Exhibit (e)(4)(x)
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AGREEMENT
AGREEMENT, dated as of September 20, 1999, by and between SENSORMATIC
ELECTRONICS CORPORATION, a Delaware corporation having its principal place of
business at 000 Xxxxxx Xxxx, Xxxx Xxxxx, Xxxxxxx 00000 ("Sensormatic"), and
Xxxxxx X. Xxxxxxx, an individual whose address is 0000 Xxxxx Xxxx Xxxxx, Xxxxx
Xxxxx Xxxxx, Xxxxxxx 00000 ("Executive").
W I T N E S S E T H:
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WHEREAS, Executive is an employee of Sensormatic, with the title of
Vice President and Treasurer, and is expected to make a significant contribution
to the performance and growth of Sensormatic;
WHEREAS, the Board of Directors of Sensormatic recognizes that, as is
the case with many publicly-held corporations, the possibility of a Change in
Control (as defined below) exists and that such possibility, and the uncertainty
which it may raise among Sensormatic's management, may result in the distraction
or departure of management personnel to the detriment of Sensormatic and its
stockholders, particularly at a time when Sensormatic is placing heavy demands
on its management in connection with its efforts to expand its product lines and
markets, restructure its operations and reduce its expenses;
WHEREAS, the Board of Directors of Sensormatic has determined that the
continued services of Executive to Sensormatic are in the best interest of
Sensormatic and its stockholders and desires to assure such continued services
by agreeing to provide to Executive certain rights as to termination
compensation in the event of a Change in Control;
WHEREAS, the Board of Directors of Sensormatic believes that the grant
of such rights to Executive will help assure Executive's continuing dedication
to his duties to Sensormatic, notwithstanding the occurrence of any Change in
Control, and, in particular, will enable Executive to objectively and
impartially assess, and advise the Board of Directors with respect to, any
proposal received by Sensormatic regarding a Change in Control and to take such
action regarding any such proposal as the Board of Directors may deem to be
appropriate; and
WHEREAS, Sensormatic and Executive are parties to an Agreement dated
September 20, 1999 (the "Officer Agreement");
NOW, THEREFORE, in consideration of the premises and for other good
and valuable consideration, the parties hereby agree as follows:
1. Term.
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(a) The term of this Agreement shall commence on the date hereof
(which for all purposes of this Agreement shall mean the date first above
written) and shall continue until a Change in Control shall occur and for so
long thereafter as Sensormatic has or may have any obligations under Sections 6,
7, 8, 12, 13 or 15 hereof.
(b) Notwithstanding the provisions of Section 1(a) hereof, Sensormatic
shall have the right to terminate this Agreement, effective on any anniversary
of the date of this Agreement, provided that no Change in Control shall have
occurred and no Attempted Change in Control (as defined below) shall have
occurred and then be pending. In the event that any Attempted Change in Control
is not followed by a Change in Control and is no longer pending; Sensormatic
shall again be entitled to terminate this Agreement as provided in the first
sentence of this Section 1(b). Sensormatic may effect a termination of this
Agreement hereunder solely by notifying Executive thereof at least 30 days prior
to the relevant anniversary date hereof.
(c) Notwithstanding the provisions of Sections 1(a) and 1(b) hereof,
this Agreement shall terminate automatically in the event of the voluntary or
involuntary termination of Executive's employment with Sensormatic prior to the
occurrence of a Change in Control, so long as, at the time of such termination
of employment, no Attempted Change in Control shall have occurred and then be
pending. Notwithstanding anything contained in this Agreement to the contrary,
if Executive's employment is terminated by Sensormatic prior to a Change in
Control, which Change in Control occurs, and Executive reasonably demonstrates
that such termination was at the request of a third party who effectuates such
Change in Control or that such termination was directly related to such Change
in Control, then for all purposes of this Agreement, Executive shall be entitled
to the payments and other benefits provided under this Agreement as if such
termination had occurred following such Change in Control.
2. Salary and Bonus. Executive's present base salary is $165,000 per
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year and Executive's target bonus is deemed to be $57,750 per year. After the
date of this Agreement, Executive's annual base salary and target bonus may be
increased or decreased as determined by the chief executive officer of
Sensormatic and approved by Sensormatic's Board of Directors or any compensation
committee thereof, except as otherwise provided by the Officer Agreement,
provided, however, that none of the following shall be effective during the
pendency of an Attempted Change in Control or in the event of a Change in
Control or at any time within 36 months after a Change in Control has occurred:
(i) any decrease in Executive's annual base salary or target bonus from the
amounts set forth above (or any greater amounts subsequently so determined and
approved), or (ii) any change in the formula then in effect for calculation of
Executive's bonus that could be reasonably anticipated to result in a decrease
in the amount payable thereunder.
3. Fringe Benefits. Sensormatic currently provides to Executive the
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fringe benefits listed below, without cost to Executive, and, while nothing in
this Agreement shall be deemed to require Sensormatic to continue any such
benefits or to prohibit Sensormatic from modifying any such benefits in any
respect, except that there shall be no material reduction in any such currently
provided benefits (and there shall be no material reduction in any additional
benefits subsequently approved by Sensormatic's Board of Directors or any
Committee thereof) during the pendency of an Attempted Change in Control or in
the event of a Change in Control or at any time within 36 months after a Change
in Control has occurred (and, in addition, there shall not, at any time
following a Change in Control, be any change in the non-qualified retirement
plan or plans of the Corporation for key executives in which Executive is, or
may later qualify as, a participant, as listed on Schedule I hereto, or any
similar or successor plan (the "Retirement Plan", which shall include, for all
purposes of this Agreement, any agreement between Sensormatic and Executive
under any such Plan) resulting in a reduction of Executive's benefits
thereunder), it is anticipated that such benefits (together with any such
additional
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benefits) shall continue to be provided to Executive on the same or a
substantially similar basis in the future in accordance with the terms of the
applicable benefit plans and policies:
(a) group medical and group dental plans in which Executive
and his eligible dependents-are-participants;
(b) life insurance on Executive's life and accidental death
and dismemberment insurance, each equal to two times Executive's
annual base salary (but not to exceed $800,000 or such greater amount
as may be established by Sensormatic for such purposes from time to
time);
(c) participation in Sensormatic's retirement and/or profit
sharing plans (including the Retirement Plan) and in Sensormatic's
annual contributions, if any, thereto, provided that such
participation is contingent on Executive's continued qualification
prior to any such Change in Control or Attempted Change in Control as
an eligible participant under the provisions of such plans as then in
effect and on Executive's election to continue his participation in
such plans;
(d) the use of a Sensormatic owned or leased automobile or
payment of its equivalent allowance, and comprehensive insurance
protection on such vehicle;
(e) disability income protection;
(f) reimbursement of Executive for reasonable travel and
entertainment expenses incurred by Executive in connection with the
business of Sensormatic; and
(g) the provision to Executive of office space befitting
Executive's position, secretarial help, and access to WATS lines.
