EXHIBIT 26.1
FIRST AMENDMENT TO CREDIT AGREEMENT
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AND WAIVER
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FIRST AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT and WAIVER dated as of
August 18, 2008 (the "First Amendment") by and among NAPCO SECURITY SYSTEMS,
INC., a Delaware corporation (the "Borrower"), CAPITAL ONE, N.A. a national
banking association, HSBC Bank USA, National Association, a national banking
association, collectively, the "Lenders") and HSBC BANK, USA, National
Association, a national banking association, as administrative agent and
collateral agent for the Lenders hereunder (in such capacities, the
"Administrative Agent" and the "Collateral Agent", respectively and each an
"Agent")".
RECITALS
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The Borrower, the Lenders, and the Administrative Agent entered into an
Amended and Restated Credit Agreement dated as of August 18, 2008, (the "Credit
Agreement"), pursuant to which certain financial accommodations were made
available to the Borrower.
The Borrower has requested that the Lenders and the Administrative Agent
modify certain of the terms set forth in the Credit Agreement and further waive
another term of the Credit Agreement for a certain period and the Lenders and
the Administrative Agent are willing to modify such terms and waive such term
but only upon and subject to the following terms and conditions.
NOW THEREFORE, in consideration of the premises and mutual covenants and
promises exchanged herein, the parties hereto mutually agree as follows:
Section 1. Definitions. Except as otherwise defined in this First
Amendment, terms defined in the Credit Agreement are used herein as defined
therein.
Section 2. Amendment. Subject to the satisfaction of the conditions
precedent specified in Section 4 below:
(A) Section 1.1 of the Credit Agreement is hereby amended by deleting the
definition of "Revolving Credit Commitment" and substituting the following
therefor:
"Revolving Credit Commitment": as to any Revolving Lender at any time, its
obligation to make Revolving Credit Loans, issue or participate in Letters
of Credit issued for the account of the Borrower and/or make or participate
in Swing Line Loans to the Borrower in an aggregate amount not to exceed at
any time outstanding the amount set forth opposite such Lender's name in
Schedule I hereto under the heading "Revolving Credit Commitment," as such
amount may be reduced from time to time pursuant to subsection 2.4 and the
other applicable provisions hereof.
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(B) Schedule I referenced in the definition of Revolving Credit Commitment
is hereby amended by deleting same and substituting Schedule I-1 attached hereto
for same.
(C) Section 6.3 of the Credit Agreement is hereby amended by deleting same
and substituting the following therefor:
"6.3 Post Closing Obligations. By January 15, 2009 (or September 18,
2008 in the case of subsection (h) hereof) the Borrower will deliver to the
Administrative Agent the following in form and content reasonably
satisfactory to the Administrative Agent and the Required Lenders in each
case, at the Borrower's sole cost and expense:
(a) An environment report (Phase II) on the Borrower's real property
located at 000 Xxxxxxx Xxxxxx, Xxxxxxxxxx, Xxx Xxxx (the
"Mortgaged Property');
(b) A mortgage and security agreement on the Administrative Agent's
standard form or other form acceptable to the Administrative
Agent and its counsel, (the "Mortgage") encumbering the land and
improvements upon the Mortgaged Property securing the $5,000,000
in principal amount of the obligations under this Agreement
together with Hazardous Material Guaranty and Indemnification
Agreement on the standard form of the Administrative Agent or on
a form acceptable to the Administrative Agent and its counsel
from the Borrower and its Domestic Subsidiaries with respect to
the real property encumbered by such Mortgage;
(c) An updated survey of the Mortgage Property guaranteed to the
Administrative Agent together with certificates of
occupancy/completion for all improvements requiring same and
satisfactory violation, flood, lien and judgment searches;
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(d) Title insurance (including such endorsements as the
Administrative Agent shall require) insuring the Mortgage as a
first mortgage lien upon the Mortgaged Property subject only to
those exceptions permitted by the Administrative Agent and its
counsel;
(e) Paid certificates of insurance evidencing hazard, business
interruption, explosion, flood (if necessary) and general
liability coverage in such amounts and on such forms as shall be
satisfactory to the Administrative Agent and its counsel;
(f) Evidence that all fees, taxes, premiums and amounts owed in
connection with the recording of the Mortgage and the issuance of
the Title Insurance Policy, including the Administrative Agent's
fees and expenses, have been paid in full;
(g) Supplements to the Loan Documents perfecting the Collateral
Agent's liens in the Mark's patents and trademarks, if any;
(h) A pledge security agreement on the Agent's standard form granting
a security interest in the shares of Napco Group Europe Limited
(48,750) shares), Alarm Lock systems, Inc. (100 shares) and Napco
Americas (65 shares) (the "Pledged Stock") together with legal
opinions from counsel relating to the effectiveness of such
security interests in such stock satisfactory to the
Administrative Agent and the Required Lenders and undated stock
powers or similar instruments duly executed by each pledgor for
such pledged shares.
Section 3. Waiver. Non-compliance by the Borrower with the covenant
contained in Section 8.1 (a) (i) of the Credit Agreement requiring the ratio of
Consolidated Funded Debt to consolidated EBITDA to be no greater than 3.5 to 1.0
to the extent of non-compliance for the period ended 12/30/08 solely to the
extent such ratio was 5.17 to 1.0 instead of the required ratio.
