Restoration Management Company, LLC
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
November 11, 1999
Gentlemen:
Pursuant to Section 5(ii) of the Agreement between Restoration Management
Company, LLC ("Restoration") and Sentry Technology Corporation (the "Company")
dated October 15, 1999 (the "Agreement"), this letter confirms the parties'
understanding as to the compensation to be paid to Restoration for the services
of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇") to the Company.
0 As of November 1, 1999, Restoration shall be compensated for the
services of Gerbino to the Company at the rate of $50 per hour for the
first 200 hours billed each month but shall not receive compensation
for hours billed in excess of 200 hours per month.
0 The Company shall pay Restoration on the 15th day of each month
beginning November 15, 1999 for hours billed during the previous
month.
0 The Company shall pay directly or reimburse Restoration, upon receipt
of periodic ▇▇▇▇▇▇▇▇, for all reasonable out-of-pocket and incidental
expenses such as travel, lodging, entertainment, postage, telephone
and facsimile charges incurred by Gerbino in connection with his
services to the Company.
As contemplated by the Agreement, Restoration shall receive no additional
compensation for services rendered by Gerbino prior to November 1, 1999.
Very truly yours,
Sentry Technology Corporation
By: /s/▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇
Vice President-Finance and CFO
Accepted and agreed as of November 11, 1999
Restoration Management Company, LLC
By: /s/▇▇▇▇▇▇▇ ▇.▇. ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇.▇. ▇▇▇▇▇▇▇▇▇▇
Managing Director
AMENDMENT
Whereas, Restoration Management Company, LLC ("Restoration") entered
into an agreement with Sentry Technology Corporation (the "Company") as of
October 15, 1999 pursuant to which Restoration agreed to provide certain
operational and financial consulting services to the Company (the "Agreement");
and
WHEREAS, certain options issuable to Restoration at the time that the
Agreement was entered into were referred to in the Agreement as "incentive stock
options"; and
WHEREAS, the Company and Restoration wish to amend the Agreement in
accordance with the terms hereof;
NOW, THEREFORE, the undersigned hereby amend the Agreement as follows:
1. The words "incentive stock options" in the first sentence of
Section 5(v) of the Agreement are hereby deleted and in their place is
substituted the words "non-qualified stock options".
2. The word "Restoration" in the first sentence of Section 5(v) of the
Agreement is hereby deleted and in its place is substituted the word "▇▇▇▇▇▇▇
▇.▇. ▇▇▇▇▇▇▇▇▇▇".
3. The following sentence shall be inserted immediately following the
first sentence of Section 5(v) of the Agreement:
Such options may be assigned or transferred only to an
employee or consultant of the Company or such employee or
consultant's family members as defined in Section A(1)(a)(5)
of the General Instructions to Form S-8 of the Securities
Act of 1933.
4. Section 5 of the Agreement shall be amended to add a subsection
(viii) which shall state as follows:
The Company shall prepare and file with the Securities and
Exchange Commission, within 20 days following the filing of
its annual report on Form 10K for the year ended December
31, 1999, a registration statement on Form S-8 including a
reoffer prospectus with respect to the shares of common
stock issuable upon exercise of the options issued pursuant
to the Agreement and shall use its best efforts to cause
such registration statement to become effective and remain
effective during the term of such options plus, if such
options are exercised in whole or in part, for one year
after such exercise.
IN WITNESS WHEREOF, the undersigned have signed this Amendment as of
the 9th day of November, 1999.
SENTRY TECHNOLOGY CORPORATION
By: /S/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Chairman of the Board
RESTORATION MANAGEMENT
COMPANY, LLC
By: /S/ ▇▇▇▇▇▇▇ ▇. ▇. ▇▇▇▇▇▇▇▇▇▇
-------------------------------
▇▇▇▇▇▇▇ ▇.▇. ▇▇▇▇▇▇▇▇▇▇
Managing Director
RESTORATION MANAGEMENT COMPANY, LLC
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
October 15, 1999
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Chairman of the Board
Sentry Technology Corporation
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Dear ▇▇. ▇▇▇▇▇▇▇▇:
This will confirm the understanding and agreement (the "Agreement") between
Sentry Technology Corporation (the "Company") and Restoration Management
Company, LLC ("Restoration") regarding the objectives, tasks, work product, fees
and expenses for the engagement of Restoration to provide operational and
financial consulting services to the Company.
1. ENGAGEMENT. To serve as the Chief Executive Officer of the
Company, reporting to the Board of Directors and to direct
the Company in its restructuring efforts (the "Engagement").
2. TASKS.
0 Perform the functions and duties of Chief
Executive Officer and such other senior executive
positions at the Company as may be appropriate and
agreed to by the Board of Directors.
