<PAGE> 1
As filed with the Securities and Exchange Commission on January 19, 1994.
Registration No. 33-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
SENSORMATIC ELECTRONICS CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 34-1024665
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
500 N.W. 12TH AVENUE
DEERFIELD BEACH, FLORIDA 33442
(305) 420-2000
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
MICHAEL E. PARDUE
EXECUTIVE VICE PRESIDENT
Sensormatic Electronics Corporation
500 N.W. 12th Avenue, Deerfield Beach, Florida 33442
(305) 420-2000
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
Copies to:
JEROME M. LEWINE
Christy & Viener
620 Fifth Avenue, New York, New York 10020
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after the effective date of this Registration Statement.
If the only securities being registered on this Form are being
offered pursuant to dividend or interest reinvestment plans, please check the
following box. [ ]
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box. [X]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Amount Proposed Maximum Proposed Maximum
Title of Shares to be to be Aggregate Offering Aggregate Offering Amount of Registration
Registered Registered Price per Share (1) Price (1) Fee
<S> <C> <C> <C> <C>
Common Stock ($.01 90,000 $35 $3,150,000 $1,087
par value)
</TABLE>
(1) Estimated solely for purposes of calculating the registration fee
on the basis of the average of the high and low reported sales
prices of the Common Stock on January 18, 1994, on the New York
Stock Exchange, in accordance with Rule 457(c) under the
Securities Act of 1933.
_________________________
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH
DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE
REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
<PAGE> 2
PROSPECTUS
SENSORMATIC ELECTRONICS CORPORATION
90,000 SHARES OF COMMON STOCK
This Prospectus relates to up to 90,000 shares (the "Shares")
of the Common Stock of Sensormatic Electronics Corporation (the "Company")
which have been issued or may be issued to the stockholders (the "Selling
Stockholders") of Advanced Entry Systems, Inc. ("AES") pursuant to the
Company's agreement to acquire all of the outstanding stock of AES. The Shares
are to be sold from time to time by the Selling Stockholders on the New York
Stock Exchange, Inc. (the "NYSE") or otherwise at prices then attainable, less
ordinary brokers' commissions and dealers' discounts, as applicable. See "The
Selling Stockholders" and "Plan of Distribution".
The Shares will be approved for listing on the NYSE, subject
to notice of issuance, under the trading symbol SRM. The last reported sale
price of the Company's Common Stock on the NYSE on January 18, 1994 was $35 1/8.
The Shares are being offered for the account of the Selling
Stockholders and the Company will receive no part of the proceeds of this
Offering. See "Use of Proceeds" and "The Selling Stockholders".
____________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
____________________
The date of this Prospectus is January __, 1994
<PAGE> 3
AVAILABLE INFORMATION
The Company is subject to the informational requirements of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and, in
accordance therewith, files reports, proxy statements and other information
with the Securities and Exchange Commission (the "Commission"). This
Prospectus contains information concerning the Company, but does not contain
all of the information set forth in the Registration Statement and exhibits
thereto which the Corporation has filed with the Commission under the
Securities Act of 1933. Such reports, proxy statements, Registration Statement
and exhibits and other information can be inspected and copied at the public
reference facilities maintained by the Commission at Room 1024, 450 Fifth
Street, N.W., Washington D.C. 20549, and at the following Regional Offices of
the Commission: Chicago Regional Office, Room 3190, Kluczynski Building, 230
South Dearborn Street, Chicago, Illinois, 60604 and New York Regional Office,
Room 1400, 75 Park Place, New York, New York 10007. Copies of such material
can also be obtained from the Public Reference Section of the Commission at 450
Fifth Street, N.W., Washington D.C. 20549 at prescribed rates. In addition,
such reports, proxy statements, Registration Statement and exhibits and other
information concerning the Company may be inspected at the offices of the New
York Stock Exchange, 20 Broad Street, 7th Floor, New York, New York 10005.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company's Annual Report on Form 10-K for the fiscal year
ended June 30, 1993; its Quarterly Report on Form 10-Q for the quarter ended
September 30, 1993; its Current Report on Form 8-K filed December 7, 1993 (File
Number 0-3953); and those portions of the Company's Prospectus, dated July 22,
1992 (File Number 33-47824), set forth under the captions "Management's
Discussion and Analysis of Financial Condition and Results of Operations of
ALP" (pages 26 and 27) and "ALP Business" (pages 38 and 39), and the financial
information appearing in the ALP financial statements as of November 30, 1991
and November 30, 1990, and for each year in the three-year period ended
November 30, 1991, included in such Prospectus, including the Report of
Independent Chartered Accountants (pages F-2 through F-19); have been filed
with the Commission and are incorporated by reference into this Prospectus.
The description of the Company's Common Stock set forth in the Company's
amended Registration Statement on Form 8-A, dated May 14, 1991, filed under the
Exchange Act, including any subsequent amendment or report filed for the
purpose of updating such description, is also incorporated herein by reference.
All documents filed by the Company with the Commission
pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act after the
date of this Prospectus and prior to the termination of the offering of the
Shares covered by this Prospectus shall be deemed to be incorporated by
reference into this Prospectus and to be a part hereof from their respective
dates of filing. Any statement contained in this Prospectus or in a document
incorporated or deemed to be incorporated herein by reference shall be deemed
to be modified or superseded for purposes of this Prospectus to the extent that
a statement contained in this Prospectus or in any other subsequently filed
document which is or is deemed to be incorporated herein by reference modifies
or supersedes such statement. Any statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of
this Prospectus.
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THIS PROSPECTUS INCORPORATES BY REFERENCE CERTAIN DOCUMENTS
WHICH ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH. THE COMPANY WILL PROVIDE
COPIES OF SUCH DOCUMENTS (OTHER THAN EXHIBITS TO SUCH DOCUMENTS, UNLESS SUCH
EXHIBITS ARE SPECIFICALLY INCORPORATED BY REFERENCE INTO THE TEXT OF SUCH
DOCUMENTS), WITHOUT CHARGE, TO EACH PERSON TO WHOM THIS PROSPECTUS IS
DELIVERED, ON THE WRITTEN OR ORAL REQUEST OF SUCH PERSON. REQUESTS FOR COPIES
OF SUCH DOCUMENTS SHOULD BE DIRECTED TO WALTER A. ENGDAHL, SECRETARY,
SENSORMATIC ELECTRONICS CORPORATION, 500 N.W. 12TH AVENUE, DEERFIELD BEACH,
FLORIDA 33442 (TELEPHONE (305) 420-2000).
___________________
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO
MAKE ANY REPRESENTATION OTHER THAN THOSE CONTAINED OR INCORPORATED BY REFERENCE
IN THIS PROSPECTUS IN CONNECTION WITH THE OFFER CONTAINED HEREIN AND, IF GIVEN
OR MADE, SUCH OTHER INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE COMPANY OR BY ANY OTHER PERSON. NEITHER THE
DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
INFORMATION ABOUT THE COMPANY SINCE THE DATE HEREOF, OR THAT THE INFORMATION
HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THEIR RESPECTIVE DATES. THIS
PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL, OR THE SOLICITATION OF AN
OFFER TO BUY, ANY SECURITY OTHER THAN THE SHARES, NOR SHALL THIS PROSPECTUS
CONSTITUTE AN OFFER OR SOLICITATION BY ANYONE IN ANY JURISDICTION IN WHICH SUCH
OFFER OR SOLICITATION IS NOT AUTHORIZED, OR IN WHICH THE PERSON MAKING SUCH
OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO, OR TO ANY PERSON TO WHOM IT IS
UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
THE COMPANY
The Company is a fully-integrated supplier of electronic
security systems to retail and non-retail markets worldwide. The Company
designs, manufactures, markets and services electronic article surveillance
("EAS") systems, including the reusable tags and disposable labels used with
such systems, microprocessor-controlled closed circuit television ("CCTV")
systems, exception monitoring systems and access control systems. These
electronic security systems are used principally to deter shoplifting, or
internal or other theft, in a wide variety of soft and hard goods retail stores
and non-retail environments (such as industrial and commercial facilities), as
well as for other security applications. The Company's multiple product lines,
which have been developed for specific targeted loss prevention applications,
make use of a broad base of technology which it has developed or acquired. The
Company's product lines, together with its extensive, experienced sales and
service organization, have made the Company the recognized world leader in
supplying loss prevention products to retailers. From inception through
September 30, 1993, the Company sold or leased worldwide approximately 206,200
EAS systems and approximately 794 million reusable tags. The Company sold
approximately 292 million disposable labels during the first three months of
fiscal 1994 and approximately 1.1 billion, 750 million and 650 million
disposable labels in fiscal 1993, 1992 and 1991, respectively. The Company
also installed more than 49,600 CCTV camera-containing domes from 1984 through
September 30, 1993.
The Company's initial EAS systems were designed and are
marketed for use primarily by department, specialty and other retail stores for
the protection of clothing and other soft goods merchandise. The Company's
newer EAS product lines have been developed and targeted for specific hard
goods retail applications (including applications in supermarkets
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and hypermarkets and drug, discount, eyeglass, music, hardware,
"do-it-yourself" home improvement, book and video stores) and the Company has
become the leading supplier of EAS products to hard goods retailers. Hard
goods retailers are estimated to be a substantially larger user group than soft
goods retailers and have only begun to use EAS products during the last few
years. These EAS hard goods retailers primarily use disposable labels which
are affixed to merchandise. Use of the hard goods EAS systems creates a
continuing need on the part of retailers for additional disposable labels to be
affixed to new merchandise, resulting in a major source of recurring revenues
for the Company.
The Company has developed a broad range of CCTV products for
use in retail and commercial and industrial applications. CCTV products are
used to control inventory shrinkage and other losses due to internal or
employee theft in retail businesses, and are also used for the protection and
monitoring of personnel and assets in large-scale office and manufacturing
complexes, warehouses, casinos and numerous other non-retail facilities.
Additionally, the CamEra division in the United Kingdom (acquired in connection
with the acquisition of ALPS in July 1992, discussed below) markets packaged,
lower cost CCTV systems primarily for smaller retail and commercial businesses.
The Company is beginning to market CamEra systems elsewhere in Europe and in
the U.S.
The Company's point-of-sale exception monitoring systems
consist of proprietary software interfaces linking retail cash registers with
CCTV systems, which are programmed to record predetermined types of
transactions.
The Company has recently directed substantial new product
development and marketing efforts to commercial, industrial and other
non-retail customers. The Company's Commercial/Industrial Group markets
electronic article protection ("EAP") systems, SensorVision(R) and other CCTV
systems and access control systems for the protection, monitoring and control
of personnel and assets in large-scale office and manufacturing complexes,
warehouses, hospitals and nursing homes, nurseries, transportation centers,
colleges and universities, casinos, nuclear power plants and numerous other
non-retail facilities. Assets which are protected or controlled by the
Company's EAP products include limited access files, computer magnetic tapes
and disks, portable computer systems, facsimile and copy machines and other
office equipment, hospital equipment, garments and supplies, and many other
valuable items. Non-retail businesses are increasingly receptive to systems
integrating combinations of these various products, furnished and serviced by a
single supplier.
To maximize the advantages of its new technologies and
improved and expanded product lines, and to realize their market potential, the
Company has also greatly expanded its sales and marketing efforts in North
America, western Europe, and certain Asia/Pacific countries in recent years.
To this end, the Company has been increasing the total number of sales and
customer engineering personnel, establishing specialized sales groups to reach
targeted potential retail customer groups, and developing a separate group, the
Commercial/Industrial Group, to market products to commercial, industrial and
other non-retail customer groups. In addition, the Company has been
strengthening its global presence through the expansion of direct sales
operations in other strategic geographic areas around the world. During the
past six years, the Company acquired the remaining 51% interest in its United
Kingdom distributor (whose territory included Australia, New Zealand and Hong
Kong); established headquarters for its Asia/ Pacific operations in Singapore;
acquired the EAS and CCTV retail distribution rights and businesses of its
Canadian distributor; acquired certain businesses and related assets of its
distributors operating in Scandinavia (primarily in Denmark,
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<PAGE> 6
Finland, Norway and Sweden), Mexico and Puerto Rico (including the Caribbean
Basin); established a joint venture company to manufacture and market certain
loss prevention products in Brazil; and established sales representation in
Hungary and expanded its sales representation into eastern Germany.
Additionally, during the same six-year period, the Company acquired ALPS
(discussed further below); Security Tag Systems, Inc. ("Security Tag"), a U.S.
based manufacturer and marketer of loss prevention products; American Dynamics,
a leading U.S. manufacturer of CCTV components and systems; Continental
Instruments Corporation, a supplier of electronic access control systems; Point
of Sale Data Products, Inc. ("POSdata"), a value-added reseller of laser
bar-code scanners; and, in September 1993, the business and related assets of
Robot Research Inc., a U.S. based manufacturer and marketer of sophisticated
CCTV display and transmission systems. The Company continually evaluates
stategic acquisition opportunities and anticipates making further acquisitions.
In July 1992, the Company acquired from Automated Security
(Holdings) PLC ("ASH"; together with its subsidiaries, the "ASH Group") the ASH
Group's European EAS, CCTV and exception monitoring loss prevention systems
division ("ALPS"; also sometimes referred to as "ALP" in this Prospectus or in
documents incorporated by reference herein). With the acquisition of ALPS,
previously a large European distributor of EAS and CCTV products, the Company
is able to offer an expanded base of European customers a full range of EAS
technologies well suited to virtually any retail application, together with a
broad range of CCTV, exception monitoring and access control products, backed
by the combined sales and service organization of Sensormatic and ALPS.
Additionally, the Company, already the leader in the U.S. and the world, became
the largest supplier of loss prevention products to retailers in the European
market.
In connection with the acquisition of ALPS, the Company
acquired the ASH Group's interest of approximately 30% in Security Tag. Prior
to June 1993, the Company distributed Security Tag's products outside North and
South America under an exclusive distribution agreement between the Company and
Security Tag. In June 1993, the Company acquired the remaining interest in
Security Tag (approximately 70%).
Another of the Company's strategic objectives is to work
closely with manufacturers and retailers to develop and implement source
labeling and source tagging programs. Source labeling and source tagging are
processes whereby the label or tag is affixed to the merchandise to be
protected at the point of manufacture rather than at the retail store. Several
large U.S. retailers have signed agreements with the Company to purchase the
Company's Ultra-Max(R) equipment in connection with the implementation by such
retailers of source labeling programs with their respective manufacturers, and
a number of other U.S. retailers are exploring similar programs with the
Company.
In March 1993, the National Association of Recording
Merchandisers ("NARM") recommended the Company's acousto- magnetic UltraoMax
product line as the industry standard for use in source labeling of
pre-recorded music in the U.S. The Company has committed to NARM that it would
license its acousto-magnetic technology in the U.S. to other companies
supplying the music industry. In November 1993, the six major music
manufacturers objected to implementing EAS source labeling of pre-recorded
music using the Company's acousto-magnetic technology as recommended by NARM,
principally on the grounds of test results obtained by the manufacturers
purporting to show degradation of the sound quality of certain audio cassette
tapes from the magnetic deactivation devices used. Compact discs, which are
the most subject to shrinkage of the pre-recorded music formats
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carried by music retailers, have not been subject to any controversy over
alleged degradation in sound quality. The manufacturers also expressed
concerns relating to possible problems with label placement and automated
manufacturing processes. NARM is currently in the process of evaluating the
test reports furnished by the manufacturers in support of their position.
While there can be no assurance as to the outcome of the NARM program, music
retailers are continuing to expand their use of the Company's acousto- magnetic
Ultra-Max products. Sales to U.S. music retailers account for approximately 3%
of the Company's total consolidated revenues.
The Company is a Delaware corporation organized in 1968 to
succeed its predecessor, an Ohio corporation founded in 1966. The Company's
principal executive offices are located at 500 N.W. 12th Avenue, Deerfield
Beach, Florida 33442 and its telephone number is (305) 420-2000. Unless the
context otherwise requires, the term "the Company" refers to the Company and
its subsidiaries.
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CONDENSED FINANCIAL INFORMATION
INTRODUCTORY NOTES
The two tables presented below set forth certain condensed
historical financial information and unaudited condensed pro forma combined
financial information for Sensormatic after giving effect to the acquisition of
ALPS, using the purchase method as if such acquisition had been consummated,
with respect to the statements of income, on July 1, 1992. (Sensormatic's
historical balance sheet at September 30, 1993, incorporated herein by
reference, reflects the acquisition of ALPS as it occurred on July 29, 1992.
See "Sensormatic Selected Historical Financial Information".) Additionally,
the unaudited condensed pro forma combined financial information gives effect
to the merger with Security Tag, using the purchase method, as if such merger
were consummated, with respect to the summary of operations data, as of July 1,
1992. (Sensormatic's historical balance sheet at September 30, 1993,
incorporated herein by reference, also reflects the merger with Security Tag as
it occurred on June 17, 1993. See "Sensormatic Selected Historical Financial
Information".) The condensed historical financial information of Sensormatic
set forth in the first table with respect to the three months ended September
30, 1993 is not necessarily indicative of the results expected for the full
year. The information contained in the second table does not purport to be
indicative of the results of operations of Sensormatic which may have been
obtained had the acquisition of ALPS and the merger with Security Tag been
consummated on the dates assumed.
||
<TABLE>
<CAPTION>
SENSORMATIC CONDENSED HISTORICAL FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
THREE MONTHS ENDED
YEARS ENDED MAY 31, YEAR ENDED SEPTEMBER 30,
------------------------------------------------- JUNE 30, ------------------------
1989 1990 1991 1992 1993(1)(2) 1992 1993
---- ---- ---- ---- ---- ---- ----
(in thousands, except per share amounts)
<S> <C> <C> <C> <C> <C> <C> <C>
SUMMARY OF OPERATIONS DATA:
Total revenues . . . . . . . . . . $150,904 $191,267 $239,165 $309,878 $487,319 $119,717 $ 143,284
Operating income . . . . . . . . . 16,726 22,796 29,336 43,562 71,008 14,256 22,270
Income from continuing operations . 16,708 20,027 24,711 31,526 54,084 10,891 14,806
Net income . . . . . . . . . . . . 16,688 20,027 24,670 31,526 54,084 10,891 14,806
Primary earnings per common
share(3):
Continuing operations . . . $ 0.40 $ 0.48 $ 0.60 $ 0.73 $ 0.97 $ 0.21 $ 0.25
Net income . . . . . . . . . 0.40 0.48 0.60 0.73 0.97 0.21 0.25
Fully diluted earnings per
common share(3):
Continuing operations . . . 0.40 0.48 0.60 0.73 0.93 0.21 0.24
Net income . . . . . . . . 0.40 0.48 0.60 0.73 0.93 0.21 0.24
Cash dividends per common share(3) 0.033 0.123 0.20 0.20 0.15 (4) 0.05 0.05
BALANCE SHEET DATA (AT END OF
PERIOD):
Cash and marketable securities . . $ 53,126 $ 26,885 $102,481 $ 62,692 $117,899 $ 52,672 $ 102,326
Total assets . . . . . . . . . . . 255,076 265,118 421,824 467,341 926,854 852,931 1,011,493
Senior debt . . . . . . . . . . . . 15,539 19,966 33,729 35,574 194,224 149,429 212,709
Convertible subordinated debentures -- -- 115,000 115,000 114,165 115,000 114,155
Total stockholders' equity . . . . 192,028 199,830 222,220 255,690 489,757 465,458 522,128
</TABLE>
||___________________
(1) In fiscal 1993, the Company acquired ALPS and the outstanding common
stock of Security Tag.
