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Forbearance Agreement-extension

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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:


-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 avai
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