0 Manage the Company's daily operations and
restructuring efforts, including negotiating with
parties in interest.
0 Assist in such other matters as may be mutually
agreed upon.
3. WORK PRODUCT. Our work product will consist of:
0 Information to be discussed with you and others,
as you may direct.
0 Written reports and analysis worksheets to support
our actions as we deem necessary or as you may
request.
4. STAFFING. ▇▇▇▇▇▇▇ ▇.▇. ▇▇▇▇▇▇▇▇▇▇ will be the principal
responsible for the overall engagement and will serve as
Chief Executive Officer of the Company. He will be assisted
by ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, who may also, with the agreement of
the Board of Directors, be appointed to an executive
position with the Company. In addition, we have
relationships with, and periodically retain, independent
contractors with specialized skills and abilities to assist
us. If retained, any such independent contractors are
considered to be Restoration staff for the purposes of the
Engagement.
5. COMPENSATION. As compensation for the services rendered by
Restoration hereunder, the Company shall pay Restoration as
follows:
(i) A retainer of $40,000 (the "Initial Amount"),
payable upon the signing of this Agreement (the
"Retainer"). This retainer shall remain
outstanding during the term of the Engagement,
provided, however, that $20,000 of the retainer
shall be applied to pay fees due Restoration on
January 15, 2000 for the month then beginning
2000. In the event that the Company terminates the
Engagement prior to the last day of the third
month following the commencement of the
Engagement, Restoration shall be entitled to
retain the remaining Retainer in full.
(ii) Restoration shall receive $20,000 per month in
fees as compensation for time devoted to the
Engagement by ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇. Time devoted to
the Engagement by ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ to assist
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ during the two weeks following
the commencement of the Engagement shall be
provided by Restoration to the Company at no
additional charge. Thereafter, Restoration shall
be additionally compensated for all time devoted
to the Engagement by ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, in excess of
occasional support time, at (i) an hourly rate to
be agreed with the Board of Directors, or (ii) in
the event Restoration recommends that ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ assume an executive position with the
Company, a monthly fee commensurate with the
duties being performed, but in no event to be less
than the monthly salary currently being paid to
senior executives of the Company performing
similar tasks.
(iii) A success fee equal to 1% of the value to be
received by the Company and/or its equity holders
as a result of any sale, merger, joint venture or
combination of the Company with any party
whatsoever, including, but not limited to any
transaction entered into with current or former
officers, directors or shareholders of the
Company; provided, however, that any such success
fee shall be capped at $100,000 and a success fee
equal to 1% of the value of any financing entered
into by the Company, whether for debt, equity or
any combination thereof; provided, however that
the size of any such financing exceeds $5 million,
provided further, that any such success fee shall
also be capped at $100,000.
(iv) If the Company enters into any agreement or
arrangement with respect to the Engagement, with
anyone contacted during the Engagement, at any
time during a period from the date hereof through
the close of business on the last day of the 6th
month following the Termination, which agreement
or arrangement would have caused the Company to
owe Restoration a payment pursuant to subsection
(iii) of this paragraph 3 had such agreement or
arrangement been entered into prior to the
Termination, than the Company shall make such
payment as if the Termination had not occurred.
(v) The Company shall, effective with the commencement
of the Engagement, issue to Restoration incentive
stock options to purchase 200,000 shares of the
common stock of the Company at an exercise price
of $0.188 per share. Such option will be
immediately exercisable and shall expire on the
second anniversary of the Termination; provided,
however, that such options may not be exercised
(A) following the Termination of the Engagement by
Restoration prior to the last day of the sixth
month following the commencement of the
Engagement, unless Restoration has terminated the
Engagement because the Company has acted in bad
faith, or has not remained current with its
payment obligations to Restoration, as set forth
herein, or has not or is unable to pay its trust
fund tax obligations (including but not limited to
withholding taxes, sales taxes), or (B) upon the
Termination of the Engagement by the Company for
cause. "Cause" as used in this sub-section shall
mean the willful or grossly negligent failure of
Restoration to perform its obligations hereunder
or of Schnelling to carry out the duties of Chief
Executive Officer.
(vi) The Company shall pay directly or reimburse
Restoration, upon receipt of periodic ▇▇▇▇▇▇▇▇,
for all reasonable out-of-pocket and incidental
expenses incurred in connection with the
Engagement such as travel, lodging, entertainment,
postage, telephone and facsimile charges.
(vii) The fees described above shall be due and shall be
paid by wire transfer on the dates set forth in
the schedule on Exhibit 1 hereto. The expenses
described above shall be payable by the Company by
wire transfer immediately upon receipt by the
Company of Restoration's invoices, which shall be
presented monthly.
6. TIMING. We will commence this engagement immediately upon
receipt of a signed engagement letter and the Retainer.
