AMENDMENT NO. 1 TO THIRD AMENDED AND RESTATED CREDIT AGREEMENT

Exhibit 4.09

This AMENDMENT NO.1 TO THIRD AMENDED AND RESTATED CREDIT AGREEMENT (this "Agreement") is entered into as of February 24, 2014, by and among NAPCO SECURITY TECHNOLOGIES, INC., a Delaware

corporation ("Borrower"), the Guarantors signatory hereto (together with Borrower, each a "Loan Parry" and collectively, "Loan Parties"), the financial institution(s) listed on the signature pages hereof (each a

"Lender" and collectively, "Lenders") and HSBC BANK USA, NATIONAL ASSOCIATION, a national banking association, as administrative agent for the Lenders hereunder (in such capacity, the "Agent").

BACKGROUND

Loan Parties, Agent and Lenders are parties to a Third Amended and Restated Credit Agreement dated as of June 29, 2012 (as amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement") pursuant to which Agent and Lenders provide Borrower with certain financial accommodations.

WHEREAS, Loan Parties have requested that Agent and the Lenders amend certain provisions of the Credit Agreement as hereinafter set forth , and Agent and Lenders are willing to do so on the terms and conditions hereafter set forth;

NOW, THEREFORE, in consideration of any loan or advance or grant of credit heretofore or hereafter made to or for the account of Borrower by Agent and Lenders, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:

1. Definitions. All capitalized terms not otherwise defined herein shall have the meanings given to them in the Credit Agreement.

2. Amendment. Subject to the satisfaction of the conditions precedent set forth in Section 3 below, the Loan Agreement is hereby amended as follows:

(a) Section 1.1 of the Loan Agreement is hereby amended by inserting the following defined terms in their appropriate alphabetical order:

"Amendment No. 1" means Amendment No. 1 to Third Amended and Restated Credit Agreement dated as of February 24, 2014, by and among Loan Parties, Agent and Lenders.

"Amendment No. 1 Effective Date" shall have the meaning assigned to such term in Amendment No. 1.

"Average Availability Test": the daily average Available Revolving Credit Commitment for all Lenders is not less than $5,500,000 for at least six calendar months in the applicable calendar year.

"Margined Inventory Test": as of the end of each fiscal quarter of the Borrower in the applicable calendar year, the portion of Aggregate Revolving Credit Outstanding for all Revolving Lenders made pursuant to clause (ii) of the definition of "Borrowing Base" (calculated assuming the Aggregate Revolving Credit Outstanding is made pursuant to clause (i) of the definition of "Borrowing Base" before clause (i) of the definition of "Borrowing Base") is not more than twenty-five percent (25%) of the total Borrowing Base.

(b) Section 1.1 of the Loa n Agreement is hereby amended by (i) deleting the text "the Closing Date" appearing in the definition of "Applicable Margin" and inserting the text "January 1, 2014" in lieu thereof and (ii) amending and restating the tables appearing in the definition of "Applicable Margin" in their entirety as follows:

Type of Loan	Applicable Margin for Prime Loans	Applicable Margin for Eurodollar Loans	Commitment Fee
Revolving Credit Loans	0.25%	1.50%	0.25%
Term A Loans	0.25%	1.50%	N/A
Term B Loans	0.25%	1.50%	N/A

Leverage Ratio	Applicable Margin for Prime Loans	Applicable Margin for Eurodollar Loans	Commitment Fee
Greater than or equal to 4.00 to 1.00	0.25%	2.75%	0.25%
Less than 4.00 to 1.00 but greater than or equal to 3.00 to 1.00	0.25%	2.125%	0.25%
Less than 3.00 to 1.00 but greater than or equal to 2.00 to 1.00	0.25%	1.75%	0.25%
Less than 2.00 to 1.00	0.25%	1.50%	0.25%

(c) Section 7.6 of the Loan Agreement is amended by amending and restating the last sentence thereof in its entirety as follows:

"Notwithstanding the foregoing, Borrower will not have to pay for more than one (1) field audit per year and, commencing July 1, 2012, one (1) inventory appraisal per year; provided, that, if the Average Availability Test and the Margined Inventory Test are satisfied in any applicable calendar year, Borrower will not have to pay for any field audits in such calendar year; provided, further, that, (x) in the case of inventory appraisals, after the occurrence and during the continuance of an Event of Default all such limitations s hall not apply and (y) in the case of field audits, after the occurrence and during the continuance an Event of Default or any event or development which could reasonably be expected to have a Material Adverse Effect, all such limitations shall not apply and Borrower will, in each case, be responsible for the costs of all field audits and appraisals conducted by the Administrative Agent. For the avoidance of doubt, it is agreed that the Borrower shall not be entitled to a refund of any amounts paid for any field audits conducted p1ior to the Amendment No. 1 Effective Date or at any time when the Average Availability Test and the Margined Inventory Test are not satisfied."

