional
compensation for their services as directors. In 1997, directors who were not
employees received $16,000 in stock or stock equivalents as a retainer.
Directors received $2,000 for each Board and committee meeting attended.
Meeting fees were paid in cash, stock or stock equivalents as elected by the
director. Directors were also reimbursed for travel and other expenses related
to attendance at Board and committee meetings. In February 1988, a
nonqualified stock option plan for outside directors (the "Directors' Plan")
was adopted by the Board and approved by the shareholders at the 1988 annual
meeting. The Directors' Plan allows eligible directors of Safety-Kleen to
purchase up to an aggregate of 300,000 shares of Common Stock at a price equal
to the fair market value of the Common Stock on the date such options are
granted. Only directors who are not employees of Safety-Kleen are eligible to
participate in the Directors' Plan. Pursuant to the Directors' Plan, an option
to purchase 15,000 shares of Safety-Kleen's Common Stock (i) was granted to
each director serving on the Board on the date the Director's Plan was adopted
and (ii) is granted to each new outside director at the time such director is
named or appointed to the Board. The Directors' Plan also provides for the
automatic grant of a second option to purchase 15,000 shares to each outside
director on the fifth anniversary of the initial grant of options to such
director, but only if such director is still serving on the Board at that
time. Options are exercisable 25 percent annually, on a cumulative basis,
starting one year from date of grant and expire ten years from date of grant.
COMMON STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the Common Stock ownership as of February 28,
1998 of (i) shareholders who, to the knowledge of Safety-Kleen, owned
beneficially more than 5% of the outstanding shares of Common Stock; (ii) each
of Safety-Kleen's directors; (iii) each named executive officer, as defined
below (see "Executive Compensation--Summary Compensation Table") and (iv)
Safety-Kleen's directors and executive officers as a group. The table does not
reflect sales of Shares made by certain of the directors and executive
officers commencing on March 18, 1998; information on such sales from March
18, 1998 through March 20, 1998 is shown on Annex I to this Information
Statement. To the knowledge of Safety-Kleen, and subject to applicable
securities laws and personal considerations, its directors and executive
officers presently intend to tender,
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pursuant to the Revised LLE Offer, or otherwise sell, any Shares which are
held of record or beneficially held by such persons.
<TABLE>
<CAPTION>
NUMBER OF PERCENTAGE OF
SHARES OUTSTANDING
BENEFICIALLY COMMON
NAME OWNED(1) STOCK(2)
- ---- ------------ -------------
<S> <C> <C>
FIVE PERCENT SHAREHOLDERS
Halcyon, Alan B. Slifka Management Co.
477 Madison Avenue, New York, NY 10022 3,769,400 6.45%
EMERY FAMILY GROUP
Joan Emery Lammers
1801 Seminary St., Alton, IL 62002 1,942,673(3) 3.24%
William H. Emery II
11388 SW Riverwoods Rd., Portland, OR 97219 1,645,510 2.75%
Lucy T. Otzen
100 Anchor Drive, #472, N. Key Largo, FL
33037 1,481,093(4) 2.47%
Edward W. Emery, Jr.
Route 18, Box 13, Bedford, IN 47421 34,100(5) *
Circle L Enterprises L.P.
Landmark Center, P.O. Box 1056, Lake Geneva,
WI 53147 1,367,520(4) 2.28%
DIRECTORS AND NAMED EXECUTIVE OFFICERS
Hyman K. Bielsky.............................. 75,918(6) *
Donald W. Brinckman........................... 907,108(7) 1.50%
Joseph Chalhoub............................... 375,071(8) *
David A. Dattilo.............................. 143,522(9) *
Richard T. Farmer............................. 43,390(10) *
Russell A. Gwillim............................ 183,493(11) *
F. Henry Habicht II........................... 67,346(12) *
Edgar D. Jannotta............................. 67,500(10) *
John G. Johnson, Jr........................... 135,338(13) *
Karl G. Otzen................................. 1,481,093(4) 2.47%
Paul D. Schrage............................... 31,180(10) *
Marcia E. Williams............................ 12,250(14) *
W. Gordon Wood................................ 71,317(10) *
ALL DIRECTORS AND EXECUTIVE OFFICERS AS A
GROUP
(23 individuals)............................. 4,282,891(15) 6.95%
</TABLE>
- --------
*Denotes less than one percent of shares outstanding.
(1) Under regulations of the Securities and Exchange Commission, persons who
own or have the power to vote or dispose of shares, either alone or
jointly with others, are deemed to be the beneficial owners of such
shares. Such persons are also deemed to be the beneficial owners of
shares beneficially owned by certain close family members.
(2) Shares subject to options exercisable within 60 days of February 28, 1998
are considered outstanding for the purpose of determining the percent of
the class held by the holder of such option, but not for the purpose of
computing the percentage held by others.
(3) The shares shown for Joan Emery Lammers include 683,760 shares
contributed by or on behalf of Mrs. Lammers in December 1992 to Circle L
Enterprises L.P. (the "Circle L Limited Partnership"). See Note (4).
