1
EXHIBIT 10(v)
EMPLOYMENT AGREEMENT
AGREEMENT, made as of the 14th day of October, 1995, by and between
SENSORMATIC ELECTRONICS CORPORATION, a Delaware corporation having its
principal place of business at 000 Xxxxxxxxx 00xx Xxxxxx, Xxxxxxxxx Xxxxx,
Xxxxxxx 00000 (hereinafter referred to as the "Corporation"), and Xxxxxx X.
Xxxxxxxx, residing at 0000 Xxxxxxxx Xxxxxx, Xxxxxx, Xxxxx 00000 (hereinafter
referred to as the "Employee");
W I T N E S S E T H:
WHEREAS, the Corporation desires to employ the Employee as its President
and Chief Operating Officer, and the Employee is willing to accept such
employment, all subject to the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants herein contained, the parties hereto agree as follows:
1. EMPLOYMENT AND TERM. Subject to the terms and conditions hereof, the
Corporation hereby employs the Employee, and the Employee hereby accepts
employment by the Corporation, for a period commencing on the date hereof and
continuing until terminated by either party, with or without cause, by giving
written notice to the other party pursuant to Section 4 hereunder (the "Term of
Employment").
2. DUTIES. The Employee shall serve the Corporation as a member of its
Board of Directors and shall hold the offices of President and Chief Operating
Officer and shall serve in such other executive capacity as may be reasonably
determined by the Board of Directors and is reasonably acceptable to him. The
Employee shall be responsible for all business units and functional units,
other than Engineering, Corporate Product Management, Corporate Marketing and
Legal, provided that the Chairman of the Board shall continue to be responsible
for the special Olympic project and direction of the Corporation's community
and philanthropic activities. The Employee shall perform such executive,
administrative and other services and duties as are incidental to the offices
he holds and as may, from time to time, be assigned to him by the Board of
Directors of the Corporation or a committee thereof. The Employee further
agrees to serve as an officer and/or director of any parent, subsidiary or
affiliate of the Corporation, upon request by the Board of Directors of the
Corporation or a committee thereof. It is the intention of the parties that
the Employee will become Chief Executive Officer no later than September 1,
1996 and shall thereafter be responsible for the general management of the
affairs of the Company, subject to the control of the Board of Directors. The
Employee shall report to the Chairman of the Board until he becomes Chief
Executive Officer and thereafter he shall report to the Corporation's Board of
Directors. During the term of this Agreement, the Employee shall devote
substantially all of his business time, attention and energies to the business
of the Corporation. Neither the Employee's participation in other
-1-
2
businesses, as a director or otherwise, with the approval of the Corporation'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 of Directors by Employee, and which approval may not subsequently be
withdrawn without cause) nor the Employee's
-2-
3
engaging in charitable activities and community affairs or managing his
personal investments and affairs shall be deemed to contravene the foregoing
provision.
3. COMPENSATION.
(a) As base compensation for the services to be rendered by the
Employee hereunder, the Corporation shall pay to the Employee a salary at the
rate of $425,000 per annum, to be paid in equal biweekly installments, during
the Term of Employment. The base salary shall be reviewed no less frequently
than annually for increase in the discretion of the Board of Directors of the
Corporation or a committee thereof.
(b) The Corporation shall pay the Employee bonus compensation, based
upon certain performance criteria, as shall be established by the Board of
Directors and agreed to by the Employee for each fiscal year during the Term of
Employment. Targeted bonus compensation shall be not less than $350,000 per
fiscal year. For the 12 months following the commencement of the Employee's
employment, Employee's bonus compensation shall be a guaranteed minimum of
$350,000 prorated between the fiscal year ended June 30, 1996 and the fiscal
year ended June 30, 1997, based on the portion of the fiscal year ended June
30, 1996 that he is employed (subject only to Employee's continued employment
through such period in accordance with the terms of this Agreement). Bonus
compensation shall be payable within sixty (60) days following the end of the
Corporation's fiscal year or within fifteen (15) days following the
Corporation's release of final earnings, whichever is later. If the Term of
Employment terminates on a date other than the last day of a fiscal year, the
bonus payment which the Employee receives for such fiscal year shall be
prorated based upon the portion of the fiscal year prior to termination.
(c) During the Term of Employment, the Employee shall be entitled to
reimbursement for all normal and reasonable travel, entertainment and other
expenses necessarily incurred by him in the performance of his obligations
hereunder. The Company shall also pay all reasonable legal expenses incurred
in connection with the preparation of the Employee's employment arrangements
with the Company.