3. Conditions of Effectiveness. This Agreement shall become effective (the "Amendment No.1 Effective Date" upon satisfaction of the following conditions precedent: Agent shall have received a copy of this Agreement executed by Borrower, Guarantors, Agent and Required Lenders.

4. Representations and Warranties. Each Loan Party hereby represents and warrants as follows:

(a) This Agreement and the Loan Agreement, as amended hereby, constitute legal, valid and binding obligations of Loan Parties and are enforceable against Loan Parries in accordance with their respective terms.

(b) Upon the effectiveness of this Agreement, each Loan Party hereby reaffirms all covenants, representations and warranties made in the Loan Agreement to the extent the same are not amended hereby and agrees that all such covenants, representations and warranties shall be deemed to have been remade as of the elate hereof.

5. Effect on the Credit Agreement.

(a) Upon the effectiveness of this Agreement, each reference in the Credit Agreement to "this Agreement," "hereunder," "hereof," "herein" or words of like import shall mean and be a reference to the Credit Agreement as modified hereby. This Agreement shall be a Loan Document for all purposes under the Credit Agreement.

(b) Except as specifically modified herein, the Credit Agreement, and all other documents, instruments and agreements executed and /or delivered in connection therewith as in effect immediately prior to the Amendment No. 1 Effective Date, shall remain in full force and effect, and are hereby ratified and confirmed.

(c) The execution, delivery and effectiveness of this Agreement shall not operate as a waiver of any right, power or remedy of Agent or Lender, nor constitute a waiver of any provision of the Credit Agreement, or any other documents, instruments or agreements executed and/or delivered under or in connection therewith.

6. Governing Law. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns and shall be governed by and construed in accordance with the laws of the State of New York.

7. Headings. Section headings in this Agreement are included herein for convenience of reference only and shall not constitute a part of this Agreement for any other purpose.

8. Counterparts: Facsimile. This Agreement may be executed by the parties hereto in one or more counterparts, each of which shall be deemed an original and all of which when taken together shall constitute one and the same agreement. Any signature delivered by a parry by facsimile or electronic transmission shall be deemed to be an original signature hereto.

IN WITNESS WHEREOF, this Agreement has been duly executed as of the day and year first written above.

NAPCO SECURITY TECHNOLOGIES, INC., as the Borrower
	By:	/s/XXXXX X XXXXXX
	Name:	Xxxxx X Xxxxxx
	Title:	Senior V.P.

ALARM LOCK SYSTEMS, INC., as a Loan a Loan Party
	By:	/s/XXXXX X XXXXXX
	Name:	Xxxxx X Xxxxxx
	Title:	V.P.

CONTINENTAL INSTRUMENTS LLC, as a Loan a Loan Party
	By:	/s/XXXXX X XXXXXX
	Name:	Xxxxx X Xxxxxx
	Title:	Manager

MARKS USA I, LLC, as a Loan Party
	By:	/s/XXXXX X XXXXXX
	Name:	Xxxxx X Xxxxxx
	Title:	Manager

VIDEO ALERT, LLC, as a Loan Party
	By:	/s/XXXXX X XXXXXX
	Name:	Xxxxx X Xxxxxx
	Title:	Manager

HSBC BANK USA, NATIONAL ASSOCIATION, as Administrative Agent and as a Lender
	By:	/s/XXXXXXX XXXXXXXXX
	Name:	Xxxxxxx Xxxxxxxxx
	Title:	AVP Portfolio Manager

Document Metadata

Table of Contents

Free Standard Templates

AMENDMENT NO. 1 TO THIRD AMENDED AND RESTATED CREDIT AGREEMENT

Document Metadata