(4) Karl G. Otzen and Lucy T. Otzen (the "Otzens") are husband and wife. For
purposes of this table, each is deemed to own shares owned by the other,
and accordingly the same shares are shown opposite each of their names.
In December 1992, the Otzens caused 683,760 of the shares shown opposite
each of their
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names to be contributed to Circle L Limited Partnership. The general
partner which controls the Partnership is a corporation in which Karl G.
Otzen, Lucy T. Otzen, Joan Emery Lammers and her husband (the "Lammers")
each own 25% of the voting stock and each occupies one of the four
positions on the Board of Directors. Because the Otzens and Lammers share
voting power over all of the shares held by the Partnership, each of them
may be deemed to "own" all shares in the Partnership under the criteria
governing this table. To enhance clarity of presentation, however, the
shares contributed to the Partnership by Joan Emery Lammers are shown only
opposite her name in the table and the shares contributed by the Otzens
are shown only opposite their respective names. The shares shown opposite
the Otzens' names also include: 773,233 shares owned by trusts of which
the Otzens are co-trustees, 9,100 shares owned by a trust of which The
Northern Trust Company is trustee and 15,000 shares subject to options
exercisable by Karl G. Otzen within 60 days of February 28, 1998.
(5) All shares are owned by a trust of which The Northern Trust Company is
trustee.
(6) Includes 71,537 shares subject to options exercisable within 60 days of
February 28, 1998 and 1,696 shares held in Safety-Kleen's 401(k) plan as
to which he does not have voting control.
(7) Includes 73 shares owned by his wife, 537,492 shares subject to options
exercisable within 60 days of February 28, 1998 and 1,268 shares held in
Safety-Kleen's 401(k) plan as to which he does not have voting control.
(8) Includes 275,000 shares owned by Breslube Industries, Ltd. of which 100%
is owned by Mr. Chalhoub. Also included are 59 shares owned by his wife,
75 shares owned by his son and 99,937 shares subject to options
exercisable within 60 days of February 28, 1998.
(9) Includes 112,177 shares subject to options exercisable within 60 days of
February 28, 1998.
(10) Includes 15,000 shares subject to options exercisable within 60 days of
February 28, 1998.
(11) Includes 30,223 shares owned by his wife and 15,000 shares subject to
options exercisable within 60 days of February 28, 1998. Mr. Gwillim is
also a co-trustee for 45,827 shares held in an irrevocable trust in which
he has no beneficial ownership; such shares are not included in the
table.
(12) Includes 64,724 shares subject to options exercisable within 60 days of
February 28, 1998 and 222 shares held in Safety-Kleen's 401(k) plan as to
which he does not have voting control.
(13) Includes 130,912 shares subject to options exercisable within 60 days of
February 28, 1998 and 539 shares held in Safety-Kleen's 401(k) plan as to
which he does not have voting control.
(14) Includes 11,250 shares subject to options exercisable within 60 days of
February 28, 1998.
(15) Includes 1,727,218 shares subject to options exercisable within 60 days
of February 28, 1998 and 4,377 shares held in Safety-Kleen's 401(k) plan
as to which they do not have voting control.
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EXECUTIVE OFFICERS
The executive officers of Safety-Kleen are:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
Donald W. Brinckman 67 Chairman of the Board and Chief Executive
Officer
Joseph Chalhoub 52 President and Chief Operating Officer
Hyman K. Bielsky 43 Senior Vice President, General Counsel and
Managing Director, European Operations
Roy D. Bullinger 49 Senior Vice President Business Management and
Marketing
Robert J. Burian 60 Senior Vice President Human Resources
Andrew A. Campbell 51 Senior Vice President Finance and Chief
Financial Officer
Michael H. Carney 50 Senior Vice President Marketing Services and
Customer Care
David A. Dattilo 57 Senior Vice President Sales and Service
Scott E. Fore 43 Senior Vice President Environment, Health and
Safety
F. Henry Habicht II 44 Senior Vice President Corporate Development
and Environment
Clark J. Rose 60 Senior Vice President Operations
Lawrence G. Davenport 55 Vice President Information Systems and Chief
Information Officer
Scott D. Krill 35 Assistant General Counsel and Secretary
Laurence M. Rudnick 52 Treasurer
Clifford J. Schulz 46 Controller and Chief Accounting Officer
</TABLE>
See "Board of Directors--Class of 1999" for Mr. Brinckman's background
information.
Mr. Chalhoub was named President and Chief Operating Officer of Safety-Kleen
on August 8, 1997. Previously he served as Senior Vice President Operations,
Oil Recovery and Envirosystems since July 1995. Prior to that, he served as
Senior Vice President, Oil Recovery since August 1990. In August 1991, Mr.
Chalhoub was assigned the additional responsibilities of overseeing the
processing and engineering departments. He was President of Safety-Kleen's
former subsidiary, Breslube Holding Corp., since May, 1987.
Mr. Bielsky was elected Senior Vice President General Counsel in May 1993.
He has also served as Safety-Kleen's Managing Director of its European
operations since 1996. Mr. Bielsky served as Assistant General Counsel-
Commercial since January 1990, and as Associate Counsel since joining Safety-
Kleen in 1987.