(d) Until the time of his retirement, and thereafter in accordance
with their respective terms, the Employee shall be entitled to participate in
or benefit from such medical insurance, pension, retirement, life insurance,
bonus, profit-sharing, stock option, stock purchase, stock purchase loan, and
other fringe benefit plans or policies as the Corporation may make available to
or have in effect for its executive personnel from time to time. The Employee
shall also be entitled to vacations, sick leave and other fringe benefits in
accordance with the policies of the Corporation from time to time in effect for
executive personnel.
During the Term of Employment the Corporation shall provide and
maintain for the Employee's use an automobile of his reasonable choice. The
Corporation shall also provide the Employee with an
-3-
4
annual allowance of $7,500 for fees involved in the preparation of the
Employee's federal income and state intangible property tax returns. The
Corporation shall also provide for the payment of such country club/golf club
fees and airline club room fees as are (i) necessary or advisable, in the
reasonable opinion of the Employee, for the Employee's professional activities,
including the entertainment of business associates/clients, and (ii)
commensurate with those currently provided to the Chairman of the Board.
(e) Except as hereinafter provided, the Corporation shall pay the
Employee, for any period that this Agreement is in effect during which he is
unable fully to perform his duties because of physical or mental disability or
incapacity, an amount equal to the compensation due him for such period in
accordance with this Agreement less the aggregate amount of all income
disability benefits which for such period he may receive or to which he may be
entitled under or by reason of (i) any group health insurance plan; (ii) any
applicable compulsory state disability law; (iii) the Federal Social Security
Act; (iv) any applicable workmen's compensation law or similar law; and (v) any
plan towards which the Corporation or any parent, subsidiary or affiliate of
the Corporation has contributed or for which it has made payroll deductions,
such as group accident or health policies or the Senior Executive Defined
Contribution Retirement Plan.
(f) During the Employee's employment hereunder, and thereafter upon
retirement in accordance with such Plan, the Employee shall be entitled to
participate in the Corporation's Senior Executive Defined Contribution
Retirement Plan. The Employee's annual Target Benefits thereunder shall be not
less than $387,500 (i.e., fifty percent (50%) of Employee's targeted annual
cash compensation as of the date of this Agreement). The Employee's rights
under such Plan shall vest at the rate of 25% per year, commencing with the
first anniversary of the date of this Agreement.
(g) Upon the commencement of the Employee's employment, the
Corporation shall grant him a 10-year option, substantially in the form
attached to this Agreement as Exhibit A, to purchase 450,000 shares of common
stock of the Corporation at an exercise price equal to the fair market value on
the date of the commencement of his employment. Such option shall vest and
become exercisable at the rate of 33 % on the first, second and third
anniversaries of the date of this Agreement. The Employee shall also be
entitled to participate in future stock option grants made by the Corporation
to its employees, as determined by the Board of Directors or a committee
thereof or under the relevant plans.
(h) The Employee shall be entitled to participate in the
Corporation's Success Sharing Program, Long-Term Incentive Plan, with a target
benefit of $1,600,000, a three-year performance period, a cumulative EPS target
of $6.14 and an allocation of 60% of the target benefit to stock options and
40% of the target benefit to restricted stock.
-4-
5
(i) The Employee shall be entitled to all of the benefits of the
Corporation's Relocation and Moving Expense Policy. Without limiting the
foregoing, the Employee shall also be entitled to reimbursement of or for:
(i) reasonable expenses connected with the sale of his
present residence;
(ii) any loss incurred by reason of a sale of his present
residence at less than cost, including all capital improvements;
(iii) all reasonable travel, meals, lodging and related
expenses incurred in connection with looking for housing or schools in the
Deerfield Beach, Florida, area;
(iv) interest costs of any bridge loan incurred to purchase a
new residence if his present residence has not been sold before the new one is
purchased;
(v) for a period not to exceed one (1) year, temporary living
expenses in the Deerfield Beach, Florida, area and weekend round trip
transportation costs between Florida and Dallas, Texas, for Employee until the
Employee's family moves to Florida;
(vi) a lump sum miscellaneous expense allowance of one month's
base salary, which shall not be subject to the maximum amount set forth in the
Company's policy, to cover those expenses not otherwise covered.
4. COMPENSATION UPON TERMINATION.
(a) The Employee may terminate the Term of Employment at any time by
giving at least two (2) month's prior written notice to the Corporation.
Except as provided in Section 4(b) below, if the Employee provides less than
two (2) months' notice, he shall not be entitled to any bonus compensation (as
set forth in Section 3(b)) for the notice period.
