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EXHIBIT 10.O
May 28, 1998
$1,947,880.00 New York, New York
PROMISSORY NOTE
Napco Security Systems, Inc., a Delaware corporation, (the "Company"),
for value received, hereby promises to pay to Kenneth Rosenberg (the "Holder"),
the sum of $1,947,880.00 plus interest thereon at the rate of 8% per annum as
follows: (i) on April 1, 1999, the Company shall pay Holder $400,000.00, which
shall be applied first to pay the accrued interest from the date hereof to the
date of payment, and second to reduce the principal balance of the Note; and
(ii) the balance of the principal amount of the Note, plus interest thereon, at
the rate of 8% per annum, from April 1, 1999 through July 31, 1999, shall be
payable in 36 consecutive equal monthly installments of principal and interest
beginning on August 1, 1999 in accordance with the payment schedule annexed
hereto. Notwithstanding the foregoing, if the Company sells all or substantially
all of the Company's assets or common stock for cash, all amounts outstanding
hereunder shall become immediately due and payable. The Company may prepay this
Note in whole or in part without premium or penalty at any time.
1. Payments.
(a) The Company hereby expressly waives demand and presentment
for payment, notice of nonpayment, notice of dishonor, protest, notice of
protest, bringing of suit and diligence in taking any action to collect any
amount called for hereunder, and shall be directly and primarily liable for the
payment of all sums owing and to be owing hereon, regardless of and without any
notice, diligence, act or omission with respect to the collection of any amount
called for hereunder.
(b) In the event that a court of competent jurisdiction shall
finally determine that the Company shall have paid or agreed to pay hereunder or
under any other agreement between the parties interest or other charges in
excess of the maximum rate permitted by law, it is the express intent of the
Company and the Holder that all such excess amounts shall, at the option of the
Holder, be held as cash collateral to secure the payment of this Note
(reimbursable to the Company to the extent of any excess after payment to the
Holder of all sums lawfully payable hereunder), and the provisions of this Note
shall be immediately deemed reformed and amounts thereafter collectible
hereunder reduced, without necessity of execution of a new document, so as to
comply with the determination of such court, but so as to permit the recovery of
the fullest amount otherwise provided for in this Note.
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2. Events of Default. The occurrence of any of the following events
shall constitute an event of default (an "Event of Default"):
(a) A default in the payment of any amount due on the Note, when and as
the same shall become due and payable, which remains uncured for a period of 10
days after written notice from Holder.
(b) The entry of a decree or order by a court having jurisdiction
adjudging the Company a bankrupt or insolvent, or approving a petition seeking
reorganization, arrangement, adjustment or composition of, or in respect of, the
Company, under federal bankruptcy law, as now or hereafter constituted, or any
other applicable federal or state bankruptcy, insolvency or other similar law,
and the continuance of any such decree or order unstayed and in effect for a
period of 60 days; or the commencement by the Company of a voluntary case under
federal bankruptcy law, as now or hereafter constituted, or any other applicable
federal or state bankruptcy, insolvency or other similar law, or the consent by
it to the institution of bankruptcy or insolvency proceedings against it, or the
filing by it of a petition or answer or consent seeking reorganization or relief
under federal bankruptcy law or any other applicable federal or state law, or
the consent by it to the filing of such petition or to the appointment of a
receiver, liquidator, assignee, trustee, sequestrator or similar of official of
the Company or of any substantial part of its property, or the making by it of
an assignment for the benefit of creditors, or the admission by it, in writing,
of its inability to pay its debts generally as they become due, or the taking of
corporate action by the Company in furtherance of any such action.
3. Remedies Upon Default. Upon the occurrence and during the
continuance of an Event of Default under this Note, in addition to all other
legal and equitable rights and remedies available to the Holder hereunder, all
amounts outstanding under this Note shall automatically become immediately due
and payable without presentment, demand, protest or other formalities of any
kind, all of which are hereby expressly waived by the Company and the Company
shall immediately issue that number of Shares, defined below, then subject to
the Security Interest also defined below. Pending such issuance, the Holder
shall nevertheless immediately upon an Event of Default be deemed to be a
Shareholder of the Company for any and all purposes and have all rights
attendant thereto, including voting rights for the amount of Shares so required
to be issued.
