Document:

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                                                                         Ex-10.M

                            INDEMNIFICATION AGREEMENT

          AGREEMENT, effective as of the 9th day of August, 1999, between NAPCO
SECURITY SYSTEMS, INC., a Delaware corporation (the "Company"), and the
individuals listed on the signature page (each an "Indemnitee" and collectively
the "Indemnitees").

          WHEREAS, Indemnitee is a director, officer or employee of the Company;
and

          WHEREAS, both the Company and the Indemnitee recognize the risk of
litigation and other claims being asserted against corporate agents or public
companies in today's environment; and

          WHEREAS, the Articles of Incorporation and Bylaws of the Company
permit the Company to indemnify and advance expenses to its directors and
officers to the fullest extent now or hereafter authorized or permitted by law.

          NOW, THEREFORE, in consideration of the premises and intending to be
legally bound hereby, the parties hereto agree as follows:

          1. Certain Definitions.

               (a) Approved Counsel shall mean any attorney or law firm located
and selected by an Indemnitee and reasonably acceptable to the Company.

               (b) Board of Directors shall mean the Board of Directors of the
Company.

               (c) Claim shall mean any threatened, pending or completed action,
suit or proceeding, or any inquiry or investigation, whether instituted by the
Company or any other party, that an Indemnitee in good faith believes might lead
to the institution of any such action, suit or proceeding, whether civil,
criminal, administrative, investigative or other and shall also include
litigation of the type described in Section 3(b), 3(c) or 5.

               (d) Expenses shall include attorneys' fees of approved counsel
and all other costs, expenses, disbursements, and obligations paid or incurred
in connection with investigating, defending, being a witness in or participating
in (including on appeal), or preparing to defend, be a witness in or participate
in any Claim relating to any Indemnifiable Event, including any litigation
described in Section 3(b), 3(c) or 5 together with interest calculated at the
Company's average cost of funds for short-term borrowings, accrued from the date
of payment of such expense of the date Indemnitee received reimbursement
therefor.

               (e) Indemnifiable Event shall mean any event or occurrence
related to the fact that an Indemnitee is or was a director, officer, employee,
agent or fiduciary of the Company, or is or was serving at the request

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of the Company as a director, officer, employee, trustee, agent or fiduciary of
another corporation of any type or kind, domestic or foreign, partnership, joint
venture, employee benefit plan, trust or other enterprise, or by reason of
anything done or not done by an Indemnitee in any such capacity. Without
limitation of an indemnification provided hereunder, an Indemnitee serving (i)
another corporation, partnership, joint venture or trust of which twenty (20%)
percent or more of the voting power or residual economic interest is held,
directly or indirectly, by the Company, or (ii) any employee benefit plan of the
Company or any entity referred to in clause (i), in any capacity shall be deemed
to be doing so at the request of the Company.

          2. Basic Indemnification Arrangement. If an Indemnitee was, is or
becomes at any time a party to or witness or other participant in, or is
threatened to be made a party to or witness or other participant in, a Claim by
reason of (or arising in part out of) an Indemnifiable Event, the Company shall
indemnify such Indemnitee to the fullest extent now or hereafter authorized or
permitted by law as soon as practicable but in any event no later than fifteen
(15) days after written demand is presented to the Company, against any and all
Expenses, judgments, fines (including excise taxes assessed against an
Indemnitee with respect to an employee benefit plan), penalties and amounts paid
in settlement (including all interest, assessments and other charges paid or
payable in connection with or in respect of such Expenses, judgments, fines,
penalties or amounts paid in settlement) of such Claim. If so requested by
Indemnitee, the Company shall advance (within two (2) business days of such
request) any and all Expenses to an Indemnitee (an "Expense Advance"), provided
however, the Indemnitee must sign an undertaking to reimburse the Company for
such Expenses if it is ultimately determined that the Indemnitee was not
entitled to indemnification with respect to the Claim. As to any action or suit
by or in the right of the Company, such indemnification shall be subject to the
provisions of Section 145(b) of the DGCL.

          3. Payment. (a) Notwithstanding the provisions of Section 2, the
obligations of the Company under Section 2 shall in no event be deemed to
preclude any right to indemnification to which an Indemnitee may be entitled
under the Delaware General Corporation Law (the "DGCL").

               (b) In the event an Indemnitee seeks indemnification in a
proceeding initiated by such Indemnitee (other than a proceeding under Section
3(c) hereof), the obligations of the Company under Section 2 shall be subject to
the requirement that such proceeding was specifically authorized, or later
ratified, by the Company.

               (c) If the Company refuses to indemnify an Indemnitee for any
reason whatsoever and such Indemnitee substantively would be permitted to be
indemnified in whole or in part under applicable law, such Indemnitee shall have
the right to commence litigation in any court in the States of New York or
Delaware having subject matter jurisdiction thereof and in which venue is proper
seeking an initial determination by the court or challenging any such refusal by
the Company or any aspect thereof, including the legal or factual bases
therefor, and the Company hereby consents to service of process relating thereto
and hereby consents to personal jurisdiction of any such court and agrees of
appear in any such proceeding. In any such litigation, an Indemnitee shall be
entitled to the benefits of the burden of proof presumption provided in Section
7 hereof.

          4. No Duplication of Payments. The Company shall not be liable under
this Agreement to make any payment in connection with any Claim made

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against an Indemnitee to the extent such Indemnitee has otherwise actually
received payment (under any insurance policy, Bylaw or otherwise) of the amounts
otherwise indemnifiable hereunder.

