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EXHIBIT 10(p)
AGREEMENT
AGREEMENT, dated as of September 1, 1998, by and between
SENSORMATIC ELECTRONICS CORPORATION, a Delaware corporation having its principal
place of business at 000 Xxxxxx Xxxx, Xxxx Xxxxx, Xxxxxxx 00000 ("Sensormatic"),
and XXXXX X. XXXXXXXXXX ("Xxxxxxxxxx"), residing at 000 Xxxxx Xxxxx Xxxx, Xxx
Xxxxxx, Xxxxxxxxxxx 00000.
W I T N E S S E T H:
WHEREAS, Xxxxxxxxxx is a member of the Board of Directors of
Sensormatic, and has made, and is expected to continue to make, a significant
contribution to the direction of Sensormatic's business and affairs and the
formulation of its policies;
WHEREAS, the Board of Directors of Sensormatic recognizes
that, as is the case with many publicly-held corporations, the possibility of a
Change in Control (as defined below) exists and that such possibility, and the
uncertainties which it may raise, may result in the distraction of directors to
the detriment of Sensormatic and its stockholders, particularly at a time when
Sensormatic is making significant efforts to expand its product lines and
markets, restructure its operations and reduce its expenses;
WHEREAS, the Board of Directors of Sensormatic believes that
the protection of certain rights of Xxxxxxxxxx, in the event of a Change in
Control, will help assure Xxxxxxxxxx'x continuing dedication to his duties to
Sensormatic, notwithstanding the possibility of a Change in Control, and,
moreover, will enable Xxxxxxxxxx to objectively and impartially assess, and
advise the Board of Directors with respect to, any proposal received by
Sensormatic regarding a Change in Control and to take such action regarding any
such proposal as the Board of Directors may deem to be appropriate;
WHEREAS, with similar purposes and intents, Sensormatic
entered into an Agreement dated as of December 23, 1988, as amended as of
January 27, 1989, with Xxxxxxxxxx relating to a possible Change in Control (the
"Prior Agreement"), and on January 10, 1997 the Board of Directors and the
Compensation Committee thereof adopted certain resolutions expressly affirming
the Prior Agreement (subject to certain modifications as set forth therein), and
Sensormatic and Xxxxxxxxxx wish to amend and restate the Prior Agreement as
hereinafter set forth in order, among other things, to clarify and update
certain provisions thereof and to conform certain provisions thereof to such
resolutions;
NOW, THEREFORE, in consideration of the premises and for other
good and valuable consideration, the parties hereto agree as follows:
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1. Term.
(a) The term of this Agreement, originally commenced on
December 23, 1998 under the Prior Agreement, and continuing pursuant to this
amended and restated Agreement as of the date hereof (which for all purposes of
this Agreement shall mean the date first above written), shall continue after a
Change in Control shall occur and for so long thereafter as Sensormatic has or
may have any obligations under Sections 5, 6, 7, 10, 11 or 13 hereof.
(b) Notwithstanding the provisions of Section 1(a) hereof,
this Agreement shall terminate automatically in the event that, prior to the
occurrence of a Change in Control and so long as no Attempted Change in Control
shall have occurred and then be pending, Xxxxxxxxxx resigns or is removed from
his directorship with Sensormatic or the term of such office expires without his
being reelected thereto. Notwithstanding anything contained in this Agreement to
the contrary, if Xxxxxxxxxx is removed from his directorship with Sensormatic or
the term of such office expires without his being re-elected thereto prior to a
Change in Control, which Change in Control occurs, and Xxxxxxxxxx reasonably
demonstrates that such removal of or failure to re-elect Xxxxxxxxxx was at the
request of a third party who effectuates such Change in Control or that such
removal of or failure to re-elect Xxxxxxxxxx was directly related to or in
anticipation of such Change in Control, then for all purposes of this Agreement,
Xxxxxxxxxx shall be entitled to the payments and other benefits provided under
this Agreement as if such removal or failure to re-elect had occurred following
such Change in Control.
2. Fringe Benefits. Sensormatic currently provides to
Xxxxxxxxxx the fringe benefits listed below, without cost to Xxxxxxxxxx, and,
while nothing herein shall be deemed to require Sensormatic to continue any such
benefits or to prohibit Sensormatic from modifying any such benefits in any
respect, except that there shall be no material reduction in any such currently
provided benefits (and there shall be no material reduction in any additional
benefits subsequently approved by Sensormatic's Board of Directors or the
Compensation Committee thereof) during the pendency of an Attempted Change in
Control or in the event of a Change in Control or at any time within 36 months
after a Change in Control has occurred (and, in addition, there shall not, at
any time following a Change in Control, be any change in Sensormatic's Salary
Continuation Plan or Board of Directors Retirement Plan (which shall include,
for all purposes of this Agreement, any Salary Continuation Agreement or
Director Retirement Agreement between Sensormatic and Xxxxxxxxxx under such
Plans) resulting in a reduction of Xxxxxxxxxx'x benefits thereunder), it is
anticipated that such benefits (together with any such additional benefits)
shall continue to be provided to Xxxxxxxxxx on the same or a substantially
similar basis in the future in accordance with the terms of the applicable
benefit plans and policies:
(a) group medical and group dental Plans in which Xxxxxxxxxx
and his eligible dependents are participants;
(b) participation in Sensormatic's retirement and/or profit
sharing plans (including the Salary Continuation Plan and Board of Directors
Retirement Plan) and in
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Sensormatic's annual contributions, if any, thereto, provided that such
participation in the Board of Directors Retirement Plan is contingent on
Xxxxxxxxxx'x continued qualification prior to any such Change in Control or
Attempted Change in Control as an eligible participant under the provisions of
such plans as then in effect; and
(c) reimbursement of Xxxxxxxxxx for reasonable travel and
entertainment expenses incurred by Xxxxxxxxxx in connection with the business of
Sensormatic.
