Exhibit 10.O
AMENDMENT NO. 4 TO THE LOAN AND SECURITY AGREEMENT
AMENDMENT NO. 4 to the Loan and Security Agreement dated as of July 27,
2000 ("Amendment No. 4") by and between NAPCO SECURITY SYSTEMS, INC., a New York
corporation having a place of business at 000 Xxxxxxx Xxxxxx, Xxxxxxxxxx, Xxx
Xxxx 00000 (the "Debtor") and HSBC BANK USA F/K/A MARINE MIDLAND BANK, having a
place of business at 000 Xxxxx Xxxxxx Xxxx, Xxxxxxxx, Xxx Xxxx 00000 (the
"Secured Party").
WITNESSETH:
WHEREAS, as of May 12, 1997, Debtor and Secured Party had entered into a
certain loan and security agreement, as amended by amendment no. 1 to the loan
and security agreement dated as of May 28, 1998, as amended by amendment no. 2
to the loan and security agreement dated as of June 30, 1999, as amended by
amendment no. 3 to the loan and security agreement dated as of February 9, 2000,
as may be amended from time to time (the "Agreement");
WHEREAS, the Debtor has requested that the Secured Party extend a
$8,250,000 term loan to Continental Instruments Systems, LLC ("Continental
Systems"), a wholly owned subsidiary of Debtor, in order that Continental
Systems may acquire all of the assets of Continental Instruments LLC ("Seller")
and partially fund a two-year earn-out payable to Xxxx Xxxxx ("Owner") pursuant
to a certain asset purchase agreement dated as of July ___, 2000 [sic] by and
between Seller, with its sole place of business at 000-X Xxxxxxxxx Xxxxx,
Xxxxxxxx, Xxx Xxxx 00000, Owner, residing at 00 Xxxxxxxxx Xxxxxx, Xxxx
Xxxxxxxxx, Xxx Xxxx 00000 and Debtor, which asset purchase agreement, and the
rights of Debtor thereunder, were duly assigned to Continental Instruments
Systems, LLC by assignment dated July 27, 2000("Asset Purchase Agreement"), and
the Secured Party has agreed to do so, in the manner set forth below, provided
however, that, among other things, Debtor execute this Amendment No. 4.
NOW, THEREFORE, in consideration of the mutual promises and for other good
and valuable consideration, the receipt of which is hereby acknowledged, the
parties hereto agree as follows:
1. The definition of "Consolidated Subsidiary" contained in Section 1.1. of
the Agreement is hereby amended to read in its entirety as follows:
CONSOLIDATED SUBSIDIARY means Alarm Lock Systems, Inc. ("Alarm"), NAPCO
Security Systems International, Inc. ("NAPCO International"), UMI
Manufacturing Corp. ("UMI"), E.E. Electronic Components Inc. ("E.E."),
Derringer Security Systems, Inc. ("Derringer"), Raltech Logic, Inc.
("Raltech"), NAPCO/Alarm Lock Grupo Internacional, S.A. ("NAPCO/Alarm
Lock"), Continental Instruments Systems, LLC ("Continental Systems"), NAPCO
Group Europe Limited ("NAPCO Europe"), and any other corporation of which
at least 50% of the voting stock is owned by Debtor directly, or
indirectly, through one or more Consolidated Subsidiaries, and any other
limited liability company of which at least 50% of the membership interest
is owned by Debtor directly, or indirectly, through
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one or more Consolidated Subsidiaries, and each of their respective
successors and/or assigns.
2. The definition "Continental Term Loan" shall be added to Section 1.1. of
the Agreement and shall read as follows:
CONTINENTAL TERM LOAN means the $8,250,000 term loan made available to
Continental Systems by Secured Party pursuant to the Term Loan Note.
