Exhibit (e)(4)(iv)
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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
XXXXXXX X. XXXXXXXXX, an individual whose address is 0 Xxxxxxx Xxxx, Xxxxxxxx,
Xxxxxxxxxxxxx 00000 ("Executive").
W I T N E S S E T H:
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WHEREAS, Executive is an employee of Sensormatic, with the title of
Vice President, General Manager, Access Control Division, and is expected to
make a significant contribution to the performance and growth of Sensormatic;
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 uncertainty
which it may raise among Sensormatic's management, may result in the distraction
or departure of management personnel to the detriment of Sensormatic and its
stockholders, particularly at a time when Sensormatic is placing heavy demands
on its management in connection with its efforts to expand its product lines and
markets, restructure its operations and reduce its expenses;
WHEREAS, the Board of Directors of Sensormatic has determined that the
continued services of Executive to Sensormatic are in the best interest of
Sensormatic and its stockholders and desires to assure such continued services
by agreeing to provide to Executive certain rights as to termination
compensation in the event of a Change in Control;
WHEREAS, the Board of Directors of Sensormatic believes that the grant
of such rights to Executive will help assure Executive's continuing dedication
to his duties to Sensormatic, notwithstanding the occurrence of any Change in
Control, and, in particular, will enable Executive 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; and
WHEREAS, Sensormatic and Executive are parties to an Agreement dated
as of July 27, 1998, as amended by letter agreement dated July 17, 1998 (the
"Officer Agreement");
NOW, THEREFORE, in consideration of the premises and for other good
and valuable consideration, the parties hereby agree as follows:
1. Term.
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(a) The term of this Agreement shall commence on the date hereof
(which for all purposes of this Agreement shall mean the date first above
written) and shall continue until a Change in Control shall occur and for so
long thereafter as Sensormatic has or may have any obligations under Sections 6,
7, 8, 12, 13 or 15 hereof.
(b) Notwithstanding the provisions of Section l(a) hereof, Sensormatic
shall have the right to terminate this Agreement, effective on any anniversary
of the date of this Agreement, provided that no Change in Control shall have
occurred and no Attempted Change in Control (as defined below) shall have
occurred and then be pending. In the event that any Attempted Change in Control
is not followed by a Change in Control and is no longer pending, Sensormatic
shall again be entitled to terminate this Agreement as provided in the first
sentence of this Section 1(b). Sensormatic may effect a termination of this
Agreement hereunder solely by notifying Executive thereof at least 30 days prior
to the relevant anniversary date hereof.
(c) Notwithstanding the provisions of Sections 1(a) and l(b) hereof,
this Agreement shall terminate automatically in the event of the voluntary or
involuntary termination of Executive's employment with Sensormatic prior to the
occurrence of a Change in Control, so long as, at the time of such termination
of employment, no Attempted Change in Control shall have occurred and then be
pending. Notwithstanding anything contained in this Agreement to the contrary,
if Executive's employment is terminated by Sensormatic prior to a Change in
Control, which Change in Control occurs, and Executive reasonably demonstrates
that such termination was at the request of a third party who effectuates such
Change in Control or that such termination was directly related to such Change
in Control, then for all purposes of this Agreement, Executive shall be entitled
to the payments and other benefits provided under this Agreement as if such
termination had occurred following such Change in Control.
2. Salary and Bonus. Executive's present base salary is $185,000
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per year and Executive's target bonus is deemed to be $55,000 per year. After
the date of this Agreement, Executive's annual base salary and target bonus may
be increased or decreased as determined by the chief executive officer of
Sensormatic and approved by Sensormatic's Board of Directors or any compensation
committee thereof, except as otherwise provided by the Officer Agreement,
provided, however, that none of the following shall be effective 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:
(i) any decrease in Executive's annual base salary or target bonus from the
amounts set forth above (or any greater amounts subsequently so determined and
approved), or (ii) any change in the formula then in effect for calculation of
Executive's bonus that could be reasonably anticipated to result in a decrease
in the amount payable thereunder.
