<PAGE> 1
As filed with the Securities and Exchange Commission on January 12, 1995.
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 (I.R.S. Employer
of incorporation or Identification No.)
organization)
-------------------------
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)
Copy to:
JEROME M. LEWINE, ESQ.
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 Amount of
Title of Shares to Be to Be Offering Price Aggregate Registration
Registered Registered per Share(1) Offering Price(1) Fee(1)
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock ( $.01 par
value) 450,000 $34.0625 $15,328,125 $5,286
=========================================================================================================
</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 11, 1995 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
450,000 SHARES OF COMMON STOCK
This Prospectus relates to up to 450,000 shares (the "Shares") of
the Common Stock of Sensormatic Electronics Corporation (the "Company" or
"Sensormatic") which have been issued or may be issued to certain of the former
shareholders (the "Selling Stockholders") of Glen Industrial Communications,
Inc. ("GIC") pursuant to the Company's agreement with GIC and the Selling
Shareholders to acquire all of the stock of GIC. 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 have been approved for listing on the NYSE, subject to
notice of issuance. Sensormatic's Common Stock trades on the NYSE under the
trading symbol SRM. The last reported sale price of the Company's Common Stock
on the NYSE on January 11, 1995 was $33 7/8.
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 __, 1995
<PAGE> 3
NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS ON BEHALF OF THE COMPANY NOT
CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OF ANY SECURITIES OTHER
THAN THOSE TO WHICH IT RELATES OR AN OFFER TO SELL, OR THE SOLICITATION OF AN
OFFER TO BUY, ANY SECURITIES IN ANY JURISDICTION WHERE, OR TO ANY PERSON TO
WHOM, IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY
OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES,
CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE
COMPANY SINCE THE DATE HEREOF OR THAT THE INFORMATION CONTAINED HEREIN IS
CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF.
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, file reports and other information with the Securities
and Exchange Commission (the "Commission"). Reports, proxy statements and
other information filed by the Company 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: Midwest Regional Office, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661-2511, and Northeast Regional Office, 7
World Trade Center, Suite 1300, New York, New York 10048. 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, reports, proxy statements and other information concerning
the Company may be inspected at the offices of the New York Stock Exchange,
Inc., 20 Broad Street, New York, New York 10005.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents heretofore filed with the Commission by
the Company (File Number 1-10739) pursuant to the Exchange Act are incorporated
by reference in this Prospectus: the Company's Annual Report on Form 10-K for
the fiscal year ended June 30, 1994, its Quarterly Report on Form 10-Q for the
quarter ended September 30, 1994, its Current Report on Form 8-K filed on
August 25, 1994, as amended by Amendment No. 1 on Form 8-K/A filed on September
20, 1994, and its Current Report on Form 8-K filed on January 11, 1995. 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 pursuant to Sections 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 of this Prospectus from the respective dates of the filing of
such documents. Any statement contained in a document 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 also 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.
This Prospectus incorporates certain documents by reference which
are not presented herein or delivered herewith. Copies of such documents
(other than exhibits not specifically incorporated by reference into the text
of such documents) are available, without charge, to each person to whom this
Prospectus is delivered, on the written or oral request of such person, to
Walter A. Engdahl, Secretary, Sensormatic Electronics Corporation, 500 N.W.
12th Avenue, Deerfield Beach, Florida 33442 (telephone (305) 420-2000).
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<PAGE> 4
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") and electronic asset protection ("EAP") systems (including the reusable
tags and disposable labels used with such systems), closed circuit television
("CCTV") systems (including microprocessor-controlled CCTV systems and
exception monitoring systems), and access control systems. These loss
prevention systems are principally used 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 commercial and industrial 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 the broad base of technology it has developed or acquired.
The Company's initial EAS systems were designed for use by
department and specialty store retailers to protect soft goods (apparel
merchandise). As a result of its sales and marketing expertise and the
technological advantages of its products, the Company gained and has maintained
the position of world leader in supplying EAS products for soft goods
retailers. For nearly the past decade the Company has implemented a strategy
of product, customer and geographic market diversification to substantially
increase its growth potential. Through the combination of substantial
expenditures in research, development and engineering activities and selected
strategic acquisitions, the Company now offers, to both retailers and
non-retail users, a broad array of products based on a number of distinct EAS
technologies, as well as CCTV, exception monitoring and access control systems.
The Company's newer EAS product lines have been developed and
targeted for specific hard goods retail applications 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 potential user group than
soft goods retailers and have only begun to use EAS products significantly
during the last few years. Further, hard goods retailers primarily use EAS
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 took a major step forward in its efforts to
increase future recurring label revenues through its Universal Product
Protection (UPP(SM)) program where EAS labels (or tags) are incorporated into
or affixed to the merchandise to be protected during the process of
manufacturing, packaging or distribution rather than at the retail store (also
referred to as source labeling or source tagging).
CCTV products are used to protect against 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
office and manufacturing complexes, warehouses, gaming establishments (e.g.,
casinos) and numerous other non-retail facilities. Additionally, the Company's
CamEra divisions in the United Kingdom, France and the United States market
packaged, lower cost CCTV systems for retail and commercial businesses.
The Company has greatly expanded its efforts in recent years
to market its products, particularly CCTV and access control products, to
commercial, industrial and other non-retail customer groups. The growth of
revenue from commercial, industrial and other non-retail customers results from
the strategy of broadening the Company s customer base by adding new
proprietary CCTV and access control products and the establishment of new
distribution channels.
The Company is diversifying the geographic areas in which it
markets its products by expanding into new geographic areas and increasing its
presence in existing areas. The Company has greatly expanded its direct sales
and service ("customer engineering") efforts in North America, Europe,
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<PAGE> 5
and certain Asia Pacific and Latin America countries in recent years through
acquisitions of other distribution organizations, including the merger with
Knogo Corporation described below (see "Merger with Knogo Corporation" below
under this heading), and of its own distributors in certain of such countries.
The Company's international strategy also involves the use of distribution
agreements with independent parties, with the Company maintaining a 51%
ownership control. Currently the Company utilizes this concept in Brazil, Peru
and Turkey and plans to expand it to China and certain countries in the Middle
East, Latin America, Africa and eastern Europe.
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.
MERGER WITH KNOGO CORPORATION
On December 29, 1994, the Company consummated a merger with
Knogo Corporation ("Knogo") pursuant to which the Company acquired all of
Knogo's business interests outside the United States, Canada and Puerto Rico.
Knogo's businesses in the United States, Canada and Puerto Rico were spun off
to its shareholders immediately prior to the merger. Knogo was engaged
primarily in the business of manufacturing, marketing and servicing EAS
systems employing radio frequency and magnetic technologies, as well as
marketing CCTV systems. The Knogo operations acquired by the Company posted
total revenues of approximately $71 million for Knogo's fiscal year ended
February 28, 1994.
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's stock
purchase agreement with GIC and the Selling Stockholders provides that the
Company will issue additional Shares or make a cash payment to the Selling
Stockholders to the extent that the valuation of the Shares issued to the
Selling Stockholders at closing which are sold during the period of five NYSE
trading days (subject to extension) following the date of this Prospectus
exceeds the net proceeds received by them from such sales. Any such additional
shares issued by the Company would also be included in the Shares offered
pursuant to this Prospectus. See "The Selling Stockholders".
THE SELLING STOCKHOLDERS
ACQUISITION OF GIC
On January 5, 1995, the Company consummated the acquisition
of all of the outstanding shares of GIC for $13,500,000. GIC is in the
business of reselling and installing access-control, CCTV and intrusion
detection systems, and providing related security services, to commercial and
industrial customers.
Pursuant to the stock purchase agreement, the purchase price
of $13,500,000 was paid in the form of a note due February 28, 1995, payable in
cash or in Sensormatic Common Stock. As of the date hereof, the note was paid
with $10,000 in cash and _____________ shares of Sensormatic Common Stock
issued to the Selling Stockholders at a valuation of $_____ per share, which
was based on the average of the closing prices of the Sensormatic Common Stock
on the NYSE for the five trading days ended January __, 1995. The Shares so
issued are sometimes referred to herein as the "Payment Date Shares". The
Company has further agreed that in the event that the aggregate net proceeds
(i.e., gross proceeds of sale less commissions and transaction expenses) from
sales of the Payment Date Shares during the period of five NYSE trading days
beginning on the date of this Prospectus (subject to extension by mutual
agreement) are less than $_____ multiplied by the number of shares sold, the
Company will issue additional shares of Common Stock or make a cash payment
sufficient to reimburse the Selling Stockholders for the difference. The
number of any additional shares issued by Sensormatic to the Selling
Stockholders will be based on the closing price of the Sensormatic Common Stock
on the NYSE for the
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<PAGE> 6
trading day preceding the date of issuance of such additional shares (or a day
not more than two trading days prior thereto). 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. 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.
SELLING STOCKHOLDERS
The Selling Stockholders, and the number of Payment Date
Shares being sold for their account under this Prospectus (including in certain
instances trusts of which such persons are the beneficiaries), include Glen
Kruglak, _____ shares; Alan Kruglak, ______ shares; Martha Kruglak, _____
shares; and National Capital Holdings, Inc., ______ shares. Glen Kruglak is
the President and Alan Kruglak a Vice President of GIC, and such individuals
will also hold regional management positions with the Company. Also included
in the Selling Stockholders are approximately 11 family members of the
above-named persons, or trusts of which such persons are beneficiaries, which
individuals and trusts are selling approximately _____ Payment Date Shares in
the aggregate.
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. The
Selling Stockholders intend to resell all the Shares held by them as of the
date of this Prospectus during the resale period referred to above under "The
Selling Stockholders--Acquisition of GIC", and have opened a brokerage account
at Wertheim Schroder & Co. Incorporated for this purpose.
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 Stockholder 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 pursuant to the stock purchase agreement (see "The
Selling Stockholders--Acquisition of GIC"), the Company may be deemed to have
borne some or all of such selling expenses. Pursuant to the stock purchase
agreement, the Company and the Selling Stockholders have agreed to indemnify
each other against certain liabilities, including certain liabilities under the
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 with respect to any
Shares offered under this Prospectus.
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SENSORMATIC SELECTED HISTORICAL FINANCIAL INFORMATION
The selected historical financial information presented below
for and as of the end of each of the five years in the period ended June 30,
1994, with the exception of balance sheet data at June 30, 1992 and other data,
is derived from the Consolidated Financial Statements of the Company, which
financial statements have been audited by Ernst & Young LLP, independent
certified public accountants. The Consolidated Financial Statements as of June
30, 1994 and 1993, and for each of the two years in the period ended June 30,
1994, the month ended June 30, 1992 and the year ended May 31, 1992, and the
report of Ernst & Young LLP thereon, are included in the Company's Annual
Report on Form 10-K for the fiscal year ended June 30, 1994 (File Number
1-10739), incorporated herein by reference. The selected historical financial
presented below as at September 30, 1994 and 1993 and for the three months
ended September 30, 1994 and 1993, with the exception of the balance sheet data
at September 30, 1993 and other data, is derived from the unaudited condensed
consolidated financial statements of the Company, included in the Company's
Quarterly Report on Form 10-Q for the quarter ended September 30, 1994 (File
Number 1-10739), incorporated herein by reference, which in the opinion of the
Company'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 consolidated financial statements, related notes,
management's discussion and analysis of financial condition and results of
operations and other financial information incorporated herein by reference.
The results of operations for the three months ended September 30, 1994 are not
necessarily indicative of results that can be expected for the full year.
