Exhibit 10.8

                     CONTRIBUTION AND DIVESTITURE AGREEMENT


                 CONTRIBUTION AND DIVESTITURE AGREEMENT dated as of _______
___, 1994, among KNOGO CORPORATION, a New York corporation (the "Company"), and
KNOGO NORTH AMERICA INC., a Delaware corporation and a wholly-owned subsidiary
of the Company ("Knewco").


                              W I T N E S S E T H:

                 WHEREAS, the Company is engaged principally in the business of
developing, manufacturing and marketing electronic article surveillance, closed
circuit television and other products to deter and detect shoplifting and
employee theft (the "Business"); and

                 WHEREAS, the parties hereto are parties to the Merger
Agreement, dated as of August 14, 1994 (the "Merger Agreement"), providing for
the merger (the "Merger") of the Company with and into Sensormatic Electronics
Corporation, a Delaware corporation ("Sensormatic"); and

                 WHEREAS, it is contemplated that prior to the Merger, the
Company shall contribute to Knewco certain of its assets used in the Business
in the fifty states of the United States, the District of Columbia, Canada and
Puerto Rico (the "Knewco Territory") and the goodwill and operations of the
Business in the Knewco Territory, and that Knewco shall assume certain of the
liabilities relating to such assets and operations, as more particularly set
forth below; and

                 WHEREAS, it is further contemplated that following such
contribution and prior to the Effective Time (as such term is defined in the
Merger Agreement), the Company will divest itself of the business of Knewco
either by distributing all of the shares of Common Stock, par value $.01 per
share, of Knewco (the "Knewco Common Stock") to its stockholders (the "Knewco
Stock Distribution") or selling all of the shares of Knewco Common Stock to a
third party (the "Knewco Sale"), or an alternative transaction as contemplated
in Section 11.7 of the Merger Agreement, in either case as contemplated in
Section 3 (the "Divestiture"), so that after the Divestiture, the Company will
own no shares of capital stock of Knewco;

                 WHEREAS, it is the intention of the parties that following the
Divestiture, the Company will retain its assets used in, and the goodwill and
operations of, the Business outside the Knewco Territory (the "Retained
Operations"), retain the rights and liabilities relating thereto and certain
other liabilities, and retain the worldwide rights to certain technology; and

                 WHEREAS, the parties intend that in the event of a Knewco
Stock Distribution, the transactions contemplated hereby qualify as a tax-free
reorganization and spin-off under Sections 368(a)(1)(D) and 355 of the Internal
Revenue Code of 1986, as amended;

                 NOW, THEREFORE, in consideration of the mutual agreements
contained herein and in the other agreements and instruments executed in
connection with this Agreement, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:
<PAGE>

                 1.       CONTRIBUTION OF ASSETS.

                 1.1      CONTRIBUTION OF ASSETS.  On the Divestiture Date (as
such term is defined in Section 2.1), subject to the terms and conditions of
this Agreement, the Company shall contribute, convey, assign, transfer and
deliver (collectively, "contribute") to Knewco all of the right, title and
interest of the Company in and to the business operations and related goodwill
of the Company in the Knewco Territory, and the Company's assets and properties
located in the Knewco Territory related to such Business operations, as more
particularly set forth below, subject to the exclusions set forth in Section
1.2 (the "Contributed Assets").  The Contributed Assets include the assets
reflected on the pro forma balance sheet of Knewco as of May 31, 1994 and the
schedules thereto, set forth as Annex A (the "May Pro Forma Balance Sheet"),
and include also assets acquired thereafter in the ordinary course of the
Business in the Knewco Territory and consistent with past practice, and in
accordance with the principles used to allocate assets for the purposes of the
Pro Forma Balance Sheet (the "Allocation Principles"), (as such assets shall be
reflected, as of the Divestiture Date, on the Divestiture Date Balance Sheet
(as defined in Section 7.6)), and are comprised of:

                 (a)      real property owned in fee and leases, easements and
         other rights and interests in real property owned by others, to the
         extent located in the Knewco Territory, including without limitation
         the facilities located in Hauppauge, New York, as set forth in
         Schedule I (the "Contributed Realty");

                 (b)      shares of all of the capital stock of Knogo Caribe
         Inc. ("Caribe") (whose assets include the Cidra, Puerto Rico
         manufacturing facility but will not include certain financial assets
         to be transferred to the Company and/or its subsidiaries as described
         in Section 1.6 (the "Caribe Financial Assets");

                 (c)      machinery, equipment, plant, vehicles, office
         furniture and equipment, computer hardware, tools, spare parts, other
         chattels, fixtures and leasehold improvements located in the Knewco
         Territory;

                 (d)      inventories of raw materials, supplies,
         work-in-process and finished goods located in the Knewco Territory, in
         amounts appropriate to the operations of Knewco in the Knewco
         Territory;

                 (e)      accounts receivable arising from the operations of
         the Business in the Knewco Territory, as listed or described on
         Schedule II, which shall not include any accounts receivable due from
         any subsidiaries of the Company (other than Caribe) (collectively, the
         "Acquired Subsidiaries") or any accounts receivable from customers
         outside the Knewco Territory or for products intended for use outside
         the Knewco Territory;

                 (f)      all purchase and other orders from, and agreements
         with, customers relating to the sale, lease or maintenance of products
         for use in the Knewco Territory;

                 (g)      all other contracts, agreements, equipment leases,
         licenses and other instruments relating to the operation of the
         Business in the Knewco Territory, all material items of which are
         listed or described on Schedule III (together with the orders and
         agreements referred to in Section 1.1(f), the "Assigned Instruments);

                 (h)      United States and Canadian patents, trademark and
         trade name registrations, all applications therefor on the date
         hereof, and other intellectual property of the Company,
         used or useful in the Business in the Knewco Territory, as
         listed or described in Schedule IV, including without limitation the
         right to  file patents and patent applications in the Knewco Territory
         corresponding to any of the patents and patent applications of the
         Company outside the Knewco Territory, or with respect to any
         intellectual property retained by the Company, and all of the
         Company's right to use the "Knogo" name and the Company's other
         trademarks and trade names in the Knewco Territory, and any rights or
         licenses held by the Company with respect to the use in the Knewco
         Territory of such intellectual property owned by others (pursuant to
         which Knewco shall have the exclusive right in the Knewco Territory)
         (including exclusivity as to the Company and Sensormatic or any person
         claiming through either of them) to make or have made, use, market,
         distribute, sell, lease, install, service and maintain the Company's
         products and use the "Knogo" name and the Company's other trademarks
         and trade names in the Knewco Territory (collectively, the
         "Contributed Intellectual Property"), subject to certain rights
         relating thereto as set forth in the License Agreement referred to in
         Section 2.2(j);

                 (i)      originals or true and complete copies of books and
         records, including customer and supplier lists, employee records, tax
         records, credit files, quotations and bids, and all sales literature
         and specifications relevant to the operation of the Business in the
         Knewco Territory;

                 (j)      all material governmental licenses, authorizations,
         consents and approvals required to carry on the Business in the Knewco
         Territory as now conducted, to the extent transferable;

                 (k)      cash and cash equivalents in an amount determined
         pursuant to Section 1.5;

                 (l)      prepaid expenses and deferred charges, as such
         prepaid expenses are described on Schedule V; and

                 (m)      the goodwill of the Business in the Knewco Territory,

all as the same exist on the date of this Agreement and shall exist on the
Divestiture Date, subject only to the disposition of any assets in the ordinary
course of business.  No contract or agreement which is by law not assignable
without the consent of any party thereto shall be deemed assigned pursuant to
this Agreement unless and until such consent (or a waiver therefrom) is given.
The Company agrees to use its best efforts to obtain prior to the Divestiture
Date all such consents and waivers.  If any such consent or waiver is not
obtained before the Divestiture Date and the Divestiture is nevertheless
consummated, the Company agrees to continue to use its best efforts to obtain
all such consents or waivers as have not been obtained prior to such date and
further agrees to cooperate with Knewco after such date in any reasonable
arrangement (such as subcontracting, sublicensing or subleasing) designed to
provide for Knewco, on terms no less favorable than the Company is entitled to,
the benefits under the applicable contract or agreement, including, without
limitation, enforcement, at the cost and for the benefit of Knewco, of any and
all rights of the Company against any other party thereto arising out of the
breach or cancellation thereof by such party otherwise.