          5. Indemnification for Additional Expenses. The Company shall
indemnify Indemnitees against any and all Expenses (including attorneys' fees)
and, if requested by such Indemnitee, shall (within two business days of such
request) advance such expenses to Indemnitee, which are incurred by Indemnitee
in connection with any claim asserted or action brought by Indemnitee for (i)
indemnification or payment of Expenses by the Company or advance of expenses
under this Agreement or any other agreement or Company Bylaw now or hereafter in
effect relating to Claims for Indemnifiable Events and/or (ii) recovery under
any directors' and officers' liability insurance policies maintained by the
Company, regardless of whether such Indemnitee ultimately is determined to be
entitled to such indemnification, advance expense payment or insurance recovery,
as the case may be.

          6. Partial Indemnity, Etc. If an Indemnitee is entitled under any
provision of this Agreement or otherwise to indemnification by the Company for
some or a portion of the Expenses, judgments, fines, penalties and amounts paid
in settlement of a Claim but not, however, for all of the total amount thereof,
the Company shall nevertheless indemnify such Indemnitee for the portion thereof
to which such Indemnitee is entitled. Moreover, notwithstanding any other
provision of this Agreement, to the extent that such Indemnitee has been
successful on the merits or otherwise in defense of any or all Claims relating
in whole or in part to an Indemnifiable Event or in defense of any issue or
matter therein, including dismissal without prejudice, such Indemnitee shall be
indemnified, to the extent permitted by law, against all Expenses incurred in
connection with such Indemnifiable Event.

          7. Burden of Proof. In connection with any determination hereunder or
otherwise, including any litigation of the sort described in Section 3(b) or
3(c), as to whether an Indemnitee is entitled to be indemnified hereunder the
burden of proof shall be on the Company to establish that such Indemnitee is not
so entitled.

          8. No Adverse Presumptions. For purposes of this Agreement, the
termination of any claim, action, suit or proceeding, whether civil or criminal,
by judgment, order, settlement (whether with or without court approval) or
conviction, or upon a plea of nolo contendere, or its equivalent, shall not
create a presumption that an Indemnitee did not meet any particular standard of
conduct or have any particular belief or that a court has determined that
indemnification is not permitted by applicable law.

          9. Nonexclusivity, Etc. The rights of an Indemnitee hereunder shall be
in addition to any other rights Indemnitee may have under the Company's Bylaws
or the DGCL or otherwise. To the extent that a change in the DGCL (whether by
statute or judicial decision) permits greater indemnification by agreement than
those currently afforded under the Company's Bylaws and this Agreement, it is
the intent of the parties hereto that such Indemnitee shall enjoy by this
Agreement the greater benefits so afforded by such change.

          5. Liability Insurance. To the extent the Company maintains an
insurance policy or policies providing directors' and officers' liability
insurance, an Indemnitee shall be covered by such policy or policies, in
accordance with its or their terms, to the maximum extent of the coverage

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available for any director or officer of the Company.

          6. Period of Limitations. No legal action shall be brought and no
cause of action shall be asserted by or on behalf of the Company against an
Indemnitee, an Indemnitee's spouse, heir, executors or personal or legal
representatives from and after the date hereof.

          7. Amendments, Etc. No supplement, modification or amendment of this
Agreement shall be binding unless executed in writing by the parties hereto. No
waiver of any of the provisions of this Agreement shall be effective unless in
writing and no written waiver shall be deemed or shall constitute a waiver of
any other provisions hereof (whether or not similar) nor shall such waiver
constitute a waiver.

          8. Subrogation. In the event of payment under this Agreement to an
Indemnitee, the Company shall be subrogated to the extent of such payment to all
of the rights of recovery of such Indemnitee, who shall execute all papers
required and shall do everything that may be necessary to secure such rights,
including the execution of such documents necessary to enable the Company
effectively to bring suit to enforce such rights.

          9. Specific Performance. The parties recognize that if any provision
of this Agreement is violated by the Company, an Indemnitee may be without an
adequate remedy at law. Accordingly, in the event of any such violation, such
Indemnitee shall be entitled, if such Indemnitee so elects, to institute
proceedings, either in law or at equity, to obtain damages or reimbursements for
costs, expenses, or disbursements, to enforce specific performance, to enjoin
such violation, or to obtain any relief or any combination of the foregoing as
such Indemnitee may elect to pursue.

          10. Binding Effect, Etc. This Agreement shall be binding upon and
inure to the benefit of and be enforceable by the parties hereto and their
respective successors, including any direct or indirect successor by purchase,
merger, consolidation or otherwise to all or substantially all of the business
and/or assets of the Company, assigns, spouses, heirs, executors, and personal
and legal representatives. This Agreement shall continue in effect regardless of
whether an Indemnitee continues to serve as an officer or director of the
Company or of any other enterprise at the Company's request or in any other
capacity, such as agent or consultant.

          11. Severability; Several Obligations. The provisions of this
Agreement shall be severable in the event that any of the provisions hereof
(including any provisions within a single section, paragraph or sentence) is
held by a court of competent jurisdiction to be invalid, void or otherwise
unenforceable in any respect, and the validity and enforceability of any such
provision in every other respect and with respect to all other Indemnitees and
of the remaining provisions hereof shall not be in any way impaired and shall
remain enforceable to the fullest extent permitted by law. The indemnities
afforded hereby are several and not joint obligations, and no requirement of
joinder, common pleadings, joint request or the like shall be needed for any
single Indemnitee to enjoy the rights hereby afforded.