Mr. Bullinger was named Senior Vice President Business Management and
Marketing in June 1994. He served as Vice President Sales-Central Division
since 1985 and as a Regional Manager since joining Safety-Kleen in 1975.
Mr. Burian was appointed Senior Vice President Human Resources in May 1993.
He served as Senior Vice President Administration since August 1990. Mr.
Burian joined Safety-Kleen in July 1986, as Vice President Personnel.
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Mr. Campbell was named Senior Vice President, Finance and Chief Financial
Officer in April of 1997. From 1994 to 1996, he served as President and
earlier as Vice President, Finance and Chief Financial Officer for Duplex
Products, Inc. He was Vice President, Finance and Chief Financial Officer of
Simmons Upholstered Furniture, Inc. from 1991 to 1994. Prior to that, he held
senior financial positions at General Electric Company and Navistar
International Corporation.
Mr. Carney was named Senior Vice President Marketing Services and Customer
Care in June 1994. He served as Senior Vice President Marketing since August
1990 and Vice President Marketing since May, 1987. He joined Safety-Kleen in
1976, serving in various marketing positions until his appointment to Vice
President Marketing.
Mr. Dattilo was named Senior Vice President Sales and Service in August
1990. He served as Vice President Corporate Branch Sales and Service since
January, 1980.
Mr. Fore was elected Senior Vice President Environment, Health and Safety in
May 1993. He served as Vice President Environment, Health and Safety since
August, 1987, and was previously Associate General Counsel since joining
Safety-Kleen in 1985.
Mr. Habicht joined Safety-Kleen in March 1993. He served as Senior Vice
President Strategic/Environmental Planning from March 1993 to July 1995. In
July 1995, he assumed responsibility for Environment, Health and Safety and
Corporate Accounts and became Senior Vice President of Corporate Development
and Environment. Prior to joining Safety-Kleen, he served as Deputy
Administrator of the U.S. Environmental Protection Agency from 1989 to 1993.
Mr. Rose was named Senior Vice President Operations in August 1997. He
served as Vice President Manufacturing and Technical Services since July 1995
and as Vice President Technical Services since August, 1989. Mr. Rose joined
Safety-Kleen in June, 1984 as the Manager of Recycle Center Operations.
Mr. Davenport joined Safety-Kleen in June 1995 as Vice President Information
Services and Chief Information Officer. Prior to joining Safety-Kleen, Mr.
Davenport was employed by JB Hunt Transport, Inc. since 1989 and served as
Senior Vice President Information Services for that company since 1992.
Mr. Krill was named Assistant General Counsel and Secretary in May 1997. He
served as Associate Counsel since joining Safety-Kleen in December 1993. Prior
to that, Mr. Krill was an associate with the firm of Gibson, Dunn & Crutcher.
Mr. Rudnick joined Safety-Kleen in September, 1979, and was appointed
Treasurer in January, 1980.
Mr. Schulz was named Controller in December 1994. He served as Controller
North American Operations and Assistant Controller Cost and Inventory since
1991 and 1987, respectively.
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EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table specifies for the last three fiscal years the components
of the compensation packages of the Chief Executive Officer of Safety-Kleen,
the four other most highly compensated executive officers of Safety-Kleen and
Safety-Kleen's former Chief Executive Officer who served as such during part
of 1997 (the "named executive officers").
ANNUAL COMPENSATION
<TABLE>
<CAPTION>
LONG-TERM
COMP.
AWARDS
($) OTHER SECURITIES ($) ALL
($) ANNUAL UNDERLYING OTHER
NAME AND ($) BONUS COMPENSATION OPTION/SARS COMPENSATION
PRINCIPAL POSITION YEAR SALARY (1)(2) (3) (#)(2) (4)
------------------ ---- ------ ------ ------------ ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Donald W. Brinckman
(5) 1997 289,305 187,511 -- -- 3,800
Chairman and CEO 1996 417,062 183,968 -- 37,750 3,750
1995 404,615 84,840 -- 30,000 2,625
Joseph Chalhoub (5) 1997 278,931 171,246 -- -- 3,800
President and COO 1996 220,221 141,976 -- 22,450 3,750
1995 205,855 86,514 -- 28,600 2,859
Hyman K. Bielsky 1997 196,848 140,221 129,965 -- 3,800
Senior Vice Presi- 1996 185,540 124,775 -- 23,600 3,750
dent 1995 164,856 78,649 -- 19,600 2,625
David A. Dattilo 1997 213,771 130,302 -- -- 2,850
Senior Vice Presi- 1996 191,470 137,502 -- 25,800 3,750
dent 1995 185,444 78,815 -- 21,000 2,625
F. Henry Habicht II 1997 197,560 110,938 -- -- 2,737
Senior Vice Presi- 1996 190,916 128,019 -- 25,050 3,750
dent 1995 182,738 78,815 -- 20,900 2,266
John G. Johnson, 1997 238,646 16,986 -- -- 1,663,884
Jr. (5) 1996 417,901 272,010 -- 65,000 3,750
Former President 1995 391,661 119,170 -- 50,000 2,625
and CEO
</TABLE>
- --------
(1) The amounts shown in the bonus column represent payments under Safety-
Kleen's Management Incentive Plan.
