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:

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                                      -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
     part of the Indebtedness and secured by the Security. The Borrower
     authorizes the Bank to debit the account it maintains with the Bank in the
     foresaid sum immediately following the execution of this Extension
     Agreement by the Borrower.

6.   The Borrower and each of the Guarantors shall provide to the Consultant
     access to the books and records of the Borrower and Sentry on or before
     April 30, 2009 for the purpose of reviewing the financial performance of
     the Borrower and Sentry, and in particular, it's most recent quarterly
     results.

7.  The  following  shall  be  added  to Article 6 of the Forbearance Agreement:

     "(w) Additional Financial Information:  On or before December 15, 2008,
     the Borrower and Sentry shall provide to the Bank and the Consultant their
     sales  backlog  report  and shipping schedules as at December 31, 2008, for
     the  upcoming  quarter;

     (x)  Additional Financial Reporting and Cash Flow Projections: The Borrower
     shall provide to the Bank, and the Guarantors shall ensure that the
     Borrower provides to the Bank consolidated and unconsolidated (i) monthly
     financial statements on the 30th day of each month for the previous month;
     and (ii) monthly 3 way projections (balance sheet, income statement and
     cash flow) for fiscal 2009 on a rolling, quarterly basis, to be provided
     every month, commencing November 30, 2008 and on the last day of each month
     thereafter."

8.   The agreement of the Bank to extend the Forbearance Period as provided for
     herein is conditional upon: (i) Brascan Technology Fund providing to the
     Bank, by no later than November 21, 2008, with written confirmation that it
     has agreed to extend the date for the repayment of the indebtedness owing
     to it by the Borrower to July 30, 2009, in form and content satisfactory to
     the Bank; (ii) the Borrower providing to the Bank, by no later than
     November 21, 2008, with written confirmation, in form and content
     satisfactory to the Bank, from Tradition Capital Bank, that the revolving
     credit agreement made as of September 26, 2007 between Sentry and Tradition
     has been extended to at least  July  30,

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                                     -3-

     2009;  and  (iii)  LaSalle Bank N.A. confirming the extension of its
     irrevocable standby letter of credit number 6591288 in favour of the Bank
     for the account of Robert  Furst,  Jr.  to  July  30,  2009.

9.   The Borrower and each of the Guarantors acknowledge that the disbursements
     and legal fees incurred by it, as well as the fees of the Consultant
     incurred by it, in the aggregate sum of $64,272.97, has been added to, and
     continues to be deemed to form part of, the Indebtedness. In addition, the
     most recent invoice of the Consultant shall be paid directly by the
     Borrower, within 30 days of it having been received by the Borrower.

10.  The Forbearance Agreement shall remain in full force and effect and
     unamended, except as amended hereby.


IN WITNESS WHEREOF the parties hereto have executed this Extension Agreement
with effect as and from the date first above written.


                         ROYAL BANK OF CANADA

                         Per:     /s/ Colin Cochrane
                                 ---------------------------
                                 Authorized Signing Officer


                         SENTRY TECHNOLOGY CANADA INC.

                         Per:    /s/ Peter L. Murdoch
                                ----------------------------
                                Authorized Signing Officer

                         Per:    /s/ Joan Miller
                                ----------------------------
                                Authorized Signing Officer


                         SENTRY TECHNOLOGY CORPORATION

                         Per:    /s/ Peter L. Murdoch
                                ----------------------------
                                Authorized Signing Officer

                         Per:    /s/ Joan Miller
                                ----------------------------
                                Authorized Signing Officer



                         CUSTOM SECURITY INDUSTRIES INC.

                         Per:   /s/ Morton Roseman
                               -----------------------------
                               Authorized Signing Officer

                         Per:
                               -----------------------------
                               Authorized Signing Officer