<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
Sensormatic Electronics Corporation
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Charter)
By order of the Board of Directors
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), or 14a-6(i)(1), or 14a-6(j)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
(4) Proposed maximum aggregate value of transaction:
Set forth the amount on which the filing fee is calculated and state how it
was determined.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
SENSORMATIC ELECTRONICS CORPORATION
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
NOVEMBER 11, 1994
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders
of SENSORMATIC ELECTRONICS CORPORATION, a Delaware corporation, will be held at
the Deerfield Beach/Boca Raton Hilton, 100 Fairway Drive, Deerfield Beach,
Florida 33441, on November 11, 1994, at 10 A.M., local time, for the following
purposes:
1. To elect two directors to serve for a term of three years
and until their successors are elected and qualified;
2. To consider and vote upon a proposal to approve the
Company's 1995 Stock Incentive Plan;
3. To approve an amendment to the Company's Employee Stock
Purchase Plan to extend such Plan to December 31, 1999; and
4. To transact such other business as may be properly brought
before the meeting.
Only stockholders of record at the close of business on
September 23, 1994, will be entitled to notice of, and to vote at, the meeting
and any adjournment thereof.
THE BOARD OF DIRECTORS OF SENSORMATIC ELECTRONICS CORPORATION
HOPES THAT YOU WILL FIND IT CONVENIENT TO ATTEND THE MEETING IN PERSON. IN ANY
EVENT, PLEASE MARK, SIGN, DATE AND RETURN THE ENCLOSED PROXY TO MAKE SURE THAT
YOUR SHARES ARE REPRESENTED AT THE MEETING. IF YOU ATTEND THE MEETING, YOU MAY
VOTE YOUR STOCK PERSONALLY EVEN THOUGH YOU HAVE SENT IN YOUR PROXY.
By Order of the Board of Directors,
WALTER A. ENGDAHL
Secretary
Deerfield Beach, Florida
October 6, 1994
<PAGE> 3
SENSORMATIC ELECTRONICS CORPORATION
PROXY STATEMENT
This Proxy Statement is furnished in connection with the
solicitation by the Board of Directors of Sensormatic Electronics Corporation,
a Delaware corporation (the "Company"), of proxies to be voted at the Annual
Meeting of Stockholders of the Company to be held at the Deerfield Beach/Boca
Raton Hilton, 100 Fairway Drive, Deerfield Beach, Florida 33441, on November
11, 1994, at 10 A.M., local time, or at any adjournment or adjournments
thereof. Only stockholders of record at the close of business on September 23,
1994, shall be entitled to notice of, and to vote at, the meeting. Shares
represented by duly executed proxies received by the Company will be voted in
accordance with the instructions contained therein and, in the absence of
specific instructions, will be voted for the election as directors of the
persons who have been nominated by the Board of Directors, for the proposal to
approve the 1995 Stock Incentive Plan, for the proposal to amend the Company's
Employee Stock Purchase Plan and in accordance with the judgment of the person
or persons voting the proxies on any other matter that may properly be brought
before the meeting. The execution of a proxy will in no way affect a
stockholder's right to attend the Annual Meeting and to vote in person. Any
proxy executed and returned by a stockholder may be revoked at any time
thereafter except as to any matter or matters upon which, prior to such
revocation, a vote shall have been cast pursuant to the authority conferred by
such proxy.
While the election of directors requires a plurality of the
votes cast, the proposal to adopt the 1995 Stock Incentive Plan requires the
affirmative vote of a majority of the votes cast at the Annual Meeting on such
proposal, provided that the total vote cast represents over 50% of all shares
entitled to vote thereon, and the proposal to amend the Company's Employee
Stock Purchase Plan requires the affirmative vote of a majority of the
outstanding shares. For purposes of determining the number of votes cast with
respect to a particular matter, only those cast "for" or "against" are
included. Abstentions and broker non-votes are counted only for purposes of
determining whether a quorum is present at the meeting.
This Proxy Statement and the accompanying proxy are being sent
on or about October 6, 1994, to stockholders entitled to vote at the Annual
Meeting of Stockholders. The cost of solicitation of the Company proxies will
be borne by the Company. In addition to the use of the mails, proxy
solicitations may be made by telephone, telecopier and personal interview by
officers, directors and employees of the Company. The Company has also
retained the services of Georgeson & Company Inc. to assist in the solicitation
of proxies for a fee estimated at $7,500, plus reimbursement for out-of-pocket
expenses. The Company will, upon request, reimburse brokerage houses and
persons holding shares in their names or in the names of their nominees for
their reasonable expenses in sending soliciting material to their principals.
The Company's executive offices are located at 500 Northwest 12th Avenue,
Deerfield Beach, Florida 33442-1795.
<PAGE> 4
VOTING SECURITIES AND SECURITY OWNERSHIP
Only stockholders of record at the close of business on
September 23, 1994, will be entitled to vote at the Annual Meeting of
Stockholders and any adjournment thereof. At the close of business on
September 23, 1994, there were outstanding 68,900,524 shares of Common Stock,
$.01 par value, of the Company. Each of such shares is entitled to one vote.
There was no other class of voting securities outstanding at that date.
To the knowledge of the Company, as of September 28, 1994, each
of the persons listed in the table below beneficially owned the number of
shares of Common Stock of the Company listed opposite its name, and, except as
noted below, each such person had sole or shared voting power and sole or
shared investment power over such shares.
<TABLE>
<CAPTION>
NAME AND ADDRESS NUMBER OF PERCENTAGE
OF BENEFICIAL OWNER SHARES OWNED OF CLASS
------------------- ------------ --------
<S> <C> <C>
Chancellor Capital Management, Inc. and
Chancellor Trust Company . . . . . . . . . . . . . . 3,561,825 5.2%
153 East 53rd Street
New York, New York 10022
Provident Investment Counsel(1) . . . . . . . . . . . 4,289,450 6.2%
300 North Lake Avenue
Pasadena, California 91101-4022
- --------------------------------
</TABLE>
(1) As set forth in the Schedule 13G, dated February 9, 1994, filed by
Provident Investment Counsel ("Provident") with respect to the Company's
Common Stock, Robert Marvin Kommerstad also beneficially owns the 4,289,450
shares of Common Stock reported therein as a result of his stock ownership
in Provident. Provident and Mr. Kommerstad have shared dispositive power
over all of such shares and shared voting power with respect to 3,163,400
of such shares. Neither Provident nor Mr. Kommerstad have any voting power
with respect to 1,126,050 of the shares over which they have shared
dispositive power.
To the knowledge of the Company, no other person owned
beneficially more than five percent of the Common Stock of the Company as of
September 28, 1994.
The following table sets forth information as to the Common
Stock of the Company beneficially owned as of September 28, 1994, by each
director, nominee for director, each person named in the Summary Compensation
Table under Executive Compensation, and by all directors and executive officers
as a group:
<TABLE>
<CAPTION>
AMOUNT AND NATURE
OF BENEFICIAL PERCENT OF
NAME OF BENEFICIAL OWNER OWNERSHIP COMMON STOCK
- ------------------------ ----------- ------------
<S> <C> <C>
Ronald G. Assaf . . . . . . . . . . . . . . . . . . . . 1,086,715 (1) 1.6%
C. Dawson Buck . . . . . . . . . . . . . . . . . . . . 0 --
Thomas V. Buffett . . . . . . . . . . . . . . . . . . . 10,675 *
Dennis C. Gillette . . . . . . . . . . . . . . . . . . 65,343 (2) *
Jerome M. LeWine . . . . . . . . . . . . . . . . . . . 113,500 (3) *
James E. Lineberger . . . . . . . . . . . . . . . . . . 712,494 (4) 1.0%
Dr. Arthur G. Milnes . . . . . . . . . . . . . . . . . 23,500 (5)(9) *
Michael E. Pardue . . . . . . . . . . . . . . . . . . . 6,473 (6) *
</TABLE>
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<PAGE> 5
<TABLE>
<CAPTION>
AMOUNT AND NATURE
OF BENEFICIAL PERCENT OF
NAME OF BENEFICIAL OWNER OWNERSHIP COMMON STOCK
- ------------------------ ----------- ------------
<S> <C> <C>
John T. Ray, Jr. . . . . . . . . . . . . . . . . . . . 45,000 (7)(9) *
Gerd Witter . . . . . . . . . . . . . . . . . . . . . . 0 --
All directors and executive officers as a group . . . . 2,190,265 (8)(9) 3.1%
- --------------------------------
</TABLE>
* Less than 1%.
(1) Includes 787,500 shares issuable upon the exercise of options. Also
includes 60,672 shares allocated to Mr. Assaf's account under the
Employee Stock Ownership Plan ("ESOP") over which Mr. Assaf has sole
voting power. Does not include 22,104 shares held by Mrs. Assaf, and
3,000 shares held by trusts for the benefit of Mr. Assaf's children, as
to all of which Mr. Assaf disclaims beneficial ownership.
(2) Includes 32,500 shares issuable upon exercise of options and 28,312
shares allocated to Mr. Gillette's account under the ESOP over which Mr.
Gillette has sole voting power.
(3) Includes 113,500 shares issuable upon exercise of options.
(4) Includes 197,500 shares issuable upon exercise of options. Also includes
15,377 shares allocated to Mr. Lineberger's account under the ESOP over
which Mr. Lineberger has sole voting power.
(5) Includes 23,500 shares issuable upon exercise of options.
(6) Includes 6,473 shares allocated to Mr. Pardue's account under the ESOP
over which Mr. Pardue has sole voting power.
(7) Includes 45,000 shares issuable upon exercise of options.
(8) Includes 1,291,316 shares issuable upon exercise of options and 116,126
shares allocated to executive officers under the ESOP over which
executive officers exercise sole voting power.
(9) Does not include a total of 205,912 shares (less than 1% of the shares of
the Company's outstanding Common Stock) held under the ESOP and
unallocated, which are voted by the trustee of the ESOP trust fund in
accordance with the instructions of the ESOP Plan Committee, consisting
of two directors, Dr. Milnes and Mr. Ray.
For the purpose of the foregoing table, each of the directors and
executive officers is deemed to be the beneficial owner of the shares which may
be acquired by him within 60 days through the exercise of options, if any, and
such shares are deemed to be outstanding for the purpose of computing the
percentage of the Company's Common Stock beneficially owned by him and by the
directors and executive officers as a group. Such shares, however, are not
deemed to be outstanding for the purpose of computing the percentage of the
Company's Common Stock beneficially owned by any other person.
Each of the persons named in the above table as beneficially
owning the shares set forth opposite his name has sole voting power (as to
outstanding shares) and sole investment power over such shares, except as
otherwise indicated.
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<PAGE> 6
ELECTION OF DIRECTORS
Unless otherwise specified, shares represented by the enclosed
proxy will be voted for the election of Jerome M. LeWine and Michael E. Pardue,
who have been nominated by the Board of Directors as directors to serve until
the Annual Meeting of Stockholders in 1997 and until their successors are
elected and qualified. Each of the nominees is now a director of the Company.
Directors shall be elected by a plurality of the votes cast, in person or by
proxy, at the meeting.
The Board of Directors is divided into three classes. One class
will stand for election for a three-year term at the Annual Meeting of
Stockholders on November 11, 1994. The terms of office of the other two
classes do not expire until the Annual Meeting of Stockholders in 1995 and
1996, respectively. The names of, and certain information concerning, the
nominees and the other directors are set forth below:
<TABLE>
<CAPTION>
FIRST YEAR
BECAME
NAME AGE DIRECTOR OFFICES
- ---- --- ----------- -------
<S> <C> <C> <C>
Nominees to serve until
Annual Meeting of Stockholders in 1997:
JEROME M. LeWINE (a)(b) . . . . . . . . . . . 54 1974 Director
MICHAEL E. PARDUE . . . . . . . . . . . . . . 44 1992 Executive Vice President, Chief
Operating Officer, Chief Financial
Officer and Director
Continuing Directors to serve until
Annual Meeting of Stockholders in 1995:
THOMAS V. BUFFETT (c) . . . . . . . . . . . . 58 1992 Vice Chairman of the Board of Directors
JAMES E. LINEBERGER (a) . . . . . . . . . . . 57 1968 Chairman of the Executive Committee and Director
JOHN T. RAY, JR. (b)(c)(d) . . . . . . . . . 56 1989 Director
Continuing Directors to serve until
Annual Meeting of Stockholders in 1996:
RONALD G. ASSAF (a) . . . . . . . . . . . . . 59 1966 Chairman of the Board of Directors,
President and Chief Executive
Officer
DR. ARTHUR G. MILNES (b)(c)(d) . . . . . . . 72 1968 Director
</TABLE>
_________________________________________
(a) Member of the Executive Committee (c) Member of the Audit
Committee
(b) Member of the Compensation Committee (d) Member of the Stock
Incentive Plan
Committee
Ronald G. Assaf, a founder of the Company, has been Chairman of
the Board of Directors of the Company since October 1971 and served as
President and Chief Executive Officer of the Company from 1974 to January 1986.