                 Failure to specifically identify on applicable Schedules
hereto any assets, property or rights of the Company that are expressly
intended to be contributed to Knewco pursuant to this Agreement shall not
exclude such assets, property or rights from the Contributed Assets.

<PAGE> 
                 1.2      EXCLUDED ASSETS.  The Contributed Assets shall not
include, in addition to the Acquired Subsidiaries, any of the assets of the
Company used in or relating to the Business outside of the Knewco Territory,
including, without limitation, the goodwill of the Business outside of the
Knewco Territory (collectively, the "Retained Assets").  Without limiting the
foregoing, the Company shall in all events retain, and the Retained Assets
shall include, all patents, trademark and trade name registrations, all
applications therefor pending on the date hereof, and all other intellectual
property used or useful in the Business outside the Knewco Territory (pursuant
to which the Company shall have the exclusive right outside the Knewco
Territory (including exclusivity as to the Company and persons claiming through
the Company) to make or have made, use, market, distribute, sell, lease,
install, service or maintain the Company's products outside the Knewco
Territory), including without limitation (i) the right to apply for, receive
and own patents in any jurisdiction outside the Knewco Territory corresponding
to any of the patents and patent applications included in the patent rights in
the Knewco Territory or other intellectual property included in the Contributed
Assets, (ii) all know-how required for the manufacture or supply of the
products used in the operation of the Business outside of the Knewco Territory,
and (iii) the exclusive right to use the "Knogo" name and the Company's
trademarks and trade names outside of the Knewco Territory (collectively, the
"Retained Intellectual Property"), certain rights relating to which shall be
the subject of the License Agreement.  The parties hereto acknowledge that they
will own in common certain know-how and technical information, which shall be
included in both the Contributed Intellectual Property and the Retained
Intellectual Property (the "Common Intellectual Property").  The Common
Intellectual Property shall be subject to the exclusive rights of Knewco inside
the Knewco Territory contemplated by Section 1.1(h) and the exclusive rights of
the Company outside the Knewco Territory contemplated by this Section 1.2, and
shall be further subject to the License Agreement.

                 1.3      ASSUMPTION OF LIABILITIES.  In connection with  the
contribution of the Contributed Assets, Knewco shall assume and agree to pay,
perform and discharge, as and when due, and shall hold the Company harmless
from, all of the liabilities (including contingent liabilities) and obligations
of the Company directly relating to (i) the employees who become employees of
Knewco in connection with the Divestiture, (ii) Knewco's customers (including
customers of the Company prior to the Divestiture Date) in the Knewco
Territory, (iii) the Company's products sold or leased to such customers or
(iv) the assets and properties of the Company located in the Knewco Territory
(the items referred to in clauses (i) through (iv) being sometimes referred to
herein as the "Knewco Related Items") arising prior to and following the
Divestiture Date, except as expressly excluded below (the "Assumed
Liabilities"), including:

                 (a)      current liabilities reflected on the May Pro Forma
         Balance Sheet or accrued following the date thereof by the Company in
         connection with the Business in the Knewco Territory and in accordance
         with the Allocation Principles;

                 (b)      payroll liabilities to employees of the Company
         located in the Knewco Territory who become employees of Knewco for
         services rendered prior to the Divestiture Date, and benefit plan
         obligations, liabilities for accrued vacation, sick and holiday time,
         all other compensation due to such employees, and employment-related
         claims or liability to such employees (Knewco shall not assume such
         employment-related liabilities of employees of the Company who do not
         become employed by Knewco);

                 (c)      the Company's obligations under the Assigned
         Instruments;

                 (d)      any liability (including contingent liabilities) of
         the Company with respect to any tort, product liability, general
         liability or other claim directly relating to the Knewco Related
         Items;
         
                 (e)      any liability under any laws concerning the disposal
         or release of hazardous substances, public health and safety, or
         pollution or protection of the environment arising out of or relating
         to any of the Contributed Realty;         

                 (f)      all warranty obligations for products of the Company
         sold or delivered in the Knewco Territory or for use in the Knewco
         Territory;

                 (g)      any liability of the Company for fines, penalties,
         damages or other like amounts payable by the Company to any government
         or governmental agency or instrumentality directly relating to the
         Knewco Related Items;

                 (h)      real property, personal property, sales and payroll
         taxes of the Company directly relating to the Knewco Related Items;
         and

                 (i)      all other liabilities and obligations arising out of
         the operation of the business of Knewco following the Divestiture
         Date.

Such liabilities, subject to the exclusions set forth below, are referred to
collectively as the "Assumed Liabilities".  In no event shall Knewco assume or
be deemed to have assumed any of the following debts, obligations, liabilities
or commitments of the Company:

                         (i)      except as set forth in Section 1.3(h), any
         liability for Taxes (as such term is defined in the Merger Agreement)
         of the Company or any Acquired Subsidiary, and any Taxes imposed on
         the Company or Caribe arising as a result of the transfer of the
         Caribe Financial Assets as referred to in Section 1.6 or the
         transactions contemplated by this Agreement (other than pursuant to a
         Knewco Sale) or by the Merger Agreement;

                        (ii)      any obligations of the Company to the banks
         listed on Schedule VI (the "Banks") arising under their respective
         loans to the Company listed on Schedule VI (the "Bank Loans");

                       (iii)      except as provided in Section 1.3(b) and
         Section 1.4, any liability to employees of the Company or to any of
         the Company's employee benefit plans;

                        (iv)      any liability of the Company or Knewco for
         expenses reasonably incurred in negotiating, preparing or consummating
         the Merger or the transactions contemplated in this Agreement
         (including the Knewco Stock Distribution but not including the Knewco
         Sale); or

                        (v)       all other liabilities of the Company not 
         expressly assumed by Knewco as Assumed Liabilities.

                          Failure to specifically identify on applicable
Schedules hereto any liabilities or obligations of the Company that are
expressly intended to be assumed by Knewco pursuant to this Agreement shall not
exclude such liabilities or obligations from the Assumed Liabilities.

                          1.4     EMPLOYEE BENEFIT PLANS.

                          (a)     On or before the Divestiture Date, Knewco
shall adopt the Company Retirement Savings 401K Plan, subject to such amendment
as Knewco deems appropriate.

                          (b)     Knewco will assume the currently existing
severance and vacation benefit arrangements covering the Company employees who
became Knewco employees immediately after the Divestiture Date (each, a 
"Transferred Employee") and, for that purpose, shall recognize service with the 
Company; provided, however, that in the event any severance payments are made 
by the Company in accordance with Section 1.4(c), service with the Company 
shall not be recognized by Knewco for purposes of the severance arrangements 
covering the recipients of such payments.

                          (c)     The parties intend that, except as provided
below, no severance pay shall become payable as a result of the transfer of the
Transferred Employees to Knewco in connection with the consummation of the
transactions contemplated by this Agreement; however, in the event that any
severance pay shall become so payable, such severance pay shall be paid by the
Company.  The Company shall remain liable for the termination payments under
the employment contracts of Robert Abbott, Arthur J.  Minasy, and Thomas A.
Nicolette, provided in the case of Mr. Nicolette that he enters into an
agreement with the Company to the effect that for a two-year period (subject to
such payments being made to him) he will not compete with the Company other
than on behalf of Knewco in the Knewco Territory and to the extent Knewco is
permitted to hereunder.