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(2) Selected financial data for and as of the end of the one month ended
June 30, 1992 is as follows: total revenues - $20,992; operating
loss - $3,325; loss from continuing operations and net loss - $2,454;
primary and fully diluted loss per common share from continuing
operations and net loss - $.06 (see Note 3, below); total assets -
$462,233; total debt - $150,268 and total stockholders' equity -
$258,262.
(3) Adjusted to reflect the three-for-two stock split in fiscal 1994.
(4) Fourth quarter dividend of $.05 per share (see Note 3, above) was
declared in July 1993.
PRELIMINARY SECOND QUARTER RESULTS
The Company recently stated that it expects net income for the three
months ended December 31, 1993 to be approximately $18.5 million, or $.29 per
share, and total revenues for the quarter to be approximately $160 million, in
comparison with net income of $13.6 million, or $.23 per share, and total
revenues of $122 million for the three months ended December 31, 1992.
See "Sensormatic Selected Historical Financial Information".
|| UNAUDITED CONDENSED PRO FORMA COMBINED FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
Combined Sensormatic and ALPS Combined Sensormatic, ALPS and Security Tag
---------------------------------------------- ------------------------------------------------
Three Months Ended Sept. 30, Three Months Ended Sept. 30,
Year Ended ------------------------------- Year Ended -------------------------------
June 30, 1993 1992 1993(1) June 30, 1993(2) 1992 1993(1)
-------------- --------------- -------------- ---------------- ---------------- --------------
<S> <C> <C> <C> <C> <C> <C>
SUMMARY OF OPERATIONS DATA:
Total revenues . . . . . . . . $ 495,874 $ 128,272 $ 143,284 $ 510,213 $ 132,347 $ 143,284
Operating income . . . . . . . 70,630 13,511 22,270 70,785 13,271 22,270
Income from continuing
operations . . . . . . . . . 54,115 10,677 14,806 53,878 10,467 14,806
Primary earnings per
common share from
continuing operations(3) . . $ 0.94 $ 0.20 $ 0.25 $ 0.92 $ 0.19 $ 0.25
Fully diluted earnings per
common share from
continuing operations(3) . . 0.92 0.20 0.24 0.89 0.19 0.24
BALANCE SHEET DATA (AT END
OF PERIOD):
Cash and marketable
securities . . . . . . . . . . $ 102,326 $ 102,326
Total assets . . . . . . . . . 1,011,493 1,011,493
Senior debt . . . . . . . . . . 212,709 212,709
Convertible subordinated
debentures . . . . . . . . . 114,155 114,155
Total stockholders' equity 522,128 522,128
</TABLE>
||__________________
(1) Sensormatic's historical balance sheet at September 30, 1993 and
income statement for the three months ended September 30, 1993 reflect
the acquisition of ALPS and the merger with Security Tag, which
occurred on July 29, 1992 and June 17, 1993, respectively.
Accordingly, historical balance sheet and income statement information
have been presented in lieu of summary pro forma information as of and
for the three months ended September 30, 1993.
(2) Includes Security Tag for the year ended March 31, 1993.
(3) Adjusted to reflect the three-for-two stock split in fiscal 1994.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF CONDENSED PRO FORMA COMBINED
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
HISTORICAL COMBINED FINANCIAL CONDITION AT SEPTEMBER 30, 1993.
Following the acquisition of ALPS and after giving effect to the
merger with Security Tag, the financial condition of the Company
remained strong. As of September 30, 1993, cash and marketable
securities were approximately $102.3 million and the debt-to-equity
ratio of the Company was .63 to 1.0.
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HISTORICAL THREE MONTHS ENDED SEPTEMBER 30, 1993 COMPARED TO
PRO FORMA THREE MONTHS ENDED SEPTEMBER 30, 1992. Historical combined revenues
of $143.3 million for the three months ended September 30, 1993 increased $10.9
million or 8.3% over the pro forma combined revenues for the three months ended
September 30, 1992, after giving effect to the acquisition of ALPS and the
merger with Security Tag. The revenue growth resulted from an increase in
worldwide Sensormatic and ALPS revenues, primarily from higher retail EAS and
CCTV revenues and higher revenues from Sensormatic's Commercial/Industrial
Group, which markets EAS, CCTV and access control systems to non-retail
customers; offset in part by the effect on the local currency revenues of
Sensormatic's international subsidiaries and ALPS when translated into U.S.
dollars for financial statement purposes caused by the stronger average U.S.
dollar (in relation to the local currencies of Sensormatic's international
subsidiaries and ALPS, in the aggregate) throughout the quarter ended September
30, 1993, compared to the quarter ended September 30, 1992.
The 68% increase in historical combined operating income for
the three months ended September 30, 1993, compared to pro forma combined
operating income for the three months ended September 30, 1992, occurred
principally due to an increase in revenues and an improvement in combined gross
profit on revenues from 53% to 55%, primarily attributable to Sensormatic and
ALPS. Combined operating expenses as a percentage of revenues increased from
43% to 46%.
Combined historical other income decreased $3.2 million in the
first three months of fiscal 1994 compared to the pro forma combined other
income for the first three months of fiscal 1993, principally due to the
decrease in interest income earned by Sensormatic and ALPS on trade receivables
under deferred terms and installment contract obligations and on net investment
in sales-type leases, and increased interest expense due to higher borrowings.
The effective tax rate on combined pretax income from continuing operations for
the first three months of fiscal 1994 remained flat at 25% when compared to the
three months ended September 30, 1992.
Historical combined income from continuing operations (and
related fully diluted earnings per share) for the first three months of fiscal
1994 increased $4.3 million (and $0.05), versus pro forma combined income from
continuing operations for the three months ended September 30, 1992, and
outpaced revenue growth based primarily on the factors previously discussed.
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USE OF PROCEEDS
The Company will receive no part of the proceeds from the sale
of the Shares offered pursuant to this Prospectus. The Company has agreed that
if the aggregate proceeds from the sale of Shares sold during a period of three
trading days following the date hereof are less than a specified amount based
on their valuation upon issuance, the Company will issue additional Shares for
resale under this Prospectus or make a cash payment sufficient to reimburse the
Selling Stockholders for the difference. See "The Selling Stockholders".
THE SELLING STOCKHOLDERS
The Selling Stockholders are Patricia McWethy, Steven McWethy
and Steven Fisher, who have been, respectively, the President, Vice President
and Vice President of Regional Operations of AES and are expected to serve,
respectively, as Regional Administrator, Regional Manager and Regional Sales
Manager of the Company. Mr. and Mrs. McWethy were also directors of AES prior
to the AES stock purchase (see "Acquisition of AES" below under this main
heading). At the closing of the stock purchase, Mrs. McWethy was issued 42,288
Shares, Mr. McWethy was issued 29,059 Shares and Mr. Fisher was issued 3,804
Shares (collectively, the "Closing Date Shares"), using a valuation of $34.375
per share (the "Closing Valuation Per Share") based on the average of the NYSE
closing prices of the Common Stock for the five trading days ending January 13,
1994. As discussed in greater detail below, additional Shares may be issued to
the Selling Stockholders in the event that the aggregate net proceeds of sale
of Closing Date Shares which are sold by them during the period beginning on
the date of this Prospectus and ending three NYSE trading days thereafter are
less than the Closing Valuation Per Share (together with accrued interest
thereon) times the number of Closing Date Shares sold during such period. Any
such additional Shares would also be included in the Shares offered pursuant to
this Prospectus in order to permit their resale by the Selling Stockholders.
ACQUISITION OF AES
Effective January 17, 1994, the Company consummated the
acquisition of all of the Stock of AES for $2,600,000 in the aggregate. The
Company paid an additional $1,000,000 to the Selling Stockholders in
consideration of certain agreements regarding non-competition and the
assignment to the Company of certain know-how and proprietary information, and
the Selling Stockholders have also entered into employment agreements with AES.
AES is in the business of reselling and installing access- control systems to
commercial and industrial customers.
The purchase price payable to the Selling Stockholders was
paid in the form of Sensormatic Common Stock issued to them at closing, at a
valuation equal to the Closing Valuation Per Share. The Company has also
agreed that in the event that the aggregate net proceeds from sales of Closing
Date Shares during the period beginning on the date of this Prospectus and
ending three NYSE trading days thereafter are less than (i) the Closing
Valuation Per Share, together with interest accrued thereon at the rate of 10%
per annum from January 17, 1994 to the date of this Prospectus, multiplied by
(ii) the number of Shares sold, the Company will issue additional Shares for
resale under this Prospectus or make a cash payment sufficient to reimburse the
Selling Stockholders for the difference. The number of any
-10-
<PAGE> 12
additional Shares issued by the Company to the Selling Stockholders will be
based on the closing price of the Company's Common Stock on the NYSE on the
trading day preceding the date of issuance of such additional Shares (or a day
not more than two trading days prior thereto). The Company has further agreed
to reimburse the Selling Stockholders, in cash, for any additional shortfall in
the event that the aggregate net proceeds from sales of such additional Shares
during a period of two trading days following their issuance are less than the
amount per share at which they were valued upon issuance multiplied by the
number of Shares sold during such period.
PLAN OF DISTRIBUTION
The Selling Stockholders expect to sell the Shares primarily
through brokers' transactions over the NYSE at prices then attainable, less
ordinary brokers' commissions and dealers' discounts, as applicable. As of the
date of this Prospectus, the Selling Stockholders have no agreement,
arrangement or understanding with any Broker (as such term is defined below) as
to the sale of the Shares.
The Selling Stockholders and any broker or dealer to or
through whom any of the Shares are sold ("Brokers") may be deemed to be
underwriters within the meaning of the Securities Act of 1933, as amended (the
"Act"), with respect to the Shares offered hereby, and any profits realized by
the Selling Stockholders or the Brokers may be deemed to be underwriting
commissions. Brokers' commissions and dealers' discounts, taxes and other
selling expenses with respect to the Shares are not expected to exceed normal
selling expenses for sales over the NYSE or otherwise, as the case may be. In
the event that the Company is required to issue additional Sensormatic Common
Stock or make cash payments to reimburse the Selling Stockholders for any
shortfall in net proceeds (see "The Selling Stockholders -- Acquisition of
AES"), the Company may be deemed to have borne some or all of such selling
expenses. The Company and the Selling Stockholders have agreed to indemnify
each other against certain liabilities, including liabilities under the
Securities Act.
The registration of the Shares under the Act shall not be
deemed an admission by the Selling Stockholders or the Company that the Selling
Stockholders are underwriters for purposes of the Act of any Shares offered
under this Prospectus.
PRO FORMA COMBINED FINANCIAL INFORMATION
OF SENSORMATIC AND ALPS
INTRODUCTORY NOTE
The following tables set forth certain unaudited condensed pro
forma combined financial information for Sensormatic after giving effect to the
acquisition of ALPS, using the purchase method as if such acquisition had been
consummated, with respect to the statements of income, on July 1, 1992.
(Sensormatic's historical balance sheet at September 30, 1993, incorporated
herein by reference, reflects the acquisition of ALPS as it occurred on July
29, 1992, and, therefore, a pro forma balance sheet has not been presented.
See "Sensormatic Selected Historical Financial Information" in this
Prospectus.) The information contained in the following tables does not
purport to be indicative of the results of operations of Sensormatic which may
have been obtained had the acquisition been consummated on the date assumed.
-11-
<PAGE> 13
ALPS's financial information contained in these pro forma
financial statements has been derived from the financial statements of ALPS
prepared in accordance with accounting principles generally accepted in the
United Kingdom ("U.K. GAAP") and stated in pounds sterling. Such financial
information has been adjusted to comply with applicable accounting principles
generally accepted in the United States ("U.S. GAAP"). Significant differences
between U.K. GAAP and U.S. GAAP are discussed in the historical financial
statements and the notes thereto of ALPS incorporated herein by reference.
This information should be read in conjunction with the
historical consolidated financial statements and accompanying notes of
Sensormatic contained in its Annual Report on Form 10-K for the fiscal year
ended June 30, 1993 and its Quarterly Report on Form 10-Q for the quarter ended
September 30, 1993, each of which is incorporated herein by reference, and the
historical financial statements and accompanying notes of ALPS contained
elsewhere herein and in Sensormatic's Prospectus, dated July 22, 1992 (File
Number 33-47824), incorporated herein by reference. See "Incorporation of
Certain Documents by Reference". See also "Unaudited Condensed Pro Forma
Combined Information -- Management's Discussion and Analysis of Condensed Pro
Forma Combined Financial Condition and Results of Operations" elsewhere in this
Prospectus.
-12-
<PAGE> 14
||
UNAUDITED CONDENSED PRO FORMA COMBINED STATEMENT OF INCOME
YEAR ENDED JUNE 30, 1993
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
COMBINED
PRO FORMA SENSORMATIC
SENSORMATIC(1) ALPS(1) ADJUSTMENTS AND ALPS
-------------- ----------- -------------------- ------------
<S> <C> <C> <C> <C>
Total revenues . . . . . . . . . . . . . . $ 487,319 $ 9,469 $ (914)(a) $ 495,874
Cost of revenues . . . . . . . . . . . . . 203,532 4,896 208,428
Operating expenses . . . . . . . . . . . . 212,779 4,092 (55)(b)(e) 216,816
----------- ---------- ---------- ------------
Operating income . . . . . . . . . . . . . 71,008 481 (859) 70,630
Other income (expenses), net . . . . . . . 976 (388) 958 (a)(c)(d) 1,546
------------ ---------- ---------- ------------
Income from continuing
operations before
income taxes . . . . . . . . . . . . . . 71,984 93 99 72,176
Provision for income taxes . . . . . . . . 17,900 42 119(f) 18,061
----------- ---------- ---------- ------------
Income from continuing
operations . . . . . . . . . . . . . . . $ 54,084 $ 51 $ (20) $ 54,115
=========== ========== =========== ============
Primary earnings per common
share from continuing
operations(2) . . . . . . . . . . . . . $ 0.97 $ 0.94
Fully diluted earnings per
common share from continuing
operations(2) . . . . . . . . . . . . . $ 0.93 $ 0.92
Common shares used in the
computation of(2):
Primary earnings per common share from
continuing operations . . . . . . . 56,028 57,378
Fully diluted earnings per common share
from continuing operations . . . . 63,633 64,983
</TABLE>
||
(1) The ALPS information reflects the pre-acquisition operating results of
ALPS (i.e. operating results for the period from July 1, 1992 to July
29, 1992). The Sensormatic information reflects the post-acquisition
results of ALPS (i.e. operating results for the period from July 30,
1992 to June 30, 1993).
(2) Adjusted to reflect the three-for-two stock split in fiscal 1994.
See Accompanying Notes to Unaudited Condensed Pro Forma Combined
Financial Information of Sensormatic and ALPS.
-13-
<PAGE> 15
|| UNAUDITED CONDENSED PRO FORMA COMBINED STATEMENTS OF INCOME
Three Months Ended September 30, 1992
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
COMBINED
PRO FORMA SENSORMATIC
SENSORMATIC(1) ALPS(1) ADJUSTMENTS AND ALPS
-------------- ----------- -------------------- ------------
<S> <C> <C> <C> <C>
Total revenues . . . . . . . . . . . . . $ 119,717 $ 9,469 $ (914)(a) $ 128,272
Cost of revenues . . . . . . . . . . . . 54,975 4,896 59,871
Operating expenses . . . . . . . . . . . 50,486 4,092 312 (b) 54,890
---------- -------- ------------ ------------
Operating income . . . . . . . . . . . . 14,256 481 (1,226) 13,511
Other income (expenses), net . . . . . . 135 (388) 958 (a)(c)(d) 705
---------- -------- ------------ ------------
Income from continuing operations
before income taxes . . . . . . . . . 14,391 93 (268) 14,216
Provision for income taxes . . . . . . . 3,500 42 (3)(f) 3,539
---------- -------- ------------ ------------
Income from continuing
operations . . . . . . . . . . . . . . $ 10,891 $ 51 $ (265) $ 10,677
========== ======== ============ ============
Primary earnings per common share from
continuing operations(2) . . . . . . . $ 0.21 $ 0.20
Fully diluted earnings per common share from
continuing operations(2) 0.21 0.20
Common shares used in the computation of(2):
Primary earnings per common share
from continuing operations . . . . . 51,961 53,312
Fully diluted earnings per common share
from continuing operations . . . . . 59,302 60,653
</TABLE>
||
(1) The ALPS information reflects the pre-acquisition operating results of
ALPS (i.e. operating results for the period from July 1, 1992 to July
29, 1992). The Sensormatic information reflects the post-acquisition
operating results of ALPS (i.e. operating results for the period from
July 30, 1992 to September 30, 1992).
(2) Adjusted to reflect the three-for-two stock split in fiscal 1994.
See Accompanying Notes to Unaudited Condensed Pro Forma Combined
Financial Information of Sensormatic and ALPS.
NOTES TO UNAUDITED CONDENSED PRO FORMA COMBINED
FINANCIAL INFORMATION OF SENSORMATIC AND ALPS
1. BASIS OF PRESENTATION
The statement of income of ALPS has been translated using the
average exchange rate in effect during the relevant period. This rate,
expressed in dollars per L.1.00, was $1.92 for the period from July 1, 1992 to
July 29, 1992.
2. PRO FORMA ADJUSTMENTS
The following pro forma adjustments have been made:
-14-
<PAGE> 16
(a) Adjustment to reclassify interest income earned by ALPS on
internally financed sales-type leases to conform to Sensormatic's financial
statement presentation. This adjustment was approximately $914,000 for the
period from July 1, 1992 to July 29, 1992.
(b) Adjustment to record the amortization of the costs in
excess of net assets acquired (approximately $198.0 million) related to the
ALPS acquisition over 40 years. This adjustment was approximately $312,000 for
the period from July 1, 1992 to July 29, 1992, net of the elimination of ALPS
historical amortization of costs in excess of net assets acquired of
approximately $101,000.