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Section 4. Conditions Precedent. The amendments to the Credit Agreement set
forth in Section 2 hereof and the waiver set forth in Section 3 hereof shall
become effective, on the date of this First Amendment, upon the execution and
delivery of this First Amendment by the Borrower, the Administrative Agent and
each of the Lenders and the satisfaction of the following conditions:
(A) Certified Copies and Other Documents. The Administrative Agent shall
have received certificates of an officer of the Borrower dated the date of this
First Amendment certifying (y) no changes in the certificate of incorporation or
by-laws from the date of the Agreement or attaching copies of any amendments,
(z) the incumbency and specimen signatures of the officers of the Borrower
executing any documents delivered to the Administrative Agent or a Lender by the
Borrower in connection herewith.
(B) Approval of the Administrative Agent and Agent's Counsel. All other
documents and legal matters in connection with the transactions contemplated by
this First Amendment shall be satisfactory in form and substance to the
Administrative Agent and its counsel.
Section 5. Representations and Warranties. The Borrower represents and
warrants to the Lenders that the representations and warranties set forth in the
Credit Agreement and in the other Loan Documents are true and complete on the
date of this First Amendment and as if made on and as of the date hereof (or, if
such representation or warranty is expressly stated to have been made as of a
specific date, as of such specific date).
Section 6. Borrower's Acknowledgments. The Borrower acknowledges and agrees
that the Borrower has no claims, counterclaims, offsets, or defenses to the Loan
Documents and the performance of the Borrower's obligations thereunder or if the
Borrower did have any such claims, counterclaims, offsets or defenses to the
Loan Documents or any transaction related to the Loan Documents, the same are
hereby waived, relinquished and released in consideration of execution and
delivery of this Second Amendment.
Section 7. Acknowledgement of Guarantors. The Guarantors acknowledge and
consent to all of the terms and conditions of this First Amendment and agree
that this First Amendment and all documents executed in connection herewith do
not operate to reduce or discharge the Guarantors' obligations under the Credit
Agreement or the other Loan Documents. The Guarantors further acknowledge and
agree that the Guarantors have no claims, counterclaims, offsets, or defenses to
the Loan Documents and the performance of the Guarantors' obligations thereunder
or if the Guarantors did have any such claims, counterclaims, offsets or
defenses to the Loan Documents or any transaction related to the Loan Documents,
the same are hereby waived, relinquished and released in consideration of
execution and delivery of this First Amendment.
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Section 8. Continuing Effect; No Further Waiver. Except as expressly set
forth in this First Amendment, all of the terms and provisions of the Loan
Documents are ratified and confirmed, and are and shall remain in full force and
effect and the Borrower shall continue to be bound by all of such terms and
provisions. The Waiver provided for herein is limited as specified herein and
shall not constitute any other waiver of the Loan Documents. The Borrower
acknowledges and agrees that nothing in this Waiver shall constitute an
indication of the Lenders' willingness to consent to any other amendment or
waiver of any other provision of the Credit Agreement or a waiver of any Default
or Event of Default not referenced in this Waiver or for any other time period.
Section 9. Governing Law; Execution in Counterparts. This First Amendment
may be executed in any number of counterparts, all of which taken together shall
constitute one and the same amendatory instrument and any of the parties hereto
may execute this First Amendment by signing any such counterpart. This First
Amendment shall be governed by, and construed in accordance with, the internal
laws of the State of New York (without regard to New York conflicts of laws
principles).
Section 10. Expenses, etc. The Borrower agrees to pay or reimburse the
Administrative Agent for all reasonable out-of-pocket costs and expenses of the
Administrative Agent (including, without limitation, the reasonable fees and
expenses of Certilman, Balin, Xxxxx & Xxxxx, LLP in connection with the
negotiation, preparation, execution and delivery of this Second Amendment and
the transactions contemplated hereby.
Section 11. Effective Date. This First Amendment is dated for convenience
as of November 14, 2008 and shall be effective as of such date, on the delivery
of an executed counterpart to the Borrower upon satisfaction of the conditions
precedent contained in Section 4 hereof.
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IN WITNESS WHEREOF, the parties hereto have caused this First Amendment to
Credit Agreement to be duly executed and delivered by their duly authorized
officers, all as of the day and year first above written.
Borrower:
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NAPCO SECURITY SYSTEMS, INC.
By:/s/XXXXX X. XXXXXX
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Xxxxx X. Xxxxxx
Senior Vice President of
Operations and Finance
Guarantors:
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ALARM LOCK SYSTEMS, INC.
By:/s/XXXXX X. XXXXXX
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Name: Xxxxx X. Xxxxxx
Title: Senior Vice President
CONTINENTAL INSTRUMENTS, LLC
By: /s/XXXXX X. XXXXXX
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Name: Xxxxx X. Xxxxxx
Title: Manager
Lenders:
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CAPITAL ONE, N.A.
By:/s/XXXXXXX XXXXXXX
Name: Xxxxxxx XxXxxxx
Title: Vice President
HSBC BANK USA, NATIONAL ASSOCIATION,
as Administrative Agent and as a Lender
By:/s/XXXX XXXXX
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Name:Xxxx Xxxxx
Title: First Vice President
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SCHEDULE I
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To the Amended and Restated Credit Agreement
COMMITMENTS
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Revolving Credit Commitment
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Revolving Lender Revolving Credit Commitment
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HSBC BANK USA, NATIONAL ASSOCIATION $12,000,000
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CAPITAL ONE, N.A. $ 8,000,000
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Total $20,000,000
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Term Commitment
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Term Lender Term Commitment
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HSBC BANK USA, NATIONAL ASSOCIATION $15,000,000
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CAPITAL ONE, N.A. $10,000,000
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Total $25,000,000
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