In January 1988, Mr. Assaf was appointed Co-Chief Executive Officer and in
July 1988 was reappointed to the positions of President and Chief Executive
-4-
<PAGE> 7
Officer. Additionally, Mr. Assaf is a director of Automated Security
(Holdings) PLC ("ASH") and Hilite Industries Inc.
Thomas V. Buffett has been Chairman and Chief Executive Officer
of ASH, a United Kingdom-based international company specializing in electronic
security, since 1974.
Jerome M. LeWine has been a partner of the New York City law
firm of Christy & Viener for more than five years.
James E. Lineberger has been Chairman of the Executive Committee
of the Company since 1974. From January 1988 to July 1988, Mr. Lineberger
served as Co-Chief Executive Officer of the Company. He has been a partner of
Lineberger & Co. and its predecessors, private investment firms, since 1974.
Additionally, Mr. Lineberger serves as Chairman of the Board of Directors of
Hilite Industries Inc.
Dr. Arthur G. Milnes is professor emeritus of electrical and
computer engineering at Carnegie-Mellon University, Pittsburgh, Pennsylvania,
where he has been a member of the faculty for more than five years.
Michael E. Pardue served in various financial management
capacities with the Company since 1978. In February 1986, Mr. Pardue was
appointed Vice President of Finance and the Company's chief financial officer
and in September 1988 was appointed Executive Vice President and Chief
Operating Officer.
John T. Ray, Jr. has served since June 1985 as the Senior Vice
President and General Manager of the United States Adhesives, Sealants and
Coatings Division of H.B. Fuller Company.
None of the directors has any family relationship with any other
director or with any executive officer of the Company.
The Company has no reason to believe that the nominees will be
unable or unwilling to serve as directors, if elected. If, however, the
nominees should decline or be unable to act as directors, the shares
represented by the enclosed proxy will be voted for such other person or
persons as may be nominated by the Board of Directors.
Committees and Meetings
The Board of Directors has standing Executive, Audit,
Compensation and Stock Incentive Plan Committees. The Board of Directors does
not have a standing nominating committee.
The Audit Committee reviews the proposed scope of audit and
non-audit services and the fees proposed to be charged for such services,
reviews the reports and receives comments and recommendations from the
Company's independent auditors following completion of the annual audit, and
reviews with such auditors and management the Company's accounting policies and
the adequacy of the Company's internal accounting controls. The Audit
Committee met two times during the 1994 fiscal year.
The Compensation Committee implements the Company's cash
compensation policies and determines the salaries, bonuses and certain other
benefits of executive officers of the Company. The Compensation Committee also
administers the Stock Purchase Loan Plan and from time to time
-5-
<PAGE> 8
makes recommendations to the Board of Directors regarding other
compensation matters. The Compensation Committee met three times during the 1994
fiscal year.
The Stock Incentive Plan Committee administers the Company's
1989 Stock Incentive Plan and will administer the Company's 1995 Stock
Incentive Plan, if such plan is approved by the Company's stockholders at the
Annual Meeting. Administration of such Plans includes the granting of options
to officers, key employees and directors who are eligible to participate in
each such Plan. The Stock Incentive Plan Committee met seven times during the
1994 fiscal year.
The Board of Directors held nine meetings during the 1994 fiscal
year. No director of the Company during the last fiscal year attended fewer
than 100% of the aggregate number of meetings of the Company's Board of
Directors and all committees of the Board of Directors on which he served,
except for Mr. Buffett, who attended less than 75% of such meetings.
Compensation of Directors
During fiscal 1994, the directors of the Company (other than
Messrs. Assaf and Pardue) received annual compensation for all services as
follows: Mr. Lineberger, $144,232; Mr. Buffett, $80,000; Mr. LeWine, $40,000;
Dr. Milnes, $24,000; Mr. Ray, $11,000; and, in the case of Dr. Milnes and Mr.
Ray, an additional $2,000 for each meeting of the Board of Directors and of the
Audit Committee (other than telephonic meetings). Commencing with fiscal 1995,
the directors of the Company (other than Messrs. Assaf and Pardue) will receive
annual compensation for all services as follows: Mr. Lineberger, $150,000; Mr.
Buffett, $80,000; Mr. LeWine, $50,000; Dr. Milnes, $33,000; Mr. Ray, $20,000;
and, in the case of Dr. Milnes and Mr. Ray, an additional $3,000 for each
meeting of the Board of Directors (other than telephonic meetings), an
additional $3,000 for service on the Audit Committee, and an additional $3,000
for service on compensation committees. In the cases of Messrs. Lineberger and
Buffett, such compensation reflects their services both as directors and as
Chairman of the Executive Committee and as Vice Chairman of the Board,
respectively. Mr. Lineberger also participates in various benefit plans and
the bonus program for executive officers of the Company.
In addition, the directors of the Company participate in either
the Directors Stock Option Plan or the 1989 Stock Incentive Plan (or, if
approved by the Company's stockholders at the Annual Meeting, the 1995 Stock
Incentive Plan, as successor to the 1989 Stock Incentive Plan). In fiscal
1994, Dr. Milnes and Mr. Ray each received 10-year options to purchase 7,500
shares of Common Stock, exercisable on a cumulative basis in three equal annual
installments, under the Directors Stock Option Plan, which provides for annual,
non-discretionary grants in such amount (after an initial grant to new
directors participating in such Plan of an option to purchase 30,000 shares) at
an exercise price per share equal to the fair market value of a share of Common
Stock on the date of grant. Messrs. Lineberger and LeWine received options to
purchase 20,000 and 15,000 shares of Common Stock, respectively, under the 1989
Stock Incentive Plan. (See footnote 1 to the table "Option/SAR Grants in Last
Fiscal Year" for a summary of the terms of options granted under the 1989 Stock
Incentive Plan.) Messrs. Assaf and Pardue also participated in the 1989 Stock
Incentive Plan, as described below under "Executive Compensation."
A Board of Directors Retirement Plan for non-officer directors,
adopted in 1989, provides for monthly payments over 15 years beginning upon the
later of the attainment of age 60 or retirement from the Company, or upon the
director's earlier death. The Plan provides that the benefits are 50% vested
after five years of service and are vested an additional 10% for each year of
service thereafter. Benefits are payable to the director's designated
beneficiary or estate in the event of death. If the director dies while in
office and prior to attaining the age of 60, the director's vested interest
would be deemed to be equal to that which would have accrued had he remained in
office until attaining that
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<PAGE> 9
age. Annual benefits are fixed by the Board of Directors or a committee
thereof and are currently fixed at $50,000 for Mr. LeWine and $20,000 for each
of Dr. Milnes and Mr. Ray.
EXECUTIVE COMPENSATION
REPORT OF THE COMPENSATION AND STOCK INCENTIVE PLAN COMMITTEES
The Compensation Committee of the Board of Directors (the
"Compensation Committee"), consisting of Messrs. Ray and LeWine and Dr. Milnes,
and the Stock Incentive Plan Committee of the Board (the "Stock Incentive Plan
Committee"), consisting of Mr. Ray and Dr. Milnes, implement the Company's
compensation programs. The Compensation Committee is responsible for
periodically reviewing and determining the cash compensation and certain other
non-equity benefits of the Company's executive officers. The Stock Incentive
Plan Committee administers the Company's 1989 Stock Incentive Plan (the "1989
Plan") (and will administer the Company's 1995 Stock Incentive Plan, if such
plan is approved by the Company's stockholders at the Annual Meeting) and
grants (or will grant) awards thereunder to the Company's executive officers,
key employees and participating directors. The Committees receive Mr. Assaf's
recommendations with respect to compensation of the Company's other executive
officers and meet with Mr. Assaf to evaluate such executives' performance and,
at times, to discuss the bases for his recommendations. The Committees meet
without Mr. Assaf to evaluate his performance and to determine compensation of
all executive officers. The Committees provide the following report, each
being responsible for the portions thereof which refer to them or their
separate functions.
Compensation Policies
The Company's executive compensation programs are designed to
attract and retain qualified leaders and motivate them to achieve the Company's
short- and long-term business objectives. The Company believes that the key to
achieving such goals is to provide compensation which is competitive with the
compensation packages provided by comparable companies, and of which a
relatively high proportion is "at risk" for performance, in the form of annual
incentive bonuses and long-term incentive stock options.
In fiscal 1994, the Company accomplished a number of significant
business objectives which enhanced its position of pre-eminence in the global
electronic security industry. During fiscal 1994, the Company continued to
pursue its market and geographic diversification strategy by making a number of
targeted acquisitions, including: Advanced Entry Systems, Inc. and the business
and related assets of Security Specialists of San Francisco, Inc., two premier
U.S. regional electronic system integrator companies; the business and related
assets of Robot Research Inc., a U.S. manufacturer of sophisticated closed
circuit television ("CCTV") equipment; and Visual Information Systems (Holdings)
PLC, a United Kingdom based marketer of CCTV systems, and by broadening its
product line through the introduction of new or enhanced products, most notably:
VRS 2000(TM), an integrated security system combining access control, CCTV,
electronic asset protection and alarm monitoring; and Super Tag(TM), a
tamper-proof, reusable anti-theft tag for soft goods retailers. The Company's
source tagging program continued to expand through the formation of strategic
alliances to develop new label application equipment as well as through the
growing acceptance of source labeling among major hard goods retailers. In
fiscal 1994, The Home Depot became the first major retailer to embrace the
concept of source tagging on a chainwide basis, and the Company expects that by
late 1994 more than 100 manufacturers will be applying the Company's
Ultra*Max(R) labels to merchandise delivered to The Home Depot stores in the
U.S. Finally, in a particularly noteworthy milestone, in March 1994 the
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<PAGE> 10
Company was named a Sponsor of and the Official Electronic Security
Supplier for the 1996 Centennial Olympic Games in Atlanta.
The Company experienced record growth in revenues; operating
income increased 48% over fiscal 1993 and net income increased 33%. Earnings
per share increased to $1.13 from $ .93 in fiscal 1993 on an additional 4.7
million shares outstanding. At fiscal year end, the rate of growth of the
Company's revenues had equalled or exceeded 20% for 28 consecutive fiscal
quarters. In addition, during fiscal 1994, the Company announced a
three-for-two stock split and a 10% increase in its quarterly cash dividend.
Finally, the Committees recognized that the growing size and complexity of
Company's operations has presented its executives with new challenges. These
accomplishments, and management's performance in response to the related
challenges, had a substantial impact on the Committees' assessment of the
overall performance of participating executive officers and resulting
compensation decisions.
Base Salary
The Compensation Committee establishes base compensation for
executive officers reflecting both the individual's responsibilities and
experience and the competitive salary ranges for executives with similar
responsibilities in corporations with revenues comparable to those of the
Company, taking into account relative profitability. The Compensation
Committee relies on information from a variety of sources to determine
competitive cash compensation ranges, including, in fiscal 1994, executive
compensation surveys conducted by three employee benefit consulting firms. The
base salaries of the Company's executive officers are generally set at or below
the median salaries reported for comparable positions.
Base salaries are modified annually, generally near the
beginning of a calendar year, by the Compensation Committee as warranted by the
performance of the Company or the applicable department or business unit or by
the performance of the executive officer or changes in his responsibilities.
The Compensation Committee believes that the increases it has adopted are in
line with current trends at comparable companies, while also reflecting the
Company's growth and exceptional performance during fiscal 1994.
Bonuses
The annual cash bonus component of an executive officer's
compensation depends upon the officer's performance, that of the Company and,
if the executive officer has responsibility for a particular department or
business unit, the performance of that department or business unit. The
Compensation Committee believes that an executive officer's responsibility for
the success of his business unit and of the Company increases as his duties
expand. Accordingly, a larger proportion of a more senior executive officer's
compensation generally will be variable, performance-based incentive
compensation, compared to that of other executive officers.