Further, Sensormatic expects that, during the term of this Agreement, and so
long as Executive continues to be employed by Sensormatic, Executive's position
shall continue to be located in Palm Beach County or Broward County, Florida
(or, if Executive's position is located outside of Broward County or Palm Beach
County, Florida prior to any Attempted Change in Control or Change in Control,
such position shall continue to be located at substantially the same location),
and that the duties and responsibilities of Executive's position shall not be
significantly diminished.
4. Employment Commitment. As partial consideration for the benefits
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available to Executive under this Agreement, Executive hereby agrees to remain
as an officer and employee of Sensormatic during any Attempted Change in Control
and for a period of six months immediately after a Change in Control first
occurs (the "Commitment Period"), and during the Commitment Period to devote
substantially all his business time and efforts to the business and affairs of
Sensormatic, provided that Executive shall be entitled to terminate his
employment by Sensormatic during an Attempted Change in Control or at any time
following a Change in Control in circumstances which constitute an involuntary
termination pursuant to Section 10 hereof. Executive's participation in other
businesses, as a director or otherwise, with the approval of Sensormatic's Board
of Directors (which approval shall be deemed to include the Board of Directors
not objecting to such participation following disclosure thereof to the Board
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of Directors by Executive, and which approval may not be withdrawn following
such Change in Control) shall not be deemed to contravene the foregoing
provision. In the event that Executive voluntarily terminates his employment
with Sensormatic (other than by resignation contemplated in Section 10 hereof)
at any time during the Commitment Period, Executive shall not be entitled to any
of the benefits provided for in this Agreement, other than those provided under
Sections 6(a)(i), 6(a)(ii), 6(a)(iii), 6(a)(iv), 6(b)(ii), 12, 13 and 15 hereof,
and shall promptly repay to Sensormatic, on an after-tax basis, any benefits
previously received by him pursuant to any provisions of Sections 6 or 7 of this
Agreement not referred to in this sentence, but Sensormatic shall have no other
remedy for Executive's failure to remain an employee and officer as required by
this Section 4. Any amounts or benefits received by Executive pursuant to the
Officer Agreement or any other written employment agreement between Sensormatic
and Executive or any other compensation plan or arrangement of Sensormatic, even
if similar or identical to those to which he would be entitled under this
Agreement, shall not be deemed received pursuant to this Agreement or be
repayable to Sensormatic for purposes of the preceding sentence.
5. Change in Control.
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(a) For purposes of this Agreement, the term "Change in Control" shall
mean a change in control of Sensormatic of a nature that would be required to be
reported in response to Item 6(e) of Schedule 14A of Regulation 14A under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), provided,
that, without limitation, such a change in control shall be deemed to have
occurred if (i) any person (as such term is used in Sections 13(d) and 14(d) of
the Exchange Act, "Person") is or becomes the "beneficial owner" (as defined in
Rule 13d-3 under the Exchange Act, "Beneficial Owner"), directly or indirectly,
of securities of Sensormatic representing 30% or more of the combined voting
power of Sensormatic's then outstanding voting securities, (ii) Sensormatic
consummates a merger, consolidation, share exchange, division or other
reorganization of Sensormatic with any other corporation or entity, unless the
shareholders of Sensormatic immediately prior to such transaction beneficially
own, directly or indirectly, (A) if Sensormatic is the surviving corporation in
such transaction, 60% or more of the combined voting power of Sensormatic's
outstanding voting securities as well as 60% or more of the total market value
of Sensormatic's outstanding equity securities, (B) if Sensormatic is not the
surviving corporation, 80% or more of the combined voting power of the surviving
entity's outstanding voting securities as well as 80% or more of the total
market value of such entity's outstanding equity securities, or (C) in the case
of a division, 80% or more of the combined voting power of the outstanding
voting securities of each entity resulting from the division as well as 80% or
more of the total market value of each such entity's outstanding equity
securities, in each case in substantially the same proportion as such
shareholders owned shares of Sensormatic prior to such transaction; (iii)
Sensormatic adopts a plan of complete liquidation or winding-up of Sensormatic;
(iv) the shareholders of Sensormatic approve an agreement for the sale or
disposition (in one transaction or a series of transactions) of all or
substantially all of Sensormatic's assets; or (v) during any period of 24
consecutive months, individuals (y) who at the beginning of such period
constitute the Board of Directors of Sensormatic or (z) whose election,
appointment or nomination for election was approved prior to such election or
appointment by a vote of at least two-thirds of the directors in office
immediately prior to such election or appointment who were directors at the
beginning of such two-year period (other than any directors who prior to the
Change in Control were associated or
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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 l4a-ll of the Rules and
Regulations under the Exchange Act or the filing of a Statement on Schedule 14B
in anticipation thereof, (iv) the receipt by Sensormatic from any Person of any
other communication proposing, or indicating an intention, to effect a Change in
Control by the acquisition of voting securities of Sensormatic, the solicitation
of proxies for the election of directors or otherwise or (v) if the Board of
Directors of Sensormatic or an authorized committee thereof otherwise determines
that an Attempted Change in Control is pending. The termination of the pendency
of an Attempted Change in Control shall be determined by the Board of Directors
of Sensormatic (or an authorized committee thereof); provided, that any
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Attempted Change in Control shall in any event be deemed to have terminated upon
the occurrence of a Change in Control.
(c) A Change in Control shall be deemed, for purposes of this
Agreement, to be: (i) "non-approved" if (A) in connection with the consideration
thereof by the Board of Directors of Sensormatic, a majority of the Previous
Members of the Board of Directors (as defined below), either before or after
such Change in Control, (x) votes to disapprove of such Change in Control, (y)
votes to approve of such Change in Control, but as a consequence of the
existence of a competing proposal for a Change in Control, or (z) otherwise
expressly declares that such Change in Control is "non-approved", or (B) a
majority of the Previous Members of the Board of Directors neither expressly
approves nor disapproves of such Change in Control, or (ii) "approved" if in
connection with the consideration thereof by the Board of Directors of
Sensormatic, a majority of the Previous Members of the Board of Directors,
either before or after such Change in Control, (x) approves of such Change in
Control (other than as a consequence of the existence of a competing proposal
for a Change of Control) or (y) otherwise expressly declares that such Change in
Control is "approved", notwithstanding clause (A) (y) of this Section 5(c). The
majority of the Previous Members of the Board of Directors shall indicate its
approval or disapproval of a Change in Control by a statement or statements in
writing to such effect. For purposes of this Agreement, Previous Members of the
Board of Directors shall mean members of the Board of Directors of Sensormatic
as of the date of a Change in Control who had been in office for a period of at
least two years immediately prior to such Change in Control (other than
directors who prior to such Change in Control were appointed or elected as
directors as a consequence of their association or affiliation with any Person
effecting such Change in Control).