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THE INDEMNITOR:

NAPCO SECURITY SYSTEMS, INC.

By: /s/
    ----------------------------------
Name: Richard Soloway
Title: President

                                         THE IMDEMNITEES:

                                         /s/
                                         ---------------------------------------
                                                  Richard Soloway

                                         /s/
                                         ---------------------------------------
                                                  Kevin S. Buchel

                                         /s/
                                         ---------------------------------------
                                                  Randy Blaustein

                                         /s/
                                         ---------------------------------------
                                                  Andrew J. Wilder

                                      E-20<PAGE>

                                                                   Exhibit 10.O

AMENDMENT NO. 4 TO THE LOAN AND SECURITY AGREEMENT

     AMENDMENT NO. 4 to the Loan and Security Agreement dated as of July 27,
2000 ("Amendment No. 4") by and between NAPCO SECURITY SYSTEMS, INC., a New York
corporation having a place of business at 333 Bayview Avenue, Amityville, New
York 11701 (the "Debtor") and HSBC BANK USA F/K/A MARINE MIDLAND BANK, having a
place of business at 534 Broad Hollow Road, Melville, New York 11747 (the
"Secured Party").

                                   WITNESSETH:

     WHEREAS, as of May 12, 1997, Debtor and Secured Party had entered into a
certain loan and security agreement, as amended by amendment no. 1 to the loan
and security agreement dated as of May 28, 1998, as amended by amendment no. 2
to the loan and security agreement dated as of June 30, 1999, as amended by
amendment no. 3 to the loan and security agreement dated as of February 9, 2000,
as may be amended from time to time (the "Agreement");

     WHEREAS, the Debtor has requested that the Secured Party extend a
$8,250,000 term loan to Continental Instruments Systems, LLC ("Continental
Systems"), a wholly owned subsidiary of Debtor, in order that Continental
Systems may acquire all of the assets of Continental Instruments LLC ("Seller")
and partially fund a two-year earn-out payable to John Banks ("Owner") pursuant
to a certain asset purchase agreement dated as of July ___, 2000 [sic] by and
between Seller, with its sole place of business at 250-H Executive Drive,
Edgewood, New York 11717, Owner, residing at 40 Ridgewood Street, East
Northport, New York 11731 and Debtor, which asset purchase agreement, and the
rights of Debtor thereunder, were duly assigned to Continental Instruments
Systems, LLC by assignment dated July 27, 2000("Asset Purchase Agreement"), and
the Secured Party has agreed to do so, in the manner set forth below, provided
however, that, among other things, Debtor execute this Amendment No. 4.

     NOW, THEREFORE, in consideration of the mutual promises and for other good
and valuable consideration, the receipt of which is hereby acknowledged, the
parties hereto agree as follows:

     1. The definition of "Consolidated Subsidiary" contained in Section 1.1. of
the Agreement is hereby amended to read in its entirety as follows:

     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"), NAPCO/Alarm Lock Grupo Internacional, S.A. ("NAPCO/Alarm
     Lock"), Continental Instruments Systems, LLC ("Continental Systems"), NAPCO
     Group Europe Limited ("NAPCO Europe"), 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, and any other
     limited liability company of which at least 50% of the membership interest
     is owned by Debtor directly, or indirectly, through

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     one or more Consolidated Subsidiaries, and each of their respective
     successors and/or assigns.

     2. The definition "Continental Term Loan" shall be added to Section 1.1. of
the Agreement and shall read as follows:

     CONTINENTAL TERM LOAN means the $8,250,000 term loan made available to
     Continental Systems by Secured Party pursuant to the Term Loan Note.

     3. The definition "Continental Term Loan Note" shall be added to Section
1.1. of the Agreement and shall read as follows:

     CONTINENTAL TERM LOAN NOTE means the $8,250,000 note evidencing the
     Continental Term Loan executed by Continental Systems and delivered to
     Secured Party as of even date hereof, as such note may be extended or
     otherwise modified from time to time; Continental Systems has used or will
     use the proceeds of the Continental Term Loan Note to acquire all of the
     assets of Seller (as the term "Seller" is defined in the recital
     paragraphs) and fund a two-year earn-out payable to Owner (as the term
     "Owner" is defined in the recital paragraph hereinabove) pursuant to the
     Asset Purchase Agreement (as the term "Asset Purchase Agreement" is defined
     in the recital paragraph hereinabove).

     4. The definition of "Transaction Documents" contained in Section 1.1. of
the Agreement is hereby amended to read in its entirety as follows:

     TRANSACTION DOCUMENTS means, individually, jointly, severally and
     collectively, the Agreement (including this Amendment No. 4 and all
     documents, instruments, notes and agreements by Debtor, Continental Systems
     or any other Third Party or any Responsible Party in favor of Secured
     Party, whether in existence now or hereinafter created, executed and
     delivered to Secured Party, as the same may be extended, re-executed,
     modified or otherwise amended from time to time, including, without
     limitation, the Term Loan Note, the Continental Term Loan Note, collateral
     documents, letter of credit agreements, notes, acceptance credit
     agreements, security agreements, pledges, guaranties, mortgages, title
     insurance, assignments, and subordination agreements required to be
     executed by Debtor, Continental Systems any other Third Party, or any
     Responsible Party pursuant hereto or in connection herewith, or in
     connection with a letter of credit application and reimbursement agreement,
     each dated as of May 12, 1997, a certain uncommitted trade line established
     by Secured Party in favor of Debtor to provide for commercial and standby
     letters of credit, evidenced by, among other documents, a continuing letter
     of credit agreement, and a continuing indemnity agreement, each dated as of
     May 12, 1997, as may be re-executed, amended, extended or otherwise
     modified from time to time, the Term Loan Note in the principal sum of
     $2,500,000., as may be extended or otherwise modified from time to time,
     the Continental Term Loan Note in the principal sum of $8,250,000, that
     certain ISDA master agreement dated as

