WAIVER AND AMENDMENT NO. 6 TO THE LOAN
AGREEMENT
THIS WAIVER AND AMENDMENT NO. 6 TO THE LOAN AGREEMENT is made as of August 28,
2002 (this "Agreement") by and among RECOTON CORPORATION, a New York
corporation ("Recoton"), INTERACT ACCESSORIES, INC., a Delaware
corporation ("InterAct"), RECOTON AUDIO CORPORATION, a Delaware
corporation ("Audio"), AAMP OF FLORIDA, INC., a Florida corporation
("AAMP"), RECOTON HOME AUDIO, INC., a California corporation
("RHAI"), RECOTON ACCESSORIES, INC., a Delaware corporation ("Recoton
Accessories") and RECOTON MOBILE ELECTRONICS, INC., a Delaware corporation
("Mobile Electronics" and together with Recoton, InterAct, Audio, AAMP,
RHAI and Recoton Accessories collectively, the "Borrowers"), the
Guarantors (the Borrowers and the Guarantors are sometimes collectively referred
to herein as the "Loan Parties"), the Lenders, XXXXXX FINANCIAL, INC., a
Delaware corporation, for itself as a Lender and as Administrative Agent and
Senior Agent and GENERAL ELECTRIC CAPITAL CORPORATION, a New York corporation
for itself as a Lender and as Collateral Agent and Syndication Agent (the
Administrative Agent, Senior Agent, Collateral Agent and Syndication Agent are
sometimes referred to herein as the "Agents") and is made with reference
to the Loan Agreement dated as of October 31, 2000 (as amended by the (i)
Consent and Amendment No. 1 to the Credit Agreement and Amendment No. 1 to the
Security Agreement, dated as of February 7, 2001, (ii) Amendment No. 2 to the
Credit Agreement, dated as of May 10, 2001, (iii) Consent and Amendment No. 3 to
the Loan Agreement, Amendment No. 2 to the Security Agreement and Amendment No.
1 to the Pledge Agreement, dated as of July 3, 2001, (iv) Fourth Amendment to
Loan Agreement, dated as of February 26, 2002, and (v) Waiver, Consent and
Amendment No. 5 to the Loan Agreement, dated as of March 29, 2002, as the same
may be further amended, supplemented, restated or otherwise modified from time
to time, the "Loan Agreement"), among the Borrowers, the Guarantors, the
Lenders and the Agents. Capitalized terms used herein and not otherwise defined
herein shall have the meanings ascribed to such terms in the Loan
Agreement.
R E C I T
A L S:
WHEREAS, the Borrowers, the Guarantors, the Lenders and the Agents have entered
into the Loan Agreement;
WHEREAS, the Lenders have made Loans to the Borrowers pursuant to the terms of
the Loan Agreement;
WHEREAS, the Borrowers expressly reaffirm all of the Loan Documents and the debt
and other obligations thereunder, the Borrowers agree that nothing contained
herein shall operate to release the Borrowers or any other person or persons
from their liability to keep and perform the provisions, conditions,
obligations, and agreements contained in the Loan Documents, except as may be
herein modified, and the Borrowers hereby reaffirm that each and every
provision, condition, obligation and agreement in such documents shall continue
in full force and effect, except as may be herein modified;
WHEREAS, the validity, priority and perfection of all mortgages, security
interests and other liens granted or created by the Loan Documents is hereby
acknowledged and confirmed by the Borrowers, and the Borrowers agree that such
documents shall continue to secure the Loans and the other Obligations, as may
be amended by this Agreement, without any change, loss or impairment of the
priority of such mortgages, security interests or other liens;
WHEREAS, the Borrowers have requested that the Lenders agree to amend and waive
certain provisions of the Loan Agreement; and
WHEREAS, the Lenders have agreed to amend and waive certain provisions of the
Loan Agreement as specifically set forth herein;
NOW, THEREFORE, in consideration of the premises and the mutual agreements
contained herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
Section 1. Limited Waivers. (a) The Borrowers acknowledge and agree that
(i) certain Events of Default have occurred under the Loan Agreement as a result
of the Borrowers' failure, (A) as of June 30, 2002, to comply with the covenants
set forth in Section 6 (Financial Covenants) of the Loan Agreement and in the
Financial Covenants Rider to the Loan Agreement; and (B) as of the date of this
Agreement, (x) to make the payments required under Section 2.4(B)(1) of the Loan
Agreement, (y) to pay interest due on the Subordinated Debt, and (z) to provide
in a timely manner certain information required under Section (B) and Section
(E), respectively, of the Reporting Rider to the Loan Agreement, (each an
"Existing Default" and collectively, the "Existing Defaults") and
(ii) certain Events of Default will probably occur under the Loan Agreement as a
result of the anticipated failure of the Borrowers to comply with the covenants
set forth in Section 5.11 (Required Minimum Excess Availability) of the Loan
Agreement, Section 6 (Financial Covenants) of the Loan Agreement and in Section
A (Consolidated Tangible Net Worth), Section B (Minimum EBITDA), Section D
(Fixed Charges Coverage) and Section E (Minimum InterAct EBITDA) of the
Financial Covenants Rider to the Loan Agreement, as of September 30, 2002 (the
"Expected Defaults").