3. The definition "Continental Term Loan Note" shall be added to Section
1.1. of the Agreement and shall read as follows:
CONTINENTAL TERM LOAN NOTE means the $8,250,000 note evidencing the
Continental Term Loan executed by Continental Systems and delivered to
Secured Party as of even date hereof, as such note may be extended or
otherwise modified from time to time; Continental Systems has used or will
use the proceeds of the Continental Term Loan Note to acquire all of the
assets of Seller (as the term "Seller" is defined in the recital
paragraphs) and fund a two-year earn-out payable to Owner (as the term
"Owner" is defined in the recital paragraph hereinabove) pursuant to the
Asset Purchase Agreement (as the term "Asset Purchase Agreement" is defined
in the recital paragraph hereinabove).
4. The definition of "Transaction Documents" contained in Section 1.1. of
the Agreement is hereby amended to read in its entirety as follows:
TRANSACTION DOCUMENTS means, individually, jointly, severally and
collectively, the Agreement (including this Amendment No. 4 and all
documents, instruments, notes and agreements by Debtor, Continental Systems
or any other Third Party or any Responsible Party in favor of Secured
Party, whether in existence now or hereinafter created, executed and
delivered to Secured Party, as the same may be extended, re-executed,
modified or otherwise amended from time to time, including, without
limitation, the Term Loan Note, the Continental Term Loan Note, collateral
documents, letter of credit agreements, notes, acceptance credit
agreements, security agreements, pledges, guaranties, mortgages, title
insurance, assignments, and subordination agreements required to be
executed by Debtor, Continental Systems any other Third Party, or any
Responsible Party pursuant hereto or in connection herewith, or in
connection with a letter of credit application and reimbursement agreement,
each dated as of May 12, 1997, a certain uncommitted trade line established
by Secured Party in favor of Debtor to provide for commercial and standby
letters of credit, evidenced by, among other documents, a continuing letter
of credit agreement, and a continuing indemnity agreement, each dated as of
May 12, 1997, as may be re-executed, amended, extended or otherwise
modified from time to time, the Term Loan Note in the principal sum of
$2,500,000., as may be extended or otherwise modified from time to time,
the Continental Term Loan Note in the principal sum of $8,250,000, that
certain ISDA master agreement dated as
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of July 27, 2000 by and between Continental Systems and Secured Party,
inclusive of all schedules thereto, as the same may be modified from time
to time (the "Master Agreement") and all such other mortgages, security
agreements, guaranties and other documents as may be executed and delivered
to Secured Party to evidence, guaranty and secure the Continental Term Loan
Note, and the obligations thereunder, as may be extended or otherwise
modified from time to time, and uncommitted line of credit facility to be
used by Debtor to finance certain acquisitions, as may be executed and
delivered to Secured Party from time to time to evidence and secure the
obligations under such facilities pursuant to the terms that the Secured
Party shall request, and all other documents, agreements, reaffirmations,
certificates and resolutions related thereto, and amendments or supplements
thereto, all such other agreements, resolutions, certificates, resolutions
and opinion letters executed and/or issued as a condition precedent to or
in connection with the Agreement, the Term Loan Note, the Continental Term
Loan Note, and all such other documents, agreements, and instruments
delivered hereunder or as a supplement or amendment thereto or as Secured
Party may reasonably require from time to time in order to evidence,
guaranty and/or secure any and all indebtedness of Debtor and/or
Continental Systems, as the case may be, to Secured Party or to create,
perfect, continue the perfection or protect the Secured Party's security
interest in the Collateral or any of the other collateral specified in the
other Transaction Documents.