                          (d)     Knewco shall endeavor to establish as of or
promptly after the Divestiture Date medical, disability and life insurance
plans and other welfare benefits substantially comparable in the aggregate to
the corresponding insurance plans and welfare benefits maintained and/or
provided by the Company in favor of the Transferred Employees.

                          1.5     TARGET BOOK VALUE; ADJUSTMENTS.  The net
worth of Knewco on the Divestiture Date shall equal $24,011,000.00, reduced by
the amount of any losses resulting from the Company's not conducting its
business in the Knewco Territory following the date hereof in the ordinary
course of business and consistent with past practices and policies, other than
the transactions contemplated by this Agreement and the Merger Agreement, or as
expressly consented to by Sensormatic (the "Target Book Value").  For purposes
of this Section 1.5 and Section 7.6, neither the Target Book Value nor the net
worth of the Company at the Divestiture Date shall reflect write-downs of the
Company's assets which write-downs are not reflected on the Pro Forma Balance
Sheet.  For purposes of estimating the amount of cash and cash equivalents to
be contributed to Knewco for purposes of Section 1.1(k), the Company and Knewco
shall prepare an estimated balance sheet as of the Divestiture Date, reasonably
acceptable to Sensormatic, giving effect to the contribution by the Company to
Knewco of the Contributed Assets (the "Contribution") (the "Estimated Balance
Sheet").  The Estimated Balance Sheet shall be prepared in accordance with
generally accepted United States accounting principles consistently applied
("GAAP"), and the Allocation Principles, and shall be consistent with the May
Pro Forma Balance Sheet.  Based on the Estimated Balance Sheet, the cash and
cash equivalents to be contributed to Knewco shall be increased or reduced in
order that the net worth of Knewco as reflected on the Estimated Balance Sheet
shall equal the Target Book Value.  In addition to cash and cash equivalents,
other current assets may be reduced if required so that the net worth of Knewco
as reflected on the Estimated Balance Sheet will not exceed the Target Book
Value.  Following the Divestiture Date, there shall be a final cash adjustment
as hereinafter set forth in Section 7.6.

                          1.6     TRANSFER OF CARIBE FINANCIAL ASSETS.
Immediately prior to the Contribution, Caribe shall transfer to the Company or
another subsidiary or subsidiaries certain cash, cash equivalents and any other
financial assets listed on Schedule VII.

                          1.7     ISSUANCE OF KNEWCO STOCK TO THE COMPANY.  If
the Divestiture shall be effected by the Knewco Stock Distribution, Knewco
shall issue to the Company, contemporaneously with the contribution by the
Company to Knewco of the Contributed Assets and the assumption by Knewco of the
Assumed Liabilities, as contemplated in Sections 1.1 and 1.3, respectively,
such additional number of shares of Knewco Common Stock as may be required in
order for the Company to fulfill its obligations pursuant to Section 3.2 and
any additional shares required in connection with outstanding stock options of
the Company.

<PAGE>   
                1.8     PROCEEDS OF KNEWCO SALE.  If the Divestiture shall be
effected by the Knewco Sale, the proceeds shall be retained by the Company 
(except as contemplated in the Merger Agreement) and the Merger Consideration 
per Share (as defined in the Merger Agreement) shall be increased in accordance
with the applicable provisions of the Merger Agreement.

                2.      CLOSING.

                2.1     CLOSING; DIVESTITURE DATE.  Subject to Section 11.1,
the closing of the transactions contemplated in this Agreement (the "Closing")
shall take place at such place and on such date (within three business days
after all of the conditions precedent set forth in Section 4 to be satisfied
prior to the Closing have been satisfied or waived) as shall be agreed upon by
the parties (the "Divestiture Date").

                2.2     COMPANY DELIVERIES.  At the Closing, the Company shall
execute and deliver to Knewco:

                (a)     an Instrument of Assignment substantially in the form
     of Exhibit A hereto (the "Instrument of Assignment");

                (b)     bargain and sale deeds with respect to such of the
     Contributed Realty as is owned in fee by the Company;

                (c)     assignments of the leases included in the Contributed
     Realty;

                (d)     duly executed assignments of the United States and
     Canadian patents and patent applications and trademarks listed on 
     Schedule IV;

                (e)     duly executed assignments of the Assigned Instruments;

                (f)     a written acknowledgement by Banks that hold any liens
     (the "Bank Liens") on the Contributed Assets arising out of the Bank 
     Loans that such Bank Liens will be released upon consummation of the 
     Merger;

                (g)     if the Divestiture shall be effected by the Knewco
     Stock Distribution, a duly executed Distribution Agency Agreement (the
     "Distribution Agency Agreement") between the Company and transfer agent 
     (the "Distribution Agent") relating to the Knewco Stock Distribution;

                (h)     THE ESTIMATED BALANCE SHEET;

                (i)     cash and cash equivalents in an amount determined
     pursuant to Section 1.5;

                (j)     a License Agreement substantially in the form of 
     Exhibit B hereto (the "License Agreement"); and

                (k)     a Supply Agreement substantially in the form of Exhibit
     C hereto.

                2.3     KNEWCO DELIVERIES.  At the Closing, Knewco shall
execute and deliver to the Company:

                (a)     an Instrument of Assumption substantially in the form
     of Exhibit D hereto (the "Instrument of Assumption");

                (b)     in each case where Knewco is a party to any agreement
     or instrument referred to in Section 2.2, a duly executed counterpart of 
     such agreement or instrument;

                (c)     if the Divestiture shall be effected by the Knewco
     Stock Distribution, a certificate or certificates representing all of the
     outstanding shares of common stock of Knewco, in the number determined in
     accordance with Section 3.2(f), for delivery to the Distribution Agent for
     distribution pursuant to the Distribution Agency Agreement; and

                (d)     if the Divestiture shall be effected by the Knewco
     Sale, a copy of all of the closing documents to such transaction.

                3.      THE DIVESTITURE.

                3.1     COOPERATION PRIOR TO THE DIVESTITURE.  The Company
shall effect the Divestiture either through the Knewco Stock Distribution, as
contemplated in Section 3.2, or through the Knewco Sale, as contemplated in
Section 3.3.  In either case, as promptly as practicable after the date hereof
and prior to the commencement of business on the Divestiture Date, the Company
and Knewco shall take all such action as may be necessary or appropriate to
effect the Divestiture through either of such transactions as determined by the
Company, including without limitation the specific actions set forth in Section
3.2 or Section 3.3, as applicable.

                3.2     THE KNEWCO STOCK DISTRIBUTION.

                (a)     The Company and Knewco shall prepare, and Knewco shall
     file with the Securities and Exchange Commission (the "SEC"), a 
     registration statement on Form 10 (the "Form 10") to effect the 
     registration of the Knewco Common Stock pursuant to the Securities 
     Exchange Act of 1934, as amended, and the rules and regulations 
     promulgated thereunder (the "Exchange Act").  The Company and Knewco shall 
     use reasonable efforts to cause the Form 10 to be declared effective under 
     the Exchange Act or, if the Company reasonably determines that the Knewco 
     Stock Distribution may not be effected without registering the Knewco 
     Common Stock pursuant to the Securities Act of 1933, as amended, and the 
     rules and regulations promulgated thereunder (the "Securities Act"), the 
     Company shall use its best efforts to cause the Knewco Common Stock to be 
     registered pursuant to the Securities Act, and thereafter effect the 
     Knewco Stock Distribution in accordance with the terms of this Agreement,
     including, without limitation, by preparing and filing on an appropriate 
     form a registration statement under the Securities Act covering the 
     Knewco Common Stock and using its best efforts to cause such registration 
     statement to be declared effective.