(b) The Corporation may terminate the Term of Employment at any time
by giving at least 30 days' prior written notice to the Employee, if without
cause, or effective immediately on notice, if with cause (after compliance with
the provisions of Section 5). In the event of such termination (except for
cause pursuant to Section 5 hereunder), the Employee shall be entitled to:
(i) base salary through the date of termination of his
employment;
(ii) base salary, at the annualized rate in effect on the date
of termination of employment (or in the event a reduction in base salary is the
basis for a termination pursuant to Section 4(c) below, then the base salary in
effect immediately prior to such reduction), for a period of 24 months
following such termination (the
-5-
6
"Continuation Period"), payable at the same regular intervals as in effect
prior to the termination;
(iii) pro rata annual bonus for the year in which termination
occurs based on the targeted bonus for such year, payable in a single
installment promptly following termination;
(iv) an amount equal to the targeted bonus for the year in
which termination occurs multiplied by 2, payable in equal monthly installments
over the Continuation Period;
(v) the balance of any incentive awards earned (but not yet
paid);
(vi) continued vesting of stock options during the
Continuation Period and the right to exercise any such option (in accordance
with its vesting and other terms) for the remainder of the original term of
such option;
(vii) any other amounts earned, accrued or owing to the
Employee but not yet paid;
(viii) continued participation in all medical, dental,
hospitalization and life insurance coverage and in other employee welfare
benefit plans or programs in which he was participating on the date of the
termination of his employment until the end of the Continuation Period;
provided that the Corporation's obligations under this clause shall be reduced
to the extent that the Employee is eligible for similar coverage and benefits
under the plans and programs of a subsequent employer; and provided further
that (x) if the Employee is precluded from continuing his participation in any
employee benefit plan or program as provided in this clause, he shall be
provided with the after-tax economic equivalent of the benefits provided under
the plan or program in which he is unable to participate for the period
specified in this clause, (y) the economic equivalent of any benefit foregone
shall be deemed to be the lowest cost that would be incurred by the Employee in
obtaining such benefit himself on an individual basis, and (z) payment of such
after-tax economic equivalent shall be made quarterly in advance; and
(ix) other or additional benefits in accordance with
applicable plans and programs of the Corporation.
(c) In the event that any of the following events occur, the
Employee may terminate the Term of Employment, without prior notice, by giving
written notice to the Corporation, and shall thereupon be entitled to the
payments, entitlements and benefits provided in Section 4(b) above as if the
Corporation had terminated the Term of Employment pursuant to Section 4(b)
above.
(i) a reduction in the Employee's then current base salary or
targeted bonus or the termination or material reduction of any employee benefit
or perquisite enjoyed by him (other than as part of an across-the-board
reduction of such benefit or perquisite applicable to all executive officers of
the Corporation);
-6-
7
(ii) the failure to elect the Employee as Chief Executive
Officer to be effective on or before September 1, 1996;
(iii) the failure to elect or reelect the Employee as President
and Chief Operating Officer (or, after he becomes Chief Executive Officer, as
Chief Executive Officer) or director or removal of him from any such position;
(iv) a material diminution in the Employee's duties or the
assignment to the Employee of duties which are materially inconsistent with his
duties or which materially impair the Employee's ability to function as the
President or Chief Executive Officer of the Corporation, as the case may be;
(v) the relocation of the Corporation's principal office, or
the Employee's own office location as assigned to him by the Corporation, to a
location more than 35 miles from Deerfield Beach, Florida; or
(vi) the failure of the Corporation to obtain the assumption
in writing of its obligation to perform this Agreement by any successor to all
or substantially all of the assets of the Corporation within 15 days after a
merger, consolidation, sale or similar transaction.
(d) In the event that the aggregate of all payments or benefits made
or provided to the Employee following a change in control of the Corporation
under this Agreement and under all other plans and programs of the Corporation
(the "Aggregate Payment") is determined to include an excess parachute payment,
as such term is defined in Section 280G(b)(1) of the Internal Revenue Code, the
Corporation shall pay to the Employee, prior to the time any excise tax imposed
by Section 4999 of the Internal Revenue Code ("Excise Tax") is payable with
respect to such excess parachute payment, an additional amount which, after the
imposition of all income and excise taxes thereon, is equal to the Excise Tax
on the excess parachute payment. The determination of whether the Aggregate
Payment includes an excess parachute payment and, if so, the amount to be paid
to the Employee and the time of payment pursuant to this Section 4(d) shall be
made by an independent auditor (the "Auditor") jointly selected by the
Corporation and the Employee and paid by the Corporation. 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 the Corporation or any affiliate thereof. If the Employee and the
Corporation cannot agree on the firm to serve as the Auditor, then the Employee
and the Corporation shall each select one accounting firm and those two firms
shall jointly select the accounting firm to serve as the Auditor.
(e) In the event of any termination of employment under this Section
4, the Employee shall be under no obligation to seek other employment and there
shall be no offset against amounts due the Employee under this Agreement on
account of any remuneration
-7-
8
attributable to any subsequent employment that he may obtain except as
specifically provided in this Section 4.
