EXHIBIT 10.14
[GRAPHIC OMITED]
Royal Bank of Canada
Information Technology - GTA
000 Xxxx Xxxxxx Xxxxx Xxxx, Xxxxx 000
Xxxxxxxx Xxxx, Xxxxxxx X0X 0X0
TeL: (000) 000-0000
Fax: (000) 000-0000
January 23, 2006
Private and Confidential
SENTRY TECHNOLOGY CANADA INC.
c/o Sentry Technology Corporation
00 Xxxxxxx Xxxxx Xxxxx
Xxxxxxx, Xxxxxxx
X0X 0X0
We refer to the agreement dated April 19, 2005 between Sentry Technology Canada
Inc., as the Borrower, and Royal Bank of Canada, as the Bank, (the "Agreement").
All capitalized terms not otherwise defined herein shall have the meaning
ascribed to them in the Agreement.
The Agreement is amended as follows:
1. Under the Repayment section, Facility (1) is amended and restated as
follows:
REPAYMENT
---------
Facility (1)
------------
Borrowings under this facility are expected to revolve with operating
requirements.
Borrowings under this facility shall be repayable on April 30, 2006.
2. Under the Interest Rates and Fees section, Facility (1) is amended and
restated as follows:
INTEREST RATES AND FEES
-----------------------
Facility (1)
------------
RBP Loans: RBP plus 1.75% per annum.
RBUSBR Loans: RBUSBR plus 1.75% per annum.
LCs: fee to be quoted by the Bank at the time of issue of each LC.
LGs: fee to be quoted by the Bank at the time of issue of each LG, subject
to a minimum fee of $100 in the currency of issue.
Sentry Technology Canada Inc. - 2 - January 23,2006
3. Under the Security section, paragraph (e) is deleted and replaced with
the following:
(e) Postponement and subordination agreement between the Brascan Technology Fund
("Brascan"), the Bank, the Borrower, Sentry Technology Corporation, Sentry
Technology USA Inc. and Custom Security Industries Inc., whereby the parties
agree, inter alia, that:
(i) the Brascan Security (as defined therein) shall rank subsequent and be
subordinate to the
Lender Security (as defined therein) held by the Bank, to a maximum of
$5,350,000;
(ii) with the exception of subparagraph (e)(i) above, the Lender
Security (as defined therein) shall rank subsequent and be subordinate to the
Brascan Security to the extent of the Brascan Indebtedness (as defined therein),
and;
(iii) upon receipt by Brascan of written notice by the Bank that the Bank
is issuing a demand pursuant to any of the obligations owing by any of the
Borrower, Sentry Technology Corporation, Sentry Technology USA Inc. or Custom
Security Industries Inc. to the Bank, Brascan will cease to receive and will
postpone receipt of all payment of any Brascan Indebtedness for a period of time
provided for therein.
4. Under the Reporting Covenants section,
(i) paragraph (b) under the reporting covenants for the Borrower, is amended
and restated as follows:
(b) monthly company prepared financial statements for the Borrower,
within 30 days of each month end; and
(ii) paragraph (a) under the reporting covenants for Sentry Technology
Corporation, is
amended and restated as follows:
(a) monthly company prepared consolidated financial statements for
Sentry Technology Corporation, within 30 days of each month end;
5. The Financial Covenants section is amended and restated as follows:
FINANCIAL COVENANTS
-------------------
Sentry Technology Corporation covenants and agrees with the Bank, while any
availability exists or any Borrowings remain outstanding under any Credit
Facility, which is a term facility:
a) maintain on a consolidated basis, to be measured as at the end of each
fiscal quarter: i. a ratio of Current Assets to Current Liabilities of not
less than 1.5:1;
ii. a ratio of Funded Debt to EBITDA, calculated on a rolling 4 quarters
basis for the fiscal quarter then ended and the immediately preceding 3 fiscal
quarters, of not greater than 2.5:1;
iii. a ratio of Total Liabilities to Tangible Net Worth of not greater than
2.5:1;
iv. EBITDA of at least the amounts listed in the table below for the
corresponding fiscal quarter, commencing with the fiscal quarter ending June 30,
2006:
Sentry Technology Canada Inc. -3- January 23,2006
Fiscal Quarter Ending: Method of Calculation US Currency EBITDA
----------------------------------------------------------------------------
June 30,2006 N/A $500
----------------------------------------------------------------------------
September 30, 2006 Year-To-Date $1,280,000
----------------------------------------------------------------------------
December 31, 2006 calculated on a rolling $1,940,000
4 quarters basis for
the fiscal quarter then
ended and the immediately
preceding 3 fiscal quarters
----------------------------------------------------------------------------
Each fiscal quarter calculated on a rolling $1,940,000
thereafter 4 quarters basis for the
fiscal quarter then ended and
the immediately preceding 3
fiscal quarters
-----------------------------------------------------------------------------
v. Tangible Net Worth of at least the amounts listed in the table below for
the corresponding fiscal quarter commencing with fiscal quarter ending March
31, 2006:
Fiscal Quarter Ending: US Currency
TNW
-----------------------------------------------------
March 31,2006 $2,900,000
-----------------------------------------------------
June 30,2006 $3,300,000
-----------------------------------------------------
September 30,2006 $4,000,000
-----------------------------------------------------
December 31,2006 $4,500,000
-----------------------------------------------------
Each fiscal
quarter thereafter $4,500,000
-----------------------------------------------------
6. Schedule "E" is replaced as attached.
CONDITIONS PRECEDENT
--------------------
The effectiveness of this amendment is conditional upon receipt of:
a) a duly executed copy of this amending agreement; and
b) such financial and other information or documents relating to the
Borrower or any Guarantor if applicable as the Bank may reasonably require.