In addition, notwithstanding any previous determination that a Change
in Control was "approved", such Change in Control may subsequently be
determined, in good faith, to be
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"non-approved" by a majority of the Previous Members of the Board of Directors
who are then still in office with Sensormatic or a corporate successor of
Sensormatic (or if fewer than two such Previous Members of the Board of
Directors are still in office, then by a majority of the Previous Members of the
Board of Directors, whether or not still in office) within the 36-month period
immediately following such Change in Control, if during such period there occur
(1) events of the types referred to in Section 10 hereof with respect to
individuals who were officers of Sensormatic at the time of the Change in
Control, (2) defaults by Sensormatic under this Agreement or any similar
agreement, (3) the involuntary termination (other than for cause or in the event
of death or permanent disability) of the employment of a number of the officers
of Sensormatic who were officers immediately prior to such Change in Control
exceeding 40% of the total number of such officers, or (4) the transfer (by
sale, merger or otherwise) of all or substantially all the equity securities of
Sensormatic acquired by the Person effecting such Change in Control, of all or
substantially all the assets of Sensormatic, or of all or substantially all the
equity securities of Sensormatic's successor corporation, directly or
indirectly, to a third party (other than a majority owned affiliate of such
Person). In the event of such a subsequent determination, Executive shall be
entitled to all benefits arising under this Agreement out of a "non- approved"
Change in Control as if such Change in Control had been deemed "non- approved"
initially. Any additional benefits arising out of such "non-approved" Change in
Control which Executive is entitled to receive through the date of such
determination shall be paid or satisfied promptly by Sensormatic. For purposes
of this Section 5(c), the term "officers" shall not include individuals whose
only office with Sensormatic is Assistant Secretary or Assistant Treasurer.
(d) For the purposes of this Section 5, references to provisions of
the Exchange Act and rules, regulations and schedules thereunder shall be to
such provisions as they are in effect and interpreted as of the date of this
Agreement.
6. Benefits on "Non-Approved" Change in Control.
(a) Benefits Effective Upon a Change in Control. In the event a
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"non-approved" Change in Control occurs, Executive shall be entitled to the
following benefits:
(i) All stock options issued by Sensormatic to Executive, whether or
not then exercisable, shall remain fully exercisable or shall become fully
exercisable immediately (or, notwithstanding the foregoing, in the event of an
Attempted Change in Control involving a proposed Reorganization Event (as such
term is defined in Section 6(a)(ii) hereof)), such options shall become fully
exercisable thirty days before the date of such Reorganization Event), and such
options shall remain outstanding and fully exercisable for the stated term
thereof or until the later of (A) nine months following the voluntary or
involuntary termination of Executive's employment with Sensormatic (or, at the
option of Executive, in the case of an incentive stock option, three months
following such termination) or (B) the end of the respective post-termination
exercisability periods provided for in such options (including if applicable,
such periods in the event of death or disability); provided, that in no event
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shall the term of such options be extended beyond their respective original
terms. In addition, any deferred vesting or forfeiture provisions applicable to
any shares of Sensormatic stock awarded to or otherwise held by Executive shall
be without further force or effect, and Executive shall have the unrestricted
right to such shares.
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(ii) In the event that (A) such Change in Control is effected through
(w) a tender or exchange offer (a "Tender Offer") or (x) any means, in one or
more transactions, with the result in either case that any Person becomes the
Beneficial Owner, directly or indirectly, of securities of Sensormatic
representing 50% or more of the combined voting power of Sensormatic's then
outstanding voting securities (any such Change in Control referred to in this
clause (A), including pursuant to a Tender Offer, being hereinafter referred to
as a "Majority Acquisition"), (B) in connection with, as a result of or within
24 months immediately following a Change in Control, Sensormatic's Board of
Directors shall have approved a merger, consolidation, reclassification,
reorganization, dissolution, sale of all or substantially all of the assets of
Sensormatic or similar event (a "Reorganization Event") as a result of which
Sensormatic's Common Stock would cease to be outstanding or (C) in connection
with, as a result of or within 24 months immediately following a Change in
Control, Sensormatic's Common Stock ceases to be listed for trading on a
national securities exchange or quoted through NASDAQ or a comparable securities
quotation system, Executive shall have the right, exercisable by written notice
given at any time during the 13-month period immediately following the date of
such Change in Control (and, if later, the date of any such Majority
Acquisition, Reorganization Event or cessation of listing or quotation), to
require Sensormatic to purchase:
(1) any or all stock options issued by Sensormatic to Executive,
whether or not then exercisable, and/or any stock options issued upon conversion
of or in exchange for any such Sensormatic stock options pursuant to any such
Reorganization Event ("Conversion Options"), at a purchase price equal to the
excess of the aggregate Fair Market Value (as defined below) of the shares of
Sensormatic Common Stock subject to such Sensormatic stock options over the
aggregate exercise price of such stock options (or, in the case of any
Conversion Options, such amount calculated with respect to the Sensormatic stock
options which were converted into or exchanged for such Conversion Options);
and/or
(2) any or all shares of Sensormatic Common Stock held by Executive at
or immediately prior to the date of such Change in Control (including any shares
of Sensormatic Common Stock (restricted or otherwise, and whether or not vested)
awarded to Executive pursuant to any compensation plan or arrangement of
Sensormatic) or issued pursuant to the exercise of any such Sensormatic stock
options following the date of such Change in Control, and/or (without
duplication) any shares or other securities issued upon conversion of or in
exchange for any such shares of Common Stock pursuant to any such Reorganization
Event ("Conversion Shares"), at a purchase price equal to the aggregate Fair
Market Value of such shares (or, in the case of any Conversion Shares issued
upon conversion of or in exchange for Common Stock, the Fair Market Value of the
shares of Common Stock which were converted into or exchanged for such
Conversion Shares); provided, that Sensormatic may offset against the amount so
payable for Common Stock or Conversion Shares all amounts outstanding on any
loans made to Executive for the purchase of, or payment of taxes relating to,
such shares of Common Stock or Conversion Shares, as contemplated by Section
6(a)(iii) hereof or otherwise.
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Payment for any such options or shares shall be made by Sensormatic within 10
days after Executive's surrender of any such options, and/or within 10 days
after Executive's surrender of the certificates representing any such shares of
Common Stock or Conversion Shares (or, if such certificates are in Sensormatic's
possession, within 10 days after Executive's notice of exercise under this
Section 6(a)(ii)).
For purposes of this Section 6(a)(ii), the "Fair Market Value" of a
share of Sensormatic Common Stock means the highest fair market value per share
of Sensormatic Common Stock of the consideration paid in any transaction by any
Person who effects such Change in Control, in connection therewith, whether
through open market purchases, Tender Offers, Reorganization Events, private
transactions or otherwise.