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     of July 27, 2000 by and between Continental Systems and Secured Party,
     inclusive of all schedules thereto, as the same may be modified from time
     to time (the "Master Agreement") and all such other mortgages, security
     agreements, guaranties and other documents as may be executed and delivered
     to Secured Party to evidence, guaranty and secure the Continental Term Loan
     Note, and the obligations thereunder, as may be extended or otherwise
     modified from time to time, and uncommitted line of credit facility to be
     used by Debtor to finance certain acquisitions, as may be executed and
     delivered to Secured Party from time to time to evidence and secure the
     obligations under such facilities pursuant to the terms that the Secured
     Party shall request, and all other documents, agreements, reaffirmations,
     certificates and resolutions related thereto, and amendments or supplements
     thereto, all such other agreements, resolutions, certificates, resolutions
     and opinion letters executed and/or issued as a condition precedent to or
     in connection with the Agreement, the Term Loan Note, the Continental Term
     Loan Note, and all such other documents, agreements, and instruments
     delivered hereunder or as a supplement or amendment thereto or as Secured
     Party may reasonably require from time to time in order to evidence,
     guaranty and/or secure any and all indebtedness of Debtor and/or
     Continental Systems, as the case may be, to Secured Party or to create,
     perfect, continue the perfection or protect the Secured Party's security
     interest in the Collateral or any of the other collateral specified in the
     other Transaction Documents.

     4. Section 3.3. of the Agreement is hereby amended to read in its entirety
as follows:

          3.3. INDEBTEDNESS SECURED. The Security Interest secures payment of
     any and all indebtedness, and performance of all obligations and
     agreements, of Debtor to Secured Party, whether now existing or hereafter
     incurred or arising, of every kind and character, primary or secondary,
     direct or indirect, absolute or contingent, sole, joint or several, and
     whether such indebtedness is from time to time reduced and thereafter
     increased, or entirely extinguished and thereafter reincurred, including,
     without limitation: (a) all Advances; (b) all interest which accrues on any
     such indebtedness, until payment of such indebtedness in full, including,
     without limitation, all interest provided for under this Agreement; (c) all
     other monies payable by Debtor, and all obligations and agreements of
     Debtor to Secured Party, pursuant to the Transaction Documents; (d) all
     debts owed, or to be owed, by Debtor to others which Secured Party has
     obtained, or may obtain, by assignment or otherwise; (e) all monies payable
     by any Third Party, and all obligations and agreements of any Third Party
     to Secured Party, pursuant to any of the Transaction Documents; (f) all
     monies due, and to become due, pursuant to Section 7.3; and (g) all
     obligations arising under that certain unlimited continuing guaranty of
     Debtor to Secured Party dated July 27, 20000, wherein Debtor
     unconditionally guaranteed the full and prompt payment to Secured Party
     when due, whether by acceleration or

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     otherwise, of any and all indebtedness (as defined in such guaranty) of
     Continental Systems to Secured Party, as such guaranty may be modified,
     reaffirmed or otherwise amended from time to time; and (h) the obligations
     of Continental Systems in favor of Secured Party under the Master
     Agreement.

     5. A new SECTION 5 shall be added to the Agreement, and shall be read in
its entirety as follows:

          5. REPRESENTATIONS AND WARRANTIES. To induce Secured Party to enter
          make the Continental Term Loan, as herein provided, Debtor represents
          and warrants, to the best of its knowledge, and, so long as any
          Indebtedness remains unpaid or this Agreement remains in effect, shall
          be deemed continuously to represent and warrant as follows:

               5.1. CORPORATE EXISTENCE. Continental Systems is a duly formed
          limited liability company, in good standing under the laws of the
          state of New York and is duly licensed or qualified to do business and
          in good standing in every state in which the nature of its business or
          ownership of its property requires such licensing or qualification.

               5.2 CORPORATE CAPACITY. The execution, delivery and performance
          of the Transaction Documents are within Continental Instrument's
          corporate powers, have been duly authorized by all necessary and
          appropriate membership consent, and are not in contravention of any
          law or the terms of Debtor's articles of organization or operating
          agreement or any amendment thereto, or of any indenture, agreement,
          undertaking, or other document to which Continental Systems is a party
          or by which Debtor or any of Debtor's property is bound or affected.

