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Sr. Vice President and President - Europe Retail Operations - Agreement

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AGREEMENT


AGREEMENT, dated as of September 1, 1998, by and between SENSORMATIC ELECTRONICS CORPORATION, a Delaware corporation having its principal place of business at 951 Yamato Road, Boca Raton, Florida 33431 ("Sensormatic"), and RONALD F. PREMUROSO, an individual whose address is 311 Eagleton Golf Drive, Palm Beach Gardens, Florida 33418 ("Executive").


W I T N E S S E T H:


WHEREAS, Executive is an employee of Sensormatic, with the title of Sr. Vice President and President - Europe Retail Operations, and has made, and is expected to continue 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, with similar purposes and intents, Sensormatic entered into an Agreement dated June 1, 1989 with Executive relating to a possible Change in Control (the "Prior Agreement"), and Sensormatic and Executive wish to amend and restate the Prior Agreement as hereinafter set forth in order, among other things, to clarify and update certain provisions thereof; and;


WHEREAS, Sensormatic and Executive are parties to an Agreement dated June 25, 1997 (the "Officer Agreement");


NOW, THEREFORE, in consideration of the premises and for other good and valuable consideration, the parties hereby agree as follows, amending and restating the Prior Agreement:


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1. TERM.


(a) The term of this Agreement, originally commenced on June 1, 1989 under the Prior Agreement, and continuing pursuant to this amended and restated Agreement as of the date hereof (which for all purposes of this Agreement shall mean the date first above written), shall continue until a Change in Control shall occur and for so long thereafter as Sensormatic has or may have any obligations under Sections 6, 7, 8, 12, 13 or 15 hereof.


(b) Notwithstanding the provisions of Section l(a) hereof, Sensormatic shall have the right to terminate this Agreement, effective on any anniversary of the date of this Agreement, provided that no Change in Control shall have occurred and no Attempted Change in Control (as defined below) shall have occurred and then be pending. In the event that any Attempted Change in Control is not followed by a Change in Control and is no longer pending, Sensormatic shall again be entitled to terminate this Agreement as provided in the first sentence of this Section 1(b). Sensormatic may effect a termination of this Agreement hereunder solely by notifying Executive thereof at least 30 days prior to the relevant anniversary date hereof.


(c) Notwithstanding the provisions of Sections 1(a) and l(b) hereof, this Agreement shall terminate automatically in the event of the voluntary or involuntary termination of Executive's employment with Sensormatic prior to the occurrence of a Change in Control, so long as, at the time of such termination of employment, no Attempted Change in Control shall have occurred and then be pending. Notwithstanding anything contained in this Agreement to the contrary, if Executive's employment is terminated by Sensormatic prior to a Change in Control, which Change in Control occurs, and Executive reasonably demonstrates that such termination was at the request of a third party who effectuates such Change in Control or that such termination was directly related to such Change in Control, then for all purposes of this Agreement, Executive shall be entitled to the payments and other benefits provided under this Agreement as if such termination had occurred following such Change in Control.


2. SALARY AND BONUS. Executive's present base salary is $224,251 per year and Executive's target bonus is deemed to be $130,000 per year. After the date of this Agreement, Executive's annual base salary and target bonus may be increased or decreased as determined by the chief executive officer of Sensormatic and approved by Sensormatic's Board of Directors or any compensation committee thereof, except as otherwise provided by the Officer Agreement, provided, however, that none of the following shall be effective during the pendency of an Attempted Change in Control or in the event of a Change in Control or at any time within 36 months after a Change in Control has occurred: (i) any decrease in Executive's annual base salary or target bonus from the amounts set forth above (or any greater amounts subsequently so determined and approved), or (ii) any change in the formula then in effect for calculation of Executive's bonus that could be reasonably anticipated to result in a decrease in the amount payable thereunder.


3. FRINGE BENEFITS. Sensormatic currently provides to Executive the 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)


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during the pendency of an Attempted Change in Control or in the event of a Change in Control or at any time within 36 months after a Change in Control has occurred (and, in addition, there shall not, at any time following a Change in Control, be any change in the non-qualified retirement plan or plans of the Corporation for key executives in which Executive is a participant, as listed on Schedule I hereto, or any similar or successor plan (the "Retirement Plan", which shall include, for all purposes of this Agreement, any agreement between Sensormatic and Executive under any such Plan) resulting in a reduction of Executive's benefits thereunder), it is anticipated that such benefits (together with any such additional benefits) shall 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 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


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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 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.


(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


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Sensormatic's assets; or (v) during any period of 24 consecutive months, individuals (y) who at the beginning of such period constitute the Board of Directors of Sensormatic or (z) whose election, appointment or nomination for election was approved prior to such election or appointment by a vote of at least two-thirds of the directors in office immediately prior to such election or appointment who were directors at the beginning of such two-year period (other than any directors who prior to the Change in Control were associated or affiliated with any Person involved with any Change in Control or Attempted Change in Control), cease for any reason to constitute at least three-fourths of the Board of Directors of Sensormatic.


(b) For purposes of this Agreement, an "Attempted Change in Control" shall be deemed to have occurred (i) if any Person files (or fails to file when required to do so) with the Securities and Exchange Commission (the "SEC") a Statement on Schedule 13D relating to voting securities of Sensormatic (A) disclosing the acquisition of 10% or more thereof or (B) while disclosing the acquisition of less than 10% of such voting securities, indicates an intention to effect any of the transactions listed in Item 4 of Schedule 13D or otherwise to effect a Change in Control, (ii) upon the public announcement (including, without limitation, the filing with the SEC of a Statement on Schedule 14D-1) by any Person of an intention to make a tender offer or otherwise to effect a Change in Control, (iii) in the event of any solicitation of proxies for the election of directors of Sensormatic pursuant to Rule l4a-11 of the Rules and Regulations under the Exchange Act or the filing of a Statement on Schedule 14B in anticipation thereof, (iv) the receipt by Sensormatic from any Person of any other communication proposing, or indicating an intention, to effect a Change in Control by the acquisition of voting securities of Sensormatic, the solicitation of proxies for the election of directors or otherwise or (v) if the Board of Directors of Sensormatic or an authorized committee thereof otherwise determines that an Attempted Change in Control is pending. The termination of the pendency of an Attempted Change in Control shall be determined by the Board of Directors of Sensormatic (or an authorized committee thereof); PROVIDED, that any 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


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as a consequence of their association or affiliation with any Person effecting such Change in Control).


In addition, notwithstanding any previous determination that a Change in Control was "approved", such Change in Control may subsequently be determined, in good faith, to be "non-approved" by a majority of the Previous Members of the Board of Directors who are then still in office with Sensormatic or a corporate successor of Sensormatic (or if fewer than two such Previous Members of the Board of Directors are still in office, then by a majority of the 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 "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 shall the term of such


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options be extended beyond their respective original terms. In addition, any deferred vesting or forfeiture provisions applicable to any shares of Sensormatic stock awarded to or otherwise held by Executive shall be without further force or effect, and Executive shall have the unrestricted right to such shares.


(ii) In the event that (A) such Change in Control is effected through (w) a tender or exchange offer (a "Tender Offer") or (x) any means, in one or more transactions, with the result in either case that any Person becomes the Beneficial Owner, directly or indirectly, of 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 quot
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