(2) Bonuses are paid and stock options are granted in February of each year
based on performance during the prior year. Accordingly, bonus payments
and option grants are reported in this table for the year to which they
relate, instead of the year in which they were paid or granted.
(3) The amounts shown in the Other Annual Compensation column for Mr. Bielsky
represent payments related to his international assignment as Managing
Director, European Operations.
(4) The compensation reported represents Company contributions to the Savings
and Investment Plan, a defined contribution plan. Amounts reported for Mr.
Johnson also include payments and accrued payments related to his
resignation discussed in note (5).
(5) Mr. Johnson resigned from Safety-Kleen on August 8, 1997. On that date,
Mr. Brinckman was named CEO and Mr. Chalhoub was promoted to President and
COO of Safety-Kleen.
10
<PAGE>
OPTIONS
See Amendment No. 29 to Schedule 14D-9, Item 3(b)(2)--"Certain Executive
Compensation and Other Employee-Related Matters in Connection with a Change of
Control of Safety-Kleen--Vesting of Stock Options" and Item 3(b)(3)--"Certain
Executive Compensation and Other Employee-Related Matters in Connection with
the LLE Merger--LLE Merger Agreement Provisions Relating to Benefit Plans,"
incorporated herein by reference.
Option/SAR Grants in Last Fiscal Year
The following table provides information related to option/SARs granted to
the named executive officers during fiscal 1997.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE
AT ASSUMED ANNUAL RATES
OF STOCK PRICE
APPRECIATION
INDIVIDUAL GRANTS FOR OPTION TERM(4)
------------------------------------------- -------------------------
% OF TOTAL
OPTIONS/
NUMBER OF SARS
SECURITIES GRANTED TO EXERCISE
UNDERLYING EMPLOYEES OR BASE
OPTIONS/SARS IN FISCAL PRICE EXPIRATION
NAME GRANTED YEAR ($/SH) DATE 5% ($) (2) 10% ($) (2)
---- ------------ ---------- -------- ---------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Donald W.
Brinckman 37,750 3.46% 17.125 02/14/07 406,561 1,030,305
Joseph Chalhoub 28,650 2.62% 17.125 02/14/07 308,555 781,940
Hyman K.
Bielsky 23,600 2.16% 17.125 02/14/07 254,168 644,111
David A.
Dattilo 25,800 2.36% 17.125 02/14/07 277,861 704,155
F. Henry Hab-
icht II 25,050 2.29% 17.125 02/14/07 269,784 683,686
John G. John-
son, Jr. 65,000 5.95% 17.125 02/14/07 700,038 1,774,035
Shareholders(3) N/A N/A N/A N/A 637,481,420 1,733,886,004
</TABLE>
- --------
(1) All options are nonqualified, expire 10 years from date of grant, were
issued at fair market value on the date of grant and vest at the rate of
25% per year beginning one year from grant date. Options granted to
executive officers have a tandem limited stock appreciation right (LSAR)
which entitles the officer to elect to receive a Change of Control Value
(as described in the 1993 Stock Option Plan) of the option in cash in the
event a change of control occurs.
(2) The potential realizable value portion of the foregoing table illustrates
the gain that might be realized upon the exercise of the options
immediately prior to the expiration of their term, assuming the specified
compounded rates of appreciation of Safety-Kleen's Common Stock over the
term of the option. Actual gains, if any, on the stock option exercises
are dependent on the future performance of the Common Stock, overall
market conditions, as well as the option holders continued employment
through the vesting period. The amounts reflected in this table may not
necessarily be achieved.
(3) With respect to shareholders, the potential realizable value illustrates
the gain that might be realized on the 59,191,462 shares of Common Stock
issued and outstanding as of year end, assuming the specified compounded
rates of appreciation of Safety-Kleen's Common Stock over the term of the
options. The value is calculated based on the Exercise or Base Price of
the option grant on February 14, 1997 of $17.125 per share.
(4) If the transactions contemplated by the LLE Merger Agreement are
consummated, the options shown in the table will be cancelled in
consideration of a per Share payment equal to $13.175 (the difference
between $30.30 and the exercise price).
11
<PAGE>
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option/SAR
Values
The following table provides information related to options exercised by the
named executive officers during fiscal year 1997 and the number and value of
options held at fiscal year end.
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED,
SHARES OPTIONS HELD AT IN-THE-MONEY OPTIONS AT
ACQUIRED FISCAL YEAR END (#) FISCAL YEAR END($)(1)
ON VALUE ------------------------- -------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- -------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Donald W.
Brinckman 0 0 537,492 0 $4,604,919 0
Joseph
Chalhoub 0 0 77,012 62,788 592,741 702,114
Hyman K.
Bielsky 0 0 53,487 50,688 491,259 567,448
David A.
Dattilo 0 0 90,090 59,325 686,662 664,425
F. Henry
Habicht
II 0 0 44,500 55,550 448,634 622,309
John G.
Johnson,
Jr. 0 0 85,375 131,225 843,687 1,464,625
</TABLE>
- --------
(1) Represents the difference between the aggregate exercise price and the
closing price of Safety-Kleen's Common Stock on January 3, 1998 ($27.50).
