1
Exhibit 10a
AGREEMENT
AGREEMENT, made as of the 2nd day of November, 1998, by and between
SENSORMATIC ELECTRONICS CORPORATION, a Delaware corporation having its principal
place of business at 000 Xxxxxx Xxxx, Xxxx Xxxxx, Xxxxxxx 00000-0000
(hereinafter referred to as the "Corporation"), and XXXX X. XXXXX, residing at
0000 Xxxxxxxxx Xxxx., Xxxx Xxxxx, XX 00000 (hereinafter referred to as the
"Employee");
W I T N E S S E T H:
WHEREAS, the Employee is an executive officer and employee of the
Corporation, and has made, and is expected to continue to make, a significant
contribution to the performance and growth of the Corporation; and
WHEREAS, in order to best dedicate himself to his duties with the
Corporation, and to avoid the distractions and market pressures which may arise
as a result of an employment-at-will relationship, the Employee wishes to be
assured of receiving, or continuing to receive for a certain period, certain
compensation and benefits in the event of the termination of his employment
without cause by the Corporation; and
WHEREAS, the Corporation has determined that the continued services of the
Employee to the Corporation are in the best interest of the Corporation and its
stockholders, and desires to assure such continued services by agreeing to
provide the Employee certain rights as to termination compensation, subject to
certain reasonable limitations on the Employee's future employment necessary to
protect the legitimate interests of the Corporation in fair competition, and
subject to such other conditions as are set forth hereunder;
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants herein contained, the parties hereto agree as follows:
1. EMPLOYMENT AT WILL AND DUTIES. The Employee shall continue to serve the
Corporation as Senior Vice President and Chief Technical Officer and shall serve
in such other executive capacity as may be reasonably determined by the
President and the Board of Directors and is reasonably acceptable to him. The
parties acknowledge and agree that the Employee's employment with the
Corporation is not contracted for any fixed term, but shall continue until
terminated by either party, with or without cause, by giving written notice to
the other party pursuant to Section 3 hereunder. The provisions of this
Agreement which are intended to apply and be effective subsequent to such
termination of employment shall survive and continue to be enforceable.
2. COMPENSATION.
(a) The Employee's present base salary is $218,000 per year and the
Employee's present targeted bonus is $98,000 per year. In addition, the Employee
presently participates in or benefits from, or may later qualify to participate
in or benefit from, the Corporation's group medical, dental and life insurance
plans, Executive Personal Umbrella Liability insurance plan, Executive Medical
Reimbursement Plan, SensorSave Plan, Supplemental Executive Retirement Plan,
Stock Incentive Plan and certain other fringe benefit plans or policies as the
Corporation makes available to or has in effect for its executive personnel from
time to time. After the date of this Agreement, such compensation and benefits
may be increased or decreased, discontinued or modified, as determined by the
Corporation's Board of Directors or the Compensation Committee thereof, subject
to the provisions of Section 3(c)(i) below.
(b) The parties agree that, during the term of the Employee's
employment hereunder, the Employee shall continue to participate in the
Corporation's Success Sharing Program - Long Term Incentive Plan as previously
established by grants of stock options and restricted stock pursuant
2
to the terms and conditions of such Plan, subject to any modifications to or
termination of such Plan as becomes effective for executive personnel generally.
(c) The parties agree that the Employee is a participant in the
Corporation's Executive Salary Continuation Plan ("ESCP") and that the Employee
is presently at least 80% vested under the ESCP and that, subject to the terms
and conditions of the ESCP, he may retire at age 60 or thereafter and receive
benefits under the ESCP for a 15-year period. The parties further agree that the
Employee is a participant in the Corporation's Senior Executive Defined
Contribution Retirement Plan (the "Senior Plan"). The Employee is presently at
least 80% vested in the Senior Plan and, subject to the terms and conditions of
the Senior Plan, he may retire at age 60 or thereafter and receive benefits
under the Senior Plan for a 15 year period. The parties agree that the total
annual benefits to be paid to the Employee pursuant to the ESCP and the Senior
Plan, in the aggregate, will be the Employee's vested percentage of an amount
equal to fifty percent (50%) of (i) Employee's base salary as of the date of his
retirement or termination from the Corporation, plus (ii) the greater of (x)
Employee's last paid annual bonus compensation for the last complete fiscal year
prior to retirement or termination, or (y) the average of the annual bonus
payments paid to the Employee for the last five complete fiscal years prior to
retirement or termination. The parties acknowledge that the information set
forth above with respect to the ESCP and the Senior Plan is intended to confirm
the level of benefits to be paid to the Employee, but the parties agree that the
language of the plans themselves will control all other issues relating to the
plans, subject to the following modification: the respective non-competition
provisions of the Employee's agreements under the ESCP and the Senior Plan are
hereby amended to conform with the scope of the non-competition provision set
forth in Section 7 hereunder.