4. Section 3.3. of the Agreement is hereby amended to read in its entirety
as follows:
3.3. INDEBTEDNESS SECURED. The Security Interest secures payment of
any and all indebtedness, and performance of all obligations and
agreements, of Debtor to Secured Party, whether now existing or hereafter
incurred or arising, of every kind and character, primary or secondary,
direct or indirect, absolute or contingent, sole, joint or several, and
whether such indebtedness is from time to time reduced and thereafter
increased, or entirely extinguished and thereafter reincurred, including,
without limitation: (a) all Advances; (b) all interest which accrues on any
such indebtedness, until payment of such indebtedness in full, including,
without limitation, all interest provided for under this Agreement; (c) all
other monies payable by Debtor, and all obligations and agreements of
Debtor to Secured Party, pursuant to the Transaction Documents; (d) all
debts owed, or to be owed, by Debtor to others which Secured Party has
obtained, or may obtain, by assignment or otherwise; (e) all monies payable
by any Third Party, and all obligations and agreements of any Third Party
to Secured Party, pursuant to any of the Transaction Documents; (f) all
monies due, and to become due, pursuant to Section 7.3; and (g) all
obligations arising under that certain unlimited continuing guaranty of
Debtor to Secured Party dated July 27, 20000, wherein Debtor
unconditionally guaranteed the full and prompt payment to Secured Party
when due, whether by acceleration or
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otherwise, of any and all indebtedness (as defined in such guaranty) of
Continental Systems to Secured Party, as such guaranty may be modified,
reaffirmed or otherwise amended from time to time; and (h) the obligations
of Continental Systems in favor of Secured Party under the Master
Agreement.
5. A new SECTION 5 shall be added to the Agreement, and shall be read in
its entirety as follows:
5. REPRESENTATIONS AND WARRANTIES. To induce Secured Party to enter
make the Continental Term Loan, as herein provided, Debtor represents
and warrants, to the best of its knowledge, and, so long as any
Indebtedness remains unpaid or this Agreement remains in effect, shall
be deemed continuously to represent and warrant as follows:
5.1. CORPORATE EXISTENCE. Continental Systems is a duly formed
limited liability company, in good standing under the laws of the
state of New York and is duly licensed or qualified to do business and
in good standing in every state in which the nature of its business or
ownership of its property requires such licensing or qualification.
5.2 CORPORATE CAPACITY. The execution, delivery and performance
of the Transaction Documents are within Continental Instrument's
corporate powers, have been duly authorized by all necessary and
appropriate membership consent, and are not in contravention of any
law or the terms of Debtor's articles of organization or operating
agreement or any amendment thereto, or of any indenture, agreement,
undertaking, or other document to which Continental Systems is a party
or by which Debtor or any of Debtor's property is bound or affected.
5.3. VALIDITY OF RECEIVABLES. With respect to each Receivable
owned or to be owned by Continental Systems: (a) each copy of each
invoice is a true and genuine copy of the original invoice sent to the
account debtor named therein and accurately evidences the transaction
from which the underlying Receivable arose, and the date payment is
due as stated on each Invoice or computed based on the information set
forth on each such Invoice is correct; (b) all Chattel Paper, and all
promissory notes, drafts, trade acceptances, and other instruments for
the payment of money relating to or evidencing each Receivable, and
each endorsement thereon, are true and genuine and in all respects
what they purport to be, and are the valid and binding obligation of
all parties thereto, and the date or dates stated on all such items as
the date on which payment in whole or in part is due is correct; (c)
all Inventory described in each Invoice has been delivered to the
Account Debtor named in such Invoice or placed for such delivery in
the possession of a carrier not owned or controlled directly or
indirectly by Continental Systems; (d) all evidence of the delivery or
shipment of Inventory is true and genuine; (e) all services to be
performed by Continental Systems and/or the Seller, as the case may
be, in connection with each Receivable have been performed by
Continental
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Systems and/or the Seller, as the case may be; and (f) all evidence of
the performance of such services by Continental Systems and/or the
Seller, as the case may be, is true and genuine.