(c) Adjustment to reverse the interest expense related to the
debt of ALPS assumed by ASH prior to the acquisition of ALPS. This adjustment
was approximately $374,000 for the period from July 1, 1992 to July 29, 1992.
(d) Adjustment to record interest expense related to the $96.1
million of bank debt, at 4.125% per annum, incurred to partially fund the
acquisition of ALPS. This adjustment was approximately $330,000 for the period
from July 1, 1992 to July 29, 1992.
(e) Adjustment to record an estimate of the cost savings
associated with the implementation by Sensormatic of a formal plan to eliminate
duplicative administrative functions and other overhead costs arising from the
acquisition of ALPS. This adjustment was approximately $367,000 for the year
ended June 30, 1993.
(f) Adjustment to record the income tax effect of the pro
forma adjustments, as applicable.
-15-
<PAGE> 17
SENSORMATIC SELECTED HISTORICAL FINANCIAL INFORMATION
The selected historical financial information presented
below for and as of the end of each of the four years in the period ended May
31, 1992, the one month ended June 30, 1992 and the year ended June 30, 1993,
with the exception of balance sheet data as of June 30, 1992 and other data, is
derived from the Consolidated Financial Statements of Sensormatic, which
financial statements have been audited by Ernst & Young, independent certified
public accountants. The Consolidated Financial Statements as of June 30, 1993
and May 31, 1992, and for each of the three years ended May 31, 1991, May 31,
1992 and June 30, 1993 and the one month ended June 30, 1992, and the report of
Ernst & Young thereon, are included in Sensormatic's Annual Report on Form 10-K
for the fiscal year ended June 30, 1993 (File Number 0-3953), incorporated
herein by reference. The selected historical financial information presented
below as of September 30, 1993 and for the three months ended September 30,
1992 and 1993, with the exception of balance sheet data as of September 30,
1992 and other data, is derived from the unaudited condensed consolidated
financial statements of Sensormatic, included in Sensormatic's Quarterly Report
on Form 10-Q for the quarter ended September 30, 1993 (File Number 0-3953),
incorporated herein by reference, which in the opinion of Sensormatic
management includes all adjustments, consisting only of normal recurring
adjustments, necessary to present fairly the information set forth therein.
This selected historical financial information should be read in conjunction
with the consolidated financial statements, related notes and other financial
information incorporated herein by reference. The results of operations for
the three months ended September 30, 1993 are not necessarily indicative of
results that can be expected for the full year.
||
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEARS ENDED MAY 31, YEAR ENDED SEPTEMBER 30,
----------------------------------------------- JUNE 30, -----------------------
1989 1990 1991 1992 1993(1)(2) 1992 1993
---- ---- ---- ---- ---- ---- ----
(in thousands, except per share amounts)
<S> <C> <C> <C> <C> <C> <C> <C>
SUMMARY OF OPERATIONS DATA:
Total revenues . . . . . . . . . . . . . $ 150,904 $ 191,267 $ 239,165 $ 309,878 $ 487,319 $ 119,717 $ 143,284
Cost of revenues . . . . . . . . . . . . 68,368 86,749 106,523 134,723 203,532 54,975 59,006
Operating expenses . . . . . . . . . . . 65,810 81,722 103,306 131,593 212,779 50,486 62,008
-------- -------- -------- -------- -------- -------- --------
Operating income . . . . . . . . . . . . 16,726 22,796 29,336 43,562 71,008 14,256 22,270
Other income (expenses), net 4,382 2,231 1,875 (2,536) 976 135 (2,464)
-------- -------- -------- -------- --------- -------- --------
Income from continuing operations
before income taxes . . . . . . . . . 21,108 25,027 31,211 41,026 71,984 14,391 19,806
Provision for income taxes . . . . . . . 4,400 5,000 6,500 9,500 17,900 3,500 5,000
-------- -------- -------- -------- --------- -------- --------
Income from continuing operations . . . . $ 16,708 $ 20,027 $ 24,711 $ 31,526 $ 54,084 $ 10,891 $ 14,806
======== ======== ======== ======== ========= ======== ========
Primary earnings per common
share from continuing operations(3). . $ 0.40 $ 0.48 $ 0.60 $ 0.73 $ 0.97 $ 0.21 $ 0.25
Fully diluted earnings per
common share from continuing
operations(3) . . . . . . . . . . . . 0.40 0.48 0.60 0.73 0.93 0.21 0.24
Common shares used in the
computation of(3):
Primary earnings per
common share from
continuing operations . . . . . . 41,725 41,722 41,242 43,075 56,028 51,961 60,271
Fully diluted earnings per
common share from
continuing operations . . . . . . 42,028 42,004 41,372 50,479 63,633 59,302 67,588
Cash dividends per common
share(3) . . . . . . . . . . . . . . . $ 0.033 $ 0.123 $ 0.20 $ 0.20 $ 0.15 (4) $ 0.05 $ 0.05
</TABLE>
-16-
<PAGE> 18
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEARS ENDED MAY 31, YEAR ENDED SEPTEMBER 30,
----------------------------------------------- JUNE 30, -----------------------
1989 1990 1991 1992 1993(1)(2) 1992 1993
---- ---- ---- ---- ---- ---- ----
(in thousands, except per share amounts)
<S> <C> <C> <C> <C> <C> <C> <C>
OTHER DATA:
Capital expenditures, net(5). $ 5,761 $ 8,060 $ 14,218 $ 14,824 $ 25,725 $ 2,540 $ 18,173
Increase in revenue
equipment and inventories,
net(5) . . . . . . . . . . 26,479 9,526 35,911 23,925 42,615 6,281 1,443
Systems installed . . . . . . 12.0 18.0 17.4 23.6 51.9 12.0 13.2
Reusable tags sold or leased. 50,000 40,000 65,000 75,000 101,000 19,000 30,000
Disposable labels sold . . . 205,000 350,000 650,000 750,000 1,100,000 206,000 292,000
CCTV domes installed . . . . 5.2 6.3 4.0 8.0 10.0 3.8 3.6
BALANCE SHEET DATA (AT END OF
PERIOD):
Cash and marketable securities $ 53,126 $ 26,885 $102,481 $ 62,692 $ 117,899 $ 52, 672 $ 102,326
Net property, plant and
equipment . . . . . . . . 40,402 49,662 65,404 83,543 121,103 122,476 139,351
Total assets . . . . . . . . 255,076 265,118 421,824 467,341 926,854 852,931 1,011,493
Senior debt . . . . . . . . . 15,539 19,966 33,729 35,574 194,224 149,429 212,709
Convertible subordinated
debentures . . . . . . . . -- -- 115,000 115,000 114,165 115,000 114,155
Total stockholders' equity . 192,028 199,830 222,220 255,690 489,757 465,458 522,128
</TABLE>
||
________________________________________
(1) In fiscal 1993, the Company acquired ALPS and the outstanding
common stock of Security Tag.
(2) Selected financial data for Sensormatic for and as of the end
of the one month ended June 30, 1992 is as follows (in
thousands, except per share amounts): total revenues -
$20,992; operating loss - $3,325; loss from continuing
operations - $2,454; loss from continuing operations per common
share - $.06 (see Note 3, below); total assets - $462,233;
senior debt - $35,268; convertible subordinated debentures -
$115,000; total stockholders' equity - $258,262; and no cash
dividends were declared for such period.
(3) Adjusted to reflect the three-for-two stock split in fiscal
1994.
(4) Fourth quarter dividend of $.05 per share (see Note 3, above)
was declared in July 1993.
(5) Excludes effects of acquisitions and foreign currency
translation adjustments.
See "Management's Discussion and Analysis of Financial Condition and
Results of Operations of Sensormatic" contained in Sensormatic's
Annual Report on Form 10-K for the fiscal year ended June 30, 1993,
and Quarterly Report on Form 10-Q for the quarter ended September 30,
1993, which are incorporated herein by reference.
_________________________________________
-17-
<PAGE> 19
PRELIMINARY SECOND QUARTER RESULTS
The Company recently stated that it expects net income for the three
months ended December 31, 1993 to be approximately $18.5 million, or $.29 per
share, and total revenues for the quarter to be approximately $160 million, in
comparison with net income of $13.6 million, or $.23 per share, and total
revenues of $122 million for the three months ended December 31, 1992. For the
six months ended December 31, 1993, it is expected that net income will be
approximately $33.5 million, or $.53 per share, and that total revenues will be
approximately $303 million, compared with net income of $24.5 million, or $.44
per share, and total revenues of $241.8 million for the comparable prior
period.
ALPS SELECTED HISTORICAL FINANCIAL INFORMATION
The selected historical financial information presented below for and
as of the end of each of the three years in the period ended November 30, 1991
is derived from the Combined Financial Statements of ALPS, which financial
statements have been audited by BDO Binder Hamlyn (internationally BDO Binder),
Chartered Accountants. The Combined Financial Statements as of November 30,
1990 and 1991, and for each of the three years in the period ended November 30,
1991, and the report of BDO Binder Hamlyn, Chartered Accountants thereon, are
included in Sensormatic's Prospectus dated July 22, 1992 (File number
33-47824), incorporated herein by reference. The selected historical financial
information presented below as of May 31, 1992 and for the periods in the six
months ended May 31, 1991 and 1992 is derived from the unaudited condensed
historical Combined Financial Statements of ALPS included elsewhere in this
Prospectus which in the opinion of ALPS's management includes all adjustments,
consisting only of normal recurring adjustments, necessary to present fairly
the information set forth therein. This selected historical financial
information should be read in conjunction with the combined financial
statements, related notes and other financial information included elsewhere in
this Prospectus and incorporated herein by reference. The results of
operations for the six months ended May 31, 1992 are not necessarily indicative
of results that can be expected for the full year.
ALPS's historical Combined Financial Statements are prepared in
accordance with U.K. GAAP, which differs in certain significant respects from
U.S. GAAP. In making commercial decisions on various transactions, including
acquisitions and dispositions, ALPS's management considered the presentation of
these transactions in its historical Combined Financial Statements under U.K.
GAAP. If ALPS had reported its financial results in accordance with U.S. GAAP,
management may have made different commercial decisions on such transactions or
may have structured such transactions differently. A summary of the
significant differences between U.K. GAAP and U.S. GAAP relevant to ALPS,
together with reconciliations of net income (loss) and shareholders' equity,
are set forth in Note 20 of the ALPS Notes to Combined Financial Statements
incorporated herein by reference.
-18-
<PAGE> 20
||
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEARS ENDED NOVEMBER 30, MAY 31,
------------------------------------------- ---------------------------------
1989 1990 1991 1991 1991 1992 1992
---- ---- ---- ---- ---- ---- ----
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
SUMMARY OF OPERATIONS DATA:
U.K. GAAP:
Total revenues . . . . . . . . . . . . . . . . L. 34,483 L. 51,257 L. 60,196 $ 89,692 L. 29,182 L. 31,343 $ 46,701
Cost of revenues . . . . . . . . . . . . . . . 16,266 24,313 29,326 43,696 14,030 15,737 23,448
Operating expenses . . . . . . . . . . . . . . 10,369 16,585 19,909 29,664 10,700 12,658 18,860
-------- -------- -------- -------- -------- -------- --------
Operating income . . . . . . . . . . . . . . . 7,848 10,359 10,961 16,332 4,452 2,948 4,393
Other expenses, net . . . . . . . . . . . . . . 1,070 2,625 3,344 4,983 1,204 1,317 1,962
-------- -------- -------- -------- -------- -------- --------
Income from continuing operations before
income taxes, minority interest and extraordinary
item . . . . . . . . . . . . . . . . . . . . 6,778 7,734 7,617 11,349 3,248 1,631 2,430
Provision for income taxes . . . . . . . . . . 194 727 7,707 11,483 3,091 676 1,007
Minority interest . . . . . . . . . . . . . . . (80) (29) (38) (57) (46) (29) (43)
-------- -------- -------- -------- -------- -------- --------
Income (loss) from continuing operations before
extraordinary items . . . . . . . . . . . . . L. 6,504 L. 6,978 L. (128) $ (191) L. 111 L. 926 $ 1,380
======== ======== ======== ======== ======== ======== ========
Cash dividends paid . . . . . . . . . . . . . . L. 5,300 -- L. 5,200 $ 7,748 L. -- L. -- $ --
======== ======== ======== ======== ======== ======== ========
U.S. GAAP:
Total revenues . . . . . . . . . . . . . . . . L. 34,483 L. 51,257 L. 60,196 $ 89,692 L. 29,182 L. 31,343 $ 46,701
Income from continuing operations . . . . . . . 3,133 3,166 4,153 6,188 1,680 682 1,015
BALANCE SHEET DATA (AT END OF PERIOD):
U.K. GAAP:
Cash . . . . . . . . . . . . . . . . . . . . . L. 241 L. 318 L. 587 $ 875 L. 3,772 L. 849 $ 1,265
Net property, plant and equipment . . . . . . . 8,960 13,442 15,870 23,646 14,685 15,875 23,654
Total assets . . . . . . . . . . . . . . . . . 50,292 82,253 94,816 141,276 99,375 111,902 166,734
Long term debt . . . . . . . . . . . . . . . . 3,785 12,326 11,084 16,515 20,661 25,703 38,297
Total shareholders' equity . . . . . . . . . . 3,690 10,533 8,031 11,966 11,910 9,748 14,525
U.S. GAAP:
Total assets . . . . . . . . . . . . . . . . . 60,283 92,715 106,861 159,223 111,872 123,653 184,243
Long term debt . . . . . . . . . . . . . . . . 3,785 12,326 11,084 16,515 20,661 25,703 38,297
Total shareholders' equity . . . . . . . . . . 8,497 13,563 18,377 27,382 20,324 19,800 29,502
</TABLE>
||
See "Management's Discussion and Analysis of Financial Condition and
Results of Operations of ALP" contained in Sensormatic's Prospectus,
dated July 22, 1992 (File Number 33-47824), incorporated herein by
reference.
The amounts relating to the periods ended November 30, 1991 and May 31,
1992 have been expressed in U.S. dollars ($), solely for the purpose of
convenience, using the Noon Buying Rate in New York City for cable
transfers in foreign currencies as announced for customs purposes by the
Federal Reserve Bank of New York in effect on January 14, 1994. This
was $1.49 = L.1.00. On January 18, 1994, the Noon Buying Rate was $1.50
= L.1.00.
-19-
<PAGE> 21
LEGAL OPINIONS
The validity of the Shares offered hereby will be passed upon
for the Company by Christy & Viener, New York, New York. Jerome M. LeWine,
Esq., a partner in the firm of Christy & Viener participating in the work on
this matter, is a director of the Company. Mr. LeWine owns 12,000 shares of
Common Stock of the Company and holds options to purchase 172,500 shares of
Common Stock of the Company.
EXPERTS
The consolidated financial statements of the Company appearing
in the Company's Annual Report (Form 10-K) for the year ended June 30, 1993,
have been audited by Ernst & Young, independent certified public accountants,
as set forth in their report thereon included therein and incorporated herein
by reference. Such consolidated financial statements are incorporated herein
by reference in reliance upon such report given upon the authority of such firm
as experts in accounting and auditing.
The combined financial statements of ALPS as of November 30,
1990 and 1991 and for each of the three years in the period ended November 30,
1991, appearing in the Company's Prospectus, dated July 22, 1992 (File No.
33-47824), have been audited by BDO Binder Hamlyn (Internationally BDO Binder),
Chartered Accountants, as set forth in their report thereon incorporated herein
by reference, and are included in reliance upon such report given upon the
authority of such firm as experts in accounting and auditing.
-20-
<PAGE> 22
INDEX TO HISTORICAL ALPS FINANCIAL STATEMENTS
Page
----
Combined condensed balance sheet as of May 31, 1992 (unaudited) . . . . . F-2
Combined condensed statements of operations for the six months
ended May 31, 1991 and 1992 (unaudited) . . . . . . . . . . . . . . . F-3
Combined condensed statements of cash flows for the six months
ended May 31, 1991 and 1992 (unaudited) . . . . . . . . . . . . . . . F-4
Notes to the combined condensed financial statements for the
six months ended May 31, 1991 and 1992 (unaudited) . . . . . . . . . . F-5
F-1
<PAGE> 23
ALPS
COMBINED CONDENSED BALANCE SHEET
AS OF MAY 31, 1992
(UNAUDITED)
<TABLE>
<CAPTION>
L.'000 $'000
----------- -----------
<S> <C> <C>
ASSETS
Current assets:
Cash. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 849 1,265
Accounts and notes receivable, prepayments and accrued income, net . . . . . . 25,021 37,281
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,051 25,406
---------- ----------
Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42,921 63,952
Long term accounts and notes receivable . . . . . . . . . . . . . . . . . . . . . 49,452 73,683
Investment in related company . . . . . . . . . . . . . . . . . . . . . . . . . . 2,744 4,089
Property and equipment, net . . . . . . . . . . . . . . . . . . . . . . . . . . 15,875 23,654
Development expenditure . . . . . . . . . . . . . . . . . . . . . . . . . . . . 910 1,356
---------- ----------
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111,902 166,734
========== ==========
LIABILITIES AND COMBINED SHAREHOLDERS' EQUITY
Current liabilities:
Short term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29,895 44,544
Accounts payable and accrued liabilities . . . . . . . . . . . . . . . . . . . 23,147 34,489
Related company--Security Tag Systems Inc. . . . . . . . . . . . . . . . . . . 1,204 1,794
---------- ----------
Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . 54,246 80,827
Amounts due to ASH . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34,859 51,940
Long term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,593 6,844
Deferred income taxes payable and other long term liabilities . . . . . . . . . . 8,335 12,419
Minority interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121 180
Combined shareholders' equity:
Ordinary shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,228 9,280
Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . 1,943 2,895
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . 1,577 2,350
---------- ----------
Total combined shareholders' equity . . . . . . . . . . . . . . . . . . . . 9,748 14,525
---------- ----------
Total liabilities and combined shareholders' equity . . . . . . . . . . . 111,902 166,734
========== ==========
Estimated adjustments to restate combined shareholders' equity in accordance
with U.S. GAAP:
Total combined shareholders' equity in accordance with U.K. GAAP . . . . . . 9,748 14,525
------ ------
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,504 14,161
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,699) (2,532)
Development costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (441) (657)
Goodwill on related companies . . . . . . . . . . . . . . . . . . . . . . . 2,688 4,005
---------- ----------
10,052 14,977
---------- ----------
Estimated combined shareholders' equity in accordance with U.S. GAAP . . . . . . . 19,800 29,502
========== ==========
</TABLE>
The amounts relating to the period ended May 31, 1992 have been
expressed in U.S. dollars ($), solely for the purpose of convenience, using the
Noon Buying Rate in New York City for cable transfers in foreign currencies as
announced for customs purposes by the Federal Reserve Bank of New York in
effect on January 14, 1994. This was $1.49 = L.1.00. On January 18, 1994, the
Noon Buying Rate was $1.50=L.1.00.