3. Fringe Benefits. Sensormatic currently provides to Executive the
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fringe benefits listed below, without cost to Executive, and, while nothing in
this Agreement 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 any
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 the non-qualified retirement
plan or plans of the Corporation for key executives in which Executive is a
participant, as listed on Schedule I hereto, or any similar or successor plan
(the "Retirement Plan", which shall include, for all purposes of this Agreement,
any agreement between Sensormatic and Executive under any such Plan) resulting
in a reduction of Executive's benefits thereunder), it is anticipated that such
benefits (together with any such additional benefits) shall
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continue to be provided to Executive 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 Executive and his
eligible dependents are participants;
(b) life insurance on Executive's life and accidental death and
dismemberment insurance, each equal to two times Executive's annual base
salary (but not to exceed $800,000 or such greater amount as may be
established by Sensormatic for such purposes from time to time);
(c) participation in Sensormatic's retirement and/or profit sharing
plans (including the Retirement Plan) and in Sensormatic's annual
contributions, if any, thereto, provided that such participation is
contingent on Executive's 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 on Executive's election
to continue his participation in such plans;
(d) the use of a Sensormatic owned or leased automobile or payment of
its equivalent allowance, and comprehensive insurance protection on such
vehicle;
(e) disability income protection;
(f) reimbursement of Executive for reasonable travel and entertainment
expenses incurred by Executive in connection with the business of
Sensormatic; and
(g) the provision to Executive of office space befitting Executive's
position, secretarial help, and access to WATS lines.
Further, Sensormatic expects that, during the term of this Agreement, and so
long as Executive continues to be employed by Sensormatic, Executive's position
shall continue to be located in Palm Beach County or Broward County, Florida
(or, if Executive's position is located outside of Broward County or Palm Beach
County, Florida prior to any Attempted Change in Control or Change in Control,
such position shall continue to be located at substantially the same location),
and that the duties and responsibilities of Executive's position shall not be
significantly diminished.
4. Employment Commitment. As partial consideration for the benefits
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available to Executive under this Agreement, Executive hereby agrees to remain
as an officer and employee of Sensormatic during any Attempted Change in Control
and for a period of six months immediately after a Change in Control first
occurs (the "Commitment Period"), and during the Commitment Period to devote
substantially all his business time and efforts to the business and affairs of
Sensormatic, provided that Executive shall be entitled to terminate his
employment by Sensormatic during an Attempted Change in Control or at any time
following a Change in Control in circumstances which constitute an involuntary
termination pursuant to Section 10 hereof. Executive's participation in other
businesses, as a director or otherwise, with the approval of Sensormatic's Board
of Directors (which approval shall be deemed to include the Board of Directors
not objecting to such participation following disclosure thereof to the Board
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of Directors by Executive, and which approval may not be withdrawn following
such Change in Control) shall not be deemed to contravene the foregoing
provision. In the event that Executive voluntarily terminates his employment
with Sensormatic (other than by resignation contemplated in Section 10 hereof)
at any time during the Commitment Period, Executive shall not be entitled to any
of the benefits provided for in this Agreement, other than those provided under
Sections 6(a)(i), 6(a)(ii), 6(a)(iii), 6(a)(iv), 6(b)(ii), 12, 13 and 15 hereof,
and shall promptly repay to Sensormatic, on an after-tax basis, any benefits
previously received by him pursuant to any provisions of Sections 6 or 7 of this
Agreement not referred to in this sentence, but Sensormatic shall have no other
remedy for Executive's failure to remain an employee and officer as required by
this Section 4. Any amounts or benefits received by Executive pursuant to the
Officer Agreement or any other written employment agreement between Sensormatic
and Executive or 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.
5. Change in Control.
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(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
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.
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(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 l4a-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
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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 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 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
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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 of the types referred to in Section 10
hereof with respect to individuals who were officers of Sensormatic at the time
of the Change in Control, (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, Executive
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 Executive 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.
(d) For the purposes of this Section 5, 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.