3. Continued Availability. As partial consideration for the
benefits available to Xxxxxxxxxx under this Agreement, Xxxxxxxxxx hereby agrees
to continue to make available a reasonable amount of his business time and
efforts, as director, to the business and affairs of Sensormatic, during any
Attempted Change in Control and for a period of six months after a Change in
Control (the "Availability Period"), on substantially the same basis as for
recent preceding periods. Xxxxxxxxxx'x substantial participation in other
businesses, as a partner, director, officer or otherwise, shall not be deemed in
any way to contravene the foregoing provision. In the event that Xxxxxxxxxx
voluntarily resigns from his directorship with Sensormatic at any time during
the Availability Period, Xxxxxxxxxx shall not be entitled to any of the benefits
provided for in this Agreement, other than those provided under Sections 5(a),
5(b), 5(c), 5(d), 7, 9 and 10 hereof, and shall promptly repay in full to
Sensormatic any benefits previously received by him under any provisions of
Section 5 of this Agreement not referred to in this sentence, but Sensormatic
shall have no other remedy for Xxxxxxxxxx'x failure to remain a director as
required by this Section 3. Any amounts or benefits received by Xxxxxxxxxx
pursuant to any other compensation plan or arrangement of Sensormatic, even if
similar or identical to those to which he would be entitled under this
Agreement, shall not be deemed received pursuant to this Agreement or be
repayable to Sensormatic for purposes of the preceding sentence.
4. Change in Control.
(a) For purposes of this Agreement, the term "Change in
Control" shall mean a change in control of Sensormatic of a nature that would be
required to be reported in response to Item 6(e) of Schedule 14A of Regulation
14A under the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
provided, that, without limitation, such a change in control shall be deemed to
have occurred if (i) any person (as such term is used in Sections 13(d) and
14(d) of the Exchange Act, "Person") is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act, "Beneficial Owner"), directly or
indirectly, of securities of Sensormatic representing 30% or more of the
combined voting power of Sensormatic's then outstanding voting securities, (ii)
Sensormatic consummates a merger, consolidation, share exchange, division or
other reorganization of Sensormatic with any other corporation or entity, unless
the shareholders of Sensormatic immediately prior to such transaction
beneficially own, directly or indirectly, (A) if Sensormatic is the surviving
corporation in such transaction, 60% or more of the combined voting power of
Sensormatic's outstanding voting securities as well as 60% or more of the total
market value of Sensormatic's outstanding equity securities, (B) if Sensormatic
is not the surviving corporation, 80% or more of the combined voting power of
the surviving
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entity's outstanding voting securities as well as 80% or more of the total
market value of such entity's outstanding equity securities, or (C) in the case
of a division, 80% or more of the combined voting power of the outstanding
voting securities of each entity resulting from the division as well as 80% or
more of the total market value of each such entity's outstanding equity
securities, in each case in substantially the same proportion as such
shareholders owned shares of Sensormatic prior to such transaction; (iii)
Sensormatic adopts a plan of complete liquidation or winding-up of Sensormatic;
(iv) the shareholders of Sensormatic approve an agreement for the sale or
disposition (in one transaction or a series of transactions) of all or
substantially all of Sensormatic's assets; or (v) during any period of 24
consecutive months, individuals (y) who at the beginning of such period
constitute the Board of Directors of Sensormatic or (z) whose election,
appointment or nomination for election was approved prior to such election or
appointment by a vote of at least two-thirds of the directors in office
immediately prior to such election or appointment who were directors at the
beginning of such two-year period (other than any directors who prior to the
Change in Control were associated or affiliated with any Person involved with
any Change in Control or Attempted Change in Control), cease for any reason to
constitute at least three-fourths of the Board of Directors of Sensormatic.
(b) For purposes of this Agreement, an "Attempted Change in
Control" shall be deemed to have occurred (i) if any Person files (or fails to
file when required to do so) with the Securities and Exchange Commission (the
"SEC") a Statement on Schedule 13D relating to voting securities of Sensormatic
(A) disclosing the acquisition of 10% or more thereof or (B) while disclosing
the acquisition of less than 10% of such voting securities, indicates an
intention to effect any of the transactions listed in Item 4 of Schedule 13D or
otherwise to effect a Change in Control, (ii) upon the public announcement
(including, without limitation, the filing with the SEC of a Statement on
Schedule 14D-1) by any Person of an intention to make a tender offer or
otherwise to effect a Change in Control, (iii) in the event of any solicitation
of proxies for the election of directors of Sensormatic pursuant to Rule 14a-11
of the Rules and Regulations under the Exchange Act or the filing of a Statement
on Schedule 14B in anticipation thereof, (iv) the receipt by Sensormatic from
any Person of any other communication proposing, or indicating an intention, to
effect a Change in Control by the acquisition of voting securities of
Sensormatic, the solicitation of proxies for the election of directors or
otherwise or (v) if the Board of Directors of Sensormatic or an authorized
committee thereof otherwise determines that an Attempted Change in Control is
pending. The termination of the pendency of an Attempted Change in Control shall
be determined by the Board of Directors of Sensormatic (or an authorized
committee thereof); provided, that any Attempted Change in Control shall in any
event be deemed to have terminated upon the occurrence of a Change in Control.
(c) A Change in Control shall be deemed, for purposes of this
Agreement, to be: (i) "non-approved" if (A) in connection with the consideration
thereof by the Board of Directors of Sensormatic, a majority of the Previous
Members of the Board of Directors (as defined below), either before or after
such Change in Control, (x) votes to disapprove of such Change in Control, (y)
votes to approve of such Change in Control, but as a consequence of the
existence of a competing proposal for a Change in Control, or (z) otherwise
expressly declares
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that such Change in Control is "non-approved", or (B) a majority of the Previous
Members of the Board of Directors neither expressly approves nor disapproves of
such Change in Control, or (ii) "approved" if in connection with the
consideration thereof by the Board of Directors of Sensormatic, a majority of
the Previous Members of the Board of Directors, either before or after such
Change in Control, (x) approves of such Change in Control (other than as a
consequence of the existence of a competing proposal for a Change of Control) or
(y) otherwise expressly declares that such Change in Control is "approved",
notwithstanding clause (A)(y) of this Section 5(c). The majority of the Previous
Members of the Board of Directors shall indicate its approval or disapproval of
a Change in Control by a statement or statements in writing to such effect. For
purposes of this Agreement, Previous Members of the Board of Directors shall
mean members of the Board of Directors of Sensormatic as of the date of a Change
in Control (the first Change in Control, if there are more than one) who had
been in office for a period of at least two years immediately prior to such
Change in Control (other than directors who prior to such Change in Control were
appointed or elected as directors as a consequence of their association or
affiliation with any Person effecting such Change in Control).