5.4. INVENTORY. (a) All representations made by Debtor and/or
Continental Systems, as the case may be, to Secured Party, and all
documents and schedules given by Debtor and/or Continental Systems, as
the case may be, to Secured Party, relating to the description,
quantity, quality, condition, and valuation of the Inventory owned by
Continental Systems are true and correct; (b) Inventory owned by
Continental Systems is located only at the following address of
Continental Systems: 000-X Xxxxxxxxx Xxxxx, Xxxxxxxx, Xxx Xxxx 00000,
or such other place or places as approved in advance by Secured Party
in writing;(c) all Inventory of Continental Systems is insured as
required by Section 9.11 of the Agreement, pursuant to policies in
full compliance with the requirements of such Section; and (d) all
manufactured or produced Inventory of Continental Systems has been
produced by Continental Systems and/or Seller in accordance with the
Federal Fair Labor Standards Act of 1938, as amended, and all rules,
regulations and orders promulgated thereunder.
5.5. TITLE TO COLLATERAL. (a) Continental Systems is the owner of
the Collateral free of all security interests, liens, and other
encumbrances, except the Security Interest; (b) Continental Systems
has the unconditional authority to grant a security interest in all
assets of Continental Systems to Secured Party; and (c) assuming that
all necessary Uniform Commercial Code filings have been made and, if
applicable, assuming compliance with the Federal Assignment of Claims
Act of 1940, as amended, Secured Party has an enforceable first lien
on all collateral granted to Secured Party by Continental Systems.
5.6. PLACE OF BUSINESS. (a) Continental Systems is engaged in
business operations which are in whole, or in part, carried on at the
following addresses: 000-X Xxxxxxxxx Xxxxx, Xxxxxxxx, Xxx Xxxx 00000
and 000 Xxxxxxx Xxxxxx, Xxxxxxxxxx, Xxx Xxxx 00000 and at no other
address or addresses; (b) Continental Systems' chief executive office
is 000 Xxxxxxx Xxxxxx, Xxxxxxxxxx, Xxx Xxxx 00000; and (c)
Continental's records concerning the collateral are kept at the
address specified at the beginning of this Agreement.
5.7. FINANCIAL CONDITION. Debtor has furnished to Secured Party
Seller's most current financial statements, including, without
limiting the foregoing, the most recent interim statements of Seller,
which statements represent correctly and fairly the results of the
operations and transactions of Seller, as of the dates, and for the
period referred to, and have been prepared in accordance with GAAP
applied during each interval involved and from interval to interval.
Since the date of such financial statements, there have not been any
materially adverse changes in the financial
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condition reflected in such financial statements, except as disclosed
in writing by Debtor to Secured Party.
5.8. TAXES. Except as disclosed in writing by Debtor to Secured
Party including Seller's financial statements provided to Secured
Party: (a) all federal and other tax returns required to be filed by
Seller have been filed, and all taxes required by such returns have
been paid; and (b) neither Seller, Continental Systems nor Debtor has
received any notice from the Internal Revenue Service or any other
taxing authority proposing additional taxes.
5.9. LITIGATION. Except as disclosed in the Asset Purchase
Agreement, there are no actions, suits, proceedings, or investigations
pending or, to the knowledge of Debtor, threatened against Seller or
Continental Systems or any basis therefor which, if adversely
determined, would, in any case or in the aggregate, materially
adversely affect the property, assets, financial condition, or
business of Seller and/or Continental Systems, as the case may be, or
materially impair the right or ability of Continental Systems to carry
on its operations substantially as conducted on the date of this
Agreement.