6. Benefits on "Non-Approved" Change in Control.
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(a) Benefits Effective Upon a Change in Control. In the event a "non-
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approved" Change in Control occurs, Executive shall be entitled to the following
benefits:
(i) All stock options issued by Sensormatic to Executive, 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 6(a)(ii) 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 (A) nine months following the voluntary or
involuntary termination of Executive's employment with Sensormatic (or, at the
option of Executive, in the case of an incentive stock option, three months
following such termination) or (B) 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
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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 Executive shall
be without further force or effect, and Executive shall have the unrestricted
right to such shares.
(ii) In the event that (A) such Change in Control is effected through
(w) a tender or exchange offer (a "Tender Offer") or (x) any means, in one or
more transactions, with the result in either case that any Person becomes the
Beneficial Owner, directly or indirectly, of
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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 (A), including pursuant to a Tender Offer, being
hereinafter referred to as a "Majority Acquisition"), (B) 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 (C)
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, Executive 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:
(1) any or all stock options issued by Sensormatic to Executive,
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 Executive 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 Executive 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 Executive
for the purchase of, or payment of taxes relating to, such shares of Common
Stock or Conversion Shares, as contemplated by Section 6(a)(iii) hereof or
otherwise.
Payment for any such options or shares shall be made by Sensormatic within 10
days after Executive's surrender of any such options, and/or within 10 days
after Executive's 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 Executive's notice of exercise under this
Section 6(a)(ii)).
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For purposes of this Section 6(a)(ii), 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.
(iii) Upon Executive's request, Sensormatic shall lend to Executive,
interest free, up to an amount equal to the aggregate exercise price of the
options referred to in Section 6(a)(i) hereof, should Executive elect to
exercise such options. If requested by Executive, Sensormatic shall also lend
to Executive, interest free (or, at Executive's option, provide a guaranty to
enable Executive to borrow), up to an amount equal to the percentage specified
in Section 6(a)(iv)(A) hereof 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 (A) the fifth
anniversary date of such loan or loans, (B) in the event that Executive's
employment with Sensormatic terminates, other than termination by Sensormatic
for Cause (as defined in Section 9 hereof, "Cause") upon the expiration of 30
months following such termination, or in the event that Executive's employment
is terminated by Sensormatic for Cause, upon the expiration of 30 days after
such termination, or (C) 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. Executive 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 6(a)(iii), Sensormatic's Stock Purchase Loan Plan or
any promissory note or security agreement executed by Executive pursuant to such
Plan, no additional collateral shall be required by Sensormatic in connection
with any such loan to Executive, 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 Executive interest free and without any imputation
of interest, Sensormatic shall pay Executive 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 Executive shall then pay
Sensormatic the rate of interest on such loan required by law to avoid
imputation.
(iv)(A) 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 Reorganization 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 Executive shall have the right, exercisable during the
period and in the manner described in Section 6(a)(iv)(B) hereof, to require
Sensormatic to purchase any or all of Executive's 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
Executive shall be entitled to sell any Option Acquired Share to Sensormatic
under this Section 6(a)(iv) shall equal the sum of (x) the option exercise price
paid (including payments made by promissory notes issued under Sensormatic's
Stock Purchase Loan Plan or otherwise) by Executive in acquiring such share,
plus (y) an amount equal to a percentage, determined as provided below in this
clause (A), of the difference between such option exercise price and the Market
Value (as defined below) of a share of Sensormatic Common Stock on the date the
share was acquired. The price at which Executive shall be entitled to sell any
Award Share under this Section 6(a)(iv)(A) shall be equal to the Market Value of
such share on the date
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Executive's right to such share vested, multiplied by the percentage determined
as provided below in this clause (A). The price at which Executive shall be
entitled to sell any Conversion Shares pursuant to this Section 6(a)(iv)(A)
shall be calculated as set forth above with respect to Option Acquired Shares or
Award Shares, as applicable, based 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 6(a)(iv)(A)
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
Executive resided at the time the Executive 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 Executive, in the case of any Option Acquired Shares, or at the
time Executive's 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 Executive of any such shares.