               5.3. VALIDITY OF RECEIVABLES. With respect to each Receivable
          owned or to be owned by Continental Systems: (a) each copy of each
          invoice is a true and genuine copy of the original invoice sent to the
          account debtor named therein and accurately evidences the transaction
          from which the underlying Receivable arose, and the date payment is
          due as stated on each Invoice or computed based on the information set
          forth on each such Invoice is correct; (b) all Chattel Paper, and all
          promissory notes, drafts, trade acceptances, and other instruments for
          the payment of money relating to or evidencing each Receivable, and
          each endorsement thereon, are true and genuine and in all respects
          what they purport to be, and are the valid and binding obligation of
          all parties thereto, and the date or dates stated on all such items as
          the date on which payment in whole or in part is due is correct; (c)
          all Inventory described in each Invoice has been delivered to the
          Account Debtor named in such Invoice or placed for such delivery in
          the possession of a carrier not owned or controlled directly or
          indirectly by Continental Systems; (d) all evidence of the delivery or
          shipment of Inventory is true and genuine; (e) all services to be
          performed by Continental Systems and/or the Seller, as the case may
          be, in connection with each Receivable have been performed by
          Continental

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          Systems and/or the Seller, as the case may be; and (f) all evidence of
          the performance of such services by Continental Systems and/or the
          Seller, as the case may be, is true and genuine.

               5.4. INVENTORY. (a) All representations made by Debtor and/or
          Continental Systems, as the case may be, to Secured Party, and all
          documents and schedules given by Debtor and/or Continental Systems, as
          the case may be, to Secured Party, relating to the description,
          quantity, quality, condition, and valuation of the Inventory owned by
          Continental Systems are true and correct; (b) Inventory owned by
          Continental Systems is located only at the following address of
          Continental Systems: 250-H Executive Drive, Edgewood, New York 11717,
          or such other place or places as approved in advance by Secured Party
          in writing;(c) all Inventory of Continental Systems is insured as
          required by Section 9.11 of the Agreement, pursuant to policies in
          full compliance with the requirements of such Section; and (d) all
          manufactured or produced Inventory of Continental Systems has been
          produced by Continental Systems and/or Seller in accordance with the
          Federal Fair Labor Standards Act of 1938, as amended, and all rules,
          regulations and orders promulgated thereunder.

               5.5. TITLE TO COLLATERAL. (a) Continental Systems is the owner of
          the Collateral free of all security interests, liens, and other
          encumbrances, except the Security Interest; (b) Continental Systems
          has the unconditional authority to grant a security interest in all
          assets of Continental Systems to Secured Party; and (c) assuming that
          all necessary Uniform Commercial Code filings have been made and, if
          applicable, assuming compliance with the Federal Assignment of Claims
          Act of 1940, as amended, Secured Party has an enforceable first lien
          on all collateral granted to Secured Party by Continental Systems.

               5.6. PLACE OF BUSINESS. (a) Continental Systems is engaged in
          business operations which are in whole, or in part, carried on at the
          following addresses: 250-H Executive Drive, Edgewood, New York 11717
          and 333 Bayview Avenue, Amityville, New York 11701 and at no other
          address or addresses; (b) Continental Systems' chief executive office
          is 333 Bayview Avenue, Amityville, New York 11701; and (c)
          Continental's records concerning the collateral are kept at the
          address specified at the beginning of this Agreement.

               5.7. FINANCIAL CONDITION. Debtor has furnished to Secured Party
          Seller's most current financial statements, including, without
          limiting the foregoing, the most recent interim statements of Seller,
          which statements represent correctly and fairly the results of the
          operations and transactions of Seller, as of the dates, and for the
          period referred to, and have been prepared in accordance with GAAP
          applied during each interval involved and from interval to interval.
          Since the date of such financial statements, there have not been any
          materially adverse changes in the financial

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          condition reflected in such financial statements, except as disclosed
          in writing by Debtor to Secured Party.

               5.8. TAXES. Except as disclosed in writing by Debtor to Secured
          Party including Seller's financial statements provided to Secured
          Party: (a) all federal and other tax returns required to be filed by
          Seller have been filed, and all taxes required by such returns have
          been paid; and (b) neither Seller, Continental Systems nor Debtor has
          received any notice from the Internal Revenue Service or any other
          taxing authority proposing additional taxes.

               5.9. LITIGATION. Except as disclosed in the Asset Purchase
          Agreement, there are no actions, suits, proceedings, or investigations
          pending or, to the knowledge of Debtor, threatened against Seller or
          Continental Systems or any basis therefor which, if adversely
          determined, would, in any case or in the aggregate, materially
          adversely affect the property, assets, financial condition, or
          business of Seller and/or Continental Systems, as the case may be, or
          materially impair the right or ability of Continental Systems to carry
          on its operations substantially as conducted on the date of this
          Agreement.

               5.10. ERISA MATTERS. (a) No Pension Plan has been terminated, or
          partially terminated, or is insolvent, or in reorganization, nor have
          any proceedings been instituted to terminate or reorganize any Pension
          Plan; (b) neither Seller nor Continental Systems, as the case may be,
          has withdrawn from any Pension Plan in a complete or partial
          withdrawal, nor has a condition occurred which, if continued, would
          result in a complete or partial withdrawal; (c) neither Seller nor
          Continental Systems, as the case may be, has incurred any withdrawal
          liability, including, without limitation, contingent withdrawal
          liability, to any Pension Plan, pursuant to Title IV of ERISA; (d)
          neither Seller nor Continental Systems, as the case may be, has
          incurred any liability to the Pension Benefit Guaranty Corporation
          other than for required insurance premiums which have been paid when
          due; (e) no Reportable Event has occurred; (f) no Pension Plan or
          other "employee pension benefit plan" as defined in Section 3(2) of
          ERISA, to which Seller or Continental Systems, as the case may be, is
          a party has an "accumulated funding deficiency" (whether or not
          waived), as defined in Section 302 of ERISA or in Section 412 of the
          Internal Revenue Code; (g) the present value of all benefits vested
          under any Pension Plan of Seller and/or Continental Systems, as the
          case may be, does not exceed the value of the assets of such Pension
          Plan allocable to such vested benefits; (h) each Pension Plan and each
          other "employee benefit plan", as defined in Section 3(3) of ERISA, to
          which Seller and/or Continental Systems, as the case may be, is a
          party is in substantial compliance with ERISA, and no such plan or any
          administrator, trustee, or fiduciary thereof has engaged in a
          prohibited transaction described in Section 406 of ERISA or in Section
          4975 of the Internal Revenue Code; (i) each Pension Plan and each
          other "employee benefit plan" as defined in

