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LOAN AND SECURITY AGREEMENT
between
NAPCO SECURITY SYSTEMS, INC.
("Debtor")
With a place of business at:
000 Xxxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
(Suffolk County)
and
MARINE MIDLAND BANK
("Secured Party")
With a place of business at:
000 Xxxxx Xxxxxx Xxxx
Xxx Xxxx, XX 00000
Dated as of May 12, 1997
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TABLE OF CONTENTS
1. DEFINITIONS...............................................
1.1. CERTAIN SPECIFIC TERMS.........................
1.2. SINGULARS AND PLURALS..........................
1.3. U.C.C. DEFINITIONS.............................
1.4. ACCOUNTING TERMS...............................
2. ADVANCES..................................................
2.1. REQUESTS FOR AN ADVANCE........................
2.2. PROCEEDS OF AN ADVANCE.........................
2.3. INTENTIONALLY DELETED..........................
2.4. LETTERS OF CREDIT..............................
3. COLLATERAL AND INDEBTEDNESS SECURED.......................
3.1. SECURITY INTEREST..............................
3.2. OTHER COLLATERAL...............................
3.3. INDEBTEDNESS SECURED...........................
4. REPRESENTATIONS AND WARRANTIES............................
4.1. CORPORATE EXISTENCE............................
4.2. CORPORATE CAPACITY.............................
4.3. VALIDITY OF RECEIVABLES........................
4.4. INVENTORY......................................
4.5. TITLE TO COLLATERAL............................
4.6. INTENTIONALLY DELETED
PRIOR TO EXECUTION ............................
4.7. INTENTIONALLY DELETED..........................
4.8. PLACE OF BUSINESS..............................
4.9. FINANCIAL CONDITION............................
4.10. TAXES..........................................
4.11. LITIGATION.....................................
4.12. ERISA MATTERS..................................
4.13. ENVIRONMENTAL MATTERS..........................
4.14. VALIDITY OF TRANSACTION DOCUMENTS..............
4.15. NO CONSENT OR FILING...........................
4.16. NO VIOLATIONS..................................
4.17. TRADEMARKS AND PATENTS.........................
4.18. CONTINGENT LIABILITIES.........................
4.19. COMPLIANCE WITH LAWS...........................
4.20. LICENSES, PERMITS, ETC.........................
4.21. LABOR CONTRACTS................................
4.22. CONSOLIDATED SUBSIDIARIES......................
4.23. AUTHORIZED SHARES..............................
4.24. LABOR MATTERS..................................
4.25. MATERIALITY....................................
5. INTENTIONALLY DELETED.....................................
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6. REVOLVING CREDIT FACILITY.................................
6.1. COMMITMENT TO MAKE ADVANCES....................
6.2. ADVANCES.......................................
6.3. INTEREST RATE..................................
6.4. DEFAULT........................................
6.5. METHOD AND PLACE OF PAYMENT....................
6.6. REVOLVING CREDIT NOTE..........................
7. PAYMENT OF PRINCIPAL, INTEREST, FEES, AND COSTS AND
EXPENSES...................................................
7.1. PROMISE TO PAY PRINCIPAL.......................
7.2. PROMISE TO PAY INTEREST........................
7.3. PROMISE TO PAY FEES............................
7.4. PROMISE TO PAY COSTS AND EXPENSES..............
7.5. METHOD OF PAYMENT OF PRINCIPAL, INTEREST, FEES,
AND COSTS AND EXPENSES.........................
