<PAGE>

         WAIVER AND EIGHTH AMENDMENT TO THE LOAN AND SECURITY AGREEMENT
         --------------------------------------------------------------


     Waiver  and Eighth Amendment dated as of August 10, 2001 (this "AMENDMENT")
to  the  Loan  and Security Agreement, dated as of December 31, 1997 (as amended
and modified, the "LOAN AGREEMENT"), among GENERAL ELECTRIC CAPITAL CORPORATION,
a  Delaware  corporation  ("LENDER")  and  KNOGO  NORTH AMERICA INC., a Delaware
corporation ("BORROWER"), and the other Credit Parties executing this Amendment.

                                  WITNESSETH :
                                  ----------

     WHEREAS, Borrower has requested that Lender waive the defaults arising from
the  breach  of  the "Minimum Net Worth" financial covenant for certain dates of
determination  and  amend  the  terms  of  certain  financial  covenants;

     WHEREAS,  Lender  is  willing to waive such financial covenant defaults and
amend  the  Loan  Agreement  only  on the terms and conditions set forth herein;

     NOW,  THEREFORE,  in  consideration  of  the  premises,  the  covenants and
agreements  contained herein, and for other good and valuable consideration, the
receipt  and  adequacy  of  which are hereby acknowledged, the parties do hereby
agree  that  all  capitalized terms used herein shall have the meanings ascribed
thereto  in  the  Loan  Agreement  and  do  hereby  further  agree  as  follows:

                               STATEMENT OF TERMS
                               ------------------

1.     WAIVERS.  Lender  hereby  waives the Event of Default arising solely as a
       --------
result  of  the  breach of the Minimum Net Worth covenant solely for the periods
ending  December  31, 2000, January 31, 2001, February 28, 2001, March 31, 2001,
April  30,  2001  and  May  31,  2001.

2.     AMENDMENT.  Paragraph 2 of Schedule G of the Loan Agreement is amended in
       ---------
     its  entirety  to  provide  as  follows:

"Minimum  Net  Worth.  Sentry  and its Subsidiaries on a consolidated basis
 -------------------
shall have  a  Net  Worth of not less than the amounts set forth below as of
the dates set forth below:
<TABLE>
<CAPTION>

<S>                                   <C>
Fiscal Month Ending                   Net Worth
------------------------------------  ----------

June 30, 2001                         $3,200,000
July 31, 2001                         $2,700,000
August 31, 2001                       $2,700,000
September 30, 2001 and the last       $3,200,000
day of each Fiscal Month thereafter"
</TABLE>


3.     REPRESENTATIONS  AND  WARRANTIES.  To  induce  Lender  to enter into this
       ---------------------------------
Amendment, each Credit Party hereto hereby warrants, represents and covenants to
Lender that: (a) each representation and warranty of the Credit Parties set
forth  in  the  Loan  Agreement  is  hereby  restated and reaffirmed as true and
correct on and as of the date hereof after giving affect to this Amendment as if
such  representation  or warranty were made on and as of the date hereof (except
to  the  extent  that any such representation or warranty expressly relates to a
prior  specific  date  or period in which case it is true and correct as of such
prior  date  or  period), and no Default or Event of Default has occurred and is
continuing  as of this date under the Loan Agreement after giving effect to this
Amendment; and (b) each Credit Party hereto has the power and is duly authorized
to  enter  into,  deliver  and perform this Amendment, and this Amendment is the
legal,  valid and binding obligation of such Credit Party enforceable against it
in  accordance  with  its  terms.
<PAGE>

4.     CONDITIONS  PRECEDENT  TO  EFFECTIVENESS  OF  THIS  AMENDMENT.  The
       -------------------------------------------------------------
effectiveness  of  this Amendment is subject to the fulfillment of the following
conditions  precedent:

     (a)     Lender  shall  have  received  one  or  more  counterparts  of this
Amendment  duly  executed  and  delivered  by  the  Credit  Parties  hereto;

     (b)     Any  and  all  guarantors of the Obligations shall have consented
to the execution,  delivery  and  performance  of  this  Amendment  and  all  of
the transactions  contemplated  hereby  by  signing one or more counterparts of
this Amendment in the appropriate space indicated below and returning same to
Lender; and

     (c)     Borrower  shall  have  paid  to Lender an amendment fee in the
amount  of  $5,000 which shall be charged to Borrower's loan account on the date
of  this  Amendment  together with all of Lenders legal fees, costs and expenses
incurred in connection with the preparation, negotiation, execution and delivery
of  this  Amendment.