(iii) Upon Executive's request, Sensormatic shall lend to
Executive, interest free, up to an amount equal to the aggregate
exercise price of the options referred to in Section 6(a)(i) hereof,
should Executive elect to exercise such options. If requested by
Executive, Sensormatic shall also lend to Executive, interest free
(or, at Executive's option, provide a guaranty to enable Executive to
borrow), up to an amount equal to the percentage specified in Section
6(a)(iv)(A) hereof times the Share Income (as such term is defined in
such Section) resulting from such exercise and/or vesting. Such loan
or loans shall be due and payable to Sensormatic upon the earliest of
(A) the fifth anniversary date of such loan or loans, (B) in the event
that Executive's employment with Sensormatic terminates, other than
termination by Sensormatic for Cause (as defined in Section 9 hereof,
"Cause") upon the expiration of 30 months following such termination,
or in the event that Executive's employment is terminated by
Sensormatic for Cause, upon the expiration of 30 days after such
termination, or (C) promptly (but in any event within five (5)
business days) after receipt of the proceeds of sale from the sale of
such shares, to the extent of the loan or loans applicable to such
sold shares. Executive shall deposit such shares with Sensormatic as
security for any such loan, if Sensormatic shall so request.
Notwithstanding anything to the contrary contained in this Section
6(a)(iii), Sensormatic's Stock Purchase Loan Plan or any promissory
note or security agreement executed by Executive pursuant to such
Plan, no additional collateral shall be required by Sensormatic in
connection with any such loan to Executive, and, if necessary to be in
compliance with applicable margin regulations under federal laws, such
loans shall be unsecured; and if, because of Internal Revenue Service
rules or other rules, Sensormatic is unable to lend such funds to
Executive interest free and without any imputation of interest,
Sensormatic shall pay Executive a dollar amount of additional
compensation which shall equal the amount of interest required to be
charged in order to avoid such imputation in such instances and
Executive shall then pay Sensormatic the rate of interest on such loan
required by law to avoid imputation.
(iv) (A) If a Majority Acquisition shall have occurred or
if, in connection with, as a result of or within 24 months immediately
following a Change in Control, either a Reorganization Event shall
have occurred or Sensormatic's Common Stock ceases to be listed for
trading on a national securities exchange or quoted through NASDAQ or
a comparable securities quotation system, then Executive shall have
the right, exercisable during the period and in the manner described
in Section 6(a)(iv)(B) hereof, to require Sensormatic to purchase any
or all of Executive's Option Acquired Shares and Award Shares (as
defined below), and/or any or all Conversion Shares issued
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with respect to any Option Acquired Shares or Award Shares. The price
at which Executive shall be entitled to sell any Option Acquired Share
to Sensormatic under this Section 6(a)(iv) shall equal the sum of (x)
the option exercise price paid (including payments made by promissory
notes issued under Sensormatic's Stock Purchase Loan Plan or
otherwise) by Executive in acquiring such share, plus (y) an amount
equal to a percentage, determined as provided below in this clause
(A), of the difference between such option exercise price and the
Market Value (as defined below) of a share of Sensormatic Common Stock
on the date the share was acquired. The price at which Executive shall
be entitled to sell any Award Share under this Section 6(a)(iv)(A)
shall be equal to the Market Value of such share on the date
Executive's right to such share vested, multiplied by the percentage
determined as provided below in this clause (A). The price at which
Executive shall be entitled to sell any Conversion Shares pursuant to
this Section 6(a)(iv)(A) shall be calculated as set forth above with
respect to Option Acquired Shares or Award Shares, as applicable,
based upon the purchase price, date of purchase and Market Value of
any Option Acquired Shares, and the vesting date and Market Value of
any Award Shares, which were converted into or exchanged for any such
Conversion Shares sold. The percentage referred to in this Section
6(a)(iv)(A) shall be equal to the sum of (1) the highest marginal net
rate of income tax (federal, state and local) applicable to an
individual residing where the Executive resided at the time the
Executive reported income ("Share Income") with respect to the Option
Acquired Shares or Award Shares, as the case may be, plus (2) the
Medicare employee tax rate, plus (3) a percentage equal to (x) that
part, if any, of the Share Income that was actually subject to
employee Social Security tax, multiplied by (y) the social security
employee tax rate, divided by (z) the total Share Income (in each case
as applicable at the time such share was purchased by Executive, in
the case of any Option Acquired Shares, or at the time Executive's
right to such share vested, in the case of any Award Shares). The
purchase price payable by Sensormatic shall in all events be equitably
adjusted to reflect any stock dividends, stock splits, extraordinary
dividends or similar events since the date of acquisition by Executive
of any such shares.
For purposes of this Section 6(a)(iv), the term "Option Acquired
Shares" shall mean shares of Sensormatic Common Stock acquired by Executive upon
exercise of options granted to Executive, the term "Award Shares" shall mean
shares of Sensormatic Common Stock awarded to Executive pursuant to
Sensormatic's Stock Incentive Plan or any other compensation plan or arrangement
of Sensormatic, other than pursuant to the exercise of options, and the term
"Market Value" shall mean the average of the high and low sales prices of a
share of such Common Stock on the applicable date (or most recent date on which
one or more sales occurred) as reported through NASDAQ or the principal exchange
on which such Common Stock was listed for trading.
(B) Executive may exercise his right to sell Option Acquired
Shares, Award Shares and/or Conversion Shares under this Section
6(a)(iv) at any time within 13 months following any of the events
specified in the first sentence of Section 6(a)(iv)(A) hereof by
giving written notice of such exercise to Sensormatic, which notice
shall set forth the Option Acquired Shares, Award Shares and/or
Conversion Shares to be sold, the exercise price paid by Executive in
acquiring any such Option Acquired Shares or Conversion Shares, the
highest
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marginal tax rates applicable for purposes of the respective
calculations specified in Section 6(a)(iv)(A) hereof and the Market
Value of the Common Stock or Conversion Shares, as applicable, on each
date that any applicable Option Acquired Shares or Conversion Shares
to be sold were purchased by Executive or Executive's right to any
applicable Award Shares vested, as the case may be. The information
set forth in such notice shall be presumed to be correct.
(C) In addition to the purchase price for the Option
Acquired Shares, Award Shares or Conversion Shares being sold to
Sensormatic under this Section 6(a)(iv), Sensormatic shall pay to
Executive an amount (the "Tax Payment") equal to a percentage
(determined pursuant to the following sentence) of the excess, if any,
of (l) the product of the number of such Option Acquired Shares, Award
Shares and/or Conversion Shares being sold multiplied by the Market
Value of a share of Sensormatic Common Stock or Conversion Shares, as
applicable, on the Purchase Date (as such term is defined in Section
6(a)(iv)(D) hereof) or such other value of a share of Sensormatic
Common Stock or Conversion Shares as may be required to be used to
determine the amount, if any, recognizable as ordinary income arising
out of the sale of such shares to Sensormatic, over (2) the aggregate
purchase price for all such Option Acquired Shares, Award Shares
and/or Conversion Shares being sold by Executive. The percentage
referred to in the preceding sentence shall be determined in
accordance with Section 6(a)(iv)(A) hereof as applicable on the
Purchase Date.
