SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
Confidential, for use of the Commission only (as permitted by Rule
[ ] 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
Soliciting Material Pursuant to ss. 240.14a-11(c) or ss. 240.14a-12
SENTRY TECHNOLOGY CORPORATION
(Name of Registrant as Specified in Its Charter)
PETER J. MUNDY, VICE PRESIDENT-FINANCE, SECRETARY AND TREASURER
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
1) Title of each class of securities to which transaction
applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the
amount on which the filing fee is calculated and state how it
was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
NOTES:
<PAGE>
SENTRY TECHNOLOGY CORPORATION
350 WIRELESS BOULEVARD
HAUPPAUGE, NEW YORK 11788
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 6, 1998
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Sentry
Technology Corporation (the "Company") will be held at the American Stock
Exchange, 86 Trinity Place, New York, New York, on May 6, 1998, at 11:00 A.M.,
New York time, for the following purposes:
1. To elect one class of Director for a term expiring in 2001;
2. To transact such other business as may properly come before the
meeting or any adjournment thereof.
Common Stockholders of record at the close of business on April 3, 1998
will be entitled to notice of and to vote at the meeting.
The Board of Directors of Sentry Technology Corporation hopes that you will
find it convenient to attend the meeting in person. In any event, please mark,
sign, date and return the enclosed proxy to make sure that your shares are
represented at the meeting. If you attend the meeting, you may vote your stock
personally even though you have sent in your proxy.
By Order of the Board of Directors,
PETER J. MUNDY
SECRETARY
Hauppauge, New York
April 10, 1998
PLEASE DATE, SIGN AND MAIL THE ACCOMPANYING FORM OF PROXY
AS PROMPTLY AS POSSIBLE IN THE ENCLOSED ENVELOPE.
<PAGE>
SENTRY TECHNOLOGY CORPORATION
350 WIRELESS BOULEVARD
HAUPPAUGE, NEW YORK 11788
PROXY STATEMENT
The accompanying proxy is solicited by and on behalf of the Board of
Directors of Sentry Technology Corporation, a Delaware corporation ("Sentry" or
the "Company"), for use at the Annual Meeting of Stockholders (the "Meeting") to
be held at the American Stock Exchange, 86 Trinity Place, New York, New York, on
May 6, 1998, at 11:00 A.M., New York time, and any adjournments thereof. Holders
of record of Common Stock at the close of business on April 3, 1998, will be
entitled to vote at the Meeting. Holders of the Company's Class A Preferred
Stock are not entitled to vote in the election of Directors.
The cost of solicitation will be borne by the Company. The Board of
Directors may use the services of the Company's Directors, officers and other
regular employees to solicit proxies personally or by telephone. Arrangements
will be made with brokerage houses and other custodians, nominees and
fiduciaries to forward solicitation material to the beneficial owners of the
shares held of record by such persons, and the Company will reimburse them for
reasonable expenses incurred by them in so doing.
The shares represented by the accompanying proxy will be voted as directed
with respect to the election of the Director, or if no direction is indicated,
will be voted in favor of the election as Director of the nominee listed herein.
Each proxy executed and returned by a Stockholder may be revoked at any time
thereafter by giving written notice of such revocation to the Secretary of the
Company or by attending the Meeting and electing to vote in person, except as to
any matter or matters upon which, prior to such revocation, a vote shall have
been cast pursuant to the authority conferred by such proxy.
A Stockholder may designate a person or persons to act as the Stockholder's
proxy other than those persons designated on the proxy card. The Stockholder may
do so by striking out the name or names appearing on the enclosed proxy card,
inserting the name or names of another person or persons, and delivering the
signed card to such person or persons. The person(s) designated by the
Stockholder must present the signed proxy card to the Secretary at the Meeting
in order for the shares to be voted.
If the Stockholder is a participant in the Company's Retirement Savings
401(k) Plan, then the proxy will also serve as a voting instruction for the
trustees of the plan for all accounts registered in the same name.
If voting by proxy with respect to the election of the Director,
Stockholders may vote in favor of the nominee or withhold their vote as to the
nominee. With respect to any other proposal that comes before the Stockholders
at the Annual Meeting, Stockholders may vote for the proposal, vote against the
proposal or abstain from voting with respect to the proposal. Assuming a quorum
is present, (i) the affirmative vote of a plurality of the votes cast by the
holders of the shares of Common Stock entitled to vote will be required to act
with respect to the election of the Director and (ii) the affirmative vote of a
majority of shares present in person or represented by proxy at the Meeting and
entitled to vote on the subject matter will be required to act on all other
proposals that come before the Annual Meeting. Abstentions and broker non-votes
(when a nominee holding shares for a beneficial owner has not received voting
instructions from the beneficial owner with respect to a particular matter and
such nominee does not possess or choose to exercise discretionary authority with
respect thereto) will be included for purposes of determining whether there are
represented at the meeting a sufficient number of shares to constitute a quorum.
