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EXHIBIT 10(q)
[Director Form -- Prior Agreement]
AGREEMENT
AGREEMENT, dated as of September 1, 1998, by and between
SENSORMATIC ELECTRONICS CORPORATION, a Delaware corporation ("Sensormatic"), and
________________ ("Director").
W I T N E S S E T H:
WHEREAS, Director is a member of the Board of Directors of
Sensormatic, and has made, and is expected to continue to make, a significant
contribution to the direction of Sensormatic's business and affairs and the
formulation of its policies;
WHEREAS, the Board of Directors of Sensormatic recognizes
that, as is the case with many publicly-held corporations, the possibility of a
Change in Control (as defined below) exists and that such possibility, and the
uncertainties which it may raise, may result in the distraction of directors to
the detriment of Sensormatic and its stockholders, particularly at a time when
Sensormatic is making significant efforts to expand its product lines and
markets, restructure its operations and reduce its expenses;
WHEREAS, the Board of Directors of Sensormatic believes that
the protection of certain rights of Director, in the event of a Change in
Control, will help assure Director's continuing dedication to his duties to
Sensormatic, notwithstanding the possibility of a Change in Control, and,
moreover, will enable Director to objectively and impartially assess, and advise
the Board of Directors with respect to, any proposal received by Sensormatic
regarding a Change in Control and to take such action regarding any such
proposal as the Board of Directors may deem to be appropriate;
WHEREAS, with similar purposes and intents, Sensormatic
entered into an Agreement dated February 12, 1996 with Director relating to a
possible Change in Control (the "Prior Agreement"), and Sensormatic and Director
wish to amend and restate the Prior Agreement as hereinafter set forth in order,
among other things, to clarify and update certain provisions thereof;
NOW, THEREFORE, in consideration of the premises, and for
other good and valuable consideration, the parties hereby agree as follows,
amending and restating the Prior Agreement:
1. TERM.
(a) The term of this Agreement, originally commenced on
February 12, 1996 under the Prior Agreement, and continuing pursuant to this
amended and restated Agreement as of the date hereof (which for all purposes of
this Agreement shall mean the date first above
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written), shall continue after a Change in Control shall occur and for so long
thereafter as Sensormatic has or may have any obligations under Sections 3, 5 or
7 hereof.
(c) Notwithstanding the provisions of Section 1(a) hereof,
this Agreement shall terminate automatically in the event that, prior to the
occurrence of a Change in Control and so long as no Attempted Change in Control
shall have occurred and then be pending, Director resigns or is removed from his
directorship with Sensormatic or the term of such office expires without his
being reelected thereto. Notwithstanding anything contained in this Agreement to
the contrary, if the Director is removed from his directorship with Sensormatic
or the term of such office expires without his being re-elected thereto prior to
a Change in Control, which Change in Control occurs, and Director reasonably
demonstrates that such removal of or failure to re-elect Director was at the
request of a third party who effectuates such Change in Control or that such
removal of or failure to re-elect Director was directly related to or in
anticipation of such Change in Control, then for all purposes of this Agreement,
Director shall be entitled to the payments and other benefits provided under
this Agreement as if such removal or failure to re-elect had occurred following
such Change in Control.