5. TERMINATION FOR CERTAIN CAUSES. Notwithstanding anything to the
contrary set forth elsewhere herein, in the event of the willful misconduct of
the Employee in the performance of his duties hereunder resulting in material
economic harm to the Corporation or the conviction of the Employee for a felony
under federal or state law relating to the assets, business or affairs of the
Corporation or involving moral turpitude, the Term of Employment may be
terminated by the Corporation by written notice to the Employee, provided that
the Employee 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. The Employee shall be entitled to a hearing before the Board
before such termination becomes effective.
6. DISCLOSURE AND ASSIGNMENT OF DISCOVERIES. The Employee shall
(without any additional compensation) promptly disclose in writing to the Board
of Directors of the Corporation all ideas, formulae, programs, systems,
devices, processes, business concepts, discoveries and inventions (hereinafter
referred to collectively as "discoveries") whether or not patentable, which the
Employee, while employed by the Corporation, conceives, makes, develops,
acquires or reduces to practice, whether alone or with others and whether
during or after usual working hours, and which are related to the Corporation's
business or interests, or are used or usable by the Corporation; and the
Employee hereby transfers and assigns to the Corporation all right, title and
interest in and to said discoveries, including any and all domestic and foreign
patent rights therein and any renewals thereof. On request of the Corporation,
the Employee shall (without any additional compensation), from time to time
during or after the expiration or termination of his employment, execute such
further instruments (including, without limitation, applications for letters
patent and assignments thereof) and do all such other acts and things as may be
deemed necessary or desirable by the Corporation to protect and/or enforce its
rights in respect of said discoveries. All expenses of filing or prosecuting
any patent applications shall be borne by the Corporation, but the Employee
shall cooperate in filing and/or prosecuting any such applications.
7. CONFIDENTIALITY. The Employee agrees that all patent rights,
inventions, technical information and know-how and trade secrets relating to
the Corporation's electronic security systems and any other products marketed
by the Corporation, any information relating thereto, and any other information
relating to the business or interests of the Corporation which he knows or
should know, is regarded as confidential and valuable by the Corporation
(whether or not any of the foregoing information is actually novel or unique or
is actually known to others), made available to the Employee by the Corporation
or acquired by the Employee from the Corporation, other than that which legally
and legitimately is or becomes of general public knowledge or passes into the
public domain from authorized sources other than the Employee, will be held in
confidence and will not be divulged (or caused or permitted to be divulged) by
the
-8-
9
Employee, without the prior written consent of the Corporation, to any person
or entity, except to responsible officers and employees of the Corporation and
other responsible persons who are in a contractual or fiduciary relationship
with the Corporation or who have a need for such information for purposes in
the interest of the Corporation or otherwise in the course of carrying out his
duties hereunder and except when required to disclose such information by a
court of law, by any governmental agency having supervisory authority over the
business of the Company or by any administrative or legislative body (including
a committee thereof) with the apparent jurisdiction to order him to divulge,
disclose or make accessible such information. The Employee further agrees that
his obligations of secrecy and confidentiality under this Section 7 shall
survive any termination of this Agreement unless specifically waived in writing
by the Corporation and, in the event of any such termination, the Employee
shall never use or market, nor disclose to others nor assist others in using or
marketing, any of the information or property rights of the Corporation
referred to in this Section 7, other than that which legally and legitimately
is or becomes of general public knowledge or passes into the public domain from
authorized sources other than the Employee.
8. NON-COMPETITION. The Employee shall not, directly or indirectly,
(a) engage in the business of manufacturing, leasing, selling,
maintaining, or servicing, anywhere in the world, anti-shoplifting, theft
detection, inventory/asset control, closed circuit television, access control,
or article surveillance devices which are similar to or purport to accomplish
results similar to the Corporation's electronic article surveillance, closed
circuit television and access control systems and other products marketed by
the Corporation;
(b) render any services as an officer, director, employee, partner,
consultant or otherwise to, or have any interest as a stockholder, partner,
lender or otherwise in, any person which is so engaged;
(c) solicit or attempt to solicit business of any customers of the
Corporation for products or services the same or similar to those offered,
sold, produced or under development by the Corporation during the Term of
Employment, or
(d) solicit or attempt to solicit for any business endeavor any
employee of the Corporation. during the Term of Employment and for a period of
two (2) years from and after the date of termination of the Term of Employment,
or for such lesser area or lesser period as may be determined by a court of law
or equity to be a reasonable limitation on the competitive activity of the
Employee, it being understood and agreed by the parties hereto that this
provision is reasonably necessary to protect the patent rights, inventions,
technical information and know-how, trademarks and the good will and reputation
of the Corporation. Notwithstanding the foregoing, the Employee shall not be
deemed to
-9-
10
have violated this Section 8 if (i) the competitor's annual sales attributable
to the product or product lines involved equal less than 5% of the competitor's
total annual sales or (ii) the Employee is employed by a business of which a
unit is in competition with the Corporation but as to which unit he does not
have direct or supervisory authority over the product or product lines
involved. For the purpose of this Section 8, the term "Corporation" shall
include any and all affiliates of the Corporation in existence from time to
time. Notwithstanding anything to the contrary contained in this Section 8,
the provisions hereof shall not prevent the Employee from purchasing or owning
up to two (2%) percent of the voting securities of any corporation, the stock
of which is publicly traded.