5.     CONTINUING  EFFECT  OF  LOAN  AGREEMENT.  Except  as  expressly set forth
       ---------------------------------------
herein,  the provisions of the Loan Agreement, and the Liens granted thereunder,
are  and  shall  remain in full force and effect and the waiver set forth herein
shall  be  limited precisely as drafted and shall not constitute a waiver of any
other  provisions  of  the  Loan  Agreement.

6.     COUNTERPARTS.  This  Amendment  may  be executed in multiple counterparts
       ------------
each  of  which  shall  be  deemed to be an original and all of which when taken
together  shall  constitute  one  and  the  same  instrument.

7.     GOVERNING  LAW.  THIS  AMENDMENT  SHALL  BE GOVERNED BY, AND CONSTRUED IN
       ---------------
ACCORDANCE  WITH,  THE  INTERNAL  LAWS  OF  THE  STATE OF NEW YORK APPLICABLE TO
CONTRACTS  MADE  AND  PERFORMED  IN  SUCH STATE WITHOUT REGARD TO THE PRINCIPLES
THEREOF  REGARDING  CONFLICTS  OF  LAWS.

<PAGE>

     IN  WITNESS  WHEREOF,  the  parties hereto have caused this Amendment to be
duly  executed  and  delivered as of the day and year specified at the beginning
hereof.

                                      KNOGO  NORTH  AMERICA  INC.,
                                      AS  BORROWER

                                      By:     /s/  Peter  J.  Mundy
                                             ---------------------
                                      Name:       Peter  J.  Mundy
                                      Title:       V.P.  -  CFO

                                      SENTRY  TECHNOLOGY  CORPORATION,
                                      AS  CREDIT  PARTY

                                      By:     /s/  Peter  J.  Mundy
                                             ---------------------
                                      Name:       Peter  J.  Mundy
                                      Title:       V.P.  -  CFO

                                      VIDEO  SENTRY  CORPORATION,
                                      AS  CREDIT  PARTY

                                      By:     /s/  Peter  J.  Mundy
                                             ---------------------
                                      Name:       Peter  J.  Mundy
                                      Title:       V.P.  -  CFO

                                      KNOGO  CARIBE,  INC.,
                                      AS  CREDIT  PARTY

                                      By:     /s/  Peter  J.  Mundy
                                              ---------------------
                                      Name:       Peter  J.  Mundy
                                      Title:       V.P.  -  CFO

                                      GENERAL  ELECTRIC  CAPITAL  CORPORATION,
                                      AS  LENDER

                                      By:     /s/  Philip  F.  Carfora
                                              ------------------------
                                      Name:     Philip  F.  Carfora
                                      Title:     Duly  Authorized  Signatory
<PAGE>
                              CONSENT OF GUARANTORS

     Each  of  the  undersigned guarantors does hereby consent to the execution,
delivery  and performance of the within and foregoing Amendment and confirms the
continuing  effect of such guarantor's guarantee of the Obligations after giving
effect  to  the  foregoing  Amendment.

     IN  WITNESS  WHEREOF,  each of the undersigned guarantors has executed this
Consent  to  Guarantors  as  of  the  day  and  year  first  above  set  forth.

                    GUARANTORS:

                    SENTRY  TECHNOLOGY  CORPORATION

                    By:  /s/  Peter  J.  Mundy
                         ---------------------
                    Name:  Peter  J.  Mundy
                    Title:     V.P.  -  CFO

                    VIDEO  SENTRY  CORPORATION

                    By:  /s/  Peter  J.  Mundy
                         ---------------------
                    Name:     Peter  J.  Mundy
                    Title:     V.P.  -  CFO

                    KNOGO  CARIBE,  INC.

                    By:  /s/  Peter  J.  Mundy
                         ---------------------
                    Name:  Peter  J.  Mundy
                    Title:     Treasurer