(D) Within 10 days after Executive's surrender of the
certificates representing any such Option Acquired Shares, Award
Shares and/or Conversion Shares or, if such certificates are in
Sensormatic's possession, within 10 days after Executive's notice of
exercise under this Section 6(a)(iv) (the "Purchase Date"),
Sensormatic shall purchase the Option Acquired Shares, Award Shares
and/or Conversion Shares referred to in such notice by paying to
Executive (subject to offset as provided in the following sentence)
the full purchase price thereof, as calculated under Section
6(a)(iv)(A) hereof, plus the Tax Payment applicable thereto.
Sensormatic may offset against payment of any or all of such purchase
price and the related Tax Payment all or a portion of any indebtedness
of Executive then outstanding under Sensormatic's Stock Purchase Loan
Plan attributable to any Option Acquired Shares and/or Conversion
Shares sold to Sensormatic hereunder.
(E) Executive's rights under this Section 6(a)(iv) are
independent of and not limited by, and do not constitute any
limitation of, Executive's rights under Section 6(a)(ii) hereof.
Executive may exercise any rights under either Section 6(a)(ii) hereof
or this Section 6(a)(iv), in whole or in part (but without
duplication), in Executive's sole discretion.
(v) (A) Subject to Section 4 hereof, if either a Majority Acquisition
occurs or, in connection with, as a result of or within 24 months following a
Change in Control, a Reorganization Event occurs, then Sensormatic shall pay to
Executive (irrespective of whether he is then employed by Sensormatic or its
successor; provided, however, that in the event that Executive voluntarily
-------- --------
terminates his employment with
10
Sensormatic (other than by resignation contemplated by Section 10
hereof) prior to the occurrence of the event giving rise to the right
to receive the cash bonus payment provided for in this Section
6(a)(v), Executive shall have no right to receive such bonus payment),
within thirty days after the effective date of such Majority
Acquisition or Reorganization Event, as the case may be, a cash bonus
payment equal to a percentage (determined pursuant to Sections
6(a)(v)(B) and 6(a)(v)(C) hereof) of Executive's "Special Bonus Base"
(as defined below). Executive's Special Bonus Base shall equal one (1)
times the greater of (x) the sum of Executive's annual base salary in
effect at the end of the last full month preceding the first public
announcement relating to the proposed Majority Acquisition or
Reorganization Event, as the case may be, plus the bonus paid to
Executive by Sensormatic with respect to the most recently completed
fiscal year of Sensormatic prior to such month, or (y) the sum of
Executive's annual base salary and target bonus as specified in
Section 2 hereof.
(B) The percentage of the Special Bonus Base which Executive
shall be entitled to receive under this Section 6(a)(v) shall be
calculated on the basis of the Premium (as defined below) paid or
offered to holders of Sensormatic's Common Stock in connection with a
Majority Acquisition or Reorganization Event. "Premium" shall mean the
percentage which results from dividing (1) the amount by which the
Event Value (as defined below) exceeds the Pre- Event Share Price (as
defined below), by (2) the Pre-Event Share Price. The "Pre-Event Share
Price" shall be equal to the average of the closing sales prices (or
if there is no sales price, the last bid price) for a share of
Sensormatic's Common Stock, as such prices are reported through NASDAQ
or the principal exchange on which such shares are listed for trading,
on the last business day of each week during the twenty-six weeks
immediately preceding the first to occur of (x) the first public
announcement relating to any proposed Change in Control or
Reorganization Event, or (y) any event resulting in the pendency of an
Attempted Change in Control which culminates, directly or indirectly,
in the Change in Control giving rise to Executive's rights under this
Section 6(a)(v). In the case of any Reorganization Event or Tender
Offer, or combination or series of Reorganization Events and/or Tender
Offers, "Event Value" shall mean the fair market value of the
consideration paid per share of Sensormatic Common Stock pursuant to
such Reorganization Event or Tender Offer determined as of the
effective date of the Reorganization Event or of the consummation of
the Tender Offer, as the case may be, provided that in the event that
different prices are paid per share of Sensormatic Common Stock
pursuant to such Reorganization Event, Tender Offer or any combination
or series thereof, the "Event Value" shall be equal to the fair market
value of the aggregate consideration paid pursuant to all such Tender
Offers and/or Reorganization Events (determined as of the dates set
forth above) divided by the number of shares of Sensormatic Common
Stock purchased pursuant to all such Tender Offers and/or
Reorganization Events. In case of any other transaction or series of
transactions giving rise to the right of Executive to receive the
bonus provided for in this Section 6(a)(v), "Event Value" shall mean
the highest fair market value of the consideration paid per share of
Sensormatic Common Stock pursuant to any such transaction, determined
as of the date of payment thereunder. The determination of Event Value
shall be
11
conclusively made by an investment banking firm selected by the
Previous Members of the Board of Directors who are not entitled to
receive bonuses under this Section 6(a)(v) or analogous provisions of
other agreements; provided, that in the event that the Previous
--------
Members of the Board of Directors fail to make such selection
within 45 days after consummation of the transaction giving rise to
the right to rights under this Section 6(a)(v), or the selected
investment banking firm fails to make such a determination within an
additional 90 days, Event Value shall be determined by arbitration
under Section 16. Sensormatic shall pay all fees and expenses of
---
any such investment banker.
(C) The percentage of the Special Bonus Base which Executive
shall be entitled to receive as a bonus under this Section 6(a)(v)
shall be 20% if the Premium is at least 20% and shall increase by 3.2%
for each one percent (and by a fraction of 3.2% for each fraction of
one percent) by which the Premium exceeds 20%. For example, if the
Premium were 30%, Executive would be entitled to a bonus of 52% of the
Special Bonus Base; if the Premium were 40.5%, Executive would be
entitled to a bonus of 85.6% of the Special Bonus Base; and if the
Premium were 50%, Executive would be entitled to a bonus of 116% of
the Special Bonus Base. The maximum bonus which Executive shall be
entitled to receive is 167% of the Special Bonus Base. No bonus shall
be payable pursuant to this Section 6(a)(v) if the Premium is less
than 20%.