9. INJUNCTIVE RELIEF. In the event of a breach or threatened breach by
the Employee of any of the provisions of Sections 6, 7 and 8, the Corporation
shall be entitled, if it shall so elect, to institute legal proceedings to
obtain damages or to enforce the specific performance of such provisions by the
Employee and to enjoin the Employee from any further violation of such
provisions and to exercise such remedies cumulatively or in conjunction with
all other rights and remedies provided by law. The Employee acknowledges,
however, that the remedies at law for any breach or threatened breach by him of
such provisions may be inadequate and that the Corporation shall be entitled to
injunctive relief against him in the event of any breach or threatened breach.
10. ENTIRE AGREEMENT. This Agreement supersedes all prior agreements and
understandings between the parties pertaining to the subject matter hereof
(other than the plans and policies referred to in Sections 3(d), 3(f) 3(g),
3(h) and 3(i) hereof and any other agreements or understandings pertaining
thereto) and may not be changed or terminated orally, and no change,
termination or attempted waiver of any of the provisions hereof shall be
binding unless in writing and signed by the party against whom the same is
sought to be enforced; provided, however, that the Employee's compensation
and/or benefits may be increased at any time by the Corporation without in any
way affecting any of the other terms and conditions of this Agreement, which in
all other respects shall remain in full force and effect.
11. SUCCESSORS AND ASSIGNS. Neither party shall have the right to assign
this personal Agreement, or any rights or obligations hereunder, without the
consent of the other party, provided, however, that upon the sale of all or
substantially all of the assets, business and goodwill of the Corporation to
another corporation, or upon the merger or consolidation of the Corporation
with another corporation, this Agreement shall inure to the benefit of, and be
binding upon, both the Employee and the corporation purchasing such assets,
business and goodwill, or surviving such merger or consolidation, as the case
may be, in the same manner and to the same extent as though such other
corporation were the Corporation. In the event of a sale, merger or
consolidation described in the preceding sentence, the Corporation shall take
whatever action it legally can in order to cause such other corporation to
expressly assume the liabilities, obligations and
-10-
11
duties of the Corporation hereunder. Subject to the foregoing, this Agreement
shall inure to the benefit of, and bind, the parties hereto and their legal
representatives, heirs, successors and assigns.
12. GOVERNING LAW. This Agreement is made and executed and shall be
governed by the laws of the State of Florida, without giving effect to choice
of law principles.
13. INDEMNIFICATION.
(a) The Corporation agrees that if the Employee is made a party, or
is threatened to be made a party, to any action, suit or proceeding, whether
civil, criminal, administrative or investigative (a "Proceeding"), by reason of
the fact that he is or was a director, officer, or employee of the Corporation
or is or was serving at the request of the Corporation as a director, officer,
member, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, including service with respect to employee benefit
plans, whether or not the basis of such Proceeding is the Employee's alleged
action in an official capacity while serving as a director, officer, member,
employee or agent, the Employee shall be indemnified and held harmless by the
Corporation to the fullest extent legally permitted or authorized by the
Corporation's certificate of incorporation or bylaws or resolutions of the
Company's Board of Directors or, if greater, by the laws of the State of
Delaware against all cost, expense, liability and loss (including, without
limitation, attorney's fees, judgments, fines, ERISA excise taxes or penalties
and amounts paid or to be paid in settlement) reasonably incurred or suffered
by the Employee in connection therewith, and such indemnification shall
continue as to the Employee even if he has ceased to be a director, officer,
member, employee or agent of the Corporation or other entity and shall inure to
the benefit of the Employee's heirs, executors and administrators. The
Corporation shall advance to the Employee all reasonable costs and expenses
incurred by him in connection with a Proceeding within 20 days after receipt by
the Corporation of a written request for such advance. Such request shall
include an undertaking by the Employee to repay the amount of such advance if
it shall ultimately be determined that he is not entitled to be indemnified
against such costs and expenses.