2. CHANGE IN CONTROL.
(a) For purposes of this Agreement, the term "Change in
Control" shall mean a change in control of Sensormatic of a nature that would be
required to be reported in response to Item 6(e) of Schedule 14A of Regulation
14A under the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
provided, that, without limitation, such a change in control shall be deemed to
have occurred if (i) any "person" (as such term is used in Sections 13(d) and
14(d) of the Exchange Act, "Person") is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act, "Beneficial Owner"), directly or
indirectly, of securities of Sensormatic representing 30% or more of the
combined voting power of Sensormatic's then outstanding voting securities; (ii)
Sensormatic consummates a merger, consolidation, share exchange, division or
other reorganization of Sensormatic with any other corporation or entity, unless
the shareholders of Sensormatic immediately prior to such transaction
beneficially own, directly or indirectly, (A) if Sensormatic is the surviving
corporation in such transaction, 60% or more of the combined voting power of
Sensormatic's outstanding voting securities as well as 60% or more of the total
market value of Sensormatic's outstanding equity securities, (B) if Sensormatic
is not the surviving corporation, 80% or more of the combined voting power of
the surviving
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entity's outstanding voting securities as well as 80% or more of the total
market value of such entity's outstanding equity securities, or (C) in the case
of a division, 80% or more of the combined voting power of the outstanding
voting securities of each entity resulting from the division as well as 80% or
more of the total market value of each such entity's outstanding equity
securities, in each case in substantially the same proportion as such
shareholders owned shares of Sensormatic prior to such transaction; (iii)
Sensormatic adopts a plan of complete liquidation or winding-up of Sensormatic;
(iv) the shareholders of Sensormatic approve an agreement for the sale or
disposition (in one transaction or a series of transactions) of all or
substantially all of Sensormatic's assets; or (v) during any period of 24
consecutive months, individuals (y) who at the beginning of such period
constitute the Board of Directors of Sensormatic or (z) whose election,
appointment or nomination for election was approved prior to such election or
appointment by a vote of at least two-thirds of the directors in office
immediately prior to such election or appointment who were directors at the
beginning of such two-year period (other than any directors who prior to the
Change in Control were associated or affiliated with any Person involved with
any Change in Control or Attempted Change in Control), cease for any reason to
constitute at least three-fourths of the Board of Directors of Sensormatic.
(b) For purposes of this Agreement, an "Attempted Change in
Control" shall be deemed to have occurred (i) if any Person files (or fails to
file when required to do so) with the Securities and Exchange Commission (the
"SEC") a Statement on Schedule 13D relating to voting securities of Sensormatic
(A) disclosing the acquisition of 10% or more thereof or (B) while disclosing
the acquisition of less than 10% of such voting securities, indicates an
intention to effect any of the transactions listed in Item 4 of Schedule 13D or
otherwise to effect a Change in Control, (ii) upon the public announcement
(including, without limitation, the filing with the SEC of a Statement on
Schedule 14D-1) by any Person of an intention to make a tender offer or
otherwise to effect a Change in Control, (iii) in the event of any solicitation
of proxies for the election of directors of Sensormatic pursuant to Rule 14a-11
of the Rules and Regulations under the Exchange Act or the filing of a Statement
on Schedule 14B in anticipation thereof, (iv) the receipt by Sensormatic from
any Person of any other communication proposing, or indicating an intention, to
effect a Change in Control by the acquisition of voting securities of
Sensormatic, the solicitation of proxies for the election of directors or
otherwise or (v) if the Board of Directors of Sensormatic or an authorized
committee thereof otherwise determines that an Attempted Change in Control is
pending. The termination of the pendency of an Attempted Change in Control shall
be determined by the Board of Directors of Sensormatic (or an authorized
committee thereof); PROVIDED, that any Attempted Change in Control shall in any
event be deemed to have terminated upon the occurrence of a Change in Control.
(c) For the purposes of this Section 2, 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
hereof.
3. BENEFITS RESULTING FROM A CHANGE IN CONTROL. In the event a
Change in Control occurs, Director shall be entitled to the following benefits:
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(a) All stock options issued by Sensormatic to Director,
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 3(b)
hereof), such options shall become fully exercisable thirty days before
the date of such Reorganization Event), and such options shall remain
outstanding and fully exercisable for the stated term thereof or until
the later of (i) nine months following the resignation or removal of
Director from his directorship with Sensormatic or the expiration of
the term of such office without his being re-elected thereto or (ii)
the end of the respective post- termination exercisability periods
provided for in such options (including if applicable, such periods in
the event of death or disability); PROVIDED, that in no event shall the
term of such options be extended beyond their respective original
terms. In addition, any deferred vesting or forfeiture provisions
applicable to any shares of Sensormatic stock awarded to or otherwise
held by Director shall be without further force or effect, and Director
shall have the unrestricted right to such shares.