7. INDEMNIFICATION. The Company hereby agrees to indemnify and
hold harmless Restoration and its officers, members,
principals, affiliates, subcontractors, their respective
directors, officers, agents and employees (collectively the
"Indemnified Persons") from and against any and all claims,
liabilities, losses, damages, and expenses incurred by any
Indemnified Person (including but not limited to any
Indemnified Person's counsel fees and disbursements and the
costs of such Indemnified Person's professional time (such
professional time will be reimbursed at our rates in effect
when such future time is required), as they are incurred,
arising in connection with investigating, preparing for, or
defending any action, formal or informal claim,
investigation, inquiry or other proceeding, whether or not
in connection with pending or threatened litigation) which
are related to or arise in any manner out of the engagement
contemplated hereby, including any legal proceeding in which
any Indemnified Person may be required or agree to
participate in, but in which such Indemnified Person is not
a party; PROVIDED, HOWEVER, that the Company shall not be
responsible for any claims, liabilities, losses, damages, or
expenses pursuant to this paragraph which are finally
determined to have resulted from the gross negligence or
willful misconduct of any Indemnified Person. The Company
further agrees that the Company shall not, without the prior
written consent of the Indemnified Parties, settle,
compromise or consent to the entry of any judgment in any
pending or threatened claim, action, suit or proceeding in
respect of which indemnification may be sought hereunder
unless such settlement, compromise or consent includes an
unconditional release of Restoration and each other
Indemnified Person hereunder from all liability arising out
of such claim, action, suit or proceeding.
8. INDEMNIFICATION OF OFFICERS. In addition to the foregoing
indemnification, any Restoration personnel who may serve as
officers of the Company shall be individually covered by the
same indemnification and directors' and officers' liability
insurance as is applicable to other officers of the Company,
which insurance shall provide for no less than $7.5 million
of coverage for each such officer or director.
9. CONFIDENTIALITY. Restoration agrees to keep confidential all
non-public information obtained from the Company.
Restoration agrees that neither it nor its officers,
members, principals, affiliates, subcontractors, their
respective directors, officers, agents and employees or
attorneys (the "Confidential Parties") will disclose to any
other person or entity, or use for any purpose other than
specified herein, any information pertaining to the Company
or any affiliate thereof which is either non-public,
confidential or proprietary in nature ("Information") which
it obtains or is given access to during the performance of
the services provided for hereunder. Restoration may,
however, make reasonable disclosure of Information to third
parties in connection with their performance of their
obligations and assignments hereunder. In addition, for
purposes of this Agreement, the Information does not include
information which (a) is now or in the future becomes
generally to the public other than as a result of a
disclosure by the Confidential Parties, (b) was available to
the Confidential Parties on a non-confidential basis prior
to its disclosure to the Confidential Parties pursuant to
this Agreement, (c) becomes available to the Confidential
Parties on a non-confidential basis from a source other than
the Company, provided that the source is not bound by a
confidentiality agreement with the Company.
Should the Confidential Parties be requested or
required, by oral questions, interrogatories, requests for
information or documents, subpoena, civil investigative
demand, court order or other process issued by a court of
competent jurisdiction or any federal or state agency or
administrative review board to which the Confidential
Parties are or may be subject, to disclose any or all of the
Information, the Confidential Parties will promptly provide
written notice of same to the Company so that the Company
may seek a protective order or other appropriate remedy. In
no event will Confidential Parties disclose more than that
portion of the Information that is legally required and the
Confidential Parties shall cooperate with the Company in its
effort to obtain a protective order or other assurance that
the Information will not be disclosed, or, if it is
disclosed, will be disclosed in such a manner as to limit to
the greatest extent possible the number of persons who are
granted access to the Information.
10. FRAMEWORK OF THE ENGAGEMENT. The Company acknowledges that
it is hiring Restoration to provide consulting service to
assist and advise the Company in its reorganization.
Restoration's engagement shall not constitute an audit,
review or compilation, or any other type of financial
reporting engagement that is subject to the rules of the
AICPA or other such state and national professional bodies.
11. TERMINATION. Either Party may terminate the Engagement at
any time by giving the other party written notice of such
termination (the "Termination"); provided that,
notwithstanding such Termination, Restoration will be
entitled to any fees and expenses earned pursuant to the
provisions of this Agreement. Such payment obligation shall
inure to the benefit of any successor or assignee of
Restoration. It is further understood that unless the
Company acts in bad faith, or has not remained current with
its payment obligations to Restoration, as set forth herein,
or has not or is unable to pay its trust fund tax
obligations (including but not limited to withholding taxes,
sales taxes), Restoration will not terminate the Engagement
prior to the last business day of the sixth month following
the commencement of the Engagement. It is further understood
that unless Restoration acts in bad faith, the Company will
not terminate the Engagement prior to the last business day
of the third month following the commencement of the
Engagement.