(b) Neither the failure of the Corporation (including its board of
directors, independent legal counsel or stockholders) to have made a
determination prior to the commencement of any Proceeding concerning payment of
amounts claimed by the Employee under Section 13(a) above that indemnification
of the Employee is proper because he has met the applicable standard of
conduct, nor a determination by the Corporation (including its board of
directors, independent legal counsel or stockholders) that the Employee has not
met such applicable standard of conduct, shall create a presumption that the
Employee has not met the applicable standard of conduct.
(c) The Corporation agrees to continue and maintain a directors and
officers' liability insurance policy covering the Employee to the extent the
Corporation provides such coverage for its other executive officers.
-11-
12
14. REPRESENTATION. The Corporation represents and warrants that it is
fully authorized and empowered by action of the Board of Directors to enter
into this Agreement and that the performance if its obligations under this
Agreement will not violate any agreement between it and any other person, firm
or organization.
15. SEVERABILITY. In the event that any provision or portion of this
Agreement shall be determined to be invalid or unenforceable for any reason, in
whole or in part, the remaining provisions of this Agreement shall be
unaffected thereby and shall remain in full force and effect to the fullest
extent permitted by law.
16. SURVIVORSHIP. The respective rights and obligations of the parties
hereunder shall survive any termination of the Employee's employment to the
extent necessary to the intended preservation of such rights and obligations.
17. BENEFICIARIES/REFERENCES. The Employee shall be entitled, to the
extent permitted under the applicable law, to select and change a beneficiary
or beneficiaries to receive any compensation or benefit payable hereunder
following the Employee's death by giving the Company written notice thereof.
In the event of the Employee's death or a judicial determination of his
incompetence, reference in this Agreement to the Employee shall be deemed,
where appropriate, to refer to his beneficiary, estate or other legal
representative.
18. RESOLUTION OF DISPUTES. Except for disputes which are subject to the
provisions of Section 9, any disputes arising under or in connection with this
Agreement shall, at the election of the Executive or the Company, be resolved
by binding arbitration, to be held in Ft. Lauderdale, Florida in accordance
with the rules and procedures of the American Arbitration Association.
Judgment upon the award rendered by the arbitrator(s) may be entered in any
court having jurisdiction thereof. Costs of the arbitration or litigation,
including, without limitation, reasonable attorneys' fees of both parties,
shall be borne by the Corporation.
19. NOTICES. Any notice given to a party shall be in writing and shall
be deemed to have been given when delivered personally or sent 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.
20. HEADINGS. The headings of the sections contained in this Agreement
are for convenience only and shall not be deemed to control or affect the
meaning or construction of any provision of this Agreement.
21. COUNTERPARTS. This Agreement may be executed in two or more
counterparts.
-12-
13
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
as of the day and year first above written.
SENSORMATIC ELECTRONICS CORPORATION XXXXXX X. XXXXXXXX
By: /s/ Xxxxxx X. Xxxxx By: /s/ Xxxxxx X. Xxxxxxxx
Print Name: Xxxxxx X. Xxxxx
Title: Chairman of the Board and CEO
-13-
14
EXHIBIT A
SENSORMATIC ELECTRONICS CORPORATION
NON-QUALIFIED STOCK OPTION
For valuable consideration, receipt of which is hereby acknowledged,
SENSORMATIC ELECTRONICS CORPORATION, a Delaware corporation (the "Company"),
hereby grants to XXXXXX X. XXXXXXXX, who resides at 0000 XXXXXXXX XXXXXX,
XXXXXX, XXXXX 00000 (the "Optionee"), a non-qualified stock option ("Option"),
subject to the terms and conditions hereof, to purchase from the Company an
aggregate of 450,000 shares of the Common Stock of the Company, par value $.01
per share (the "Common Stock"), at the price of $22.12 per share (the "Option
Price"), such option to be exercisable in installments as set forth below on or
before the day (the "Termination Date") preceding the tenth anniversary of the
date hereof.
This Option may be exercised as to one-third of the shares of Common
Stock subject hereto after the first anniversary of the date hereof, as to an
additional one-third of such shares after the second anniversary of the date
hereof, and as to the remaining one-third of such shares after the third
anniversary of the date hereof.
This Option is granted pursuant to the Company's 1995 Stock Incentive
Plan (the "Plan") and is subject to the terms and conditions thereof. The Plan
is administered by the Company's Stock Incentive Plan Committee (the
"Committee"). All determina-
15
tions and acts of the Committee as to any matters concerning the Plan,
including interpretations or constructions of this Option and of the Plan,
shall be conclusive and binding on the Optionee and any parties claiming
through the Optionee.
Unless the Optionee ceases to be employed by the Company or a direct
or indirect subsidiary thereof, the right of the Optionee to purchase shares
subject to any installment may be exercised in whole at any time or in part
from time to time after the accrual of such respective installment and prior to
the Termination Date, except as otherwise provided herein. This Option may be
exercised only with respect to full shares.