See accompanying notes.
F-2
<PAGE> 24
||
ALPS
COMBINED CONDENSED STATEMENTS OF OPERATIONS
FOR SIX MONTHS ENDED MAY 31, 1991 AND 1992
(UNAUDITED)
<TABLE>
<CAPTION>
1991 1992 1992
-------- -------- --------
L.'000 L.'000 $'000
<S> <C> <C> <C>
Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29,182 31,343 46,701
Cost of sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,030 15,737 23,448
------- ------- -------
Gross profit on sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,152 15,606 23,253
Selling, general and administrative expenses . . . . . . . . . . . . . . . . . . . . 10,700 12,658 18,860
------- ------- -------
Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,452 2,948 4,393
Share of related company results . . . . . . . . . . . . . . . . . . . . . . . . . . 110 90 134
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,314 1,407 2,096
------- ------- -------
Income before income taxes and minority interest and extraordinary items . . . . . . 3,248 1,631 2,430
Provision for income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3,091) (676) (1,007)
Minority interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (46) (29) (43)
Extraordinary items . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (193) -- --
------- ------- -------
Net income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (82) 926 1,380
======= ======= =======
Estimated adjustments to restate net income (loss) in accordance with
U.S. GAAP:
Estimated net income (loss) in accordance with U.K. GAAP . . . . . . . . . . . . (82) 926 1,380
------- ------- -------
Development costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (132) -- --
Amortization of goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . (275) (275) (410)
Amortization of goodwill on related company . . . . . . . . . . . . . . . . . . (45) (45) (67)
Extraordinary items . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 193 -- --
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,021 76 113
------- ------- -------
1,762 (244) (365)
------- ------- -------
Estimated net income in accordance with U.S. GAAP . . . . . . . . . . . . . . . . . . 1,680 682 1,015
======= ======= =======
</TABLE>
||
See accompanying notes.
F-3
<PAGE> 25
||
ALPS
COMBINED CONDENSED STATEMENTS OF CASH FLOWS
FOR SIX MONTHS ENDED MAY 31, 1991 AND 1992
(UNAUDITED)
<TABLE>
<CAPTION>
1991 1992 1992
---------------- -------------- ----------------
L.'000 L.'000 $'000
<S> <C> <C> <C>
Cash flows from operating activities:
Net income (loss) . . . . . . . . . . . . . . . . . . . . . (82) 926 1,380
Adjustments to reconcile net income (loss) to cash
provided (used) by operations:
Depreciation and amortization . . . . . . . . . . . . 1,239 1,540 2,295
Shares of related companies' results . . . . . . . . . (110) (90) (134)
Net changes in operating assets and liabilities. . . . 295 (10,289) (15,331)
--------- --------- ---------
Net cash provided (used) by operating activities . . . . . . . 1,342 (7,913) (11,790)
Cash flows from investing activity:
Increase in property and equipment, net . . . . . . . . . . (2,424) (1,545) (2,302)
Cash flows from financing activities:
Repayments to ASH . . . . . . . . . . . . . . . . . . . . . (7,223) (12,752) (19,000)
New loans . . . . . . . . . . . . . . . . . . . . . . . . . 10,318 21,681 32,305
Additional share capital paid in . . . . . . . . . . . . . 1,441 791 1,179
--------- --------- ---------
Net cash provided by financing activities . . . . . . . . . . 4,536 9,720 14,483
--------- --------- ---------
Net increase in cash . . . . . . . . . . . . . . . . . . . . . 3,454 262 390
Cash at beginning of period . . . . . . . . . . . . . . . . . 318 587 875
--------- --------- ---------
Cash at end of period . . . . . . . . . . . . . . . . . . . . 3,772 849 1,265
========= ========= =========
Supplementary disclosure:
Cash paid during the period for:
Interest . . . . . . . . . . . . . . . . . . . . . . . 1,314 1,407 2,096
Income taxes . . . . . . . . . . . . . . . . . . . . . . -- 20 30
</TABLE>
||
See accompanying notes.
F-4
<PAGE> 26
||
ALPS
NOTES TO THE COMBINED CONDENSED FINANCIAL STATEMENTS
FOR SIX MONTHS ENDED MAY 31, 1991 AND 1992
(UNAUDITED)
(a) The interim combined financial information included herein is
unaudited. Other than indicated herein, there have been no
significant changes from the financial data set forth in the audited
combined financial statements incorporated herein by reference. In
the opinion of management, such unaudited information reflects all
adjustments, consisting only of normal recurring accruals, necessary
for a fair presentation of the unaudited information shown.
Results for interim periods are not necessarily indicative of results
expected for the full year.
(b) Accounts and notes receivable
At May 31, 1992 accounts and notes receivable were net of an allowance
for possible losses of L.4.5 million.
(c) Inventories
At May 31, 1992 inventories consisted of the following:
L.'000
----------------
Work-in-progress . . . . . . . . . . . . . . 216
Finished goods . . . . . . . . . . . . . . . 16,835
----------------
17,051
================
(d) Debt
At May 31, 1992 debt is summarized as follows:
L.'000
----------------
Bank overdrafts . . . . . . . . . . . . . . . 8,785
Unsecured bank loans at variable rates
ranging between 9% and 15% . . . . . . . . 25,631
Obligations under finance lease contracts . . 72
----------------
34,488
Less: current portion . . . . . . . . . . . 29,895
----------------
Long term portion . . . . . . . . . . . . . . 4,593
================
||
F-5
<PAGE> 27
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The expenses payable by the Company in connection with the issuance and
distribution of the Shares, are set forth below. All the amounts shown are
estimates, except for the registration fee.
Securities and Exchange
Commission registration fee . . . . . . . . . . . . . . . $ 1,081
NYSE listing fee . . . . . . . . . . . . . . . . . . . . . 1,500
Fees and expenses of accountants . . . . . . . . . . . . . 2,500
Fees and expenses of counsel . . . . . . . . . . . . . . . 5,000
Blue Sky fees and expenses . . . . . . . . . . . . . . . . 500
Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . 1,419
-------
Total . . . . . . . . . . . . . . . . $12,000
=======
Item 15. Indemnification of Directors and Officers.
Article TENTH of the Company's Restated Certificate of Incorporation and
Article IX of the Company's By-Laws provide for indemnification of officers
and directors of the Company, to the fullest extent permitted by applicable
law, for expenses, liabilities and losses actually and reasonably incurred by
them in connection with actual or threatened claims, actions, suits or
proceedings by reason of the fact that such persons are or were officers or
directors of the Company. Such indemnification right includes the right to
receive payment in advance of expenses incurred by the persons seeking
indemnification in connection with claims, actions, suits or proceedings, to
an extent consistent with applicable law. The By-Laws provide that the right
to indemnification is a contract right and authorize the Company to obtain
insurance to effect indemnification. Section 145 of the General Corporation
Law of the State of Delaware grants each corporation organized thereunder,
such as the Company, express powers to indemnify its directors and officers.
The Company carries directors' and officers' liability insurance covering
losses up to $20,000,000 (subject to certain deductible amounts).
Item 16. Exhibits.
Exhibit
Number Description of Exhibit
- ------- ----------------------
* 2(a) Stock Purchase Agreement, dated as of December 31, 1993,
among the Company, Advanced Entry Systems, Inc. ("AES")
and the Stockholders of AES.
II-1
<PAGE> 28
4(a) Composite Restated Certificate of Incorporation of the Company filed
pursuant to Rule 232.102(c) of Regulation S-T (incorporated by
reference to Exhibit 4(d) to the Company's Registration Statement
No. 33-61626)
4(b) By-Laws of the Company (incorporated by reference to Exhibit
3(b) to Form 10-K for the fiscal year ended May 31, 1990 (File
No. 0-3953))
* 5 Opinion of Christy & Viener, including consent
* 23(a) Consent of Christy & Viener (included in Exhibit 5)
* 23(b) Consent of Ernst & Young
* 23(c) Consent of BDO Binder Hamlyn
* 24 Powers of Attorney of Ronald G. Assaf, Thomas V. Buffett, James E.
Lineberger, Michael E. Pardue, Lawrence J. Simmons, Jerome M. LeWine,
Arthur G. Milnes and John T. Ray, Jr. (included on page II-4 of
the Registration Statement)
________________________
* Filed herewith.
Item 17. Undertakings.
(1) The Company hereby undertakes:
(a) To file, during any period in which offers or sales are being made, a
post-effective amendment to the registration statement to include any
material information with respect to the plan of distribution not previously
disclosed in the registration statement or any material change to such
information in the registration statement.
(b) That for the purposes of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to
be the initial bona fide offering thereof.
(c) To remove from registration by means of a post-effective amendment,
any of the securities being registered which remain unsold at the
termination of the offering.
(2) The Company hereby undertakes that, for purposes of determining any
liability under the Securities Act of 1933, each filing of the registrant's
annual report pursuant to Section 13(a) or Section 15(d) of the Securities
Exchange Act of 1934 that is incorporated by reference in the registration
statement shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(3) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Company pursuant to the
II-2
<PAGE> 29
provisions described under Item 15, or otherwise, the Company has been advised
that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Company of expenses
incurred or paid by a director, officer or controlling person of the Company in
the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Company will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication
of such issue.
II-3
<PAGE> 30
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Deerfield Beach, Florida on the 18th day of January,
1994.
SENSORMATIC ELECTRONICS CORPORATION
By /s/ Ronald G. Assaf
-----------------------
Ronald G. Assaf,
Chairman of the Board and President
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Ronald G. Assaf, James E. Lineberger, Michael E.
Pardue and Jerome M. LeWine, or any of them, his attorney-in-fact, for him in
any and all capacities, with full power of substitution and resubstitution, to
sign any amendments, including any post-effective amendments, to this
Registration Statement, and to file the same, with exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange Commission,
hereby ratifying and confirming all that said attorney-in-fact, or his
substitutes, may do or cause to be done by virtue thereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the date indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Ronald G. Assaf Chairman of the Board of Directors, 1/18/94
- ---------------------------------- President and Chief Executive Officer
(Ronald G. Assaf) (principal executive officer)
/s/ Thomas V. Buffett Vice Chairman of the Board of Directors 1/18/94
- ----------------------------------
(Thomas V. Buffett)
/s/ Michael E. Pardue Executive Vice President, Chief Operating 1/18/94
- ---------------------------------- Officer and Chief Financial Officer
(Michael E. Pardue) (principal financial officer) and Director
/s/ Lawrence J. Simmons Vice President of Finance and Chief 1/18/94
- ---------------------------------- Accounting Officer (principal accounting
(Lawrence J. Simmons) officer)
/s/ James E. Lineberger Chairman of the Executive Committee and 1/18/94
- ---------------------------------- Director
(James E. Lineberger)
/s/ Arthur G. Milnes Director 1/18/94
- ----------------------------------
(Dr. Arthur G. Milnes)
/s/ Jerome M. LeWine Director 1/18/94
- ----------------------------------
(Jerome M. LeWine)
/s/ John T. Ray, Jr. Director 1/18/94
- ----------------------------------
(John T. Ray, Jr.)
</TABLE>
II-4
<PAGE> 31
Index to Exhibits
Exhibit
Number Description of Exhibit
- ------- ----------------------
* 2(a) Stock Purchase Agreement, dated as of December 31, 1993,
among the Company, Advanced Entry Systems, Inc.
("AES") and the Stockholders of AES.
4(a) Composite Restated Certificate of Incorporation of the Company filed
pursuant to Rule 232.102(c) of Regulation S-T (incorporated by
reference to Exhibit 4(d) to the Company's Registration Statement
NO. 33-61626)
4(b) By-Laws of the Company (incorporated by reference to Exhibit 3(b)
to Form 10-K for the fiscal year ended May 31, 1990 (File No.
0-3953))
* 5 Opinion of Christy & Viener, including consent
* 23(a) Consent of Christy & Viener (included in Exhibit 5)
* 23(b) Consent of Ernst & Young
* 23(c) Consent of BDO Binder Hamlyn
* 24 Powers of Attorney of Ronald G. Assaf, Thomas V. Buffett, James E.
Lineberger, Michael E. Pardue, Lawrence J. Simmons, Jerome M.
LeWine, Dr. Arthur G. Milnes and John T. Ray, Jr. (included on page
II-4 of Registration Statement)
________________________
* Filed herewith.
<PAGE> 1
Exhibit 2(a)
STOCK PURCHASE AGREEMENT
Dated as of December 31, 1993
among
SENSORMATIC ELECTRONICS CORPORATION,
ADVANCED ENTRY SYSTEMS, INC.
and
THE STOCKHOLDERS
of
ADVANCED ENTRY SYSTEMS, INC.
<PAGE> 2
Table of Contents
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
1. Purchase and Sale of the Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Purchase and Sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Consideration for Purchase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.3 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.4 Optional Payment in Sensormatic Stock. . . . . . . . . . . . . . . . . . . . . . . . . . 2
2. Representations and Warranties of the Selling Stockholders . . . . . . . . . . . . . . . . . . . 6
2.1 Due Incorporation and Qualification of AES; Subsidiaries; Capitalization . . . . . . . . 6
2.2 Authority; Due Authorization; Valid Obligation . . . . . . . . . . . . . . . . . . . . . 7
2.3 No Conflicts or Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.4 Copies of Charter Documents and Stock Records . . . . . . . . . . . . . . . . . . . . . . 8
2.5 Authorizations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.6 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.7 Title to Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.8 Ordinary Course; No Material Adverse Effect . . . . . . . . . . . . . . . . . . . . . . . 11
2.9 Products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.10 Permits; Compliance with Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.11 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
2.12 Employee Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
2.13 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
2.14 Agreements and Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
2.15 Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
2.16 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
2.17 Suppliers and Customers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
2.18 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
2.19 Bank Accounts, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
2.20 Sensormatic Common Stock Not Registered . . . . . . . . . . . . . . . . . . . . . . . . . 19
2.21 Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
2.22 Information Supplied . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
3. Representations and Warranties of Sensormatic . . . . . . . . . . . . . . . . . . . . . . . . . . 20
3.1 Due Incorporation and Qualification . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
3.2 Authority; Due Authorization; Valid Obligation . . . . . . . . . . . . . . . . . . . . . 20
3.3 No Conflicts or Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
3.4 Authorizations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
3.5 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
3.6 Investment Intention . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
3.7 Registration Statement; Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . 21
3.8 Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
</TABLE>
(i)
<PAGE> 3
<TABLE>
<CAPTION>
Page
----
<S><C> <C>
4. Pre-Closing Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
4.1 Preserve AES's Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
4.2 Preserve Accuracy of Representations and Warranties; Updates . . . . . . . . . . . . . . . . . . . 23
4.3 Further Investigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
4.4 Consents, Waivers and Filings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
4.5 No Solicitation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
4.6 AES Benefit Plans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
4.7 Insurance Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
5. Conditions to the Obligations of Sensormatic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
5.1 Due Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
5.2 Accuracy of Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
5.3 Certificate of Stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
5.4 Corporate Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
5.5 Legal Opinion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
5.6 Certificates Representing the Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
5.7 Non-Competition and Assignment Agreement; Employment Agreement 25
5.8 Completion of Due Diligence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
5.9 Board of Directors Approval . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
5.10 Employee Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
5.11 No Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
5.12 Governmental Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
5.13 Consents and Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
5.14 Satisfaction of Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
5.15 Resignations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
6. Conditions to the Obligations of Stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
6.1 Due Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
6.2 Accuracy of Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
6.3 Officers' Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
6.4 Corporate Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
6.5 Legal Opinion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
6.6 Employment Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
6.7 No Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
6.8 Governmental Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
6.9 Satisfaction of Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
7. Waiver of Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
8. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
8.1 General -- Selling Stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
8.2 Proceedings -- the Selling Stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
8.3 Purchaser and Sensormatic's Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
8.4 Related Costs and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
</TABLE>
(ii)
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<TABLE>
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8.5 Limitations on Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
8.6 Right of Offset . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
9. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
9.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
9.2 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
9.3 Communications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
9.4 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
9.5 Public Announcements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
9.6 Survival of Representations, Warranties and Agreements . . . . . . . . . . . . . . . . . . . . . . 33
9.7 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
9.8 Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
9.9 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
9.10 Savings Clause . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
9.11 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
9.12 Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
9.13 Consent to Jurisdiction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
</TABLE>
Schedules
Schedule I -- Selling Stockholders
Schedule 5.5 -- Matters for Opinion of AES Counsel
Schedule 5.10 -- Employee Receivables to Survive the Closing
Schedule 6.5 -- Matters for Opinion of Sensormatic
(iii)
<PAGE> 5
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT, dated as of December 31, 1993, among SENSORMATIC
ELECTRONICS CORPORATION, a Delaware corporation ("Sensormatic"); ADVANCED ENTRY
SYSTEMS, INC., a Texas corporation ("AES"); STEVEN McWETHY and PATRICIA
McWETHY, individuals residing in the state of Texas (the "Principal
Stockholders"); and the additional stockholders of AES listed on Schedule I
hereto (together with the Principal Stockholders, the "Selling Stockholders").
W I T N E S S E T H:
WHEREAS, AES is engaged principally in the business (the "Business") of
purchasing, combining, assembling and reselling and installing electronic
access control, closed-circuit television ("CCTV") and other equipment,
components and parts for access- control and other security purposes; and
WHEREAS, the Selling Stockholders wish to sell to Sensormatic, and
Sensormatic wishes to purchase, all of the issued and outstanding capital stock
of AES (the "Stock"), on the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the mutual representations, warranties
and agreements contained herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:
1. PURCHASE AND SALE OF THE STOCK.
1.1 PURCHASE AND SALE.
(a) Subject to the terms and conditions of this Agreement, on the Closing
Date (as such term is defined in Section 1.3), Sensormatic shall purchase, and
each Selling Stockholder shall sell, convey, assign, transfer and deliver to
Sensormatic, that number of shares of Stock set forth opposite such Selling
Shareholder's name in Schedule I hereto. The Stock shall be transferred to
Sensormatic free and clear of all claims, liens, security interests, charges,
encumbrances, equities, adverse interests and restrictions of any kind
(collectively, "Liens").
(b) At the Closing (as such term is defined in Section 1.3), each of the
Selling Stockholders shall deliver to Sensormatic one or more certificates
evidencing the number of shares of Stock to be sold to Sensormatic by such
Selling
<PAGE> 6
Stockholder, in each case duly endorsed in blank or accompanied by duly
executed stock powers in blank, with signatures guaranteed by a bank or trust
company as requested by Sensormatic, together with all necessary documentary or
stock transfer stamps affixed to such certificates.