<TABLE>
<CAPTION>
Three Months Ended
Years Ended May 31 Years Ended June 30, September 30,
-------------------------------- -------------------------- -----------------------
1990 1991(1)(2) 1992 1993(1)(3) 1994(2) 1993(2) 1994
-------------------------------- -------------------------- -----------------------
(in millions, except per share amounts or as indicated)
<S> <C> <C> <C> <C> <C> <C> <C>
SUMMARY OF OPERATIONS
DATA:
Total revenues . . . . $ 191.3 $ 239.2 $ 309.9 $ 487.3 $ 656.0 $ 143.3 $ 190.9
Cost of revenues . . . 86.8 106.6 134.7 203.5 271.0 59.0 79.1
Operating expenses . . 81.7 103.3 131.6 212.8 280.2 62.0 83.4
------ ------- ------- ------- -------- ------- --------
Operating income . . . 22.8 29.3 43.6 71.0 104.8 22.3 28.4
Other income (expenses),
net . . . . . . . . 2.2 1.9 (2.6) 1.0 (8.8) (2.5) (1.6)
------ ------- ------- ------- -------- ------- --------
Income from continuing
operations before
income taxes . . . . 25.0 31.2 41.0 72.0 96.0 19.8 26.8
Provision for income
taxes . . . . . . . . . 5.0 6.5 9.5 17.9 23.9 5.0 6.7
------ ------- ------- ------- -------- ------- --------
Income from continuing
operations . . . . . $ 20.0 $ 24.7 $ 31.5 $ 54.1 $ 72.1 $ 14.8 $ 20.1
====== ======= ======= ======= ======== ======= ========
Primary earnings per
common share from
continuing operations
and net income . . . $ 0.48 $ 0.60 $ 0.73 $ 0.97 $ 1.16 $ 0.25 $ 0.29
Fully diluted earnings
per common share from
continuing operations
and net income . . . 0.48 0.60 0.73 0.93 1.13 0.24 0.29
Common Shares used in
the computation of:
Primary earnings per
common share from
continuing operations 41.7 41.2 43.1 56.0 61.9 60.3 69.9
Fully diluted earnings
per common share from
continuing operations 42.0 41.4 50.5 63.6 68.3 67.6 70.0
Cash dividends per
common share . . . . $ 0.123 $ 0.20 $ 0.20 $ 0.15 (4) $ 0.21 $ 0.05 $ 0.055
</TABLE>
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<TABLE>
<CAPTION>
Three Months Ended
Years Ended May 31 Years Ended June 30, September 30,
--------------------------------- --------------------------- ----------------------
1990 1991(1)(2) 1992 1993(1)(3) 1994(2) 1993(2) 1994
--------------------------------- --------------------------- ----------------------
(in millions, except per share amounts or as indicated)
<S> <C> <C> <C> <C> <C> <C> <C>
OTHER DATA:
Capital expenditures,
net(5) . . . . . . . $ 8.6 $ 14.5 $ 15.0 $ 26.7 $ 51.8 $ 18.2 $ 13.3
Increase in revenue,
equipment and
inventories, net(5) $ 11.8 $ 38.4 $ 25.4 $ 41.5 $ 73.4 $ 4.5 $ 2.9
EAS systems installed
(in thousands) . . . 18.0 17.4 23.6 25.0 30.0 6.5 8.0
CCTV domes installed (in
thousands) . . . . . 6.3 4.0 8.0 10.0 17.0 3.6 6.1
Reusable tags sold or
leased (in thousands) 40,000 65,000 75,000 101,000 147,000 30,000 48,000
Disposable labels sold
(in thousands) . . . 350,000 650,000 750,000 1,100,000 1,500,000 292,000 560,000
BALANCE SHEET DATA (AT
END OF PERIOD):
Cash and marketable
securities . . . . . $ 26.9 $ 102.4 $ 62.7 $ 117.9 $ 54.5 $ 102.3 $ 55.8
Revenue equipment and
other property, plant
and equipment, net . 49.7 65.4 83.5 121.1 165.5 139.4 175.1
Total assets . . . . . 265.1 421.8 461.7 926.9 1,155.5 1,011.5 1,257.6
Senior debt(6) . . . . 20.0 33.7 35.6 194.2 219.2 212.7 273.2
Convertible subordinated
debentures(6) . . . . -- 115.0 115.0 114.2 -- 114.2 --
Total stockholders'
equity . . . . . . . . 199.8 222.2 255.7 489.8 727.7 (6) 522.1 781.7
</TABLE>
_________________
(1) In fiscal 1993, the Company acquired the European EAS, CCTV and exception
monitoring loss prevention systems division of Automated Security
(Holdings) PLC ("ALPS") and the outstanding common stock of Security Tag
Systems, Inc. and in fiscal 1991, it acquired the outstanding common stock
of American Dynamics.
(2) In fiscal 1994, the Company adopted Statement of Financial Accounting
Standards ("SFAS") No. 109 "Accounting for Income Taxes". In fiscal 1991,
the Company adopted SFAS No. 106 "Employers' Accounting for Postretirement
Benefits Other Than Pensions".
(3) Selected financial data for and as of the end of the one month ended June
30, 1992 is as follows: total revenues - $21.0; operating loss - $3.3;
loss from continuing operations and net loss - $2.5; primary and fully
diluted loss per common share for continuing operations and net loss -
$0.06; total assets - $462.2; total debt - $150.3; and total stockholders'
equity - $258.3.
(4) Fourth quarter dividend of $0.05 per share of Common Stock was declared in
July 1993.
(5) Excludes effects of acquisitions and foreign currency adjustments.
(6) In fiscal 1994, the outstanding $114.1 million of the $115 million
principal amount of 7% convertible subordinated debentures, issued in
fiscal 1991, were converted to approximately 7.3 million shares of Common
Stock and in fiscal 1993, Sensormatic issued $135 million aggregated
principal amount of Senior Notes.
See "Management's Discussion and Analysis of Financial Condition and Results of
Operations of Sensormatic" contained in the Company's Annual Report on Form
10-K for the fiscal year ended June 30, 1994 and Quarterly Report on Form 10-Q
for the quarter ended September 30, 1994, which are incorporated herein by
reference.
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<PAGE> 9
LEGAL OPINIONS
The validity of the shares of Sensormatic Common Stock 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 holds options to
purchase 168,500 shares of Sensormatic Common Stock.
EXPERTS
The consolidated financial statements and schedules of the Company
appearing in the Company's Annual Report (Form 10-K) for the year ended June
30, 1994, have been audited by Ernst & Young LLP, 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 financial statements of Knogo incorporated in this prospectus by
reference from the Company's Current Report on Form 8-K, as filed January 11,
1995, have been audited by Deloitte & Touche LLP, independent auditors, as
stated in their report, which is incorporated herein by reference, and have
been so incorporated in reliance upon the report of such firm given upon their
authority as experts in accounting and auditing.
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<PAGE> 10
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 . . . . . . . . . . $ 5,286
NYSE listing fee . . . . . . . . . . . . . . . . . 1,575
Fees and expenses of accountants . . . . . . . . . 6,000
Fees and expenses of counsel . . . . . . . . . . . 10,000
Blue Sky fees and expenses . . . . . . . . . . . . 500
Miscellaneous . . . . . . . . . . . . . . . . . . 1,639
--------
Total . . . $ 25,000
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Article TENTH of the Registrant's Restated Certificate of Incorporation
and Article IX of the Registrant's By-Laws provide for indemnification of
officers and directors of the Registrant, 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 Registrant. 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
the fullest extent consistent with applicable law. The By-Laws provide that
the right to indemnification is a contract right and authorize the Registrant
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 Registrant, express powers to indemnify its directors
and officers.
The Registrant carries directors' and officers' liability insurance
covering losses up to $30,000,000 (subject to certain deductible amounts).
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
-------- ----------------------
<S> <C> <C>
* 2(a) -- Stock Purchase Agreement dated as of December 22, 1994 between Sensormatic Electronics Corporation ("Sensormatic"),
Glen Industrial Communications, Inc. ("GIC") and the Stockholders of GIC.
</TABLE>
II-1
<PAGE> 11
<TABLE>
<S> <C> <C>
2(b) -- Amended and Restated Agreement and Plan of Merger ("Merger Agreement") dated as of August 14, 1994, between
Sensormatic Electronics Corporation, Knogo Corporation and Knogo North America Inc. (incorporated by reference to
Exhibit 2(a) to Registration Statement on Form S-4, File No. 33-56619)
(Copies of omitted schedules will be furnished supplementally to the Securities and Exchange Commission upon request.)
4(a) -- Copy of Composite Restated Certificate of Incorporation of Sensormatic Electronics Corporation filed pursuant to Rule
232.102(c) of Regulation S-T (incorporated by reference to Exhibit 4(d) to Registration Statement on Form S-3, File
No. 33-61626).
4(b) -- Copy of By-Laws of Sensormatic Electronics Corporation (incorporated by reference to Exhibit 3(b) to Form 10-K for the
fiscal year ended May 31, 1990 (File Number 1-10739)).
4(c) -- Note Agreement, dated as of January 15, 1993, among the Registrant and the Purchasers named therein, relating to the
Registrant's 8.21% Senior Notes Due January 30, 2003 (incorporated by reference to Exhibit 4.4 to Registration
Statement on Form S-4, File No. 33-62750).
4(d) -- The Registrant agrees to furnish copies of any instrument defining the rights of holders of long-term debt of the
Registrant and its consolidated subsidiaries that does not exceed 10 percent of the total assets of the Registrant and
its consolidated subsidiaries, which is not required to be filed as an exhibit, to the Commission upon request.
* 5 -- Opinion of Christy & Viener, including consent.
23(a) -- Consent of Christy & Viener (included in Exhibit 5)
* 23(b) -- Consent of Ernst & Young LLP
* 23(c) -- Consent of Deloitte & Touche LLP
24 -- Powers of Attorney of Ronald G. Assaf, Thomas V. Buffett, James E. Lineberger, Michael E. Pardue, Lawrence J. Simmons,
Jerome M. LeWine and Dr. Arthur G. Milnes (included on page II-4 of the Registration Statement).
</TABLE>
____________________
* Filed herewith.
II-2
<PAGE> 12
ITEM 17. UNDERTAKINGS.
(1) The undersigned Registrant 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 purpose 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 undersigned Registrant 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 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to 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 Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant 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
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant 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 Registrant 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> 13
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant 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 11th day of
January, 1995.
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, Lawrence J. Simmons, Miguel A. Flores 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 all 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 dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ RONALD G. ASSAF Chairman of the Board of Directors, January 11, 1995
- ---------------------------------- President and Chief Executive Officer
(Ronald G. Assaf) (principal executive officer)
/s/ THOMAS V. BUFFETT Vice Chairman of the Board of Directors January 11, 1995
- ----------------------------------
(Thomas V. Buffett)
/s/ JAMES E. LINEBERGER Chairman of the Executive Committee and Director January 11, 1995
- ----------------------------------
(James E. Lineberger)
/s/ MICHAEL E. PARDUE Executive Vice President and Chief January 11, 1995
- ---------------------------------- Operating Officer (principal financial
(Michael E. Pardue) officer) and Director
/s/ LAWRENCE J. SIMMONS Vice President of Finance (principal January 11, 1995
- ---------------------------------- accounting officer)
(Lawrence J. Simmons)
/s/ JEROME M. LEWINE Director January 11, 1995
- ----------------------------------
(Jerome M. LeWine)
/s/ DR. ARTHUR G. MILNES Director January 11, 1995
- ----------------------------------
(Dr. Arthur G. Milnes)
Director
- ----------------------------------
(John T. Ray, Jr.)
</TABLE>
II-4
<PAGE> 14
Exhibit Index
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT PAGE NUMBER
------- ---------------------- -----------
<S> <C>
* 2(a) Stock Purchase Agreement dated as of December 22, 1994 between Sensormatic
Electronics Corporation, Glen Industrial Communications, Inc. ("GIC") and
the Stockholders of GIC.