Abstentions and broker non-votes will not be included, however, in the
tabulations of votes cast on proposals presented to Stockholders.
An Annual Report to Stockholders for the fiscal year ended December 31,
1997, including financial statements, accompanies this Proxy Statement. The date
of this Proxy Statement is the approximate date on which the Proxy Statement and
form of proxy were first sent or given to Stockholders.
The Board of Directors of the Company has selected the firm of Deloitte &
Touche LLP as the principal accountants for the current fiscal year, in which
capacity they have served since the Company commenced operations after the
merger of the Company's predecessors in February 1997. Representatives of
Deloitte & Touche LLP are expected to be present at the Annual Meeting, at which
time they will have the opportunity to make a statement if they desire to do so
and to respond to appropriate questions.
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth the beneficial ownership of Sentry Common
Stock at April 3, 1998, as to each (i) beneficial owner of five percent or more
of the Common Stock, (ii) Sentry Director, (iii) executive officer of Sentry and
(iv) all Directors and executive officers as a group. On April 3, 1998,
9,750,760 shares of Common Stock and 5,079,244 shares of Preferred Stock were
outstanding.
SHARES OF PERCENT
NAME AND ADDRESS OF COMMON STOCK OF CLASS(1)
BENEFICIAL OWNERS
Walter & Edwin Schloss
Associates L.P.
52 Vanderbilt Avenue
New York, NY 10017 675,522 (2) 6.9%
<TABLE>
<CAPTION>
SHARES OF
SHARES OF PERCENT CLASS A PERCENT
DIRECTORS AND EXECUTIVE OFFICERS COMMON STOCK OF CLASS(1) PREFERRED STOCK OF CLASS (3)
- -------------------------------- ------------ --------------- ---------------- ---------------------
<S> <C> <C> <C> <C> <C>
Thomas A. Nicolette 360,882 (4) 3.6% 317,560 (5) 6.1%
Peter J. Mundy 103,012 (6) 1.0% 92,518 (7) 1.8%
John F. Whiteman 42,473 (8) * 33,896 (9) *
Peter Y. Zhou 95,157 (10) 1.0% 85,548 (11) 1.7%
Andrew L. Benson 103,911 (12) 1.1% -
Paul D. Mellin - -
Robert L. Barbanell 8,000 (13) * 15,750 *
William A. Perlmuth
c/o Stroock & Stroock &
Lavan LLP
180 Maiden Lane
New York, NY 10038 905,368 (14) 9.3% 962,321 (15) 17.8%
Robert D. Furst, Jr.
3900 Walden Road
Deephaven, MN 55391 912,172 (16) 9.3% -
All Sentry Directors and
executive officers as a group 2,530,975 (17) 24.6% 1,491,844 (18) 27.3%
- ---------------------------
* Less than one percent
(1) Based on 9,750,760 shares of Common Stock outstanding as of April 3, 1998.
Each figure showing the percentage of outstanding shares beneficially
owned has been calculated by treating as outstanding and owned the shares
of Common Stock which could be purchased by the indicated person within 60
days upon exercise of stock options.
(2) Includes 10,070 shares of Common Stock beneficially owned solely by Mr.
Walter J. Schloss, and 8,022 shares of Common Stock beneficially owned
solely by Mr. Edwin W. Schloss.
(3) Based on 5,079,244 shares of Class A Preferred Stock outstanding as of
April 3, 1998. Each figure showing the percentage of outstanding shares
beneficially owned has been calculated by treating as outstanding and
owned the shares of Class A Preferred Stock which could be purchased by
the indicated person within 60 days upon exercise of stock options.
(4) Excludes 41,590 shares of Common Stock held by a trust for the
benefit of Mr. Nicolette's wife, as to which shares Mr.
Nicolette disclaims beneficial ownership. Includes 74,862 shares
of Common Stock held by Mr. Nicolette as co- trustee under trusts
for the benefit of his minor children and as to which shares Mr.
Nicolette disclaims beneficial ownership. Also includes
217,138 shares of Common Stock issuable upon the exercise of
stock options exercisable within 60 days from the date hereof.
(5) Excludes 43,669 shares of Class A Preferred Stock held by a trust
for the benefit of Mr. Nicolette's wife, as to
which shares Mr. Nicolette disclaims beneficial ownership.