5.10. ERISA MATTERS. (a) No Pension Plan has been terminated, or
partially terminated, or is insolvent, or in reorganization, nor have
any proceedings been instituted to terminate or reorganize any Pension
Plan; (b) neither Seller nor Continental Systems, as the case may be,
has withdrawn from any Pension Plan in a complete or partial
withdrawal, nor has a condition occurred which, if continued, would
result in a complete or partial withdrawal; (c) neither Seller nor
Continental Systems, as the case may be, has incurred any withdrawal
liability, including, without limitation, contingent withdrawal
liability, to any Pension Plan, pursuant to Title IV of ERISA; (d)
neither Seller nor Continental Systems, as the case may be, has
incurred any liability to the Pension Benefit Guaranty Corporation
other than for required insurance premiums which have been paid when
due; (e) no Reportable Event has occurred; (f) no Pension Plan or
other "employee pension benefit plan" as defined in Section 3(2) of
ERISA, to which Seller or Continental Systems, as the case may be, is
a party has an "accumulated funding deficiency" (whether or not
waived), as defined in Section 302 of ERISA or in Section 412 of the
Internal Revenue Code; (g) the present value of all benefits vested
under any Pension Plan of Seller and/or Continental Systems, as the
case may be, does not exceed the value of the assets of such Pension
Plan allocable to such vested benefits; (h) each Pension Plan and each
other "employee benefit plan", as defined in Section 3(3) of ERISA, to
which Seller and/or Continental Systems, as the case may be, is a
party is in substantial compliance with ERISA, and no such plan or any
administrator, trustee, or fiduciary thereof has engaged in a
prohibited transaction described in Section 406 of ERISA or in Section
4975 of the Internal Revenue Code; (i) each Pension Plan and each
other "employee benefit plan" as defined in
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Section 3(2) of ERISA, to which Seller and/or Continental Systems, as
the case may be, is a party has received a favorable determination by
the Internal Revenue Service with respect to qualification under
Section 401(a) of the Internal Revenue Code; and (j) neither Seller
nor Continental Systems, as the case may be, has incurred any
liability to a trustee or trust established pursuant to Section 4049
of ERISA or to a trustee appointed pursuant to Section 4042(b) or (c)
of ERISA.
5.11. NO CONSENT OR FILING. No consent, license, approval, or
authorization of, or registration, declaration, or filing with, any
court, governmental body or authority, or other person or entity is
required in connection with the valid execution, delivery, or
performance of the Transaction Documents on the part of Continental
Systems or for the conduct of Continental Instrument's business as now
conducted or as conducted by Seller, as the case may be, other than
filings and recordings to perfect security interests in or liens on
all assets of Continental Systems in favor of Secured Party in
connection with the Transaction Documents.
5.12. NO VIOLATIONS. Neither Seller nor Continental Systems, as
the case may be, is in violation of any term of any other indenture,
instrument, or agreement to which it is a party or by which it or its
property may be bound, resulting, or which might reasonably be
expected to result, in a material and adverse effect upon its business
or assets. Neither Seller nor Continental Systems is in violation of
any order, writ, judgment, injunction, or decree of any court of
competent jurisdiction or of any statute, rule or regulation of any
governmental authority. The execution and delivery of the Asset
Purchase Agreement and consummation of the sale by the Seller, as set
forth therein and the performance of all of the same, is, and will be,
in compliance with the foregoing and will not result in any violation
thereof, or result in the creation of any mortgage, lien, security
interest, charge, or encumbrance upon, any properties or assets except
in favor of Secured Party. There exists no fact or circumstance
(whether or not disclosed in the Transaction Documents or the Asset
Purchase Agreement) which materially adversely affects, or in the
future (so far as Debtor can now foresee) may materially adversely
affect, the condition, business, or operations of Continental Systems.
5.13. TRADEMARKS AND PATENTS. After the consummation of the
purchase described in the Asset Purchase Agreement, Continental
Systems shall possess all trademarks, trademark rights, patents,
patent rights, tradenames, tradename rights and copyrights that are
required to conduct its business as now conducted without conflict
with the rights or claimed rights of others. A list of the foregoing
is set forth in Exhibit A attached hereto.
5.14. CONTINGENT LIABILITIES. To the best of Debtor's knowledge,
after due inquiry, there are no suretyship agreements, guaranties, or
other contingent liabilities of
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Seller which are not disclosed by the financial statements described
in Section 5.7.
5.15. COMPLIANCE WITH LAWS. Seller and/or Continental Systems, as
the case may be, is in compliance with all applicable laws, rules,
regulations, and other legal requirements with respect to its business
and the use, maintenance and operations of the real and personal
property owned or leased by it in the conduct of its business.