Certain officers, including Messrs. Buck, Gillette and Witter,
receive incentive bonuses based on performance goals for the business unit or
revenue-producing operations for which they are responsible.
The bonuses of Messrs. Assaf and Pardue are determined with
reference to a broad range of criteria, including the Company's financial
results generally, the achievement of budgetary goals, the Company's growth,
such officers' contributions to the realization of the Company's strategic plan
and other objectives, and their roles in expanding the Company's businesses and
its leadership in
-8-
<PAGE> 11
its markets. The bonuses awarded to Messrs. Assaf and Pardue for fiscal
1994 reflect the Company's successful results, as well as its other significant
achievements discussed above.
Stock Options
The Company believes that stock options are a very important
component of executive compensation because they encourage an executive to
remain in the Company's employ and link long-term rewards to stock price
appreciation. The Stock Incentive Plan Committee recognizes that such
long-term incentives will motivate executives to balance pressures to manage
for the short-term with the steps necessary to assure the Company's future
vitality. Options typically are granted annually. In determining the size of
a grant to an executive officer or participating director, the Stock Incentive
Plan Committee considers the number of shares that would be thought to be a
meaningful incentive for long-term performance, given the participant's
position, responsibilities, level of cash compensation and expected
contributions. In addition, with respect to options granted in fiscal 1994 to
certain executive officers, the Stock Incentive Plan Committee adopted a new
vesting schedule that places more emphasis on achieving results that will
enhance the value of the Company's Common Stock. At times, the Stock Incentive
Plan Committee also takes into account whether extraordinary effort would be
required to reach particular objectives in succeeding periods. Although the
1989 Stock Incentive Plan (and the 1995 Stock Incentive Plan, as proposed)
permits awards of restricted stock or stock appreciation rights, during fiscal
1994 the Stock Incentive Plan Committee did not grant such awards (relying
instead only upon awards of stock options), but will utilize awards of
restricted stock to implement a long-term incentive compensation program
commencing in fiscal 1995.
Additional Factors Relating to CEO's Compensation
The Committees measured Mr. Assaf's performance in fiscal 1994
by the standards discussed above, and by his continuing success in developing
and implementing the Company's long-term strategic plan, resulting in the
Company's worldwide pre-eminence in its industry.
Mr. Assaf was a founder of the Company and has been a driving
force in its growth over twenty-five years. The Company has become the leading
electronic article surveillance supplier in every market in which it competes.
Mr. Assaf has led the Company's efforts to assemble a strong management team,
develop technical innovations, improve quality, increase efficiency and
aggressively pursue new areas of growth, internally and by acquisitions. He
initiated the Company's strategic plan, which has evolved and continues to
evolve under his leadership. The strategic plan has provided the structure for
achieving the Company's market expansion and technology development goals,
emphasizing diversification of its product lines and the broadening of its
markets. The Committees believe that Mr. Assaf's leadership, vision and
management of the Company have fueled the growth in the Company's revenues,
from less than $100 million seven years ago to more than $655 million in fiscal
1994.
Compensation Committee Stock Incentive Plan Committee
Jerome M. LeWine Arthur G. Milnes
Arthur G. Milnes John T. Ray, Jr.
John T. Ray, Jr.
-9-
<PAGE> 12
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Company established a Stock Purchase Loan Plan (the "Loan
Plan") in 1979 under which officers, directors and certain designated key
employees may borrow an amount equal to the purchase price of shares of the
Company's Common Stock purchased upon exercise of their respective stock
options ("Option Shares") and an amount approximating the amount of income tax
liability resulting from the exercise of such options. Under the Loan Plan,
loans generally bear interest at the rate of 4% per annum, payable annually.
Loans are required to be secured and to comply with Federal Reserve margin
requirements, to the extent applicable. The loans generally are due within
five years of the date of the loan, upon cessation of employment or upon the
sale of the Option Shares, whichever occurs first. Of the Committees' members,
Mr. LeWine had loans outstanding under the Loan Plan during the fiscal year
ended June 30, 1994, in the aggregate maximum amount of $119,500, which were
repaid in their entirety in September 1993. (Information regarding loans to
other directors and executive officers under the Loan Plan is set forth below
under "Stock Purchase Loan Plan.")
The firm of Christy & Viener, of which Mr. LeWine is a partner,
acts as counsel to the Company and also performs legal services for the
Company's domestic and foreign subsidiaries. The firm received fees in the
aggregate amount of approximately $1,447,875 for legal services rendered to
the Company and its subsidiaries during the fiscal year ended June 30, 1994.
-10-
<PAGE> 13
SUMMARY COMPENSATION TABLE
The following table shows compensation for services rendered in
all capacities to the Company and its subsidiaries during fiscal 1994, 1993 and
1992 by the Chief Executive Officer and the next four highest-paid executive
officers of the Company.
<TABLE>
<CAPTION>
Long-Term
Compensation
Annual Compensation Awards
------------------------------------ ---------------
Name and Principal Other Annual All Other
------------------ Salary Bonus Compensation Options/SARS Compensation
Position Year (1) ($)(2) ($) ($)(3) (#)(4) ($)(5)
-------- -------- -------- -------- -------------- ------------ --------------------
<S> <C> <C> <C> <C> <C> <C>
Ronald G. Assaf, 1994 464,615 425,000 -- 75,000 79,054 (6)(7)(8)(9)
Chairman of the Board of 1993 415,484 370,000 -- 1,200,000 51,046 (7)(8)(9)
Directors, President and 1992 373,960 300,000 -- 112,500 --
Chief Executive Officer
Michael E. Pardue, 1994 241,038 205,000 -- 35,000 40,959 (7)(8)(9)(10)
Executive Vice President, 1993 202,476 165,000 -- 75,000 11,069 (7)(8)(9)
Chief Operating Officer 1992 175,032 155,000 -- 37,500 --
and Chief Financial
Officer
Gerd Witter, 1994 215,405 153,513 -- 20,000 60,516 (8)(9)(10)
President, Sensormatic 1993 229,488 316,560 -- 45,000 10,120 (8)(9)
Europe(11) 1992 195,647 160,517 -- 30,000 --
C. Dawson Buck, Senior 1994 276,900 61,595 -- 20,000 111,581 (12)
Vice President and 1993 198,854 116,218 -- 75,000 18,505 (12)
President of Sensormatic
International(12)
Dennis C. Gillette, 1994 154,443 137,300 -- 20,000 79,295 (7)(8)(9)(10)
Senior Vice President 1993 144,750 134,900 -- 37,500 18,692 (7)(8)(9)
1992 133,667 127,157 -- 30,000 --
</TABLE>
(1) In August 1992, the Company changed its fiscal year end from May 31 to
June 30. The fiscal 1992 figures for each of the named executive
officers reflect compensation for the twelve months ended May 31,
1992, while the fiscal 1993 and 1994 figures reflect compensation for
the twelve months ended June 30, 1993, and June 30, 1994,
respectively. Compensation for each of the named executive officers
for June 1992 was at an annualized rate not significantly different
from the compensation level in the table.
(2) Annual raises generally are effective near the beginning of a calendar
year. Thus, each named executive's salary for each fiscal year
reflects about six months at the prior year's annual rate and about
six months at the annual rate in the disclosed year.
(3) None of the named executive officers of the Company received
reportable amounts of Other Annual Compensation for fiscal 1993 or
fiscal 1994 which would be required to be disclosed herein. Amounts
of Other Annual Compensation are not required to be disclosed for
fiscal 1992, in accordance with the transitional provisions applicable
to the revised rules on executive compensation disclosure adopted by
the Securities Exchange Commission ("SEC").
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<PAGE> 14
(4) The options granted in fiscal 1992 and fiscal 1993 have been adjusted
to reflect the Company's 3-for-2 stock split in November 1993. The
Company has not issued any stock appreciation rights to the named
executive officers. See footnote 1 to the table "Option/SAR Grants in
Last Fiscal Year" for summary terms of options granted.
(5) Amounts of All Other Compensation are not disclosed for fiscal 1992,
in accordance with the transitional provisions applicable to the SEC's
rules on executive compensation disclosure.
(6) Includes a contribution of $30,158 toward the funding of a $3,000,000
death benefit provided by the Company. The Company has purchased a
life insurance policy on Mr. Assaf, the death benefit of which will
reimburse the Company for a portion of this commitment.
(7) Includes contributions made by the Company under its Employee Stock
Ownership Plan, which is a defined contribution plan, to or for the
benefit of the eligible named executive officers. Under the ESOP, the
Company makes an annual contribution to a trust fund for the benefit
of participants in an amount determined by the Board of Directors.
Fund assets are required to be invested primarily in the Company's
Common Stock. The trust fund holds shares which it previously
acquired from the Company at a price of $8.46 per share, paid for by
delivery of a promissory note of the ESOP's trustee. Principal and
interest of the note are payable from the proceeds of the Company's
annual contributions. As the indebtedness is retired, a proportionate
amount of the purchased shares are allocated to the accounts of
eligible employees under such plan. In fiscal 1994, the Company
contributed $1,524, $1,524 and $1,524 for the accounts of Messrs.
Assaf, Pardue and Gillette, respectively.
(8) Includes contributions made by the Company under its SensorSave Plan
("SSP"), which is a defined contribution plan, to or for the benefit
of the eligible named executive officers. The SSP is a 401(k) plan
under which the Company makes annual contributions as determined by
the Board of Directors and additional contributions matching a
proportion of participating employees' voluntary contributions. In
fiscal 1994, the Company contributed $6,437, $6,728 and $6,794 to the
accounts of Messrs. Assaf, Pardue and Gillette, respectively.
(9) Includes contributions made by the Company under or in connection with
the Executive Salary Continuation Plan ("ESCP"), which is a plan that
provides for defined deferred compensation benefits, to or for the
benefit of the eligible named executive officers. Under the ESCP, a
participating executive officer will receive an annual retirement
benefit of an amount determined by the Board of Directors multiplied
by a percentage equal to the participant's vested interest as of the
date of the participant's termination of employment. Benefits
generally vest over a 15-year schedule and are payable in monthly
installments for 15 years from the later of the participant's
attainment of retirement age (60) or the participant's actual
retirement from employment with the Company, or, if earlier, from the
participant's death. The Company has purchased life insurance
policies on the participants and anticipates that the cash surrender
value and death benefits of such policies will reimburse the Company
for a portion of its obligations under the ESCP. The Company's
contributions toward the funding of benefits under the ESCP during
fiscal 1994 were $40,935, $1,907, $7,195 and $5,588 for Messrs. Assaf,
Pardue, Witter and Gillette, respectively. Based upon the ESCP as
presently in effect, Messrs. Assaf, Witter, Pardue and Gillette,
assuming their respective vested interests will be 100% upon attaining
retirement age, could expect to receive annual retirement benefits
under the ESCP of $255,000, $114,000, $100,000 and $102,000,
respectively, as last determined by the Board of Directors.
(10) Includes contributions made by the Company under or in connection with
the Senior Executive Defined Contribution Retirement Plan (the "Senior
Executive Plan"), which is a target benefit
-12-
<PAGE> 15
defined contribution plan, to or for the benefit of the eligible
named executive officers. Under the Senior Executive Plan, which was
established by the Company in fiscal 1994 for certain senior officers,
a participant will receive an annual retirement benefit equal to the
lesser of (i) the benefit previously targeted for such participant by
the Board of Directors (which benefit, together with benefits expected
to be received by such participant under the ESCP, is generally
intended to approximate 50% of such participant's annual cash
compensation) and (ii) the benefit which could be paid out of such
participant's investment account under the Senior Executive Plan, the
annual yield of which will be determined by the chief executive officer
of the Company, subject to the approval of the Board of Directors or a
committee thereof, in each case multiplied by a percentage equal to the
participant's vested interest as of the date of the participant's
termination of employment. Benefits under the Senior Executive Plan
generally vest over a 15-year schedule, but a participant who has ten
or more years of service and is employed by the Company immediately
prior to his normal retirement is deemed to be 100% vested upon
retirement. Benefits are payable in monthly installments for 15 years
after the later to occur of the participant's attainment of retirement
age (60) or his actual retirement from employment with the Company, or,
if earlier, the participant's death. The Company has purchased life
insurance policies on the participants and anticipates that the cash
surrender value and death benefits of such policies will reimburse the
Company for substantially all its obligations under the Senior
Executive Plan. The Company's contributions toward the funding of
benefits under the Senior Executive Plan during fiscal 1994 were
$31,200, $53,321 and $65,389 for Messrs. Pardue, Witter and Gillette,
respectively. Based upon the Senior Executive Plan as presently in
effect, Messrs. Pardue, Witter and Gillette, assuming their respective
vested interests will be 100% upon attaining retirement age and the
yield from their respective investment accounts will be sufficient to
fund their respective targeted benefits (as last determined by the
Board of Directors), could expect to receive annual retirement benefits
under the Senior Executive Plan of $81,000, $68,000 and $41,000,
respectively.
