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THIRD AMENDMENT and WAIVER dated as
of October 13, 1995 to the LOAN
AGREEMENT dated as of July 27, 1994 (as the
same may be further amended, supplemented or
modified from time to time in accordance with
its terms, the "Loan Agreement), among
NAPCO SECURITY SYSTEMS, INC., a
Delaware corporation (the "Borrower"),
NAPCO SECURITY SYSTEMS
INTERNATIONAL, INC., UMI
MANUFACTURING CORP., RALTECH
LOGIC, INC., E.E. ELECTRONIC
COMPONENTS, INC., ALARM LOCK
SYSTEMS, INC. and DERRINGER
SECURITY SYSTEMS, INC. (individually,
each a "Guarantor" and collectively, the
"Guarantors"), CHEMICAL BANK, a New
York banking corporation ("Chemical"), THE
BANK OF NEW YORK ("BONY" and
collectively with Chemical, the "Banks") and
CHEMICAL BANK, as Agent (the "Agent).
WHEREAS, the Borrower and the Guarantors wish to amend and waive certain
provisions of the Loan Agreement;
WHEREAS, the Banks and the Agent have consented to amend and waive the Loan
Agreement to reflect the requests herein set forth;
NOW, THEREFORE, in consideration of the premises and of the mutual agreements
herein contained, the parties hereto agree as follows:
1. Waiver of ARTICLE V. COVENANTS OF THE BORROWER, SECTION 5.03 Financial
Requirements. (a) Minimum Consolidated Tangible Net Worth.
Compliance with ARTICLE V. SECTION 5.03. (a) of the Loan Agreement is
hereby waived for the fiscal year ended June 30, 1995 to permit the
Consolidated Tangible Net Worth plus Consolidated Subordinated Debt of
the Borrower to be less than $26,971,000 as of the fiscal year ended
June 30, 1995 provided, however, the Consolidated Tangible Net Worth
plus Consolidated Subordinated Debt of the Borrower was not less than
$25,455,000 as of such fiscal year end.
2. Amendment to ARTICLE V. COVENANTS OF THE BORROWER, SECTION 5.03.
Financial Requirements.(a) Minimum Consolidated Tangible Net Worth.
ARTICLE V. SECTION 5.03.(a) of the Loan Agreement is hereby amended by
deleting sub-section (iii) in its entirety and substituting therefor the
following:
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"(iii) $25,455,000 from June 30, 1995 until June 29, 1996;"
3. Waiver of ARTICLE V. COVENANTS OF THE BORROWER, SECTION 5.03. Financial
Requirements. (e) Debt Service Ratio.
Compliance with Section 5.03(e) of the Loan Agreement is hereby waived
for the fiscal year ended June 30, 1995 to permit the Debt Service
Coverage Ratio of the Borrower to be less than .94 to 1.00 as of the
fiscal year ended June 30, 1995 provided, however, the Debt Service
Coverage Ratio of the Borrower was not less than .91 to 1.00 as of such
fiscal year end.
4. Waiver of ARTICLE V. COVENANTS OF THE BORROWER, SECTION 5.03. Financial
Requirements. (g) Inventory Reliance.
Compliance with Section 5.03(g) of the Loan Agreement is hereby waived
for the fiscal year ended June 30, 1995 to permit the Inventory Reliance
of the Borrower to be greater than 34% as of the fiscal year ended
June 30, 1995 provided, however, the Inventory Reliance of the
Borrower was not greater than 36% as of such fiscal year end.
This THIRD AMENDMENT and WAIVER shall be construed and enforced in accordance
with the laws of the State of New York.
Except as expressly amended or consented to hereby, the Loan Agreement shall
remain in full force and effect in accordance with the original terms thereof.
The THIRD AMENDMENT and WAIVER herein contained is limited specifically to the
matters set forth above and does not constitute directly or by implication an
amendment or waiver of any other provision of the Loan Agreement or any default
which may occur or may have occurred under the Loan Agreement.
The Borrower and the Guarantors hereby represent and warrant that, after giving
effect to this THIRD AMENDMENT and WAIVER, no Event of Default or Default
exists under the Loan Agreement or any other related document.
Please be advised that should there be a need for further amendments or waivers
with respect to these covenants or any other covenants, those requests shall be
evaluated by the Agent and the Lenders when formally requested, in writing, by
the Borrower and the Guarantors.
This THIRD AMENDMENT and WAIVER may be executed in one or more counterparts,
each of which shall constitute an original, but all of which when, taken
together shall constitute but one THIRD AMENDMENT and WAIVER. The THIRD
AMENDMENT and WAIVER shall become effective when (i) duly executed counterparts
hereof which, when taken together, bear the signatures of each of the parties
hereto shall have been delivered to the Agent and (ii) the Agent shall have
received copies of (a) the executed Tenth Amendment and Waiver to the Letter of
Credit and Bond Purchase Agreement dated as of April 1, 1985 between the
Borrower and Chemical Bank, in the form attached hereto as Exhibit A and
(b) the executed Seventh Amendment and Waiver to the Credit Agreement dated as
of November 21, 1991 among the Borrower, the Guarantors named therein and
Chemical Bank, in the form attached hereto as Exhibit B.
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Capitalized terms used herein and not otherwise defined herein shall have the
same meanings as defined in the Loan Agreement.
IN WITNESS WHEREOF, the Borrower, the Guarantors, the Banks and the Agent have
caused this THIRD AMENDMENT and WAIVER to be duly executed by their duly
authorized officers, all as of the day and year first above written.
NAPCO SECURITY SYSTEMS, INC.
By: /s/ Kevin S. Buchal
--------------------------------
Name:
Title: Senior Vice President
NAPCO SECURITY SYSTEMS
INTERNATIONAL INC.
By: /s/ Kevin S. Buchal
--------------------------------
Name:
Title: Senior Vice President
UMI MANUFACTURING CORP.
By: /s/ Kevin S. Buchal
--------------------------------
Name:
Title: Senior Vice President
RALTECH LOGIC, INC.
By: /s/ Kevin S. Buchal
--------------------------------
Name:
Title: Senior Vice President
E.E. ELECTRONIC COMPONENTS, INC.
By: /s/ Kevin S. Buchal
--------------------------------
Name:
Title: Senior Vice President
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ALARM LOCK SYSTEMS, INC.
By: /s/ Kevin S. Buchal
--------------------------------
Name:
Title: Senior Vice President
DERRINGER SECURITY SYSTEMS, INC.
By: /s/ Kevin S. Buchal
--------------------------------
Name:
Title: Senior Vice President
CHEMICAL BANK, as Agent and Bank
By: /s/ Robert F. Eisen
--------------------------------
Name:
Title: Vice President
THE BANK OF NEW YORK, as Bank
By: /s/ Adam Ostrach
--------------------------------
Name: Adam Ostrach
Title: Vice President
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