                (b)     The Company and Knewco shall cooperate in preparing,
     filing with the SEC and causing to become effective any registration 
     statements or amendments thereto which are appropriate to reflect the 
     establishment of, or amendments to, any employee benefit and other plans 
     contemplated in this Agreement to be in effect for Knewco.

                (c)     The Company and Knewco shall take all such action as
     may be necessary or appropriate under any applicable state securities or 
     "Blue Sky" laws or other applicable laws in connection with the 
     transactions contemplated in this Section 3.2.

                (d)     The Company and Knewco shall prepare, and Knewco shall
     file and seek to make effective, an application to permit listing or 
     quotation of the Knewco Common Stock on ______________.

<PAGE> 
                (e)     The Company's Board of Directors (or any duly appointed
     committee thereof) shall in its sole discretion establish the record date 
     for the Knewco Stock Distribution (the "Distribution Record Date"), and the
     Divestiture Date and any appropriate procedures in connection with the 
     Knewco Stock Distribution (subject in each case to the provisions of 
     applicable law); provided that in no event shall the Knewco Stock 
     Distribution occur prior to such time as (i) the Form 10 (or other 
     registration statement referred to in Section 3.2(a)) shall have been 
     declared effective by the SEC, (ii) the Knewco Common Stock shall have 
     been approved for listing or quotation in accordance with Section 3.2(d) 
     and (iii) the conditions set forth in Section 4 have been satisfied or 
     waived.

                (f)     Subject to Section 4, following the Distribution Record
     Date, but prior to the Divestiture Date, the Company shall deliver to the
     Distribution Agent one or more share certificates representing all of the
     outstanding shares of Knewco Common Stock to be distributed in the Knewco 
     Stock Distribution and shall instruct the Distribution Agent to 
     distribute on the Divestiture Date one share of Knewco Common Stock for 
     each share of Common Stock, par value $.01 per share, of the Company, held 
     by holders of record of such stock on the Distribution Record Date.  
     Knewco agrees to provide all share certificates that the Distribution 
     Agent shall require in order to effect the Knewco Stock Distribution.  All 
     shares of Knewco Common Stock issued in the Knewco Stock Distribution 
     shall be duly authorized, validly issued, fully paid, non-assessable and 
     free of preemptive rights.

                (g)     Immediately upon consummation of the Knewco Stock
     Distribution, the Company shall not hold or beneficially own directly or
     indirectly any shares of Knewco Common Stock.

                3.3     KNEWCO SALE.

                (a)     Subject to the provisions of Section 5.9 of the Merger
     Agreement, the Company's Board of Directors (or any duly appointed 
     committee thereof) shall in its sole discretion establish any appropriate 
     procedures in connection with the consideration and approval of proposals 
     to purchase Knewco pursuant to the Knewco Sale (subject in each case to 
     the provisions of applicable law) and shall approve a suitable agreement 
     of purchase and sale to effect such transaction with a third party 
     purchaser; however, any such agreement shall not commit the Company to any 
     liability for representations or warranties, or any indemnity or any other 
     obligations, to the purchaser of Knewco that survive the closing of such 
     transaction, other than Sensormatic's obligations under this Agreement, 
     in accordance with the terms hereof, and under the License Agreement and 
     the Supply Agreement, in accordance with their respective terms.

                (b)     The Company shall cause the purchaser under the Knewco
     Sale to acknowledge and accept this Agreement as contemplated on the 
     signature page hereof.

                (c)     The Company and Knewco shall take all such action as
     may be necessary or appropriate under any applicable federal securities 
     laws, state securities or "Blue Sky" laws, or other applicable laws in 
     connection with the transactions contemplated in this Section 3.3.

                (d)     Immediately upon the effectiveness of the Knewco Sale,
     the Company shall not hold or beneficially own directly or indirectly any
     equity interest in the Contributed Assets.

                3.4     COMPANY APPROVAL OF CERTAIN KNEWCO ACTIONS.  Unless
otherwise provided in this Agreement, the Company shall cooperate with Knewco
in effecting, and if so requested by Knewco the Company shall, as the sole
stockholder of Knewco, ratify any actions that are reasonably necessary or 
desirable to be taken by Knewco to effectuate, prior to the Divestiture Date, 
the transactions contemplated in this Agreement in a manner consistent with the 
terms of this Agreement, including, without limitation, the following: (a) the 
preparation and approval of the Certificate of Incorporation and By-laws of 
Knewco to be in effect at the Divestiture Date; (b) the election or appointment
of directors and officers of Knewco to serve in such capacities commencing on 
the Divestiture Date; (c) the adoption, preparation and implementation of 
appropriate plans, agreements and arrangements for Knewco employees and Knewco 
non-employee directors (including, without limitation, plans, agreements or 
arrangements pursuant to which securities of Knewco would be acquired by 
employees); (d) the registration under applicable securities laws of any 
securities of Knewco issued or distributed pursuant to Section 3.2 and any 
securities issuable pursuant to employee benefit plans as contemplated in 
clause (c) above; and (e) the adoption of an appropriate purchase and sale 
agreement with a third party in connection with a Knewco Sale.

                3.5     TERMINATION OF CERTAIN CLAIMS.

                (a)     As of the effectiveness of the Divestiture, Knewco
shall have no claims against the Company based on any breach by the Company or
its affiliates of any obligations under this Agreement that occurred prior to
the effectiveness of the Divestiture, all of such claims being hereby
irrevocably waived and terminated as of such time of effectiveness; provided
that the foregoing shall not limit the Company's liability for any breach by
the Company or its affiliates of any obligation under this Agreement that
occurs following the effectiveness of the Divestiture, including, without
limitation, the Company's obligation to indemnify Knewco as set forth herein,
or under the License Agreement and the Supply Agreement.

                (b)     As of the effectiveness of the Divestiture, the Company
shall have no claims against Knewco based on any breach by Knewco or its
affiliates of any obligations under this Agreement that occurred prior to the
effectiveness of the Divestiture, all of such claims being hereby irrevocably
waived and terminated as of such time of effectiveness; provided that the
foregoing shall not limit Knewco's liability for any breach by Knewco or its
affiliates of any obligation under this Agreement that occurs following the
effectiveness of the Divestiture, including, without limitation, Knewco's
obligation to indemnify the Company as set forth herein, or under the License
Agreement and the Supply Agreement.

                4.      CONDITIONS.

                4.1     GENERAL CONDITION.  The respective obligations of each
party hereto to consummate the Divestiture and to perform all other obligations
set forth herein is subject to the satisfaction or waiver (as provided for
therein) of all of the conditions set forth in Section 6 and Section 7 of the
Merger Agreement (other than the Divestiture and the conditions set forth in
Sections 6.8 and 7.7 of the Merger Agreement).

                4.2     CONDITIONS TO THE OBLIGATIONS OF THE COMPANY.  The
obligations of the Company to consummate the Divestiture and to perform all 
other obligations set forth herein is subject to the satisfaction of the 
condition that Knewco shall have effected its assumption of the Assumed 
Liabilities, as contemplated in Section 1.3.

                4.3     CONDITIONS TO THE OBLIGATIONS OF KNEWCO. The
obligations of Knewco to consummate the transactions contemplated herein and to
perform all other obligations set forth herein is subject to the satisfaction
or waiver of the conditions that (a) the Company shall have contributed to
Knewco the Contributed Assets, as contemplated in Section 1.1, and (b) the
Company shall have obtained an acknowledgement from the Banks with respect to
the release of the Bank Liens, as contemplated in Section 2.2(f).


<PAGE> 
                5.      ACTS AND INSTRUMENTS OF TRANSFER.