AMENDMENT FEE
-------------
A non-refundable amendment fee of $3,000 is payable by the Borrower upon
acceptance of this amending agreement.
COUNTERPART EXECUTION
---------------------
This amending agreement may be executed in any number of counterparts and by
different parties in separate counterparts, each of which when so executed shall
be deemed to be an original and all of which taken together constitute one and
the same instrument.
All other terms and conditions outlined in the Agreement remain unchanged and in
full force and effect.
Sentry Technology Canada Inc. - 4 - January 23,2006
This amending agreement is open for acceptance until February 22, 2006, after
which date it will be null and void, unless extended in writing by the Bank.
ROYAL BANK OF CANADA
Per: /s/ Xxxx X. Xxxxxx
Name: Xxxx X. Xxxxxx
Title: Senior Account Manager
Agreed to and accepted this 2nd day of February, 2006.
SENTRY TECHNOLOGY CANADA INC.
Per: /s/Xxxxx X. Murcoch
Name: Xxxxx X. Xxxxxxx
Title: President
Per:
Name:
Title:
I/We have the authority to bind the Borrower
Agreed to and accepted this 2nd day of February, 2006.
SENTRY TECHNOLOGY CORPORATION
Per: /s/ Xxxxx X. Xxxxxxx
Name: Xxxxx X. Xxxxxxx
Title: President
Per:
Name:
Title:
I/We have the authority to bind the Guarantor
Sentry Technology Canada Inc. - 5 - January 23,2006
We acknowledge and confirm our agreement with the foregoing terms and
conditions, as Guarantor, as of February 2, 2006.
SENTRY TECHNOLOGY USA INC.
Per: /s/ Xxxxx X. Xxxxxxx
Name: Xxxxx X. Xxxxxxx
Title: President
Per:
Name:
Title:
I/We have the authority to bind the Guarantor
We acknowledge and confirm our agreement with the foregoing terms and
conditions, as Guarantor, as of February 2, 2006.
CUSTOM SECURITY INDUSTRIES INC.
Per: /s/ Xxxxxx X. Xxxxxxx
Name: Xxxxxx X. Xxxxxxx
Title: President
Per:
Name:
Title:
I/We have the authority to bind the Guarantor
Schedule E
Schedule "E" to the agreement dated April 19, 2005, between Sentry Technology
Canada Inc., as Borrower, and Royal Bank of Canada, as the Bank.
Compliance Certificate
I, , the of Sentry Technology Corporation
(the "Guarantor") hereby certify as of fiscal quarter ending __________________:
1. I am familiar with and have examined the provisions of the letter
agreement (the "Agreement") dated April 19, 2005, and any amendments thereto,
between Sentry Technology Canada Inc., as Borrower, and Royal Bank of Canada
(the "Bank"), as the Bank, and have made reasonable investigations of
corporate records and inquiries of other officers and senior personnel of the
Borrower and Guarantor. Terms defined in the Agreement have the same meanings
when used in this certificate.
2. The representations and warranties contained in the Agreement are true
and correct.
3. No event or circumstance has occurred which constitutes or which, with
the giving of notice, lapse of time, or both, would constitute an Event of
Default under the Agreement and there is no reason to believe that during the
next fiscal quarter of the Guarantor, any such event or circumstance will occur.
4. The ratio of Current Assets to Current Liabilities is : 1, being not
less than the minimum required ratio of 1.5:1.
5. The ratio of Total Liabilities to Tangible Net Worth is : 1, being
not greater than the maximum ratio of 2.5:1.
6. The ratio of Net Funded Debt to EBITDA is : 1, being not greater than
the required maximum ratio of 2.5:1.
7. EBITDA is US$_____________, being no less than the required US$500 for
the fiscal quarter ending June 30, 2006, improving to US$1,280,000 for fiscal
quarter ending September 30,2006, and US$ 1,940,000 for the fiscal quarter
ending December 31,2006 and for each fiscal quarter thereafter.
8. Tangible Net Worth is US$___________, being not less the required
US$2,900,000 for the fiscal quarter ending March 31,2006, improving to US
$3,300,000 for the fiscal quarter ending June 30, 2006, US$4,000,000 for the
fiscal quarter ending September 30,2006 and US$4,500,000 for the fiscal quarter
ending December 31,2006 and for each fiscal quarter thereafter.
9. The detailed calculations of the foregoing ratios and covenants is set
forth in the addendum annexed hereto and are true and correct in all respects.
Dated this day of , 20 .
Per:
Name:__________________________________
Title: ______________________________