Subject to the provisions of this Option, this Option may be exercised
by written notice (the "Notice") to the Company stating the number of shares of
Common Stock with respect to which it is being exercised. The Notice shall be
accompanied by the Optionee's payment in full of the Option Price for each of
the shares to be purchased by the Optionee, such payment to be made by (a)
certified or bank cashier's check payable to the order of the Company or (b)
any other means acceptable to the Committee.
As soon as practicable after receipt of the Notice and payment, and
subject to the next two paragraphs, the Company shall, without transfer or
issue tax or other incidental expense to the Optionee, deliver to the Optionee
a certificate or
-2-
16
certificate for the shares of Common Stock so purchased. Such delivery shall
be made (a) at the offices of the Company at 000 Xxxxxxxxx 00xx Xxxxxx,
Xxxxxxxxx Xxxxx, Xxxxxxx 00000, (b) at such other place as may be mutually
acceptable to the Company and the Optionee, or (c) at the election of the
Company, by certified mail addressed to the Optionee at (i) the Optionee's
address shown in the employment records of the Company or (ii) the location at
which the Optionee is employed by the Company.
The Company shall have the right to withhold an appropriate number of
shares of Common Stock (based on the fair market value thereof on the date of
exercise) for payment of taxes required by law or to take such other action as
may be necessary in the opinion of the Company to satisfy all tax withholding
obligations.
The Company may postpone the time of delivery of certificate(s) for
shares of Common Stock for such additional time as the Company shall deem
necessary or desirable to enable it to comply with the requirements of any
securities exchange upon which the Common Stock may be listed, or the
requirements of the Securities Act of 1933, as amended, the Securities
Exchange Act of 1934, as amended, any rules or regulations of the Securities
and Exchange Commission promulgated thereunder, or any applicable state laws
relating to the authorization, issuance or sale of securities.
-3-
17
The issuance of the shares of Common Stock subject hereto and issuable
upon the exercise of this Option and the transfer or resale of such shares
shall be subject to such restrictions as are, in the opinion of the Company's
counsel, required to comply with the Securities Act of 1933, as amended, and
the rules and regulations promulgated thereunder, and the certificate(s)
representing such shares shall, if it is deemed advisable by the Company's
counsel, bear a legend to such effect.
If, upon tender of delivery thereof, the Optionee fails to accept
delivery of and pay or have paid for all or any part of the number of shares of
Common Stock specified in the Notice, the Optionee's right to exercise this
Option with respect to such undelivered and unpaid for shares may be terminated
by the Company.
During the Optionee's lifetime, this Option shall be exercisable only
by the Optionee (except as otherwise provided below), and neither this Option
nor any right hereunder shall be assignable or transferable otherwise than by
will or the laws of descent and distribution (as provided below), or be subject
to attachment, execution or other similar process. In the event of any attempt
by the Optionee to alienate, assign, pledge, hypothecate or otherwise dispose
of this Option or of any right hereunder, except as provided for herein, or in
the event of any levy or any attachment, execution or similar process upon the
rights
-4-
18
or interest hereby conferred, the Company may terminate this Option by notice
to the Optionee, and it shall become null and void.
If, prior to the Termination Date, the Optionee's employment with the
Company or its direct or indirect subsidiaries terminates for any reason
(otherwise than by reason of (i) the Optionee's death or disability (as defined
below), (ii) termination of the Optionee's employment by the Company without
cause (as defined in Section 5 of the Employment Agreement dated as of October
14, 1995 between the Company and the Optionee (the "Employment Agreement")) or
(iii) by termination of the Optionee's employment by the Optionee pursuant to
Section 4(c) of the Employment Agreement), this Option, and all rights
hereunder to the extent that such rights shall not have been exercised, shall
immediately terminate and become null and void.
In the event of the Optionee's death prior to the Termination Date,
and while the Optionee is employed by the Company or a direct or indirect
subsidiary thereof, this Option shall immediately become fully exercisable and
may be exercised within one year after the date of the Optionee's death by the
person(s) to whom the right passes pursuant to the following sentence, but in
no event may this Option be exercised later than the Termination Date. All
rights with respect to this Option, including the right to exercise it, shall
pass in the following
-5-
19
order: (a) to such person(s) as the Optionee may designate in a writing duly
delivered to the Company (in the form available from the Company for such
purpose), or in the absence of such a designation, then (b) to the Optionee's
estate (the Option to be exercised by the legal representative).