For purposes of this Section 6(a)(iv), the term "Option Acquired
Shares" shall mean shares of Sensormatic Common Stock acquired by Executive upon
exercise of options granted to Executive, the term "Award Shares" shall mean
shares of Sensormatic Common Stock awarded to Executive 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.
(B) Executive may exercise his right to sell Option Acquired Shares,
Award Shares and/or Conversion Shares under this Section 6(a)(iv) at any time
within 13 months following any of the events specified in the first sentence of
Section 6(a)(iv)(A) 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 Executive
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 6(a)(iv)(A) 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 Executive or
Executive's 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.
(C) In addition to the purchase price for the Option Acquired Shares,
Award Shares or Conversion Shares being sold to Sensormatic under this Section
6(a)(iv), Sensormatic shall pay to Executive an amount (the "Tax Payment") equal
to a percentage (determined pursuant to the following sentence) of the excess,
if any, of (1) 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 6(a)(iv)(D) hereof) or such
other value of a
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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 (2) the aggregate purchase
price for all such Option Acquired Shares, Award Shares and/or Conversion Shares
being sold by Executive. The percentage referred to in the preceding sentence
shall be determined in accordance with Section 6(a)(iv)(A) hereof as applicable
on the Purchase Date.
(D) Within 10 days after Executive's 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 Executive's notice of exercise under this Section 6(a)(iv) (the "Purchase
Date"), Sensormatic shall purchase the Option Acquired Shares, Award Shares
and/or Conversion Shares referred to in such notice by paying to Executive
(subject to offset as provided in the following sentence) the full purchase
price thereof, as calculated under Section 6(a)(iv)(A) 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 Executive then outstanding under Sensormatic's Stock Purchase
Loan Plan attributable to any Option Acquired Shares and/or Conversion Shares
sold to Sensormatic hereunder.
(E) Executive's rights under this Section 6(a)(iv) are independent of
and not limited by, and do not constitute any limitation of, Executive's rights
under Section 6(a)(ii) hereof. Executive may exercise any rights under either
Section 6(a)(ii) hereof or this Section 6(a)(iv), in whole or in part (but
without duplication), in Executive's sole discretion.
(v)(A) Subject to Section 4 hereof, 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
Executive (irrespective of whether he is then employed by Sensormatic or its
successor; provided, however, that in the event that Executive voluntarily
-------- -------
terminates his employment with Sensormatic (other than by resignation
contemplated by Section 10 hereof) prior to the occurrence of the event giving
rise to the right to receive the cash bonus payment provided for in this Section
6(a)(v), Executive shall have no right to receive such bonus payment), 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 6(a)(v)(B) and 6(a)(v)(C) hereof) of
Executive's "Special Bonus Base" (as defined below). Executive's Special Bonus
Base shall equal one (1) times the greater of (x) the sum of Executive's annual
base salary in effect at the end of the last full month preceding the first
public announcement relating to the proposed Majority Acquisition or
Reorganization Event, as the case may be, plus the bonus paid to Executive by
Sensormatic with respect to the most recently completed fiscal year of
Sensormatic prior to such month, or (y) the sum of Executive's annual base
salary and target bonus as specified in Section 2 hereof.
(B) The percentage of the Special Bonus Base which Executive shall be
entitled to receive under this Section 6(a)(v) 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 the percentage which results from dividing (1) the amount
by which the Event Value (as defined below) exceeds the Pre-Event Share Price
(as defined below), by (2) 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,
-10-
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 Executive's rights under this Section 6(a)(v). 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 Executive to
receive the bonus provided for in this Section 6(a)(v), "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 6(a)(v) 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 6(a)(v), 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 16. Sensormatic shall pay all fees and
---
expenses of any such investment banker.
(C) The percentage of the Special Bonus Base which Executive shall be
entitled to receive as a bonus under this Section 6(a)(v) 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%, Executive would be entitled
to a bonus of 52% of the Special Bonus Base; if the Premium were 40.5%,
Executive would be entitled to a bonus of 85.6% of the Special Bonus Base; and
if the Premium were 50%, Executive would be entitled to a bonus of 116% of the
Special Bonus Base. The maximum bonus which Executive shall be entitled to
receive is 167% of the Special Bonus Base. No bonus shall be payable pursuant
to this Section 6(a)(v) if the Premium is less than 20%.