(11) Although Mr. Witter's cash compensation is presented in U.S. dollars,
such compensation is determined and payable in German marks.
Fluctuations in the rate of exchange between the two currencies from
year to year result in fluctuations in the cash compensation of Mr.
Witter as reported from year to year in U.S. dollars.
(12) Mr. Buck's employment with the Company began July 28, 1992. Although
Mr. Buck's cash compensation is presented in U.S. dollars, such
compensation is determined and payable in British pounds sterling.
Fluctuations in the rate of exchange between the two currencies from
year to year will result in fluctuations in the cash compensation of
Mr. Buck as reported in U.S. dollars. Amounts of All Other
Compensation include contributions made by the Company for the benefit
of Mr. Buck under a defined benefit pension plan sponsored by ASH, his
former employer (the "ASH Plan"), and under a defined contribution
money purchase plan for the Company's employees located in the United
Kingdom (the "U.K. Plan"). In connection with its acquisition of the
European EAS, CCTV and exception monitoring loss prevention systems
division of ASH ("ALPS") in fiscal 1993, the Company agreed to
preserve the level of benefits of certain ASH employees, including Mr.
Buck, who joined the Company as a result of such acquisition. The
Company made a contribution in the amount of $18,505 under the ASH
Plan to temporarily continue Mr. Buck's participation in such plan
until July 31, 1993. On August, 1, 1993, Mr. Buck became a
participant in the U.K. Plan, and his accrued benefits under the ASH
Plan have been transferred to the U.K. Plan. Pension benefits under
the U.K. Plan are payable in monthly installments from the later to
occur of the participant's attainment of retirement age (60) or his
actual retirement from employment with the Company, or, if earlier,
the participant's death. In addition, the U.K. Plan provides for
early retirement at age 50, with the consent of the Company. Under
the U.K. Plan, benefits vest over a two-year period and are funded
from a participant's investment account under such Plan. In order to
meet the
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<PAGE> 16
projected level of retirement benefits that Mr. Buck would
have received under the ASH Plan, the Company contributed during
fiscal 1994 $111,587 (or 46% of Mr. Buck's pensionable salary) to Mr.
Buck's account under the U.K. Plan; in addition, Mr. Buck contributed
4% of his pensionable salary to such account. The Company expects
that its funding rate for Mr. Buck's pension benefits will remain
constant until his retirement.
The Company has an employment agreement with Mr. Assaf which
expires June 30, 1996, providing for Mr. Assaf to receive a minimum annual
salary of $435,000. The Company also has an employment agreement with Mr.
Witter, providing for a minimum annual salary of 313,000 German marks until
October 31, 1995, and with Mr. Buck, providing for a minimum annual salary of
188,500 British pounds sterling plus an annual cost of living increase, which
is terminable upon two years' notice.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
The following table provides certain information with respect to
options granted to each person named in the Summary Compensation Table during
fiscal 1994. In addition, in accordance with SEC rules, there are shown
hypothetical gains that would exist for the options granted, based on assumed
rates of annual compound stock price appreciation of 5% and 10% from the date
the options were granted over the full option term. The named officers will
realize no gain on these options unless the price of the Common Stock increases
above the exercise price for such options, which will benefit all stockholders
proportionately. No stock appreciation rights have been awarded by the
Company.
<TABLE>
<CAPTION>
Individual Grants Potential Realizable Value at
---------------------------------------------------- Assumed Annual Rates of Stock
Options/ Percent of Total Price Appreciation for
SARS Options/SARS Option Term(2)
Granted in Granted to Exercise --------------
Fiscal Employees in or Base Expiration
Name Year(1) Fiscal Year Price Date 5%($) 10%($)
---- ------- ----------- ----- ---------- ----- ------
<S> <C> <C> <C> <C> <C> <C>
Ronald G. Assaf 75,000 5.5% $31.625 4/18/04 1,491,700 3,780,200
Michael E. Pardue 35,000 2.6% $31.625 4/18/04 696,100 1,764,100
Gerd Witter 20,000 1.5% $31.625 4/18/04 397,800 1,008,000
C. Dawson Buck 20,000 1.5% $31.625 4/18/04 397,800 1,008,000
Dennis C. Gillette 20,000 1.5% $31.625 4/18/04 397,800 1,008,000
All Optionees 1,371,400 100% $32.399 27,943,039 70,813,147
(participants)(3)
All Stockholders' 1,416,271,898 3,589,111,058
Potential
Realizable Value at
Assumed Growth
Rates(4)
</TABLE>
(1) All options granted during the period were granted pursuant to the
Company's 1989 Stock Incentive Plan, at the fair market value on the
date of grant. Options granted to the named executives have terms of
ten years and become exercisable in full after the fifth anniversary
of the date of grant or at such earlier date on which the fair market
value of the Company's Common Stock has exceeded the exercise price
by at least 35% for at least ten consecutive
-14-
<PAGE> 17
trading days, provided such earlier date is after the first
anniversary of the date of grant. Options granted under such plan to
other officers, and to the named executives prior to the 1994 fiscal
year, generally have terms of ten years and become exercisable on a
cumulative basis in three equal annual installments, commencing on the
first anniversary of the date of grant.
(2) The potential realizable value of these options does not take into
account any taxes or other expenses that might become payable as a
result of exercise. The Company expresses no opinion and makes no
representation that this level of appreciation will, in fact, be
realized.
(3) Calculated based on the weighted average exercise price of all
options granted during fiscal 1994 ($32.399), and assuming all
options have a term of ten years.
(4) Calculated based on the weighted average exercise price of all
options granted during fiscal 1994 ($32.399), and assuming the
exercise of outstanding warrants issued in connection with an
acquisition and stock price appreciation at the indicated rates over
the same period used to calculate the individuals' potential
realizable value.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION VALUES
The following table sets forth as to each person named in the
Summary Compensation Table the specified information with respect to option
exercises during fiscal 1994 and the status of their options at the end of
fiscal 1994.
<TABLE>
<CAPTION>
Value of Unexercised
Number of Unexercised in--the--Money (2)
Number of Options/SARs at Fiscal Options/SARS at
Shares Value Year--End Fiscal Year--End ($)(3)
Acquired on Realized -------------------------- -----------------------
Name Exercise ($)(1) Exercisable Nonexercisable Exercisable Nonexercisable
---- -------- ---------- ----------- -------------- ----------- --------------
<S> <C> <C> <C> <C> <C> <C>
Ronald G. Assaf 200,000 4,105,443 387,500 912,500 4,767,800 9,964,850
Michael E. Pardue 52,501 925,589 -- 97,500 -- 431,250
Gerd Witter 32,500 532,269 -- 60,000 -- 472,510
C. Dawson Buck 24,999 333,312 -- 70,000 -- 595,850
Dennis C. Gillette 30,000 707,790 62,500 55,000 821,775 258,750
</TABLE>
(1) The "value realized" represents the difference between the exercise
price of the option shares and the market price of the option shares
on the date the option was exercised. The value realized was
determined without considering any taxes which may become payable in
respect of the sale of any such shares.
(2) "In-the-money" options are options whose exercise price was less than
the market price of Common Stock at June 30, 1994.
(3) Based on a stock price of $28.75 per share, which was the closing
price of a share of Common Stock reported on the New York Stock
Exchange on June 30, 1994.
-15-
<PAGE> 18
PERFORMANCE GRAPH
The SEC requires that the Company present a line graph comparing
cumulative, five-year stockholder returns on an indexed basis with the Standard
& Poor's 500 Stock Index (the "S&P 500") (or another broad-based index) and
either a nationally-recognized industry standard or an index of peer companies
selected by the Company. The Company has selected, for purposes of this
performance comparison, six public companies (the "Self-Constructed Peer Group")
that it believes offer security products or services similar to those offered by
the Company. A list of these companies follows the graph below. Certain other
companies similarly in the security field have not been included in the Self-
Constructed Peer Group either because they are privately-held or because their
securities were not traded publicly for the duration of the period presented in
the graph. The graph assumes that $100 was invested on June 1, 1989, in each of
the Common Stock, the S&P 500 and the Self-Constructed Peer Group (weighted on
the basis of capitalization), and that all dividends were reinvested.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
<TABLE>
<CAPTION>
SELF-CONSTRUCTED
MEASUREMENT PERIOD SENSORMATIC PEER GROUP S&P 500
(FISCAL YEAR COVERED)
<S> <C> <C> <C>
1989 100 100 100
1990 118 117 117
1991 175 138 130
1992 235 144 143
1993* 339 170 160
1994 378 164 163
</TABLE>
________________
* Includes the thirteen months ended June 30, 1993, in order to coincide with
the Company's change in fiscal year end.
The Self-Constructed Peer Group consists of the following companies:
Checkpoint Systems, Inc.; Diebold, Incorporated; Knogo Corporation; Minnesota
Mining & Manufacturing Co.; Vicon Industries, Inc.; and The Wackenhut
Corporation.
Agreements Relating to Change in Control
The Board of Directors, in December 1988, authorized the Company
to enter into agreements (the "Agreements") providing for certain protections
and benefits for all executive and
-16-
<PAGE> 19
certain other officers in connection with a change in control of the
Company. The Agreements, among other things, protect the value of stock options
held by such persons, protect their retirement benefits, provide for severance
compensation in the event of certain terminations of service and provide, in
certain cases where the Company is acquired at a premium over the market price
for the Common Stock, a bonus based on such premium.
For purposes of the Agreements, a "change in control" will be
deemed to have occurred if (a) any "person" or "group" of persons (as the terms
"person" and "group" are used in Section 13(d) and 14(d) of the Securities
Exchange Act of 1934 and the rules thereunder) is or becomes the beneficial
owner, directly or indirectly, of securities of the Company representing 30% or
more of the combined voting power of the then outstanding securities of the
Company or (b) a change of more than 25% in the composition of the Board of
Directors occurs within a two-year period unless such change was approved in
advance by at least two-thirds of the previous directors.
Under the Agreements, upon the occurrence of a change in
control, all stock options become fully exercisable. In addition, in the case
of an acquisition of 50% or more of the Company's voting securities, or a
merger or certain other events which result in the elimination of the Common
Stock or a cessation of trading of the Common Stock in a nationally recognized
market, the Company may be required by the officers to purchase options or
stock held by them at the highest price per share paid in connection with the
change in control, less, in the case of unexercised options, the exercise price
(or, in the case of shares previously acquired upon exercise of options, a
price equal to the cost of such option shares (including related tax costs), if
greater).
The Agreements provide for the protection of compensation levels
and benefits during an attempted change in control and for three years
following a change in control. In addition, the Agreements provide for
severance compensation in amounts commensurate with previous annual
compensation in the event of certain terminations of service with the Company
following a change in control. Severance payments would be payable generally
for a period of up to 36 months, but not less than 24 months, in the event of
involuntary termination of service (other than for cause, as defined in the
Agreements) within 36 months following a change in control deemed
"non-approved" by the Board of Directors. In the case of Mr. Assaf, similar
payments would be payable following an "approved" change in control and
irrespective of the manner of termination (other than for cause). Mr. Assaf is
required to provide consulting services to the Company during the period he
receives severance compensation following a voluntary termination of service.
For other officers generally, severance payments would be payable for up to one
year in the event of voluntary termination of service following a
"non-approved" change in control or involuntary termination of service
following an "approved" change in control. Involuntary termination is defined
to include resignation following a material change in responsibilities, a
reduction in compensation or relocation.
The Agreements also provide, in the event of termination of
service of the officer following a "non-approved" change in control, that the
Company pay to such officer an amount equal to the non-vested portion of his
accounts under the Company's employee retirement plans (other than the ESCP).