Includes 78,606 shares of Common Stock held
by Mr. Nicolette as co-trustee under trusts for the benefit of
his minor children and as to which shares Mr. Nicolette
disclaims beneficial ownership. Also includes 197,138 shares of
Common Stock issuable upon the exercise of stock options within
60 days from the date hereof.
(6) Includes 81,614 shares of Common Stock issuable upon the exercise of stock
options exercisable within 60 days from the date hereof.
(7) Includes 73,614 shares of Class A Preferred Stock issuable upon the
exercise of stock options exercisable within 60 days from the date hereof.
(8) Includes 26,716 shares of Common Stock issuable upon the exercise of stock
options exercisable within 60 days of the date hereof.
(9 ) Includes 18,716 shares of Class A Preferred Stock issuable upon the
exercise of stock options exercisable within 60 days of the date hereof.
(10) Includes 78,703 shares of Common Stock issuable upon the exercise of stock
options exercisable within 60 days from the date hereof.
(11) Includes 70,703 shares of Class A Preferred Stock issuable upon the
exercise of stock options exercisable within 60 days from the date hereof.
(12) Mr. Benson resigned as an officer and Director of the
Company as of July 1997 but continued as a major account
representative through the remainder of 1997. Effective January
1, 1998 Mr. Benson became an independent sales representative
for Sentry working on a commissioned basis. Includes 25,000
shares of Common Stock issuable upon the exercise of options
exercisable within 60 days of the date hereof.
(13) Includes 3,000 shares of Common Stock issuable upon exercise of stock
options exercisable within 60 days from the date hereof.
(14) Consists of (a) 750,729 shares of Common Stock held by Mr.
Perlmuth as Executor of the Estate of Arthur J. Minasy, (b)
130,011 shares of Common Stock held by Mr. Perlmuth as trustee
under trusts for the benefit of Mr. Minasy's adult children, and
(c) 3,327 shares of Common Stock beneficially owned by Mr.
Perlmuth. Also includes 21,300 shares of Common Stock issuable
upon the exercise of stock options exercisable within 60 days
from the date hereof. Under the policies of the law firm of
which he is of counsel, Mr. Perlmuth will share any economic
benefits of the options with the other members of such firm.
(15) Consists of (a) 788,265 shares of Class A Preferred Stock
held by Mr. Perlmuth as Executor of the Estate of Arthur J.
Minasy, (b) 136,513 shares of Class A Preferred Stock held by Mr.
Perlmuth as trustee under trusts for the benefit of Mr. Minasy's
adult children, and (c) 3,493 shares of Class A Preferred Stock
beneficially owned by Mr. Perlmuth. Also includes 18,300 shares
of Class A Preferred Stock issuable upon the exercise of stock
options exercisable within 60 days from the date hereof. Under
the policies of the law firm of which he is of counsel, Mr.
Perlmuth will share any economic benefits of the options with
the other members of such firm.
(16) Includes 89,250 shares of Common Stock which could be purchased upon the
exercise of existing options and warrants which are currently exercisable
or which will become exercisable within 60 days from the date hereof.
(17) Includes 542,721 shares of Common Stock which could be purchased upon the
exercise of existing options and warrants which are currently exercisable
or which will become exercisable within 60 days from the date hereof.
(18) Includes 378,471 shares of Class A Preferred Stock which could be
purchased upon the exercise of existing options and warrants which are
currently exercisable or which will become exercisable within 60 days from
the date hereof.
</TABLE>
PROPOSAL NO. 1
ELECTION OF DIRECTOR
The Company's Board of Directors is divided into three classes serving
staggered three-year terms, the term of one class of Directors to expire each
year. At the Annual Meeting, Stockholders will consider for election the
Director whose class term expires in 2001. Mr. Robert L. Barbanell, the nominee
of the Board of Directors, is presently serving as a Director of the Company. If
no direction to the contrary is given, all proxies received by the Board of
Directors will be voted "FOR" the election of Mr. Barbanell as Director. In the
event that Mr. Barbanell is unable to serve, the proxy solicited herewith may be
voted for the election of another person in his stead at the discretion of the
proxies. The Board of Directors knows of no reason to anticipate that this will
occur.
NOMINEE FOR DIRECTOR FOR A TERM
EXPIRING AT THE 2001 ANNUAL MEETING
ROBERT L. BARBANELL, age 67, has been Director since February 1997. He has
been President of Robert L. Barbanell Associates, Inc., a financial consultancy
firm, since July 1994. Prior thereto, Mr. Barbanell served in various capacities
at Bankers Trust New York Corporation, where he was Managing Director of the
European Merchant Bank of Bankers Trust International PLC from 1991 to 1994;
Managing Director of BT Securities Corporation from 1989 to 1991; Managing
Director of Bankers Trust Company from 1986 to 1989; Senior Vice President of
Bankers Trust Company from 1981 to 1986. Prior to his service with Bankers
Trust, Mr. Barbanell served in various executive capacities at Amcon Group, Inc.
and GI Export Corporation. Mr. Barbanell currently serves on the Boards of
Directors of Marine Drilling Companies, Inc., Kaye Group, Inc. and Cantel
Industries, Inc.