1.2 CONSIDERATION FOR PURCHASE. The consideration payable in the
aggregate for all the Stock (the "Aggregate Purchase Price") shall be
$2,600,000. Each Selling Stockholder shall be entitled to receive that
percentage (his or her "Stockholder Percentage") of the Aggregate Purchase
Price set forth opposite his or her name on Schedule I hereto, which percentage
has been calculated on the basis of the respective number of shares of Stock
held by the Selling Stockholders, also as set forth on Schedule I.
1.3 CLOSING. Subject to Section 9.1, the closing of the transactions
contemplated by this Agreement (the "Closing") shall take place at 10:00 a.m.
on January 17, 1994, or such later date agreed upon by the parties as is within
three business days after all of the conditions precedent set forth in Sections
5 and 6 to be satisfied prior to the Closing have been satisfied or waived (the
"Closing Date"), at the offices of Spafford, Gay, Ferro & Ivy, or such other
date, time and place is agreed to by the parties. At the Closing, the Selling
Stockholders shall deliver to Sensormatic the endorsed certificates for the
Stock as contemplated by Section 1.1(b), and Sensormatic shall deliver to the
Selling Stockholders, in the aggregate, the Aggregate Purchase Price. The
Aggregate Purchase Price shall be apportioned among the Selling Stockholders on
the basis of their respective Stockholder Percentages and shall be payable by
wire transfer or in shares of Sensormatic Common Stock pursuant to Section 1.4,
as applicable. At the Closing, the applicable Selling Stockholders shall also
execute and deliver to Sensormatic and AES the applicable Non- Competition and
Assignment Agreements (as such term is defined in Section 5.7) and the Selling
Stockholders and AES shall deliver the additional certificates, documents and
instruments contemplated to be delivered by them pursuant to Section 5; and
Sensormatic shall also execute and deliver the Non-Competition and Assignment
Agreements and deliver the consideration contemplated thereby, i.e., $475,000
to each of the Principal Stockholders and $50,000 to Stephen Fisher, and shall
execute and deliver the additional certificates, documents and instruments
contemplated to be delivered by Sensormatic pursuant to Section 6.
1.4 OPTIONAL PAYMENT IN SENSORMATIC STOCK.
(a) Those portions of the Aggregate Purchase Price payable to the
Principal Stockholders and Stephen Fisher shall
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be paid in the form of Sensormatic Common Stock, par value $.01 per share
("Sensormatic Common Stock), subject to the terms and conditions of this
Section 1.4. The other Selling Stockholders shall receive an amount equal to
the Aggregate Purchase Price times their respective Stockholder Percentages, as
set forth on Schedule I, by wire transfer or check representing good funds.
(b) The number of shares of Sensormatic Common Stock payable to each
Selling Stockholder receiving stock pursuant to this Section 1.4 shall be
determined by dividing (a) that portion of the Aggregate Purchase Price payable
to such Selling Stockholder (i.e., the Aggregate Purchase Price multiplied by
such Selling Stockholder's Stockholder Percentage, as set forth on Schedule I)
by (b) the average of the closing prices (last sale) of Sensormatic Common
Stock on the New York Stock Exchange, Inc. ("NYSE") for the five trading days
immediately prior to the Closing Date (or, at Sensormatic's option, a five-day
period ending up to two days earlier). Such closing price as of a given day is
sometimes referred to generically herein as the "Average Closing Price", and
such price for purposes of determining the number of shares deliverable at
closing is sometimes referred to herein as the "Closing Date Price".
Fractional shares, if any, shall be settled in cash.
(c) Sensormatic shall file a Registration Statement on Form S-3 (the
"Registration Statement") with the Securities and Exchange Commission in order
to register under the Securities Act of 1933 (the "Securities Act") the resale
by the applicable Selling Stockholders of the shares of Sensormatic Common
Stock delivered to them at Closing pursuant to this Section 1.4 (the "Closing
Date Shares") and any additional shares issued pursuant to this Section 1.4,
and shall use its best efforts to cause such Registration Statement to become
effective promptly after the Closing Date. When such Registration Statement
becomes effective, Sensormatic shall promptly (and in any event within two
business days thereafter) so notify the Selling Stockholder Representative (as
defined in Section 9.3). With respect to all sales of Closing Date Shares
during the period beginning on the date the Registration Statement becomes
effective (or the date of such notice of effectiveness from Sensormatic, or the
Closing Date, whichever is latest) and ending at the close of the third NYSE
trading day following such date (the "Resale Period"), Sensormatic shall
reimburse each applicable Selling Stockholder, in cash or Sensormatic Common
Stock (or a combination thereof) at Sensormatic's option, for the amount, if
any, by which (i) the product of the Closing Date Price times the number of
Closing Date Shares sold by such Selling Stockholder during the Resale Period,
together with interest
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<PAGE> 8
thereon at the Interest Rate (as defined in Section 1.4(e)) from the Closing
Date to the first day of the Resale Period, exceeds (ii) the "Net Proceeds" of
sale of such Closing Date Shares sold -- i.e., the cash proceeds of all sales
of Closing Date Shares by each of the Selling Stockholders during the Resale
Period less broker commissions of not more than $.06 per share. Sensormatic
shall make such reimbursement within three business days following the delivery
by the applicable Selling Stockholders of a schedule showing the calculation on
a trade-by-trade basis of such cash proceeds and Net Proceeds from sales of
Closing Date Shares during the Resale Period. The Selling Stockholders agree
that all sales during the Resale Period and the period referred to in Section
1.4(d) of Sensormatic Common Stock issued to them pursuant to this Agreement
shall be made in a orderly fashion and in a manner reasonably acceptable to
Sensormatic.
The effect of the foregoing is to guarantee that the Selling Stockholders
collectively receive not less than $2,600,000, together with interest thereon
from the Closing date to the first day of the Resale Period, from the sale of
all the Closing Date Shares, provided they sell all such shares during the
Resale Period (it being understood that they have no obligation to do so, but
that Sensormatic's obligation to guarantee any shortfall shall apply pro rata
only to those Closing Date Shares sold during the Resale Period). In the event
that such net proceeds of sale are less than the guaranteed amount, Sensormatic
is obligated to make up any shortfall, including any broker commissions (of up
to $.06 per share) responsible for all or a portion of such shortfall. Should
such net proceeds of sale equal or exceed the guaranteed amount, however, the
Selling Stockholders would be entitled to retain any such excess, but
Sensormatic would not be responsible for any broker commissions.
(d) In the event that Sensormatic elects to deliver additional Sensormatic
Common Stock pursuant to Section 1.4(c), (i) the number of such shares
delivered shall be equal to the amount payable pursuant to such Section 1.4(c)
divided by the NYSE Closing Price as of the trading date immediately prior to
the date of delivery of such shares (or within two trading days prior thereto,
as determined by Sensormatic), and (ii) with respect to any shares so delivered
(or a like number of Closing Date Shares) which are sold by the Selling
Stockholders receiving them before the end of the second NYSE trading day
following the date of delivery of such shares to them or their broker,
Sensormatic shall further promptly reimburse the applicable Selling
Stockholders, in cash, for the amount, if any, by which the aggregate valuation
of such shares as determined pursuant to clause (i) of this Section 1.4(d)
exceeds the Net Proceeds of sale of such shares.
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<PAGE> 9
(e) In the event that the Registration Statement does not become effective
until after the Closing Date, for the period following the Closing Date through
the first day of the Resale Period, interest shall accrue on the Aggregate
Purchase Price, for purposes of Sections 1.4(c) and 1.4(f), at a fixed rate per
annum equal to 4% above the prime rate identified as such in the Wall Street
Journal for the Closing (the "Interest Rate"). If less than all the Closing
Date Shares are sold during the Resale Period, Sensormatic shall not be
required to pay or accrue interest on the amount (based on the Closing Date
Price) attributable to the unsold Closing Date Shares.
(f) In the event the Registration Statement has not become effective as of
the earlier of (i) the 90th day following the Closing Date, or (ii) April 15,
1994 (or such later date as may be agreed to in writing by the parties),
Sensormatic shall deliver to the Selling Stockholders who received Closing Date
Shares pursuant to this Section 1.4, in exchange for all of their Closing Date
Shares, good funds in an amount equal to the amount that would have been
payable to them at the Closing, together with accrued interest at the Interest
Rate from the Closing Date to the date of delivery of such amount.
Notwithstanding the foregoing, any such Selling Stockholder may by written
notice to Sensormatic given within three business days prior to the date set
forth above elect to retain some or all of his or her Closing Date Shares, in
which event the principal amount delivered pursuant to this Section 1.4(f) and
interest thereon shall be reduced in proportion to the number of shares so
retained.
(g) In the event that Sensormatic defaults in its obligations under this
Section 1.4, such that it neither (i) registers the Closing Date Shares as
contemplated by Section 1.4(c), nor (ii) delivers cash in exchange therefor as
contemplated by Section 1.4(f) (subject to any election by a Selling
Stockholder thereunder to retain his or her shares) on or before April 15, 1994
(or such later date as may be agreed to in writing by the Selling Stockholder
Representative and Sensormatic), the Selling Stockholders may on any business
day following such date that such default remains uncured, rescind the sale of
the stock by delivering written notice of such rescission from the Selling
Shareholder Representative to Sensormatic. In order for such notice to be
effective, the Selling Stockholders must simultaneously or promptly thereafter
redeliver the Closing Date Shares to Sensormatic, in exchange for the Stock, in
each case accompanied by appropriate instruments of assignment. Upon such
exchange, the transactions contemplated by this Agreement shall be without
further force or effect, except that the Selling Stockholders who are parties
to the Non-Competition and
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<PAGE> 10
Assignment Agreements may retain the payments made pursuant thereto but shall
be released from their obligations under such Agreements. Prior to the date
that it either effects the registration of the Closing Date Shares in
accordance with Section 1.4(c) or delivers cash in exchange therefor in
accordance with Section 1.4(f), Sensormatic shall not make any material change
in the business or operations of AES.
2. REPRESENTATIONS AND WARRANTIES OF THE SELLING STOCKHOLDERS. The
Principal Stockholders, jointly and severally, and the other Selling
Stockholders, severally, hereby represent and warrant to Sensormatic, as of the
date hereof and as of the Closing Date, as follows:
2.1 DUE INCORPORATION AND QUALIFICATION OF AES; SUBSIDIARIES;
CAPITALIZATION.
(a) AES is a corporation duly incorporated, validly existing and in good
standing under the laws of Texas, with full corporate power and authority to
own, lease and operate its properties and to carry on business in the places
and in the manner as currently conducted.
(b) AES has no direct or indirect subsidiaries, nor are there any other
entities which AES otherwise controls or in which it has an ownership or
investment interest.
(c) Set forth in Item 2.1(c) of the Disclosure Schedule is a list of all
jurisdictions in which AES is qualified to do business and is in good standing
as a foreign corporation, which are the only jurisdictions in which such
qualification is necessary.
(d) None of AES, the Selling Stockholders nor any of their respective
affiliates (or their spouses, parents or children) owns, directly or
indirectly, any assets used in the Business or any interest in any corporation,
partnership, joint venture or other business entity that (i) competes with AES,
(ii) sells or purchases products or services to or from AES, (iii) leases real
or personal property to or from AES or (iv) otherwise does business with AES.
(e) The authorized capital stock of AES consists of 100,000 shares of
common stock, par or stated value $1.00 per share, of which 31,230 shares,
constituting the Stock, are issued and outstanding, and an additional 1,570
shares are held in treasury. All of such issued and outstanding shares of
Stock were duly authorized and validly issued, are fully paid and nonassessable
and were not issued in violation of any preemptive rights. Except as expressly
set forth in this Section 2.1(e), there are no issued or outstanding shares of
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<PAGE> 11
capital stock of AES and no outstanding options, warrants, rights, conversion
rights, pre-emptive rights, calls, commitments or demands of any character
obligating AES to issue, sell, redeem or repurchase any of its shares of such
capital stock or any other security giving a right over such shares of capital
stock.
(f) Set forth opposite each Selling Stockholder's name on Schedule I is
the number of shares of Common Stock owned by such Selling Stockholder. Each
such Selling Stockholder is the sole beneficial and record owner of the shares
of Stock so indicated, free and clear of all Liens. At the Closing, all right,
title and interest in and to all of such shares, beneficially and of record,
shall be owned by such Selling Stockholder free and clear of all Liens, except
as provided by this Agreement; each such Selling Stockholder has and shall have
full right, power and authority to sell and deliver to Sensormatic the shares
of Stock required to be sold by such person on the Closing Date; and upon the
assignment and delivery of the certificates for such shares by or on behalf of
each such Selling Stockholder to Sensormatic, duly endorsed or accompanied by
properly executed stock powers for transfer, Sensormatic shall acquire full,
good and marketable title to such shares, free and clear of all Liens.
2.2 AUTHORITY; DUE AUTHORIZATION; VALID OBLIGATION.
(a) AES has all requisite corporate power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated hereby.
The Board of Directors of AES has approved this Agreement and the transactions
contemplated hereby, and AES has taken any additional corporate action
necessary for the execution and delivery by it of this Agreement and the
consummation of the transactions contemplated hereby.
(b) This Agreement constitutes the valid and binding obligation of each of
AES and each of the Selling Stockholders, and the Non-Competition and
Assignment Agreements and the Employment Agreements referred to in Section 5.7
(collectively, the "Ancillary Agreements") constitute the valid and binding
obligations of the respective Selling Stockholders who are parties thereto,
enforceable against each of such persons (as applicable) in accordance with
their respective terms, except as may be limited by principles of equity or by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the enforcement of creditors' rights generally.
2.3 NO CONFLICTS OR DEFAULTS. The execution and delivery of this
Agreement and the Ancillary Agreements and
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<PAGE> 12
the consummation of the transactions contemplated hereby and thereby do not and
shall not (a) contravene AES's Certificate of Incorporation or By-laws; or (b)
except as set forth in Item 2.3 of the Disclosure Schedule, with or without the
giving of notice or the passage of time, or both, (i) violate or conflict with,
or result in a breach of, or a default or loss of rights under, any agreement,
mortgage, indenture, lease, instrument, permit or license to which AES or any
of the Selling Stockholders are a party or by which any of such persons or any
of AES's assets is bound (including without limitation any of the contracts
referred to in Section 2.6(d) or Section 2.14, except that with respect to the
Installation Contracts referred to therein, this representation is to the
knowledge of the Principal Stockholders), or any judgment, order, decree, law,
rule or regulation to which any of such persons or any of AES's assets is
subject, (ii) result in the creation of, or give any party the right to create,
any Liens upon AES or any of AES's assets or (iii) terminate or give any party
the right to terminate, abandon or refuse to perform any agreement, arrangement
or commitment to which AES is a party or by which it or any of its assets is
bound.
2.4 COPIES OF CHARTER DOCUMENTS AND STOCK RECORDS.
(a) Correct and complete copies of the Certificate of Incorporation,
By-laws and other organizational or governing instruments of AES, in each case
as amended to the date hereof, have been furnished to Sensormatic by AES.
(b) AES has made available to Sensormatic correct and complete copies of
the minute books, stock ledgers or other statutory books of AES.
2.5 AUTHORIZATIONS. Except as set forth in Item 2.5 of the Disclosure
Schedule, no authorization, approval, order, license, permit or consent of, or
filing or registration with, any court or governmental authority, or consent of
any other party, is required in connection with the execution, delivery and
performance by AES or the Selling Stockholders of this Agreement and the
Ancillary Agreements.
2.6 FINANCIAL STATEMENTS.
(a) AES has furnished to Sensormatic (i) audited financial statements for
and as of the end of each of the two fiscal years ended March 31, 1993,
reported upon by Grace & Bryan Company, P.C., and (ii) unaudited interim
financial statements as of and for the six months ended September 30, 1993
(collectively, the "Financial Statements"). The Financial Statements were
prepared in accordance with U.S. generally accepted accounting principles
("GAAP") applied on a
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consistent basis, are reconcilable to the books and records of AES and present
fairly the financial position of AES as at the dates thereof and the results of
its operations, cash flows and changes in financial position for the periods
then ended, except, in the case of such unaudited interim financial statements,
for the omission of footnote information and for year end audit adjustments
neither of which are, singly or in the aggregate, material.
(b) As of September 30, 1993, AES had no material liabilities of any
nature, whether accrued, absolute, contingent or otherwise, and whether due or
to become due ("Liabilities"), which were not specifically disclosed or
provided for in the unaudited consolidated balance sheet of AES as of September
30, 1993, included in Financial Statements (the "Interim Balance Sheet") or the
notes to the Financial Statements as of and for the period ended March 31, 1993
(the "Financial Statement Notes"). Since September 30, 1993, AES has not
incurred any Liabilities outside of the ordinary course of business, or any
Liabilities which, individually or in the aggregate, are likely to have a
material adverse effect on the business, prospects, financial condition or
results of operations of AES (a "Material Adverse Effect"). All such
Liabilities incurred since September 30, 1993 are fully reflected or reserved
on the books and records of AES.
(c) AES has furnished to Sensormatic true and correct schedules of its
aged accounts receivable and accounts payable as of September 30, 1993, and
will provide updated schedules thereof as reasonably requested by Sensormatic
prior to the Closing. All of the accounts receivable and notes receivable
reflected on the Interim Balance Sheet and the books of AES are actual are bona
fide receivables representing obligations for the amounts thereof shown on the
Interim Balance Sheet or such books, which resulted or shall have resulted from
the regular course of AES's business and are fully collectible by AES, except
to the extent reserved for on the Interim Balance Sheet or, in the case of such
accounts and notes receivable arising after September 30, 1993, on the books of
AES consistent with prior practice.
(d) The Selling Stockholders have delivered to Sensormatic Schedules of
Closed Contracts and Contracts in Progress as of September 30, 1993, in form
similar to those included in the Financial Statements, and will furnish similar
updated schedules as they become available prior to the Closing. All such
schedules are true, correct and complete in all material respect as of their
respective dates, the contracts listed thereon (the "Installation Contracts")
remain in force and, to the knowledge of the Selling Stockholders, there have
occurred no defaults or other events which would
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cause the information set forth on such Schedules to be incorrect in any
material respect.
(e) Set forth in Item 2.6(e) of the Disclosure Schedule is a true and
complete list of all outstanding bids or proposals of AES with respect to its
products or services, which remained undelivered or uninstalled or unperformed,
in whole or in part, as of the latest practicable date. All such outstanding
bids and proposals, and all unperformed Installation Contracts referred to in
Section 2.6(d), are in customary quantities, at customary prices and on
customary terms, based upon the past marketing policies with respect to such
products, and, to the knowledge of the Principal Stockholders, there are no
such material orders or commitments which will not, upon fulfillment in
accordance with their terms, result in a profit to AES based upon its recent
experience and operations.