(b) Benefits on Termination. In the event of any termination, other
-----------------------
than termination by Sensormatic for Cause, of Executive's employment with
Sensormatic at any time following a "non-approved" Change in Control, Executive
shall be entitled to the following benefits:
(i) Subject to Section 4 hereof, Sensormatic shall, as soon as
practicable, pay to Executive a lump sum payment equal to the amount of any
then unvested
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interest which Executive may have had on the date of such "non-approved"
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 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 then in office assuring payment of benefits to or for
the benefit of Executive under Sensormatic's 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 Executive's benefits under
such Plan (after giving effect to the change in control provisions of such
Plan) 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 Plan at the date of such
termination or immediately after such Change in Control) upon Executive's
attaining retirement age under such Plan or upon his earlier death or
disability (as defined in such Plan) (despite Executive's no longer being
employed by 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 Executive 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 Section 8(a). In addition, following any such termination which is
involuntary, the non-competition provisions included in any such Plan shall
have no force or effect.
(c) Additional Benefits In the Case of a Voluntary Termination.
----------------------------------------------------------
Subject to Section 4 hereof, in the event of Executive's voluntary termination
of employment with Sensormatic (other than by resignation contemplated in
Section 10 hereof) within the 24-month period immediately following a "non-
approved" Change in Control:
(i) Executive shall be entitled to receive, for each of the 6
months immediately following the effective date of such termination and
irrespective of whether Executive commences new employment within such
period, the greatest of (A) 1/12 of the amount of Executive's most recent
rate of annual base salary, plus 1/12 of Executive's most recent annual
bonus, (B) 1/12 of Executive's annual base salary and target bonus in
effect immediately prior to the date of such Change in Control or (C) 1/12
of Executive's annual base salary and target bonus as specified in Section
2 hereof;
(ii) If Executive has not commenced new regular, full time
employment during the first 6 months following the effective date of such
termination, Executive shall receive for each of the 7th through 12th
months following such effective date of termination in which Executive was
not so employed for the entire month the amount payable under Section
6(c)(i) hereof;
(iii) Within 30 days after the effective date of such
termination, Sensormatic shall pay to Executive an amount equal to his pro
rata annual bonus for the year in which termination occurs, based on the
target bonus for such year; provided; that if at the time of such
--------
termination, it is probable, based upon interim period results for the
then-current fiscal year together with the current forecast for the
remainder of such year,
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that the conditions to payment of the full amount of the target bonus will
not be met, the amount of the bonus payment hereunder may be reduced
accordingly; and
(iv) During that portion of the periods set forth in Sections
6(c)(i) and 6(c)(ii) hereof during which Executive has not commenced new
regular, full time employment,
(x) Sensormatic shall continue to provide to Executive the fringe
benefits enumerated in Sections 3(a), (b), (c) and (e) hereof on at
least the same basis as in effect immediately prior to the Change in
Control, and shall, if requested by Executive, provide Executive with
office space appropriate for his level and in close proximity to the
office he occupied at the time of the Change in Control, secretarial
help and local and long distance telephone service; and
(y) Sensormatic shall provide Executive with appropriate out-
placement services, including counseling and traveling expenses to
such outplacement services, when necessary, as well as to potential
job interviews when not paid by the potential employer, all without
charge to Executive.