5.16. LICENSES, PERMITS, ETC. Each franchise, grant, approval,
authorization, license, permit, easement, consent, certificate, and
order of and registration, declaration, and filing with, any court,
governmental body or authority, or other person or entity required for
or in connection with the conduct of Seller's and/or Continental
Instrument's business as now conducted by Seller is in full force and
effect.
5.17. LABOR CONTRACTS. Neither Seller nor Continental Systems is
a party to any collective bargaining agreement or to any existing or
threatened labor dispute or controversies.
5.18. LABOR MATTERS.
(a) Neither Continental Systems, nor, to the best of
Debtor's knowledge, Seller is engaged in any unfair labor practice. To
the best of Debtor's knowledge, after due inquiry, Continental Systems
and/or Seller, as the case may be, are in compliance in all material
respects with all applicable federal, state and local laws,
regulations, rules, orders or other requirements respecting terms and
conditions of employment, employment practices, and wages and hours,
(b) No strike, walkout or similar business interruption
resulting from any labor dispute has been suffered by Seller and/or
Continental Systems, as the case may be, during the last five years
nor is any state of facts known to Debtor which would indicate that
such event or circumstance is likely to occur in the next twelve
months.
(c) There is no pending, or to the knowledge of Debtor,
threatened unfair labor practice complaint against Seller or
Continental Systems, as the case may be, before the National Labor
Relations Board.
(d) There is no strike, labor dispute, slowdown or stoppage
actually pending or, to the knowledge of Debtor, threatened against
Seller and/or Continental Systems, as the case may be.
(e) No union representation question exists respecting the
employees, or any group of employees, of Seller and/or Continental
Systems, as the case may be.
(f) No grievance which might have a material adverse effect
on Seller and/or Continental Systems,
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as the case may be, or the conduct of their business nor any
arbitration proceeding arising out of or under collective bargaining
agreements is pending, and no claims therefor exist.
(g) No collective bargaining agreement which is binding on
Seller and/or Continental Systems, as the case may be, will restrict
Continental Systems from relocating or closing any office, warehouse
or any other facility presently being used by Seller and/or
Continental Systems, as the case may be.
(h) To Debtor's knowledge, neither Seller nor Continental
Systems has experienced any material work stoppage or other material
labor difficulty at any office, warehouse or other facility.
(i) To Debtor's knowledge, there are no claims, complaints
or charges pending before any state or federal agency concerning
employment penalties with respect to Seller and/or Continental
Systems, including without limitation, employment discrimination,
retaliatory discharge and wage and hour claims.
5.19. MATERIALITY. Notwithstanding anything to the contrary
contained in Section 5 hereof, no representation or warranty contained
in Section 5 shall be deemed false or cause an Event of Default to the
extent that the falsity of such representation or warranty is not
material, would not have a material adverse effect on Continental
Systems and/or Seller, as the case may be, would not cause an untrue
statement of material fact, and/or would not result in an omission to
state a material fact in order to make the statements contained herein
not misleading, and/or would not materially adversely affect the
financial and/or business condition of Seller and/or Continental
Systems, as the case may be.
6. Section 9.26. of the Agreement is hereby amended in its entirety to read
as follows:
(a) The Debtor and its Consolidated Subsidiaries shall
maintain, on a consolidated basis, a ratio of Total Liabilities to
Tangible Net Worth of not greater than (to be tested quarterly based
upon the financial statements required to be presented to Secured
Party pursuant to Section 9.1. hereof):
during the period commencing as of the date hereof through
the fiscal year ending June 30, 2000, and thereafter while
any Indebtedness remains outstanding, 1.50 to 1.