(d) 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 base salary due him for such period based on
his rate of base salary just prior to the disability, 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 Key Executive
Supplemental Retirement Plan.
3. COMPENSATION UPON TERMINATION.
(a) The Employee may terminate his employment with the Corporation at
any time by giving thirty (30) days written notice to the Corporation. The
Corporation may waive any or all of this notice period. Except as provided in
Sections 3(c) and 3(d) below, the Corporation's sole obligation to the Employee
after the date of notice of such termination is (i) to pay the Employee's base
salary and other compensation and benefits provided for in Section 2 above to
the date of termination, (ii) to pay any non-discretionary incentive
compensation which had been earned but not yet paid for any evaluation period
(i.e., fiscal year) completed prior to the date of notice of termination, and
(iii) to complete any obligations required to be discharged under the terms of
group benefit plans. Except as provided in Sections 3(c) and 3(d) below, no
further compensation (including, without limitation, payment of severance
compensation, discretionary bonus compensation for any period, or incentive
compensation for the current evaluation period as of the date of termination,
whether through discretionary or targeted plans) shall be paid to the Employee,
pro-rata or otherwise, and all other benefits and perquisites (including,
without limitation, stock options, executive medical reimbursement, corporate
country club privileges, airline club room privileges and auto allowances) shall
be canceled as of the date of termination.
(b) The Corporation may terminate the Employee's employment with the
Corporation at any time by giving 30 days' prior written notice to the Employee.
In the event of such termination (except for cause pursuant to Section 4
hereunder), the Employee shall be entitled to:
(i) base salary and other compensation provided in Section 2
above through the date of termination of his employment;
2
3
(ii) non-discretionary incentive compensation which had been
earned but not yet paid for any evaluation period completed prior to the date of
termination;
(iii) continuation in full force and effect of the following
stock options, in accordance with the terms and conditions of the related option
agreements: (A) non-qualified options to purchase 7,500 shares of Sensormatic's
common stock at an exercise price of $11.42 per share, granted February 4, 1991,
all of which are currently vested and which are scheduled to expire on February
4, 2001; (B) non-qualified options to purchase 9,000 shares of Sensormatic's
common stock at an exercise price of $17.25 per share, granted February 25,
1992, all of which are currently vested and which are scheduled to expire on
February 25, 2002; (C) non-qualified options to purchase 9,000 shares of
Sensormatic's common stock at an exercise price of $23.00 per share, granted
January 22, 1993, all of which are currently vested and which are scheduled to
expire on January 22, 2003; (D) non-qualified options to purchase 15,000 shares
of Sensormatic's common stock at an exercise price of $31.625 per share, granted
April 18, 1994, all of which vest on April 18, 1999, and which are scheduled to
expire on April 18, 2004; (E) non-qualified options to purchase 10,000 shares of
Sensormatic's common stock at an exercise price of $28.50 per share, granted
February 3, 1995, all of which are currently vested, and which are scheduled to
expire on February 3, 2005; (F) non-qualified options to purchase 25,000 shares
of Sensormatic's common stock at an exercise price of $18.1875 per share,
granted February 12, 1996, of which 16,666 are currently vested, 8,334 will vest
on February 12, 1999, and which are scheduled to expire on February 12, 2006;
(G) non-qualified options to purchase 15,000 shares of Sensormatic's common
stock at an exercise price of $13.6563 per share, granted October 3, 1997, of
which 5,000 will vest on October 3, 1998, 5,000 will vest on October 3, 1999,
5,000 will vest on October 3, 2000, and which are scheduled to expire on October
3, 2007; PROVIDED, HOWEVER, that if the Employee has breached, or has been
alleged to have breached, any of the provisions of Sections 5, 6 or 7 hereof,
any of such options which are outstanding at such time shall thereupon
automatically be suspended without any further action by the Corporation,
provided, however, that upon the Corporation's receipt of knowledge of
allegations of the Employee's breach, it shall provide the Employee (i) with
written notice of such breach and its intention to terminate the options, and
(ii) an opportunity for the Employee to respond to the allegations before the
Corporation's Board of Directors or a committee thereof prior to the termination
of the options.