(b) In the event that (i) such Change in Control is effected
through (A) a tender or exchange offer (a "Tender Offer") or (B) any
means, in one or more transactions, with the result in either case that
any Person becomes the Beneficial Owner, directly or indirectly, of
securities of Sensormatic representing 50% or more of the combined
voting power of Sensormatic's then outstanding voting securities (any
such Change in Control referred to in this clause (i), including
pursuant to a Tender Offer, being hereinafter referred to as a
"Majority Acquisition"), (ii) in connection with, as a result of or
within 24 months immediately following a Change in Control,
Sensormatic's Board of Directors shall have approved a merger,
consolidation, reclassification, reorganization, dissolution, sale of
all or substantially all of the assets of Sensormatic or similar event
(a "Reorganization Event") as a result of which Sensormatic's Common
Stock would cease to be outstanding or (iii) in connection with, as a
result of or within 24 months immediately following a Change in
Control, Sensormatic's Common Stock ceases to be listed for trading on
a national securities exchange or quoted through NASDAQ or a comparable
securities quotation system, Director 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
Director, 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
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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 Director 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 Director 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 Director for the purchase of, or payment of
taxes relating to, such shares of Common Stock or Conversion
Shares, as contemplated by Section 3(c) hereof or otherwise.
Payment for any such options or shares shall be made by Sensormatic
within 10 days after Director's surrender of any such options, and/or
within 10 days after Director'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 Director's notice of exercise under this Section 3(b)).
For purposes of this Section 3(b), the "Fair Market Value" of
a share of Sensormatic Common Stock means the highest fair market value
per share of Sensormatic Common Stock of the consideration paid in any
transaction by any Person who effects such Change in Control, in
connection therewith, whether through open market purchases, Tender
Offers, Reorganization Events, private transactions or otherwise.
(c) Upon Director's request, Sensormatic shall lend to
Director, interest free, up to an amount equal to the aggregate
exercise price of the options referred to in Section 3(a) hereof,
should Director elect to exercise such options. If requested by
Director, Sensormatic shall also lend to Director, interest free (or,
at Director's option, provide a guaranty to enable Director to borrow),
up to an amount equal to the percentage specified below times the Share
Income (as such term is defined below) resulting from such exercise
and/or vesting. Such loan or loans shall be due and payable to
Sensormatic upon the earliest of (i) the fifth anniversary date of such
loan or loans, (ii) in the event of the resignation or removal, other
than for Cause (as defined in Section 4 hereof, "Cause"), of
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Director from his directorship with Sensormatic or the expiration of
the term of such office without his being re-elected thereto, upon the
expiration of 30 months following such resignation, removal or
expiration, or in the event of the removal of Director from his
directorship with Sensormatic for Cause, upon the expiration of 30 days
after such removal, and (iii) promptly (but in any event within five
(5) business days) after receipt of the proceeds of sale from the sale
of such shares, to the extent of the loan or loans applicable to such
sold shares. Director 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
3(c), Sensormatic's Stock Purchase Loan Plan or any promissory note or
security agreement executed by Director pursuant to such Plan, no
additional collateral shall be required by Sensormatic in connection
with any such loan to Director, 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 Director
interest free and without any imputation of interest, Sensormatic shall
pay Director 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 Director shall then pay
Sensormatic the rate of interest on such loan required by law to avoid
imputation. The percentage referred to in this Section 3(c) 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 Director resided at the time the Director 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 Director, in the case of any Option Acquired Shares, or at the time
Director's right to such share vested, in the case of any Award
Shares).
For purposes of this Section 3(c), the term "Option Acquired
Shares" shall mean shares of Sensormatic Common Stock acquired by
Director upon exercise of options granted to Director and the term
"Award Shares" shall mean shares of Sensormatic Common Stock awarded to
Director pursuant to Sensormatic's Stock Incentive Plan or any other
compensation plan or arrangement of Sensormatic, other than pursuant to
the exercise of options.