2(b) Amended and Restated Agreement and Plan of Merger ("Merger Agreement") dated as
of August 14, 1994, between Sensormatic Electronics Corporation, Knogo
Corporation and Knogo North America Inc. (incorporated by reference to Exhibit
2(a) to Registration Statement on Form S-4, File No. 33-56619)
(Copies of omitted schedules will be furnished supplementally to the Securities
and Exchange Commission upon request.)
4(a) Copy of Composite Restated Certificate of Incorporation of Sensormatic
Electronics Corporation filed pursuant to Rule 232.102(c) of Regulation S-T
(incorporated by reference to Exhibit 4(d) to Registration Statement on Form
S-3, File No. 33-61626).
4(b) Copy of By-Laws of Sensormatic Electronics Corporation (incorporated by
reference to Exhibit 3(b) to Form 10-K for the fiscal year ended May 31, 1990
(File Number 1-10739)).
4(c) Note Agreement, dated as of January 15, 1993, among the Registrant and the
Purchasers named therein, relating to the Registrant's 8.21% Senior Notes Due
January 30, 2003 (incorporated by reference to Exhibit 4.4 to Registration
Statement on Form S-4, File No. 33-62750).
4(d) The Registrant agrees to furnish copies of any instrument defining the rights of
holders of long-term debt of the Registrant and its consolidated subsidiaries
that does not exceed 10 percent of the total assets of the Registrant and its
consolidated subsidiaries, which is not required to be filed as an exhibit, to
the Commission upon request.
* 5 Opinion of Christy & Viener, including consent.
23(a) Consent of Christy & Viener (included in Exhibit 5)
* 23(b) Consent of Ernst & Young LLP
* 23(c) Consent of Deloitte & Touche LLP
24 Powers of Attorney of Ronald G. Assaf, Thomas V. Buffett, James E. Lineberger,
Michael E. Pardue, Lawrence J. Simmons, Jerome M. LeWine and Dr. Arthur G.
Milnes (included on page II-4 of the Registration Statement).
</TABLE>
_____________
* Filed herewith.
<PAGE> 1
EXHIBIT 2(A)
STOCK PURCHASE AGREEMENT
Dated as of December 22, 1994
among
SENSORMATIC ELECTRONICS CORPORATION,
GLEN INDUSTRIAL COMMUNICATIONS, INC.
and
THE STOCKHOLDERS
of
GLEN INDUSTRIAL COMMUNICATIONS, 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 OR BY A NOTE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.5 CLOSING NET WORTH; REDEMPTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS REGARDING GIC . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.1 DUE INCORPORATION AND QUALIFICATION OF GIC; SUBSIDIARIES; CAPITALIZATION . . . . . . . . . . . . . . . . . . 6
2.2 AUTHORITY; DUE AUTHORIZATION; VALID OBLIGATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.3 NO CONFLICTS OR DEFAULTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.4 COPIES OF CHARTER DOCUMENTS AND STOCK RECORDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.5 AUTHORIZATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.6 FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.7 TITLE TO ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.8 ORDINARY COURSE; NO MATERIAL ADVERSE EFFECT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.9 PRODUCTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.10 PERMITS; COMPLIANCE WITH LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.11 TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.12 EMPLOYEE BENEFITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
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. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
2.20 SENSORMATIC COMMON STOCK NOT REGISTERED . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
3.4 AUTHORIZATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
3.5 LITIGATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
3.6 INVESTMENT INTENTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
3.7 REGISTRATION STATEMENT; COMMON STOCK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
3.8 MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
4. PRE-CLOSING AGREEMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
4.1 PRESERVE GIC'S BUSINESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
4.2 PRESERVE ACCURACY OF REPRESENTATIONS AND WARRANTIES; UPDATES . . . . . . . . . . . . . . . . . . . . . . . . 23
4.3 FURTHER INVESTIGATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
4.4 CONSENTS, WAIVERS AND FILINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
4.5 NO SOLICITATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
4.6 GIC BENEFIT PLANS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
4.7 INSURANCE MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
5.5 LEGAL OPINION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
5.6 CERTIFICATES REPRESENTING THE STOCK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
5.7 AGREEMENTS RELATING TO EMPLOYMENT; RESIGNATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
5.8 INSURANCE POLICY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
5.9 BOARD OF DIRECTORS APPROVAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
5.10 NO CLAIMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
5.11 GOVERNMENTAL ACTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
5.12 CONSENTS AND WAIVERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
5.13 SATISFACTION OF COUNSEL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
6.5 LEGAL OPINION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
6.6 AGREEMENTS RELATING TO EMPLOYMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
6.7 INSURANCE POLICY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
6.8 NO CLAIMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
6.9 GOVERNMENTAL ACTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
6.10 SATISFACTION OF COUNSEL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
7. WAIVER OF CONDITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
8. INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
8.1 GENERAL--STOCKHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
8.2 TAX-RELATED--STOCKHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
8.3 PROCEEDINGS--STOCKHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
8.4 SENSORMATIC'S INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
8.5 RELATED COSTS AND EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
8.6 LIMITATIONS ON INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
9. CONFIDENTIALITY AND NON-COMPETITION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
9.1 NON-COMPETITION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
9.2 CONFIDENTIALITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
9.3 REMEDIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
10. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
10.1 TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
10.2 ENTIRE AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
10.3 COMMUNICATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
10.4 SUCCESSORS AND ASSIGNS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
10.5 PUBLIC ANNOUNCEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
10.6 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
10.7 EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
</TABLE>
-2-
<PAGE> 4
<TABLE>
<S> <C> <C>
10.8 RECORDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
10.9 GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
10.10 SAVINGS CLAUSE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
10.11 COUNTERPARTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
10.12 CONSTRUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
10.13 CONSENT TO JURISDICTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Exhibit A -- Form of Sensormatic Note
Schedules
Schedule I -- Selling Stockholders
Schedule 5.5 -- Matters for Opinion of GIC Counsel
Schedule 5.7-1 -- Rider to Glen Kruglak Employment Agreement
Schedule 5.7-2 -- Rider to Alan Kruglak Employment Agreement
Schedule 6.5 -- Matters for Opinion of Sensormatic Counsel
</TABLE>
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<PAGE> 5
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT, dated as of December 22, 1994, among
SENSORMATIC ELECTRONICS CORPORATION, a Delaware corporation ("Sensormatic");
GLEN INDUSTRIAL COMMUNICATIONS, INC., a Delaware corporation ("GIC"); GLEN
KRUGLAK, ALAN KRUGLAK and MARTHA KRUGLAK, individuals residing in the state of
Maryland (the foregoing individuals being sometimes referred to herein as the
"Principal Stockholders"); and the additional stockholders of GIC listed on
Schedule I hereto (together with the Principal Stockholders, the
"Stockholders").
W I T N E S S E T H:
WHEREAS, GIC is engaged principally in the business (the "Business")
of purchasing, combining, assembling, 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 Stockholders wish to sell to Sensormatic, and Sensormatic
wishes to purchase, all of the issued and outstanding capital stock of GIC (the
"Stock") (except to the extent redeemed as contemplated herein), 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, and
following the redemption of certain of the Stock as referred to in Section 1.5
(the "Redemption"), on the Closing Date (as such term is defined in Section
1.3), Sensormatic shall purchase, and each Stockholder (other than any thereof
whose Stock has been totally redeemed pursuant to Section 1.5) shall sell,
convey, assign, transfer and deliver to Sensormatic, all shares of Stock held
by such Stockholder following the Redemption (the number of which shall be set
forth opposite such Stockholder's name in Schedule I hereto under the heading
"Shares Sold to Sensormatic"). Those Stockholders whose Stock is not totally
<PAGE> 6
redeemed pursuant to the Redemption are sometimes referred to herein as the
"Selling Stockholders." The Stock shall be transferred by the Selling
Stockholders 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 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 (if requested by Sensormatic), together with all necessary
documentary or stock transfer stamps affixed to such certificates.
1.2 CONSIDERATION FOR PURCHASE. The consideration payable by
Sensormatic in the aggregate for all the Stock held by the Selling Stockholders
following the Redemption (the "Aggregate Purchase Price") shall be $13,500,000.
Each Selling Stockholder shall be entitled to receive that percentage (his or
her "Post-Redemption Stockholder Percentage") of the Aggregate Purchase Price
set forth opposite his or her name on Schedule I hereto under the heading
"Post-Redemption Stockholder Percentage", which percentage has been calculated
on the basis of the respective number of shares of Stock to be held by the
Selling Stockholders following the Redemption, also as set forth on Schedule I.
1.3 CLOSING. Subject to Section 10.1, the closing of the
transactions contemplated by this Agreement (the "Closing") shall take place at
10:00 a.m. on January 5, 1995, 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 Christy & Viener, or such other
date, time and place is agreed to by the parties. The Closing and the
transactions contemplated by this Agreement shall be given effect as of the
commencement of business on January 1, 1995 or, if the Closing occurs after
January 6, 1995, as of the Closing Date. At the Closing, the Stockholders
whose Stock is to be redeemed pursuant to Section 1.5 shall deliver to GIC the
certificates for the Stock to be redeemed pursuant to Section 1.5, endorsed for
transfer or accompanied by duly executed stock powers, and GIC shall deliver to
them the redemption price therefor as contemplated by Section 1.5; and the
Selling Stockholders shall deliver to Sensormatic the certificates for the
remaining Stock as contemplated by Section 1.1(b), endorsed for transfer or
accompanied by duly executed stock powers, 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 Post-Redemption Stockholder Percentages
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<PAGE> 7
and paid by wire transfer or certified or cashiers' check or in shares of
Sensormatic Common Stock pursuant to Section 1.4, as applicable. At the
Closing, the Stockholders and GIC shall deliver the additional certificates,
documents and instruments contemplated to be delivered by them pursuant to
Section 5; and Sensormatic 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 OR BY A NOTE.
(a) At Sensormatic's option, all or a portion of the Aggregate
Purchase Price may be paid in the form of (i) Sensormatic Common Stock, par
value $.01 per share ("Sensormatic Common Stock), or (ii) in the event that the
Registration Statement filed by Sensormatic pursuant to Section 1.4(c) hereof
has not become effective as of the Closing Date, a note payable in cash or
Sensormatic Common Stock or a combination thereof (the "Sensormatic Note")
substantially in the form of Exhibit A hereto, subject to the terms and
conditions of this Section 1.4. Any portion of the Aggregate Purchase Price
or, if the Sensormatic Note is delivered, any portion of the outstanding
balance of the Sensormatic Note, which is not paid in Sensormatic Common Stock
shall be payable by wire transfer or by certified or cashier's check delivered
to the Stockholder Representative (as defined in Section 10.3) or an account
designated by him for the benefit of the Selling Stockholders, and allocated
among the Selling Stockholders on the basis of their respective Post-Redemption
Stockholder Percentages, as set forth on Schedule I. If the Sensormatic Note
is delivered, it will be secured by the Stock pursuant to a pledge agreement
(the "Pledge Agreement") in a form mutually acceptable to the parties, to be
executed by the parties at the Closing.