DIRECTORS NOT PRESENTLY STANDING FOR REELECTION
ROBERT D. FURST, JR., age 45, has been a Director of the Company since its
inception. Prior thereto he was a Director of Video Sentry Corporation ("Video
Sentry"), a predecessor of the Company, from January 1993 until February 1997.
He was Chairman of the Board of Video Sentry from July 1996 and Chief Executive
Officer from August 1996 until February 1997. Mr. Furst was one of the original
shareholders of Video Sentry. He is also the founder and owner of Furst Capital
Management, a firm specializing in trading government and equity securities as
well as commodity futures. Mr. Furst is a member of the Chicago Board of Trade
and has been a securities and commodities trader since 1980. Mr. Furst currently
serves on the Boards of Directors of NOW Technologies, Inc., a privately-held
manufacturer of chemical packaging and dispensing systems serving the
semi-conductor industry; Lucht, Inc., a privately-held manufacturer of high
volume photographic printers and other equipment; and Neighborhood Marketing
Corporation, a privately-held consumer promotion and database marketing company
utilizing proprietary patented technologies. Mr. Furst's term as a Director
expires at the 2000 Annual Meeting of Stockholders.
PAUL D. MELLIN, age 34, has been a Director since August 1997, when he was
appointed to fill the vacancy created by the resignation of Andrew Benson as a
Director. Mr. Mellin joined the BT Alex Brown Incorporated mergers and
acquisitions group in 1996. Prior to Mr. Mellin's joining BT Alex Brown, he was
a member of the mergers and acquisitions group at Smith Barney. Mr. Mellin's
term as a Director expires at the 1999 Annual Meeting of Stockholders.
THOMAS A. NICOLETTE, age 47, has been President, Chief Executive Officer
and a Director of the Company since January 1997. Prior thereto, Mr. Nicolette
served in various capacities at several predecessors of the Company, including
Knogo North America Inc., where he was President, Chief Executive Officer and a
Director from December 1994 to February 1997, and Knogo Corporation, where he
was a Director from 1987 until December 1994, Chief Executive Officer from May
1994 to December 1994 and President and Chief Operating Officer from 1990 to May
1994. Prior thereto he served in other positions as an officer at Knogo
Corporation. Mr. Nicolette serves on the Board of Directors of SenTech EAS
Corporation and is Vice Chairman of the Board of Trustees of WLIW, the Long
Island-based affiliate of the Public Broadcasting System. Mr. Nicolette's term
as President, Chief Executive Officer and a Director expires at the 2000 Annual
Meeting of Stockholders.
WILLIAM A. PERLMUTH, age 68, has been Chairman of the Board of Directors of
the Company since January 1997. Prior thereto, Mr. Perlmuth served as a Director
of several predecessors of the Company from 1979 to February 1997. Mr. Perlmuth
has been a partner in the law firm of Stroock & Stroock & Lavan LLP in New York,
New York for more than five years and is presently of counsel to such firm. Such
firm and Mr. Perlmuth have performed legal services for the Company. The
aggregate amount of fees paid by the Company to Stroock & Stroock & Lavan LLP
was less than 5% of the law firm's gross revenues for the last fiscal year. The
Company believes that the billing rates for the foregoing legal services were no
less favorable to the Company than could have been obtained from unaffiliated
parties for comparable services. Mr. Perlmuth's term as Chairman of the Board of
Directors expires at the 1999 Annual Meeting of Stockholders.
COMPENSATION OF DIRECTORS
Directors who are also full-time employees of Sentry receive no additional
compensation for their services as Directors. Each non-employee Director
receives $12,000 annually for services on the Board and $1,000 per Board meeting
attended. In addition, each non-employee Director who is a member of any
committee of the Board receives $500 for attendance at any meeting of such
committee which is held neither immediately before nor immediately after a
Sentry Board meeting; PROVIDED, HOWEVER, that the chairman of the Audit
Committee of the Board receives $1,000 for attendance at any such separately
held meeting of the Audit Committee and $500 for attendance at any meeting of
such committee held either immediately before or immediately after a Board
meeting.
In addition, each non-employee Director is eligible to participate in the
1997 Stock Incentive Plan of Sentry. Options for 15,000 shares of Common Stock
at an exercise price of $3.00, vesting in equal portions over a five-year
period, were granted by the Board to each non-employee Director on February 13,
1997, and to Mr. Mellin on August 11, 1997 when he became a Director.