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<PAGE>

          Section 3(2) of ERISA, to which Seller and/or Continental Systems, as
          the case may be, is a party has received a favorable determination by
          the Internal Revenue Service with respect to qualification under
          Section 401(a) of the Internal Revenue Code; and (j) neither Seller
          nor Continental Systems, as the case may be, has incurred any
          liability to a trustee or trust established pursuant to Section 4049
          of ERISA or to a trustee appointed pursuant to Section 4042(b) or (c)
          of ERISA.

               5.11. NO CONSENT OR FILING. No consent, license, approval, or
          authorization of, or registration, declaration, or filing with, any
          court, governmental body or authority, or other person or entity is
          required in connection with the valid execution, delivery, or
          performance of the Transaction Documents on the part of Continental
          Systems or for the conduct of Continental Instrument's business as now
          conducted or as conducted by Seller, as the case may be, other than
          filings and recordings to perfect security interests in or liens on
          all assets of Continental Systems in favor of Secured Party in
          connection with the Transaction Documents.

               5.12. NO VIOLATIONS. Neither Seller nor Continental Systems, as
          the case may be, is in violation of any term of any other indenture,
          instrument, or agreement to which it is a party or by which it or its
          property may be bound, resulting, or which might reasonably be
          expected to result, in a material and adverse effect upon its business
          or assets. Neither Seller nor Continental Systems is in violation of
          any order, writ, judgment, injunction, or decree of any court of
          competent jurisdiction or of any statute, rule or regulation of any
          governmental authority. The execution and delivery of the Asset
          Purchase Agreement and consummation of the sale by the Seller, as set
          forth therein and the performance of all of the same, is, and will be,
          in compliance with the foregoing and will not result in any violation
          thereof, or result in the creation of any mortgage, lien, security
          interest, charge, or encumbrance upon, any properties or assets except
          in favor of Secured Party. There exists no fact or circumstance
          (whether or not disclosed in the Transaction Documents or the Asset
          Purchase Agreement) which materially adversely affects, or in the
          future (so far as Debtor can now foresee) may materially adversely
          affect, the condition, business, or operations of Continental Systems.

               5.13. TRADEMARKS AND PATENTS. After the consummation of the
          purchase described in the Asset Purchase Agreement, Continental
          Systems shall possess all trademarks, trademark rights, patents,
          patent rights, tradenames, tradename rights and copyrights that are
          required to conduct its business as now conducted without conflict
          with the rights or claimed rights of others. A list of the foregoing
          is set forth in Exhibit A attached hereto.

               5.14. CONTINGENT LIABILITIES. To the best of Debtor's knowledge,
          after due inquiry, there are no suretyship agreements, guaranties, or
          other contingent liabilities of

                                      E-27

<PAGE>

          Seller which are not disclosed by the financial statements described
          in Section 5.7.

               5.15. COMPLIANCE WITH LAWS. Seller and/or Continental Systems, as
          the case may be, is in compliance with all applicable laws, rules,
          regulations, and other legal requirements with respect to its business
          and the use, maintenance and operations of the real and personal
          property owned or leased by it in the conduct of its business.

               5.16. LICENSES, PERMITS, ETC. Each franchise, grant, approval,
          authorization, license, permit, easement, consent, certificate, and
          order of and registration, declaration, and filing with, any court,
          governmental body or authority, or other person or entity required for
          or in connection with the conduct of Seller's and/or Continental
          Instrument's business as now conducted by Seller is in full force and
          effect.

               5.17. LABOR CONTRACTS. Neither Seller nor Continental Systems is
          a party to any collective bargaining agreement or to any existing or
          threatened labor dispute or controversies.

               5.18. LABOR MATTERS.

                    (a) Neither Continental Systems, nor, to the best of
          Debtor's knowledge, Seller is engaged in any unfair labor practice. To
          the best of Debtor's knowledge, after due inquiry, Continental Systems
          and/or Seller, as the case may be, are in compliance in all material
          respects with all applicable federal, state and local laws,
          regulations, rules, orders or other requirements respecting terms and
          conditions of employment, employment practices, and wages and hours,

                    (b) No strike, walkout or similar business interruption
          resulting from any labor dispute has been suffered by Seller and/or
          Continental Systems, as the case may be, during the last five years
          nor is any state of facts known to Debtor which would indicate that
          such event or circumstance is likely to occur in the next twelve
          months.

                    (c) There is no pending, or to the knowledge of Debtor,
          threatened unfair labor practice complaint against Seller or
          Continental Systems, as the case may be, before the National Labor
          Relations Board.