(b) The number of shares of Sensormatic Common Stock payable to
each Selling Stockholder receiving stock pursuant to this Section 1.4 shall be
equal to (i) the product of that portion of the Aggregate Purchase Price
payable in Sensormatic Common Stock multiplied by such Selling Stockholder's
Post-Redemption Stockholder Percentage, as set forth on Schedule I, divided 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 date they are delivered to or for the account of the
Selling Stockholders (the "Payment Date") (or, at Sensormatic's option, a
five-day period ending up to two days earlier). Such average closing price of
the Sensormatic Common Stock 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 on the Payment Date is
sometimes referred to herein as the "Payment Date Price". A certificate
representing the aggregate number of shares so issued shall be
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<PAGE> 8
delivered in street name for the account of the Selling Stockholders' broker,
for the benefit of the Selling Stockholders collectively, and any remaining
fractional share 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 Selling Stockholders of the shares of Sensormatic Common Stock
delivered to them at the Closing pursuant to this Section 1.4 or pursuant to
the Sensormatic Note (the "Payment 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. The effectiveness of the
Registration Statement shall be a condition to the issuance of the Payment Date
Shares, as contemplated by Section 6.12. With respect to all sales of Payment
Date Shares during the period beginning on the Payment Date and ending at the
close of the fifth NYSE trading day thereafter (subject to extension by mutual
agreement of Sensormatic and the Stockholder Representative) (the "Resale
Period"), Sensormatic shall reimburse the Selling Stockholders collectively, 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 Payment Date
Price times the number of Payment Date Shares sold by the Selling Stockholders
during the Resale Period, exceeds (ii) the "Net Proceeds" of sale of such
Payment Date Shares sold -- i.e., the cash proceeds of all sales of Payment
Date Shares by the Selling Stockholders during the Resale Period less broker
commissions and selling expenses. Sensormatic shall make such reimbursement
within five business days following the delivery by the Selling Stockholder's
broker or representative for the applicable brokerage of a schedule showing the
calculation on a trade-by-trade basis of such cash proceeds and Net Proceeds
from sales of Payment Date Shares during the Resale Period, accompanied by the
applicable confirmations. 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
broker for the Selling Stockholders shall be Wertheim Schroder & Co.,
Incorporated or another broker designated by the Stockholders' Representative
and reasonably acceptable to Sensormatic, provided, that such other brokers'
commission shall not exceed the broker's commission which would have been
payable to Wertheim Schroder & Co., Incorporated if it acted as broker for the
Selling Stockholders.
(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) to be paid in shares divided by the NYSE Closing Price as of the trading
date
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<PAGE> 9
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 Payment 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.
1.5 CLOSING NET WORTH; REDEMPTION.
(a) The net worth of GIC as of December 31, 1994 (i.e., total
assets minus total liabilities, in each case as arising in the operation of the
Business in the ordinary course through such date and calculated in accordance
with generally accepted accounting principles consistently applied with prior
periods, subject to any express provision of this Agreement) shall be
$2,222,195. In the event GIC's net worth as of December 31, 1994 is greater
than $2,222,195, GIC may redeem shares (or fractional shares) of stock from
certain of the Stockholders, as determined by the Board of Directors of GIC,
and in a manner and amount reasonably acceptable to Sensormatic, as of the
Closing Date, in exchange for cash or obligations of GIC in such amounts as
shall reduce GIC's net worth as of December 31, 1994 (treating the redemptions
as made on that date) to $2,222,195. A schedule prepared and signed by the
Stockholder Representative, and countersigned by Sensormatic, showing the
number of shares of Stock redeemed from each applicable Stockholder and the
redemption price therefor, shall be binding on Sensormatic and all Stockholders
(subject to adjustment as set forth in this Section 1.5), and Schedule I shall
be updated to give effect to the Redemption. The shares so redeemed shall be
delivered to GIC free and clear of all Liens. In the event that GIC's net
worth as of December 31, 1994 is less than $2,222,195, Sensormatic shall be
entitled to a dollar-for-dollar reduction in the Aggregate Purchase Price,
effective at the Closing or reimbursable pursuant to Section 8 promptly
following the Closing. For purposes of this Section 1.5, the net worth of GIC
shall not be affected by any elections under the Internal Revenue Code made by
Sensormatic or GIC after the Closing Date.
(b) The redemption amount payable by GIC prior to the Closing Date
shall be based upon the estimated net worth of GIC as reflected on an estimated
balance sheet of GIC as of December 31, 1994 prepared by GIC and acceptable to
Sensormatic. As soon as practicable after the Closing Date, the Stockholder
Representative shall prepare a proposed final balance sheet of GIC as of
December 31, 1994 (the "December 31 Balance Sheet") which shall be audited by
Deloitte & Touche (at GIC's expense following the Closing Date). Sensormatic
may at its option (and its expense)
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<PAGE> 10
cause the audited December 31, 1994 Balance Sheet to be reviewed by Ernst &
Young. Any issues raised by Ernst & Young as to the definitive net worth of
GIC as of December 31, 1994 shall be resolved by the mutual agreement of
Sensormatic and the Stockholder Representative, on behalf of the Selling
Stockholders. In the event that Sensormatic and the Stockholder Representative
are not able to resolve all such disputes, the parties shall submit any
remaining disputes to binding determination by an accounting firm designated by
mutual agreement of Deloitte & Touche and Ernst & Young. Sensormatic shall
bear all costs associated with any such final determination, except that if
such final determination results in an adjustment in Sensormatic's favor of
more than $10,000, compared with the December 31 Balance Sheet as originally
audited by Deloitte & Touche, such costs (up to a maximum of $40,000) shall be
borne by the Stockholders. On the basis of the net worth of GIC reflected on
the December 31 Balance Sheet as finally determined in accordance with this
Section 1.5(b), the Stockholders shall promptly repay to Sensormatic any
excess, or Sensormatic shall promptly pay to the Selling Stockholders any
deficiency, as applicable, in the amount previously distributed to them
pursuant to this Section 1.5 as compared with the amount required to give
proper effect to the provisions of Section 1.5(a).
2. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS REGARDING
GIC. The Principal Stockholders, jointly and severally, and the other
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 GIC; SUBSIDIARIES;
CAPITALIZATION.
(a) Each of GIC and Glen Industrial Communications of Delaware,
Inc. ("GIC Delaware"), GIC's subsidiary, is a corporation duly incorporated,
validly existing and in good standing under the laws of Delaware, with full
corporate power and authority to own, lease and operate its properties and to
carry on its business in the places and in the manner as currently conducted.
(b) With the exception of GIC Delaware, GIC has no direct or
indirect subsidiaries, nor are there any other entities which GIC otherwise
controls or in which GIC has an ownership or investment interest. References
herein to "GIC" shall be deemed to refer to GIC and GIC Delaware collectively
unless the context otherwise requires.
(c) Set forth in Item 2.1(c) of the Disclosure Schedule delivered
by the Stockholders herewith and incorporated by reference herein (the
"Disclosure Schedule") is a list of all jurisdictions in which each of GIC and
GIC Delaware is qualified to do business and is in good standing as a foreign
corporation.
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<PAGE> 11
Except as disclosed in Item 2.1(c) of the Disclosure Schedule, GIC 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 GIC and GIC
Delaware, taken as a whole (a "Material Adverse Effect")
(d) Except as set forth in Item 2.1(d) of the Disclosure Schedule,
none of GIC, the 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 GIC, (ii) sells or purchases
products or services to or from GIC, (iii) leases real or personal property to
or from GIC or (iv) otherwise does business with GIC. Also set forth in Item
2.1(d) of the Disclosure Schedule is a schedule of performance bonds or
guaranties furnished by any of the Selling Shareholders for the benefit of GIC
(copies of each of which have been furnished to Sensormatic), briefly
describing the amount and terms thereof.
(e) The authorized capital stock of GIC consists of 1,000 shares
of common stock, par value $1.00 per share (the "GIC Shares"), of which 337
shares, constituting the Stock, are issued and outstanding, and an additional
63 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. All of the 100
issued and outstanding shares of capital stock of GIC Delaware were duly and
validly issued, are fully paid and non-assessable and were not issued in
violation of any preemptive rights, and are held beneficially and of record by
GIC. Except as expressly set forth in this Section 2.1(e) or in Item 4.1 of
the Disclosure Schedule, there are no issued or outstanding shares of capital
stock of GIC or GIC Delaware and no outstanding options, warrants, rights,
conversion rights, pre-emptive rights, calls, commitments or demands of any
character obligating GIC or GIC Delaware 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 Stockholder's name on Schedule I under
the heading "Number of GIC Shares Held" is the number of shares of Common Stock
owned by such Stockholder as of the date hereof and to be owned by him or her
immediately prior to the Redemption and the Closing.
2.2 AUTHORITY; DUE AUTHORIZATION; VALID OBLIGATION.
(a) GIC has all requisite corporate power and authority to execute
and deliver this Agreement and to perform its
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<PAGE> 12
obligations hereunder. GIC has taken all corporate action necessary for the
execution and delivery by it of this Agreement and the consummation by it of
the transactions contemplated hereby.
(b) This Agreement constitutes the valid and binding obligation of
GIC, enforceable against GIC in accordance with its 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 consummation of the transactions contemplated hereby do not
and shall not (a) contravene GIC's or GIC Delaware'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 GIC or GIC Delaware is a party or by
which any of such persons or any of GIC's or GIC Delaware's assets is bound
(including without limitation any of the contracts referred to in Sections
2.6(d), 2.6(g) or 2.14, except that the foregoing representation shall not
apply to any Installation Contracts referred to in Section 2.6(d) involving a
billing backlog of less than $30,000 or any Monitoring Contracts referred to in
Section 2.6(d) involving annual payments in 1994 of less than $25,000), or any
judgment, order, decree, law, rule or regulation to which any of such persons
or any of GIC's or GIC Delaware's assets is subject, (ii) result in the
creation of, or give any party the right to create, any Liens upon GIC, GIC
Delaware or any of GIC's or GIC Delaware'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 GIC or GIC Delaware 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 GIC
and GIC Delaware, in each case as amended to the date hereof, have been
furnished to Sensormatic by GIC.
(b) GIC has made available to Sensormatic correct and complete
copies of the minute books, stock ledgers or other statutory books of GIC and
GIC Delaware.
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
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<PAGE> 13
party, is required in connection with the execution, delivery and performance
by GIC or the Stockholders of this Agreement.
2.6 FINANCIAL STATEMENTS.
(a) GIC has furnished to Sensormatic (i) audited consolidated
financial statements for and as of the end of each of the two fiscal years
ended December 31, 1993, reported upon by Deloitte & Touche, and (ii) unaudited
interim consolidated financial statements as of and for the ten months ended
October 31, 1994 (collectively, the "Financial Statements"). The Financial
Statements were prepared in accordance with U.S. generally accepted accounting
principles ("GAAP") applied on a consistent basis, are reconcilable to the
books and records of GIC and present fairly the financial position of GIC as at
the dates thereof and the results of its operations, cash flows and changes in
financial position for the periods then ended, provided, however, that the
unaudited interim financial statements are subject to normal year-end
adjustments and lack of footnotes and other presentation items, none of which
are, singly or in the aggregate, material.
(b) Except as disclosed in Item 2.6(b) of the Disclosure Schedule,
as of October 31, 1994 (the "Balance Sheet Date"), GIC 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 GIC as
of the Balance Sheet Date (the "Interim Balance Sheet") or the notes to the
Financial Statements as of and for the period ended December 31, 1993 (the
"Financial Statement Notes"). Since the Balance Sheet Date, GIC 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 GIC (a "Material Adverse Effect"). All such
Liabilities incurred since the Balance Sheet Date are fully reflected or
reserved on the books and records of GIC. Except as set forth in the Financial
Statement Notes, during the period covered by the Financial Statements, GIC has
not changed any of its accounting methods, principles or procedures or made any
revaluations of any material assets, other than write-downs of inventory in the
ordinary course of business.
(c) GIC has furnished to Sensormatic true and correct schedules of
its aged accounts receivable and accounts payable as of the Balance Sheet Date,
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 GIC are
actual 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
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<PAGE> 14
GIC's business and are fully collectible by GIC, except to the extent reserved
for on the Interim Balance Sheet or, in the case of such accounts and notes
receivable arising after the Balance Sheet Date, on the books of GIC consistent
with prior practice.