In addition, notwithstanding any previous determination that
a Change in Control was "approved", such Change in Control may subsequently be
determined, in good faith, to be "non-approved" by a majority of the Previous
Members of the Board of Directors who are then still in office with Sensormatic
or a corporate successor of Sensormatic (or if fewer than two such Previous
Members of the Board of Directors are still in office, then by a majority of the
Previous Members of the Board of Directors, whether or not still in office)
within the 36-month period immediately following such Change in Control, if
during such period there occur (1) events with respect to individuals who were
officers of Sensormatic at the time of the Change in Control that would
constitute involuntary termination under their Change in Control agreements, (2)
defaults by Sensormatic under this Agreement or any similar agreement, (3) the
involuntary termination (other than for cause or in the event of death or
permanent disability) of the employment of a number of the officers of
Sensormatic who were officers immediately prior to such Change in Control
exceeding 40% of the total number of such officers, or (4) the transfer (by
sale, merger or otherwise) of all or substantially all the equity securities of
Sensormatic acquired by the Person effecting such Change in Control, of all or
substantially all the assets of Sensormatic, or of all or substantially all the
equity securities of Sensormatic's successor corporation, directly or
indirectly, to a third party (other than a majority owned affiliate of such
Person). In the event of such a subsequent determination, Xxxxxxxxxx shall be
entitled to all benefits arising under this Agreement out of a "non-approved"
Change in Control as if such Change in Control had been deemed "non-approved"
initially. Any additional benefits arising out of such "non-approved" Change in
Control which Xxxxxxxxxx is entitled to receive through the date of such
determination shall be paid or satisfied promptly by Sensormatic. For purposes
of this Section 5(c), the term "officers" shall not include individuals whose
only office with Sensormatic is Assistant Secretary or Assistant Treasurer.
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(d) For the purposes of this Section 4, references to
provisions of the Exchange Act and rules, regulations and schedules thereunder
shall be to such provisions as they are in effect and interpreted as of the date
of this Agreement.
5. Benefits Effective Upon a Change in Control. In the event
a Change in Control occurs, Xxxxxxxxxx shall be entitled to the following
benefits:
(a) All stock options issued by Sensormatic to Xxxxxxxxxx,
whether or not then exercisable, shall remain fully exercisable or shall become
fully exercisable immediately (or, notwithstanding the foregoing, in the event
of an Attempted Change in Control involving a proposed Reorganization Event (as
such term is defined in Section 5(b) hereof)), such options shall become fully
exercisable thirty days before the date of such Reorganization Event, and such
options shall remain outstanding and fully exercisable for the stated term
thereof or until the later of (i) nine months following the resignation or
removal of Xxxxxxxxxx from his directorship with Sensormatic or the expiration
of the term of such office without his being re-elected thereto (or, at the
option of Xxxxxxxxxx, in the case of an incentive stock option, three months
following such termination or ceasing to be a director) or (ii) the end of the
respective post-termination exercisability periods provided for in such options
(including if applicable, such periods in the event of death or disability);
provided, that in no event shall the term of such options be extended beyond
their respective original terms. In addition, any deferred vesting or forfeiture
provisions applicable to any shares of Sensormatic stock awarded to or otherwise
held by Xxxxxxxxxx shall be without further force or effect, and Xxxxxxxxxx
shall have the unrestricted right to such shares.
(b) In the event that (i) such Change in Control is effected
through (A) a tender or exchange offer (a "Tender Offer") or (B) any means, in
one or more transactions, with the result in either case that any Person becomes
the Beneficial Owner, directly or indirectly, of securities of Sensormatic
representing 50% or more of the combined voting power of Sensormatic's then
outstanding voting securities (any such Change in Control referred to in this
clause (i), including pursuant to a Tender Offer, being hereinafter referred to
as a "Majority Acquisition"), (ii) in connection with, as a result of or within
24 months immediately following a Change in Control, Sensormatic's Board of
Directors shall have approved a merger, consolidation, reclassification,
reorganization, dissolution, sale of all or substantially all of the assets of
Sensormatic or similar event (a "Reorganization Event") as a result of which
Sensormatic's Common Stock would cease to be outstanding or (iii) in connection
with, as a result of or within 24 months immediately following a Change in
Control, Sensormatic's Common Stock ceases to be listed for trading on a
national securities exchange or quoted through NASDAQ or a comparable securities
quotation system, Xxxxxxxxxx shall have the right, exercisable by written notice
given at any time during the 13-month period immediately following the date of
such Change in Control (and, if later, the date of any such Majority
Acquisition, Reorganization Event or cessation of listing or quotation), to
require Sensormatic to purchase:
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(1) any or all of such stock options issued by Sensormatic to
Xxxxxxxxxx, whether or not then exercisable, and/or any stock options
issued upon conversion of or in exchange for any such Sensormatic stock
options pursuant to any such Reorganization Event ("Conversion
Options"), at a purchase price equal to the excess of the aggregate
Fair Market Value (as defined below) of the shares of Sensormatic
Common Stock subject to such Sensormatic stock options over the
aggregate exercise price of such stock options (or, in the case of any
Conversion Options, such amount calculated with respect to the
Sensormatic stock options which were converted into or exchanged for
such Conversion Options); and/or
(2) any or all shares of Sensormatic Common Stock held by
Xxxxxxxxxx at or immediately prior to the date of such Change in
Control (including any shares of Sensormatic Common Stock (restricted
or otherwise, and whether or not vested) awarded to Xxxxxxxxxx pursuant
to any compensation plan or arrangement of Sensormatic) or issued
pursuant to the exercise of any such Sensormatic stock options
following the date of such Change in Control, and/or (without
duplication) any shares or other securities issued upon conversion of
or in exchange for any such shares of Common Stock pursuant to any such
Reorganization Event ("Conversion Shares"), at a purchase price equal
to the aggregate Fair Market Value of such shares (or, in the case of
any Conversion Shares issued upon conversion of or in exchange for
Common Stock, the Fair Market Value of the shares of Common Stock which
were converted into or exchanged for such Conversion Shares); provided,
that Sensormatic may offset against the amount so payable for Common
Stock or Conversion Shares all amounts outstanding on any loans made to
Xxxxxxxxxx for the purchase of, or payment of taxes relating to, such
shares of Common Stock or Conversion Shares, as contemplated by Section
5(c) hereof or otherwise.