The Agreements further provide, in the event of a change in
control involving the acquisition of 50% or more of the Company's voting
securities, or a merger or other transaction affecting the market in the Common
Stock as described above, for the payment of bonuses if the stockholders
receive a substantial premium over the market price of the Company's Common
Stock. The amounts of such bonuses are directly related to, and increase in
relation to increases in, the percentage of such premium.
-17-
<PAGE> 20
Pursuant to the Agreements, the officers are obligated to
continue to make their services available to the Company during an attempted
change in control and for six months following a change in control.
In December 1988, the Company also entered into agreements
similar to the Agreements described above with certain non-executive officers,
other key employees and Mr. LeWine. Certain other officers and other key
employees of the Company have also been granted agreements providing for
certain benefits following a "non-approved" change in control. In addition, in
March 1989, the Company entered into an agreement with Dr. Milnes, a director
of the Company, containing provisions with respect to options and stock held by
him and the protection of retirement benefits under the Directors Retirement
Plan substantially similar to the corresponding provisions in the Agreements.
Such agreement for Dr. Milnes does not provide for any severance benefits,
bonus payments or similar benefits.
The Board of Directors of the Company believes that the
Agreements will help assure management's continued dedication to their duties
to the Company notwithstanding the occurrence of any change in control and in
particular, will enable management to assess objectively and impartially, and
advise the Board of Directors with respect to, any proposal received by the
Company regarding a change in control. In addition, such agreements will help
assure continued services to the Company by management and other key personnel.
Stock Purchase Loan Plan
Under the Company's Stock Purchase Loan Plan established in 1979
to facilitate the exercise of stock options, Messrs. Lineberger and Gillette
had loans outstanding during the fiscal year ended June 30, 1994, in the
maximum amounts of $2,123,407 and $222,600, respectively. The currently
outstanding balance of the loan to Mr. Lineberger is $1,321,817; the loan to
Mr. Gillette has been repaid in its entirety. The loan presently outstanding
to Mr. Lineberger under the Loan Plan was outstanding in March 1984 and, in
accordance with amendments to the Loan Plan adopted in March 1984, is
non-interest bearing.
Transactions with Management
At June 30, 1994, the Company held a promissory note of TSI
Security Acquisition Corp. ("TSI"), a company in which Mr. Lineberger is the
principal investor. The promissory note, the outstanding principal balance of
which is $84,710, is payable in installments from 1992 to 1994, bears interest
at the rate of 10% per annum and is subordinate to any other indebtedness of
TSI owed to banks or other institutional lenders incurred for the purpose of
providing working capital for TSI. The promissory note was originally given by
TSI to Datavision, Inc., a former subsidiary of the Company which was
liquidated and dissolved during 1991, as partial consideration for the purchase
by TSI of Datavision's automotive security alarm business in 1991. Datavision
assigned the promissory note to the Company as part of a liquidating
distribution of its assets.
Certain Filings
Section 16(a) of the Securities Exchange Act of 1934 requires
the Company's directors, executive officers and persons who own beneficially
more than ten percent of the Company's outstanding Common Stock to file with
the SEC initial reports of beneficial ownership and reports of changes in
beneficial ownership of Common Stock and other securities of the Company on
Forms 3, 4
-18-
<PAGE> 21
and 5, and to furnish the Company with copies of all such forms they
file. Based on a review of copies of such reports, all of the Company's
directors and executive officers timely filed all reports required with respect
to fiscal 1994, except that, in Mr. Assaf's otherwise timely filed Form 4 for
the month of February 1994, he inadvertently omitted one instance in which he
exercised options to purchase shares of Common Stock, and in Mr. Pardue's
otherwise timely filed Form 4 for the month of February 1994, he inadvertently
omitted one transaction in which he both exercised options to purchase shares
of Common Stock and sold such shares on the same day. In each case, the error
was discovered within four weeks and an amendment was filed immediately.
PROPOSAL TO APPROVE THE 1995 STOCK INCENTIVE PLAN
On August 13, 1994, the Board of Directors of the Company
adopted the 1995 Stock Incentive Plan (the "1995 Plan"), subject to the
approval of the stockholders. The purpose of the 1995 Plan is to aid the
Company in attracting, retaining and motivating officers, key employees and
directors by providing them with incentives for making significant
contributions to the growth and profitability of the Company. The 1995 Plan is
designed to accomplish this goal by giving participants a proprietary interest
in the success of the Company, through the grant of stock options and other
incentive awards.
The Board of Directors recommends approval of the 1995 Plan by
the stockholders for the reasons set forth below. If approved by the
stockholders, the 1995 Plan will replace the Company's existing 1989 Plan
(under which 221,589 shares remain available for the grant of options or other
awards). No new awards would be granted under the 1989 Plan after the approval
of the 1995 Plan; awards then outstanding under the 1989 Plan will remain in
effect (see "Option/SAR Grants in Last Fiscal Year" for a description of the
material terms of certain awards granted under the 1989 Plan).
Set forth below is a brief description of the principal features
of the 1995 Plan (which is in most respects substantially similar to the 1989
Plan). Such description is qualified in its entirety by the full text of the
1995 Plan, a copy of which is attached hereto as Exhibit A. Reference to such
exhibit should be made for a more complete description of the 1995 Plan.
General Terms
The 1995 Plan authorizes the Company to grant awards in the form
of stock options, both incentive stock options (within the meaning of Section
422 of the Internal Revenue Code of 1986, as amended (the "Internal Revenue
Code")) and non-qualified stock options, SARs and awards payable in stock,
restricted stock or cash. All of such awards may be granted singly, in
combination or in tandem, or in substitution for awards granted previously
under the 1995 Plan or any other plan of the Company. In addition, the 1995
Plan permits the Company to extend dividend equivalency rights to awards made
thereunder. The payment or exercise of any awards, including stock options,
under the 1995 Plan may be conditioned on the satisfaction of various criteria,
such as the achievement of specific business objectives, attainment of growth
rates and other comparable measurements of the Company's performance. While
some or all of the other types of awards referred to above may be made from
time to time, the Company will grant principally stock options and restricted
stock awards under the Plan.
The 1995 Plan provides for a maximum of 3,900,000 shares of the
Company's Common Stock to be available for issuance in respect of awards
granted under the 1995 Plan, which terminates in November 2004. Shares related
to awards (or portions thereof) that are forfeited, canceled or terminated,
expire unexercised, are surrendered in exchange for other awards, or are
settled in cash in lieu of shares or in any other manner such that shares
covered by an award are not and will not be issued,
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<PAGE> 22
will be restored to the total number of shares available for issuance
pursuant to awards granted under the 1995 Plan. The aggregate number of shares
issuable pursuant to options, or which may be used as a basis for SARs, granted
to any individual participant under the 1995 Plan is limited to 800,000 shares
during any three consecutive fiscal-year periods beginning after July 1, 1994,
subject to proportional adjustments as described below.
The 1995 Plan provides that, in the event of a stock split,
stock dividend, combination or reclassification of shares, recapitalization,
merger, consolidation or similar event, proportional adjustments will be made
in (a) the number of shares of the Company's Common Stock (i) reserved for
issuance under the 1995 Plan, (ii) available for options or other awards and
for issuance pursuant to options, or upon which SARs may be based, for
individual participants, and (iii) covered by outstanding awards; (b) the
prices related to outstanding awards; and (c) the appropriate fair market value
and other price determinations for such awards. In addition, equitable
adjustments will be made in the event of any other change affecting the
Company's Common Stock or any distribution (other than normal cash dividends)
to stockholders of the Company.
The 1995 Plan provides that it shall be administered by a Stock
Incentive Plan Committee designated by the Board of Directors (the
"Committee"), consisting of at least two directors who are not officers or
employees of the Company or any of its subsidiaries. The Committee has the
sole authority, among other things, to: grant awards; determine the terms,
conditions and limitations of awards (including any applicable performance
criteria); establish rules, procedures, regulations and guidelines relating to
the 1995 Plan generally; and to interpret the 1995 Plan and award agreements
entered into pursuant to the Plan.
Officers, key employees and directors who are also officers or
employees of the Company or its subsidiaries or who have been designated by the
Board of Directors of the Company as eligible to receive awards under the 1995
Plan, are eligible to participate in the 1995 Plan. Key employees are those
employees who hold positions of responsibility or whose performance, in the
judgment of the Committee, can have a significant effect on the growth and
profitability of the Company. The number of persons who are currently eligible
to participate in the 1995 Plan is approximately 550.
Generally, a 1995 Plan participant may exercise or receive
payment of an award only while employed by or associated with the Company or a
subsidiary of the Company, except that, under some circumstances, and subject
to restrictions and limitations imposed by the Committee, the Committee may
permit exercise by, or payment to, participants who have retired or become
disabled, or who otherwise have had their employment or association with the
Company or a subsidiary thereof terminated. In addition, if a participant dies
while still employed or associated with the Company or a subsidiary thereof,
the estate, heirs or beneficiaries of the deceased participant may, subject to
restrictions and limitations imposed by the Committee, exercise or receive
payment in respect of awards held by the participant at the time of death. In
general, awards granted under the 1995 Plan are not assignable or transferable
by a participant, except under the limited circumstances contemplated by the
1995 Plan.
The exercise price of an option granted under the 1995 Plan will
be not less than the fair market value of the Company's Common Stock on the
date of grant. (The closing sales price of a share of the Company's Common
Stock was $34.25 on September 28, 1994, as reported on the New York Stock
Exchange.) The exercise price of an option must be paid in full in cash at the
time of exercise, or, if permitted by the Committee, may be paid in whole or in
part by (a) tendering shares of Common Stock or surrendering another award
granted under the Plan or another benefit plan of the Company, (b) delivering a
promissory note issued by the participant to the Company pursuant to the terms
and conditions of the Company's Stock Purchase Loan Plan or otherwise as
determined by the
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Committee, or (c) any other means acceptable to the Committee. In order
to enable the Company to satisfy any tax payment obligations resulting from any
exercise of, or other payment on, an award under the Plan, the Company has the
right, among other things, to withhold an appropriate amount from such payment
or to withhold an appropriate number of shares of the Company's Common Stock
receivable by the participant, for payment thereof.
The 1995 Plan may not, without the approval of the stockholders
as set forth therein, be amended to (i) materially increase the aggregate
number of shares of the Company's Common Stock that may be issued under the
1995 Plan (except for adjustments pursuant to the 1995 Plan in connection with
a stock split, stock dividend, combination or reclassification of shares,
recapitalization, merger, consolidation or similar event, as described above),
(ii) materially increase the benefits accruing to participants (except that the
limit on the aggregate number of shares that may be issued to any individual
participant during any three consecutive fiscal-year periods pursuant to
options, or which are used as a basis of SARs, may not be amended at all
without the approval of stockholders) or (iii) materially modify the
eligibility requirements of the 1995 Plan. The 1995 Plan may not be changed in
such a way as to alter, impair, amend, modify, suspend or terminate any rights
of a participant or any obligations of the Company under any award theretofore
granted in any manner adverse to such participant without the consent of such
participant.
Federal Income Tax Consequences
Under current federal tax laws and regulations and judicial
interpretations thereof, which are subject to change at any time, the following
are the federal income tax consequences generally arising with respect to
awards granted under the 1995 Plan. The grant of a stock option or SAR will
create no tax consequences for the participant or the Company. The participant
will have no taxable income upon exercising an incentive stock option (except
that the alternative minimum tax may apply), and the Company will not receive a
deduction when an incentive stock option is exercised. Upon exercising an SAR
or a non-qualified stock option, the participant must recognize ordinary income
in an amount equal to the difference between the exercise price and the fair
market value of the stock on the exercise date. At such time, the Company will
receive a deduction for the same amount (assuming the applicable requirements
of Section 162(m) of the Internal Revenue Code have been met).
With respect to other awards granted under the 1995 Plan that
are settled in cash or stock that is either transferable or not subject to a
substantial risk of forfeiture, the participant must recognize ordinary income
in an amount equal to the cash or the fair market value of the shares received,
when received. The Company will receive a deduction for the same amount,
provided that, at the time the income is recognized, the participant either is
not a covered employee or does not have total compensation in excess of
$1,000,000 for the year of recognition (other than compensation that otherwise
meets the requirements of Section 162(m) of the Internal Revenue Code). With
respect to other awards granted under the 1995 Plan that are settled in stock
that is subject to restrictions as to transferability and subject to a
substantial risk of forfeiture, the participant must recognize ordinary income
in an amount equal to the fair market value of the shares received on the date
the shares first become transferable or not subject to a substantial risk of
forfeiture, whichever occurs earlier. At such time, the Company will receive a
deduction for the same amount, subject to the proviso set forth above in this
paragraph.