(d) Set forth in Item 2.6(d) of the Disclosure Schedule are (i) a
correct and complete list of all open and uncompleted installation contracts
and purchase orders as of the Balance Sheet Date (collectively, the
"Installation Contracts") and (ii) a correct and complete list of all current
monitoring and maintenance contracts as of the Balance Sheet Date
(collectively, the "Monitoring Contracts"), and GIC will furnish similar
updated lists as they become available prior to the Closing. All such lists
are and will be true, correct and complete in all material respects as of their
respective dates, the contracts and purchase orders listed thereon are and will
be in force as of such dates and, to GIC's knowledge, there have occurred and
will have occurred no defaults or other events which would cause the
information set forth on such lists to be incorrect in any material respect.
GIC has furnished to Sensormatic its standard form of Installation Contract and
its standard form of Monitoring and Maintenance Contracts (it being understood
that individual contracts may not conform to the same).
(e) Set forth in Item 2.6(e) of the Disclosure Schedule is a
correct and complete list as of the Balance Sheet Date of all outstanding bids
or proposals of GIC with respect to its products or services which had not as
of that date resulted in Installation Contracts or Monitoring Contracts
referred to in Section 2.6(d). GIC will furnish updated lists thereof as they
become available prior to the Closing. All such outstanding bids and
proposals, and all Installation Contracts and Monitoring Contracts referred to
in Section 2.6(d), are and will be entered into in the ordinary course of GIC's
business, based upon the past marketing policies with respect to such products
and services, and, to the best of the knowledge of the Principal Stockholders,
such bids, proposals, Installation Contracts and Monitoring Contracts
collectively will, upon fulfillment in accordance with their terms and based
upon estimated life cycle revenues, result in a profit to GIC consistent with
past practice.
(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 GIC
consist of items in good and merchantable condition and which were acquired in
the ordinary course of business of GIC. The inventories reflected on the
Interim Balance Sheet or such books of GIC 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 GIC
is appropriate in relation to the current requirements of GIC.
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<PAGE> 15
(g) Set forth in Item 2.6(g) of the Disclosure Schedule is a true,
complete and correct list of all rental agreements and leases of GIC's products
(the "Equipment Agreements"), setting forth the date of each such Equipment
Agreement, the name of the lessee the remaining thereunder, the equipment
leased thereunder, the term remaining on such Equipment Agreement, the
respective amounts of the remaining lease or installment payments and the
amount of any security deposit held by GIC thereunder. Each such Equipment
Agreement is valid, assignable without the consent of the lessee thereunder and
noncancelable by the lessee thereunder for the term thereof. GIC is in
compliance and is current in all material respects in its obligations under the
Equipment Agreements. All work performed by GIC is respect of its installation
and service duties under the Equipment Agreements has been performed in a
workmanlike manner in the normal course of GIC's business.
2.7 TITLE TO ASSETS.
(a) With the exception of the Liens and other exceptions to title
listed in Item 2.7(a) of the Disclosure Schedule, GIC has good and marketable
title to all its principal properties and assets, real and personal, free and
clear of all Liens.
(b) Set forth in Item 2.7(b) of the Disclosure Schedule is a list
of all real property owned or leased by GIC (the "Realty"). Included in such
list is the address (including the county) of each location where GIC keeps a
material amount of its inventory or work-in-process.
(c) All material leases pursuant to which GIC 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 the Balance Sheet Date, GIC
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, there has not been any material adverse change in the
business, financial condition or results of operations of GIC and GIC Delaware
or their assets, taken as a whole, and none of the events referred to in the
second sentence of Section 4.1 has occurred.
2.9 PRODUCTS.
(a) To the best of GIC's and the Stockholders' knowledge, after
due inquiry, (i) to the extent that any equipment or products sold or leased by
GIC are required to meet applicable standards of the Federal Communications
Commission ("FCC") or Underwriters Laboratories Inc. ("UL"), such equipment and
products meet such standards, and (ii) to the extent that any
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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. Further,
GIC's central station product has received the applicable UL approval.
(b) Except as set forth in Item 2.9(b) of the Disclosure Schedule,
GIC 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, installation,
maintenance or use of any of the products of, or any services performed by or
on behalf of, GIC, and, neither GIC, any of the Stockholders nor any GIC
management personnel interviewed by Sensormatic knows of any such liability or
claim or any basis for any such liability or claim, except to the extent (if
any) reserved against on the Interim Balance Sheet.
2.10 PERMITS; COMPLIANCE WITH LAW.
(a) GIC and/or its employees hold 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, are in compliance in all material respects with the
terms of each thereof and have not received any notice or claim pertaining to
the failure to obtain any such Permit. 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. To the best of GIC's and the
Stockholders' knowledge, GIC's business has not been, and is not being,
conducted in violation of any law, ordinance, rule or regulation, except for
violations that, individually or in the aggregate, do not and are not likely to
have a Material Adverse Effect.
(b) The structures and equipment, whether owned or leased, which
are currently used by GIC 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.
2.11 TAXES.
(a) GIC 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 GIC has paid or made provision in the Interim Balance Sheet or,
since the Balance
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Sheet Date, 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 the
date hereof.
(b) Except as disclosed in Item 2.11(b) of the Disclosure
Schedule, GIC has not received notice of any claims pending or threatened for
taxes against GIC or GIC Delaware for periods ending on or before the date
hereof in excess of the amounts reflected in the Interim Balance Sheet or such
records. Except as set forth in Item 2.11(b) of the Disclosure Schedule, no
tax return of GIC is currently under audit or examination by any governmental
authority, or, to GIC's knowledge, proposed to be audited or examined. Except
as disclosed in Item 2.11(b) of the Disclosure Schedule, GIC does not know of
any threatened Tax claims or assessments against GIC and has not received
notice of any proposed deficiency with respect to any of its income tax
returns.
(c) GIC (which for purposes of this Section 2.11(c) includes any
predecessor thereof) 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. GIC has not 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. GIC has never been an "S" corporation and no "S"
election has ever been filed with respect to GIC. GIC has not made or filed
for, nor is it required by any law or regulation to make or file for, any
change of accounting method that will result in its reporting taxable income
for any period after the Closing. GIC is not acting as a nominee or a trustee
for any person, corporation, partnership, trust or estate.
2.12 EMPLOYEE BENEFITS.
(a) The Glen Industrial Communications Retirement Savings Plan
(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 GIC or to which GIC 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 plans, agreements, arrangements or understandings providing benefits
to any current or former employee, officer or
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director of GIC or to which GIC has any liability or obligation (all such
plans, agreements, arrangements and understandings referred to in this Section
2.12(a), including the Profit Sharing Plan, being hereinafter referred to as
the "GIC Benefit Plans"). GIC has delivered to Sensormatic true, complete and
correct copies of (w) each GIC Benefit Plan and any amendments thereto (or, in
the case of any unwritten GIC 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 GIC Benefit Plan (if any such report
was required), (y) all summary plan descriptions for each GIC 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 GIC Benefit
Plan. Except as set forth in Item 2.12(a) of the Disclosure Schedule, GIC has
not terminated any GIC Benefit Plan previously in effect. GIC's Benefit Plans
previously provided for post-retirement medical benefits, but such benefits
have since been terminated.
(b) The accrued obligations of GIC under all GIC Benefit Plans are
reflected on the Interim Balance Sheet as of its date and on the books of GIC
for periods thereafter up to the Closing Date.
(c) Each GIC 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 GIC 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 GIC Benefit Plan have been or will be obtained on a timely basis.
(d) The Profit Sharing Plan is a prototype standardized profit
sharing plan sponsored by State Mutual Life Assurance Co. of America ("State
Mutual"). State Mutual has obtained a determination letter with respect to the
Profit Sharing Plan (and a copy thereof has been furnished to Sensormatic). To
the best of GIC's and the Stockholders' knowledge, the determination letter has
not been revoked. All contributions of GIC required by the Profit Sharing Plan
have been made by GIC 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 material liability of GIC has
occurred (and the Stockholders have no knowledge of any prohibited transaction
resulting in liability of GIC, whether or not material); (iii) no breach of
fiduciary responsibility under Part 4 of Title I of ERISA resulting in material
liability of GIC has occurred (and the Stockholders have no knowledge of any
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breach of fiduciary duty resulting in liability of GIC, whether or not
material); 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. GIC has furnished to Sensormatic an estimate
of contributions to be made by GIC under the Profit Sharing Plan through
December 31, 1994.
(e) GIC does not maintain, and has no obligation to, any
"multi-employer plan" (as such term is defined in Section 4001(a)(3) of ERISA).
GIC has no liability (contingent or otherwise) with respect to any terminated
GIC Benefit Plan. GIC 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 GIC, 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. Set forth in Item 2.13 of the Disclosure Schedule
is a list of all claims, actions, suits, proceedings, investigations and
criminal proceedings, 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 GIC's knowledge,
threatened against GIC. Except as noted in Item 2.13 of the Disclosure
Schedule, none of such Proceedings, 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
challenges the validity or propriety of the transactions contemplated by this
Agreement. To the knowledge of GIC, 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 GIC or
its assets.
2.14 AGREEMENTS AND COMMITMENTS.
(a) Set forth in Item 2.14 of the Disclosure Schedule is a correct
and complete list of all of the following agreements and instruments to which
GIC (including GIC Delaware) is a party ("Listed Instruments"): (i) each
employment, 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 GIC (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
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at least $20,000 per annum, pursuant to which real or personal property is held
under lease, or leased to any person by GIC (other than leases of its products
to customers in the ordinary course of business referred to in Section 2.6(g));
(iii) each loan, security, mortgage, guaranty or other agreement or instrument
evidencing indebtedness for monies borrowed by or credit available to GIC, or
any guaranty of an obligation by GIC, or securing any thereof; (iv) each
distribution, dealership, franchise, sales agency or similar agreement to which
GIC is a party; (v) each manufacturing or supply agreement to which GIC is a
party (other than Installation Contracts listed under Section 2.6(d)); (vi)
each partnership, joint venture, shareholders or similar agreement to which GIC
or any of the Stockholders (in their capacity as such) is a party; (vii) each
agreement or understanding relating to the acquisition by GIC of any
Intellectual Property (as such term is defined in Section 2.15) or any rights
therein, or the grant by GIC 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 GIC is a party (and which is not disclosed in any other
Item of the Disclosure Schedule or in the Financial Statement 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 made
available to Sensormatic, (y) the consummation of the transactions contemplated
by this Agreement will not cause any of the Listed Instruments or the
Installation Contracts or Equipment Agreements to terminate or give any party
thereto the right to terminate or renegotiate the same, and (z) GIC is not in
breach or default in any material respect under any of the Listed Instruments,
Installation Contracts or Equipment Agreements. Neither GIC nor any of the
Principal Stockholders has any knowledge of any other material breach or
default under any Listed Instrument, Installation Contract or Equipment
Agreement by any other party thereto or by any other person, firm or
corporation bound thereby.
(b) GIC is not a party to any union or collective bargaining
contracts with respect to any employees of GIC and there has not been, nor has
GIC received written notice threatening, any representational or organizational
activity, strike, slowdown, picketing or work stoppage by any union or other
group of employees against GIC.
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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 GIC or the conduct of the Business infringes any patent,
trademark, trade secret or other proprietary right (collectively, "Intellectual
Property") of any third party. GIC has not received any claims that it or its
Intellectual Property has infringed the rights of others, and neither GIC nor
either of the Principal Stockholders is aware of any infringement of GIC'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
GIC with respect to any of the Realty (the "Environmental Reports"). True and
complete copies of any such Environmental Reports have been collected by GIC
and made available to Sensormatic.