                5.1     ACTS AND INSTRUMENTS.  Whenever reasonably requested to
do so by Knewco, on or after the Divestiture Date, the Company shall do,
execute, acknowledge and deliver all such acts, bills of sale, assignments,
confirmations, consents, other instruments of assignment, transfer and
conveyance, and any and all such further instruments and documents, in form
reasonably satisfactory to Knewco and its counsel, as shall be reasonably
necessary or advisable to carry out the intent of this Agreement and to vest in
Knewco all the right, title and interest of the Company in and to the
Contributed Assets.  The Company shall take such steps as may be required to
put Knewco in actual possession and control of the Contributed Assets as of the
time of Closing.

                5.2     AUTHORIZATION TO KNEWCO.  Without limiting in any
respect the right, title and interest in and to the Contributed Assets to be
acquired by Knewco hereunder, effective upon the Closing, the Company hereby
irrevocably authorizes Knewco, and its successors and assigns: to demand and
receive, from time to time, any and all of the Contributed Assets, to give
receipts and releases for or in respect of the same, to collect, assert or
enforce any claim, right or title of any kind therein or thereto and, for such
purpose, from time to time, to institute and prosecute in the name of the
Company, or otherwise, any and all proceedings at law, in equity or otherwise,
which Knewco shall deem expedient or desirable.  The Company further agrees
that Knewco shall retain for its own account any amounts collected pursuant to
the foregoing authorization, and the Company agrees to pay to Knewco, if and
when received, any amounts which shall be received by the Company after the
Divestiture Date in respect of any acquired Contributed Assets.

                6.      CORRESPONDENCE AND RECORDS.

                6.1     CORRESPONDENCE.  The Company hereby authorizes Knewco,
on and after the Divestiture Date, to receive and open mail addressed to the
Company and to deal with the contents thereof in a responsible manner, provided
that such mail relates (or reasonably appears to relate) to the Business in the
Knewco Territory, the Contributed Assets or the Assumed Liabilities, but Knewco
shall deliver to the Company all other mail addressed to the Company which is
delivered to and received by it.

                6.2     REFERRAL OF ORDERS.  For a period of five years
beginning on the Divestiture Date, (i) Knewco agrees to use reasonable efforts
to refer to Sensormatic all orders and inquiries with respect to any products
related to the Business for use outside of the Knewco Territory, and (ii)
Sensormatic agrees to use reasonable efforts to refer to Knewco all orders and
inquiries specifically referring to any products acquired with the Business and
marketed or manufactured by Knewco following the Divestiture Date for delivery,
or expressly intended for use, in the Knewco Territory ("Knewco Products"),
with the exception of SuperStrip products; provided, however, that nothing in
this Agreement shall prohibit or in any way limit Sensormatic from marketing,
selling, leasing or in any other way dealing in any products competitive with
any of the Knewco Products anywhere in the world, including the Knewco
Territory.

                6.3     RECORDS.  Knewco shall have the right to examine, use
and make excerpts from any corporate minute books, books of account and other
records and documents which are not included in the Contributed Assets, or
connected with or relating to any of the Assumed Liabilities pursuant to this
Agreement, and the Company shall not destroy any such books or records without
Knewco's consent for seven years following the date of this Agreement.  The
Company shall have the right to examine, use and make excerpts from any books
of account and other records and documents which are transferred to Knewco
pursuant to this Agreement for any purpose connected with or relating to any
event occurring prior to the Divestiture Date, and Knewco shall not destroy any
such books or records without the Company's consent for seven years following
the date of this Agreement.

<PAGE> 
                7.      OTHER AGREEMENTS.

                7.1     RELEASE OF BANK LIENS.  The Company will obtain the
release of Contributed Assets from the Bank Liens, following consummation of 
the Merger.

                7.2     FURTHER ASSURANCES.  In addition to the actions
specifically provided for elsewhere in this Agreement, each of the parties
hereto shall use its best efforts to take, or cause to be taken, all actions,
and to do, or cause to be done, all things, reasonably necessary, proper or
advisable under applicable laws, regulations and agreements to consummate and
make effective the transactions contemplated in this Agreement, including,
without limitation, using its best efforts to obtain the consents and approvals
to enter into any amendatory agreements and to make the filings and
applications necessary or desirable to have been obtained, entered into or made
in order to consummate the transactions contemplated in this Agreement.
Without limiting the foregoing, Knewco shall provide such cooperation and
assistance (and that of its appropriate employees, if needed) as is reasonably
requested by Sensormatic, and at Sensormatic's expense, to file and prosecute
patent applications corresponding to any of the Retained Intellectual Property
in any jurisdiction outside of the Knewco Territory, and to maintain any
resulting patents in effect, including, without limitation, execution of any
such patent applications and related documents and pleadings, and the giving of
testimony.

                7.3     TRANSITION SERVICES.  Following the Divestiture Date
for a period of up to six months, Knewco will continue to provide to the
Company and its subsidiaries, and their respective successors and assigns (each
a "Knogo Entity"), as any such Knogo Entity shall request, any or all
administrative services or functions, such as data processing, tax, accounting,
insurance, personnel, employee benefits and communications (collectively,
"Services") currently being provided by the Company and its subsidiaries (other
than Knewco and its subsidiaries), in connection with the Business outside of
the Knewco Territory, except that each Knogo Entity shall have the right to not
accept any Services.  During such period and thereafter as reasonably requested
by Sensormatic, Knewco will provide the services of its appropriate personnel
in connection with the preparation of any tax filings of the Company or
Sensormatic and Sensormatic's year-end audit.  Any of such Services shall be
provided on a reasonable cost basis and such cost basis shall be documented by
Knewco at the request of Sensormatic.  Any Knogo Entity may terminate any
Services at any time upon 10 days prior written notice to Knewco.  At the
request of Knewco, any Knogo Entity will enter into an agreement satisfactory
to Knewco, Sensormatic and such Knogo Entity with respect to the provision of
any Services that such Knogo Entity may request.

without repeating each and every allegation contained in the complaint.

                7.4     PERSONS TO BE EMPLOYED BY KNEWCO.  Knewco shall extend
an offer of employment to each of the persons listed in Schedule VIII, each 
currently an employee of the Company, consisting of approximately 200 people, 
commencing on the Divestiture Date and in the capacity set forth on such 
Schedule opposite such person's name or a comparable capacity.

                7.5     INSURANCE.

                (a)     Knewco will endeavor to procure insurance having terms,
conditions, exclusions and limitations substantially equivalent to the 
insurance coverages currently maintained by the Company with respect to the
property and Business in the Knewco Territory and providing coverage with 
respect to the property, business and operations of Knewco on and after the 
Divestiture Date and with respect to any liabilities of Knewco caused by or 
arising out of occurrences or events taking place on or after the Divestiture 
Date.

<PAGE> 
                (b)     On or before the Divestiture Date the parties shall
arrange for Knewco to be protected, whether by means of liability insurance
coverage having terms, conditions, exclusions and limitations substantially
equivalent to the liability insurance coverage currently maintained by the
Company with respect to the property and Business in the Knewco Territory or 
by other means, with respect to any liabilities of Knewco caused by or arising 
out of occurrences or events taking place prior to the Divestiture Date; 
provided that (i) the cost of such protection shall be reasonable and shall be 
for the Company's account and (ii) the Company and Knewco shall consult with 
each other and their respective insurance brokers in order to identify the 
most cost-effective means of maintaining the level of insurance previously 
maintained by the Company in the most cost-effective manner (possibly including 
each other as named insureds under their respective policies).