(iv) a thirty (30) day period following termination in which the
Employee may exercise any vested stock options not granted as part of the
options set forth in subsection (iii) above (except for such options as are set
forth in subsection (iii) above, all unvested options, as well as all shares of
restricted stock issued under the Corporation's long-term incentive plan/Success
Sharing Program, or any subsequently adopted similar plan, shall automatically
terminate and be canceled upon the Employee's termination of employment, and the
Employee shall at such time immediately return to the Corporation for
cancellation any restricted share certificates issued thereunder);
(v) other or additional benefits in accordance with applicable
group plans and programs of the Corporation (subject to any and all Employee
obligations or contributions required by such plans and programs, which shall
continue to be paid by the Employee) which, by their terms, survive termination;
(vi) an option, which the Employee may elect, (and the
Corporation shall be bound by any such election), by written notification to the
Corporation to be received no later than fifteen (15) days prior to the date of
termination, to enter into a 12 month Consulting Agreement with the Corporation,
commencing on the date of termination, in the form attached to this Agreement as
Exhibit A, under which his services may be retained by the Corporation; and
(vii) subject to the Employee's continued compliance with
Sections 5, 6 and 7 below, the Employee shall also be entitled to receive the
following benefits for a period of 18 months immediately following the date of
termination of employment or, if the Employee chooses the Consulting Agreement
option, under which his services may be retained by the Corporation, pursuant to
clause (iii) above, for a period of 18 months immediately following the
termination date of the
3
4
period of consultancy (the "Continuation Period"). Such benefits shall continue
notwithstanding any disability of the Employee suffered during the period of
consultancy or the Continuation Period, and, except for insurance policies which
are not transferable, shall be paid to the Employee's designated heirs in the
event of the Employee's death during the period of consultancy or the
Continuation Period:
(A) 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 3(c) below, then the base salary
in effect immediately prior to such reduction), payable at the same regular
intervals as in effect prior to the termination, PROVIDED, HOWEVER, that in the
event the Employee procures full time employment at any time during the
Continuation Period at compensation that amounts to at least 51% of that
received from the Corporation at such time, base salary payable hereunder shall
continue to be paid only for a period equal to one-half of the remainder of the
Continuation Period;
(B) participation, at the Corporation's expense (either
through Corporation-paid COBRA premiums, while eligible, or, if such eligibility
ends during the consultancy period or the Continuation Period, through the
Corporation's Executive Early Retirement Medical/Dental Plan), in medical and
dental insurance coverage equivalent to that in which he was participating on
the date of the termination of his employment (including spouse or family
coverage, if applicable), to the extent such coverage continues to be provided
to active employees; 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;
(C) participation, at the Corporation's expense, in a
personal life insurance policy equivalent to, and converted from, the group life
insurance coverage in which he was participating on the date of the termination
of his employment, subject to approval by the life insurance company of the
amount to be converted; and
(D) payment by the Corporation of the Employee's monthly
auto lease payments until such lease term expires in July 1999 (provided that
the Employee provides all necessary paperwork and assistance to effect the
transfer of the lease from the Corporation to the Employee within sixty (60)
days of the termination of employment), followed by, for the remainder of the
Continuation Period, if any, payment to the Employee of a monthly auto allowance
of $750.00l; the Employee shall be responsible for all other costs, expenses and
liabilities regarding his use of such automobile.
Except as provided above, no further compensation (including,
without limitation, payment of discretionary bonus compensation for any period
or incentive compensation for the current evaluation period as of the date of
termination, whether through discretionary or targeted plans) shall be paid to
the Employee, pro-rata or otherwise, and all other benefits and perquisites
(including, without limitation, executive medical reimbursement, and airline
club room privileges) shall be canceled as of the date of termination.
(c) In the event that any of the following events occur, the Employee
may terminate his employment with the Corporation within twelve (12) months of
the occurrence of such event by giving written notice to the Corporation, and
shall thereupon be entitled to the payments, entitlements and benefits provided
in Section 3(b) above as if the Corporation had terminated the Employee's
employment with the Corporation pursuant to Section 3(b) above.
(i) a reduction in the Employee's then current base salary, or a
reduction in the Employee's targeted bonus under a non-discretionary incentive
compensation plan not offset by a corresponding increase in base salary, or the
termination or material reduction of any employee benefit or perquisite enjoyed
by him without his permission or agreement (in each case, other than as part of
an across-the-board reduction of such compensation, benefit or perquisite
applicable to all executive officers of the Corporation);
4
5
(ii) a material diminution in the Employee's duties, or the
assignment to the Employee of duties, such that the remaining duties are
materially inconsistent with the duties of a senior officer of the Corporation;
or
(iii) 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) Notwithstanding anything to the contrary contained in this
Agreement, in the event that the Employee terminates his employment with the
Corporation for any reason (unless such termination follows conduct by the
Employee which would constitute a terminable offense pursuant to Section 4
below) within four (4) months of the date of this Agreement, the Employee shall
thereupon be entitled to the payments, entitlements and benefits provided in
Section 3(b) above as if the Corporation had terminated the Employee's
employment with the Corporation pursuant to Section 3(b) above.