In the event that the Optionee, prior to the Termination Date, ceases
to be employed by the Company or a direct or indirect subsidiary thereof
because the Optionee is deemed by the Company to be disabled, this Option shall
immediately become fully exercisable and may be exercised by the Optionee, if
legally competent, or by a committee or other legally designated guardian or
representative if the Optionee is legally incompetent, within one year after
the date the Optionee ceases to be employed by the Company or a direct or
indirect subsidiary thereof as a result of such disability, but in no event may
this Option be exercised later than the Termination Date. For purposes of this
Option, the Optionee shall be deemed by the Company to be disabled if the
Optionee is unable to engage in any substantial gainful activity by reason of
any medically determinable physical or mental impairment which can be expected
to result in death or which has lasted or can be expected to last for a
continuous period of not less than twelve months. The Optionee shall not be
considered to be disabled unless the Optionee or the Optionee's representative
furnishes proof of the
-6-
20
existence of such disability in such form and manner, and at such times, as may
be required by the Committee, and unless such proof shall be satisfactory to
the Committee. The determination by the Committee with respect to the
existence of such disability shall be conclusive and binding upon the Optionee
and any parties claiming through the Optionee.
In the event that the Optionee's employment is terminated prior to the
Termination Date by the Company without cause (as defined in Section 5 of the
Employment Agreement) or by the Optionee pursuant to Section 4(c) of the
Employment Agreement, this Option shall continue to become exercisable in
accordance with the second paragraph of this Option during the Continuation
Period (as defined in Section 4(b) of the Employment Agreement) and may be
exercised at any time on or prior to the Termination Date to the extent it
shall have become exercisable at the time of such exercise.
In the event of any change in the outstanding Common Stock by reason
of a stock split, stock dividend, combination or reclassification of shares,
recapitalization, merger or similar event, the Committee shall adjust
proportionally the number of shares of Common Stock covered by this Option and
the Option Price thereof. In the event of any other change affecting the
Common Stock or any distribution (other than normal cash
-7-
21
dividends) to holder of Common Stock, such adjustments as may be deemed
equitable by the Committee, including adjustments to avoid fractional shares,
shall be made to give proper effect to such event. In the event of a corporate
merger, consolidation, acquisition of property or stock, separation,
reorganization or liquidation, the Committee may authorize the assumption of
this Option or the substitution of a new stock option for this Option, whether
or not in a transaction to which Section 424(a) of the Internal Revenue Code of
1986, as amended from time to time, applies. The judgment of the Committee
with respect to any matter referred to in this paragraph shall be conclusive
and binding upon the Optionee and any parties claiming through the Optionee.
Neither the Optionee nor any person or persons entitled to exercise
the Optionee's rights under this Option in accordance herewith shall have any
rights to dividends or any other rights of a stockholder with respect to any
shares of Common Stock subject to this Option, except to the extent that a
certificate for such shares shall have been issued upon the exercise of this
Option as provided herein.
Each notice relating to this Option shall be in writing and delivered
in person or by certified mail to the proper address. All notices to the
Company shall be addressed to it at its offices at 000 Xxxxxxxxx 00xx Xxxxxx,
Xxxxxxxxx Xxxxx,
-0-
00
Xxxxxxx 00000, attention of the Committee, c/o the Company's Secretary, and
shall become effective when received by the Secretary. All notices to the
Optionee or other person or persons then entitled to exercise any rights with
respect to this Option shall be addressed to the Optionee or such other person
or persons at (i) the Optionee's address shown in the employment records of the
Company or (ii) the location at which the Optionee is employed by the Company.
Anyone to whom a notice may be given under this Option may designate a new
address by notice to that effect.
Neither the adoption of the Plan nor the granting of this Option
confers on the Optionee any right to continued employment with the Company (or
any of its direct or indirect subsidiaries) or in any way interferes with or
alters the Company's (and its direct and indirect subsidiaries') right to
terminate the employment of the Optionee at any time, with or without cause,
and without liability therefor. This Option shall not be deemed a part of the
Optionee's regular, recurring compensation for any purpose, including, without
limitation, for the purposes of any termination indemnity or severance pay law
of any jurisdiction.
-9-
23
This Option and all determinations made and actions taken pursuant
hereto, to the extent not otherwise governed by the Internal Revenue Code of
1986, as amended from time to time, or the securities laws of the United
States, shall be governed by and construed under the laws of the State of
Delaware.
IN WITNESS WHEREOF, SENSORMATIC ELECTRONICS CORPORATION has caused
this Option to be executed by its officers, thereunto duly authorized, as of
the 15th day of October, 1995.
SENSORMATIC ELECTRONICS
CORPORATION
By:
--------------------------------
Xxxxxx X. Xxxxx
Chairman of the Board
and Chief Executive Officer
ATTEST:
----------------------------------
Xxxxxx X. Xxxxxxx
Assistant Secretary
-10-