                7.6     POST-CLOSING ADJUSTMENT.

                (a)     As promptly as practicable after the Divestiture Date
     and in any event within 45 days thereafter, Knewco shall prepare (with
     Sensormatic's cooperation, as appropriate) its final balance sheet at the
     Divestiture Date (the "Divestiture Date Balance Sheet").  The Divestiture 
     Date Balance Sheet, which shall be prepared in accordance with GAAP and the
     Allocation Principles, and consistent with the Estimated Balance Sheet, 
     shall reflect, among other things, the net worth of Knewco at the 
     Divestiture Date after giving effect to the Contribution (but without 
     giving effect to any write-downs described in Section 1.5).  If 
     Sensormatic and Knewco are in agreement as to the net worth of Knewco, as 
     reflected on the Divestiture Date Balance Sheet, such net worth shall have 
     been finally determined in accordance with this Section 7.6 and, 
     accordingly, either Sensormatic or Knewco shall promptly pay to the other 
     the cash payment, if any, required pursuant to Section 7.6(e).  If 
     Sensormatic and Knewco are not in agreement on such net worth, they shall 
     promptly thereafter jointly instruct Deloitte & Touche ("Deloitte") to 
     conduct an audit or, if agreed to by the parties, a review of the 
     Divestiture Date Balance Sheet (the "Examination").  The purpose of the
     Examination shall be to determine the net worth of Knewco at the 
     Divestiture Date after giving effect to the Contribution and the amount of 
     any adjustment in the amount of cash or cash equivalents contributed to 
     Knewco pursuant to this Section 7.6.

                (b)     Sensormatic and Knewco shall jointly instruct Deloitte
     to complete the Examination within 30 days after the receipt of the 
     Divestiture Date Balance Sheet as prepared by Knewco and to render its 
     report thereon (the "Report") to Knewco and Sensormatic within such 
     period. The Report shall include, among other things, Deloitte's 
     calculation of the net worth of Knewco as reflected on the Divestiture 
     Date Balance Sheet. Sensormatic and Knewco shall jointly instruct 
     Deloitte to make its work papers with respect to the Examination and the 
     Report available to Knewco and its advisers and to Sensormatic, Ernst & 
     Young and Sensormatic's other advisers.

                (c)     The content and conclusions of the Report shall be
     conclusive and binding on Sensormatic and Knewco unless either one notifies
     the other and Deloitte that it disputes the Report within 30 days after
     Deloitte's delivery of the Report to it.  If either Sensormatic or Knewco
     timely disputes the Report, they shall promptly attempt to resolve any
     differences between them with respect to the Report.  If they are unable 
     to do so within 30 days after the date of the notice of dispute, either 
     Sensormatic or Knewco or both of them jointly may submit the dispute to 
     Price Waterhouse or, if they are unable or unwilling to act, such other 
     "Big Six" public accounting firm as may be selected by the American 
     Arbitration Association (the "Second Auditor") for resolution. The Second 
     Auditor shall provide Sensormatic and Knewco with the opportunity to 
     present their respective positions with respect to the dispute.  The 
     determination of the Second Auditor shall be conclusion and binding on 
     Sensormatic and Knewco, except in the event of manifest error.  In making 
     such determination, the Second Auditor shall be deemed to act as an 
     expert and not as an arbitrator.

                (d)     The charges of Deloitte in the conduct of the
     Examination and the preparation of the Report shall be borne by 
     Sensormatic. The charges of the Second Auditor shall be borne by 
     Sensormatic and Knewco in the proportions determined by the Second 
     Auditor on the basis that each party shall bear the cost of the Second 
     Auditor's services which relate to the amount of the disputed items that 
     are resolved against it.  Such determination by the Second Auditor shall 
     be binding on Sensormatic and Knewco.  Sensormatic and Knewco shall 
     cooperate with Deloitte and the Second Auditor in the conduct of the 
     Examination, the preparation of the Report and any resolution of any
     dispute with respect thereto by the Second Auditor.

                (e)     After the net worth of Knewco as reflected on the
     Divestiture Date Balance Sheet has been finally determined in accordance 
     with this Section 7.6, (i) if such net worth exceeds the Target Book 
     Value, Knewco shall promptly make a cash payment to Sensormatic in the 
     amount of such excess, or (ii) if the Target Book Value exceeds such net 
     worth, Sensormatic shall promptly make a cash payment to Knewco in the 
     amount of such excess.

                7.7     DELAYED TRANSFERS UNDER MERGER AGREEMENT.  In the event
that any Acquired Subsidiary (as defined in the Merger Agreement) is managed by
Knewco on an interim basis, or is ultimately transferred to Knewco by the
Escrow Agent pursuant to Section 10.2 of the Merger Agreement, the parties
agree that any such Acquired Subsidiary shall be deemed to be covered by this
Agreement as if it were a subsidiary of Knewco, and that the Knewco Territory,
non-competition and other provisions of this Agreement shall be modified by the
parties as may be necessary to equitably adjust their respective rights and
obligations hereunder in order to enable Knewco to operate the business of any
such Acquired Subsidiary.  Knewco shall abide by Section 5.1 of the Merger
Agreement with respect to any such Acquired Subsidiary, unless and until
transferred to Knewco thereunder.

                8.      NO WARRANTY.  Except as set forth in Section 1.5 and
Section 7.1, the Company does not, in this Agreement or any other agreement, 
instrument or document contemplated in this Agreement or the Merger Agreement,
make any representation or warranty, or (except as expressly set forth herein) 
any covenant or agreement, with respect to:

                (a)     the value of any asset or thing of value to be
     transferred to Knewco;

                (b)     the freedom from encumbrance of any asset or thing of
     value to be transferred to Knewco;

                (c)     the absence of defenses or freedom from counterclaims 
     with respect to any claim, including accounts receivable, to be 
     transferred to Knewco; or

                (d)     the legal sufficiency of any assignment, document or
     instrument delivered hereunder to convey title to any asset or thing of 
     value upon its execution, delivery and filing.

All assets to be transferred to Knewco shall be transferred "AS IS, WHERE IS"
and Knewco shall bear the economic and legal risk that any conveyance shall
prove to be insufficient to vest in Knewco good and marketable title, free and
clear of any lien, claim, equity or other encumbrance, provided that Knewco
shall in any event receive all of the Company's right, title and interest
therein.

<PAGE>
                9.      INDEMNIFICATION.

                9.1     INDEMNIFICATION OF KNEWCO.  The Company and Sensormatic
(as successor to the Company following the Merger) jointly and severally shall
indemnify, defend and hold harmless Knewco from and against any loss, damage,
liability or expense (including any related costs and expenses referred to in
Section 9.3) (collectively "Damages") (i) arising out or connected with any
breach of any covenant of the Company contained in this Agreement, (ii) arising
out of or in connection with any matter relating to the Business (other than
related to the Assumed Liabilities), or (iii) arising out of or in connection
with any matter which is specifically set forth in Schedule IX.

                Without limiting the generality of the foregoing, the Company
and Sensormatic shall indemnify, defend and hold harmless Knewco, each
director, officer, employee, and agent of Knewco, and each person, if any, who
controls Knewco, within the meaning of Section 15 of the Securities Act or
Section 20(a) of the Exchange Act, and each of the heirs, executors, successors
and assigns of any of the foregoing, from and against any and all Damages
arising out of or based upon any untrue statement or alleged untrue statement
of a material fact contained anywhere in the proxy statement (the "Proxy
Statement") pursuant to which the Board of Directors of the Company shall
solicit proxies to be voted for the approval of the Merger and which shall also
set forth appropriate financial and other disclosure concerning the
Divestiture, Knewco, the Business, and certain other matters, and the
Registration Statement of which it forms a part (the "Registration Statement"),
but not as to any Knogo Information (as hereinafter defined) included in the
Proxy Statement or Registration Statement), or the omission or alleged omission
to state anywhere in the Proxy Statement or the Registration Statement (other
than in the Knogo Information) a material fact required to be stated therein or
necessary to make the statements made therein, in light of the circumstances
under which they were made, not misleading.

                Knewco shall give the Company and Sensormatic prompt notice of
any claim, action, suit or proceeding which Knewco believes might give rise to
indemnification under this Section 9.1.

