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:
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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.
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(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.
(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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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 0000 (xxx "Xxxxxxxx Xxx").
SECTION 2. Conditions to Delivery of Shares. The Grantor's obligation to
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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 Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 0000 (xxx "XXX Xxx") 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.
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(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 Xxxxxxx Xxxx & Xxxxxxxxx, 000
Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, 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)
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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
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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
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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
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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.
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(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
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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
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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
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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
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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
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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
Xxxxxxxxxxxxxx 00
Xxxxxxxxx, Xxxxxx
Attention: President
Facsimile: 46 8 657 7071
With a copy to:
Xxxxxxx Xxxx & Xxxxxxxxx
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxx, Esq.
Facsimile: (000) 000-0000
(b) If to the Grantor:
Xxxxxxxxx'x, Inc.
World Support Center
0000 Xxxx Xxxxxxx Xxxxx
Xxxxxxxx Xxxxxxx, XX 00000
Attention: General Counsel
Facsimile: (000) 000-0000
With a copy to:
Xxxxxx, Xxxx & Xxxxxxxx LLP
000 Xxxxx Xxxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxx, Esq.
Facsimile: (000) 000-0000
SECTION 10. Expenses. Except as otherwise expressly set forth herein or the
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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
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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
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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
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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
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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
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of law or otherwise.
SECTION 15. Governing Law. This Agreement shall be governed by, and
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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
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instrument in writing signed by the parties hereto.
SECTION 17. Waiver. Any party hereto may (a) extend the time for the
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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
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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
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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
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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
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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).
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SECTION 21. Public Announcements. So long as this Agreement is in effect,
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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.
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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/ Xxxxx X. Xxxxx
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Name: Xxxxx X. Xxxxx
Title: President and Chief Executive
Officer
SECURITAS AB
By: /s/ Xxxxxx Xxxxxxxx
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Name: Xxxxxx Xxxxxxxx
Title: President and Chief Executive
Officer
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