Payment for any such options or shares shall be made by Sensormatic within 10
days after Xxxxxxxxxx'x surrender of any such options, and/or within 10 days
after Xxxxxxxxxx'x surrender of the certificates representing any such shares of
Common Stock or Conversion Shares (or, if such certificates are in Sensormatic's
possession, within 10 days after Xxxxxxxxxx'x notice of exercise under this
Section 5(b)).
For purposes of this Section 5(b), the "Fair Market Value" of
a share of Sensormatic Common Stock means the highest fair market value per
share of Sensormatic Common Stock of the consideration paid in any transaction
by any Person who effects such Change in Control, in connection therewith,
whether through open market purchases, Tender Offers, Reorganization Events,
private transactions or otherwise.
(c) Upon Xxxxxxxxxx'x request, Sensormatic shall lend to
Xxxxxxxxxx, interest free, up to an amount equal to the aggregate exercise price
of the options referred to in Section 5(a) hereof, should Xxxxxxxxxx elect to
exercise such options. If requested by Xxxxxxxxxx, Sensormatic shall also lend
to Xxxxxxxxxx, interest free (or, at Xxxxxxxxxx'x option, provide a guaranty to
enable Xxxxxxxxxx to borrow), up to an amount equal to the percentage specified
in
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Section 5(d)(i) times the Share Income (as such term is defined in such Section)
resulting from such exercise and/or vesting. Such loan or loans shall be due and
payable to Sensormatic upon the earliest of (i) the fifth anniversary date of
such loan or loans, (ii) in the event of the resignation or removal, other than
for Cause (as defined in Section 5 hereof, "Cause"), of Xxxxxxxxxx from his
directorship with Sensormatic or the expiration of the term of such office
without his being re-elected thereto, upon the expiration of 30 months following
such resignation or removal, or in the event that Xxxxxxxxxx is removed as a
director for Cause, upon the expiration of 30 days after the later of such
removal, or (iii) promptly (but in any event within five (5) business days)
after receipt of the proceeds of sale from the sale of such shares, to the
extent of the loan or loans applicable to such sold shares. Xxxxxxxxxx shall
deposit such shares with Sensormatic as security for any such loan, if
Sensormatic shall so request. Notwithstanding anything to the contrary contained
in this Section 5(c), Sensormatic's Stock Purchase Loan Plan or any promissory
note or security agreement executed by Xxxxxxxxxx pursuant to such Plan, no
additional collateral shall be required by Sensormatic in connection with any
such loan to Xxxxxxxxxx, and, if necessary to be in compliance with applicable
margin regulations under federal laws, such loans shall be unsecured; and if,
because of Internal Revenue Service rules or other rules, Sensormatic is unable
to lend such funds to Xxxxxxxxxx interest free and without any imputation of
interest, Sensormatic shall pay Xxxxxxxxxx a dollar amount of additional
compensation which shall equal the amount of interest required to be charged in
order to avoid such imputation in such instances and Xxxxxxxxxx shall then pay
Sensormatic the rate of interest on such loan required by law to avoid
imputation.
(d) (i) If a Majority Acquisition shall have occurred or if,
in connection with, as a result of or within 24 months immediately
following a Change in Control, either a Reor ganization Event shall
have occurred or Sensormatic's Common Stock ceases to be listed for
trading on a national securities exchange or quoted through NASDAQ or a
comparable securities quotation system, then Xxxxxxxxxx shall have the
right, exercisable during the period and in the manner described in
Section 5(d)(ii) hereof, to require Sensormatic to purchase any or all
of Xxxxxxxxxx'x Option Acquired Shares and Award Shares (as defined
below), and/or any or all Conversion Shares issued with respect to any
Option Acquired Shares or Award Shares. The price at which Xxxxxxxxxx
shall be entitled to sell any Option Acquired Share to Sensormatic
under this Section 5(d)(i) shall equal the sum of (A) the option
exercise price paid (including payments made by promissory notes issued
under Sensormatic's Stock Purchase Loan Plan or otherwise) by
Xxxxxxxxxx in acquiring such share, plus (B) an amount equal to a
percentage, determined as provided below in this clause (i), of the
difference between such option exercise price and the Market Value of a
share of Sensormatic Common Stock on the date the share was acquir ed.
The price at which Xxxxxxxxxx shall be entitled to sell any Award Share
under this Section 5(d)(i) shall be equal to the Market Value (as
defined below) of such share on the date Xxxxxxxxxx'x right to such
share vested, multiplied by the percentage determined as provided below
in this clause (i). The price at which Xxxxxxxxxx shall be entitled to
sell any Conversion Shares pursuant to this Section 5(d)(i) shall be
calculated as set forth above with respect to Option Acquired Shares or
Award Shares, as applicable, based
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upon the purchase price, date of purchase and Market Value of any
Option Acquired Shares, and the vesting date and Market Value of any
Award Shares, which were converted into or exchanged for any such
Conversion Shares sold. The percentage referred to in this Section
5(d)(i) shall be equal to the sum of (1) the highest marginal net rate
of income tax (federal, state and local) applicable to an individual
residing where the Xxxxxxxxxx resided at the time the Xxxxxxxxxx
reported income ("Share Income") with respect to the Option Acquired
Shares or Award Shares, as the case may be plus (2) the Medicare
employee tax rate, plus (3) a percentage equal to (x) that part, if
any, of the Share Income that was actually subject to employee Social
Security tax, multiplied by (y) the social security employee tax rate,
divided by (z) the total Share Income (in each case as applicable at
the time such share was purchased by Xxxxxxxxxx, in the case of any
Option Acquired Shares, or at the time Xxxxxxxxxx'x right to such share
vested, in the case of any Award Shares). The purchase price payable by
Sensormatic shall in all events be equitably adjusted to reflect any
stock dividends, stock splits, extraordinary dividends or similar
events since the date of acquisition by Xxxxxxxxxx of any such shares.