(d) Additional Benefits in Case of an Involuntary Termination. In the
---------------------------------------------------------
event of the involuntary termination (other than termination by Sensormatic for
Cause) of Executive's employment with Sensormatic within the 36-month period
immediately following a "non-approved" Change in Control:
(i) Executive shall be entitled to receive, for each of the 18
months immediately following the effective date of such termination and
irrespective of whether Executive commences new employment within such
period, the greatest of (A) 1/12 of the amount of Executive's most recent
rate of annual base salary, plus 1/12 of Executive's most recent annual
bonus, (B) 1/12 of Executive's annual base salary and target bonus in
effect immediately prior to the date of such Change in Control or (C) 1/12
of Executive's annual base salary and target bonus as specified in Section
2 hereof;
(ii) If Executive has not commenced new regular, full time
employment during the first 18 months following the effective date of such
termination, Executive shall receive for each of the 19th through 24th
months following such effective date of termination in which Executive was
not so employed for the entire month the amount payable under Section
6(d)(i) hereof;
(iii) During that portion of the periods set forth in Sections
6(d)(i) and 6(d)(ii) hereof during which Executive has not commenced new
regular, full time employment, Executive shall be entitled to the benefits
set forth in Section 6(c)(iv) hereof;
(iv) Within 30 days after the effective date of such termination,
Sensormatic shall pay to Executive an amount equal to his pro rata annual
bonus for the year in which termination occurs, based on the target bonus
for such year, subject to the proviso in Section 6(c)(iii) hereof; and
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(v) On the date of such termination, ownership of the car which
Sensormatic was providing to Executive shall immediately be transferred to
Executive free and clear of any liens or other obligations, if such car is
then owned by Sensormatic. If such car is then leased, rather than owned,
by Sensormatic, Executive shall continue to have the use of such car and
Sensormatic shall continue to pay all lease payments and insurance premiums
with respect thereto until the end of the then existing term, at which time
Sensormatic shall purchase such car and shall transfer title to such car to
Executive. If, on the date of such termination, Sensormatic is paying a
car allowance to Executive in lieu of providing a car to Executive, for
each month in which Sensormatic is obligated to make a monthly payment to
Executive under Sections 6(d)(i) or 6(d)(ii) hereof, Executive shall
receive 1/12 of the amount of Executive's most recent rate of annual car
allowance.
7. Benefits on "Approved" Change in Control.
----------------------------------------
(a) Benefits Effective Upon Change in Control.
-----------------------------------------
(i) Subject to Section 4 hereof, in the event an "approved"
Change in Control occurs, Executive shall be entitled to all of the rights
and compensation set forth in Section 6(a) hereof.
(ii) In the event that Executive voluntarily terminates his
employment with Sensormatic (other than by resignation contemplated in
Section 10 hereof) at any time following an "approved" Change in Control,
Executive shall not be entitled to any benefits under this Agreement other
than as set forth in Section 7(a)(i) hereof.
(b) Additional Benefits Upon Involuntary Termination. In the event
------------------------------------------------
that Executive's employment with Sensormatic is involuntarily terminated (other
than for Cause) within the 36-month period following an "approved" Change in
Control:
(i) Executive shall be entitled to receive, for each of the first
12 months immediately following the effective date of such termination and
irrespective of whether Executive commences new employment within such
period, the greatest of (A) 1/12 of the amount of Executive's most recent
rate of annual salary, plus 1/12 of the amount of Executive's most recent
annual bonus, (B) 1/12 of Executive's annual base salary and target bonus
in effect immediately prior to the date of such Change in Control or (C)
1/12 of Executive's annual base salary and target bonus as specified in
Section 2 hereof;
(ii) If Executive has not commenced new regular, full time
employment during the first 12 months following the effective date of such
termination, Executive shall receive for each of the 13th through 18th
months following such effective date of termination in which Executive was
not so employed for the entire month the amount payable under Section
7(b)(i) hereof;
(iii) Within 30 days after the effective date of such
termination, Sensormatic shall pay to Executive an amount equal to his pro
rata annual bonus for the year in which termination occurs, based on the
target bonus for such year year, subject to the proviso in Section
6(c)(iii) hereof; and
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(iv) During that portion of the period set forth in Section
7(b)(i) hereof during which Executive has not commenced new regular, full
time employment, Executive shall be entitled to all of the rights and
compensation set forth in Section 6(c)(iv) hereof.
(c) In the event of any termination of Executive's employment to which
Section 6(c) or 6(d) or this Section 7 is applicable, Executive shall be under
no obligation to seek other employment and there shall be no offset against
amounts due Executive under this Agreement on account of any remuneration
attributable to any subsequent employment that he may obtain, except as
expressly set forth in Section 6(c) or 6(d) or this Section 7.