(e) 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 3(e) 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.
4. 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 significant
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 Employee's employment with the
Corporation 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.
5. 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
5
6
applications shall be borne by the Corporation, but the Employee shall cooperate
in filing and/or prosecuting any such applications.
6. 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 in development
or 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 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 6 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 6,
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.
7. NON-COMPETITION. In order to protect the legitimate business interests
of the Corporation, such as, without limitation, in its trade secrets,
confidential and professional information, substantial relationships with
existing and prospective customers, and investments in extraordinary and
specialized training, 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,
article surveillance devices or other products 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 produced, being developed or marketed by the Corporation during the
Employee's employment with 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 entity 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 Employee's
employment with the Corporation;
(d) solicit or attempt to solicit for any business endeavor any
employee of the Corporation;
(e) accept any orders for products or services or any other business
from any customers of the Corporation for products or services the same or
similar to those offered, sold or produced by the Corporation during the
Employee's employment with the Corporation; or
(f) hire or retain as a consultant - or 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 entity which
hires or retains as a consultant - any person who, within six (6) months prior
to the date of such hiring or retention, had been employed by the Corporation in
a sales, marketing,
6
7
managerial or professional (e.g. accounting, engineering, legal) capacity;
during the term of the Employee's employment with the Corporation and until the
end of the Continuation Period, 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
have violated this Section 7 if (a) the competitor's annual sales attributable
to the product or product lines involved equal less than 5% of the competitor's
annual total annual sales, 9b) 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,
(c) the Employee provides consultation or services to any person (i) related to
product standards which are being developed in the public domain or (ii) on
matters involving general business or product development processes, provided
that such consultation or services does not relate to any specific products,
technology or marketing strategy, (d) the Employee provides consultation or
services to end-user customers of the Corporation on the application or use of
loss prevention or security products or technology, (e) the Employee provides
consultation or services, with the Corporation's prior written consent, to any
person with whom the Corporation has an OEM distribution arrangement, joint
venture arrangement or other like relationship or (f) the Employee provides
consultation or services with respect to RFID tags or systems to any person (i)
who is a producer for, or supplier to, the Corporation of such RFID tags or
systems or (ii) has offered to supply such RFID tags or systems to the
Corporation on terms at least as favorable as those offered by such producer or
supplier to any other customer. For the purpose of this Section 7, 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 7, 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.
8. TERMINATION OF BENEFITS AND INJUNCTIVE RELIEF. In the event of a breach
or threatened breach by the Employee of any of the provisions of Sections 5, 6
and 7, the Corporation shall be entitled, if it shall so elect, to (a) terminate
any remaining benefits (including any unpaid severance payments or unexercised
options) otherwise due or outstanding pursuant to Section 3 (PROVIDED, HOWEVER,
that upon the Corporation's receipt of knowledge of the Employee's breach or
threatened breach, it shall provide the Employee with (i) written notice of such
breach or threatened beach and its intention to terminate such benefits, and
(ii) an opportunity for the Employee to respond to the allegations at a hearing
before the Corporation's Board of Directors or a committee thereof prior to the
termination of such benefits), and/or (b) except in the case of a breach or
threatened breach of Section 7(e) or (f), 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.
9. 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 2 and 3 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.
10. 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
7
8
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 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.
11. 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.
12. 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 any of 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 12(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.
13. 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 of its obligations under this Agreement
will not violate any agreement between it and any other person, firm or
organization.
14. 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.
8
9
15. 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.
16. 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 Corporation 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.
17. RESOLUTION OF DISPUTES. Except for disputes as to which the Corporation
has instituted legal proceedings under clause (b) of Section 8, any disputes
arising under or in connection with this Agreement shall, at the election of the
Employee or the Corporation, 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. Each
party shall bear its respective costs of the arbitration or litigation,
provided, however, that in the event the Employee is the prevailing party, he
shall recover his reasonable attorneys fees and costs in bringing the action and
enforcing the judgment from the Corporation. "Prevailing Party" shall mean the
party which has been granted the relief or remedy sought, or which has obtained
judgment for damages of at least 50% of the amount claimed.
18. 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 have specified by written notice
hereunder.
19. 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.
20. COUNTERPARTS. This Agreement may be executed in two or more
counterparts.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the day and year first above written.
SENSORMATIC ELECTRONICS CORPORATION XXXX X. XXXXX
By: /s/ Xxxxxx X. Xxxxxxxx By: /s/ Xxxx X. Xxxxx
-------------------------------------- -------------------------
Xxxxxx X. Xxxxxxxx
President and Chief Executive Officer
9