The tax treatment upon disposition of shares acquired under the
1995 Plan will depend on how long the shares have been held. In the case of
shares acquired through exercise of a stock option, the tax treatment will also
depend on whether or not the shares were acquired by exercising an incentive
stock option. There will be no tax consequences to the Company upon the
disposition of shares acquired under the 1995 Plan except that the Company may
receive a deduction in the case of
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the disposition of shares acquired under an incentive stock option
before the applicable incentive stock option holding period has been satisfied.
Recommendation
The Board of Directors of the Company believes that it is in the
best interests of the Company and its stockholders that the 1995 Plan be
approved. The Board of Directors believes that the future success of the
Company will in large part depend on its ability to attract, retain and
motivate key employees through, among other things, competitive compensation
programs. The 1995 Plan will permit certain incentive compensation to be
tailored to support corporate and business objectives, and allow the Company to
respond to changing business environments and competitive compensation
practices. Accordingly, the Board of Directors has adopted, and recommends
that the stockholders approve, the 1995 Plan.
Approval requires the affirmative vote of a majority of the
votes cast at the meeting, in person or by proxy, on such proposal, provided
that the total vote cast represents over 50% of all shares entitled to vote on
the proposal.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE PROPOSAL TO
ADOPT THE 1995 STOCK INCENTIVE PLAN.
PROPOSAL TO AMEND EMPLOYEE STOCK PURCHASE PLAN
On August 13, 1994, the Board of Directors approved an amendment
to the Company's Employee Stock Purchase Plan (the "ESPP"), subject to the
approval of the stockholders, to extend the term of the ESPP to December 31,
1999. The purpose of the ESPP is to provide U.S. employees with an
opportunity to acquire a proprietary interest in the Company by the purchase of
shares of the Company's Common Stock directly from the Company through payroll
deductions. The Board of Directors believes that employee participation in the
ownership of the Company will contribute to the growth and success of the
Company and be to the mutual benefit of both the Company and its employees, and
therefore recommends approval of the amendment.
There follows a summary of the principal features of the ESPP.
Generally
The ESPP, designed to qualify as an "employee stock purchase
plan" under Section 423 of the Internal Revenue Code, was initially adopted by
the Board of Directors and approved by the stockholders of the Company in 1976.
Its initial term was subsequently extended to December 31, 1995, and the number
of shares available for issuance thereunder increased to 3,337,500 (after
adjusting for the Company's 3-for-2 stock split in November 1993) by vote of
the Board of Directors and approval by the stockholders in 1987.
Under the ESPP, the total number of shares of the Company's
Common Stock which may be issued is not to exceed 3,337,500 shares (subject to
adjustment in accordance with the anti-dilution provisions of the ESPP). Of
these authorized shares, 2,588,270 shares will have been issued since the
establishment of the ESPP in 1976 through the completion of the offering
concluding on August 19, 1994, and 749,230 shares will remain available for
issuance after such date. Separate offerings to eligible employees, up to a
maximum of 250,000 shares, may be made from time to time,
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<PAGE> 25
but not more than once in any twelve-month period. The ESPP would
expire on December 31, 1995, unless extended with the approval of the
stockholders.
Under the ESPP, eligible employees are offered shares at a
purchases price equal to 85% of the fair market value of a share of the
Company's Common Stock on the offering date or on the quarterly purchase dates,
whichever is lower. The purchase price for shares subscribed for is paid
through payroll deductions over a period of one year. Shares are issued
quarterly.
The maximum number of shares for which an eligible employee may
subscribe in an offering is determined by dividing 15% of such employee's
compensation for the preceding calendar year by the purchase price of the
shares determined as of the offering date. However, no employee will be
entitled to subscribe for shares if the subscription would permit his rights to
purchase shares of Common Stock under the ESPP to accrue at a rate which would
exceed $25,000 of fair market value of such shares (determined at the offering
date) for any calendar year in which the subscription would be outstanding.
All U.S. employees, including officers (but not non-employee
directors), of the Company and its U.S. subsidiaries participating in the ESPP
whose customary employment is for more than 20 hours a week and for more than
five months in a calendar year are eligible to participate in an offering under
the ESPP after being continuously employed by the Company or a subsidiary for
at least twelve months. The number of persons presently eligible to
participate in the ESPP is approximately 1,425. No employee will be offered
shares under the ESPP if his stock ownership (including shares which would be
offered to him under the ESPP and any shares which could be purchased by him
under any options or other rights to purchase stock) would exceed the five
percent stock ownership limitation set forth in Section 423(b)(3) of the
Internal Revenue Code.
An employee may subscribe to purchase all or part of the shares
offered to him. If for any reason the shares of Common Stock available for an
offering are over-subscribed for, the number of shares which each subscribing
employee may purchase shall be reduced pro rata to avoid such
over-subscription. A participant under the ESPP subscribing for shares may,
at any time, cancel or reduce his remaining commitment for the purchase of
shares.
If a participant's employment with the Company is terminated for
any reason other than death or disability, his rights to purchase shares under
any outstanding subscriptions will terminate, except to the extent that payment
for shares already has been made through payroll deductions. If a participant
dies or becomes permanently disabled prior to the completion of the purchase of
all of the shares for which he is subscribed, the participant (or, in the event
of his death, his personal representative or heirs) may within 90 days after
such death or disability (but in no event later than the expiration of the
payment period) purchase all or part of the remaining shares for which such
participant subscribed. All subscriptions and rights under the ESPP are
otherwise non-transferable and during the lifetime of the participant are
exercisable only by the participant.
The Board of Directors has the right without prior approval of
the stockholders to terminate or amend the ESPP, provided that the Board of
Directors may not, without prior approval by the holders of a majority of the
outstanding shares of the Common Stock of the Company, amend or modify the ESPP
so as to increase the total number of shares of Common Stock which may be
issued under the ESPP or increase the number of shares which an eligible
employee is entitled to purchase. Furthermore, the Board of Directors may not
amend or modify the ESPP in any manner which would prevent it from qualifying
as an "employee stock purchase plan" (within the meaning of Section 423 of the
Internal Revenue Code), and no termination, amendment or modification of the
ESPP may, without the consent of the participants, adversely affect the rights
of the participants under an outstanding subscription.
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<PAGE> 26
The ESPP is administered by a committee consisting of Mr. Ray
and Dr. Milnes.
Summary of Tax Consequences
There is no Federal income tax liability to a participant in the
ESPP under Section 423 of the Internal Revenue Code resulting from either the
offering of shares to him or his acquisition of shares pursuant to the ESPP,
and the Company is not allowed a deduction therefor. However, the proceeds of
participants' disposition of shares purchased under the ESPP are subject to
taxation. If a participant holds the shares purchased pursuant to the ESPP for
at least two years after the date the shares were offered, the participant will
be taxed at the time he disposes of such shares at ordinary income rates on the
lesser of (a) the excess of the fair market value of the shares at the date the
offering was made over the price paid for such shares or (b) the excess of the
fair market value of such shares at the date of disposition over the price paid
for such shares. Any additional gain will be taxed as long-term capital gain.
The Company will not be entitled to take a deduction for the amount of the
discount under these circumstances. However, if a participant does not hold
the shares for the period described above, the participant will be taxed at the
time of disposition at ordinary income rates on the excess of the fair market
value of such shares as of the date of acquisition over the price paid for such
shares. The Company will be entitled to a deduction for the amount of such
excess. Any additional gain will be taxed as long-term capital gain.
Recommendation
The Board of Directors of the Company believes that it is in the
best interests of the Company and its stockholders that the ESPP continue to
provide U.S. employees with an opportunity to participate in the ownership of
the Company, and thereby enhance their contribution to its growth and success.
Accordingly, the Board of Directors has adopted, and recommends that the
stockholders approve, the amendment to the ESPP extending the term of the ESPP
from December 31, 1995 to December 31, 1999.
Approval of the amendment to the ESPP requires the affirmative
vote of a majority of the outstanding shares of the Common Stock of the
Company.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE PROPOSAL TO
AMEND THE ESPP.
SUBMISSION OF STOCKHOLDER PROPOSALS
In order for a stockholder proposal to be eligible for inclusion
in the Company's proxy material relating to its 1995 Annual Meeting (currently
scheduled to be held on November 9, 1995) it must be in writing and received by
the Secretary of the Company prior to June 2, 1995. Stockholders wishing to
bring any matter before a meeting should consult the Company's By-Laws with
respect to any applicable notice or other procedural requirements.
ANNUAL REPORT
All stockholders of record on September 23, 1994, have been
sent, or are concurrently being sent, a copy of the Company's 1994 Annual
Report, which contains certified financial statements of the Company for the
fiscal year ended June 30, 1994.
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ANY PERSON WHO WAS A STOCKHOLDER OF THE COMPANY AT THE CLOSE OF
BUSINESS ON SEPTEMBER 23, 1994, MAY OBTAIN A COPY OF THE COMPANY'S 1994 ANNUAL
REPORT ON FORM 10-K AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION,
WITHOUT CHARGE, BY WRITTEN REQUEST TO THE COMPANY, 500 NORTHWEST 12TH AVENUE,
DEERFIELD BEACH, FLORIDA 33442-1795, ATTENTION: SHAREHOLDER RELATIONS.
ACCOUNTANTS
The Company's independent auditors, selected by the Board of
Directors, are Ernst & Young certified public accountants. Ernst & Young, and
its predecessor, Arthur Young & Company, have served as the Company's auditors
since 1969.
Representatives of Ernst & Young are expected to be present at
the Annual Meeting of Stockholders, and will have the opportunity to make a
statement if they desire to do so and are expected to be available to respond
to appropriate questions at the meeting.
OTHER MATTERS
As of the date of this Proxy Statement, the Company knows of no
matter other than those set forth herein which will be presented for
consideration at the Annual Meeting of Stockholders. If any other matter or
matters are properly brought before the meeting or any adjournment thereof, it
is the intention of the persons named in the accompanying proxy to vote, or
otherwise act, on such matters in accordance with their judgment.
WALTER A. ENGDAHL
Secretary
Deerfield Beach, Florida
October 6, 1994
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EXHIBIT A
SENSORMATIC ELECTRONICS CORPORATION
1995 STOCK INCENTIVE PLAN
1. Purpose. The purpose of the 1995 Stock Incentive Plan (the "Plan") is
to aid the Company in attracting, retaining and motivating officers, key
employees and directors by providing them with incentives for making
significant contributions to the growth and profitability of the Company. The
Plan is designed to accomplish this goal by offering stock options and other
incentive awards, thereby providing Participants with a proprietary interest in
the growth, profitability and success of the Company.
2. Definitions.
(a) Award. Any form of stock option, stock appreciation right, stock or
cash award granted under the Plan, whether granted singly, in combination or in
tandem, pursuant to such terms, conditions and limitations as the Committee may
establish in order to fulfill the objectives, and in accordance with the terms
and conditions, of the Plan.
(b) Award Agreement. An agreement between the Company and a Participant
setting forth the terms, conditions and limitations applicable to an Award.
(c) Board. The Board of Directors of Sensormatic Electronics Corporation.
(d) Code. The Internal Revenue Code of 1986, as amended from time to time.
(e) Committee. Such committee of the Board as may be designated from time
to time by the Board to administer the Plan or any subplan under the Plan. Any
such committee shall consist of not less than two members of the Board who are
not officers or employees of the Company.
(f) Company. Sensormatic Electronics Corporation and its direct and
indirect subsidiaries.
(g) Fair Market Value. If the Stock is listed on the New York Stock
Exchange (or other national exchange), the average of the high and low sale
prices as reported on the New York Stock Exchange (or such other exchange) or,
if the Stock is not listed on a national exchange, the average of the high and
low sale prices of the Stock in the over-the-counter market, as reported by the
National Association of Securities Dealers through its Automated Quotation
System or otherwise, in either case for the date in question, provided that if
no transactions in the Stock are reported for that date, the average of the
high and low sale prices as so reported for the preceding day on which
transactions in the Stock were effected.