See also "Option/SAR Grants in Last Fiscal Year," at footnote (4).
PENSION PLAN
The following table reflects annual pension benefits commencing at age 65
based upon assumed final pay amounts and years of credited service:
ESTIMATED ANNUAL PENSION BASED UPON
INDICATED YEARS OF CREDITED SERVICE FOR THE
PENSION PLAN AND THE EXCESS BENEFIT PLAN
<TABLE>
<CAPTION>
ASSUMED AVERAGE 10 15 20 25 30 35 40
ANNUAL FINAL PAY YEARS YEARS YEARS YEARS YEARS YEARS YEARS
- ---------------- ----- ----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C>
$250,000 41,155 61,733 82,310 102,888 123,465 123,675 123,885
300,000 49,490 74,235 98,980 123,725 148,470 148,680 148,890
350,000 57,825 86,738 115,650 144,563 173,475 173,685 173,895
400,000 66,160 99,240 132,320 165,400 198,480 198,690 198,900
450,000 74,495 111,743 148,990 186,238 223,485 223,695 223,905
500,000 82,830 124,245 165,660 207,075 248,490 248,700 248,910
550,000 91,165 136,748 182,330 227,913 273,495 273,705 273,915
600,000 99,500 149,250 199,000 248,750 298,500 298,710 298,920
650,000 107,835 161,753 215,670 269,588 323,505 323,715 323,925
700,000 116,170 174,255 232,340 290,425 348,510 348,720 348,930
750,000 124,505 186,758 249,010 311,263 373,515 373,725 373,935
800,000 132,840 199,260 265,680 332,100 398,520 398,730 398,940
850,000 141,175 211,763 282,350 352,938 423,525 423,735 423,945
</TABLE>
The Safety-Kleen Pension Plan for Salaried Employees (the "Pension Plan")
provides retirement benefits for life for salaried employees, including
executive officers, of Safety-Kleen and its participating subsidiaries.
Pensions are based on final pay, which is defined as the average annual
earnings (including commissions and incentive compensation) for the five
consecutive years which yield the highest average. For the named executive
officers, covered compensation is substantially the same as the sum of the
Salary and Bonus columns for 1996 on the Summary Compensation Table. The
pensions are payable monthly commencing the first calendar month after
retirement. Various provisions under the Internal Revenue Code of 1986, as
amended (the "Code") limit the accrued benefit payable under the Pension Plan,
currently to $130,000, and limit the amount of annual compensation that may be
taken into account in determining pension benefits, currently to $160,000.
12
<PAGE>
Under the Safety-Kleen Corp. Excess Benefit Plan (the "Excess Benefit
Plan"), executive officers are generally entitled to the difference between
the benefits actually paid to them under the Pension Plan and the benefits
which they would have received under the Pension Plan were it not for certain
restrictions imposed under the Code, discussed above. The Excess Benefit Plan
also provides that the executive officers' benefits are calculated on the
highest five of their last ten years' compensation and that any executive
officer who has attained both the age of 60 years and 30 years of service will
receive an unreduced pension benefit. In 1997, Safety-Kleen placed funds
sufficient to pay the benefits accrued under the Excess Benefit Plan in a so
called Rabbi Trust. The funds in the Rabbi Trust remain subject to the claims
of Safety-Kleen's creditors.
The amounts shown above are computed on straight-life annuity amounts and
are not subject to deduction for Social Security Benefits or other offset
amounts. The amounts are assumed payable under the Pension Plan option
providing lifetime benefits for the employee only, and would be reduced if the
retiree elected a surviving spouse's pension. Messrs. Brinckman, Chalhoub,
Bielsky, Dattilo and Habicht had 38 years, 20 years, 11 years, 30 years and 5
years, respectively, of credited service under the Pension Plan as of December
31, 1997. Mr. Chalhoub's benefits paid under the Pension Plan will be offset
by benefits payable under a defined contribution plan administered by Safety-
Kleen Canada, Inc. which he participated in for the first 17 years of his
employment.
EMPLOYMENT CONTRACTS AND SEVERANCE ARRANGEMENTS
Safety-Kleen has agreed to provide executive life insurance to 37 of its
officers and key managers (including the named executive officers) whereby
Safety-Kleen and executive contribute to a life insurance policy owned by the
executive; during 1997, bonuses were paid in lieu of Safety-Kleen
contributions and are reflected in the Summary Compensation Table.
In August, 1997, Safety-Kleen entered into Change of Control Severance
Agreements with its 14 executive officers and five other employees of Safety-
Kleen who are not executive officers. The Board of Directors of Safety-Kleen
approved the Change of Control Severance Agreements in order to close the gap
between the prior change of control agreements adopted by Safety-Kleen in 1990
and current competitive practices for change of control agreements. Each
Change of Control Severance Agreement provides for, among other things: (a) a
three-year employment period, beginning on the date of a Change of Control (as
defined in such agreements; a Change of Control will occur upon consummation
of the Revised LLE Offer) at a guaranteed annual base salary equal to at least
12 times the highest base monthly salary payable during the 12-month period
immediately preceding the Change of Control, with increases consistent with
increases in base salary awarded to other peer executives of Safety-Kleen; (b)
a guaranteed bonus for each bonus plan performance period (under each bonus
arrangement) ending within such three year employment period; (c) continued
participation in the incentive, savings, retirement, welfare and other fringe
benefit plans sponsored by Safety-Kleen; (d) full vesting on the date of the
Change of Control of all stock options (or a lump sum payment of the spread of
all non-vested, forfeited options); and (e) full payment on the date of the
Change of Control, of the value of the executive's accrued benefits under
Safety-Kleen's excess benefit, supplemental retirement and any other
nonqualified retirement plans.