                    (d) There is no strike, labor dispute, slowdown or stoppage
          actually pending or, to the knowledge of Debtor, threatened against
          Seller and/or Continental Systems, as the case may be.

                    (e) No union representation question exists respecting the
          employees, or any group of employees, of Seller and/or Continental
          Systems, as the case may be.

                    (f) No grievance which might have a material adverse effect
          on Seller and/or Continental Systems,

                                      E-28

<PAGE>

          as the case may be, or the conduct of their business nor any
          arbitration proceeding arising out of or under collective bargaining
          agreements is pending, and no claims therefor exist.

                    (g) No collective bargaining agreement which is binding on
          Seller and/or Continental Systems, as the case may be, will restrict
          Continental Systems from relocating or closing any office, warehouse
          or any other facility presently being used by Seller and/or
          Continental Systems, as the case may be.

                    (h) To Debtor's knowledge, neither Seller nor Continental
          Systems has experienced any material work stoppage or other material
          labor difficulty at any office, warehouse or other facility.

                    (i) To Debtor's knowledge, there are no claims, complaints
          or charges pending before any state or federal agency concerning
          employment penalties with respect to Seller and/or Continental
          Systems, including without limitation, employment discrimination,
          retaliatory discharge and wage and hour claims.

               5.19. MATERIALITY. Notwithstanding anything to the contrary
          contained in Section 5 hereof, no representation or warranty contained
          in Section 5 shall be deemed false or cause an Event of Default to the
          extent that the falsity of such representation or warranty is not
          material, would not have a material adverse effect on Continental
          Systems and/or Seller, as the case may be, would not cause an untrue
          statement of material fact, and/or would not result in an omission to
          state a material fact in order to make the statements contained herein
          not misleading, and/or would not materially adversely affect the
          financial and/or business condition of Seller and/or Continental
          Systems, as the case may be.

     6. Section 9.26. of the Agreement is hereby amended in its entirety to read
as follows:

                    (a) The Debtor and its Consolidated Subsidiaries shall
          maintain, on a consolidated basis, a ratio of Total Liabilities to
          Tangible Net Worth of not greater than (to be tested quarterly based
          upon the financial statements required to be presented to Secured
          Party pursuant to Section 9.1. hereof):

                    during the period commencing as of the date hereof through
                    the fiscal year ending June 30, 2000, and thereafter while
                    any Indebtedness remains outstanding, 1.50 to 1.

                    (b) The Debtor and its Consolidated Subsidiaries shall
          maintain, on a consolidated basis, a minimum Tangible Net Worth (to be
          tested quarterly based upon the financial statements required to be
          presented to Secured Party pursuant

                                      E-29

<PAGE>

          to Section 9.1. hereof) of not less than:

                    (i) during the period commencing as of the date hereof
                    through June 29, 2001, $21,000,000, and

                    (ii) during the period commencing on June 30, 2001 through
                    June 29, 2002, $24,500,000, and

                    (iii) during the period commencing on June 30, 2002 through
                    June 29, 2003, $27,000,000, and

                    (iv) during the period commencing on June 30, 2003 through
                    June 29, 2004, and thereafter while any Indebtedness remains
                    outstanding, $30,000,000.

                    (c) At all times, Debtor and its Consolidated Subsidiaries
          shall maintain, on a consolidated basis, a ratio of Current Assets to
          Current Liabilities, to be tested each fiscal quarter end of each
          fiscal year, based upon the financial statements required to be
          presented to Secured Party pursuant to Section 9.1. hereof:

                    (i) of not less than 3.25 to 1 from the date hereof through
                    the fiscal year ending June 30, 2000, and

                    (ii) of not less than 3.50 to 1 from July 1, 2000 through
                    the fiscal year ending June 30, 2001, and

                    (iii) of not less than 3.75 to 1 from July 1, 2001 through
                    the fiscal year ending June 30, 2002, and

                    (iv) of not less than 4.00 to 1 from July 1, 2002 through
                    the fiscal year ending June 30, 2003, and thereafter while
                    any Indebtedness remains outstanding.

                    (d) Debtor and its Consolidated Subsidiaries shall maintain,
          on a consolidated basis, a minimum "Debt Service Coverage Ratio" of
          1.25 to 1, to be tested at the end of each fiscal year, based upon the
          financial statements required to be presented to Secured Party
          pursuant to Section 9.1. hereof. "Debt Service Coverage Ratio" shall
          mean earnings before interest, taxes, depreciation and amortization,
          less distributions, all divided by prior period current portion of
          long term debt plus interest expense.

                    (e) At all times, Debtor and its Consolidated Subsidiaries
          shall maintain, on a consolidated basis, a ratio of the aggregate of
          cash plus total Receivables to Current Liabilities, to be tested each
          fiscal quarter end of each fiscal year, based upon the financial
          statements required to be presented to Secured Party pursuant Section
          9.1. hereof:

                         from the date hereof through the fiscal year ending
                    June 30, 2000, and thereafter while any Indebtedness remains
                    outstanding, of not less than 1.25 to 1.

                                      E-30

<PAGE>

                    (f) During any fiscal year, the Debtor and its Consolidated
          Subsidiaries shall not cause Capital Expenditures of Debtor and its
          Consolidated Subsidiaries to exceed, on a combined basis, $1,000,000
          per fiscal year (excluding the incurrence of the Continental Term
          Loan).