7.6. COMPUTATION OF DAILY OUTSTANDING BALANCE.......
7.7. ACCOUNT STATED.................................
8. INTENTIONALLY DELETED PRIOR TO EXECUTION..................
9. AFFIRMATIVE COVENANTS.....................................
9.1. FINANCIAL STATEMENTS...........................
9.2. GOVERNMENT AND OTHER SPECIAL RECEIVABLES.......
9.3. TERMS OF SALE..................................
9.4. BOOKS AND RECORDS..............................
9.5. INVENTORY IN POSSESSION OF THIRD PARTIES......
9.6. EXAMINATIONS...................................
9.7. VERIFICATION OF COLLATERAL.....................
9.8. RESPONSIBLE PARTIES............................
9.9. TAXES..........................................
9.10. LITIGATION.....................................
9.11. INSURANCE......................................
9.12. GOOD STANDING; BUSINESS........................
9.13. PENSION REPORTS................................
9.14. NOTICE OF NON-COMPLIANCE.......................
9.15. COMPLIANCE WITH ENVIRONMENTAL LAWS.............
9.16. DEFEND COLLATERAL..............................
9.17. USE OF PROCEEDS................................
9.18. COMPLIANCE WITH LAWS...........................
9.19. MAINTENANCE OF PROPERTY........................
9.20. LICENSES, PERMITS, ETC.........................
9.21. TRADEMARKS AND PATENTS.........................
9.22. ERISA..........................................
9.23. MAINTENANCE OF OWNERSHIP.......................
9.24. ACTIVITIES OF CONSOLIDATED SUBSIDIARIES........
9.25. LABOR DISPUTES.................................
9.26. FINANCIAL COVENANTS............................
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00. XXXXXXXX COVENANTS........................................
10.1. LOCATION OF INVENTORY, EQUIPMENT, AND
BUSINESS RECORDS..............................
10.2. BORROWED MONEY.................................
10.3. SECURITY INTEREST AND OTHER ENCUMBRANCES.......
10.4. STORING AND USE OF COLLATERAL..................
10.5. MERGERS, CONSOLIDATIONS OR SALES...............
10.6. CAPITAL STOCK..................................
10.7. DIVIDENDS OR DISTRIBUTIONS.....................
10.8. INVESTMENTS AND ADVANCES.......................
10.9. GUARANTIES.....................................
10.10. LEASES.........................................
10.11. CAPITAL EXPENDITURES...........................
10.12. COMPENSATION...................................
10.13. NAME CHANGE....................................
10.14. DISPOSITION OF COLLATERAL......................
10.15. FINANCIAL COVENANTS............................
10.16. NEGATIVE PLEDGE................................
11. EVENTS OF DEFAULT.........................................
11.1. EVENTS OF DEFAULT..............................
11.2. EFFECTS OF AN EVENT OF DEFAULT.................
12. SECURED PARTY'S RIGHTS AND REMEDIES.......................
12.1. GENERALLY......................................
12.2. INTENTIONALLY DELETED PRIOR TO EXECUTION.......
12.3. POSSESSION OF COLLATERAL.......................
12.4. COLLECTION OF RECEIVABLES......................
12.5. INTENTIONALLY DELETED PRIOR TO EXECUTION
12.6. LICENSE TO USE PATENTS, TRADEMARKS, AND
TRADENAMES....................................
13. MISCELLANEOUS.............................................
13.1. PERFECTING THE SECURITY INTEREST;
PROTECTING THE COLLATERAL.....................
13.2. PERFORMANCE OF DEBTOR'S DUTIES.................
13.3. NOTICE OF SALE.................................
13.4. WAIVER BY SECURED PARTY........................
13.5. WAIVER BY DEBTOR...............................
13.6. SETOFF.........................................
13.7. ASSIGNMENT.....................................
13.8. SUCCESSORS AND ASSIGNS.........................
13.9. MODIFICATION...................................
13.10. COUNTERPARTS...................................
13.11. GENERALLY ACCEPTED ACCOUNTING PRINCIPLES.......
13.12. INDEMNIFICATION................................
13.13. TERMINATION; PREPAYMENT PREMIUM................
13.14. FURTHER ASSURANCE..............................
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13.15. HEADINGS.......................................
13.16. CUMULATIVE SECURITY INTEREST, ETC..............
13.17. SECURED PARTY'S DUTIES.........................
13.18. NOTICES GENERALLY..............................
13.19. SEVERABILITY...................................
13.20. INCONSISTENT PROVISIONS........................
13.21. ENTIRE AGREEMENT...............................
13.22. APPLICABLE LAW.................................
13.23. CONSENT TO JURISDICTION........................
13.24. JURY TRIAL WAIVER..............................
EXHIBITS
--------
"A" --- Trademarks and Patents........................