If, during the three year employment period, the executive's employment is
terminated by Safety-Kleen (other than for Cause (as defined in such
agreements) or by reason of the executive's death or disability), or if the
executive terminates employment for Good Reason (as defined in such
agreements), the executive will receive: (i) guaranteed annual base salary,
guaranteed bonus and accrued vacation pay through the date of termination;
(ii) previously deferred and unpaid compensation; (iii) an amount equal to
three times the sum of the executive's guaranteed base salary and guaranteed
bonus in the year in which the termination occurs; (iv) the value of the
unvested portion of the executive's accounts under qualified Safety-Kleen
plans, (v) reimbursement for unpaid benefits which would have accrued if the
executive had remained employed by Safety-Kleen until three years after the
executive's termination of employment under Safety-Kleen's excess benefit and
supplemental plans; and (vi) continuation of all medical, life insurance and
other welfare benefits for a period of three years from termination. The sum
of the amounts referred to in clauses (i) and (ii) is referred to as the
"Accrued Obligations".
13
<PAGE>
If, during the three year employment period, the executive's employment is
terminated (i) by the Surviving Corporation for Cause, as defined, the
executive is entitled only to his guaranteed base salary through the date of
termination, plus any deferred compensation and accrued vacation pay not
previously paid; (ii) by the executive other than for Good Reason, the
executive is entitled only to the Accrued Obligations; (iii) by Safety-Kleen
for disability, the executive is entitled to receive the Accrued Obligations
and disability and other benefits at least equal to the greater of those
provided to peer executives by the Surviving Corporation immediately prior to
the executives termination and those provided to peer executives by Safety-
Kleen at any time during the 90 day period immediately preceding a Change in
Control; and (iv) by the executive's death, his estate is entitled to the
Accrued Obligations and benefits at least equal to the most favorable benefits
provided to survivors of peer executives, and at least as favorable in the
aggregate as the most favorable provided to the executive during the 90 days
preceding closing of the Revised LLE Offer.
Each of the Change of Control Severance Agreements provides that if it is
determined that benefits received by the executive thereunder (or otherwise)
are subject to any excise tax under Section 4999 of the Internal Revenue Code
or any similar excise taxes, then Safety-Kleen will also pay the executive an
amount (the "Gross-up Payment") such that, after the payment of all income and
excise taxes, the executive will be in the same after-tax position that he
would have been in had no excise tax been imposed.
Each Change of Control Severance Agreement contains a non-compete provision
that during the period of the executive's employment and for one year
thereafter, prohibits the executive from certain participation in the business
of any company engaged in business that directly or materially competes with
Safety-Kleen, and certain other competitive activity. Each such agreement also
obligates the executive to maintain the confidentiality of Safety-Kleen's
Confidential Information (as defined in such agreement).
Severance payments that would be made to the persons who are parties to the
Change of Control Severance Agreements in the event they are all terminated
during the three year employment period after a Change of Control (other than
for Cause or by reason of the executive's death or disability) are
approximately $46,000,000 for all officers with Change of Control Severance
Agreements, including approximately $4,500,000 for Mr. Brinckman, $4,625,000
for Mr. Chalhoub, $2,825,000 for Mr. Bielsky, $3,650,000 for Mr. Dattilo and
$2,450,000 for Mr. Habicht.
The foregoing description of the Change of Control Severance Agreements does
not purport to be complete and is qualified in its entirety by reference to
the Change of Control Severance Agreement filed as Exhibit 4 to the Schedule
14D-9 and incorporated herein by reference.
Effective as of August 8, 1997, Safety-Kleen entered into a General Release
and Separation Agreement with John G. Johnson, Jr., pursuant to which he
resigned as a Director of Safety-Kleen and from his offices with Safety-Kleen
including that of Chief Executive Officer. Pursuant to the Agreement, Safety-
Kleen paid Mr. Johnson $175,000 and accrued vacation pay. Safety-Kleen also
agreed to make payments to him in the amount of $28,205 every two weeks, until
such payments aggregate $1.1 million. Upon a Change of Control (as defined in
Safety-Kleen's 1993 Stock Option Plan; consummation of the Revised LLE Offer
will constitute such a Change of Control), any portion of the $1.1 million not
already paid accelerates. Mr. Johnson relinquished his rights to bonuses, but
his options were vested and continued as though his employment had not
terminated. He also received certain medical and outplacement benefits and
exchanged releases with Safety-Kleen. The Agreement also subjects Mr. Johnson
to non-competition and non-interference obligations and provides that the
considerations exchanged do not constitute and shall not be interpreted as any
admission of fault on the part of either party.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Safety-Kleen's executive officers and directors are required to file under
the Exchange Act reports of ownership and changes of ownership with the
Securities and Exchange Commission and the New York Stock Exchange.