(b) Except as set forth in the Environmental Reports or in Item
2.16 of the Disclosure Schedule, neither GIC nor, to the knowledge of GIC, 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 GIC
or, to the knowledge of GIC, 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 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 GIC nor, to the knowledge of GIC 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.
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(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) GIC 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 GIC or affecting the Realty, or any
violation or alleged violation of any Environmental Law by GIC.
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) from whom GIC has purchased
more than $15,000 of goods or services during the first ten months of 1994 and
all customers of GIC. GIC has adequate sources of supply for all products or
the components thereof. The relationship of GIC with such suppliers and
customers is good and, except as disclosed in Item 2.17 of the Disclosure
Schedule, none of GIC's suppliers or customers has expressed any intent to
terminate or materially modify any of such relationships with GIC.
2.18 INSURANCE. All of the insurable assets of GIC are adequately
insured for GIC'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 the date hereof in
accordance with their terms, and GIC has not received notice of termination of
any such policies.
2.19 BANK ACCOUNTS, ETC. GIC has heretofore furnished Sensormatic
with a true, correct and complete list of (a) all accounts and credit
arrangements maintained by GIC, and all persons authorized to sign or act on
behalf of GIC 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 GIC or otherwise authorized to act on behalf of GIC 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
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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 GIC and
the Stockholders set forth in this Agreement and all information set forth by
GIC and the 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. None of the information to be supplied
by or on behalf of GIC 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 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.
2A INDIVIDUAL REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS.
Each of the Stockholders, severally, represents and warrants to Sensormatic as
follows:
(a) Neither the execution, delivery or performance of this
Agreement, nor the consummation of the transactions contemplated hereby, will
conflict with or contravene, or result in the breach of, any agreement binding
upon him or her or to which his or her property or assets may be subject, or
any decree, order or rule of any court or governmental authority which is
binding on or applicable to him or her or his or her property or assets.
(b) He or she is the sole beneficial and record owner of the
shares of Stock indicated after his or her name on Schedule I hereto, free and
clear of all Liens, and has the unrestricted right to deliver all right, title
and interest in and to the same to Sensormatic (or, to the extent redeemed, to
GIC). At the Closing, upon the assignment and delivery of the certificates for
such shares by or on behalf of each such Stockholder to Sensormatic (or, to the
extent redeemed, to GIC),
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duly endorsed or accompanied by properly executed stock powers for transfer,
Sensormatic (or GIC) will acquire full, good and marketable title to all such
shares, free and clear of all Liens.
(c) He or she is not a party to any agreement or understanding
(other than as contemplated by this Agreement) pursuant to which any person has
any option or right to acquire any of the shares of Stock owned by him or her.
(d) This Agreement constitutes the valid and binding obligation of
him or her, enforceable against him or her in accordance with its 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.
(e) Except as set forth in Item 2.1(d) of the Disclosure Schedule,
he or she (and his or her spouse, parents and children) does not own, 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 GIC, (ii) sells or purchases products or services to or from GIC,
(iii) leases real or personal property to or from GIC or (iv) otherwise does
business with GIC.
3. REPRESENTATIONS AND WARRANTIES OF SENSORMATIC. Sensormatic
hereby represents and warrants to the 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 Sensormatic Note, if applicable, 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 Sensormatic Note, if applicable, and
for the consummation by it of the transactions contemplated hereby and thereby,
and this Agreement and the Sensormatic Note, if applicable, constitute the
valid and binding obligations of
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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 Sensormatic Note, if applicable, 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 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.
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 of this Agreement and the Sensormatic Note, if
applicable, except for such authorizations, approvals, licenses, permits,
consents, filings or registrations as are obtained by the Closing Date (or, in
the case of any thereof applicable to the issuance of Sensormatic Common Stock,
as of the Payment 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 which challenges the validity or propriety of the
transactions contemplated by this Agreement.
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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. 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 Registration Statement will not,
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 GIC 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 GIC'S BUSINESS. Between the date of this Agreement
and the Closing Date, GIC shall (and the Principal Stockholders shall cause GIC
to), in all material respects, (a) preserve substantially intact the business
organization of GIC and use reasonable best efforts to keep available the
services of GIC's present officers and key employees and preserve GIC's present
relationships with persons having significant business relations therewith, and
(b) conduct GIC's Business only in the ordinary course. Without limiting the
generality of the foregoing, GIC and GIC Delaware shall not, without the prior
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written consent of Sensormatic in each instance, (i) except as disclosed in
Item 4.1 to the Disclosure Schedule, issue or commit to issue any GIC Shares or
other capital stock of GIC or GIC Delaware, (ii) sell, grant or commit to grant
any options, warrants or other rights to subscribe for or purchase, any Stock
or other capital stock of GIC or GIC Delaware, (iii) declare, set aside, or pay
any dividend with respect to any Stock or other capital stock or make any
distribution of capital (except as permitted by Section 1.5), (iv) except as
contemplated by Section 1.5, directly or indirectly redeem, purchase or
otherwise acquire or commit to acquire any Stock or other capital stock or
other ownership interest of GIC or any other party, (v) effect a split or
reclassification of its capital stock, or a recapitalization, (vi) amend the
Certificate of Incorporation or By-laws of GIC or GIC Delaware, (vii) except as
disclosed in Item 4.1 to the Disclosure Schedule, 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 additional
indebtedness (other than under any existing bank lines of credit), or (x) sell,
encumber or otherwise dispose of any material properties or assets (other than
the sale of inventory in the ordinary course of business). GIC 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 GIC.
4.2 PRESERVE ACCURACY OF REPRESENTATIONS AND WARRANTIES; UPDATES.
Between the date of this Agreement and the Closing Date, each of GIC, the
Stockholders and Sensormatic shall refrain from taking, without the prior
written consent in each instance of Sensormatic or the Stockholder
Representative, as applicable, any action which would render any of the
representations or warranties set forth in Sections 2, 2A 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, GIC 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.
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4.3 FURTHER INVESTIGATION. Between the date of this Agreement and
the Closing Date, GIC shall (and the Stockholders shall cause GIC to) give to
Sensormatic and its representatives reasonable access during normal business
hours, on reasonable prior notice, to all of its premises, files, books,
records and employees; and shall cause its officers, employees and
representatives to furnish such financial and operating data and other
information with respect to its respective businesses as Sensormatic 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
GIC's business. 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. Except
in consultation with one of the Principal Stockholders, in no event shall
Sensormatic contact any of GIC's customers or suppliers in connection with any
investigation conducted by it regarding the transactions contemplated by this
Agreement. Sensormatic and its employees or representatives shall not discuss
the contents of this Agreement, nor the nature of any of the transactions
contemplated hereby, with any of GIC's customers, suppliers, or employees prior
to the Closing Date, without the express consent of GIC in each instance, it
being understood and agreed that the filing of the Registration Statement will
have the effect of publicly disclosing certain information regarding the
transactions contemplated hereby.
4.4 CONSENTS, WAIVERS AND FILINGS. Upon the terms and subject to
the conditions set forth in this Agreement, GIC, the 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 file
the Registration Statement and 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 may not have been completed as of the
date hereof, and agree to supply promptly and fully any additional schedules
and other information contemplated by this Agreement to be supplied by them and
not supplied as of the date hereof.
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(a) NO SOLICITATION. Neither GIC nor any 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 GIC or for the sale or other disposition of the
business or assets of GIC (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 10.1.
4.5 GIC BENEFIT PLANS. GIC shall cooperate with Sensormatic and
furnish Sensormatic any information reasonably requested by Sensormatic in
connection with its disposition of the GIC Benefit Plans following the Closing.
4.6 INSURANCE MATTERS. The parties shall cooperate to preserve
existing insurance coverage of GIC through and following the Closing and to
effect an appropriate transition to Sensormatic's insurance at the time of
Closing. Within 45 days following the Closing (subject to extension as
reasonably necessary to obtain the same end any required consent), Sensormatic
shall purchase bonds to replace the bonds listed in Item 2.1(d) of the
Disclosure Schedule, subject to obtaining any required consent of customers or
the bonding company.
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. GIC and the 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 GIC and the 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 GIC's and the Stockholders'
representations and warranties and due performance of and compliance with their
respective obligations and conditions.
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5.4 CORPORATE ACTION. Sensormatic shall have received copies of
the resolutions of GIC's Board of Directors, certified by the Secretary or
Assistant Secretary of GIC, 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
Bell, Boyd & Lloyd, counsel for GIC, 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 Stockholders
shall have delivered to Sensormatic and/or GIC, as applicable, certificates
representing all of the Stock owned by him or her, duly endorsed or accompanied
by properly executed stock powers for transfer.
5.7 AGREEMENTS RELATING TO EMPLOYMENT; RESIGNATIONS.
(a) Glen Kruglak and Alan Kruglak shall have executed and
delivered agreements relating to their employment substantially in
Sensormatic's standard form, previously submitted to them, modified by Riders
to the effect set forth in Schedules 5.7-1 and 5.7-2, respectively. The
foregoing shall not be construed to cause any of such persons to be considered
anything other than an employee at will of GIC or Sensormatic (as the case may
be).
(b) All current directors of GIC and GIC Delaware shall have
resigned as directors of GIC and GIC Delaware.
5.8 INSURANCE POLICY. GIC shall have obtained and fully paid for
(60% of which payment shall be reflected in GIC's net worth as of December 31,
1994) a $10 million insurance policy reasonably acceptable to Sensormatic
covering potential liability under the Monitoring Contracts and related
services provided by GIC during the period of not less than one year prior to
the Closing Date (the "Tail Policy").
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 NO CLAIMS. No legislation, regulation, claim, action, suit,
investigation or proceeding shall be enacted, adopted, pending or threatened
against GIC 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 GIC or Sensormatic of substantial
damages as a result of the transactions contemplated hereby or (c) have a
Material Adverse Effect or a material
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adverse effect on the business, financial condition or results of operations of
Sensormatic and its subsidiaries considered as a whole.
5.11 GOVERNMENTAL ACTION. Sensormatic and GIC 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 GIC, Sensormatic nor any Stockholder shall have received notice from
any court or governmental authority, board, agency, commission or
instrumentality of its intention to (a) institute any action or proceeding to
restrain, enjoin, nullify or render ineffective this Agreement or the
transactions contemplated hereby, or (b) commence any investigation into the
consummation of this Agreement and the transactions contemplated hereby, which
would make it inadvisable to consummate such transactions.
5.12 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.
5.13 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.
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 (except as
otherwise set forth herein), 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 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
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performance of and compliance with its obligations and conditions.
6.4 CORPORATE ACTION. The 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. GIC and the Stockholders shall have received
an opinion of Christy & Viener, counsel for Sensormatic, dated the Closing
Date, reasonably satisfactory in form and substance to counsel for GIC and
covering the matters set forth in Schedule 6.5.
6.6 AGREEMENTS RELATING TO EMPLOYMENT. Sensormatic and/or GIC, as
applicable, shall have executed the respective agreements referred to in
Section 5.7(a) to which they are parties.
6.7 INSURANCE POLICY. GIC shall have obtained the Tail Policy.
6.8 NO CLAIMS. No legislation, regulation, claim, action, suit,
investigation or proceeding shall be enacted, adopted, pending or threatened
against GIC, Sensormatic or any 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
GIC or the Stockholders collectively of substantial damages as a result of the
transactions contemplated hereby.
6.9 GOVERNMENTAL ACTION. Neither GIC, the 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.
6.10 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 Stockholders.
6.11 AGGREGATE PURCHASE PRICE. Sensormatic shall have delivered
the Aggregate Purchase Price to the Selling Stockholders in accordance with
Section 1.