                    (g) At all times while any Indebtedness remains outstanding,
          the Debtor and its Consolidated Subsidiaries maintain, on a
          consolidated basis, not less than fifty (50%) of the value of all of
          their identifiable assets (as disclosed in the 10K statement) in the
          United States, to be tested annually, at each fiscal year end.

          The above ratios of this Section 9.26. are being calculated assuming
          that in the last year of the Agreement; and Advances under the
          Revolving Credit Facility are viewed as long term debt, unless there
          is an event of default which is continuing under the Revolving Credit
          Facility.

     7. Section 10.16. of the Agreement is hereby amended to read in its
entirety as follows:

               10.16. NEGATIVE PLEDGE. (a) Encumber or cause to encumber, or
          cause NAPCO/Alarm Lock Grupo Internacional, S.A. f/k/a NSS Caribe S.A.
          to encumber, the assets (personal property, fixtures or real property)
          of NAPCO/Alarm Lock Grupo Internacional, S.A. f/k/a NSS Caribe S.A; or
          (b) encumber or cause to encumber the assets (personal property,
          fixtures or real property) of NAPCO Group Europe Limited.

     8. Section 4.17 of the Agreement shall be supplemented with the following
additional paragraphs:

          Since May 12, 1997, Debtor and its Consolidated Subsidiaries possess
          the following additional trademarks, trademark rights, patents, patent
          rights, tradenames, tradename rights and copyrights without conflict
          with the rights or claimed rights of others. A list of the foregoing
          as set forth in Exhibit B attached hereto.

          To secure the Indebtedness, Debtor hereby grants to Secured Party,
          and/or reaffirms its grant to Secured Party, a security interest in,
          and a lien on, all trademarks, trademark rights, patents, patent
          rights, tradenames, tradename rights and copyrights owned by Debtor,
          wherever located and whether now owned or hereafter acquired; all
          books, records, ledger cards, data processing records, computer
          software, and other property at any time evidencing or relating to
          such collateral; all parts, accessories, attachments, special tools,
          additions,

                                      E-31

<PAGE>

          replacements, substitutions and accessions to or for all of the
          foregoing; and all proceeds and products of the all of the foregoing
          in any form, including, without limitation, amounts payable under any
          policies of insurance insuring the foregoing against loss or damage,
          and all increases and profits received from all of the foregoing.

     9. Section 10.2. of the Agreement is hereby amended to read in its entirety
as follows:

               10.2. BORROWED MONEY. Create, incur, assume, or suffer to exist
          any liability for borrowed money, except to Secured Party, except for
          permitted Capital Expenditures, and except the obligations of
          Continental Systems in favor of Seller pursuant to the terms of a
          certain $1,445,000 promissory note by Continental Systems in favor of
          Seller dated July 27, 2000, as adjusted pursuant thereto, an executed
          copy of which has been delivered to Secured Party.

     10. The following paragraphs shall be added to Section 11.1. of the
Agreement:

          (r) Nonpayment of Continental Term Loan Note. Nonpayment when due of
          any principal, interest, premium, fee, cost or expense due under the
          Continental Term Loan Note, and such nonpayment is not cured within
          ten (10) days after notice thereof by Secured Party to Debtor.

          (s) Mortgage Default. The occurrence of an Event of Default under that
          certain collateral mortgage and security agreement dated July 27,
          2000, by Debtor in favor of Secured Party in the principal sum of
          $3,200,000, as the same may be extended or otherwise modified from
          time to time (the "Collateral Mortgage"; and as used in this
          subparagraph (s), the term "Event of Default" shall have the meaning
          set forth in the Collateral Mortgage).

     11. As an inducement to the Bank extending the Continental Term Loan, and
modifying the provisions of the Agreement pursuant to the terms hereof, Debtor
represents and warrants to Secured Party that, as of the date of execution of
this Amendment No. 4, (i) the representations and warranties set forth in
Article 4 of the Agreement and the representations and warranties of Debtor and
any Third Party set forth in the other Transaction Documents to which any is a
party are true and correct in all respects, (ii) no event has occurred and is
continuing which constitutes an "Event of Default" under any of the Transaction
Documents (as "Event of Default" is defined in each of those Transaction
Documents"), and (iii) Debtor is in compliance with the covenants set forth in
Articles 9 and 10 of the Agreement.

     12. Debtor represents and warrants to Secured Party that there are no
offsets, defenses or counterclaims to the payment of the Indebtedness owing
Secured Party, including the Advances, and to the continuing general security
interest in the Collateral granted to Secured Party by Debtor as security for
payment of the Indebtedness, as fully described in the Agreement.

     13. Except as modified herein, all other provisions of the Agreement and
the other Transaction Documents remain unmodified and are in full

                                      E-32

<PAGE>

force and effect.

     14. Capitalized terms not otherwise defined herein shall have the meanings
ascribed to such terms in the Agreement.

     15. This Amendment No. 4 shall be governed by the laws of the State of New
York.

     IN WITNESS WHEREOF, the parties have executed this Amendment No. 4 to the
Loan and Security Agreement as of the day and year first above written.

                                         HSBC BANK USA F/K/A MARINE
                                         MIDLAND BANK

                                         By: /s/ Roger Coleman
                                             -----------------------------------
                                             Roger Coleman
                                             Vice President

                                         NAPCO SECURITY SYSTEMS, INC.

                                         By: /s/ Kevin Buchel
                                             -----------------------------------
                                              Kevin Buchel
                                              Senior Vice President

                                      E-33

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