12. SURVIVAL. The obligations of the parties pursuant to
paragraphs 5, 6, 7, 8, 9 and 10 shall survive the
Termination of this Agreement along with any other section
that expressly provides that it shall survive the
Termination.
13. RELATIONSHIP OF THE PARTIES. The parties hereto intend that
an independent contractor relationship will be created by
this Agreement. Restoration and its officers, members,
principals, affiliates, subcontractors, their respective
directors, officers, agents and employees are not to be
considered an employee or agent of the Company and are not
entitled to any of the benefits that the Company provides
for the Company's employees, except as may otherwise be
expressly provided for in this Agreement.
14. ASSIGNABILITY. The benefits of this Agreement shall inure to
the benefit of the parties hereto, their respective
successors and assigns and of the Indemnified Persons
hereunder and their successors, assigns and representatives
and the obligations and liabilities assumed in this
Agreement by the parties hereto shall be binding upon their
respective successors and assigns. This Agreement may not be
assigned by any party hereto, without the prior written
consent of all the parties hereto.
15. ENTIRE AGREEMENT. This Agreement incorporates the entire
understanding between the parties with respect to its
subject matter and supersedes all previous agreements or
understandings that might exist or have existed. This
Agreement may not be amended or modified, except in writing,
executed by the parties hereto.
16. GOVERNING LAW. This agreement shall be governed by and
construed in accordance with the laws of the State of New
York, without giving effect to principles of conflicts of
laws.
17. ALTERNATIVE DISPUTE RESOLUTION. If there is any dispute
between the parties as to the terms of this Agreement and
they are unable to agree on a mutually satisfactory
resolution within 30 days, either party may require the
matter to be settled by binding arbitration. Such
arbitration shall take place in New York City. Following a
request for arbitration by either party, the parties shall
attempt to agree upon a single arbitrator. If the parties
are unable to agree upon a single arbitrator, each party
shall appoint one arbitrator. These two arbitrators shall
jointly appoint a third arbitrator. In the event the two
arbitrators cannot agree on a third arbitrator, the American
Arbitration Association in New York City shall appoint the
third arbitrator. The arbitration shall be held according to
the rules and procedures of the American Arbitration
Association. The decision of the arbitrator(s) shall be
final, binding and non-appealable.
18. DISCLOSURE OF CONFLICTS. Except as may be expressly set
forth in an attachment to this Agreement, Restoration knows
of no fact or situation that would represent a conflict of
interest for it in connection with this Assignment and with
regard to the Company. However, it is possible that there
may be relationships, either past or currently existing,
that need to be brought to your attention as Restoration
becomes familiar with the universe of parties who are
involved in this assignment. Any such disclosure will be
promptly made by Restoration upon its becoming aware of a
need to make such disclosure.
19. SEVERABILITY. Any provision of this Agreement that shall be
determined to be invalid or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability
without invalidating the remaining provisions hereof or
affecting the validity or enforceability of such provision
in any other jurisdiction.
20. NOTICES. All Notices required or permitted to be delivered
under this Agreement shall be sent, if to restoration, to
the address set forth at the head of this Agreement, to
▇▇▇▇▇▇▇ ▇.▇. ▇▇▇▇▇▇▇▇▇▇ and, if to the Company, to the
address set forth above, to the attention of the Chairman of
the Board with a copy to ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, c/o Stroock &
Stroock & ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
or to such other name or address as you may give Restoration
in writing. All notices under this Agreement shall be deemed
delivered if sent by facsimile or by overnight mail or
courier. All notices shall be deemed to have been delivered
only upon receipt by the receiving party.
If the Company becomes involved in a proceeding under the U.S. Bankruptcy Code,
it agrees to petition the Court to affirm this agreement as part of its first
day motions.
Please confirm that the foregoing is in accordance with our understanding by
signing and returning to Restoration the enclosed duplicate of this letter,
whereupon it shall constitute an agreement binding upon yourselves and
ourselves.
Very Truly Yours,
/S/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Restoration Management Company LLC
By: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Its: Managing Director
Accepted and agreed as of
October 15, 1999
SENTRY TECHNOLOGY CORPORATION
By: /S/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------
Its: Chairman of the Board
Exhibit 1
Fee Payments Due
October 15, 1999 $40,000 Retainer
November 15, 1999 $20,000 Nov. Fees
December 15, 1999 $20,000 Dec. Fees
January 15, 2000 $0 Retainer Reduction
February 15, 2000 $20,000 February Fees
March 15, 2000 $20,000 March Fees1
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1 Unless the Engagement is extended or modified prior to April 1, 2000