For purposes of this Section 5(d), the term "Option Acquired
Shares" shall mean shares of Sensormatic Common Stock acquired by
Xxxxxxxxxx upon exercise of options granted to Xxxxxxxxxx, the term
"Award Shares" shall mean shares of Sensormatic Common Stock awarded to
Xxxxxxxxxx pursuant to Sensormatic's Stock Incentive Plan or any other
compensation plan or arrangement of Sensormatic, other than pursuant to
the exercise of options, and the term "Market Value" shall mean the
average of the high and low sales prices of a share of such Common
Stock on the applicable date (or most recent date on which one or more
sales occurred) as reported through NASDAQ or the principal exchange on
which such Common Stock was listed for trading.
(ii) Xxxxxxxxxx may exercise his right to sell
Option Acquired Shares, Award Shares and/or Conversion Shares under
this Section 5(d) at any time within 13 months following any of the
events specified in the first sentence of Section 5(d)(i) hereof by
giving written notice of such exercise to Sensormatic, which notice
shall set forth the Option Acquired Shares, Award Shares and/or
Conversion Shares to be sold, the exercise price paid by Xxxxxxxxxx in
acquiring any such Option Acquired Shares or Conversion Shares, the
highest marginal tax rates applicable for purposes of the respective
calculations specified in Section 5(d)(i) hereof and the Market Value
of the Common Stock or Conversion Shares, as applicable, on each date
that any applicable Option Acquired Shares or Conversion Shares to be
sold were purchased by Xxxxxxxxxx or Xxxxxxxxxx'x right to any
applicable Award Shares vested, as the case may be. The information set
forth in such notice shall be presumed to be correct.
(iii) In addition to the purchase price for the
Option Acquired Shares, Award Shares or Conversion Shares being sold to
Sensormatic under this Section 5(d), Sensormatic shall pay to
Xxxxxxxxxx an amount (the "Tax Payment") equal to a percentage
(determined pursuant to the following sentence) of the excess, if any,
of (A)
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the product of the number of such Option Acquired Shares, Award Shares
and/or Conversion Shares being sold multiplied by the Market Value of a
share of Sensormatic Common Stock or Conversion Shares, as applicable,
on the Purchase Date, as such term is defined in Section 5(d)(iv)
hereof, or such other value of a share of Sensormatic Common Stock or
Conversion Shares as may be required to be used to determine the
amount, if any, recognizable as ordinary income arising out of the sale
of such shares to Sensormatic, over (B) the aggregate purchase price
for all such Option Acquired Shares, Award Shares and/or Conversion
Shares being sold by Xxxxxxxxxx. The percentage referred to in the
preceding sentence shall be determined in accordance with Section
5(d)(i) hereof as applicable on the Purchase Date.
(iv) Within 10 days after Xxxxxxxxxx'x surrender of
the certificates representing any such Option Acquired Shares, Award
Shares and/or Conversion Shares or, if such certificates are in
Sensormatic's possession, within 10 days after Xxxxxxxxxx'x notice of
exercise under this Section 5(d) (the "Purchase Date"), Sensormatic
shall purchase the Option Acquired Shares, Award Shares and/or
Conversion Shares referred to in such notice by paying to Xxxxxxxxxx
(subject to offset as provided in the following sentence) the full
purchase price thereof, as calculated under Section 5(d)(i) hereof,
plus the Tax Payment applicable thereto. Sensormatic may offset against
payment of any or all of such purchase price and the related Tax
Payment all or a portion of any indebtedness of Xxxxxxxxxx then
outstanding under Sensormatic's Stock Purchase Loan Plan attributable
to any Option Acquired Shares and/or Conversion Shares sold to
Sensormatic hereunder.
(v) Xxxxxxxxxx'x rights under this Section 5(d) are
independent of and not limited by, and do not constitute any limitation
of, Xxxxxxxxxx'x rights under Section 5(b) hereof. Xxxxxxxxxx may
exercise any rights under either Section 5(b) hereof or this Section
5(d), in whole or in part (but without duplication), in Xxxxxxxxxx'x
sole discretion.
(e) (i) If either a Majority Acquisition occurs or, in
connection with, as a result of or within 24 months following a Change
in Control, a Reorganization Event occurs, then Sensormatic shall pay
to Xxxxxxxxxx (irrespective of whether he is then a director of
Sensormatic or its successor), within thirty days after the effective
date of such Majority Acquisition or Reorganization Event, as the case
may be, a cash bonus payment equal to a percentage (determined pursuant
to Sections 5(e)(ii) and 5(e)(iii) hereof) of Xxxxxxxxxx'x Special
Bonus Base (as defined below). Xxxxxxxxxx'x Special Bonus Base shall
equal four times the amount of Xxxxxxxxxx'x highest annual compensation
while Chairman of the Executive Committee of Sensormatic (i.e.,
$155,000).