"B" --- Consolidated Subsidiaries.....................
"C" --- Authorized Shares.............................
"D" --- Compliance Certificate........................
"E" --- Request for Advance and Notice of Interest
Rate Section.................................
"F" --- Financial Statement Certification
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XXXXXX AND SECURED PARTY AGREE AS FOLLOWS:
1. DEFINITIONS:
1.1. CERTAIN SPECIFIC TERMS. For purposes of this Agreement, the
following terms shall have the following meanings:
(a) ACCOUNT DEBTOR means the person, firm, or entity obligated
to pay a Receivable.
(b) ADJUSTED LIBOR RATE means a rate per annum (rounded
upwards, if necessary, to the next 1/16 of 1%) equal to the product arrived at
by multiplying the Base Libor Rate (as hereinafter defined) with respect to the
applicable Interest Period (as hereinafter defined) by a fraction (expressed as
a decimal); the numerator of which shall be the number one and the denominator
of which shall be the number one minus the aggregate reserve percentages
(expressed as a decimal) from time to time established by the Board of
Governors of the Federal Reserve System of the United States and other banking
authority to which the Secured Party is now or hereafter subject, including,
but not limited to, any Reserve Eurocurrency Liabilities as defined in
Regulation D of the Board of Governors of the Federal Reserve System of the
United States at the ratios provided in such Regulation, from time to time, it
being agreed that any portion of the Indebtedness (as hereinafter defined)
bearing interest at a Libor Rate shall be deemed to constitute Eurocurrency
Liabilities, as defined by such Regulation, and it being further agreed that
such Eurocurrency Liabilities shall be deemed to be subject to such reserve
requirements without benefit of or credit for prorations, exceptions or offsets
that may be available to the Secured Party from time to time under such
Regulation and irrespective of whether the Secured Party actually maintains all
or any portion of such reserve.
(c) ADVANCE means a loan made to Debtor by Secured Party,
pursuant to this Agreement.
(d) AGREEMENT or LOAN AGREEMENT means this Loan and Security
Agreement including all exhibits hereto, as the same may be amended or
otherwise modified from time to time; the terms "herein", "hereunder" and like
terms shall be taken as referring to this Agreement in its entirety and shall
not be limited to any particular section or provision thereof.
(e) BASE LIBOR RATE applicable to a particular Interest Period
means a rate per annum (rounded upwards, if necessary, to the next 1/16th of
1%) equal to the rate at which dollars approximately equal in principal amount
to the applicable portion of the Indebtedness and for a maturity equal to the
applicable
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Interest Period are offered in immediately available funds to the Secured Party
by leading banks in the London Interbank Market for Eurodollars at
approximately 11:00 a.m., London time, two (2) Business Days prior to the
commencement of such Interest Period.
(f) BORROWING means the incurrence of an Advance on a given
date.
(g) BORROWING CAPACITY means, at the time of computation,
$16,000,000.
(h) BUSINESS DAY means a day other than a Saturday, Sunday, or
other day on which banks are authorized or required to close under the laws of
New York or the State.
(i) COLLATERAL means collectively all of the property of
Debtor subject to the Security Interest and described in Sections 3.1 and 3.2.
(j) COMMITMENT or COMMITMENTS means Secured Party's
obligations, pursuant to the terms of this Agreement, to make Advances under
the Revolving Credit Facility.
(k) 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") 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.
(l) CURRENT ASSETS shall be determined in accordance with GAAP.
(m) CURRENT LIABILITIES shall be determined in accordance with
GAAP.
(n) DEBTOR means the person or entity defined on the cover
page to this Agreement.
(o) DEBT SERVICE COVERAGE RATIO means net income plus non cash
expense plus interest expense divided by interest expense plus current portion
of long term debt.
(p) DISPOSAL means the intentional or unintentional
abandonment, discharge, deposit, injection, dumping, spilling, leaking,
burning, thermal destruction, or placing of any Hazardous Substance so that it
or any of its constituents may enter the environment.
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