6.12 ADDITIONAL SEC FILINGS, NYSE LISTING. If Sensormatic elects
to deliver Sensormatic Common Stock with respect to some or all of the
Aggregate Purchase Price, either at
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Closing or pursuant to the Sensormatic Note, the following additional
conditions shall be satisfied as of the Payment Date:
(a) The Registration Statement shall have become effective.
(b) The Sensormatic Common Stock issuable pursuant to this
Agreement shall have been accepted for listing on the NYSE, subject to
notice of issuance.
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.
8. INDEMNIFICATION.
8.1 GENERAL--STOCKHOLDERS. The Principal Stockholders, jointly
and severally, and the other Stockholders severally in proportion to the
respective percentages listed opposite their names under the heading
"Pre-Redemption Stockholder Percentage (their "Pre-Redemption Stockholder
Percentages"), shall indemnify, defend and hold harmless Sensormatic and GIC
(including any successor to all or a portion of GIC's business) from and
against, and reimburse Sensormatic and GIC for, (i) any loss, damage, liability
or expense, including any related loss, liability or expense under Section 8.5
(collectively, "Damages") arising out of or connected with any breach or
inaccuracy of any representation, warranty or covenant of GIC or any
Stockholder contained in this 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 8.6; and
(ii) Damages arising out of or relating to GIC's monitoring services or
operations through the Closing Date and which would not be subject to
indemnification under clause (i) of this Section 8.1, to the extent that such
Damages which are not reimbursed by insurance exceed $500,000, provided, that
the amount payable by the Stockholders pursuant to this clause (ii) shall not
exceed $1,000,000 in the aggregate.
8.2 TAX-RELATED--STOCKHOLDERS. The Principal Stockholders,
jointly and severally, and the other Stockholders, severally in proportion to
their respective Pre-Redemption Stockholder Percentages, shall further
indemnify, defend and hold harmless Sensormatic and GIC (including any
successor to all or a portion of GIC's business) from and against, and
reimburse
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Sensormatic and GIC for, any Damages (including any related penalties, fines
and interest) arising out of, or in connection with, any liability for Taxes of
GIC attributable to the period through and including December 31, 1994 (or, if
the Closing Date occurs after January 6, 1995, through and including the
Closing Date) (the "Pre-Closing Tax Period") or arising out of any transaction
consummated by GIC or any of its successors or affiliates during the
Pre-Closing Tax Period, except to the extent reflected on the Interim Balance
Sheet, on the books and records of GIC since the Interim Balance Sheet Date
(and disclosed to Sensormatic) or in Item 2.11 of the Disclosure Schedule. The
disclosure of the claim relating to excess compensation in Item 2.11(b) of the
Disclosure Schedule (the "Excess Compensation Claim") shall not alter or impair
the Stockholders' indemnification obligations hereunder with respect thereto.
8.3 PROCEEDINGS--STOCKHOLDERS. Sensormatic shall give to the
Stockholder Representative prompt written notice of any claim, action, suit or
proceeding which Sensormatic believes might give rise to indemnification under
Sections 8.1 or 8.2 and, if known, the facts giving rise to such claim and
copies of the complaint or claim in any such action, suit or proceeding. The
Stockholder Representative, on behalf of the Stockholders, shall have the right
to participate in, and (subject to the concurrence of Sensormatic that the
proviso at the end of this sentence is not applicable, not to 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 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, relating to Taxes (other than the Excess Compensation
Claim) 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 any of which cases 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 Stockholder Representative (on behalf of the
Stockholders), which consent shall not be unreasonably withheld by either of
them.
8.4 SENSORMATIC'S INDEMNIFICATION. Sensormatic shall indemnify,
defend and hold harmless the Stockholders from and against any Damages arising
out of or connected with (i) any breach or inaccuracy of any representation,
warranty or covenant of Sensormatic contained in this Agreement or in any
certificate or other instrument or document delivered pursuant to or in
connection with this Agreement, and (ii) arising under any performance bond
posted by any such Stockholder for the benefit of GIC; subject in the case of
clause (i), however, to the
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limitations set forth in Section 8.6. The Stockholder Representative shall
give Sensormatic prompt notice of any claim, action, suit or proceeding which
it believes might give rise to indemnification under this Section 8.4.
Sensormatic shall have the right 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 the Stockholder Representative. 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 the Stockholders), which consent shall not be
unreasonably withheld by either of them.
8.5 RELATED COSTS AND EXPENSES. Subject to the limitations set
forth in Section 8.6, each indemnifying party hereto shall, in addition to such
indemnifying party's obligations under Section 8.1, 8.2, 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 as a
result of any matter as to which the indemnified party is entitled to
indemnification under such Sections, or in defending 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 (provided such indemnified party prevails in such action for
enforcement).
8.6 LIMITATIONS ON INDEMNIFICATION. No payment shall be required
to be made by the Stockholders pursuant to Section 8.1(i), 8.2 or 8.5, or by
Sensormatic pursuant to Section 8.4(i) or 8.5, 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, exceeds $250,000 (the "Basket Amount") in the
aggregate; provided, however, that the foregoing limitation shall not apply to
the obligations of the parties under Sections 1, 9 or 10.7, or of the
Stockholders with respect to the Excess Compensation Claim. No right to
indemnification may be asserted under this Section 8 after the expiration of
eighteen months following 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 matters,
(ii) arising pursuant to Sections 8.1(ii), 8.4(ii), 9 or 10.7, or (iii) arising
out of or in connection with any claim as to which the notice required by
Section 8.3 or 8.4, as applicable, has been given on or prior to the expiration
of eighteen months following the Closing Date. The eighteen-month period
referred to in this Section 8.6 has been accepted by Sensormatic based on
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the express understanding that there will be no delay in any audit of or
relating to GIC caused by any of the Stockholders.
9. CONFIDENTIALITY AND NON-COMPETITION
9.1 NON-COMPETITION. Each of the Stockholders agrees that, for a
period of five years after the Closing Date, he or she shall not, anywhere in
the United States of America (or for such lesser area or such lesser period as
may be determined by a court of competent jurisdiction to be a reasonable
limitation on the competitive activity of such person) (except that clause (e),
below, shall not be subject to any limitation as to time or territory),
directly or indirectly:
(a) engage for or on behalf of any person or entity in a
competitive line of business to that carried on by GIC as of the
Closing Date;
(b) solicit or attempt to solicit business of any customers of GIC
(including prospective customers solicited by GIC) for products or
services the same or similar to those offered, sold, produced or under
development by GIC as of the Closing Date;
(c) otherwise divert or attempt to divert from GIC or Sensormatic
any business whatsoever;
(d) solicit or attempt to solicit for any business endeavor any
employee of GIC or Sensormatic, or solicit or attempt to solicit for
any electronic access control business purpose any employee of GIC or
Sensormatic;
(e) use the "Glen Industrial Communications" name, or any portion
thereof, except on behalf of GIC; or
(f) render any services as an officer, director, employee,
partner, consultant or otherwise to, or have any interest as a
stockholder, partner, lender or otherwise in, any person which is
engaged in activities which, if performed by such Stockholder, would
violate this Section 9.
The foregoing shall not prevent any Stockholder from purchasing or any of the
Stockholders from owning up to 2% (but not more than 5% collectively) of the
voting securities of any corporation, the securities of which are
publicly-traded and the ownership of which would otherwise violate this Section
9.1.
9.2 CONFIDENTIALITY. Each Stockholder understands and
acknowledges that as a result of his or her past involvement with GIC and its
business, he or she has become informed of, and had access to, confidential
information of GIC including, without limitation, inventions, trade secrets,
technical information, know-how, plans, specifications, marketing plans and
information,
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pricing information, identity of customers and prospective customers and
identity of suppliers, and that such information, even though it may have been
or may be developed or otherwise acquired by one or more of the Stockholders,
was and is the exclusive property of GIC and is held by such Stockholder in
trust and solely for the benefit of GIC or any successor or assign thereof,
including without limitation Sensormatic. No Stockholder shall at any time
reveal, report, publish, transfer or otherwise disclose to any person,
corporation or other entity, or use, any of GIC's or Sensormatic's confidential
information, except for use on behalf of GIC or Sensormatic in connection with
GIC's or Sensormatic's business, and except for such information which legally
and legitimately is or becomes of general public knowledge from authorized
sources other than any of the Stockholders.
9.3 REMEDIES. Because GIC and Sensormatic do not have an adequate
remedy at law to protect their business from any Stockholder's competition or
to protect their interests in their trade secrets, privileged, proprietary or
confidential information and similar commercial assets, each of Sensormatic and
GIC shall be entitled to injunctive relief, in addition to such other remedies
and relief that would, in the event of a breach of the provisions of this
Section 9, be available to Sensormatic. The provisions of this Section 9 shall
survive the Closing Date. For purposes of this Section 9, the term
"Sensormatic" includes Sensormatic's subsidiaries, joint ventures and other
affiliates.
10. MISCELLANEOUS.
10.1 TERMINATION. This Agreement may be terminated at any time
prior to the Closing Date (a) by mutual written consent of the Stockholder
Representative and Sensormatic; (b) by either the Stockholder Representative or
Sensormatic, by written notice to the other, if the Closing shall not have
occurred on or before February 15, 1995 (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 Stockholder
Representative if required to obtain the Tail Policy or any of the consents
listed on Item 2.5 of the Disclosure Schedule; or (c) by Sensormatic if
Sensormatic determines that any portion of any amended Disclosure Schedule (or
the lack thereof) delivered following the date hereof is unacceptable.
10.2 ENTIRE AGREEMENT. This Agreement, together with the schedules
hereto, the Disclosure Schedule and the exhibits thereto, 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 GIC and Sensormatic. Failure of any party to enforce any provision
of this Agreement shall not be construed as
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a waiver of its rights under such or any other provision. The respective
rights and obligations of the parties under this Agreement and any other
agreements between them (including without limitation the agreements referred
to in Section 5.7(a)) shall be cumulative, provided, that the respective terms
of the non-competition covenants contained in this Agreement and any other such
agreements shall run concurrently.
10.3 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, (b) five days after being deposited in any
United States post office enclosed in a postage prepaid registered or certified
envelope addressed, 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: Vice President of
Corporate Development
Telecopier number: 305-420-2964
and Vice President and Corporate Counsel
Telecopier number: 305-420-2561
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 GIC or the Stockholders:
Glen Industrial Communications, Inc.
979 Rollins Avenue
Rockville, Maryland 20852
Attention: Glen Kruglak
(being sometimes referred to herein as the
"Stockholder Representative")
Telecopier number: 301-816-0845
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With a copy to:
Bell, Boyd, and Lloyd
1615 L St. N.W., Suite 1200
Washington, D.C. 20036
Attention: Joel Rubinstein, Esq.
Telecopier number: 202-463-0678
The Stockholder Representative may be changed by a notice given in accordance
with this Section 10.3 and signed by all three Principal Stockholders.
10.4 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 GIC, 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. Nothing herein shall preclude
any Stockholder from holding his or her Stock in an individual retirement
account ("IRA") or other trust, or receiving Sensormatic Common Stock into an
IRA or other trust in exchange therefor, it being understood and agreed that
such Stockholder's individual Pre-Redemption Stockholder Percentage shall
reflect any Stock so held for purposes of Section 8.
10.5 PUBLIC ANNOUNCEMENTS. No public announcement or disclosure
with respect to this Agreement or the transactions contemplated hereby prior to
the Closing shall be made for or on behalf of any party without the prior
written 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, and except pursuant to the Registration
Statement.
10.6 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 8.6.