(f) Except as set forth in Item 2.6(f) of the Disclosure Schedule, the
inventories reflected on the Interim Balance Sheet and on the books of AES
consist of items in good and merchantable condition and which were acquired in
the ordinary course of business of AES. The inventories reflected on the
Interim Balance Sheet or such books of AES are valued at the lower of cost
(under the first-in, first-out method) or market, determined in a manner
consistent with prior periods. The level of inventories currently owned by AES
is not excessive, and is adequate, in relation to the current requirements of
AES.
(g) The net worth of AES (i.e., total assets minus total liabilities) as
of the Closing Date shall be not less than $1,075,000. To the extent that the
foregoing representation proves incorrect, Sensormatic shall be entitled to a
dollar-for-dollar reimbursement pursuant to Section 8 hereof of any deficiency,
payable promptly following the Closing, which reimbursement shall be made pro
rata by the Selling Stockholders on the basis of their respective Stockholder
Percentages.
2.7 TITLE TO ASSETS.
(a) Except as set forth in Item 2.7(a) of the Disclosure Schedule, AES has
good and marketable title to all its principal properties and assets, real and
personal, free and clear of all Liens, except: (i) Liens to secure
indebtedness of AES reflected on the Interim Balance Sheet and listed in Item
2.7(a) of the Disclosure Schedule; (ii) Liens consisting of zoning or planning
restrictions, easements, permits and other restrictions or limitations on the
use of real property or irregularities in title thereto which do not materially
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detract from the value of such property, or impair the use of such property by
AES in the operation of its business; (iii) Liens for taxes, assessments or
governmental charges or levies on its property listed in Item 2.7(a) of the
Disclosure Schedule, if such taxes, assessments or governmental charges or
levies shall not at the time be due and delinquent or if the same thereafter
can be paid without penalty or if AES shall currently be contesting the
validity thereof in good faith, provided the amount thereof is fully reserved
against on the Interim Balance Sheet; (iv) Liens consisting of (A) pledges or
deposits to secure obligations of AES under workmen's compensation or other
similar laws; (B) pledges or deposits to secure performance in connection with
bids, tenders, contracts or leases entered into in the ordinary course of
business to which AES is a party; (C) deposits to secure public or statutory
obligations of AES; (D) leases granted in the ordinary course of business or
property acquired in the ordinary course of business subject to leases or
purchase money security interests; or (E) mechanics', carriers', workmen's,
repairmen's or other like Liens arising or incurred in the ordinary course of
business or deposits to obtain the release of such Liens; and (v) other Liens
which do not interfere materially with possession, ownership or use of any real
or personal property of AES.
(b) Set forth in Item 2.7(b) of the Disclosure Schedule is a list of all
real property leased by AES (the "Realty"). Included in such list is the
address (including the county) of each location where AES keeps a material
amount of its inventory or work-in- process. AES does not own any real
property.
(c) All material leases pursuant to which AES leases real or personal
property from others are in good standing, valid and effective in accordance
with their respective terms.
2.8 ORDINARY COURSE; NO MATERIAL ADVERSE EFFECT. Except as set forth in
Item 2.8 of the Disclosure Schedule, since September 30, 1993, AES has
conducted the Business and maintained its assets substantially in the same
manner as previously conducted or maintained and solely in the ordinary course
and , since such date, (a) there has not been any material adverse change in
the business, financial condition or results of operations of AES or in Assets,
(b) AES has not sold, encumbered or committed to sell or encumber any of its
material assets or properties, other than the sale of inventory in the ordinary
course of business, or incurred or committed to incur any material amount of
additional indebtedness (other than under any existing bank facilities
described in the Financial Statement Notes) and (c) no dividends or
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distributions have been declared or paid with respect to any of the Stock.
2.9 PRODUCTS.
(a) To the extent that any equipment or products sold or leased by AES are
required to meet applicable standards of the Federal Communications Commission
("FCC") or Underwriters Laboratories Inc. ("UL"), such equipment and products
meet such standards. To the extent that any such equipment or products require
any FCC or UL approvals, registrations or certifications, such equipment and
products have received or are in the process of timely receiving such
approvals, registrations or certifications.
(b) Except as set forth in Item 2.9(b) of the Disclosure Schedule, AES has
not received any notice of any outstanding or threatened liability or claim for
defects or breaches of warranty or negligence, existing or alleged, in
connection with the design, manufacture, sale, lease or use of any of the
products of, or any services performed by or on behalf of, AES.
2.10 PERMITS; COMPLIANCE WITH LAW.
(a) AES holds all valid and subsisting permits, certificates, licenses,
approvals and other authorizations of governmental authorities (collectively,
"Permits) as are material to the conduct of the Business, is in compliance in
all material respects with the terms of each thereof, has made all
notifications and applications to governmental authorities required under law
to continue its material manufacturing operations and has not received any
notice or claim pertaining to the failure to obtain any such Permit, except for
instances or notices of noncompliance which would not. Except as set forth in
Item 2.10(a) of the Disclosure Schedule, no such Permits will terminate as of a
result of the transactions contemplated by this Agreement. Except for
violations that, individually or in the aggregate, do not and are not likely to
have a Material Adverse Effect, AES's business has not been, and is not being,
conducted in violation of any law, ordinance, rule or regulation.
(b) The structures and equipment, whether owned or leased, which are
currently used by AES conform to all applicable laws, orders, regulations,
ordinances or governmental or contractual requirements relating to their
construction, use and operation, except any such instances of noncompliance as
do not, singly or in the aggregate, have a Material Adverse Effect.
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2.11 TAXES.
(a) AES has filed all federal, state, provincial, local and foreign
returns, notices, reports and computations which were required to be filed
prior to the date hereof in respect of all income, withholding, franchise,
payroll, excise, property, value- added, sales, use or other taxes, duties or
assessments (together with any related penalties, fines or interest, "Taxes"),
each such return and report is complete and accurate in all material respects,
and AES has paid or made provision in the Interim Balance Sheet or, since
September 30, 1993, in its books and records for (i) payment of all Taxes (and
any related penalties, fines and interest) shown to be due on such returns or
reports, (ii) assessments received with respect thereto, and (iii) any Taxes
which otherwise may be due with respect to periods ending on or prior to
September 30, 1993. AES has not received notice of any claims pending or
threatened for taxes against AES or any of its subsidiaries for periods ending
on or before September 30, 1993 in excess of the amounts reflected in the
Interim Balance Sheet.
(b) The amount of all accrued and unpaid federal and state franchise and
income Taxes of AES, calculated in accordance with GAAP consistently applied
and FASB 109 thereunder (which represents a change from APB 11, the method used
in preparing the March 31, 1993 Financial Statements), was not more than
$450,000 as of September 30, 1993. In the event that the foregoing
representation proves incorrect, Sensormatic shall be entitled to a
dollar-for-dollar reimbursement pursuant to Section 8 hereof of any excess of
such accrued and unpaid Taxes over $450,000, payable promptly following the
Closing, which reimbursement shall be made pro rata by the Selling Stockholders
on the basis of their respective Stockholder Percentages.
(c) AES is not a party to any agreement characterized as a lease under
Internal Revenue Code ("Code") Section 168(f)(8) (safe harbor leases) at any
time in effect. Neither AES nor any of its predecessors has made a consent
under Code Section 341(f)(1) or agreement under Code Section 341(f)(3)(B)
(shareholder relief from collapsible corporation rules) (or any comparable
state income tax provision) consenting or agreeing to have the provisions of
Section 341(f)(2) of the Code (or any comparable state income tax provision)
apply to any disposition of any of the Company's assets or property. AES never
been an "S" corporation and no "S" election has ever been filed with respect to
AES. AES is not acting as a nominee or a trustee for any person, corporation,
partnership, trust or estate.
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2.12 EMPLOYEE BENEFITS.
(a) The Profit Sharing Plan of AES (the "Profit Sharing Plan") is the only
"employee pension benefit plan" (as defined in Section 3(2) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")) maintained by AES
or to which AES has any liability or obligation. Set forth in Item 2.12(a) of
the Disclosure Schedule is a list of all "employee welfare benefit plans" (as
defined in Section 3(1) of
ERISA) and all other bonus, pension, profit sharing, deferred compensation,
stock ownership, stock bonus, stock option, phantom stock, retirement,
vacation, disability, death benefit, unemployment, hospitalization, medical,
severance, or other plan, agreement, arrangement or understanding providing
benefits to any current or former employee, officer or director of AES or to
which AES has any liability or obligation (all such plans, agreements,
arrangements and understandings referred to in this Section 2.12(a) being
hereinafter referred to as the "AES Benefit Plans"). AES has delivered to
Sensormatic true, complete and correct copies of (w) each AES Benefit Plan and
any amendments thereto (or, in the case of any unwritten AES Benefit Plans,
descriptions thereof), (x) annual reports on Form 5500 for the past three years
(together with accompanying financial statements) filed with the Internal
Revenue Service or Department of Labor, as applicable, with respect to each AES
Benefit Plan (if any such report was required), (y) all summary plan
descriptions for each AES Benefit Plan for which such summary plan description
is required or otherwise available and (z) each trust agreement and group
annuity contract relating to any AES Benefit Plan. Except as set forth in Item
2.12(a) of the Disclosure Schedule, AES has not terminated any AES Benefit Plan
previously in effect. No AES Benefit Plan provides for post- retirement
medical benefits.
(b) The accrued obligations of AES under all AES Benefit Plans are
reflected on the Interim Balance Sheet as of its date and on the books of AES
for periods thereafter up to the Closing Date.
(c) Each AES Benefit Plan and any related trust complies currently, and
has complied at all times in the past, both as to form and operation, in all
material respects with the terms of such AES Benefit Plan and with the
applicable provisions of ERISA, the Internal Revenue Code of 1986, as amended,
and other applicable laws. All necessary government approvals for each AES
Benefit Plan have been or will be obtained on a timely basis.
(d) A determination letter has been obtained with respect to the Profit
Sharing Plan (and a copy furnished to
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Sensormatic) and has not been revoked. All contributions of AES required by
the Profit Sharing Plan have been made by AES or properly accrued and reflected
on the Interim Balance Sheet. With respect to the Profit Sharing Plan, (i) the
financial statements of the Profit Sharing Plan, as of the close of its most
recent Plan year for which financial statements are available, present fairly
the financial condition of such Plan for such plan year; (ii) no "prohibited
transaction" (as defined in Section 406 of ERISA) resulting in liability of AES
has occurred; (iii) no breach of fiduciary responsibility under Part 4 of Title
I of ERISA resulting in liability of AES has occurred; and (iv) the Profit
Sharing Plan is qualified under Code Section 401 and the trusts maintained
pursuant thereto are exempt from federal income taxation under Code Section
501.
(e) AES does not maintain, and has no obligation to, any "multi-employer
plan" (as such term is defined in Section 4001(a)(3) of ERISA). AES has no
liability (contingent or otherwise) with respect to any terminated AES Benefit
Plan. AES is not a member of and does not have any liability with respect to a
controlled group of corporations or a trade or business (whether or not
incorporated) under common control which, together with AES, is or was at any
time treated as a single employer under Section 414(b), (c), (m) or (o) of the
Code or Section 4001(b)(1) of ERISA.
2.13 LITIGATION. Except as described in Item 2.13 of the Disclosure
Schedule, there is no claim, action, suit, proceeding, investigation or
criminal proceeding, at law or in equity, before any national, state or
provincial, local or other governmental authority, court, arbitration tribunal
or other forum (collectively, "Proceedings") pending or, to AES's knowledge,
threatened against AES which, if adversely determined, would, singly or in the
aggregate, have a Material Adverse Effect or would materially adversely affect
consummation of the transactions contemplated by this Agreement, or which
challenges the validity or propriety of the transactions contemplated by this
Agreement. Item 2.13 of the Disclosure Schedule contains a list of all
Proceedings to which AES is a party or to which AES or the Assets are subject.
To the knowledge of AES, there is no material outstanding and unsatisfied
judgment, order, writ, ruling, injunction, stipulation or decree of any court,
arbitrator or governmental authority against or relating to AES or its assets.
2.14 AGREEMENTS AND COMMITMENTS.
(a) Set forth in Item 2.14 of the Disclosure Schedule is a complete list
of all of the following instruments to which AES is a party ("Listed
Instruments"): (i) each employ-
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qment, consulting, severance or other agreement (including any "golden
parachute" or similar arrangement) with any employee, consultant, sales or
manufacturers representative, officer, director or stockholder of AES (or any
company which is controlled by any such individual) whose total rate of annual
remuneration, including the fair market value of all non-cash "personal
benefits" received by any such individual or company, exceeds $40,000, and all
employment and other agreements with any such individual or company which
provide total aggregate compensation thereunder in excess of $75,000; (ii) each
lease requiring the payment of rentals aggregating at least $20,000 per annum,
pursuant to which real or personal property is held under lease, or leased to
any person by AES (other than leases of its products to customers in the
ordinary course of business); (iii) each loan, guaranty or other agreement or
instrument evidencing indebtedness for monies borrowed by or credit available
to AES, or any guaranty of an obligation by AES; (iv) each distribution,
dealership, franchise, sales agency or similar agreement to which AES is a
party; (v) each manufacturing or supply agreement to which AES is a party
(other than Installation Contracts listed under Section 2.6(d)); (vi) each
partnership, joint venture, shareholders or similar agreement to which AES or
any of the Selling Stockholders (in their capacity as such) is a party; (vii)
each agreement or understanding relating to the acquisition by AES or any
Intellectual Property (as such term is defined in Section 2.15) or any rights
therein, or the grant by AES of any rights therein (including by license in
either case), or any consulting or other services provided by any person with
respect thereto; (viii) each research, development and technical assistance
agreement; (ix) any covenants not to compete or similar restrictions on the
conduct of the Business; and (x) each other contract, commitment or
understanding to which AES is a party (and which is not disclosed in any other
Item of the Disclosure Schedule or in the Notes) and which (A) involves in
excess of $50,000, (B) has a term of one year or more and is not terminable
without further liability, penalty or premium or (C) was entered into other
than in the ordinary course of business.
Except as set forth in the applicable Item of the Disclosure Schedule, (x) a
true and complete copy of each written Listed Instrument has been furnished to
Sensormatic, (y) the consummation of the transactions contemplated by this
Agreement will not cause any of the Listed Instruments or, to the knowledge of
the Principal Stockholders, the Installation Contracts to terminate or give any
party thereto the right to terminate or renegotiate the same, and (z) AES is
not in breach or default in any material respect under any of the Listed
Instruments or Installation Contracts. Neither AES nor any of the Principal
Stockholders has any knowledge of any
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other material breach or default under any Listed Instrument or Installation
Contract by any other party thereto or by any other person, firm or corporation
bound thereby.
(b) AES is not a party to any union or collective bargaining contracts
with respect to any employees of AES and there has not been, nor has AES
received written notice threatening, any representational or organizational
activity, strike, slowdown, picketing or work stoppage by any union or other
group of employees against AES.
2.15 INTELLECTUAL PROPERTY. Except as set forth in Item 2.15 of the
Disclosure Schedule, none of the products or services sold or otherwise
furnished by AES or the conduct of the Business infringes any patent,
trademark, trade secret or other proprietary right (collectively, "Intellectual
Property") of any third party. AES has not received any claims that it or its
Intellectual Property has infringed the rights of others, and neither AES nor
either of the Principal Stockholders is aware of any infringement of AES's
Intellectual Property by others.
2.16 ENVIRONMENTAL MATTERS.
(a) Set forth in Item 2.16 of the Disclosure Schedule is a true and
complete list of any environmental reports and studies performed by or for AES
with respect to any of the Realty (the "Environmental Reports"). True and
complete copies of any such Environmental Reports have been collected by AES
and made available to Sensormatic.
(b) Except as set forth in the Environmental Reports or in Item 2.16 of
the Disclosure Schedule, neither AES nor, to the knowledge of AES, any other
person has ever caused or permitted any Hazardous Material (as hereinafter
defined) to be spilled, released, discharged or disposed of on, under or at the
Realty or any part thereof other than in the ordinary course of business and in
compliance with all laws (and rules and regulations thereunder), ordinances,
Permits, guidelines, orders and consent decrees of any applicable federal,
state, local or foreign government (or agency thereof) concerning the disposal,
release or threatened release of hazardous substances, public health and
safety, or pollution or protection of the environment (collectively,
"Environmental Laws"). The Realty has never been used by AES or, to the
knowledge of AES, by any other person as a dump site or storage site (whether
permanent or temporary) for any Hazardous Material, except for temporary
storage of Hazardous Material used or generated in the ordinary course of
business and generated, used, stored and disposed of in accordance with all
applicable Environmental Laws. For all purposes of this
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Agreement, "Hazardous Material" shall mean any pollutants, contaminants,
chemicals, or industrial toxic or hazardous substance or material defined as
such in (or for purposes of) the Environmental Laws, including, without
limitation, any waste constituents coming within the definition or list of
hazardous substances in 40 C.F.R. Section 261.1 through 261.33.
(c) Except as set forth in Item 2.16 of the Disclosure Schedule, neither
AES nor, to the knowledge of AES and the Principal Stockholders, any other
person has ever caused or permitted any Hazardous Material to be placed, held,
handled or located on, under or at the Realty or any part thereof other than in
the ordinary course of business and in compliance with all Environmental Laws.
(d) Except as set forth in the Environmental Reports, the Realty does not
have any environmentally sensitive areas (such as wetlands, floodplains and
stream corridors) that restrict the current or contemplated uses of the Realty.
(e) Except as set forth in the Environmental Reports furnished to
Sensormatic and in Item 2.16 of the Disclosure Schedule, AES has not received
any complaint, order, citation or other notice from any governmental authority
(including, without limitation, the Environmental Protection Agency) of any
misuse, spill, discharge or other release of any Hazardous Material by AES or
affecting the Realty, or any violation or alleged violation of any
Environmental Law by AES.
2.17 SUPPLIERS AND CUSTOMERS. Set forth in Item 2.17 of the Disclosure
Schedule is a list of all suppliers (including assemblers or manufacturers of
component or finished products) and customers accounting for 5% or more of
AES's annual purchases and sales, respectively. AES has adequate sources of
supply for all products or the components thereof. The relationship of AES
with such suppliers and customers is good and there has been no expression of
any intention to terminate or materially modify any of such relationships.
2.18 INSURANCE. All of the insurable assets of AES are adequately
insured for AES's benefit against loss or damage by theft, fire and all other
hazards and risks of a character usually insured against by persons operating
similar properties in the localities where such properties are located, under
valid and enforceable policies issued by insurance carriers of substantial
assets and recognized responsibility in amounts sufficient to prevent the
insured from becoming a co-insurer within the terms of such policies. All such
policies of insurance are in full force and effect on
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the date hereof in accordance with their terms, and neither AES nor Stockholder
has received notice of termination of any such policies.