8. Benefits on Death or Disability.
-------------------------------
(a) In the event of Executive's death at any time within 36 months
immediately following a Change in Control (whether "approved" or "non-approved")
and prior to any termination of Executive's employment, or in the event that
Executive had died 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
Retirement Plan for Executive, 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 Executive under such Plan in the event
of a Change in Control has been previously established and is then in effect,
Sensormatic shall promptly pay to Executive's designated beneficiary or
Executive's heirs, executors, administrators or personal representatives
(collectively, "Successors") all of the remaining benefits under such Plan to
which Executive's 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.
--- -----
(b) In the event of Executive's 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 any termination of Executive's employment, Executive or
Executive's Successors shall be entitled to all of the benefits of Executive
provided under this Agreement as if Executive had voluntarily terminated his
employment with Sensormatic (but without giving effect to Section 4 hereof or to
the loss of benefits upon voluntary termination under Section 6(a)(v)(A)
hereof), including, without limitation, those set forth in Section 6(a)(iii)
hereof.
(c) In the event of Executive's death or disability after termination
of Executive's employment with Sensormatic, Executive or Executive's Successors
shall be entitled to receive all remaining benefits to which Executive is
entitled under this Agreement.
9. Termination for Cause. In the event that Executive's employment
---------------------
with Sensormatic is terminated for Cause at any time after any Change in
Control, whether "approved" or "non-approved", Executive shall not be entitled
to any of the benefits set forth in
-15-
Sections 6, 7 or 8 of this Agreement not yet received by him, except to the
extent that Executive exercised rights prior to such termination with respect to
options, Award Shares or Conversion Shares as provided under Sections 6(a)(i),
6(a)(ii) and, 6(a)(iv) hereof (including by reference under Section 7(a)(i)
hereof). The foregoing shall not affect any rights of Executive accrued other
than by virtue of this Agreement. For purposes of this Agreement, Sensormatic
shall be deemed to have terminated Executive's employment with Sensormatic for
Cause only if such termination is effected for any of the following reasons:
(a) gross neglect or willful misconduct by Executive in the
performance of Executive's duties resulting in material economic harm to
Sensormatic; or
(b) the conviction of Executive for a felony involving moral turpitude
under federal or state law;
provided, however, that the determination of the existence of the grounds
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referred to in subparagraph (a) of this Section 9 shall be made, in good faith,
only (i) 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 Executive 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 9,
and shall be entitled to a hearing before such Previous Members of the Board of
Directors (or a committee thereof designated by such Previous Members) before
such termination becomes effective or (ii) if at least two Previous Members of
the Board of Directors are not then in office, by a majority of the persons who
are then, and were, for a period of two years immediately prior to such Change
in Control, officers of Sensormatic (or, if Sensormatic is then a division, such
persons who were previously such officers of Sensormatic and are then employed
in an executive or managerial capacity in the division).