(d) In the event of the removal, other than for Cause, or
resignation of Director from his directorship with Sensormatic or the
expiration of the term of such office without his being re-elected
thereto, or the death of Director, at any time following a Change in
Control (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, in the
event of a Change in Control, to or for the benefit of Director under
Sensormatic's Board of Directors Retirement Plan (which shall
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include for all purposes of this Agreement Director's Board of
Directors Retirement Agreement thereunder) has been previously
established and is then in effect), Sensormatic shall take such steps
as are necessary, within 30 days after such termination of service as a
director, to fully fund all of Director'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) 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 Director 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 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. In
addition, in the event of the removal, other than for Cause, of
Director from his directorship with Sensormatic or the expiration of
the term of such office without his being re-elected thereto at any
time following a Change in Control, other than pursuant to the
generally applicable term limits and/or retirement policies of the
Corporation (without giving effect to any changes therein that reduce
the retirement age or the permitted term of office which were
implemented following such Change of Control or the commencement of an
Attempted Change of Control which culminated in such Change of
Control), any non-competition provisions included in such Plan shall
have no further force or effect.
4. REMOVAL FOR CAUSE. In the event that Director is removed
for Cause at any time after a Change in Control, Director shall not be entitled
to any of the benefits set forth in Section 3 of this Agreement not yet received
by him, except to the extent that Director exercised rights prior to such
removal with respect to options as provided under Sections 3(a) and 3(b) hereof.
The foregoing shall not affect any rights of Director accrued other than by
virtue of this Agreement. For purposes of this Agreement, Director shall be
deemed to have been removed for cause only if such removal is effected for any
of the following reasons:
(a) gross neglect or willful misconduct by Director in the
performance of Director's duties resulting in material economic harm to
Sensormatic; or
(b) the conviction of Director for a felony involving moral
turpitude under federal or state law;
PROVIDED, HOWEVER, that the determination of the existence of the grounds
referred to in subparagraph (a) of this Section 4 shall be made, in good faith,
solely by a majority of the members of Sensormatic's (or its corporate
successor's) Board of Directors who were members of Sensormatic's Board of
Directors for a period of at least two years immediately prior to the Change in
Control (other than directors who prior to such Change in Control were appointed
or
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elected as directors as a consequence of their association or affiliation with
any Person effecting such Change in Control) ("Previous Members of the Board of
Directors") who are then in office with Sensormatic or its corporate successor
(provided that such majority shall consist of not less than two persons); and
PROVIDED, FURTHER, that Director 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 4,
and shall be entitled to a hearing before such Previous Members of the Board of
Directors before such termination becomes effective.
5. COSTS OF COLLECTION. Sensormatic agrees upon demand to pay
all costs and expenses of Director (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 Director hereunder.
6. 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 Director under the provisions of 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 Director
under this Agreement and any other such agreement, plan or program being
cumulative and not in substitution of each other; PROVIDED, HOWEVER, that this
Agreement amends, restates and supersedes the Prior Agreement, including any
amendments thereto, in its entirety and nothing in this Agreement shall entitle
Director to receive duplicative payments of salary, director fees or other
benefits. Further, nothing in this Agreement shall diminish or otherwise
adversely affect Director's rights or benefits accruing as a consequence of his
death or permanent and total disability, at any time after a Change in Control,
under the terms and conditions of the plans or programs of Sensormatic in which
Director is a participant immediately prior to any Change in Control and any
additional plan or program of Sensormatic in which Director is a participant at
the time of Director's death or disability.
7. 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 Director 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 Director 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 Board of Directors Retirement Plan resulting in
a reduction of Director's benefits thereunder.
8. 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
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having jurisdiction thereof. Any costs, including, without limitation,
attorneys' fees and disbursements, incurred by Director 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 Director hereunder
in the event that the arbitral panel or appeals court finds that Director's
claims and/or defenses are substantially without reasonable basis.
9. SURVIVAL. This Agreement (including, without limitation,
the benefits provided under Section 3 hereof) shall be binding on, enforceable
against and inure to the benefit of, Director 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.
10. 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.
11. 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 8 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.
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12. 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:
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Title:
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