                9.2     INDEMNIFICATION OF THE COMPANY AND SENSORMATIC.  Knewco
shall indemnify, defend and hold harmless the Company and Sensormatic from and
against any Damages (i) arising out or connected with any breach of any
covenant of Knewco contained in this Agreement,  (ii) arising out of or in
connection with any Assumed Liabilities, (iii) arising out of or in connection
with the Divestiture (except with respect to liabilities or obligations of the
Company or Sensormatic hereunder), or (iv) arising out of or in connection with
any matter which is specifically set forth in Schedule X.

                Knewco shall indemnify, defend and hold harmless the Company
and Sensormatic, each of their respective subsidiaries, each director, officer,
employee and agent of each of the Company and Sensormatic or any of their
respective subsidiaries, and each person, if any, who controls the Company and
Sensormatic or any of their respective subsidiaries within the meaning of
Section 15 of the Securities Act or Section 20(a) of the Exchange Act, and each
of the heirs, executors, successors and assigns of any of the foregoing, from
and against any and all Damages arising out of or based upon any untrue
statement or alleged untrue statement of a material fact contained in any
portion of the Proxy Statement or the Registration Statement supplied by, or
based on information supplied by, the Company or Knewco, or any Form 10 (or
other registration statement referred to in Section 3.2(a)) of Knewco (the
"Knogo Information"), or the omission or alleged omission to state in the Knogo
Information a material fact required to be stated therein or necessary to make
the statements made therein, in light of the circumstances under which they
were made, not misleading.

                9.3     RELATED COSTS AND EXPENSES.  Each indemnifying party
hereto (the "Indemnitor") shall, in addition to such Indemnitor's obligations
under Section 9.1 or 9.2, as applicable, indemnify and hold harmless the 
indemnified party hereto (the "Indemnitee") 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 incurred by the Indemnitee as a result of any matter 
as to which the Indemnitee 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 Indemnitee of this Section 9 (provided the Indemnitee prevails in such 
action for enforcement).

                9.4     PROCEDURES FOR ASSERTING CLAIMS, ETC.  All claims for
indemnification under this Section 9 shall be asserted and resolved as follows:

                (a)     In the event that any claim or demand for which an
Indemnitee would be entitled to indemnification pursuant to this Section 9 is
asserted against an Indemnitee or sought to be collected from an Indemnitee by
a third party, the Indemnitee shall give the Indemnitor timely notice (to the
extent practicable), specifying the nature of such claims or demand and the
amount or the estimated amount thereof to the extent then feasible (which
estimate shall not be conclusive of the final amount of such claim or demand)
(the "Claim Notice").  For purposes of this Section 9.4(a), in the event that
any such claim is asserted directly against any Indemnitor, a Claim Notice
shall be deemed to have been given with respect to such claim by the
Indemnitee, and the Indemnitor shall promptly notify the Indemnitee of such
claim and of the Indemnitor's response under this Section 9.4(a).  The
Indemnitor shall have 10 business days from receipt of the Claim Notice (the
"Notice Period") to notify the Indemnitee (i) whether or not it acknowledges in
full its liability to the Indemnitee hereunder with respect to such claim or
demand, and (ii) if the Indemnitor acknowledges such liability, whether or not
it desires, at its sole cost and expense, to defend the Indemnitee against such
claim or demand.  In the event that the Indemnitor notifies the Indemnitee
within the Notice Period (and not thereafter) that it acknowledges in full such
liability and desires to defend against such claim or demand, then except as
hereinafter provided, the Indemnitor shall have the right to defend the claim
using counsel reasonably satisfactory to the Indemnitee; provided, however,
that such Indemnitee shall in any event have the right to defend any claim with
respect to which an adverse outcome could have a material adverse effect on its
business, condition (financial or otherwise) or results of operations.  The
Indemnitee shall also have the right to control the defense of any claim as to
which the Indemnitor does not timely acknowledge liability in full, or as to
which it does not timely notify the Indemnitee of its desire to defend.  The
party not entitled to defend may participate in, but not control, any such
defense at its sole cost and expense.

                (b)     No settlement or compromise of any such claim or
demand, or any related action, suit or proceeding, shall be made without the
prior consent of the Indemnitor and the Indemnitee, which consent shall not be
unreasonably withheld by either of them.

                (c)     In the event that an Indemnitee should have a claim
against an Indemnitor hereunder which does not involve a claim or demand being
asserted against or sought to be collected from it by a third party, such
Indemnitee shall promptly send a Claim Notice with respect to such claim to the
Indemnitor.

                10.     NON-COMPETITION AND CONFIDENTIALITY.

                (a)     Knewco agrees that, for a period of five years after
the Divestiture Date, it shall not, anywhere in France, Germany, Spain, the
United Kingdom, Belgium, The Netherlands or Italy, elsewhere in Europe or
elsewhere in the world outside the Knewco Territory (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 Knewco), directly or
indirectly:

<PAGE>   
                        (i)     market, distribute, sell, lease, install,
     service or maintain any electronic article surveillance systems, including
     re-usable tags, disposable labels and accessory products used in such 
     systems, closed circuit television systems and products, and other 
     products to deter and detect shoplifting and employee theft (collectively, 
     "Loss Prevention Products") manufactured, marketed, sold or leased by the 
     Company prior to the Divestiture Date, or any improvements or successors 
     thereto (or license any Contributed Intellectual Property);

                         (ii)   otherwise engage in the business of or
     activities relating to manufacturing, marketing, distributing, selling,
     leasing, servicing or maintaining, or licensing, any Loss Prevention 
     Products whatsoever;

                        (iii)   solicit or attempt to solicit business of any
     customers of the Company or any Acquired Subsidiary (including prospective
     customers solicited by the Company or any Acquired Subsidiary) for Loss
     Prevention Products or related services the same or similar to those 
     offered, sold, produced or under development by the Company or any 
     Acquired Subsidiary as of the date hereof;

                        (iv)    otherwise divert or attempt to divert from any
     Acquired Subsidiary any business whatsoever;

                        (v)     solicit or attempt to solicit for any business
     endeavor any employee of the Company or any Acquired Subsidiary or any 
     former employee of the Company or any Acquired Subsidiary who becomes an 
     employee of Sensormatic by virtue of the Merger;

                        (vi)    interfere with any business relationship
     between the Company or any Acquired Subsidiary or Sensormatic, on the one 
     hand, and any other person, on the other hand; or

                        (vii)   have any interest as a stockholder, partner,
     lender or otherwise in, any person which is engaged in activities which, if
     performed by Knewco, would violate this Section 10, or permit or 
     encourage any of its employees or employees to engage in any such 
     activity; provided, however, that the foregoing shall not prevent Knewco 
     from purchasing or owing up to 2% of the voting securities of any 
     corporation, the securities of which are publicly traded, that may be 
     deemed to be in competition with Sensormatic outside of the Knewco 
     Territory.

In addition, at no time (either before or after the term hereinabove set forth)
shall Knewco, or any successor thereto, do business under the "Knogo" name or a
name similar thereto outside the Knewco Territory, or utilize the Company's
other trademarks or trade names outside the Knewco Territory.

                In the event of a "Change of Control" of Knewco, either
pursuant to a Knewco Sale or following the date of this Agreement, the
obligations of Knewco under this Section 10(a) shall continue with respect to
Knewco's then existing trademarks, trade names and products, and products
subsequently developed which utilize any of the Contributed Intellectual
Property, but shall not be construed to limit the activities of the acquiring
person with respect to its names and products, or new products developed by the
combined entity which do not utilize any of the Contributed Intellectual
Property.

                As used in this Section 10(a), "Change of Control" means any
transaction or series of transactions pursuant to which (i) any "person" (as
such term is used in Sections 13(d) and 14(d) of the Exchange Act) becomes the
"beneficial owner" (as such term is defined in Rule 13(d) under 
the Exchange Act) of more than 50% of the combined voting power of Knewco or 
(ii) the business, and substantially all of the assets, of Knewco relating to 
the products used in the Business that are included in the Contributed Assets 
are sold or transferred to an unaffiliated third party.