(h) Participant. An officer, director or employee of the Company to whom
an Award has been granted.
(i) Sensormatic. Sensormatic Electronics Corporation.
(j) Stock. Authorized and issued or unissued shares of Common Stock of
Sensormatic or any security issued in exchange or substitution therefor.
<PAGE> 29
3. Eligibility. Only officers, key employees, and directors who are also
officers or employees of the Company or who have been designated by the Board
as eligible to receive Awards are eligible to receive Awards under the Plan.
Key employees are those employees who hold positions of responsibility or whose
performance, in the judgment of the Committee, can have a significant effect on
the growth and profitability of the Company.
4. Stock Available for Awards. Subject to Section 14 hereof, a total of
3,900,000 shares of Stock shall be available for issuance pursuant to Awards
granted under the Plan, provided, however, that the aggregate number of shares
of Stock subject to options and upon which stock appreciation rights are based
pursuant to Awards hereunder shall not exceed 800,000 for any Participant
during any three consecutive fiscal-year periods beginning on or after July 1,
1994. From time to time, the Board and appropriate officers of Sensormatic
shall file such documents with governmental authorities and, if the Stock is
listed on the New York Stock Exchange (or other national exchange), with such
stock exchange, as are required to make shares of Stock available for issuance
pursuant to Awards and publicly tradeable. Shares of Stock related to Awards,
or portions of Awards, that are forfeited, canceled or terminated, expire
unexercised, are surrendered in exchange for other Awards, or are settled in
cash in lieu of Stock or in such manner that all or some of the shares of Stock
covered by an Award are not and will not be issued to a Participant, shall be
restored to the total number of shares of Stock available for issuance pursuant
to Awards.
5. Administration.
(a) General. The Plan shall be administered by the Committee, which shall
have full and exclusive power to (i) authorize and grant Awards to persons
eligible to receive Awards under the Plan; (ii) establish the terms, conditions
and limitations of each Award or class of Awards; (iii) construe and interpret
the Plan and all Award Agreements; (iv) grant waivers of Plan restrictions; (v)
adopt and amend such rules, procedures, regulations and guidelines for carrying
out the Plan as it may deem necessary or desirable; and (vi) take any other
action necessary for the proper operation and administration of the Plan, all
of which powers shall be exercised in a manner consistent with the objectives,
and in accordance with the terms and conditions, of the Plan. The Committee's
powers shall include, but shall not be limited to, the authority to (A) adopt
such subplans as may be necessary or appropriate (1) to provide for the
authorization and granting of Awards to promote specific goals or for the
benefit of specific classes of Participants, (2) to provide for grants of
Awards by means of formulae, standardized criteria or otherwise, or (3) for any
other purposes as are consistent with the objectives of the Plan, and to
segregate shares of Stock available for issuance under the Plan generally as
being available specifically for the purposes of one or more subplans, and (B)
subject to Section 11 hereof, adopt modifications, amendments, rules,
procedures, regulations, subplans and the like as may be necessary or
appropriate (1) to comply with provisions of the laws of other countries in
which the Company may operate in order to assure the effectiveness of Awards
granted under the Plan and to enable Participants employed in such other
countries to receive advantages and benefits under the Plan and such laws, (2)
to effect the continuation, acceleration or modification of Awards under
certain circumstances, including events which might constitute a Change in
Control (as set forth in Section 7 hereof) of Sensormatic, or (3) for any other
purposes as are consistent with the objectives of the Plan. All such
modifications, amendments, rules, procedures, regulations and subplans shall be
deemed to be a part of the Plan as if stated herein.
(b) Committee Actions. All actions of the Committee with respect to the
Plan shall require the vote of a majority of its members or, if there are only
two members, by the vote of both. Any action of the Committee may be taken by
a written instrument signed by a majority (or both members) of the Committee,
and any action so taken shall be as effective as if it had been
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<PAGE> 30
taken by a vote at a meeting. All determinations and acts of the Committee as
to any matters concerning the Plan, including interpretations or constructions
of the Plan and any Award Agreement, shall be conclusive and binding on all
Participants and on any parties validly claiming through any Participants.
6. Delegation of Authority. The Committee may delegate to the Chief
Executive Officer of Sensormatic and to other executive officers of the Company
certain of its administrative duties under the Plan, pursuant to such
conditions or limitations as the Committee may establish, except that the
Committee may not delegate its authority with respect to (a) the selection of
eligible persons as Participants in the Plan, (b) the granting or timing of
Awards, (c) establishing the amount, terms and conditions of any such Award,
(d) interpreting the Plan, any subplan or any Award Agreement or (e) amending
or otherwise modifying the terms or provisions of the Plan, any subplan or any
Award Agreement.
7. Awards. Subject to Section 4, the Committee shall determine the types
and timing of Awards to be made to each Participant and shall set forth in the
related Award Agreement the terms, conditions and limitations applicable to
each Award. Awards may include, but are not limited to, those listed below in
this Section 7. Awards may be granted singly, in combination or in tandem, or
in substitution for Awards previously granted under the Plan. Awards may also
be made in combination or in tandem with, in substitution for, or as
alternatives to, grants or rights under any other benefit plan of the Company,
including any such plan of any entity acquired by, or merged with or into, the
Company. Any such Awards made in substitution for, or as alternatives to,
grants or rights under a benefit plan of an entity acquired by, or merged with
or into, the Company in order to give effect to the transaction shall be deemed
to be issued in accordance with the terms and conditions of the Plan. Awards
shall be effected through Award Agreements executed by the Company in such
forms as are approved by the Committee from time to time.
All or part of any Award may be subject to conditions established by the
Committee, and set forth in the Award Agreement, which conditions may include,
without limitation, achievement of specific business objectives, increases in
specified indices, attainment of growth rates and other measurements of Company
performance.
The Committee may determine to make any or all of the following Awards:
(a) Stock options. A grant of a right to purchase a specified number of
shares of Stock at an exercise price not less than 100% of the Fair Market
Value of the Stock on the date of grant, during a specified period, all as
determined by the Committee. Without limitation, a stock option may be in the
form of (i) an incentive stock option which, in addition to being subject to
such terms, conditions and limitations as are established by the Committee,
complies with Section 422 of the Code or (ii) a non-qualified stock option
subject to such terms, conditions and limitations as are established by the
Committee.
(b) Stock Appreciation Rights. A right to receive a payment, in cash or
Stock, equal to the excess of the Fair Market Value (or other specified
valuation) of a specified number of shares of Stock on the date the stock
appreciation right ("SAR") is exercised over the Fair Market Value (or other
specified valuation) on the date of grant of the SAR, except that if an SAR is
granted in tandem with a stock option, valuations on the grant and exercise
dates shall be no less than as determined on the basis of Fair Market Value.
The eventual amount, vesting or issuance of an SAR may be subject to future
service, performance standards and such other restrictions and conditions as
may be established by the Committee.
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<PAGE> 31
(c) Stock Awards. An Award made in Stock or denominated in units of
Stock. The eventual amount, vesting or issuance of a Stock Award may be
subject to future service, performance standards and such other restrictions
and conditions as may be established by the Committee. Stock Awards may be
based on Fair Market Value or another specified valuation.
(d) Cash Awards. An Award made or denominated in cash. The eventual
amount of a cash Award may be subject to future service, performance standards
and such other restrictions and conditions as may be established by the
Committee.
Dividend equivalency rights, on a current or deferred basis, may be extended
to and be made part of any Award denominated in whole or in part in Stock or
units of Stock, subject to such terms, conditions and restrictions as the
Committee may establish.
Notwithstanding the provisions of the paragraphs of this Section 7, Awards
may be subject to acceleration of exercisability or vesting in the event of a
Change in Control of Sensormatic (i) as set forth in agreements between
Sensormatic and certain of its officers, directors and key employees which
provide for certain protections and benefits in the event of a change in
control (as defined in such agreements) or (ii) as may otherwise be determined
by the Committee under and in accordance with the terms and conditions of the
Plan. "Change in Control" for purposes of the Plan shall mean a change in
control of Sensormatic under such circumstances as shall be specified by (x)
the Committee or (y) where applicable to any Awards granted under the Plan by
such agreements between Sensormatic and a Participant as (1) may have been
entered into prior to the effective date of the Plan or (2) shall be entered
into after the effective date of the Plan with, to the extent such an agreement
is applicable to an Award, the approval of the Committee. A "Change in
Control" may, without limitation, be deemed to have occurred if (A) any
"person" or "group" of persons (as the terms "person" and "group" are used in
Sections 13(d) and 14(d) of the Securities Exchange Act of 1934 and the rules
thereunder) is or becomes the beneficial owner, directly or indirectly, of
securities of Sensormatic representing 30% or more of the combined voting power
of the then outstanding securities of Sensormatic or (B) a change of more than
25% in the composition of the Board occurs within a two-year period, unless
such change in composition was approved in advance by at least two-thirds of
the previous directors.
8. Payment under Awards. Payment by the Company pursuant to Awards may be
made in the form of cash, Stock or combinations thereof and may be subject to
such restrictions as the Committee determines, including, in the case of Stock,
restrictions on transfer and forfeiture provisions. Stock subject to transfer
restrictions or forfeiture provisions is referred to herein as "Restricted
Stock". The Committee may provide for payments to be deferred, such future
payments to be made in installments or by lump-sum payment. The Committee may
permit selected Participants to elect to defer payments of some or all types of
Awards in accordance with procedures established by the Committee to assure
that such deferrals comply with applicable requirements of the Code.
The Committee may also establish rules and procedures for the crediting of
interest on deferred cash payments and of dividend equivalencies on deferred
payments to be made in Stock or units of Stock.
At the discretion of the Committee, a Participant may be offered an election
to substitute an Award for another Award or Awards, or for awards made under
any other benefit plan of the Company, of the same or different type.
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<PAGE> 32
9. Stock Option Exercise. The price at which shares of Stock may be
purchased upon exercise of a stock option shall be paid in full at the time of
the exercise, in cash or, if permitted by the Committee, by (a) tendering Stock
or surrendering another Award, including Restricted Stock, or an option or
other award granted under another benefit plan of the Company, in each case
valued at, or on the basis of, Fair Market Value on the date of exercise, (b)
delivery of a promissory note issued by a Participant to the Company pursuant
to the terms and conditions of the Company's Stock Purchase Loan Plan or
otherwise as determined by the Committee, or (c) any other means acceptable to
the Committee. The Committee shall determine acceptable methods for tendering
Stock or surrendering other Awards or grants and may impose such conditions on
the use of Stock or other Awards or grants to exercise a stock option as it
deems appropriate. If shares of Restricted Stock are tendered as consideration
for the exercise of a stock option, the Committee may require that the number
of shares issued upon exercise of the stock option equal to the number of
shares of Restricted Stock used as consideration therefor be subject to the
same restrictions as the Restricted Stock so surrendered and any other
restrictions as may be imposed by the Committee. The Committee may also permit
Participants to exercise stock options and simultaneously sell some or all of
the shares of Stock so acquired pursuant to a brokerage or similar arrangement
which provides for the payment of the exercise price substantially concurrently
with the delivery of such shares.
10. Tax Withholding. The Company shall have the right to deduct
applicable taxes from any Award payment or shares of Stock receivable under an
Award and to withhold an appropriate number of shares of Stock for payment of
taxes required by law or to take such other action as may be necessary in the
opinion of the Company to satisfy all tax withholding obligations. In
addition, the Committee may permit Participants to elect to (a) have the
Company deduct applicable taxes resulting from any Award payment to, or
exercise of an Award by, such Participant by withholding an appropriate number
of shares of Stock for payment of tax obligations or (b) tender to the Company
for the purpose of satisfying tax payment obligations other Stock held by the
Participant. If the Company withholds shares of Stock to satisfy tax payment
obligations, the value of such Stock in general shall be its Fair Market Value
on the date of the Award payment or the date of exercise of an Award, as the
case may be. If a Participant tenders shares of Stock pursuant to clause (b)
above to satisfy tax payment obligations, the value of such Stock shall be the
Fair Market Value on the date the Participant tenders such Stock to the
Company.