(b) Benefits on Termination. In the event of any termination, other
-----------------------
than termination by Sensormatic for Cause, of Executive's employment with
Sensormatic at any time following a "non-approved" Change in Control, Executive
shall be entitled to the following benefits:
(i) Subject to Section 4 hereof, Sensormatic shall, as soon
as practicable, pay to Executive a lump sum payment equal to the
amount of any then unvested interest which Executive may have had on
the date of such "non-approved" Change in Control (less any amount of
such interest subsequently vested), and as supplemented thereafter
through the date of such termination, in Sensormatic's profit sharing,
ESOP or other retirement plans (other than the Retirement Plan); and
(ii) Unless a trust or other arrangement previously
determined in writing to be satisfactory by a majority of the Previous
Members of the Board of Directors then in office assuring payment of
benefits to or for the benefit of Executive under Sensormatic's
Retirement Plan in the event of a Change in Control has been
previously established and is then in effect, Sensormatic shall take
such steps as are necessary, within 30 days after such termination, to
fully fund all of Executive's benefits under such Plan (after giving
effect to the change in control provisions of such Plan) through
paid-up insurance, annuity contracts and/or other similar means, so
that the ultimate payment of benefits (at a rate not less than the
greater of the rates in effect under such Plan at the date of such
termination or immediately after such Change in Control) upon
Executive's attaining retirement age under such Plan or upon his
earlier death or disability (as defined in such Plan) (despite
Executive's no longer being employed by Sensormatic) shall be assured
beyond any reasonable doubt; provided, however, that either such
-----------------
manner of funding shall be structured so as not to constitute
"constructive
12
receipt" by Executive of the benefits in question for income tax
purposes, or the benefits in question shall be paid out in a lump sum,
discounted to present value in the manner provided in Section 8(a). In
addition, following any such termination which is involuntary, the
non-competition provisions included in any such Plan shall have no
force or effect.
(c) Additional Benefits In the Case of a Voluntary Termination.
Subject to Section 4 hereof, in the event of Executive's voluntary termination
of employment with Sensormatic (other than by resignation contemplated in
Section 10 hereof) within the 24-month period immediately following a "non-
approved" Change in Control:
(i) Executive shall be entitled to receive, for each of the
6 months immediately following the effective date of such termination
and irrespective of whether Executive commences new employment within
such period, the greatest of (A) 1/12 of the amount of Executive's
most recent rate of annual base salary, plus 1/12 of Executive's most
recent annual bonus, (B) 1/12 of Executive's annual base salary and
target bonus in effect immediately prior to the date of such Change in
Control or (C) 1/12 of Executive's annual base salary and target bonus
as specified in Section 2 hereof;
(ii) If Executive has not commenced new regular, full time
employment during the first 6 months following the effective date of
such termination, Executive shall receive for each of the 7th through
12th months following such effective date of termination in which
Executive was not so employed for the entire month the amount payable
under Section 6(c)(i) hereof;
(iii) Within 30 days after the effective date of such
termination, Sensormatic shall pay to Executive an amount equal to his
pro rata annual bonus for the year in which termination occurs, based
on the target bonus for such year; provided; that if at the time of
--------
such termination, it is probable, based upon interim period results
for the then-current fiscal year together with the current forecast
for the remainder of such year, that the conditions to payment of the
full amount of the target bonus will not be met, the amount of the
bonus payment hereunder may be reduced accordingly; and
(iv) During that portion of the periods set forth in
Sections 6(c)(i) and 6(c)(ii) hereof during which Executive has not
commenced new regular, full time employment,
(x) Sensormatic shall continue to provide to
Executive the fringe benefits enumerated in Sections 3(a),
(b), (c) and (e) hereof on at least the same basis as in
effect immediately prior to the Change in Control, and
shall, if requested by Executive, provide Executive with
office space appropriate for his level and in close
proximity to the office he occupied at the time of the
Change in Control, secretarial help and local and long
distance telephone service; and
(y) Sensormatic shall provide Executive with
appropriate out- placement services, including counseling
and traveling expenses to such out-placement services, when
necessary, as well as to potential job interviews when not
paid by the potential employer, all without charge to
Executive.
13
(d) Additional Benefits in Case of an Involuntary Termination. In the
---------------------------------------------------------
event of the involuntary termination (other than termination by Sensormatic for
Cause) of Executive's employment with Sensormatic within the 36-month period
immediately following a "non-approved" Change in Control:
(i) Executive shall be entitled to receive, for each of the
18 months immediately following the effective date of such termination
and irrespective of whether Executive commences new employment within
such period, the greatest of (A) 1/12 of the amount of Executive's
most recent rate of annual base salary, plus 1/12 of Executive's most
recent annual bonus, (B) 1/12 of Executive's annual base salary and
target bonus in effect immediately prior to the date of such Change in
Control or (C) 1/12 of Executive's annual base salary and target bonus
as specified in Section 2 hereof;
(ii) If Executive has not commenced new regular, full time
employment during the first 18 months following the effective date of
such termination, Executive shall receive for each of the 19th through
24th months following such effective date of termination in which
Executive was not so employed for the entire month the amount payable
under Section 6(d)(i) hereof;
(iii) During that portion of the periods set forth in
Sections 6(d)(i) and 6(d)(ii) hereof during which Executive has not
commenced new regular, full time employment, Executive shall be
entitled to the benefits set forth in Section 6(c)(iv) hereof;
(iv) Within 30 days after the effective date of such
termination, Sensormatic shall pay to Executive an amount equal to his
pro rata annual bonus for the year in which termination occurs, based
on the target bonus for such year, subject to the proviso in Section
6(c)(iii) hereof; and
(v) On the date of such termination, ownership of the car
which Sensormatic was providing to Executive shall immediately be
transferred to Executive free and clear of any liens or other
obligations, if such car is then owned by Sensormatic. If such car is
then leased, rather than owned, by Sensormatic, Executive shall
continue to have the use of such car and Sensormatic shall continue to
pay all lease payments and insurance premiums with respect thereto
until the end of the then existing term, at which time Sensormatic
shall purchase such car and shall transfer title to such car to
Executive. If, on the date of such termination, Sensormatic is paying
a car allowance to Executive in lieu of providing a car to Executive,
for each month in which Sensormatic is obligated to make a monthly
payment to Executive under Sections 6(d)(i) or 6(d)(ii) hereof,
Executive shall receive 1/12 of the amount of Executive's most recent
rate of annual car allowance.
7. Benefits on "Approved" Change in Control.
----------------------------------------
(a) Benefits Effective Upon Change in Control.
-----------------------------------------
(i) Subject to Section 4 hereof, in the event an "approved"
Change in Control occurs, Executive shall be entitled to all of the
rights and compensation set forth in Section 6(a) hereof.
14
(ii) In the event that Executive voluntarily terminates his
employment with Sensormatic (other than by resignation contemplated in
Section 10 hereof) at any time following an "approved" Change in
Control, Executive shall not be entitled to any benefits under this
Agreement other than as set forth in Section 7(a)(i) hereof.