2.19 BANK ACCOUNTS, ETC. AES has heretofore furnished Sensormatic with a
true, correct and complete list of (a) all accounts and credit arrangements
maintained by AES, and all persons authorized to sign or act on behalf of
seller with respect thereto, and all safe deposit boxes and other similar
custodial arrangements and (b) the names of all persons holding powers of
attorney from AES or otherwise authorized to act on behalf of AES with respect
to any matters and a summary of the terms thereof.
2.20 SENSORMATIC COMMON STOCK NOT REGISTERED. The Selling Stockholders
receiving Sensormatic Common Stock recognize and agree that such stock has not
been registered under the Securities Act or any applicable state securities or
"blue sky" laws, and that such stock may not be resold absent such
registration, or pursuant to an opinion of counsel acceptable to counsel for
Sensormatic to the effect that such resale would be permitted pursuant to an
exemption from registration. If the Registration Statement has not become
effective as of or prior to the Closing, the foregoing limitation shall be
reflected in a legend on the certificates representing the Closing Date Shares
until such time as the Registration Statement becomes effective.
2.21 MISCELLANEOUS. All representations and warranties of AES and the
Selling Stockholders set forth in this Agreement and all information set forth
by AES and the Selling Stockholders in the Disclosure Schedule or any schedules
or exhibits hereto or thereto, were, as of the date of which they were made or
given, true and complete in all material respects and no such representation,
warranty or information contains or contained any untrue statement of a
material fact or, to the knowledge of the Principal Stockholders, omits or
omitted to state any material fact necessary in order to make such
representation or warranty, in light of the circumstances under which it is or
was made, not false or misleading. Any disclosure made pursuant to any of the
representations in this Section 2 shall be deemed to have been made for
purposes of any other such representations.
2.22 INFORMATION SUPPLIED. In the event that the Registration Statement
is filed by Sensormatic pursuant to Section 1.4, none of the information to be
supplied by or on behalf of AES or any Selling Stockholder for inclusion or
incorporation by reference in the Registration Statement, including any
amendments or supplements thereto, shall, at the time the Registration
Statement becomes effective under the
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Securities Act, or, in the case of any subsequent amendment or supplement
thereto, the date thereof, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they
were made, not misleading.
3. REPRESENTATIONS AND WARRANTIES OF SENSORMATIC. Sensormatic hereby
represents and warrants to the Selling Stockholders, as of the date hereof and
as of the Closing Date, as follows:
3.1 DUE INCORPORATION AND QUALIFICATION. Sensormatic is a corporation
duly incorporated, validly existing and in good standing under the laws of the
State of Delaware, with full corporate power and authority to own, lease and
operate its properties and to carry on its businesses in the places and in the
manner currently conducted. Sensormatic is qualified to do business and is in
good standing as a foreign corporation in each jurisdiction in which the nature
of the activities conducted by it or the character of the properties owned or
leased by it makes such qualification necessary and the failure to so qualify
would have a material adverse effect on the business, financial condition or
results of operations of Sensormatic and its subsidiaries, considered as a
whole.
3.2 AUTHORITY; DUE AUTHORIZATION; VALID OBLIGATION. Sensormatic has all
requisite corporate power and authority to execute and deliver this Agreement
and the Ancillary Agreements and to consummate the transactions contemplated
hereby and thereby. Subject to Section 5.9, Sensormatic has taken all
corporate action necessary for the execution and delivery by it of this
Agreement and the Ancillary Agreements and for the consummation of the
transactions contemplated hereby and thereby, and this Agreement constitutes
the valid and binding obligations of Sensormatic, enforceable against
Sensormatic in accordance with their respective terms, except as may be limited
by principles of equity or by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of creditors' rights
generally.
3.3 NO CONFLICTS OR DEFAULTS. The execution and delivery of this
Agreement and the Ancillary Agreements by Sensormatic and the consummation of
the transactions contemplated hereby and thereby do not and shall not (a)
contravene the Certificate of Incorporation or By-Laws of Sensormatic or (b)
with or without the giving of notice or the passage of time, or both, (i)
violate or conflict with, or result in a breach of, or a default or loss of
rights under, any material agreement, mortgage, indenture, lease, instrument,
permit or license to which Sensormatic is a party or by which either of
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it or any material portion its assets are bound, or any judgment, order,
decree, law, rule or regulation to which it or any material portion of its
assets are subject, (ii) result in the creation of, or give any party the right
to create, any Lien upon any material portion of its assets, or (iii) terminate
or give any party the right to terminate, abandon or refuse to perform any
agreement, arrangement or commitment to which Sensormatic is a party or by
which it or any material portion of its assets is bound, except any such
violation conflict, breach, default, loss of rights, Lien, termination or
failure of performance referred to in this clause (b) as will not, singly or in
the aggregate, materially adversely affect the consummation of the transactions
contemplated by this Agreement and the Ancillary Agreements.
3.4 AUTHORIZATIONS. No authorization, approval, order, license, permit or
consent of, or filing or registration with, any court or governmental
authority, or consent of any other party (other than the Registration
Statement) is required in connection with the execution, delivery and
performance by Sensormatic or Sensormatic of this Agreement, except for such
authorizations, approvals, licenses, permits, consents, filings or
registrations as are obtained by the Closing Date or which, if not obtained or
made, the failure to obtain or make would not materially adversely affect the
consummation of the transactions contemplated by this Agreement.
3.5 LITIGATION. There are no Proceedings pending against Sensormatic, and
Sensormatic has not received notice of any threatened Proceedings, which, if
adversely determined, would, singly or in the aggregate, materially adversely
affect consummation of the transactions contemplated by this Agreement or the
Ancillary Agreements, or which challenges the validity or propriety of the
transactions contemplated by this Agreement or the Ancillary Agreements.
3.6 INVESTMENT INTENTION. Sensormatic is acquiring the Stock for
investment purposes only, and not with a view to, or for resale in connection
with, any offering or distribution thereof. Sensormatic recognizes and agrees
that the Stock has not been registered under the Securities Act or applicable
state securities or "blue sky" laws, and that the Stock may not be resold
absent such registration or pursuant to an exemption therefrom. If requested
by the Selling Stockholders, the foregoing restriction will be reflected in a
legend on the certificates representing the Stock delivered at Closing.
3.7 REGISTRATION STATEMENT; COMMON STOCK. The information included or
incorporated by reference in the
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Registration Statement shall, at the time the Registration Statement becomes
effective under the Securities Act, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, except that no representation or warranty
is made by Sensormatic with respect to statements made or incorporated by
reference in the Registration Statement based upon information supplied by AES
or the Selling Stockholders for inclusion therein. Any Sensormatic Common
Stock issued pursuant to Section 1.4 will have been duly authorized and validly
issued, will be fully paid and non-assessable and will not be issued in
violation of any preemptive rights.
3.8 MISCELLANEOUS. All representations and warranties of Sensormatic set
forth in this Agreement and all information set forth by Sensormatic in any
schedules or exhibits hereto or thereto were, as of the date on which they were
made or given, true and complete in all material respects and no such
representation, warranty or information contains or contained any untrue
statement of a material fact or, to Sensormatic's knowledge, omits or omitted
any material fact necessary in order to make such representation or warranty,
in light of the circumstances under which it is made, not false or misleading.
Any disclosure made pursuant to any of the representations in this Section 3
shall be deemed to have been made for purposes of any other such
representations.
4. PRE-CLOSING AGREEMENTS.
4.1 PRESERVE AES'S BUSINESS. Between the date of this Agreement and the
Closing Date, AES shall (and the Principal Stockholders shall cause AES to), in
all material respects, (a) preserve substantially intact the business
organization of AES and use reasonable best efforts to keep available the
services of AES's present officers and key employees and preserve AES's present
relationships with persons having significant business relations therewith, and
(b) conduct AES's Business only in the ordinary course. Without limiting the
generality of the foregoing, AES shall not, without the prior written consent
of Sensormatic in each instance, (i) issue or commit to issue any AES Shares or
other capital stock, (ii) sell, or grant or commit to grant any options,
warrants or other rights to subscribe for or purchase, any Stock or other
capital stock, (iii) declare, set aside, or pay any dividend with respect to
any Stock or other capital stock or make any distribution of capital, (iv)
directly or indirectly redeem, purchase or otherwise acquire or commit to
acquire any Stock or other capital stock or other ownership interest of AES or
any other party, (v) effect a
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split or reclassification of its capital stock, or a recapitalization, (vi)
amend its Certificate of Incorporation or By-laws, (vii) make or grant any wage
or salary increases or any bonuses other than pursuant to pre-existing
commitments, or enter into or amend any material employment, consulting,
agency, personal services, compensation or severance agreement or arrangement
with any party, (viii) enter into any material transaction, contract or
commitment other than in the ordinary course of business, (ix) incur or commit
to incur a material amount of additional indebtedness (other than under any
existing bank lines of credit), or (x) sell, encumber or otherwise dispose of
any material properties or assets. AES shall use its best efforts to maintain
in full force and effect insurance policies providing coverage and amounts of
coverage comparable to the coverage and amounts of coverage provided under the
policies of insurance now in effect for AES.
4.2 PRESERVE ACCURACY OF REPRESENTATIONS AND WARRANTIES; UPDATES. Between
the date of this Agreement and the Closing Date, each of AES, the Selling
Stockholders and Sensormatic shall refrain from taking, without the prior
written consent in each instance of Sensormatic or the Selling Stockholder
Representative, as applicable, any action which would render any of the
representations or warranties set forth in Sections 2 or 3 inaccurate in any
material respect as of the Closing Date, and shall notify the other promptly of
the occurrence of any matter, event or change in circumstances known to it
after the date hereof that would have been required to be disclosed by it
hereunder if it had occurred on or prior to the date hereof. Between the date
of this Agreement and the Closing Date, AES shall supply to Sensormatic or its
representatives, on a monthly basis, copies of all internally generated sales
reports and financial statements, and such additional financial and business
information as may be required by this Agreement or as they may otherwise
reasonably request, which shall be prepared in a manner consistent with the
manner in which they are now prepared.
4.3 FURTHER INVESTIGATION. Between the date of this Agreement and the
Closing Date, AES shall (and the Selling Stockholders shall cause AES to) give
to Sensormatic and its representatives full access during normal business
hours, on reasonable prior notice, to all of its premises, files, books,
records and employees and shall cause their officers, employees and
representatives to furnish such financial and operating data and other
information with respect to their respective businesses as any of the other
parties shall from time to time request; provided, however, that any such
investigation shall be conducted in such manner as not to interfere
unreasonably with the operation of AES's business.
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No such investigation shall impair or affect any representation or warranty, or
any right to indemnification, under this Agreement. If the transactions
contemplated by this Agreement are not consummated, each of the parties shall
return all confidential information and copies and derivations thereof to the
party from which it originated.
4.4 CONSENTS, WAIVERS AND FILINGS. Upon the terms and subject to the
conditions set forth in this Agreement, AES, the Selling Stockholders and
Sensormatic shall use their respective best efforts to take, or cause to be
taken, all actions, and to do, or cause to be done, and to assist and cooperate
with the other parties in doing, all things, reasonably necessary or desirable
to consummate in an expeditious manner the transactions contemplated by this
Agreement. Without limiting the foregoing, the parties shall cooperate to
obtain from all relevant third parties and governmental authorities all
consents and waivers to, and permits, authorizations and licenses for, the
transactions contemplated by this Agreement that may be required under any
agreement, lease, financing arrangement, license, Permit or other instrument or
under any applicable law, rule or regulation, and to obtain and file
appropriate registrations and transfers of Intellectual Property. Further in
that connection, the parties note that the various agreements and schedules
(including the Disclosure Schedule) contemplated by this Agreement have not
been prepared or completed as of the date hereof, and agree to supply promptly
and fully all schedules and other information contemplated by this Agreement to
be supplied by them and not supplied as of the date hereof.
4.5 NO SOLICITATION. Neither AES nor any Selling Stockholder shall,
directly or through any other party, negotiate or conclude an agreement with
any other party for a merger, or sale of the securities, of AES or for the sale
or other disposition of the business or assets of AES (other than the sale of
inventory in the ordinary course of business), or enter into any discussions
with any other party for such purposes or knowingly take any other action that
might materially prejudice the consummation of the transactions contemplated
hereby, unless and until this Agreement is terminated prior to the Closing in
accordance with Section 9.1.
4.6 AES BENEFIT PLANS. AES shall cooperate with if Sensormatic reasonably
requests any termination, transfers or other actions reasonably requested by
Sensormatic with respect to the AES Benefit Plans.
4.7 INSURANCE MATTERS. The parties shall cooperate to preserve existing
insurance coverage of AES through and
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following the Closing and to effect an appropriate transition to Sensormatic's
insurance at the time of Closing.
5. CONDITIONS TO THE OBLIGATIONS OF SENSORMATIC. The obligations of
Sensormatic under Section 1 of this Agreement are subject to the satisfaction,
on or prior to the Closing Date, of the following conditions:
5.1 DUE PERFORMANCE. AES and the Selling Stockholders shall have
performed in all material respects all obligations required by this Agreement
to be performed by them on or prior to the Closing Date.
5.2 ACCURACY OF REPRESENTATIONS AND WARRANTIES. All representations and
warranties of AES and the Selling Stockholders set forth in this Agreement
shall be true and correct in all material respects on and as of the Closing
Date as though made on and as of the Closing Date.
5.3 CERTIFICATE OF STOCKHOLDERS. Sensormatic shall have received a
certificate executed by each of the Principal Stockholders, to the effect set
forth in Sections 5.1 and 5.2, with respect to AES's and the Selling
Stockholders' representations and warranties and due performance of and
compliance with their respective obligations and conditions.
5.4 CORPORATE ACTION. Sensormatic shall have received copies of the
resolutions of AES's Board of Directors, certified by the Secretary or
Assistant Secretary of AES, approving the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby.
5.5 LEGAL OPINION. Sensormatic shall have received an opinion of
Spafford, Gay, Ferro & Ivy, counsel for AES, dated the Closing Date, reasonably
satisfactory in form and substance to counsel for Sensormatic and covering the
matters set forth on Schedule 5.5.
5.6 CERTIFICATES REPRESENTING THE STOCK. Each of the Selling Stockholders
shall have delivered to Sensormatic certificates representing all of the Stock
owned by him or her, duly endorsed or accompanied by properly executed stock
powers for transfer.
5.7 NON-COMPETITION AND ASSIGNMENT AGREEMENT; EMPLOYMENT AGREEMENT. Each
of the Principal Stockholders and Stephen Fisher shall have executed and
delivered agreements as to confidentiality, non-competition and assignment of
intellectual property (collectively, the "Non-Competition and Assignment
Agreements") and employment agreements (the
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"Employment Agreements") substantially in the respective forms previously
initialled by them and Sensormatic.
5.8 COMPLETION OF DUE DILIGENCE. Sensormatic shall have completed its due
diligence investigation of AES and shall be satisfied with the results thereof,
provided, that Sensormatic will be deemed to be so satisfied (and this
condition waived) if AES is not notified to the contrary by Sensormatic in
writing on or before January 17, 1994.
5.9 BOARD OF DIRECTORS APPROVAL. The Board of Directors or Executive
Committee of Sensormatic shall have approved the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby.
5.10 EMPLOYEE RECEIVABLES. Except as set forth in Schedule 5.10 hereof,
all outstanding receivables due to AES from its employees, officers, directors
or Selling Stockholders shall have been repaid.
5.11 NO CLAIMS. No legislation, regulation, claim, action, suit,
investigation or proceeding shall be enacted, adopted, pending or threatened
against AES or Sensormatic which, if enacted, adopted or adversely determined,
might (a) prevent or hinder consummation of the transactions contemplated by
this Agreement, (b) result in the payment by AES or Sensormatic of substantial
damages as a result of the transactions contemplated hereby or (c) have a
Material Adverse Effect or a material adverse effect on the business, financial
condition or results of operations of Sensormatic and its subsidiaries
considered as a whole.
5.12 GOVERNMENTAL ACTION. Sensormatic and AES shall have received all
authorizations, orders, grants, confirmations, consents, permits and approvals
necessary in respect of the transactions contemplated by this Agreement from
all relevant governments and governmental authorities and agencies and
supranational or trade agencies and regulatory bodies, without the imposition
of any materially burdensome conditions or restrictions, and all thereof shall
continue to be in full force and effect at the Closing Date. Neither AES,
Sensormatic nor any Selling Stockholder shall have received notice from any
court or governmental authority, board, agency, commission or instrumentality
of its intention to (i) institute any action or proceeding to restrain, enjoin,
nullify or render ineffective this Agreement or the transactions contemplated
hereby, or (ii) commence any investigation into the consummation of this
Agreement and the transactions contemplated hereby, which would make it
inadvisable to consummate such transactions.
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5.13 CONSENTS AND WAIVERS. All consents listed in Item 2.5 of the
Disclosure Schedule and all further consents, waivers, permits and licenses
from third parties to the consummation of the transactions contemplated by this
Agreement required under any agreement, lease, license or other instrument or
under any applicable law, rule or regulation, shall have been obtained.
5.14 SATISFACTION OF COUNSEL. All actions, proceedings, instruments,
documents and other legal matters in connection with the transactions
contemplated by this Agreement shall be reasonably satisfactory to counsel for
Sensormatic.
5.15 RESIGNATIONS. The Principal Stockholders shall have resigned as
directors of AES.
6. CONDITIONS TO THE OBLIGATIONS OF STOCKHOLDERS. The obligations of the
Selling Stockholders under Section 1 of this Agreement are subject to the
satisfaction, on or prior to the Closing Date, of the following conditions:
6.1 DUE PERFORMANCE. Sensormatic shall have performed in all material
respects all obligations required by this Agreement to be performed by it on or
prior to the Closing Date.
6.2 ACCURACY OF REPRESENTATIONS AND WARRANTIES. All representations and
warranties of Sensormatic set forth in this Agreement shall be true and correct
in all material respects at and as of the Closing Date.
6.3 OFFICERS' CERTIFICATE. The Selling Stockholders shall have received a
certificate executed by a Vice President of Sensormatic to the effect set forth
in Sections 6.1 and 6.2 with respect to Sensormatic's representations and
warranties and due performance of and compliance with its obligations and
conditions.
6.4 CORPORATE ACTION. The Selling Stockholders shall have received copies
of the resolutions of Sensormatic's Board of Directors, or the Executive
Committee of Sensormatic, certified by the Secretary or an Assistant Secretary
of Sensormatic, approving the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby.