14
<PAGE>
Based solely on information provided to Safety-Kleen by executive officers
and directors, Safety-Kleen believes that during the preceding year all filing
requirements applicable to executive officers and directors under Section
16(a) of the Exchange Act have been satisfied.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During 1997, Safety-Kleen paid approximately $140,000 and $20,000 to
Williams & Vanino, Inc. and Putnam, Hayes & Bartlett, Inc., respectively, for
environmental management consulting services. Marcia E. Williams, was
President of Williams & Vanino until August of 1997 when that firm merged with
Putnam, Hayes & Bartlett, Inc. where Ms. Williams serves as a Managing
Director. In addition, Ms. Williams' husband is a partner with the law firm of
Latham & Watkins. Safety-Kleen utilized Latham & Watkins for certain legal
services in 1997.
Edgar D. Jannotta, a director of Safety-Kleen is a Senior Director of
William Blair & Co. Safety-Kleen retained the services of William Blair
pursuant to a letter agreement (the William Blair Letter Agreement) dated
August 8, 1997, to render certain financial advisory and investment banking
services in connection with Safety-Kleen's analysis of strategic options
including a possible business combination (through tender offer, merger, sale
or exchange of stock, sale of all or a substantial part of its assets or
otherwise) of Safety-Kleen with another party (the "Possible Transaction"). In
exchange for the services provided, Safety-Kleen agreed to pay William Blair a
quarterly retainer fee of $25,000, payable in advance (with the first
installment due upon execution of the William Blair Engagement Letter), and an
opinion fee of $300,000, payable in the event William Blair renders a fairness
opinion or advises the Board of Directors that it is unable to render such an
opinion. In addition, Safety-Kleen agreed to pay William Blair an additional
fee (subject to a credit of the retainer fee and opinion fee) equal to 0.5% of
the Equity Purchase Price received by Safety-Kleen and its shareholders as a
result of the consummation of any Possible Transaction. Both the Revised LLE
Offer and the LLE Merger, upon consummation, would satisfy the definition of a
Possible Transaction. The William Blair Engagement Letter also provides that
Safety-Kleen shall reimburse William Blair for all itemized out-of-pocket
expenses (including reasonable fees and expenses of William Blair's counsel
and any other independent experts retained by William Blair) reasonably
incurred by William Blair in connection with its engagement by Safety-Kleen.
Safety-Kleen and William Blair also entered into a separate letter agreement,
dated August 8, 1997, whereby Safety-Kleen agreed to indemnify William Blair
against certain liabilities in connection with William Blair's engagement
under the William Blair Engagement Letter.
CERTAIN LEGAL MATTERS
Between November 4 and 12, 1997, and on December 5, 1997, a total of seven
putative class actions were filed against Safety-Kleen and its directors in
the Circuit Court of Cook County, Illinois. The actions purport to have been
brought as derivative actions on behalf of Safety-Kleen. In general, the
complaints allege, among other things, that the director defendants (i) have
refused to seriously consider LLE's offer, and have failed to maximize
shareholder value by entertaining offers to purchase Safety-Kleen, (ii) have
breached their fiduciary and other common law duties due to plaintiffs and
other class members in that they have not exercised, and are not exercising,
independent business judgment and (iii) are acting to entrench themselves in
their offices and positions and maintain their salaries and perquisites, all
at the expense and to the detriment of the public shareholders of Safety-
Kleen. As relief, the complaints seek, among other things (i) a declaration
that the action be certified as a proper class action; (ii) injunctive relief
requiring that the director defendants carry out their fiduciary duties to
plaintiff and other members of the class by announcing their intention to,
among other things, cooperate fully with any entity or person, including LLE,
having a bona fide interest in proposing any transaction that would maximize
shareholder value; and (iii) damages, costs, and attorneys' fees. Safety-Kleen
believes that the allegation contained in the complaints are without merit
and, if the plaintiffs elect to proceed with their actions, intends to contest
the actions vigorously on behalf of itself and the Board of Directors.
15
<PAGE>
On December 5, 1997, six of the seven actions were consolidated into a
single action. On February 28, 1998, Safety-Kleen filed an answer denying the
material allegations of the consolidated complaint and asserting several
defenses. On March 12, 1998, Safety-Kleen filed a motion for judgment on the
pleadings in the consolidated case.
On November 17, 1997, Safety-Kleen filed a lawsuit in Federal District Court
for the Northern District of Illinois against LLE seeking a declaratory
judgment that LLE violated the "gun-jumping" prohibitions of federal
securities law by certain of its public announcements made before the
effectiveness of the registration statement with the Commission relating to
the LLE shares it proposes to use in its offer for Safety-Kleen. The suit also
challenged LLE's asserted right under Wisconsin law to demand such a
shareholders' meeting at that time.