(ii) The percentage of the Special Bonus Base which
Xxxxxxxxxx shall be entitled to receive under this Section 5(e) shall
be calculated on the basis of the Premium (as defined below) paid or
offered to holders of Sensormatic's Common Stock in connection with a
Majority Acquisition or Reorganization Event. Premium shall mean
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the percentage which results from dividing (A) the amount by which the
Event Value (as defined below) exceeds the Pre-Event Share Price (as
defined below), by (B) the Pre- Event Share Price. The Pre-Event Share
Price shall be equal to the average of the closing sales prices (or if
there is no sales price, the last bid price) for a share of
Sensormatic's Common Stock, as such prices are reported through NASDAQ
or the principal exchange on which such shares are listed for trading,
on the last business day of each week during the twenty-six weeks
immediately preceding the first to occur of (x) the first public
announcement relating to any proposed Change in Control or
Reorganization Event, or (y) any event resulting in the pendency of an
Attempted Change in Control which culminates, directly or indirectly,
in the Change in Control giving rise to Xxxxxxxxxx'x rights under this
Section 5(e). In the case of any Reorganization Event or Tender Offer,
or combination or series of Reorganization Events and/or Tender Offers,
"Event Value" shall mean the fair market value of the consideration
paid per share of Sensormatic Common Stock pursuant to such
Reorganization Event or Tender Offer determined as of the effective
date of the Reorganization Event or of the consummation of the Tender
Offer, as the case may be, provided that in the event that different
prices are paid per share of Sensormatic Common Stock pursuant to such
Reorganization Event, Tender Offer or any combination or series
thereof, the Event Value shall be equal to the fair market value of the
aggregate consideration paid pursuant to all such Tender Offers and/or
Reorganization Events (determined as of the dates set forth above)
divided by the number of shares of Sensormatic Common Stock purchased
pursuant to all such Tender Offers and/or Reorganization Events. In
case of any other transaction or series of transactions giving rise to
the right of Xxxxxxxxxx to receive the bonus provided for in this
Section 5(e), "Event Value" shall mean the highest fair market value of
the consideration paid per share of Sensormatic Common Stock pursuant
to any such transaction, determined as of the date of payment
thereunder. The determination of Event Value shall be conclusively made
by an investment banking firm selected by the Previous Members of the
Board of Directors who are not entitled to receive bonuses under this
Section 5(e) or analogous provisions of other agreements; provided,
that in the event that the Previous Members of the Board of Directors
fail to make such selection within 45 days after consummation of the
transaction giving rise to the right to rights under this Section 5(e),
or the selected investment banking firm fails to make such a
determination within an additional 90 days, Event Value shall be
determined by arbitration under Section 14 hereof. Sensormatic shall
pay all fees and expenses of any such investment banker.
(iii) The percentage of the Special Bonus Base which
Xxxxxxxxxx shall be entitled to receive as a bonus under this Section
5(e) shall be 20% if the Premium is at least 20% and shall increase by
3.2% for each one percent (and by a fraction of 3.2% for each fraction
of one percent) by which the Premium exceeds 20%. For example, if the
Premium were 30%, Xxxxxxxxxx would be entitled to a bonus of 52% of the
Special Bonus Base; if the Premium were 40.5%, Xxxxxxxxxx would be
entitled to a bonus of 85.6% of the Special Bonus Base; and if the
Premium were 50%, Xxxxxxxxxx would be entitled to a bonus of 116% of
the Special Bonus Base. The maximum bonus which
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Xxxxxxxxxx shall be entitled to receive is 167% of the Special Bonus
Base. No bonus shall be payable pursuant to this Section 5(e) if the
Premium is less than 20%.
6. Benefits on Termination.
(a) Severance Benefits. In the event of the removal, other
than for Cause, of Xxxxxxxxxx from his directorship with Sensormatic or the
expiration of the term of such office without his being reelected thereto within
36 months immediately following a Change in Control, or the death of Xxxxxxxxxx
or (subject to Section 3 hereof) the resignation of Xxxxxxxxxx from his
directorship with Sensormatic within 24 months immediately following a Change in
Control, Xxxxxxxxxx shall be entitled to receive, for each of the 36 months
immediately following the date of such death, resignation, removal or
expiration, $12,916.67, payable on or before the 10th day of each month in which
payable.
(b) Protection of Certain Benefits. In the event of the
removal, other than for Cause, or (subject to Section 3 hereof) resignation of
Xxxxxxxxxx from his directorship with Sensormatic or the expiration of the term
of such office without his being re-elected thereto, or Xxxxxxxxxx'x death, at
any time following a Change in Control, Xxxxxxxxxx (or his Successor, as
hereinafter defined) shall be entitled to the following benefits:
(i) Sensormatic shall, as soon as practicable, pay
to Xxxxxxxxxx a lump sum payment equal to the amount of any then
unvested interest which Xxxxxxxxxx may have had on the date of such
Change in Control (less any amount of such interest subsequently
vested), and as supplemented thereafter through the date of such
termination, in Sensormatic's profit sharing, ESOP or other retirement
plans (other than the Salary Continuation Plan or Board of Director
Retirement Plan); and
(ii) Unless a trust or other arrangement previously
determined in writing to be satisfactory by a majority of the Previous
Members of the Board of Directors (as defined below) then in office
assuring payment of benefits to or for the benefit of Xxxxxxxxxx under
Sensormatic's Salary Continuation Plan and/or Board of Directors
Retirement Plan in the event of a Change in Control has been previously
established and is then in effect, Sensormatic shall take such steps as
are necessary, within 30 days after such termination, to fully fund all
of Xxxxxxxxxx'x benefits under such Plans (after giving effect to the
change in control provisions of such Plans) through paid-up insurance,
annuity contracts and/or other similar means, so that the ultimate
payment of benefits (at a rate not less than the greater of the rates
in effect under such Plans at the date of such termination or
immediately after such Change in Control) upon Xxxxxxxxxx'x becoming
entitled to receive payment thereunder (as if he had remained a
director of Sensormatic) shall be assured beyond any reasonable doubt;
provided, however, that either such manner of funding shall be
structured so as not to constitute "constructive receipt" by Xxxxxxxxxx
of the benefits in question for income tax purposes, or the benefits in
question shall be paid out in a lump sum, discounted to present value
in the manner provided in
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Section 7(a) hereof. In addition, in the event of the removal, other
than for Cause, of Xxxxxxxxxx from his directorship with Sensormatic or
the expiration of the term of such office without his being re-elected
thereto other than pursuant to the generally applicable term limits
and/or retirement policies of the Corporation (without giving effect to
any changes therein that reduce the retirement age or the permitted
term of office which were implemented following such Change of Control
or the commencement of an Attempted Change of Control which culminated
in such Change of Control), at any time following a Change in Control,
any noncompetition provisions included in such Plans shall have no
force or effect.
(c) Consulting Services. For a period of one year following
Xxxxxxxxxx'x resignation from the Board of Directors following an "approved"
Change in Control in which Xxxxxxxxxx receives payments under Section 6(a)
hereof (the "Payment Period"), Xxxxxxxxxx agrees to make himself available at
the executive offices of Sensormatic in Palm Beach County or Broward County,
Florida to advise and consult with Sensormatic with respect to matters speci
fied by the chief executive officer or Board of Directors of Sensormatic and
appropriate to Xxxxxxxxxx'x former capacities with Sensormatic. Xxxxxxxxxx shall
perform such services at such times as (i) are reasonably requested by the chief
executive officer or Board of Directors of Sensormatic, (ii) are reasonably
acceptable to Xxxxxxxxxx and (iii) are consistent with Xxxxxxxxxx'x duties and
obligations in the course of his then occupation or employment, if any.
