HydraLogic Announces Forbearance Agreement with Lender

TORONTO, Oct. 9 /CNW/ - HydraLogic Systems Inc. ("HydraLogic" or the "Company") (TSX.V: HLS - OTC Pink Sheet: HYSYF), today announced the Company has entered into a forbearance agreement with CCM Master Qualified Fund, Ltd. ("Lender"), relating to the previously disclosed breach of financial covenants in the September 5, 2008 investment agreement.

Pursuant to the terms of the forbearance agreement signed October 8th, 2009, the Lender has agreed to forbear from exercising its rights and remedies, with respect to existing breach of covenants, until October 31, 2009. The Company has agreed to a forbearance fee of US$325,000 to be paid at the time of repayment of the principal of US$2M due and payable to the Lender on October 31, 2009. The repayment plan could include the sale of strategic assets and/or a financing.

"We appreciate the support of the Lender who agreed to enter into the forbearance agreement with the Company, which we believe gives us additional time and flexibility to continue negotiations with alternate capital facilities and asset purchase candidates", stated Michael Beckley, President and Chief Executive Officer of HydraLogic Systems Inc. "This standstill also allows us to continue focusing on our top priority, providing HLS Ecolo and Bug Defence customers with the quality products and service they expect from us. The Company continues to make significant bottom line progress which has helped significantly in our efforts to attract new investment and the ability to support our long-term strategic plan and business objectives."

About HydraLogic Systems:

HydraLogic is an innovator of engineered misting systems and proprietary environmental chemistries with reoccurring revenue distribution platforms. The company strives to be market leaders in providing technologies, though turnkey distribution and service models into the multi-billion dollar mosquito and odour control industries as Bug Defence and HLS Ecolo respectively.

HydraLogic Systems is traded on the TSX Venture exchange - symbol: HLS.

Forward Looking Statements

This press release contains certain "forward looking statements". These statements relate to future events or future performance and reflect expectations and belief regarding growth, results of operations, performance, business prospects, opportunities or industry performance and trends. These forward looking statements reflect current internal projections, expectations or beliefs and are based on information currently available. A number of factors could cause actual events or results to differ materially from the results discussed in the forward looking statements. Although it is believed that the forward looking statements contained in this press release are based upon reasonable assumptions, investors cannot be assured that actual results will be consistent with these forward looking statements. These forward looking statements are made as of the date of this press release, and HydraLogic Systems Inc. assumes no obligation to update or revise them to reflect new events or circumstances, except as required pursuant to applicable laws.

    The TSX Venture Exchange does not accept responsibility for the adequacy
    or accuracy of this news release.

%SEDAR: 00020350E

SOURCE HydraLogic Systems Inc.

For further information: For further information: Michael Beckley, President & CEO, (416) 740-3900 ext 400, beckley@hydralogic.com

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