On November 24, 1997, LLE answered the complaint, denying liability and
asserting several defenses. In addition, LLE and its subsidiary filed
counterclaims against Safety-Kleen and its directors. The counterclaims sought
a declaratory judgment that Safety-Kleen is required to hold a special meeting
under Wisconsin law, and assert claims against Safety-Kleen for violation of
certain Wisconsin statutes pertaining to furnishing of shareholder lists and
takeovers, and against the directors for breach of fiduciary duty in failing
to negotiate with LLE and entering into the Philip Merger Agreement, including
the termination fees and expenses, and for failure to amend its Rights
Agreement, or poison pill, to make it inapplicable to the then pending LLE
offer, and a derivative claim for corporate waste.
On December 4, 1997, the Federal District Court of the Northern District
Court of Illinois ruled that LLE could seek the approval of Safety-Kleen
shareholders at a special meeting to restore voting power to Shares that LLE
may acquire in excess of 20% of the outstanding Shares. Accordingly, Safety-
Kleen scheduled a special meeting of shareholders on January 9, 1998 to vote
on such restoration of voting power, at which shareholders voted to restore
such voting power. The Court also scheduled a preliminary hearing for January
28, 1998 on LLE's request that the Rights Agreement be amended to make it
inapplicable to LLE's then pending offer and that the Court void the
termination fee and certain other provisions of the Philip Merger Agreement.
On January 28, 1998, the Federal District Court for the Northern District of
Illinois began a preliminary hearing on LLE's request that the Rights
Agreement be amended to make it inapplicable to LLE's then pending offer, that
the Court order Safety-Kleen's Board of Directors to take action to make the
Wisconsin Business Combination Statute inapplicable to LLE's then pending
offer and the merger contemplated thereby, and that the Court void the
termination fee and certain other provisions of the Philip Merger Agreement.
The Court granted LLE's request to withdraw its challenge to the termination
fee. LLE also advised the Court that it would not seek to delay the Safety-
Kleen shareholders' meeting on February 11, 1998.
On February 4, 1998, the Court issued a ruling affirming the decision of the
Board of Directors of Safety-Kleen to leave the Rights Agreement in place with
respect to the LLE offer in its form prior to its amendment on January 26,
1998. The Court's decision did not address Safety-Kleen's ability to leave the
Rights Agreement in place with respect to the offer reflecting such amendment.
On February 5, 1998, the Federal District Court for the Northern District of
Illinois denied LLE's motion to find that the Board of Directors of Safety-
Kleen had violated the federal securities laws by not responding to LLE's
January 26 amendment to its offer prior to February 5, 1998.
On March 5, 1998, the Federal District court for the Northern District of
Illinois denied LLE's motion to require Safety-Kleen's board to make its
Rights Agreement, inapplicable to LLE's then pending tender offer (the
"Amended LLE Offer") before the March 9, 1998 shareholders' meeting. The Judge
set another hearing for Thursday, March 12 to again consider the motion, after
taking testimony. LLE committed to the court that it would extend the Amended
LLE offer on its then current terms through March 16. On March 12, 1998, the
Court did not hold a hearing, but scheduled a telephonic status report for
March 13, 1998.
The LLE Merger Agreement includes a provision obligating the parties to take
all action necessary to dismiss with prejudice all pending litigation between
such parties. Accordingly, on March 16, 1998, the Federal
16
<PAGE>
District Court for the Northern District of Illinois, on motion of the
plaintiff, dismissed with prejudice LLE's action against Safety-Kleen, subject
to LLE's right to reinstate the case on or before April 16, 1998. Safety-Kleen
believes LLE's action to be without merit and intends, if it were reinstated,
to contest such action vigorously on behalf of Safety-Kleen and the Board of
Directors.
17
<PAGE>
ANNEX I
SAFETY-KLEEN CORP.
DIRECTORS AND EXECUTIVE OFFICERS
SALES OF STOCK
MARCH 18, 1998 THROUGH MARCH 20, 1998
<TABLE>
<CAPTION>
PRICE
# OF PER
NAME DATE SHARES SHARE
---- ---- ------ -----
<S> <C> <C> <C>
Hyman K. Bielsky 3/18/1998 2,685 $28.2500
Donald W. Brinckman 3/19/1998 10,000 28.1250
3/19/1998 2,040 28.0625
3/19/1998 63,000 28.0000
3/20/1998 138,400 27.5000
Roy D. Bullinger 3/18/1998 10,773 28.1875
Joseph Chalhoub 3/19/1998 142,100 27.8913
3/20/1998 102,900 27.4271
3/20/1998 30,000 27.3333
David A. Dattilo 3/19/1998 31,000 27.5000
Scott E. Fore 3/18/1998 21 28.3125
3/18/1998 1,683 28.5000
C. James Schulz 3/18/1998 1,925 28.3125
Richard T. Farmer 3/20/1998 28,390 27.5000
Russell A. Gwillim 3/19/1998 13,600 28.1167
Karl G. Otzen 3/18/1998 131,500 28.2626
3/19/1998 28,300 28.1167
3/20/1998 53,600 28.1167
Paul D. Schrage 3/19/1998 16,180 28.1250
W. Gordon Wood 3/18/1998 56,317 28.2500
</TABLE>
18