10.7 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
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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,
accountants 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 GIC and the
Stockholders prior to the Closing Date in connection with the transactions
contemplated by this Agreement may be paid by GIC, provided that such payment
is reflected on the December 31 Balance Sheet prior to the determination of the
amount payable to the Stockholders pursuant to the redemption.
10.8 RECORDS. The 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 GIC in the ordinary course of its
business following the Closing, during regular business hours following
reasonable prior notice to GIC in connection with preparation of tax returns
and similar matters.
10.9 GOVERNING LAW. This Agreement shall in all respects be
governed by and construed in accordance with the laws of the State of New York.
10.10 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.
10.11 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.
10.12 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.
10.13 CONSENT TO JURISDICTION. Each party hereto hereby irrevocably
submits himself, herself or itself to the
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jurisdiction of any federal or state court sitting in New 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.
(Signature Page Follows)
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<PAGE> 42
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first set forth above.
<TABLE>
<CAPTION>
SENSORMATIC ELECTRONICS CORPORATION GLEN INDUSTRIAL COMMUNICATIONS INC.
<S> <C>
By: /s/ TERRY PRICE By: /s/ GLEN KRUGLAK
--------------------------- ---------------------------
Terry Price Glen Kruglak
Group Vice President President
/s/ GLEN KRUGLAK /s/ ALAN KRUGLAK
--------------------------- ---------------------------
Glen Kruglak Alan Kruglak
/s/ MARTHA KRUGLAK /s/ JEFFREY CAPPEL
--------------------------- ---------------------------
Martha Kruglak Jeffrey Cappel
/s/ BARBARA KRUGLAK /s/ FRANCES KRUGLAK
--------------------------- ---------------------------
Barbara Kruglak Frances Kruglak
Alan Kruglak Special Trust,
Danielle Kruglak Special Trust,
NATIONAL CAPITAL HOLDINGS, INC. Eric Kruglak Special Trust
By: /s/ LOUIS M. MAYBERG By: /s/ ALAN KRUGLAK
--------------------------- ----------------------------
Louis M. Mayberg, President Alan Kruglak, Trustee
Glen Kruglak Special Trust,
Seth Kruglak Special Trust, Scott & Stringfellow, Inc.
Ilyssa Kruglak Special Trust, FBO Louis Mayberg SEP IRA
Rachel Kruglak Special Trust, Scott & Stringfellow, Inc.
Brian Kruglak Special Trust, FBO Phil Weintraub SEP IRA
Sean Kruglak Special Trust, Scott & Stringfellow, Inc.
Bryan Schneider Special Trust, FBO Manete Mayberg IRA
Lindsey Schneider Special Trust Irene Weintraub
By: /s/ GLEN KRUGLAK By: /s/ LOUIS M. MAYBERG
--------------------------- ---------------------------
Glen Kruglak, Trustee Louis M. Mayberg
</TABLE>
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<PAGE> 43
Disclosure Schedule
<TABLE>
<S> <C> <C>
Item 2.1(c) -- Jurisdictions Where Qualified
Item 2.1(d) -- Interests in Other Entities; Performance Bonds
Item 2.3 -- Conflicting Agreements, Etc.
Item 2.5 -- Consents
Item 2.6(a) -- Exceptions to GAAP
Item 2.6(b) -- Material Liabilities
Item 2.6(d) -- Installation Contracts
Item 2.6(e) -- Bids and Proposals
Item 2.6(f) -- Inventory Exceptions
Item 2.6(g) -- Equipment Agreements
Item 2.7(a) -- Liens, Title Expenses
Item 2.7(b) -- Realty
Item 2.8 -- Exceptions to Ordinary Course
Item 2.9(b) -- Product Claims
Item 2.10(a) -- Permits
Item 2.11(b) -- Tax Claims, Under Audit, Etc.
Item 2.12(a) -- Employee Plans
Item 2.13 -- Proceedings
Item 2.14 -- Listed Instruments
Item 2.15 -- Patents, Trademarks, Copyrights, Etc.
Item 2.16 -- Environmental Matters
Item 2.17 -- Major Suppliers and Customers
Item 4.1 -- Compensation Matters
</TABLE>
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<PAGE> 44
EXHIBIT A
FORM OF PURCHASE PRICE NOTE
(NON-NEGOTIABLE)
$13,500,000 New York, New York
January 5, 1995
FOR VALUE RECEIVED, Sensormatic Electronics Corporation
("Maker") promises to pay to Glen Kruglak, as Stockholder Representative
("Payee"), for the benefit of the Selling Stockholders of Glen Industrial
Communications, Inc. (the "Company") pursuant to the Stock Purchase Agreement
(the "Purchase Agreement") dated as of December 22, 1994 between Maker, the
Company and the Company's stockholders, to the Selling Stockholders' account at
Wertheim Schroder & Co., Incorporated, 787 Seventh Avenue, New York, New York
10019, or to such other account as Payee may from time to time designate in
writing in accordance with the Purchase Agreement, the principal sum of
THIRTEEN MILLION FIVE HUNDRED THOUSAND DOLLARS ($13,500,000) in lawful money of
the United States of America, without interest except as hereinafter set forth.
Such principal amount shall be payable in full on February 28, 1995 (the "Final
Payment Date"). Capitalized terms not otherwise defined herein shall be
defined as in the Purchase Agreement.
This Note may be paid in good funds or in Common Stock of
Maker (or a combination thereof), as set forth in Sections 1.2 and 1.4 of the
Purchase Agreement. This Note may be prepaid at any time in whole or in part
without additional consideration.
Each of the following events and occurrences shall constitute
an Event of Default under this Note:
(n) Maker shall fail to pay this Note in full on or
before the Final Payment Date, which failure to pay continues for one
business day following the giving of notice thereof by Payee on behalf
of the Selling Stockholders; or
(o) Any court of competent jurisdiction shall issue an
order (i) adjudicating Maker bankrupt or insolvent, (ii) appointing a
receiver, trustee or liquidator of Maker, which order shall continue
in effect and unstayed for 20 consecutive days or longer, or (iii)
approving a petition for, or effecting an arrangement in, bankruptcy
of Maker; or Maker shall (A) apply for or consent to the appointment
of a receiver, trustee or liquidator for Maker or for a material
portion of Maker's property, (B) as debtor, file a voluntary petition
in bankruptcy, or petition or answer seeking reorganization or an
arrangement with creditors or to take advantage of any bankruptcy,
reorganization, insolvency, readjustment of debt, dissolution or
liquidation law or
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<PAGE> 45
statute, or file an answer admitting the material allegations of a
petition filed against Maker under such a law, or (C) make a general
assignment for the benefit of creditors.
If an Event of Default shall occur and be continuing, Payee,
on behalf of the Selling Stockholders, shall have the right, by written notice
to Maker, to declare the entire unpaid principal amount hereof, together with
any accrued interest hereunder, to be immediately due and payable and all
outstanding obligations of Maker under this Note shall thereupon become due and
payable. Notwithstanding the preceding sentence, upon the occurrence of any
Event of Default referred to in clause (b), above, the entire unpaid principal
amount hereof, together with accrued interest hereunder, shall immediately
become due and payable without presentment, demand, protest or notice of any
kind.
Maker hereby agrees that if default be made in the payment of
the outstanding principal amount pursuant to the terms of this Note following
the date the same becomes due and payable (whether upon maturity or pursuant to
the preceding paragraph), or in the event that this Note is not paid in full
(in stock or cash or a combination thereof) within 30 days after the date
hereof, Payee shall be entitled to receive interest, commencing on the earlier
of such 30th day, the Final Payment Date or the occurrence of an Event of
Default, on the entire unpaid principal sum at the rate from time to time
publicly announced by Citibank N.A., as its prime or base rate. This clause,
however, shall not be construed as an agreement or privilege to extend the date
of the payment of this Note, nor as a waiver of any other right or remedy
accruing to Payee by reason of any such default. Maker shall also pay all
costs and expenses, including reasonable attorneys' fees, incurred by Payee
collecting or attempting to collect the debt evidenced hereby following a
default by Maker in making any payment due hereunder, including without
limitation costs and expenses incurred by Payee in enforcing any remedy
provided for under the Pledge Agreement, but not including any costs, expenses
and fees arising out of any such action which results in a judgment in favor of
Maker.
This Note is secured by the Pledge and Security Agreement (the
"Pledge Agreement") of even date herewith between Maker, certain Selling
Stockholders and Christy & Viener, as Pledge Agent.
This Note may not be changed orally, but only by an agreement
in writing signed by the party against whom enforcement of any waiver, change,
modification or discharge is sought.
Maker and all others who may become liable for the payment of
all or any part of the indebtedness evidenced by this
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<PAGE> 46
Note do hereby severally waive presentment and demand for payment, notice of
dishonor, protest and notice of protest and non- payment. No release of any
security for the indebtedness evidenced hereby or extension of time for payment
of this Note or any installment hereof, and no alteration, amendment or waiver
of any provision of this Note or the Pledge Agreement made by agreement between
Payee and any other person or party shall release, discharge, modify, change or
affect the liability of Maker under this Note or the Pledge Agreement.
Maker represents that Maker has full power, authority and
legal right to execute and deliver this Note and the Pledge Agreement and that
this Note and the Pledge Agreement constitute valid and binding obligations of
Maker.
This Note may not be negotiated, assigned, transferred or
hypothecated by Payee without the express written consent of Maker.
This Note shall be governed and construed in accordance with
the laws of the State of New York and the applicable laws of the United States
of America.
Whenever used, the singular number shall include the plural,
the plural the singular, and the words "Payee" and "Maker" shall include their
respective successors and assigns.
IN WITNESS WHEREOF, Maker has duly executed this Note on the
day and year first above written.
SENSORMATIC ELECTRONICS CORPORATION
By____________________________
Name:
Title:
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<PAGE> 1
EXHIBIT 5
CHRISTY & VIENER
620 FIFTH AVENUE
NEW YORK, NEW YORK 10020-2457
(212) 632-5500
(212) 632-5555 (fax)
January 12, 1995
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 450,000 shares of the Corporation's Common Stock
issued or to be issued to certain of the stockholders of Glen Industrial
Communications, Inc. ("GIC") pursuant to the Stock Purchase Agreement (the
"Agreement") dated as of December 22, 1994 among the Corporation, GIC 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
Sensormatic Electornics Corporation
Page 2 January 12, 1995
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,
/s/ CHRISTY & VIENER
<PAGE> 1
EXHIBIT 23(B)
Consent of Independent
Certified Public Accountants
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3 filed January 12, 1995) and related Prospectus
of Sensormatic Electronics Corporation for the Registration of 450,000 shares
of its common stock and to the incorporation by reference therein of our report
dated August 8, 1994, with respect to the consolidated financial statements and
schedules of Sensormatic Electronics Corporation included in its Annual Report
(Form 10-K) for the year ended June 30, 1994, filed with the Securities and
Exchange Commission.
/s/ ERNST & YOUNG LLP
West Palm Beach, Florida
January 11, 1995
<PAGE> 1
EXHIBIT 23(C)
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
Sensormatic Electronics Corporation on Form S-3 of our report dated May 18,
1994 (December 29, 1994 as to Notes 2, 7, 8 and 11 which report expresses an
unqualified opinion as to the financial statements of Knogo Corporation and
includes explanatory paragraphs referring to the consummation of the Merger
between Knogo Corporation and Sensormatic Electronics Corporation), relating to
the consolidated financial statements of Knogo Corporation for the year ended
February 28, 1994 appearing in the Current Report on Form 8-K of Sensormatic
Electronics Corporation filed January 11, 1995 and to the reference to us under
the heading "Experts" in the Prospectus, which is part of this Registration
Statement.
/s/ DELOITTE & TOUCHE LLP
Jericho, New York
January 9, 1995