11. Amendment, Modification, Suspension or Termination of the Plan. The
Board may amend, modify, suspend or terminate the Plan, or adopt subplans under
the Plan, (a) for the purpose of meeting or addressing any changes in any
applicable tax, securities or other laws, rules or regulations or (b) for any
other purpose permitted by law. Subject to changes in law or other legal
requirements which would permit otherwise, the Plan may not be amended without
the approval of the holders of a majority of the shares of Stock voting on such
amendment to (i) materially increase the aggregate number of shares of Stock
that may be issued under the Plan (except for any increase resulting from
adjustments pursuant to Section 14 hereof), (ii) materially increase the
benefits accruing to Participants (except that the limit on the aggregate
number of shares that may be issued to any individual participant during any
three consecutive fiscal-year periods pursuant to option, or which are used as
a basis of SARs, may not be amended at all without the approval of
stockholders) or (iii) materially modify the requirements as to eligibility for
participation in the Plan. In addition, no subplan which provides for the
granting of Awards by a formula whose provisions fix the selection of
Participants, the granting and timing of Awards and the terms and conditions of
such Awards, shall be amended with respect to such provisions more frequently
than once every six months (other than to comport with changes in the Code or
the Employee Retirement Income Security Act or the rules thereunder). Further,
the Plan may not be amended in a manner that would alter, impair, amend,
modify, suspend or terminate any rights of a
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<PAGE> 33
Participant or obligation of the Company under any Awards theretofore granted,
in any manner adverse to any such affected Participant, without the consent of
such affected Participant.
12. Termination of Employment. Except as otherwise set forth in an
applicable Award Agreement or determined by the Committee, or as otherwise
provided in paragraph (a) or (b) of this Section 12, if a Participant's
employment or association with the Company terminates, all unexercised,
deferred and unpaid Awards (or portions of Awards) shall be canceled
immediately.
(a) Retirement, Resignation or Other Termination. If a Participant's
employment or association with the Company terminates by reason of the
Participant's retirement or resignation, or for any other reason (other than
the Participant's death or disability), the Committee may, under circumstances
in which it deems an exception from the provisions of the first sentence of
this Section 12 to be appropriate to carry out the objectives of the Plan and
to be consistent with the best interests of the Company, permit Awards to
continue in effect and be exercisable or payable beyond the date of such
termination, up until the expiration date specified in the applicable Award
Agreement and otherwise in accordance with the terms of the applicable Award
Agreement, and may accelerate the exercisability or vesting of any Award, in
either case, in whole or in part.
(b) Death or Disability.
(i) In the event of a Participant's death, the
Participant's estate or beneficiaries shall have a period, not
extending beyond the expiration date specified in the applicable Award
Agreement (except as otherwise provided in such Award Agreement),
within which to exercise any outstanding Award held by the
Participant, as may be specified in the Award Agreement or as may
otherwise be determined by the Committee. All rights in respect of
any such outstanding Awards shall pass in the following order: (A) to
beneficiaries so designated in writing by the Participant; or if none,
then (B) to the legal representative of the Participant; or if none,
then (C) to the persons entitled thereto as determined by a court of
competent jurisdiction. Awards so passing shall be exercised or paid
at such times and in such manner as if the Participant were living,
except as otherwise provided in the applicable Award Agreement or as
determined by the Committee.
(ii) If a Participant ceases to be employed or
associated with the Company because the Participant is deemed by the
Company to be disabled, outstanding Awards held by the Participant may
be paid to or exercised by the Participant, if legally competent, or
by a committee or other legally designated guardian or representative
if the Participant is legally incompetent, for a period, not extending
beyond the expiration date specified in the applicable Award Agreement
(except as otherwise provided in such Award Agreement), following the
termination of his employment or association with the Company, as may
be specified in the Award Agreement or as may otherwise be determined
by the Committee.
(iii) After the death or disability of a
Participant, the Committee may at any time (A) terminate restrictions
with respect to Awards held by the Participant, (B) accelerate the
vesting or exercisability of any or all installments and rights of the
Participant in respect of Awards held by the Participant and (C)
instruct the Company to pay the total of any accelerated payments
under the Awards in a lump sum to the Participant or to the
Participant's estate, beneficiaries or representatives,
notwithstanding that, in the absence of such termination of
restrictions or acceleration of payments, any or all of the payments
due under the Awards might ultimately have become payable to other
beneficiaries.
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<PAGE> 34
(iv) In the event of uncertainty as to the
interpretation of, or controversies concerning, paragraph (b) of this
Section 12, the Committee's determinations shall be binding and
conclusive on all Participants and any parties validly claiming
through them.
13. Nonassignability.
(a) Except as provided for in paragraphs (a) and (b) of Section 12
hereof and paragraph (b) of this Section 13, no Award or any other
benefit under the Plan, or any right with respect thereto, shall be assignable
or transferable, or payable to or exercisable by, anyone other than the
Participant to whom it is granted.
(b) If a Participant's employment or association with the Company
terminates in order for such Participant to assume a position with a
governmental, charitable or educational agency or institution, and the
Participant retains Awards pursuant to paragraph (a) of Section 12 hereof, the
Committee, in its discretion and to the extent permitted by law, may authorize
a third party (including, without limitation, the trustee of a "blind" trust),
acceptable to the applicable authorities, the Participant and the Committee, to
act on behalf of the Participant with respect to such Awards.
14. Adjustments. In the event of any change in the outstanding
Stock by reason of a stock split, stock dividend, combination or
reclassification of shares, recapitalization, merger or similar event, the
Committee shall adjust proportionally (a) the number of shares of Stock (i)
reserved under the Plan, (ii) available for options or other Awards and
available for issuance pursuant to options, or upon which SARs may be based,
for individual Participants and (iii) covered by outstanding Awards denominated
in Stock or units of Stock; (b) the prices related to outstanding Awards; and
(c) the appropriate Fair Market Value and other price determinations for such
Awards. In the event of any other change affecting the Stock or any
distribution (other than normal cash dividends) to holders of Stock, such
adjustments as may be deemed equitable by the Committee, including adjustments
to avoid fractional shares, shall be made to give proper effect to such event.
In the event of a corporate merger, consolidation, acquisition of property or
stock, separation, reorganization or liquidation, the Committee shall be
authorized to issue or assume stock options or other awards, whether or not in
a transaction to which Section 425(a) of the Code applies, by means of
substitution of new stock options or Awards for previously issued options or
awards or an assumption of previously issued stock options or awards.
15. Notice. Any written notice to Sensormatic required by any of the
provisions of the Plan shall be addressed to the Committee, c/o the Secretary
of Sensormatic, and shall become effective when received by the Secretary.
16. Unfunded Plan. Insofar as the Plan provides for Awards of cash or
Stock, the Plan shall be unfunded unless and until the Board or the Committee
otherwise determines. Although bookkeeping accounts may be established
with respect to Participants who are entitled to cash, Stock or rights thereto
under the Plan, any such accounts shall be used merely as a bookkeeping
convenience. Unless the Board otherwise determines, (a) the Company shall not
be required to segregate any assets that may at any time be represented by
cash, Stock or rights thereto, nor shall the Plan be construed as providing for
such segregation, nor shall the Company, the Board or the Committee be deemed
to be a trustee of any cash, Stock or rights thereto to be granted under the
Plan; (b) any liability of the Company to any Participant with respect to a
grant of cash, Stock or rights thereto under the Plan shall be based solely
upon any contractual obligations that may be created by the Plan and an Award
Agreement; (c) no such obligation of the Company shall be deemed to be secured
by any pledge or other encumbrance on any property of the Company; and (d)
neither the Company, the Board nor the Committee shall be required to give
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<PAGE> 35
any security or bond for the performance of any obligation that may be created
by or pursuant to the Plan.
17. Payments to Trust. Notwithstanding the provisions of Section 16
hereof, the Board or the Committee may cause to be established one or
more trust agreements pursuant to which the Committee may make payments of
cash, or deposit shares of Stock, due or to become due under the Plan to
Participants.
18. No Right to Employment. Neither the adoption of the Plan nor the
granting of any Award shall confer on any Participant any right to
continued employment or association with the Company or in any way interfere
with the Company's right to terminate the employment or association of any
Participant at any time, with or without cause, and without liability therefor.
Awards, payments and other benefits received by a Participant under the Plan
shall not be deemed a part of the Participant's regular, recurring compensation
for any purpose, including, without limitation, for the purposes of any
termination indemnity or severance pay law of any jurisdiction.
19. Governing Law. The Plan and all determinations made and actions
taken pursuant hereto, to the extent not otherwise governed by the Code
or the securities laws of the United States, shall be governed by and construed
under the laws of the State of Delaware.
20. Effective and Termination Dates. The Plan, and any
amendment hereof requiring stockholder approval, shall become effective as of
the date of its adoption by the Board, subject to the subsequent approval of
the stockholders of Sensormatic by the affirmative vote of a majority of the
votes cast at a stockholders' meeting at which the approval of the Plan (or any
such amendment) is considered, provided that the total vote cast represents
over 50% of all shares entitled to vote on the proposal. The Plan shall
terminate ten years after its initial effective date, subject to earlier
termination by the Board pursuant to Section 11 hereof, except as to Awards
then outstanding.
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<PAGE> 36
SENSORMATIC ELECTRONICS CORPORATION
P PROXY - ANNUAL MEETING OF STOCKHOLDERS - NOVEMBER 11, 1994
R PROXY SOLICITED BY THE BOARD OF DIRECTORS
O
X
Y The undersigned, a stockholder of SENSORMATIC ELECTRONICS CORPORATION,
a Delaware corporation (the "Company"), does hereby appoint RONALD G. ASSAF,
WALTER A. ENGDAHL and MIGUEL A. FLORES, and each of them, the true and
lawful attorneys and proxies, with full power of substitution, for and in
the name, place and stead of the undersigned, to vote, as designated on the
reverse side, all of the shares of stock of the Company which the
undersigned would be entitled to vote if personally present at the Annual
Meeting of Stockholders of the Company to be held at the Deerfield
Beach/Boca Raton Hilton, 100 Fairway Drive, Deerfield Beach, Florida 33441,
on November 11, 1994, at 10 A.M., local time, and at any adjournment or
adjournments thereof.
SEE REVERSE
(Continued and to be signed on the reverse side) SIDE
<PAGE> 37
Please Mark
/X/ votes as in
this example.
UNLESS OTHERWISE DIRECTED, THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE
RECOMMENDATIONS OF THE BOARD OF DIRECTORS.
<TABLE>
<CAPTION>
<S> <C>
THE BOARD OF DIRECTORS RECOMMENDS THE BOARD OF DIRECTORS RECOMMENDS
A VOTE "FOR" THE NOMINEES. A VOTE "FOR" ITEM 2.
FOR AGAINST ABSTAIN
1. ELECTION OF DIRECTORS. 2. PROPOSAL TO ADOPT THE 1995 / / / / / /
STOCK INCENTIVE PLAN.
Nominees: Jerome M. LeWine and Michael E. Pardue
WITHHELD
FOR FROM
BOTH / / BOTH / / THE BOARD OF DIRECTORS RECOMMENDS
NOMINEES NOMINEES A VOTE "FOR" ITEM 3.
/ / for, except vote withheld from MARK HERE / / FOR AGAINST ABSTAIN
the following nominee: FOR ADDRESS 3. PROPOSAL TO APPROVE AN / / / / / /
CHANGE AND AMENDMENT TO THE EMPLOYEE
_________________________ NOTE BELOW STOCK PURCHASE PLAN.
4. To vote with discretionary authority with respect to all
other matters which may come before the meeting.
The undersigned hereby revokes any proxy or proxies heretofore
given and ratifies and confirms all that the proxies appointed
hereby, or either one of them, or their substitutes, may lawfully
do or cause to be done by virtue hereof. Both of said premises or
their substitutes who shall be present and act at the meeting, or
if only one is present and acts, then that one, shall have and may
exercise all of the powers hereby granted to such proxies. The
undersigned hereby acknowledges receipt of a copy of this Notice
of Annual Meeting and Proxy Statement, both dated October 6, 1994
and a copy of the Annual Report for the fiscal year ended June
30, 1994.
NOTE: Your signature should appear as your name appears Signature: Date
hereon. In signing as attorney, executor, administrator, ----------------------------------- ---------------
trustee, or guardian, please indicate the capacity in which Signature: Date
signing. When signing as joint tenants, all parties in the ----------------------------------- ---------------
joint tenancy must sign. When a proxy is given by a corporation,
it should be signed by an authorized officer in the corporate
seal affixed. No postage is required if returned in the enclosed
envelope and mailed in the United States.
</TABLE>