COMMITTEE OF THE BOARD OF DIRECTORS; ATTENDANCE AT MEETINGS
The Board of Directors has an Audit Committee. The members of the Audit
Committee are Directors of Sentry who are neither officers nor employees of
Sentry. The members of the Audit Committee are Messrs. Barbanell and Mellin. Mr.
Barbanell is Chairman of the Audit Committee. During 1997 there were six
meetings of the full Board and one meeting of the Audit Committee. Each Director
attended all of the meetings of the Board and of each committee of which he is a
member.
<PAGE>
OFFICERS
Set forth below are the names and titles of certain of the persons serving
as executive officers of the Company.
NAME AGE OFFICE
Thomas A. Nicolette................. 47 President and Chief Executive
Officer of Sentry since January
1997. Mr. Nicolette was
President, Chief Executive
Officer and a Director of Knogo
North America Inc. since its
inception in August 1994. Prior
thereto, Mr. Nicolette served in
various capacities with Knogo
Corporation, where he was Chief
Executive Officer from May 1994
to December 1994; President and
Chief Operating Officer from 1990
to May 1994; President of its
North America Division from 1989
to 1990; Vice President from 1986
to 1990; and a Director from 1987
to December 1994. Mr. Nicolette
serves on the Board of Directors
of SenTech EAS Corporation and is
a Vice Chairman of the Board of
Trustees of WLIW, the Long
Island-based affiliate of the
Public Broadcasting System.
Peter J. Mundy...................... 41 Vice President-Finance and Chief
Financial Officer of Sentry. Mr.
Mundy also serves as Secretary
and Treasurer of the Company. Mr.
Mundy was Vice President -
Finance, Chief Financial Officer,
Secretary and Treasurer of Knogo
North America Inc. from December
1994. Prior thereto, Mr. Mundy
served as an officer of Knogo
Corporation where he was Vice
President - Corporate Controller
from May 1994 and, prior to such
time, Corporate Controller for
more than five years. Mr. Mundy
is a Certified Public Accountant.
Peter Y. Zhou....................... 58 Vice President - Technology of
Sentry. Dr. Zhou was Vice
President - Technology of Knogo
North America Inc. from December
1994. Prior thereto, Dr. Zhou
served as an officer of Knogo
Corporation where he was Senior
Vice President - Technology from
1992 and Vice President -
Research from 1988.
John F. Whiteman.................... 39 Mr. Whiteman became Senior Vice
President - Sales and Marketing
of Sentry in January 1998. Prior
thereto he was Senior Vice
President - Sales and Marketing
of Knogo North America Inc. since
January 1997; Vice President
Sales - West of Knogo North
America Inc. and Knogo
Corporation from 1994 to 1996;
and, prior to such time, served
in various sales positions with
Knogo Corporation since 1986.
EMPLOYMENT AGREEMENTS AND COMPENSATION OF EXECUTIVE OFFICERS; CHANGE OF
CONTROL ARRANGEMENTS
The employment agreement between the Company and Mr. Nicolette is for a
term ending February 11, 2001. In addition to establishing Mr. Nicolette's
annual compensation of $200,000 per year, together with an opportunity to
receive up to an additional 50% of such amount, based upon certain
performance-based criteria, the use of an automobile and the receipt of life
insurance in the amount of $1,000,000, the agreement requires that the Company
grant to Mr. Nicolette options to acquire 100,000 shares of Common Stock, with
such options vesting at 20% per annum during the five year period commencing on
the date of the grant thereof. These options were granted in February 1997. The
employment agreements of Mr. Mundy and Dr. Zhou provide for a term of two years
at annual salaries of $120,000 and $130,000, respectively. In addition to their
annual salaries, Mr. Mundy and Dr. Zhou received options to purchase 40,000
shares of Common Stock, vesting at 20% per annum during the five year period
commencing on February 10, 1997. The employment agreements of Messrs. Nicolette
and Mundy and Dr. Zhou provide for a cost of living adjustment to the base
annual salary of each such executive calculated based upon the percentage
increase of the Consumer Price Index (as defined in such agreements).
The employment agreements of Messrs. Nicolette and Mundy and Dr. Zhou
provide that in the event of a change in control of the Company, the term of
each of their employment will be automatically extended for the period ending
two years in the case of Mr. Nicolette's agreement and one year in the case of
each of the other agreements, following the date of such change in control.
Following such change in control, each of such persons will have the right to
terminate his employment for good reason while continuing to receive the salary
and bonus otherwise payable thereunder for the remainder of the employment term.