(b) Additional Benefits Upon Involuntary Termination. In the event
------------------------------------------------
that Executive's employment with Sensormatic is involuntarily terminated (other
than for Cause) within the 36-month period following an "approved" Change in
Control:
(i) Executive shall be entitled to receive, for each of the
first 12 months immediately following the effective date of such
termination and irrespective of whether Executive commences new
employment within such period, the greatest of (A) 1/12 of the amount
of Executive's most recent rate of annual salary, plus 1/12 of the
amount of Executive's most recent annual bonus, (B) 1/12 of
Executive's annual base salary and target bonus in effect immediately
prior to the date of such Change in Control or (C) 1/12 of Executive's
annual base salary and target bonus as specified in Section 2 hereof;
(ii) If Executive has not commenced new regular, full time
employment during the first 12 months following the effective date of
such termination, Executive shall receive for each of the 13th through
18th months following such effective date of termination in which
Executive was not so employed for the entire month the amount payable
under Section 7(b)(i) hereof;
(iii) Within 30 days after the effective date of such
termination, Sensormatic shall pay to Executive an amount equal to his
pro rata annual bonus for the year in which termination occurs, based
on the target bonus for such year, subject to the proviso in Section
6(c)(iii) hereof; and
(iv) During that portion of the period set forth in Section
7(b)(i) hereof during which Executive has not commenced new regular,
full time employment, Executive shall be entitled to all of the rights
and compensation set forth in Section 6(c)(iv) hereof.
(c) In the event of any termination of Executive's employment to which
Section 6(c) or 6(d) or this Section 7 is applicable, Executive shall be under
no obligation to seek other employment and there shall be no offset against
amounts due Executive under this Agreement on account of any remuneration
attributable to any subsequent employment that he may obtain, except as
expressly set forth in Section 6(c) or 6(d) or this Section 7.
8. Benefits on Death or Disability.
-------------------------------
(a) In the event of Executive's death at any time within 36 months
immediately following a Change in Control (whether "approved" or "non-approved")
and prior to any termination of Executive's employment, or in the event that
Executive had died prior to a Change in Control and that as of the date of such
Change in Control there remain outstanding amounts payable under Sensormatic's
Retirement Plan for Executive, unless in either case a trust or other
arrangement previously determined in writing to be satisfactory by a majority of
the
15
Previous Members of the Board of Directors then in office assuring payment of
benefits to or for the benefit of the Executive under such Plan in the event of
a Change in Control has been previously established and is then in effect,
Sensormatic shall promptly pay to Executive's designated beneficiary or
Executive's heirs, executors, administrators or personal representatives
(collectively, "Successors") all of the remaining benefits under such Plan to
which Executive's Successors are then entitled, in the form of a lump sum
payment equal to the amount of such benefits discounted to present value using
an interest rate equal to the rate published by Pension Benefit Guaranty
Corporation for the purpose of discounting pension benefits to present value in
the event of a lump sum prepayment thereof, as then in effect, but such discount
rate shall in no event be greater than ten percent (10%) per annum.
--- -----
(b) In the event of Executive's death or permanent and total
disability (within the meaning of Section 22(e)(3) of the Internal Revenue Code
of 1986, as amended and in effect and interpreted as of the date of this
Agreement) at any time within the 24-month period immediately following a Change
in Control and prior to any termination of Executive's employment, Executive or
Executive's Successors shall be entitled to all of the benefits of Executive
provided under this Agreement as if Executive had voluntarily terminated his
employment with Sensormatic (but without giving effect to Section 4 hereof or to
the loss of benefits upon voluntary termination under Section 6(a)(v)(A)
hereof), including, without limitation, those set forth in Section 6(a)(iii)
hereof.
(c) In the event of Executive's death or disability after termination
of Executive's employment with Sensormatic, Executive or Executive's Successors
shall be entitled to receive all remaining benefits to which Executive is
entitled under this Agreement.
9. Termination for Cause. In the event that Executive's employment with
---------------------
Sensormatic is terminated for Cause at any time after any Change in Control,
whether "approved" or "non-approved", Executive shall not be entitled to any of
the benefits set forth in Sections 6, 7 or 8 of this Agreement not yet received
by him, except to the extent that Executive exercised rights prior to such
termination with respect to options, Award Shares or Conversion Shares as
provided under Sections 6(a)(i), 6(a)(u) and, 6(a)(iv) hereof (including by
reference under Section 7(a)(i) hereof). The foregoing shall not affect any
rights of Executive accrued other than by virtue of this Agreement. For purposes
of this Agreement, Sensormatic shall be deemed to have terminated Executive's
employment with Sensormatic for Cause only if such termination is effected for
any of the following reasons:
(a) gross neglect or willful misconduct by Executive in the
performance of Executive's duties resulting in material economic harm to
Sensormatic; or
(b) the conviction of Executive for a felony involving moral turpitude
under federal or state law;
provided, however, that the determination of the existence of the grounds
--------- -------
referred to in subparagraph (a) of this Section 9 shall be made, in good faith,
only (i) by a majority of the Previous Members of the Board of Directors who are
then in office with Sensormatic or a corporate successor of Sensormatic
(provided that such majority shall consist of not less than two persons); and
provided, further, that Executive shall be given prior written notice by the
-------- -------
Board of Directors of the intention to terminate him for Cause and the specific
grounds for such
16
termination, as determined in accordance with this Section 9, and shall be
entitled to a hearing before such Previous Members of the Board of Directors (or
a committee thereof designated by such Previous Members) before such termination
becomes effective or (ii) if at least two Previous Members of the Board of
Directors are not then in office, by a majority of the persons who are then, and
were, for a period of two years immediately prior to such Change in Control,
officers of Sensormatic (or, if Sensormatic is then a division, such persons who
were previously such officers of Sensormatic and are then employed in an
executive or managerial capacity in the division).
10. Involuntary Termination Events. By way of illustration, and not of
----------- ----------- ------
limitation, each of the following events shall constitute involuntary
termination of Executive's employment with Sensormatic, provided that Executive
resigns from such employment within six months following such event, but in no
case later than 36 months immediately following a Change in Control, and
provided, further, that Executive shall not have consented to such event in
writing:
(a) Executive is assigned any duties or responsibilities that are
materially inconsistent with Executive's position, office, duties,
responsibilities or status immediately prior to the date of such Change in
Control, or a material change is made in Executive's reporting responsibilities,
titles or offices from those in effect immediately prior to such Change in
Control, or Executive is removed from, or is not re-elected to, any such
position or office, following such Change in Control, unless in connection with
the termination of Executive's employment with Sensormatic for Cause or by
reason of his death or disability; provided, however, that, in the event of an
-------- -------
"approved" Change in Control, as a result of which Sensormatic becomes a
division and not a separate corporation, a change to offices and titles in such
division reasonably comparable to the previous offices and positions in
Sensormatic and a reasonable change in reporting responsibilities shall not be
deemed such a material change;
(b) (i) Executive's annual rate of base salary or target bonus is
reduced below the greater of the amounts (x) paid therefor immediately preceding
the date of such Change in Control or (y) expressly set forth in Section 2
hereof; (ii) the formula for the calculation of Executive's bonus is changed in
a manner that could reasonably be anticipated to decrease the amount payable
thereunder or (iii) any other change is made with respect to Executive's salary
or bonus that would violate Section 2;
(c) a material reduction is made in the benefits set forth in
paragraphs (a) through (g) of Section 3 hereof or to any additional benefits or
perquisites which may have been granted to Executive subsequent to the date of
this Agreement (other than changes made in benefit plans required by law or
applicable regulations thereunder), as they may be in effect immediately prior
to the date of such Change in Control, or if any increase is made in the cost to
Executive for such benefits; or
(d) Executive is transferred or required to transfer to a location
outside of a 25-mile radius of Sensormatic's then-current headquarters in Palm
Beach County or Broward County, Florida (or, if Executive's position was located
outside of Palm Beach County or Broward County, Florida prior to such Change in
Control, Executive is transferred or required to transfer to a location located
more than 25 miles therefrom), or the principal place of business of Sensormatic
in which Executive's major duties have been carried out is transferred to a
location
17
outside of a 25-mile radius of Sensormatic's then-current headquarters in Palm
Beach County or Broward County, Florida.