10. Involuntary Termination Events. By way of illustration, and not
------------------------------
of limitation, each of the following events shall constitute involuntary
termination of Executive's employment with Sensormatic, provided that Executive
resigns from such employment within six months following such event, but in no
case later than 36 months immediately following a Change in Control, and
provided, further, that Executive shall not have consented to such event in
writing:
(a) Executive is assigned any duties or responsibilities that are
materially inconsistent with Executive's position, office, duties,
responsibilities or status immediately prior to the date of such Change in
Control, or a material change is made in Executive's reporting responsibilities,
titles or offices from those in effect immediately prior to such Change in
Control, or Executive is removed from, or is not re-elected to, any such
position or office, following such Change in Control, unless in connection with
the termination of Executive's employment with Sensormatic for Cause or by
reason of his death or disability; provided, however, that, in the event of an
-------- -------
"approved" Change in Control, as a result of which Sensormatic becomes a
division and not a separate corporation, a change to offices and titles in such
division reasonably comparable to the previous offices and positions in
Sensormatic and a reasonable change in reporting responsibilities shall not be
deemed such a material change;
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(b)(i) Executive's annual rate of base salary or target bonus is
reduced below the greater of the amounts (x) paid therefor immediately preceding
the date of such Change in Control or (y) expressly set forth in Section 2
hereof, (ii) the formula for the calculation of Executive's bonus is changed in
a manner that could reasonably be anticipated to decrease the amount payable
thereunder or (iii) any other change is made with respect to Executive's salary
or bonus that would violate Section 2;
(c) a material reduction is made in the benefits set forth in
paragraphs (a) through (g) of Section 3 hereof or to any additional benefits or
perquisites which may have been granted to Executive subsequent to the date of
this Agreement (other than changes made in benefit plans required by law or
applicable regulations thereunder), as they may be in effect immediately prior
to the date of such Change in Control, or if any increase is made in the cost to
Executive for such benefits; or
(d) Executive is transferred or required to transfer to a location
outside of a 25-mile radius of Sensormatic's then-current headquarters in Palm
Beach County or Broward County, Florida (or, if Executive's position was located
outside of Palm Beach County or Broward County, Florida prior to such Change in
Control, Executive is transferred or required to transfer to a location located
more than 25 miles therefrom), or the principal place of business of Sensormatic
in which Executive's major duties have been carried out is transferred to a
location outside of a 25-mile radius of Sensormatic's then-current headquarters
in Palm Beach County or Broward County, Florida.
(e) Sensormatic fails to obtain the assumption in writing of its
obligation to perform this Agreement by any successor to all or substantially
all of the assets and/or business of Sensormatic within 15 days after a
Reorganization Event or any other transaction occurring in connection with, as a
result of or within 24 months following a Change in Control pursuant to which
Sensormatic is not the surviving corporation.
11. Payments. All monthly payments that Executive (or his
--------
Successors) is entitled to receive under Sections 6 or 7 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 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 Executive under Sections 6 or 8(a) of this
Agreement shall be paid by or on behalf of Sensormatic within 10 days after
Executive's right to such payment accrues.
12. Costs of Collection. Sensormatic agrees upon demand to pay all
-------------------
costs and expenses of Executive (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 Executive hereunder.
13. No Effect on Employment. This Agreement is not, and nothing
-----------------------
hereby shall be deemed to create, a contract of employment between Sensormatic
and Executive. The right of Sensormatic to terminate Executive's employment
with Sensormatic or any subsidiary thereof, at any time at will or as otherwise
provided in the Officer Agreement or any other agreement between Sensormatic and
Executive, shall not be affected or limited by this Agreement and is
specifically reserved. Further, this Agreement shall not be deemed to require
-17-
Sensormatic to continue, or to continue unmodified, any benefit plan or policy,
whether or not referred to in Section 3 hereof, provided that no Change in
Control shall have occurred and no Attempted Change in Control shall have
occurred and then be pending.
14. 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 Executive under the provisions of the Officer
Agreement or any other agreement between them or of any plan or program of
Sensormatic, 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 Executive under this Agreement and any other such agreement,
plan or program being cumulative and not in substitution of each other;
provided, however, that nothing in this Agreement shall entitle Executive to
-------- -------
receive duplicative payments of salary, bonus or other benefits. Further,
nothing in this Agreement shall diminish or otherwise adversely affect
Executive's 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 Executive is a
participant immediately prior to any Change in Control and any additional plan
or program of Sensormatic in which Executive is a participant at the time of
Executive's death or disability.
15. 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 Executive 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 Executive thereunder 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 Retirement Plan resulting in a reduction of
Executive's benefits thereunder.
16. 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 Executive 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 Executive hereunder in the event
that the arbitral panel or appeals court finds that Executive's claims and/or
defenses are substantially without reasonable basis.
17. Survival. This Agreement shall be binding on, enforceable
--------
against and inure to the benefit of Executive 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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18. 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.
19. 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 16 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.
20. 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:
--------------------------------
Title:
-----------------------------
Executive: /s/ Xxxxxxx X. Xxxxxxxxx
--------------------------
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SCHEDULE I
Applicable Retirement Plans
1. Supplemental Executive Retirement Plan.
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