Xxxxxxxxxx shall use reasonable efforts to comply with such requests to perform
up to 250 hours of such services during the Payment Period.
7. Benefits on Death or Disability.
(a) In the event of Xxxxxxxxxx'x death at any time within 36
months after a Change in Control and prior to Xxxxxxxxxx'x ceasing to be a
director of Sensormatic, or in the event that Xxxxxxxxxx had died (or otherwise
become entitled to receive benefits) prior to a Change in Control and that as of
the date of such Change in Control there remain outstanding amounts payable
under Sensormatic's Salary Continuation Plan or Board of Directors Retirement
Plan for Xxxxxxxxxx, unless in either case a trust or other arrangement
previously determined in writing to be satisfactory by a majority of the
Previous Members of the Board of Directors then in office assuring payment of
benefits to or for the benefit of the Xxxxxxxxxx under such Plans in the event
of a Change in Control has been previously established and is then in effect,
Sensormatic shall promptly pay to Xxxxxxxxxx'x designated beneficiary or
Xxxxxxxxxx'x heirs, executors, administrators or personal representatives
(collectively, "Successors") all of the remaining benefits under such Plans to
which Xxxxxxxxxx'x Successors are then entitled, in the form of a lump sum
payment equal to the amount of such benefits discounted to present value using
an interest rate equal to the rate published by Pension Benefit Guaranty
Corporation for the purpose of discounting pension benefits to present value in
the event of a lump sum prepayment thereof, as then in effect, but such discount
rate shall in no event be greater than ten percent (10%) per annum.
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(b) In the event of Xxxxxxxxxx'x death or permanent and total
disability (within the meaning of Section 22(e)(3) of the Internal Revenue Code
of 1986, as amended and in effect and interpreted as of the date of this
Agreement) at any time within the 24-month period immediately following a
Change in Control and prior to Xxxxxxxxxx'x ceasing to be a director, Xxxxxxxxxx
or Xxxxxxxxxx'x Successors shall be entitled to all of the benefits of
Xxxxxxxxxx provided under this Agreement as if Xxxxxxxxxx had voluntarily
terminated his employment with Sensormatic (but without giving effect to Section
3 hereof), including, without limitation, those set forth in Section 5(c)
hereof.
(c) In the event of Xxxxxxxxxx'x death or disability after
Xxxxxxxxxx becomes entitled to any benefits under Sections 6 or 7 of this
Agreement, Xxxxxxxxxx or Xxxxxxxxxx'x Successors shall be entitled to receive
all remaining benefits to which Xxxxxxxxxx is entitled under this Agreement.
8. Termination for Cause. In the event that, at any time
after any Change in Control, Xxxxxxxxxx is removed from his directorship for
Cause, Xxxxxxxxxx shall not be entitled to any of the benefits set forth in
Sections 5, 6 or 7 of this Agreement not yet received by him, except to the
extent that Xxxxxxxxxx exercised rights prior to such termination with respect
to options, Award Shares or Conversion Shares as provided under Sections 5(a),
5(b) and 5(d) hereof. The foregoing shall not affect any rights of Xxxxxxxxxx
accrued other than by virtue of this Agreement. For purposes of this Agreement,
Xxxxxxxxxx shall be deemed to have been removed as a director for Cause only if
such removal is effected for any of the following reasons:
(i) gross neglect or willful misconduct by Xxxxxxxxxx in the
performance of Xxxxxxxxxx'x duties resulting in material economic harm
to Sensormatic; or
(ii) the conviction of Xxxxxxxxxx for a felony involving moral
turpitude under federal or state law;
provided, however, that the determination of the existence of the grounds
referred to in of this Section 8 shall be made, in good faith, only by a
majority of the Previous Members of the Board of Directors who are then in
office with Sensormatic or a corporate successor of Sensormatic, provided that
such majority shall consist of not less than two persons; and provided, further,
that Xxxxxxxxxx shall be given prior written notice by the Board of Directors of
the intention to terminate him for Cause and the specific grounds for such
termination, as determined in accordance with this Section 8, and shall be
entitled to a hearing before such Previous Members of the Board of Directors
before such termination becomes effective.
9. Payments. All monthly payments that Xxxxxxxxxx (or his
Successors) is entitled to receive under Section 6 of this Agreement shall be
paid by or on behalf of Sensormatic on or before the 10th day of each month in
which payable, except that any regular payments required to be made under the
plans referred to in Section 6(b) hereof shall be made in accordance with the
terms of such plans. Any lump sum payable to Xxxxxxxxxx under Sections 5,
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6, 7(a) or 10 of this Agreement shall be paid by or on behalf of Sensormatic
within 10 days after Xxxxxxxxxx'x right to such payment accrues, except as
otherwise expressly set forth any provision of such Sections.
10. Excise Taxes. In the event that the aggregate of all
payments or benefits made or provided to Xxxxxxxxxx in connection with a Change
in Control under this Agreement and under all other plans and programs of
Sensormatic (the "Aggregate Payment") is determined to constitute a Parachute
Payment, as such term is defined in Section 280G(b)(2) of the Internal Revenue
Code, as amended, or any successor provision, Sensormatic shall pay to
Xxxxxxxxxx, prior to the time any excise tax imposed by Section 4999 of the
Internal Revenue Code, as amended, or any successor provision ("Excise Tax"), is
payable with respect to such Aggregate Payment, an additional amount which,
after the imposition of all income and excise taxes thereon, is equal to the
Excise Tax on the Aggregate Payment. The determination of whether the Aggregate
Payment constitutes a Parachute Payment and, if so, the amount to be paid to
Xxxxxxxxxx and the time of payment pursuant to this Section 10 shall be made by
an independent auditor (the "Auditor") jointly selected by Sensormatic and
Xxxxxxxxxx and paid by Sensormatic. The Auditor shall be a nationally recognized
United States public accounting firm which has not, during the two years
preceding the date of its selection, acted in any way on behalf of Sensormatic
or any affiliate thereof. If Xxxxxxxxxx and Sensormatic cannot agree on the firm
to serve as the Auditor, then Xxxxxxxxxx and Sensormatic shall each select one
nationally recognized United States accounting firm and those two firms shall
jointly select the accounting firm to serve as the Auditor. Notwithstanding the
foregoing, in the event that the amount of Xxxxxxxxxx'x Excise Tax liability is
subsequently determined to be greater than the Excise Tax liability with respect
to which an initial payment to Xxxxxxxxxx under this Section 10 has been made,
Sensormatic shall pay to Xxxxxxxxxx an additional amount with respect to such
additional Excise Tax (and any interest and penalties thereon) at the time that
the amount of the actual Excise Tax liability is finally determined, such
additional amount to be calculated in the same manner as such initial payment.