4. Security. As security for the performance of the Company's
obligations hereunder, the Company hereby grants the Holder a first priority
security interest (the "Security Interest") in 650,000 shares of the Company's
common stock (the "Shares") which are in the Company's treasury and which are
part of the shares that the Company is acquiring from the Holder simultaneously
with the execution and delivery of this Note. The Security Interest granted
hereby shall also extend to: (i) all shares representing a dividend on any of
the Shares, or resulting from a split-up, revision, reclassification or other
like change of the Shares or otherwise received in exchange therefor; and (ii)
in case of any consolidation or merger in which the Company is not the surviving
corporation, all shares of each class of the capital stock of the successor
corporation formed by or resulting from such consolidation or merger
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(collectively, the "Collateral"). The Security Interest on such Shares shall be
released as follows: 150,000 Shares shall be released upon payment of
$400,000.00 on April 1, 1999 and 1/3 of the balance of the Shares shall be
released on July 31, 2001 provided all payments due prior to such date shall
have been made on a timely basis. Upon payment in full, all Shares shall be
released from the Security Interest. The Company hereby agrees that the
financial statements contained in its filings with the Securities and Exchange
Commission shall disclose the existence and extent of the Holder's lien on the
Shares and his rights and remedies with respect to an Event of Default
hereunder.
5. Rights with Respect to the Collateral
(a) If an Event of Default shall have occurred, then while
such Event of Default shall continue, all dividends and other distributions on
the Collateral shall be paid directly to the Holder in reduction of the
obligations under this Note.
(b) During the period during which an Event of Default shall
have occurred and be continuing:
(i) the Holder shall have all of the rights and
remedies with respect to the Collateral of a secured party under the Uniform
Commercial Code (whether or not said Code is in effect in the jurisdiction where
the rights and remedies are asserted) and such additional rights and remedies to
which a secured party is entitled under the laws in effect in any jurisdiction
where any rights and remedies hereunder may be asserted, including the right, to
the maximum extent permitted by law, to exercise all voting, consensual and
other powers of ownership pertaining to the Collateral as if the Holder were the
sole and absolute owner thereof (and the Pledgor shall take all such action as
may be appropriate to give effect to such right);
(ii) the Holder, upon 10 business days' prior written
notice to the Company of the time and place, with respect to the Collateral or
any part thereof which shall then be or shall thereafter come into the
possession, custody or control of the Holder, may sell all or any part of such
Collateral, at such place or places as the Holder deems best, at public or
private sale, without demand of performance or notice of intention to effect any
such disposition or of the time or place thereof (except such notice as may be
required above or by applicable statute and cannot be waived).
(c) If the proceeds of sale, collection or other realization
of or upon the Collateral pursuant to clause (b) above are insufficient to cover
the costs and expenses of such realization and the payment in full of the
amounts due under this Note, the Company shall remain liable for any deficiency.
(d) Except as otherwise herein expressly provided, the
proceeds of any sale of all or any part of the Collateral pursuant hereto, shall
be applied:
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First, to the payment of the reasonable costs and expenses of
such collection, sale or other realization, including reasonable
out-of-pocket costs and expenses to the Holder and the reasonable fees
and expenses of its agents and counsel;
Next, to the payment in full of the obligations under the
Note, and;
Finally, to the payment to the Company of any surplus then
remaining.
6. Miscellaneous.
(a) Upon receipt of evidence satisfactory to the
Company of the loss, theft, destruction or mutilation of this Note (and upon
surrender of this Note if mutilated), the Company shall execute and deliver to
the Holder a new Note of like date, tenor and denomination.
(b) No course of dealing and no delay or omission on
the part of the Holder in exercising any right or remedy shall operate as a
waiver thereof or otherwise prejudice the Holder's rights, powers or remedies.
No right, power or remedy conferred by this Note upon the Holder shall be
exclusive of any other right, power or remedy referred to herein or now or
hereafter available at law, in equity, by statute or otherwise, and all such
remedies may be exercised singly or concurrently.
(c) This Note may be amended only by a written
instrument executed by the Company and the Holder hereof. Any amendment shall be
endorsed upon this Note, and all future Holders shall be bound thereby.
(d) In any action, suit or proceeding to enforce the
Holder's rights hereunder, as part of any judgment, the Court shall award Holder
his reasonable costs and expenses (including reasonable attorneys fees) incurred
in connection with enforcing such rights.
(e) The Company irrevocably consents to the
jurisdiction of the courts of the States of New York and Florida and of any
federal court located in such States in connection with any action or proceeding
arising out of or relating to this Note. By accepting this Note, Holder and the
Company each agree to waive their right to a jury trial.
(f) The Company shall be responsible and pay any and
all documentary stamps and/or fees and taxes, if any, which may be applicable in
connection with issuance of this Note.
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IN WITNESS WHEREOF, the Company has caused this Note to be
executed and dated the day and year first above written.
NAPCO Security Systems, Inc.
By: /s/ RICHARD SOLOWAY
Richard Soloway, an Authorized Officer
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SCHEDULE TO PROMISSORY NOTE
PAYMENT # DATE PAYMENT INTEREST PRINCIPAL BALANCE
- --------------- ------------------ --------------------- ------------------ -------------------- --------------------
1,722,545.00
1 08/01/1999 53,978.30 11,483.63 42,494.67 1,680,050.33
2 09/01/1999 53,978.30 11,200.34 42,777.98 1,637,272.37
3 10/01/1999 63,978.30 10,915.15 43,063.15 1,594,209.22
4 11/01/1999 53,978.30 10,628.06 43,350.24 1,550,858.98
5 12/01/1999 53,978.30 10,338.06 43,639.24 1,507,219.74
6 01/01/2000 53,978.30 10,048.13 43,930.17 1,463,289.57
7 02/01/2000 53,978.30 9,755.26 44,223.04 1,419,066.53
8 03/01/2000 53,978.30 9,460.44 44,217.86 1,374,548.67
9 04/01/2000 53,978.30 9,163.65 44,814.64 1,329,734.03
10 05/01/2000 53,978.30 8,864.89 45,113.41 1,284,620.62
11 06/01/2000 53,978.30 8,534.89 45,414.16 1,239,206.46
12 07/01/2000 53,978.30 8,261.38 45,718.92 1,293,489.54
13 08/01/2000 53,978.30 7,956.60 46,021.70 1,147,467.84
14 09/01/2000 53,978.30 7,649.79 46,328.51 1,101,139.33
15 10/01/2000 53,978.30 7,340.93 46,637.37 1,054,501.96
16 11/01/2000 53,978.30 7,030.01 46,948.29 1,007,553.67
17 12/01/2000 53,978.30 6,717.02 47,261.28 960,282.39
18 01/01/2001 53,978.30 6,401.95 47,576.35 912,716.04
19 02/01/2001 53,978.30 6,084.77 47,893.53 864,822.51
20 03/01/2001 53,978.30 5,765.48 48,212.82 816,609.69
21 04/01/2001 53,978.30 5,444.06 48,534.24 768,075.45
22 05/01/2001 53,978.30 5,120.50 48,857.80 718,217.65
23 06/01/2001 53,978.30 4,794.78 49,183.52 670,034.13
24 07/01/2001 53,978.30 4,466.89 49,511.41 820,522.72
25 08/01/2001 53,978.30 4,136.82 49,841.48 570,681.24
26 09/01/2001 53,978.30 3,804.54 50,173.76 520,507.48
27 10/01/2001 53,978.30 3,470.05 50,508.25 469,999.23
28 11/01/2001 53,978.30 3,133.33 50,844.97 419,154.26
29 12/01/2001 53,978.30 2,794.36 51,183.94 367,970.32
30 01/01/2002 53,978.30 2,453.14 51,525.15 316,445.16
31 02/01/2002 53,978.30 2,109.63 51,868.67 264,576.49
32 03/01/2002 53,978.30 1,763.84 52,214.46 212,362.03
33 04/01/2002 53,978.30 1,415.75 52,562.55 159,799.48
34 05/01/2002 53,978.30 1,065.33 52,912.97 106,886.51
35 06/01/2002 53,978.30 712.58 53,265.72 53,620.79
36 07/01/2002 53,978.30 367.51 53,620.79 0.00
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