6.5 LEGAL OPINION. AES and the Selling Stockholders shall have received
an opinion of Christy & Viener, counsel for Sensormatic, dated the Closing
Date, reasonably
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satisfactory in form and substance to counsel for AES and covering the matters
set forth in Schedule 6.5.
6.6 EMPLOYMENT AGREEMENTS. Sensormatic and/or AES, as applicable, shall
have executed and delivered the Ancillary Agreements.
6.7 NO CLAIMS. No legislation, regulation, claim, action, suit,
investigation or proceeding shall be enacted, adopted, pending or threatened
against AES, Sensormatic or any Selling Stockholder which, if enacted, adopted
or adversely determined, might (a) prevent or hinder consummation of the
transactions contemplated by this Agreement, or (b) result in the payment by
AES or the Selling Stockholders collectively of substantial damages as a result
of the transactions contemplated hereby.
6.8 GOVERNMENTAL ACTION. Neither AES, the Selling Stockholders nor
Sensormatic shall have received notice from any court or governmental
authority, board, agency, commission or instrumentality of its intention to
institute any action or proceeding to restrain, enjoin, nullify or render
ineffective this Agreement or the transactions contemplated hereby.
6.9 SATISFACTION OF COUNSEL. All actions, proceedings, instruments,
documents and other legal matters in connection with the transactions
contemplated by this Agreement shall be reasonably satisfactory to counsel for
the Selling Stockholders.
6.10 AGGREGATE PURCHASE PRICE AND NON-COMPETITION CONSIDERATION.
Sensormatic shall have delivered the Aggregate Purchase Price to the Selling
Stockholders in accordance with Section 1 and the respective amounts
contemplated by the Non-Competition and Assignment Agreement to the applicable
persons thereunder.
7. WAIVER OF CONDITIONS. Each of the parties hereto shall have the right
to waive, in whole or in part, any of the conditions to its performance set
forth in this Agreement and, upon such waiver, the waiving party may proceed
with the consummation of the transactions contemplated hereby, it being
expressly understood that such waiver shall not constitute a waiver of any
right which such party may have by reason of the breach by the other party of
any representation, warranty or agreement contained herein, or by reason of any
misrepresentation made by such other party herein.
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8. INDEMNIFICATION.
8.1 GENERAL -- SELLING STOCKHOLDERS. The Principal Stockholders, jointly
and severally, and the remaining Selling Stockholders, severally and in
proportion to their respective Stockholder Percentages, shall indemnify, defend
and hold harmless Sensormatic and AES from and against any loss, damage,
liability or expense (including reasonable attorneys' fees and disbursements)
(collectively "Damages") (i) arising out or connected with any breach or
inaccuracy of any representation, warranty or covenant of AES or any Selling
Stockholder contained in this Agreement or in any certificate or other
instrument or document delivered pursuant to or in connection with this
Agreement, or (ii) any tort, products liability or general liability claim
arising out of or connection with the operation of the Business on or prior to
the Closing Date, to the extent not reserved against on the Interim Balance
Sheet; subject, however, to the limitations set forth in Section 8.5.
8.2 PROCEEDINGS -- THE SELLING STOCKHOLDERS. Sensormatic shall give to
the Selling Stockholder Representative prompt notice of any claim, action, suit
or proceeding which Sensormatic believes might give rise to indemnification
under Sections 8.1. The Selling Stockholder Representative, on behalf of
himself or herself and the other Selling Stockholders, shall have the right to
participate in, and, with the consent of Sensormatic, which consent shall not
be unreasonably withheld, to control, the defense against any such claim,
action, suit or proceeding, at their expense, and with counsel of their own
choosing reasonably acceptable to Sensormatic; provided, however, that the
Selling Stockholders shall not have the right to control such defense in the
case of any claim, action, suit or proceeding respecting any patents, patent
rights, copyrights or other proprietary rights or with respect to which an
adverse outcome could have a material adverse effect on the business, results
of operations or financial condition of Sensormatic, in which case Sensormatic
shall have the right to direct any such defense with counsel of its own
choosing. No settlement or compromise of any such claim, action, suit or
proceeding shall be made without the prior consent of Sensormatic and the
Selling Stockholder Representative (on behalf of himself or herself and the
other Selling Stockholders), which consent shall not be unreasonably withheld
by either of them.
8.3 PURCHASER AND SENSORMATIC'S INDEMNIFICATION. Sensormatic shall
indemnify, defend and hold harmless the Selling Stockholders from and against
any Damages arising out or connected with any breach or inaccuracy of any
representation, warranty or covenant of Sensormatic contained in this
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Agreement or in any certificate or other instrument or document delivered
pursuant to or in connection with this Agreement; subject, however, to the
limitations set forth in Section 8.5. The Stockholder Representative shall
give Sensormatic prompt notice of any claim, action, suit or proceeding which
they believe might give rise to indemnification under this Section 8.5.
Sensormatic shall have the right to participate in, and, with the consent of
Stockholder, which consent shall not be unreasonably withheld, to control, the
defense against any such claim, action, suit or proceeding, at its expense, and
with counsel of its own choosing reasonably acceptable to Stockholder. No
settlement or compromise of any such claim, action, suit or proceeding shall be
made without the prior consent of Sensormatic and the Stockholder
Representative (on behalf of himself or herself and the Selling Stockholder),
which consent shall not be unreasonably withheld by either of them.
8.4 RELATED COSTS AND EXPENSES. Each indemnifying party hereto shall, in
addition to such indemnifying party's obligations under Section 8.1 or 8.3, as
applicable, indemnify and hold harmless the indemnified party hereto from,
against and in respect of any and all actions, suits, proceedings, demands,
assessments, judgments, settlements, costs (including reasonable attorneys'
fees and disbursements) and legal and other expenses of the indemnified party
incident to any matter as to which the indemnified party is entitled to
indemnification under such Sections, or incident to any allegations or claims
which, if true, would give rise to Damages subject to indemnification
thereunder, or incident to the enforcement by the indemnified party of this
Section 8.
8.5 LIMITATIONS ON INDEMNIFICATION. No payment shall be required to be
made by the Selling Stockholders pursuant to Section 8.1 or by Sensormatic
pursuant to Section 8.3 unless the amount of damages suffered by the party
claiming indemnification in connection with such claim, together with all
claims asserted therewith or previously asserted under this Section 8 by any of
them, in the aggregate exceeds $30,000 in the aggregate; provided, however,
that the foregoing limitation shall not apply to the obligations of the parties
under Sections 1 or 9.7 or under the Non-Competition and Assignment Agreement,
or to the representations of the Selling Stockholders (or any related
indemnification) under Sections 2.6(g) (net worth) or 2.11(b) (accrued taxes).
No right to indemnification may be asserted under this Section 8 after the
second anniversary of the Closing Date, except any such rights to
indemnification (i) arising under or in connection with any matter referred to
in Sections 2.11, 2.12, or 2.16, none of which shall be subject to any time
limitation other than any statutes of limitation applicable to such
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matters, (ii) arising pursuant to Section 9.7, or (iii) arising out of or in
connection with any claim as to which the notice required by Section 8.2 or
8.3, as applicable, has been given on or prior to the second anniversary of the
Closing Date. In no event shall the amount payable by the Selling Stockholders
collectively pursuant to this Section 8 exceed the total amount received by the
Selling Stockholders collectively pursuant to this Agreement and/or the
Ancillary Agreements.
8.6 RIGHT OF OFFSET. Without limiting any other rights or remedies of
Sensormatic with respect to any amount owed to it by any Selling Stockholder
pursuant to this Section 8, Sensormatic shall have the right to set off such
amount against any amount owed by Sensormatic or AES to such Selling
Stockholder, however arising, including without limitation any wages or other
amounts that may be owed to the applicable Selling Stockholders by Sensormatic
or AES in connection with such individuals' employment.
9. MISCELLANEOUS.
9.1 TERMINATION. This Agreement may be terminated at any time prior to
the Closing Date (a) by mutual written consent of the Selling Stockholder
Representative and Sensormatic; (b) by either the Selling Stockholder
Representative or Sensormatic, by written notice to the other, if the Closing
shall not have occurred on or before February 15, 1994 (other than by mutual
agreement of the parties or by reason of the default of the party seeking to
terminate), provided, however, that such right to terminate shall be postponed
by up to an additional 60 days at the option of either Sensormatic or the
Selling Stockholder Representative if required to obtain any of the consents
listed on Item 2.5 of the Disclosure Schedule; (c) by Sensormatic by written
notice to the Selling Stockholders Representative given on or before January
17, 1994, if Sensormatic determines prior to such date that the conditions
specified in Section 5.8 will not be met, or (d) by Sensormatic if Sensormatic
determines that any portion of the Disclosure Schedule (or the lack thereof)
following the date hereof is unacceptable.
9.2 ENTIRE AGREEMENT. This Agreement, together with the schedules hereto,
the Disclosure Schedule and the exhibits thereto and the Ancillary Agreements,
sets forth the entire understanding of the parties with respect to its subject
matter, merges and supersedes all prior and contemporaneous understandings of
the parties hereto with respect to its subject matter, except any
confidentiality agreements executed by AES and Sensormatic. Failure of any
party to
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enforce any provision of this Agreement shall not be construed as a waiver of
its rights under such or any other provision.
9.3 COMMUNICATIONS. All notices, consents and other communications given
under this Agreement shall be in writing and shall be deemed to have been duly
given (a) when delivered by hand or by Federal Express or a similar overnight
courier to, (b) five days after being deposited in any United States post
office enclosed in a postage prepaid registered or certified envelope addressed
to, or (c) when successfully transmitted by telecopier (with a confirming copy
of such communication to be sent as provided in (a) or (b) above) to, the party
for whom intended, at the address or telecopier number for such party set forth
below, or to such other address or telecopier number as may be furnished by
such party by notice in the manner provided herein; provided, however, that any
notice of change of address or telecopier number shall be effective only upon
receipt.
If to Sensormatic:
Sensormatic Electronics Corporation
500 N.W. 12th Avenue
Deerfield Beach, Florida 33442
Attention: Terry Price
Telecopier number: 305-420-2829
With a copy to:
Christy & Viener
620 Fifth Avenue
New York, New York 10020
Attention: Anthony J. Carroll
Telecopier number: 212-632-5555
If to AES or the Selling Stockholders:
Pat and Steve McWethy (Marked "Confidential")
(Ms. McWethy being sometimes referred to herein as the "Selling
Stockholder Representative")
c/o Advanced Entry Systems, Inc.
1555 Valwood Parkway
Suite 150
Carrollton, Texas 75006
Telecopier number:
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With a copy to:
Spafford, Gay, Ferro & Ivy
1412 Main Street, Suite 210
Dallas, Texas 75202
Attention: Jimmy D. Ivy, Esq.
Telecopier number: 214-748-2506
The Selling Stockholder Representative may be changed by a notice given in
accordance with this Section 9.3 and signed by both Principal Stockholders.
9.4 SUCCESSORS AND ASSIGNS. This Agreement shall be binding on,
enforceable against and inure to the benefit of the parties hereto and their
respective successors and permitted assigns, and nothing herein is intended to
confer any right, remedy or benefit upon any other person. No party hereto may
assign its rights or delegate its obligations under this Agreement without the
express written consent of Sensormatic or AES, as applicable; provided,
however, that Sensormatic may assign its rights and obligations under this
Agreement to any wholly-owned subsidiary of Sensormatic, provided that
Sensormatic remains a party to this Agreement.
9.5 PUBLIC ANNOUNCEMENTS. No public announcement or disclosure with
respect to this Agreement and the transactions contemplated hereby prior to the
Closing shall be made for or on behalf of any party without the prior approval
of the other parties, except to the extent required by applicable securities
laws or the rules and regulations of any stock exchange or otherwise required
by law.
9.6 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS. All
representations and warranties made by any party hereto in this Agreement or in
any document or certificate delivered pursuant hereto shall survive the Closing
and shall be unaffected by any investigation made by or on behalf of any party
hereto or by any notice of breach of, or failure to perform under, this
Agreement which is not effectively waived pursuant to Section 7, subject,
however, to the limitations on indemnification set forth in Section 8.5.
9.7 EXPENSES. Each of the parties hereto shall bear and pay, without any
right of reimbursement from any other party, all costs, expenses and fees
incurred by it or on its or his behalf incident to the preparation, execution
and delivery of this Agreement and the performance of such party's obligations
hereunder, whether or not the transactions contemplated by this Agreement are
consummated, including, without limitation, the fees and disbursements of
attorneys, account-
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ants and consultants employed by such party, and all brokers, investment
bankers, finders and financial advisors retained or utilized by it, or
otherwise acting on its behalf, in connection with the transactions
contemplated by this Agreement, and shall indemnify and hold harmless the other
parties from and against all such fees, costs and expenses. For purposes of
the foregoing sentence, the fees, costs and expenses incurred by AES prior to
the Closing Date in connection with the transactions contemplated by this
Agreement shall be deemed to have been incurred for the benefit of, and shall
be borne by, the Selling Stockholders.
9.8 RECORDS. The Selling Stockholders shall have the right to examine,
use and make excerpts from any corporate minute books, books of account and
other records and documents retained by AES in the ordinary course of its
business following the Closing, during regular business hours following
reasonable prior notice to AES in connection with preparation of tax returns
and similar matters.
9.9 GOVERNING LAW. This Agreement shall in all respects be governed by
and construed in accordance with the laws of the State of New York.
9.10 SAVINGS CLAUSE. If any provision of this Agreement is held to be
invalid or unenforceable by any court or tribunal of competent jurisdiction,
the remainder of this Agreement shall not be affected thereby, and such
provision shall be carried out as nearly as possible according to its original
terms and intent to eliminate such invalidity or unenforceability.
9.11 COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
9.12 CONSTRUCTION. Headings contained in this Agreement are for
convenience only and shall not be used in the interpretation of this Agreement.
References herein to the Agreement shall be deemed to include all Schedules
(including the Disclosure Schedule) and Exhibits hereto, and references herein
to Sections, Schedules and Exhibits are to the sections, schedules and exhibits
of this Agreement. As used herein, the singular includes the plural, and the
masculine, feminine and neuter gender each includes the others where the
context so indicates.
9.13 CONSENT TO JURISDICTION. Each party hereto hereby irrevocably
submits himself, herself or itself to the jurisdiction of any federal or state
court sitting in New
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<PAGE> 39
York, New York, and hereby waives any and all objections it may have with
respect to the jurisdiction of such forum or the inconvenience of such forum or
venue, in connection with any action to enforce any provision of this Agreement
or any of the Ancillary Agreements or any dispute or controversy arising
hereunder or thereunder, and agrees that service may be served on him, her or
it by mail, personal service or such other manner as may be permissible under
the rules of the applicable jurisdiction.
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first set forth above.
SENSORMATIC ELECTRONICS CORPORATION
By: /s/ Terry Price
---------------------------------------
Terry Price
Group Vice President
ADVANCED ENTRY SYSTEMS, INC.
By: /s/ Patricia M. McWethy
---------------------------------------
Patricia M. McWethy
President
/s/ Steven J. McWethy
---------------------------------------
Steven J. McWethy
/s/ Patricia M. McWethy
---------------------------------------
Patricia M. McWethy
/s/ Steven P. Fisher
---------------------------------------
Steven P. Fisher
-35-
<PAGE> 40
/s/ David J. Dyehouse
---------------------------------------
David J. Dyehouse
/s/ Donald D. Prouse
---------------------------------------
Donald D. Prouse
-36-
<PAGE> 1
Exhibit 5
CHRISTY & VIENER
620 FIFTH AVENUE
NEW YORK, NEW YORK 10020-2457
(212) 632-5500
DIRECT DIAL NUMBER FACSIMILE
(212) 632- (212) 632-5555
January 18, 1994
Sensormatic Electronics Corporation
500 N.W. 12th Avenue
Deerfield Beach, Florida 33442-1795
Re: Registration Statement on Form S-3
----------------------------------
Gentlemen:
We have acted as general counsel to Sensormatic Electronics
Corporation, a Delaware corporation (the "Corporation"), in connection with
the preparation of a Registration Statement on Form S-3 (the "Registration
Statement") being filed under the Securities Act of 1933 for the
registration by the Corporation of up to 90,000 shares of the Corporation's
Common Stock issued or to be issued to certain of the stockholders of
Advanced Entry Systems, Inc. ("AES") pursuant to the Stock Purchase
Agreement (the "Agreement") dated as of December 31, 1993 among the
Corporation, AES and its stockholders (the "Shares").
As general counsel of the Corporation, we have examined and are
familiar with the Registration Statement, the Agreement, the Corporation's
Restated Certificate of Incorporation and By-Laws, the proceedings of its
stockholders, Board of Directors and committees thereof, and such
certificates of public officials and such other corporate records and other
documents as we have deemed necessary in rendering this opinion.
Based on the foregoing, we are of the opinion that:
1. The Corporation is duly incorporated, validly existing and in
good standing under the laws of the State of Delaware.
<PAGE> 2
CHRISTY & VIENER
Sensormatic Electronics Corporation
Page 2 January 18, 1994
2. The Shares have been duly authorized, and, as and when
issued pursuant to the Agreement, are or will be validly issued, fully paid
and nonassessable.
We consent to being named in the Registration Statement as
attorneys who have passed on legal matters in connection with the Shares
and we consent to the filing of this opinion as Exhibit 5 to the
Registration Statement.
Very truly yours,
CHRISTY & VIENER
<PAGE> 1
EXHIBIT 23(b)
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We consent to the references to our firm under the
captions "Sensormatic Selected Historical Financial Information" and "Experts"
in the Registration Statement (Form S-3) and related Prospectus of Sensormatic
Electronics Corporation (the "Company") for the registration of 90,000 shares
of the Company's Common Stock, par value $.01 per share, and to the
incorporation by reference therein of our report dated August 13, 1993, with
respect to the consolidated financial statements and schedules of the Company
included in its Annual Report (Form 10-K) for the year ended June 30, 1993,
filed with the Securities and Exchange Commission.
ERNST & YOUNG
Miami, Florida
January 18, 1994
<PAGE> 1
EXHIBIT 23(c)
CONSENT OF INDEPENDENT CHARTERED ACCOUNTANTS
We consent to the references to our firm under the
captions "ALPS Selected Historical Financial Information" and "Experts" and to
the use of our report dated March 23, 1992, except as to Note 19, which is as
of May 20, 1992, with respect to the combined financial statements of ALPS
incorporated by reference in the Registration Statement (Form S-3) and related
Prospectus of Sensormatic Electronics Corporation (the "Company") for the
registration of 90,000 shares of the Company's Common Stock, par value $.01 per
share.
BDO BINDER HAMLYN
Chartered Accountants
(Internationally BDO Binder)
London, England
January 18, 1994