(e) Sensormatic fails to obtain the assumption in writing of its
obligation to perform this Agreement by any successor to all or substantially
all of the assets and/or business of Sensormatic within 15 days after a
Reorganization Event or any other transaction occurring in connection with, as a
result of or within 24 months following a Change in Control pursuant to which
Sensormatic is not the surviving corporation.
11. Payments. All monthly payments that Executive (or his Successors)
--------
is entitled to receive under Sections 6 or 7 of this Agreement shall be paid by
or on behalf of Sensormatic on or before the 10th day of each month in which
payable, except that any regular payments required to be made under the plans
referred to in Section 6(b) hereof shall be made in accordance with the terms of
such plans. Any lump sum payable to Executive under Sections 6 or 8(a) of this
Agreement shall be paid by or on behalf of Sensormatic within 10 days after
Executive's right to such payment accrues.
12. Costs of Collection. Sensormatic agrees upon demand to pay all
-------------------
costs and expenses of Executive (including, without limitation, reasonable
counsel fees and expenses) in connection with the enforcement, whether through
negotiations, arbitration or legal proceedings or otherwise, of this Agreement
and the collection of any benefits due to Executive hereunder.
13. No Effect on Employment. This Agreement is not, and nothing hereby
-------------------
shall be deemed to create, a contract of employment between Sensormatic and
Executive. The right of Sensormatic to terminate Executive's employment with
Sensormatic or any subsidiary thereof, at any time at will or as otherwise
provided in the Officer Agreement or any other agreement between Sensormatic and
Executive, shall not be affected or limited by this Agreement and is
specifically reserved. Further, this Agreement shall not be deemed to require
Sensormatic to continue, or to continue unmodified, any benefit plan or policy,
whether or not referred to in Section 3 hereof, provided that no Change in
Control shall have occurred and no Attempted Change in Control shall have
occurred and then be pending.
14. Conflicts with Other Agreements. Nothing contained in or arising out of
-------------------------------
this Agreement shall be deemed to discharge, release or modify the obligations
of Sensormatic to Executive under the provisions of the Officer Agreement or any
other agreement between them or of any plan or program of Sensormatic,
regardless of whether the subject matter of any provision thereof is the same or
similar to that of any provision of this Agreement, the rights and remedies of
Executive under this Agreement and any other such agreement, plan or program
being cumulative and not in substitution of each other; provided, however, that
-------- -------
nothing in this Agreement shall entitle Executive to receive duplicative
payments of salary, bonus or other benefits. Further, nothing in this Agreement
shall diminish or otherwise adversely affect Executive's rights or benefits
accruing as a consequence of his death or disability, at any time after a Change
in Control, under the terms and conditions of the plans or programs of
Sensormatic in which Executive is a participant immediately prior to any Change
in Control and any additional plan or program of Sensormatic in which Executive
is a participant at the time of Executive's death or disability.
18
15. Maintenance of Plans. Sensormatic agrees that, for not less than
--------------------
36 months after a Change in Control, it shall maintain in effect the plans and
programs in which Executive is a participant immediately prior to such Change in
Control (or comparable plans and programs) to the extent necessary to assure
that the rights and benefits of Executive thereunder shall be no less favorable
after such Change in Control than immediately prior thereto, provided, that
Sensormatic shall in no event make any change in the event of or at any time
after a Change in Control in the Retirement Plan resulting in a reduction of
Executive's benefits thereunder.
16. Arbitration. Any controversy or claim arising out of or relating
-----------
to this Agreement shall be settled by arbitration before the American
Arbitration Association in Miami, Florida, in accordance with the Commercial
Arbitration Rules of the American Arbitration Association. Judgment upon the
award rendered by the arbitrators may be entered in any court having
jurisdiction thereof. Any costs, including, without limitation, attorneys' fees
and disbursements, incurred by Executive in such arbitration or in connection
with any appeal therefrom or any action brought to enforce or collect any such
award or judgment thereon, shall be reimbursed by Sensormatic, provided, that
Sensormatic shall not be required to reimburse Executive hereunder in the event
that the arbitral panel or appeals court finds that Executive's claims and/or
defenses are substantially without reasonable basis.
17. Survival. This Agreement shall be binding on, enforceable against
--------
and inure to the benefit of Executive and his heirs, executors, administrators,
personal representatives, successors and assigns and Sensormatic and its
successors and assigns, including, without limitation, any corporation with or
into which Sensormatic is merged or consolidated, or any entity which acquires
all or substantially all of the business and assets of Sensormatic, in
connection with any Change in Control. In connection with any sale, merger or
consolidation described in the preceding sentence, Sensormatic shall take all
actions permissible under applicable law in order to cause such other
corporation to expressly assume Sensormatic's liabilities, obligations and
duties hereunder.
18. Notices. Any notice given to a party pursuant to or in connection
-------
with this Agreement shall be in writing and shall be deemed to have been given
when delivered personally or sent by Federal Express or a similar overnight
courier service or by certified or registered mail, postage prepaid, return
receipt requested, duly addressed to the party concerned at the address
indicated at the beginning of this Agreement or to such changed address as such
party may subsequently give such notice of.
19. Severability. If any provision of this Agreement is found to be
------------
invalid or unenforceable by a court of competent jurisdiction or an arbitral
panel under Section 16 hereof, this Agreement shall be interpreted and
enforceable as if such provision were severed or limited, but only to the extent
necessary to render such provision and this Agreement enforceable.
20. Governing Law. This Agreement shall in all respects be governed by
-------------
and construed in accordance with the laws of the State of Florida applicable to
agreements made and fully to be performed in such state, without giving effect
to conflicts of law principles.
19
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date first set forth above.
SENSORMATIC ELECTRONICS CORPORATION
By:
----------------------------------------
Title:
--------------------------------------
Executive: /s/ Xxxxxx X. Xxxxxxx
----------------------------------
20
SCHEDULE I
Applicable Retirement Plans
1. Supplemental Executive Retirement Plan