Additionally, the employment agreements provide that in the event of a change in
control all options held by each of such person, whether or not then vested,
would fully vest. If the change in control was not approved by a majority of the
Existing Directors (as defined in the Company's Certificate of Incorporation),
each such officer would be entitled to receive cash in cancellation of such
options in an amount equal to the difference between the exercise price of such
options and the market price of the Common Stock at the time of cancellation.
Andrew Benson, formerly a Director and executive officer of the Company,
resigned from these positions in July 1997 and is presently an independent sales
representative for the Company. Mr. Benson had been employed pursuant to an
agreement which has been terminated. Under the agreement, he received annual
cash compensation of $218,773 and other benefits similar to those described
above for the other executive officers.
EXECUTIVE COMPENSATION
REPORT OF THE BOARD OF DIRECTORS WITH RESPECT TO COMPENSATION
The Board of Directors, without Mr. Nicolette's participation, sets the
compensation paid to the Chief Executive Officer and for final approval of the
compensation paid to the other executive officers of the Company, approving or
disapproving the recommendation of the Chief Executive Officer. The Board of
Directors also determines the amount of shares and exercise prices for any stock
option grants under the Company's 1997 Stock Incentive Plan, and the amount of
the Company's matching contribution percentage under the Company's Retirement
Savings 401(k) Plan, respectively.
Currently, the Company's executive officers, including the Chief Executive
Officer, are compensated pursuant to written employment agreements providing for
a base salary. These agreements provide for annual salary increases intended to
maintain the executive's base salary against increases in the cost of living as
measured by the United States Department of Labor.
<PAGE>
STOCK OPTION AND OTHER EQUITY PLANS; COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
The Board of Directors endorses the view that the value of compensation
paid to the Company's executive officers, and the Chief Executive Officer in
particular, should be closely linked to increases in the value of the Common
Stock. Accordingly, the Board supports option awards under the Company's 1997
Stock Incentive Plan and participation by executive officers in the Retirement
Savings 401(k) Plan, which includes a Company Common Stock fund among its
investment alternatives. A substantial portion of the total compensation of the
executive officers, including the Chief Executive Officer, is wholly dependent
on increases in the value of the Common Stock.
The number of stock options granted to executive officers is not determined
by reference to any formulas but is determined by the Board's evaluation of the
particular officer's ability to influence the long-term growth and profitability
of the Company. The Board also considers the Company's performance against
certain of its competitors, its general performance against internal goals
established by management, and the executive's relative contribution thereto.
This report is submitted by the Board of Directors of the Company.
SUMMARY COMPENSATION TABLE
The following table summarizes the compensation for the Company's fiscal
year ended December 31, 1997 of the Company's Chief Executive Officer and each
of four other executive officers of the Company:
<TABLE>
<CAPTION>
LONG-TERM ALL OTHER
ANNUAL COMPENSATION (1) COMPENSATION (1) (2)
COMPENSATION (1)
SECURITIES
NAME AND UNDERLYING
PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS (#)
<S> <C> <C> <C> <C> <C>
Thomas A. Nicolette, 1997 $194,167 - 100,000 $4,390
President and 1996 150,000 - 83,181 4,391
CEO 1995 150,000 - 89,004 4,386
Peter J. Mundy, 1997 118,110 - 40,000 3,543
Vice President - Finance, 1996 103,800 - 33,272 3,114
Secretary and 1995 103,800 - 37,431 3,223
Treasurer
John F. Whiteman (3) 1997 149,120 $30,943 40,000 3,586
Sr. Vice 1996 103,057 32,760 16,636 3,573
President Sales 1995 90,543 31,716 2,080 3,765
and Marketing
Peter Y. Zhou, 1997 128,833 - 40,000 3,865
Vice President - 1996 120,000 - 33,272 3,600
Technology 1995 120,000 - 37,431 3,649
Andrew L. Benson 1997 184,730 34,043 50,000 633
Vice President-CCTV 1996 125,000 - - -
Systems(4) 1995 84,436 - - -
- ------------------------
(1) Compensation information for 1996 and 1995 reflects compensation
paid to the named executive officers by the predecessors of the
Company, Knogo or Video Sentry, as the case may be. Share
information is provided on a converted basis, giving effect to
the exchange of shares of such predecessors for shares of the
Company pursuant to the terms of the merger of Knogo and Video
Sentry into subsidiaries of the Company on February 12, 1997.
(2) Amounts shown consist of the Company's matching contributions under the
Retirement Savings 401(k) Plan.
(3) Mr. Whiteman became an executive officer of the Company in January
1998. Prior thereto, Mr. Whiteman had not served as an officer of the
Company.
(4) Mr. Benson resigned as a Director and Vice-President of the Company in
July 1997, but remained a major account sales representative throughout
1997.
