Document:

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                                                                  Exhibit 10.2.2

          Second Amendment to the Martha Stewart Living Omnimedia, Inc.
                           1999 Stock Incentive Plan

The Martha Stewart Living Omnimedia, Inc. 1999 Stock Incentive Plan (the "Plan")
is hereby amended, effective upon receipt of approval by the stockholders of
Martha Stewart Living Omnimedia, Inc. (the "Effective Date"), as set forth
below.

        1.  In the second line of Section 3 of the Plan, "7,300,000" shall be
            deleted and replaced with "10,000,000."

                                       19<PAGE>   1
                                                                    Exhibit 10.U

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").

                             W I T N E S S E T H :

         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

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                 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
                 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

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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
                 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

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                 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

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                 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
                 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

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                 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
                 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

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                 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

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                 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
                 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

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                 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
                 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,

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                 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,

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                 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
                 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.

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                                  (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,
                 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

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                  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):

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                          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
                 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

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                          (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.

                          (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,

                                       55
<PAGE>   16
                                                  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

                                       56
<PAGE>   17
                 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,
                 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"

                                       57
<PAGE>   18
                 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
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.

                                       58
<PAGE>   19
         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

                                       59

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