(b) The Debtor and its Consolidated Subsidiaries shall
maintain, on a consolidated basis, a minimum Tangible Net Worth (to be
tested quarterly based upon the financial statements required to be
presented to Secured Party pursuant
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to Section 9.1. hereof) of not less than:
(i) during the period commencing as of the date hereof
through June 29, 2001, $21,000,000, and
(ii) during the period commencing on June 30, 2001 through
June 29, 2002, $24,500,000, and
(iii) during the period commencing on June 30, 2002 through
June 29, 2003, $27,000,000, and
(iv) during the period commencing on June 30, 2003 through
June 29, 2004, and thereafter while any Indebtedness remains
outstanding, $30,000,000.
(c) At all times, Debtor and its Consolidated Subsidiaries
shall maintain, on a consolidated basis, a ratio of Current Assets to
Current Liabilities, to be tested each fiscal quarter end of each
fiscal year, based upon the financial statements required to be
presented to Secured Party pursuant to Section 9.1. hereof:
(i) of not less than 3.25 to 1 from the date hereof through
the fiscal year ending June 30, 2000, and
(ii) of not less than 3.50 to 1 from July 1, 2000 through
the fiscal year ending June 30, 2001, and
(iii) of not less than 3.75 to 1 from July 1, 2001 through
the fiscal year ending June 30, 2002, and
(iv) of not less than 4.00 to 1 from July 1, 2002 through
the fiscal year ending June 30, 2003, and thereafter while
any Indebtedness remains outstanding.
(d) Debtor and its Consolidated Subsidiaries shall maintain,
on a consolidated basis, a minimum "Debt Service Coverage Ratio" of
1.25 to 1, to be tested at the end of each fiscal year, based upon the
financial statements required to be presented to Secured Party
pursuant to Section 9.1. hereof. "Debt Service Coverage Ratio" shall
mean earnings before interest, taxes, depreciation and amortization,
less distributions, all divided by prior period current portion of
long term debt plus interest expense.
(e) At all times, Debtor and its Consolidated Subsidiaries
shall maintain, on a consolidated basis, a ratio of the aggregate of
cash plus total Receivables to Current Liabilities, to be tested each
fiscal quarter end of each fiscal year, based upon the financial
statements required to be presented to Secured Party pursuant Section
9.1. hereof:
from the date hereof through the fiscal year ending
June 30, 2000, and thereafter while any Indebtedness remains
outstanding, of not less than 1.25 to 1.
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(f) During any fiscal year, the Debtor and its Consolidated
Subsidiaries shall not cause Capital Expenditures of Debtor and its
Consolidated Subsidiaries to exceed, on a combined basis, $1,000,000
per fiscal year (excluding the incurrence of the Continental Term
Loan).
(g) At all times while any Indebtedness remains outstanding,
the Debtor and its Consolidated Subsidiaries maintain, on a
consolidated basis, not less than fifty (50%) of the value of all of
their identifiable assets (as disclosed in the 10K statement) in the
United States, to be tested annually, at each fiscal year end.
The above ratios of this Section 9.26. are being calculated assuming
that in the last year of the Agreement; and Advances under the
Revolving Credit Facility are viewed as long term debt, unless there
is an event of default which is continuing under the Revolving Credit
Facility.
7. Section 10.16. of the Agreement is hereby amended to read in its
entirety as follows:
10.16. NEGATIVE PLEDGE. (a) Encumber or cause to encumber, or
cause NAPCO/Alarm Lock Grupo Internacional, S.A. f/k/a NSS Caribe S.A.
to encumber, the assets (personal property, fixtures or real property)
of NAPCO/Alarm Lock Grupo Internacional, S.A. f/k/a NSS Caribe S.A; or
(b) encumber or cause to encumber the assets (personal property,
fixtures or real property) of NAPCO Group Europe Limited.
8. Section 4.17 of the Agreement shall be supplemented with the following
additional paragraphs:
Since May 12, 1997, Debtor and its Consolidated Subsidiaries possess
the following additional trademarks, trademark rights, patents, patent
rights, tradenames, tradename rights and copyrights without conflict
with the rights or claimed rights of others. A list of the foregoing
as set forth in Exhibit B attached hereto.