</TABLE>
As to various items of personal benefits, the Company has concluded that
the aggregate amount of such benefits with respect to each individual does not
exceed the lesser of $50,000 or 10% of the annual salary and bonus reported in
the table for such individual.
OPTIONS GRANTED IN LAST FISCAL YEAR
The following table sets forth certain information concerning options
granted during 1997 to each person named in the Summary Compensation Table:
<TABLE>
<CAPTION>
Number Of
Securities % Of Total Potential Realizable
Underlying Granted To Value At Assumed
Options Employees Exercise Expiration Annual Rate Of Stock Price
Name Granted In 1997 Price Date Appreciation For Option Term
5% 10%
-- ---
<S> <C> <C> <C> <C> <C> <C>
Thomas A. Nicolette 100,000 23.6% $2.38 February 10, 2007 $149,724 $379,311
Peter J. Mundy 40,000 9.4% 2.38 February 10, 2007 59,871 151,724
John F. Whiteman (1) 40,000 9.4% 2.38 February 10, 2007 59,871 151,724
Peter Y. Zhou 40,000 9.4% 2.38 February 10, 2007 59,871 151,724
Andrew L. Benson (2) 50,000 11.8% 2.38 February 10, 2007 74,838 189,655
- ---------------
(1) Mr. Whiteman became an executive officer of the Company in January 1998.
(2) Mr. Benson resigned as a Director and Vice-President of the Company in
July 1997, but remained a major account sales representative throughout 1997.
</TABLE>
<PAGE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END
OPTION VALUES
The following table sets forth for each of the persons named in the Summary
Compensation Table the number of options exercised during 1997 and the amount
realized by each such officer. In addition, the table shows the number of
options that the named executive officer held as of December 31, 1997, both
exercisable (E) and unexercisable (U), and the value of such options as of that
date.
<TABLE>
<CAPTION>
NUMBER OF VALUE OF
UNEXERCISED UNEXERCISED IN
OPTIONS AT THE MONEY
YEAR-END (#) OPTIONS AT YEAR
END ($)
SHARES
ACQUIRED
ON VALUE EXERCISABLE/ EXERCISABLE/
NAME EXERCISE (#) REALIZED ($) UNEXERCISABLE UNEXERCISABLE
<S> <C> <C> <C> <C> <C> <C>
Thomas A. Nicolette - - E 217,138 E $108,669
U 80,000 U -
Peter J. Mundy - - E 81,614 E $35,236
U 32,000 U -
John F. Whiteman (1) - - E 26,716 E $629
U 32,000 U -
Peter Y. Zhou - - E 70,703 E $31,619
U 32,000 U -
Andrew L. Benson (2) - - E 25,000 E -
U 25,000 U -
- ---------------
(1) Mr. Whiteman became an executive officer of the Company in January 1998.
(2) Mr. Benson resigned as a Director and Vice-President of the
Company in July 1997, but remained a major account sales representative
throughout 1997.
</TABLE>
<PAGE>
PERFORMANCE GRAPH
<TABLE>
<CAPTION>
February 12, March 31, June 30, September 30, December 31,
1997 1997 1997 1997 1997
<S> <C> <C> <C> <C> <C>
Sentry Technology Corporation $100 $96 $114 $75 $43
S&P 600 Small Cap Index 100 93 110 127 123
S&P Elec. Equip. Index 100 92 118 124 131
</TABLE>
BENEFICIAL OWNERSHIP REPORTS
Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange Act")
requires the Company's officers, Directors and persons who own more than 10% of
a registered class of the Company's equity securities to file reports of
ownership and changes in ownership with the Securities and Exchange Commission
and the American Stock Exchange. Officers, Directors and greater than
ten-percent Stockholders are required by Securities and Exchange Commission
regulations to furnish the Company with copies of all such reports they file.
Based solely on a review of the copies of such reports furnished to the
Company, or written representations that no Forms 5 were required, the Company
believes that during the fiscal year ended December 31, 1995, all Section 16(a)
filing requirements applicable to its officers, Directors and greater than
ten-percent beneficial owners were complied with, except that Andrew Benson,
formerly a Director and executive officer, filed one late Form 4 in October
1997.
AFFILIATE TRANSACTION
In October and November 1996, Video received an aggregate of $250,000 from
Mr. Furst under a promissory note (the "October 1996 Note") which allowed Video
Sentry to borrow up to $500,000, with interest at 10%, and which matured in
January 1997. This promissory note was secured by all of the assets of Video
Sentry and was subordinated to Video Sentry's bank line of credit. In 1997,
Video Sentry repaid the October 1996 Note with funds advanced to Video Sentry
from Knogo North America Inc., a subsidiary of the Company.
