EXHIBIT 10.1
FORBEARANCE AGREEMENT -EXTENSION
--------------------------------
THIS AGREEMENT made as of November 12, 2008.
AMONG:
ROYAL BANK OF CANADA
(hereinafter referred to as the "BANK")
-and-
SENTRY TECHNOLOGY CANADA INC.
(hereinafter referred to as the "BORROWER")
-and-
SENTRY TECHNOLOGY CORPORATION
(hereinafter referred
to as the "SENTRY")
- and -
CUSTOM SECURITY INDUSTRIES INC.
(hereinafter referred to as "CSI")
WHEREAS:
A.
The Bank and the Borrower entered into a Forbearance Agreement made
as of
the 29th day of May, 2008, a copy of which is
attached hereto as Appendix "A"
("Forbearance
Agreement").
B.
By letter dated October 31, 2008, the Borrower has advised the
Bank,
among other
things, that it is making steady progress
towards profitability,
will be implementing
further expense cuts, and requires further time to attract
investment capital
sufficient
to repay the Indebtedness.
C.
Accordingly, the Borrower has requested that the Bank extend
the
Forbearance Period.
D. As an inducement to the Bank agreeing
to extend the Forbearance Period,
the Borrower
has agreed to enter into this Extension
Agreement and to comply
with the terms and conditions contained in the Forbearance Agreement and
contained herein.
NOW THEREFORE in consideration of the acknowledgements,
confirmations, covenants
and agreements
contained herein, and other good and valuable consideration
(the
receipt and
sufficiency of which
is hereby acknowledged by each of the Parties
hereto), each
of the Parties hereto hereby agrees as follows:
<PAGE>
-2-
1. All
capitalized words and phrases not specifically defined herein
shall
have
the meaning as defined in the Forbearance Agreement.
2. Subsection
5.02(a) of the Forbearance Agreement is hereby amended by
deleting "October 31, 2008" and inserting "May 15, 2009".
3. Subsection
5.06(a) of the Forbearance Agreement is hereby amended by
deleting "the Bank's Prime Rate plus 3 and 1/4% per annum", and
inserting
"the
Bank's Prime Rate plus 3 and 3/4% per annum".
4.
Section 5.06
of the Forbearance Agreement is
hereby amended by adding:
"(b)
the availability
under Facility #1 of the Credit Facilities shall
be reduced to $3,000,000, effective immediately."
5. The Borrower
shall pay to the Bank an extension fee in the sum of $5,000 in
consideration for the Bank's agreement to extend the Forbearance
Period as
set
out herein. Such extension fee shall be and is hereby deemed to
form
par