To secure the Indebtedness, Debtor hereby grants to Secured Party,
and/or reaffirms its grant to Secured Party, a security interest in,
and a lien on, all trademarks, trademark rights, patents, patent
rights, tradenames, tradename rights and copyrights owned by Debtor,
wherever located and whether now owned or hereafter acquired; all
books, records, ledger cards, data processing records, computer
software, and other property at any time evidencing or relating to
such collateral; all parts, accessories, attachments, special tools,
additions,
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replacements, substitutions and accessions to or for all of the
foregoing; and all proceeds and products of the all of the foregoing
in any form, including, without limitation, amounts payable under any
policies of insurance insuring the foregoing against loss or damage,
and all increases and profits received from all of the foregoing.
9. Section 10.2. of the Agreement is hereby amended to read in its entirety
as follows:
10.2. BORROWED MONEY. Create, incur, assume, or suffer to exist
any liability for borrowed money, except to Secured Party, except for
permitted Capital Expenditures, and except the obligations of
Continental Systems in favor of Seller pursuant to the terms of a
certain $1,445,000 promissory note by Continental Systems in favor of
Seller dated July 27, 2000, as adjusted pursuant thereto, an executed
copy of which has been delivered to Secured Party.
10. The following paragraphs shall be added to Section 11.1. of the
Agreement:
(r) Nonpayment of Continental Term Loan Note. Nonpayment when due of
any principal, interest, premium, fee, cost or expense due under the
Continental Term Loan Note, and such nonpayment is not cured within
ten (10) days after notice thereof by Secured Party to Debtor.
(s) Mortgage Default. The occurrence of an Event of Default under that
certain collateral mortgage and security agreement dated July 27,
2000, by Debtor in favor of Secured Party in the principal sum of
$3,200,000, as the same may be extended or otherwise modified from
time to time (the "Collateral Mortgage"; and as used in this
subparagraph (s), the term "Event of Default" shall have the meaning
set forth in the Collateral Mortgage).
11. As an inducement to the Bank extending the Continental Term Loan, and
modifying the provisions of the Agreement pursuant to the terms hereof, Debtor
represents and warrants to Secured Party that, as of the date of execution of
this Amendment No. 4, (i) the representations and warranties set forth in
Article 4 of the Agreement and the representations and warranties of Debtor and
any Third Party set forth in the other Transaction Documents to which any is a
party are true and correct in all respects, (ii) no event has occurred and is
continuing which constitutes an "Event of Default" under any of the Transaction
Documents (as "Event of Default" is defined in each of those Transaction
Documents"), and (iii) Debtor is in compliance with the covenants set forth in
Articles 9 and 10 of the Agreement.
12. Debtor represents and warrants to Secured Party that there are no
offsets, defenses or counterclaims to the payment of the Indebtedness owing
Secured Party, including the Advances, and to the continuing general security
interest in the Collateral granted to Secured Party by Debtor as security for
payment of the Indebtedness, as fully described in the Agreement.
13. Except as modified herein, all other provisions of the Agreement and
the other Transaction Documents remain unmodified and are in full
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force and effect.
14. Capitalized terms not otherwise defined herein shall have the meanings
ascribed to such terms in the Agreement.
15. This Amendment No. 4 shall be governed by the laws of the State of New
York.
IN WITNESS WHEREOF, the parties have executed this Amendment No. 4 to the
Loan and Security Agreement as of the day and year first above written.
HSBC BANK USA F/K/A MARINE
MIDLAND BANK
By: /s/ Xxxxx Xxxxxxx
-----------------------------------
Xxxxx Xxxxxxx
Vice President
NAPCO SECURITY SYSTEMS, INC.
By: /s/ Xxxxx Xxxxxx
-----------------------------------
Xxxxx Xxxxxx
Senior Vice President
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