Xxxxxxxxxx and Sensormatic shall cooperate with each other in connection with
any action, arbitration, suit, investigation or proceeding (collectively,
"Proceeding") relating to the existence or amount of liability for Excise Tax,
and all expenses relating to any such Proceeding (including all reasonable
attorney's fees and other expenses incurred by Xxxxxxxxxx in connection
therewith) shall be paid by Sensormatic promptly upon notice of demand from
Xxxxxxxxxx.
11. Costs of Collection. Sensormatic agrees upon demand to pay
all costs and expenses of Xxxxxxxxxx (including, without limitation, reasonable
counsel fees and expenses) in connection with the enforcement, whether through
negotiations, arbitration or legal proceedings or otherwise, of this Agreement
and the collection of any benefits due to Xxxxxxxxxx hereunder.
12. Conflicts with Other Agreements. Nothing contained in or
arising out of this Agreement shall be deemed to discharge, release or modify
the obligations of Sensormatic to Xxxxxxxxxx under the provisions of any
other agreement between them or of any plan or program of Sensormatic or
resolutions of the Board of Directors,
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regardless of whether the subject matter of any provision thereof is the same or
similar to that of any provision of this Agreement, the rights and remedies of
Xxxxxxxxxx under this Agreement and any other such agreement, plan, program or
resolutions being cumulative and not in substitution of each other; provided,
however, that this Agreement amends, restates and supersedes the Prior
Agreement, including any amendments thereto in its entirety and nothing in this
Agreement shall entitle Xxxxxxxxxx to receive duplicative payments of salary,
bonus or other benefits. Further, nothing in this Agreement shall diminish or
otherwise adversely affect Xxxxxxxxxx'x rights or benefits accruing as a
consequence of his death or disability, at any time after a Change in Control,
under the terms and conditions of the plans or programs of Sensormatic in which
Xxxxxxxxxx is a participant immediately prior to any Change in Control and any
additional plan or program of Sensormatic in which Xxxxxxxxxx is a participant
at the time of Xxxxxxxxxx'x death or disability.
13. Maintenance of Plans. Sensormatic agrees that, for not
less than 36 months after a Change in Control, it shall maintain in effect the
plans and programs in which Xxxxxxxxxx is a participant immediately prior to
such Change in Control (or comparable plans and programs) to the extent
necessary to assure that the rights and benefits of Xxxxxxxxxx there under shall
be no less favorable after such Change in Control than immediately prior
thereto, provided, that Sensormatic shall in no event make any change in the
event of or at any time after a Change in Control in the Salary Continuation
Plan or Board of Directors Retirement Plan resulting in a reduction of
Xxxxxxxxxx'x benefits thereunder.
14. Arbitration. Any controversy or claim arising out of or
relating to this Agreement shall be settled by arbitration before the American
Arbitration Association in Miami, Florida, in accordance with the Commercial
Arbitration Rules of the American Arbitration Association. Judgment upon the
award rendered by the arbitrators may be entered in any court having
jurisdiction thereof. Any costs, including, without limitation, attorneys' fees
and disbursements, incurred by Xxxxxxxxxx in such arbitration or in connection
with any appeal therefrom or any action brought to enforce or collect any such
award or judgment thereon, shall be reimbursed by Sensormatic, provided, that
Sensormatic shall not be required to reimburse Xxxxxxxxxx hereunder in the event
that the arbitral panel or appeals court finds that Xxxxxxxxxx'x claims and/or
defenses are substantially without reasonable basis.
15. Survival. This Agreement shall be binding on, enforceable
against and inure to the benefit of Xxxxxxxxxx and his heirs, executors,
administrators, personal representatives, successors and assigns and Sensormatic
and its successors and assigns, including, without limitation, any corporation
with or into which Sensormatic is merged or consolidated, or any entity which
acquires all or substantially all of the business and assets of Sensormatic, in
connection with any Change in Control. In connection with any sale, merger or
consolidation described in the preceding sentence, Sensormatic shall take all
actions permissible under applicable law in order to cause such other
corporation to expressly assume Sensormatic's liabilities, obligations and
duties hereunder.
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16. Notices. Any notice given to a party pursuant to or in
connection with this Agreement shall be in writing and shall be deemed to have
been given when delivered personally or sent by Federal Express or a similar
overnight courier service or by certified or registered mail, postage prepaid,
return receipt requested, duly addressed to the party concerned at the address
indicated at the beginning of this Agreement or to such changed address as such
party may subsequently give such notice of.
17. Severability. If any provision of this Agreement is found
to be invalid or unenforceable by a court of competent jurisdiction or an
arbitral panel under Section 13 hereof, this Agreement shall be interpreted and
enforceable as if such provision were severed or limited, but only to the extent
necessary to render such provision and this Agreement enforceable.
18. Governing Law. This Agreement shall in all respects be
governed by and construed in accordance with the laws of the State of Florida
applicable to agreements made and fully to be performed in such state, without
giving effect to conflicts of law principles.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on the date first set forth above.
SENSORMATIC ELECTRONICS
CORPORATION
By: /s/ Xxxxxx X. Xxxxxxxx
-------------------------------------
Xxxxxx X. Xxxxxxxx
President and Chief Executive
Officer
/s/ Xxxxx X. Xxxxxxxxxx
----------------------------------------
Xxxxx X. Xxxxxxxxxx
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