The Company believes that all transactions between the Company and its
predecessors, on the one hand, and the officers, Directors, or other affiliates
of the Company and its predecessors, on the other hand, were on terms no less
favorable to the Company and its predecessors than could have been obtained from
unaffiliated third parties on an arm's length basis.
OTHER BUSINESS
As of the date of this Proxy Statement, the only business which the Board
of Directors intends to present, and knows that others will present, at the
meeting is that set forth herein. If any other matter or matters are properly
brought before the meeting or any adjournments thereof, it is the intention of
the persons named in the accompanying form of proxy to vote the proxy on such
matters in accordance with their judgment.
STOCKHOLDER PROPOSALS
Proposals of Stockholders intended to be presented at the Company's 1999
Annual Meeting of Stockholders must be received by the Company on or prior to
December 10, 1998 to be eligible for inclusion in the Company's Proxy Statement
and form of proxy to be used in connection with the 1999 Annual Meeting.
The Company's Bylaws provide that a Stockholder of the Company who
intends to nominate persons for election as Directors or introduce other
proposals from the floor of an Annual Meeting of Stockholders follow certain
notice and disclosure requirements.
The Bylaw provision requires a Stockholder introducing a proposal at an
Annual Meeting to notify the Company of such intention not less than 60 days
prior to the date of the Annual Meeting. If the Company has given less than 75
days public notice of the date of the Annual Meeting, the Stockholder must give
such notice so that it is received by the Company not later than 10 days after
the public notice is given or the Proxy Statement is mailed. The Stockholder's
notice must give the information specified in the Bylaws, including information
about the Stockholder making the proposal, the number of shares such Stockholder
owns and any interest such Stockholder may have in the subject of the proposal.
If such Stockholder will be nominating persons for election as Directors,
certain information specified in the Bylaws must also be given about the nominee
and the nominee's interest in the Company.
The Bylaw provision grants to the Chairman of the Meeting the authority to
determine whether a proposal has been brought to the floor in accordance with
the provision.
By Order of the Board of Directors,
PETER J. MUNDY,
SECRETARY
Hauppauge, New York
April 10, 1998
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED
DECEMBER 31, 1997, MAY BE OBTAINED BY STOCKHOLDERS SOLICITED HEREBY, WITHOUT
CHARGE, UPON WRITTEN REQUEST SENT TO THE SECRETARY OF THE COMPANY, MR. PETER J.
MUNDY, SENTRY TECHNOLOGY CORPORATION, 350 WIRELESS BOULEVARD, HAUPPAUGE, NEW
YORK 11788.
<PAGE>
PROXY
SENTRY TECHNOLOGY CORPORATION
ANNUAL MEETING OF STOCKHOLDERS, MAY 6, 1998
PROXY SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby appoints Thomas A. Nicolette, William A. Perlmuth and
Peter J. Mundy, or a majority of those present and acting, or if only one is
present, then that one, proxies, with full power of substitution, to vote all
shares of SENTRY TECHNOLOGY CORPORATION (the "Company") which the undersigned is
entitled to vote at the Company's Annual Meeting to be held at the American
Stock Exchange, 86 Trinity Place, New York, NY, on May 6, 1998, at 11:00 A.M.,
New York time, and at any adjournment thereof, hereby ratifying all that said
proxies or their substitutes may do by virtue hereof, and the undersigned
authorizes and instructs said proxies to vote as follows:
1. ELECTION OF DIRECTORS: To elect the nominee for one class of Director below
for a term expiring in 2001.
[ ] FOR the nominee listed below [ ] WITHHOLD AUTHORITY
(except as marked to the contrary below) to vote for the
nominee listed below
NOMINEE FOR DIRECTOR FOR TERM EXPIRING IN 2001:
ROBERT L. BARBANELL
2. In their discretion, upon any other matters which may properly come before
the meeting or any adjournments thereof.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR THE NOMINEE LISTED IN PROPOSAL 1.
Receipt of the Notice of Annual Meeting and Proxy Statement and of the Annual
Report of the Company preceding or accompanying the same is hereby acknowledged.
Dated ____________________________, 1998
__________________________________
(Signature of Stockholder)
__________________________________
(Signature of Stockholder)
Your signature should appear the same as your
name appears hereon. If signing as attorney,
executor, administrator, trustee or guardian,
please indicate the capacity in which signing.
When signing as joint tenants, all parties to
the joint tenancy must sign. When the proxy is
given by a corporation it should be signed by
an authorized officer.
PLEASE DATE, SIGN AND RETURN THIS PROXY PROMPTLY USING THE
ENCLOSED ENVELOPE.