                (b)     Knewco acknowledges that it and its employees have
become informed of, and had access to, in addition to the Contributed
Intellectual Property, other confidential information of the Company including,
without limitation, technical know-how and other intellectual property,
marketing plans and information, pricing information, identity of customers and
prospective custom ers with respect to the Business outside of the Knewco
Territory, 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 such
employees, was and is the property of the Company except to the extent relating
solely to the Business in the Knewco Territory, and, to the extent not
proprietary to Knewco by virtue of this Agreement, Knewco shall, and shall use
its reasonable best efforts to cause any such employee to, hold the same in
trust and solely for the benefit of the Company or any successor or assign
thereof, including without limitation Sensormatic, except as hereinafter set
forth.  Except in connection with the conduct of Knewco's business in the
Knewco Territory, Knewco shall not, and it shall use its reasonable best
efforts to cause its employees, affiliates or agents not to, at any time
reveal, report, publish, transfer or otherwise disclose to any person,
corporation or other entity, or use any of the Company's confidential
information, except for such information which legally and legitimately is or
becomes of general public knowledge from authorized sources other than Knewco
or its employees, affiliates or assets or legitimately acquired from third
parties not under an obligation of confidentiality to Sensormatic or the
Company or can be demonstrated to have been independently developed by Knewco
after the date hereof without reference to such confidential information.

                (c)     Because neither the Company (and Sensormatic, as
successor to the Company) nor Knewco have an adequate remedy at law to protect
their respective businesses from the other's competition or to protect their
respective interests in their respective trade secrets, privileged, proprietary
or confidential information (including technical know-how) and similar
commercial assets, each of the Company (and, following the Effective Time,
Sensormatic) and Knewco 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 10, be available to them.  The provisions of this
Section 10 shall survive the Divestiture Date.

                For purposes of this Section 10, the term "Sensormatic"
includes Sensormatic's subsidiaries, joint ventures and other affiliates
(including those acquired pursuant to the Merger).

                11.     MISCELLANEOUS.

                11.1    TERMINATION.  This Agreement (a) may be terminated at
any time prior to the Divestiture Date by mutual written consent of the Company 
and Sensormatic, or (b) shall terminate upon termination of the Merger 
Agreement prior to the Merger.

                11.2    ENTIRE AGREEMENT.  This Agreement, together with the
schedules and exhibits hereto, and together with the Merger Agreement, the
License Agreement and the Supply Agreement, to the extent applicable, 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 the Company and Sensormatic.  Failure of
any party to enforce any provision of this Agreement shall not be construed as
a waiver of its rights under such or any other provision.

                11.3    AMENDMENTS; WAIVERS.  This Agreement (including the
Annex, Schedules and Exhibits hereto) may be amended by the parties at any time
prior to the Divestiture Date.  Any such amendment shall be in writing signed 
on behalf of the party or parties to be charged.  At any time prior to the 
Divestiture Date, either the Company or Knewco may waive compliance by the 
other party with any of the agreements or conditions contained in this 
Agreement.  Any agreement on the part of a party to any such waiver shall be 
valid only if set forth in an instrument in writing signed on behalf of such 
party.  The failure of any party to this Agreement to assert any of its rights 
under this Agreement or otherwise shall not constitute a waiver of such rights.

                11.4    COMMUNICATIONS.  All notices, consents and other
communications given under this Agreement shall be in writing and shall be
deemed to have been duly given (a) when delivered by hand or by Federal Express
or a similar overnight courier to, (b) five days after being deposited in any
United States post office enclosed in a postage prepaid registered or certified
envelope addressed to, or (c) when successfully transmitted by telecopier (with
a confirming copy of such communication to be sent as provided in (a) or (b)
above) to, the party for whom intended, at the address or telecopier number for
such party set forth below, or to such other address or telecopier number as
may be furnished by such party by notice in the manner provided herein;
provided, however, that any notice of change of address or telecopier number
shall be effective only upon receipt.

                If to the Company:

                        Knogo Corporation
                        350 Wireless Boulevard
                        Hauppauge, New York 11788
                        Attention:    Thomas A. Nicolette
                                      Facsimile No.: (516) 232-2812

                With a copy to:

                        Stroock & Stroock & Lavan
                        Seven Hanover Square
                        New York, New York 10004
                        Attention:    David H. Kaufman
                                      Facsimile No.: (212) 806-6006

                If to Knewco:

                        Knogo North America Inc.
                        350 Wireless Boulevard
                        Hauppauge, New York 11788
                        Attention:    Thomas A. Nicolette
                                      Facsimile No.: (516) 232-2812


                With a copy to:

                        Stroock & Stroock & Lavan
                        Seven Hanover Square
                        New York, New York 10004
                        Attention:    David H. Kaufman
                                      Facsimile No.: (212) 806-6006

            If to Sensormatic:

                        Sensormatic Electronics Corporation
                        500 N.W. 12th Avenue
                        Deerfield Beach, Florida 33442
                        Attention:    Corporate Counsel
                                      Facsimile No.: (305) 420-2561
                                      and
                                      Vice President of Corporate Development
                                      Facsimile No.: (305) 420-2964

                With a copy to:

                        Christy & Viener
                        620 Fifth Avenue
                        New York, New York 10020
                        Attention:    Anthony J. Carroll
                                      Facsimile No.: (212) 632-5555

                11.5    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 (including, without
limitation, Sensormatic as the successor to the Company pursuant to the Merger,
and a purchaser of Knewco pursuant to a Knewco Sale or subsequent successor to
Knewco's Business), and nothing herein is intended to confer any right, remedy
or benefit upon any other person.  Except as contemplated in the preceding
sentence, Knewco may not assign its rights or delegate its obligations under
this Agreement without the express written consent of Sensormatic or the
Company, as applicable.

                11.6    GOVERNING LAW; JURISDICTION.  This Agreement shall in
all respects be governed by and construed in accordance with the laws of the
State of New York.  Each of the parties hereto expressly and irrevocably
submits to the non-exclusive personal jurisdiction of the United States
District Court, Southern District of New York and to the jurisdiction of any
other competent court of the State of New York located in New York City in
connection with all disputes arising out of or in connection with this
Agreement or the transactions contemplated herein.  Each party hereby waives
the right to any other jurisdiction or venue to which any of them may be
entitled by reason of its present or future domicile.  The parties agree that
service of process may be made by U.S. registered mail, return receipt
requested, to a party at its address set forth in Section 11.4.

                11.7    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.

                11.8    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.

                11.9    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 and Exhibits hereto, and references herein to Annexes, 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.
<PAGE>

                IN WITNESS WHEREOF, the parties have executed this Agreement as
of the date first set forth above.

                                             KNOGO CORPORATION
                                                                
                                                                
                                             By:              
                                               --------------------------------
                                                Thomas A. Nicolette
                                                President


                                             KNOGO NORTH AMERICA INC.


                                             By:
                                                --------------------------------
                                                Thomas A. Nicolette
                                                President
        
                Effective as of the Effective Time of the Merger, Sensormatic
Electronics Corporation, as successor to Knogo Corporation, shall become a
party to the foregoing Contribution and Divestiture Agreement and hereby
acknowledges and accepts such Agreement.

                                             SENSORMATIC ELECTRONICS CORPORATION


                                             By:
                                                --------------------------------
                                                Name:
                                                Title:

                At the effective time of a Knewco Sale, the undersigned, as the
purchaser and successor to Knogo North America Inc., hereby acknowledges and
accepts the foregoing Contribution and Divestiture Agreement and agrees to be
bound by the terms thereof and of the License Agreement, the Supply Agreement
and the other documents and instruments referred to therein.

                                             [PURCHASER IN A KNEWCO SALE]


                                             By:
                                                --------------------------------
                                                Name:
                                                Title: