EXHIBIT 4.1
FIFTH AMENDMENT AND WAIVERS
FIFTH AMENDMENT AND WAIVERS TO AMENDED AND RESTATED CREDIT AGREEMENT dated as of
October 13, 2009 (the "Fifth Amendment") by and among NAPCO SECURITY
TECHNOLOGIES, INC. f/k/a NAPCO SECURITY SYSTEMS, INC., a Delaware corporation
(the "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
The Borrower, the Lenders, and the Administrative Agent entered into an Amended
and Restated Credit Agreement dated as of August 18, 2008, as amended by a First
Amendment and Waivers dated November 17, 2008, as supplemented by the extension
of the waivers contained in Section 3 of such First Amendment and Waivers to
January 15, 2009, by letter of the Required Lenders dated as of December 30,
2008, a Second Amendment and Waivers dated as of January 29, 2009, a letter
agreement dated February 6, 2009, a Third Amendment and Waivers dated as of
March 30, 2009 and a Fourth Amendment and Waivers dated as of June 25, 2009
(collectively, 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
or extend waivers already provided and the Lenders and the Administrative Agent
are willing to modify such terms and provide such waivers 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 Fifth
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 5 below no later than October 13, 2009:
(a) Section 7.1(f) is amended in its entirety to read as follows:
"(f) within twenty-five (25) days after the end of each month, the
internally prepared financial statements of the Borrower and its
Consolidated Subsidiaries which statements shall consist of a balance
sheet, income statement, and statement of changes in financial
position covering the period of the Borrower's immediately preceding
month."
(b) Section 7.2(b) is amended by deleting the text "subsections 7.1(a) and
(b)" in both instances where it appears and inserting the text "subsections
7.1(a), 7.1(b) and 7.1(f)" in lieu thereof.
(c) Section 7.2(e) is amended in its entirety as follows:
"(e) within five (5) Business Days after the close of each month and
the first two week period of each such month, an accounts receivable
aging report (including a report listing the accounts receivable by
Subsidiary), an accounts payable aging report and an inventory
schedule of the Borrower and all of its Subsidiaries in the form
previously submitted to and found acceptable by the Lenders (modified
to report the inventory of the Borrower and its Subsidiaries by
location)."
(d) Section 8.1 is amended by inserting the following new sub-clauses (e)
and (f) therein:
"(e) Overadvances. Permit as of the end of any calendar month,
commencing with the calendar month ending October 31, 2009, the
Overadvance as of the end of such calendar month to exceed the amount
set forth opposite the row captioned "Proposed Inventory Cap - @15% of
Projections" for such calendar month on the collateral tracking report
attached to Fifth Amendment as Exhibit A thereto (the "Collateral
Tracking Report"). "Overadvance" means the difference between (x) the
sum of (i) 70% of the value of the Loan Parties' gross accounts
receivable (with foreign accounts receivable to be excluded from gross
accounts receivable to the extent foreign accounts receivable exceed
15% of the gross accounts receivable, but only to the extent of such
excess) plus (ii) 70% of the value (as determined in good faith by the
Administrative Agent or as set forth in the most recent appraisal
conducted by or on behalf of the Administrative Agent) of the
Mortgaged Property and (y) the outstanding principal balance of the
Revolving Credit Loans plus the outstanding principal balance of the
Term Loans plus the aggregate amount of all Letter of Credit
Liabilities.
(f) Inventory Caps. Permit as of the end of any calendar month,
commencing with the calendar month ending October 31, 2009, (x) Gross
Inventory Reliance for such calendar month to exceed the percentage
set forth opposite the row captioned "Gross Inventory Reliance Cap"
for such calendar month on the Collateral Tracking Report and (y)
Current Inventory Reliance for such calendar month to exceed the
percentage set forth opposite the row captioned "Current Inventory
Reliance Cap" for such calendar month on the Collateral Tracking
Report. "Gross Inventory Reliance" means the quotient (expressed as a
percentage) obtained by dividing the Overadvance for such calendar
month by Loan Parties' total Inventory as the end such calendar month
(with total Inventory determined by adding the amounts set forth on
the line items "Inventory, Net" and "Non-current inventory, Net" on
the Loan Parties balance sheet for such month). "Current Inventory
Reliance" means the quotient (expressed as a percentage) obtained by
dividing Overadvance for such calendar month by Loan Parties "current"
Inventory as the end such calendar month (with "current" Inventory
determined by taking the amount set forth on the line item "Inventory,
Net" on the Loan Parties balance sheet for such month)."
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(e) Section 9(k) is amended in its entirety as follows:
"(k) the Borrower incurs, on a consolidated basis, net income less
than, or net losses in excess of, as applicable, the following amounts
for the corresponding periods: (i) month ending September 30, 2009,
$940,000.00; (ii) month ending October 31, 2009, ($1,379,000.00);
(iii) month ending November 30, 2009, ($851,000.00); (iv) month ending
December 31, 2009, $1,051,000.00; (v) month ending January 31, 2010,
($1,303,000.00); (vi) month ending February 28, 2010, ($736,000.00);
(vii) month ending March 31, 2010, $1,323,000.00; (viii) month ending
April 30, 2010, ($1,227,000.00); (ix) month ending May 31, 2010,
($604,000.00); and (x) month ending June 30, 2010, $1,563,000.00;
Section 3. Additional Covenants. The Borrower hereby further agrees that
the following covenants and agreements shall be deemed a part of the Credit
Agreement and/or Security Agreement, as applicable.
(a) By November 6, 2009, the Borrower shall have retained a business
consultant satisfactory to the Administrative Agent and Lenders in their
reasonable discretion pursuant to an engagement letter in form and substance
satisfactory to the Administrative Agent and Lenders in their reasonable
discretion (the "Business Consultant"). The scope of the engagement will
include, but not be limited to, vetting projections, reviewing efficiency and
integrity of reporting and systems, reviewing inventory reserve policy and
purchasing policies, and reviewing cost cutting to date and possible cost
cutting opportunities. Each Loan Party hereby consents to the Administrative
Agent contacting the Business Consultant directly with respect to the status of
Loan Parties' business operations, the Loan Parties' prospects and financial
condition, and hereby agrees that such communications shall not be restricted or
denied in any way. The Borrower further agrees that the Business Consultant
and/or the Borrower shall deliver to the Administrative Agent, for distribution
to the Lenders, copies of any written reports, work product, information,
documents or items received by the Borrower from the Business Consultant,
simultaneously with the delivery or receipt of the same, and any other written
reports and work product of the Business Consultant that the Administrative
Agent may reasonably request in its sole discretion. After the retention
thereof, the Borrower shall not terminate the Business Consultant, unless a
replacement satisfactory to the Administrative Agent and Lenders in their
reasonable discretion has been retained pursuant to an engagement letter in form
and substance satisfactory to the Administrative Agent and Lenders in their
reasonable discretion.
(b) The Loan Parties consent to the retention by the Administrative Agent
(or its counsel) of an Appraisal Firm (the "Appraiser") to conduct an appraisal
of the value of the Inventory, machinery and equipment of the Loan Parties. The
Loan Parties shall cooperate with the Appraiser, including without limitation,
providing the Appraiser with access to each location in which Inventory,
machinery and equipment is located and furnishing the Appraiser with any and all
reports as to the Inventory, machinery and equipment, all as reasonably
requested by the Appraiser. All costs and expenses of the Appraiser shall be
borne by and be the responsibility of the Borrower and shall be payable by the
Borrower on demand by the Administrative Agent.
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(c) The Loan Parties consent to the retention by the Administrative Agent
(or its counsel) of an Appraisal Firm (the "RE Appraisal") to conduct an
appraisal of the Mortgaged Property. The Borrower shall cooperate with the RE
Appraiser, including without limitation, providing the RE Appraiser with access
to the Mortgaged Property and any and all other information relating to the
Mortgaged Property as reasonably requested by the RE Appraiser. All costs and
expenses of the Appraisal of the premises shall be borne by and be the
responsibility of the Borrower and shall be payable by the Borrower on demand by
the Administrative Agent.
(d) The Borrower acknowledges and agrees that Agents and Lenders may
exercise their rights to conduct Collateral field examinations pursuant to
Section 7.6 of the Credit Agreement and Section 4 of the Security Agreement no
less frequently than once each fiscal quarter of the Borrower.
(e) (i) The Borrower shall direct all of each Loan Parties' domestic
account debtors to make all payments on the accounts receivable directly to a
post office box (the "Lock Box") designated by, and under the exclusive control
of, the Administrative Agent, at HSBC or another financial institution
acceptable to the Administrative Agent. The Borrower shall provide such
assistance as is reasonably requested by the Administrative Agent in the
establishment of such Lock Box. The Borrower, in conjunction with Administrative
Agent, shall establish an account (the "Dominion Account") in the Borrower's
name, for the benefit of the Administrative Agent (or, at the request of the
Administrative Agent, in the Administrative Agent's name, for the benefit of the
Borrower), at HSBC or another financial institution acceptable to the
Administrative Agent, into which all payments received in the Lock Box shall be
deposited, and into which the Borrower will immediately deposit all payments
received by the Borrower or any other Loan Party on accounts receivable in the
identical form in which such payments were received, whether by cash or check.
If the Borrower, any Affiliate or Subsidiary, any shareholder, officer,
director, employee or agent of the Borrower or any Affiliate or Subsidiary, or
any other Person acting for or in concert with the Borrower shall receive any
monies, checks, notes, drafts or other payments relating to or as proceeds of
accounts receivable or other Collateral, the Borrower and each such Person shall
receive all such items in trust for, and as the sole and exclusive property of,
the Administrative Agent and, immediately upon receipt thereof, shall remit the
same (or cause the same to be remitted) in kind to the Dominion Account.
Notwithstanding the foregoing, the Borrower and the Loan Parties may continue to
collect payments on foreign accounts receivable from their foreign account
debtors and deposit such amounts in deposit accounts maintained in the
applicable foreign jurisdiction; provided that all amounts maintained in such
foreign deposit accounts representing proceeds of accounts receivable or other
Collateral shall be wired in Dollars to the Dominion Account at least once per
calendar month (or more frequently if requested by the Administrative Agent) or
when the aggregate balance of all such foreign deposit accounts exceeds
$150,000. The financial institution with which the Dominion Account is
established shall acknowledge and agree, in a manner satisfactory to the
Administrative Agent, that the amounts on deposit in such Lock Box and Dominion
Account are the sole and exclusive property of the Administrative Agent, that
such financial institution will follow the instructions of the Administrative
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Agent with respect to disposition of funds in the Lock Box and Dominion Account
without further consent from the Borrower, that such financial institution has
no right to setoff against the Lock Box or Dominion Account or against any other
account maintained by such financial institution into which the contents of the
Lock Box or Dominion Account are transferred, and that such financial
institution shall wire, or otherwise transfer in immediately available funds to
the Administrative Agent in a manner satisfactory to the Administrative Agent,
funds deposited in the Dominion Account on a daily basis as such funds are
collected. The Borrower agrees that all payments made to such Dominion Account
or otherwise received by the Administrative Agent, whether in respect of the
accounts receivable or as proceeds of other Collateral or otherwise (except for
proceeds of Collateral which are required to be delivered to the holder of a
Lien permitted under Section 8.3 of the Credit Agreement which is prior in right
of payment), will be applied on account of the Obligations in accordance with
the terms of the Credit Agreement. The Borrower agrees to pay all customary
fees, costs and expenses in connection with opening and maintaining the Lock Box
and Dominion Account. All of such fees, costs and expenses if not paid by the
Borrower, may be paid by the Administrative Agent and in such event all amounts
paid by the Administrative Agent shall constitute Obligations under the Credit
Agreement, shall be payable to the Administrative Agent by the Borrower upon
demand, and, until paid, shall bear interest at the rate applicable to Revolving
Credit Loans maintained as Prime Loans. All checks, drafts, instruments and
other items of payment or Proceeds of Collateral shall be endorsed by the
Borrower to the Administrative Agent, and, if that endorsement of any such item
shall not be made for any reason, the Administrative Agent is hereby irrevocably
authorized to endorse the same on the Borrower's behalf. For the purpose of this
section, the Borrower irrevocably hereby makes, constitutes and appoints the
Administrative Agent (and all Persons designated by the Administrative Agent for
that purpose) as the Borrower's true and lawful attorney and the agent-in-fact
(i) to endorse the Borrower's name upon said items of payment and/or proceeds of
Collateral and upon any Chattel Paper, Document, Instrument, invoice or similar
document or agreement relating to any Account of the Borrower or Goods
pertaining thereto; (ii) to take control in any manner of any item of payment or
Proceeds thereof and (iii) to have access to any lock box or postal box into
which any of the Borrower's mail is deposited, and open and process all mail
addressed to the Borrower and deposited therein. The Lock Box and Dominion
Account shall be established to the Administrative Agent's satisfaction on or
before October 30, 2009.
(ii) For purposes of determining the amount of Loans available for
borrowing purposes, the ledger balance in the main Dominion Account as of the
end of a Business Day shall be applied to the Obligations at the beginning of
the next Business Day. If, as a result of such application, a credit balance
exists, the balance shall not accrue interest in favor of the Borrower and shall
be made available to the Borrower as long as no Event of Default exists.
(f) The Borrower shall use its best efforts to assist the Collateral Agent
in obtaining a first priority perfected security interest for Collateral Agent,
or comparable Lien in all assets of the Loan Parties not located in the United
States of America pursuant to agreements, documents and instruments satisfactory
to the Collateral Agent in all respects; provided that no Loan Party shall be
required to grant a security interest to the Collateral Agent in any such asset,
if the Collateral Agent, in its reasonable discretion, determines that the
granting of such security interest to the Collateral Agent would have material
adverse tax consequences on the Borrower.
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(g) The Borrower covenants and agrees that when the existing Interest
Periods with respect Eurodollar Loans expire on November 2, 2009, all such Loans
will be converted into Prime Loans, and thereafter no Loan may be maintained as
a Eurodollar Loan and Borrower agrees that it will not request that any Loan be
made as, or converted into, a Eurodollar Loan.
Section 4. Waivers. Subject to the satisfaction of the conditions precedent
specified in Section 5 below no later than October 13, 2009, the Lenders hereby
waive non-compliance with the following covenants (the "Covenant Defaults"):
(a) 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 Trailing four quarter period ended:
(i) 09/30/08, solely to the extent such ratio was 5.28 to 1.0 instead
of the required ratio.
(ii) 12/31/08, solely to the extent such ratio was 6.29 to 1.0 instead
of the required ratio. (FOR PURPOSES OF THIS CALCULATION, THE FIRST
POST-ACQUISITION QUARTER OF MARKS CONSOLIDATED EBITDA FOR THE THREE MONTHS ENDED
DECEMBER 31, 2008 WILL BE ADDED TO THE PRE-ACQUISITION CONSOLIDATED EBITDA OF
MARKS FOR THE THREE QUARTERS ENDED JULY 31, 2008); and
(iii) 03/31/09, solely to the extent such ratio was -18.37 to 1.0
instead of the required ratio.
(iv) 6/30/09, solely to the extent such ratio was -24.61 to 1.0
instead of the required ratio.
(b) Section 8.1(b) of the Credit Agreement requiring the Debt Service
Coverage Ratio of the Borrower and its Consolidated Subsidiaries to be at least
1.25 to 1.0 to the extent of non-compliance for the Trailing four quarter period
ended:
(i) 12/31/08 solely to the extent such ratio was 1.08 to 1.0 instead
of the required ratio (FOR PURPOSES OF THIS CALCULATION, THE FIRST
POST-ACQUISITION QUARTER OF MARKS CONSOLIDATED CASH FLOW FOR THE THREE MONTHS
ENDED DECEMBER 31, 2008 WILL BE ADDED TO THE PRE-ACQUISITION CONSOLIDATED CASH
FLOW OF MARKS FOR THE THREE QUARTERS ENDED JULY 31, 2008); and
(ii) 03/31/09, solely to the extent such ratio was -0.86 to 1.0
instead of the required ratio.
(iii) 6/30/09, solely to the extent such ratio was -0.12 to 1.0
instead of the required ratio.
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(c) Section 8.1(c) of the Credit Agreement requiring the Modified Quick
Ratio of the Borrower and its Consolidated Subsidiaries to be at least 1.15 to
1.0 to the extent of non-compliance for the Trailing Four Quarter period ended:
(i) 09/30/08, solely to the extent such ratio was 1.09 to 1.0 instead
of the required ratio.
(ii) 12/31/08, solely to the extent such ratio was 1.06 to 1.0 instead
of the required ratio; and
(iii) 03/31/09, solely to the extent such ratio was 0.90 to 1.0
instead of the required ratio.
(iv) 6/30/09, solely to the extent such ratio was 1.09 to 1.0 instead
of the required ratio.
(d) Section 9(k) of the Credit Agreement requiring the Borrower and its
Consolidated Subsidiaries to not incur Net Losses in excess of certain amounts,
to the extent of non-compliance for the following periods:
(i) Fiscal Year ended 6/30/09, solely to the extent such Net Loss was
($13,382,000) instead of the required ($5,065,000).
(ii) Month ended 7/31/09, solely to the extent such Net Loss was
($1,513,000) instead of the required ($1,327,100).
(iii) Month ended 8/31/09, solely to the extent such Net Loss was
($1,438,000) instead of the required ($777,950).
; provided, however, that such waiver shall extend only to the Covenant
Defaults, and is a one-time waiver and shall not be deemed (a) to be a consent
granted pursuant to, or a waiver or modification of, any other term or condition
of the Loan Documents or any of the instruments or agreements referred to
therein or a waiver of any other Default or Event of Default under the Loan
Documents, whether or not known to the Lenders or (b) to prejudice any right or
rights which the Agents and the Lenders may now have or have in the future under
or in connection with any Loan Document or any of the instruments or agreements
referred to in any Loan Document. This waiver is made in express reliance upon
the terms and conditions of this Fifth Amendment, including all representations,
warranties and covenants of the Loan Parties.
Section 5. Conditions Precedent. The amendments and modifications to the
Credit Agreement set forth in Sections 2 and 3 hereof and the waivers set forth
in Section 4 hereof shall become effective on the date of this Fifth Amendment,
upon the execution and delivery of this Fifth 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
Fifth Amendment certifying (x) no changes in the certificate of incorporation or
by-laws from the date of the Agreement or attaching copies of any amendments,
(y) 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 and (z) resolutions of the Board of Directors of
the Borrower authorizing the execution, deliver and performance of this Fifth
Amendment.
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(b) Approval of the Administrative Agent and the Administrative Agent's
Counsel. All other documents and legal matters in connection with the
transactions contemplated by this Fifth Amendment shall be satisfactory in form
and substance to the Administrative Agent, the Lenders and their counsel.
(c) Amendment Fee. The Borrower shall have paid to the Administrative
Agent, for the ratable benefit of the Lenders an amendment fee of $50,000;
provided that 50% of such amendment fee shall be refunded ratably by the Lenders
on November 15, 2009, if the Borrower has complied with the covenants set forth
in Sections 3(a), 3(b), 3(c) and 3(e) of this Fifth Amendment, within the time
frames set forth therein and Borrower has fully complied with all of the
financial reporting requirements in the Credit Agreement; provided further, that
in the case of Section 3(a) of this Fifth Amendment, the Business Consultant
must be retained in compliance with such Section on or prior to October 30,
2009, for the Borrower to be eligible for the 50% refund. Such fee shall be
fully earned on the date such fee is paid and, except as set forth in the
proviso in the immediately preceding sentence, shall not be subject to any
rebate, refund, proration and/or reduction of any kind.
Section 6. Representations and Warranties. The Borrower represents and
warrants as follows:
(a) This Fifth Amendment and the Credit Agreement, as amended hereby,
constitute legal, valid and binding obligations of the Borrower and is
enforceable against the Borrower in accordance with their respective terms.
(b) Upon the effective date of this Fifth Amendment, the Borrower hereby
reaffirms all covenants, representations and warranties made in the Credit
Agreement to the extent the same are not amended hereby and agrees that all such
covenants, representations and warranties shall be deemed to have been remade as
of the effective date of this Fifth Amendment.
(c) No Event of Default or Default has occurred and is continuing or would
exist after giving effect to this Fifth Amendment.
(d) The Borrower has no defense, counterclaim or offset with respect to the
Credit Agreement or any other Loan Document.
Section 7. Effect on the Credit Agreement.
(a) Upon the effectiveness of Sections 2 and 3 hereof, each reference in
the Credit Agreement to "this Agreement," "hereunder," "hereof," "herein" or
words of like import shall mean and be a reference to the Credit Agreement as
amended hereby.
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(b) Except as specifically amended herein, the Credit Agreement, and all
other documents, instruments and agreements executed and/or delivered in
connection therewith, shall remain in full force and effect, and are hereby
ratified and confirmed.
(c) The execution, delivery and effectiveness of this Fifth Amendment shall
not operate as a waiver of any right, power or remedy of the Administrative
Agent or Lenders, nor constitute a waiver of any provision of the Credit
Agreement, or any other documents, instruments or agreements executed and/or
delivered under or in connection therewith.
Section 8. Reaffirmation.
(a) The Borrower hereby acknowledges and agrees that (i) the principal
amount of the Term Loan outstanding as of October 8, 2009 is $21,428,000 (i) the
aggregate principal amount of the Revolving Credit Loans outstanding as of
October 8, 2009 is $11,100,000, (iii) the aggregate face amount of the Letters
of Credit outstanding as of October 8, 2009 is $0 and (iv) the amounts referred
to in the foregoing clauses (i), (ii) and (iii) are enforceable obligations of
the Borrower payable to the Administrative Agent and Lenders pursuant to the
provisions of the Credit Agreement and the other Loan Documents without any
deduction, offset, defense or counterclaim.
(b) Each Guarantor hereby (i) acknowledges and agrees that notwithstanding
the execution of this Fifth Amendment and the consummation of the transactions
contemplated hereby or any other facts and circumstances all of the terms and
conditions, representations and covenants contained in the Guarantee Agreement
are and shall remain in full force and effect and are hereby ratified and
confirmed, (ii) represents, warrants and confirms that no offsets, counterclaims
or defenses exist with respect to such Guarantor's obligations under the
Guarantee Agreement, and (iii) ratifies and confirms that the Obligations under
the Credit Agreement are guaranteed by such Guarantor under and pursuant to the
terms of the Guarantee Agreement, as reaffirmed hereby.
Section 9. Release. The Loan Parties acknowledge and agree that: (a)
neither they nor any of their Affiliates have any claim or cause of action
against the Agents or any Lender (or any of their respective Affiliates,
officers, directors, employees, attorneys, consultants or agents) and (b) the
Agents and each Lender has heretofore properly performed and satisfied in a
timely manner all of its obligations to the Loan Parties and their Affiliates
under the Credit Agreement and the other Loan Documents. Notwithstanding the
foregoing, the Agents and Lenders wish (and the Loan Parties agree) to eliminate
any possibility that any past conditions, acts, omissions, events or
circumstances would impair or otherwise adversely affect any of the Agents' and
the Lenders' rights, interests, security and/or remedies under the Credit
Agreement and the other Loan Documents. Accordingly, for and in consideration of
the agreements contained in this Fifth Amendment and other good and valuable
consideration, the Loan Parties (and their Affiliates and the successors,
assigns, heirs and representatives of each of the foregoing) (collectively, the
"Releasors") do hereby fully, finally, unconditionally and irrevocably release
and forever discharge the Agents and each Lender and each of their respective
Affiliates, officers, directors, employees, attorneys, consultants and agents
(collectively, the "Released Parties") from any and all debts, claims,
obligations, damages, costs, attorneys' fees, suits, demands, liabilities,
actions, proceedings and causes of action, in each case, whether known or
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unknown, contingent or fixed, direct or indirect, and of whatever nature or
description, and whether in law or in equity, under contract, tort, statute or
otherwise, which any Releasor has heretofore had or now or hereafter can, shall
or may have against any Released Party by reason of any act, omission or thing
whatsoever done or omitted to be done on or prior to the date hereof arising out
of, connected with or related in any way to this Fifth Amendment, the Credit
Agreement or any other Loan Document, or any act, event or transaction related
or attendant thereto, or the agreements of the Agents or any Lender contained
therein, or the possession, use, operation or control of any of the assets of
any of the Loan Parties, or the making of any Loan or other advance, or the
management of such Loan or advance or the Collateral.
Section 10. Waivers. The Borrower and each other Loan Party waives and
affirmatively agrees not to allege or otherwise pursue any or all defenses,
affirmative defenses, counterclaims, claims, causes of action, setoffs or other
rights that it may have, as of the date hereof, to contest (a) any Defaults or
Events of Default which were or could have been declared by the Administrative
Agent and/or the Lenders on the date of this Fifth Amendment, (b) any provision
of the Loan Documents or this Fifth Amendment, (c) the right of the Agents
and/or the Lenders to all of the rents, issues, profits and proceeds from the
Collateral, (d) any matter acknowledged by the Borrower in Section 8 of this
Fifth Amendment, (e) the Liens of the Collateral Agent and/or the Lenders,
including without limitation the validity, extent, priority, perfection and
enforceability thereof, in any property, whether real or personal, tangible or
intangible, or any right or other interest, now or hereafter arising in
connection with the Collateral, or (f) the conduct of the Agents and/or the
Lenders in administering the lending arrangements by and among Loan Parties, the
Agents and Lenders.
Section 11. Effect and Construction of Agreement. Except as expressly
provided herein, the Loan Documents shall remain in full force and effect in
accordance with their respective terms, and this Fifth Amendment shall not be
construed to:
(a) impair the validity, perfection or priority of any Lien securing the
Obligations; or
(b) constitute an agreement by or require the Administrative Agent and/or
the Lenders to grant additional waivers.
Section 12. Presumptions. Each Loan Party acknowledges that it has
consulted with and advised by counsel and such other experts and advisors as it
has deemed necessary in connection with the negotiation, execution and delivery
of this Fifth Amendment and has participated in the drafting hereof. Therefore,
this Fifth Amendment shall be construed without regard to any presumption or
rule requiring that it be construed against any one party causing this Fifth
Amendment or any part hereof to be drafted.
Section 13. Expenses. The Borrower shall pay all costs, fees and expenses
of the Agents and the Lenders (including the reasonable costs, fees and expenses
of the Agents' and Lenders' in-house and outside counsel, consultants and
appraisers) incurred by the Agents and the Lenders (a) in connection with the
negotiation, preparation and closing of this Fifth Amendment, and (b) from and
after the date of this Fifth Amendment in connection with the administration and
enforcement of this Fifth Amendment. All of the foregoing costs, fees and
expenses (a) shall be Obligations and may be charged by the Agents to the
Borrower, and (b) shall be in addition to, and not in replacement or
supersession of, the fees, costs, charges and expenses authorized under the Loan
Documents as of the date of this Fifth Amendment.
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Section 14. Entire Agreement. This Fifth Amendment sets forth the entire
agreement among the parties hereto with respect to the subject matter hereof and
supercedes all prior negotiations among the parties hereto, whether written or
oral. Loan Parties have not relied on any agreements, representations, or
warranties of the Agents and/or Lenders, except as specifically set forth
herein. Any promises, representations, warranties or guarantees not herein
contained and hereinafter made shall have no force and effect unless in writing,
signed by each party hereto. Each Loan Party acknowledges that it is not relying
upon oral representations or statements inconsistent with the terms and
provisions of this Fifth Amendment.
Section 15. Further Assurances. Loan Parties shall execute such other and
further documents and instruments as the Administrative Agent may reasonably
request to implement the provisions of this Fifth Amendment and to perfect and
protect the liens and security interests created by or agreed upon in the Loan
Documents.
Section 16. Benefit of Agreement. This Fifth Amendment shall be binding
upon, inure to the benefit of and be enforceable by the parties hereto and their
respective permitted successors and assigns. No other person or entity shall be
entitled to claim any right or benefit hereunder, including, without limitation,
any third-party beneficiary of this Fifth Amendment. The Administrative Agent's
and/or Lenders' waiver pursuant to Section 4 hereof does not in any manner limit
Loan Parties' obligations to comply with, and the Administrative Agent's and
Lenders' rights to insist upon compliance with, each and every one of the terms
of this Fifth Amendment and the Loan Documents except as specifically waived or
modified herein.
Section 17. Severability. The provisions of this Fifth Amendment are
intended to be severable. If any provisions of this Fifth Amendment shall be
held invalid or unenforceable in whole or in part in any jurisdiction, such
provision shall, as to such jurisdiction, be ineffective to the extent of such
invalidity or enforceability without in any manner affecting the validity or
enforceability of such provision in any other jurisdiction or the remaining
provisions of this Fifth Amendment in any jurisdiction.
Section 18. Governing Law, Jurisdiction, Venue. This Fifth Amendment shall
be governed by and construed in accordance with the laws of the State of New
York applied to contracts to be performed wholly within the State of New York.
Any judicial proceeding brought by or against any Loan Party with respect to
this Fifth Amendment or any related agreement may be brought in any court of
competent jurisdiction in the State of New York, County of New York, United
States of America, and, by execution and delivery of this Fifth Amendment, each
Loan Party accepts for itself and in connection with its properties, generally
and unconditionally, the non-exclusive jurisdiction of the aforesaid courts, and
irrevocably agrees to be bound by any judgment rendered thereby in connection
with this Fifth Amendment. Nothing herein shall affect the right to serve
process in any manner permitted by law or shall limit the right of the Agents
and/or Lenders to bring proceedings against any Loan Party in the courts of any
other jurisdiction. Each Loan Party waives any objection to jurisdiction and
venue of any action instituted hereunder and shall not assert any defense based
on lack of jurisdiction or venue or based upon forum non conveniens. Any
judicial proceeding by any Loan Party against the Agents and/or Lenders
involving, directly or indirectly, any matter or claim in any way arising out
of, related to or connected with this Fifth Amendment or any related agreement,
shall be brought only in a federal or state court located in the State of New
York, County of New York.
11
Section 19. Waiver of Jury Trial. EACH PARTY TO THIS AGREEMENT HEREBY
EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR
CAUSE OF ACTION (A) ARISING UNDER THIS FIFTH AMENDMENT, THE LOAN DOCUMENTS OR
ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION
HEREWITH, OR (B) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE
DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO THIS FIFTH
AMENDMENT, THE LOAN DOCUMENTS OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT
EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR THE TRANSACTIONS RELATED HERETO
OR THERETO IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER
SOUNDING IN CONTRACT OR TORT OR OTHERWISE AND EACH PARTY HEREBY CONSENTS THAT
ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT
TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO THIS FIFTH AMENDMENT MAY FILE AN
ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN
EVIDENCE OF THE CONSENTS OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO
TRIAL BY JURY. IN ADDITION, EACH LOAN PARTY WAIVES THE RIGHT TO CLAIM OR RECOVER
IN ANY SUCH SUIT, ACTION OR PROCEEDING ANY DAMAGES OTHER THAN OR IN ADDITION TO
ACTUAL DAMAGES.
Section 20. Counterparts; Facsimile. This Fifth Amendment may be executed
by the parties hereto in one or more counterparts, each of which shall be deemed
an original and all of which when taken together shall constitute one and the
same agreement. Any signature delivered by a party by facsimile or "pdf"
transmission shall be deemed to be an original signature hereto.
Section 21. Amendment. No amendment, modification, rescission, waiver or
release of any provision of this Fifth Amendment shall be effective unless the
same shall be in writing and signed by the Borrower, the Administrative Agent
and the Required Lenders. This Fifth Amendment shall constitute a Loan Document.
Section 22. Headings. Section headings in this Fifth Amendment are included
herein for convenience of reference only and shall not constitute a part of this
Fifth Amendment for any other purpose.
12
IN WITNESS WHEREOF, the parties hereto have caused this Fifth 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.
THE BORROWER:
------------
NAPCO SECURITY TECHNOLOGIES, INC.
By: /s/KEVIN S. BUCHEL
------------------
Name: Kevin S. Buchel
Title: Senior Vice President of
Operations and Finance
GUARANTORS:
----------
ALARM LOCK SYSTEMS, INC.
By: /s/KEVIN S. BUCHEL
------------------
Name: Kevin S. Buchel
Title: Senior Vice President
CONTINENTAL INSTRUMENTS, LLC
By: /s/KEVIN S. BUCHEL
------------------
Name: Kevin S. Buchel
Title: Manager
Signature Page to Fifth Amendment and Waivers - 1747664
LENDERS:
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CAPITAL ONE, N.A.
By:/s/DOUGLAS BOTTNER
------------------
Name: Douglas Bottner
Title: Senior Vice President
HSBC BANK USA, NATIONAL ASSOCIATION,
as the Administrative Agent,
the Collateral Agent and as a Lender
By:/s/ALAN HARRIS
--------------
Name: Alan Harris
Title: Vice President
Signature Page to Fifth Amendment and Waivers - 1747664