(b) Subject to the terms of this Agreement, effective as of the Effective Date
(as defined herein), the Administrative Agent and the Lenders hereby waive the
Existing Defaults and the Expected Defaults, as in effect prior to giving effect
to this Agreement.
The foregoing limited waivers shall not apply to any other provisions of the
Loan Agreement or any other periods.
Section 2. Certain Amendments to the Loan Agreement. Except as otherwise
provided for herein, effective as of the Effective Date (as defined herein), the
Loan Agreement is hereby amended as follows:
(a) Section 2.1((B) of the Loan Agreement is hereby amended and restated in its
entirety as follows:
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"Revolving Loan. Each Revolving Loan Lender, severally, agrees to lend to
Borrowers from time to time its Pro Rata Share of each Revolving Advance. The
aggregate amount of all Revolving Loan Commitments shall not exceed (i)
$170,000,000 for the period beginning on August 19, 2002 and ending on August
30, 2002, (ii) $165,000,000 for the period beginning on August 31, 2002 and
ending on September 15, 2002 and (iii) $150,000,000 for the period beginning on
September 16, 2002 and at all times thereafter as reduced by subsections
2.4(B)(5), 2.4(B)(6) and 2.4(C). Subject to the provisions of the
immediately preceding sentence, amounts borrowed under this subsection
2.1(B) may be repaid and reborrowed at any time prior to the earlier
of (i) the termination of the Revolving Loan Commitment pursuant to
subsection 8.3 or (ii) the Termination Date. Except as provided in
subsections 2.4(A) and 9.9, no Revolving Loan Lender shall have any
obligation to make a Revolving Advance to the extent such Revolving Advance
would cause the Revolving Loan (after giving effect to any immediate application
of the proceeds thereof) to exceed the Maximum Revolving Loan Amount.";
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(b) The definition of "Borrowing Base" in Section 2.1(B)(2) of the Loan
Agreement is hereby amended and restated in its entirety as follows:
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""Borrowing Base" means, as of any date of determination, an amount equal to the
sum of, in each case, less reserves, such reserves including, but not limited
to, the Dilution Reserve and those reserves set forth in Exhibit B-2, as
Administrative Agent, in its reasonable credit judgment elects to establish
unless otherwise directed by the Requisite Lenders: (a) up to 80% of Eligible
Accounts, (b) up to, the lesser of, 65% of Eligible Inventory or (i) 100% of the
Appraised Value of Eligible Inventory for the period between August 19, 2002
through September 29, 2002; (ii) 95% of the Appraised Value of Eligible
Inventory for the period between September 30, 2002 through October 30, 2002;
(iii) 90% of the Appraised Value of Eligible Inventory for the period between
October 31, 2002 through November 29, 2002; and (iv) 85% of the Appraised Value
of Eligible Inventory for the period between November 30, 2002 and at all times
thereafter; (c) up to 65% of Letter of Credit Inventory (as defined below), (d)
up to an additional 5% of each of Eligible Inventory and Letter of Credit
Inventory during the "In-Season Period" (as defined below) and (e) 100% of the
letter of credit, if any, provided by Recoton Germany as set forth in
subsection 5.12, less the Required Minimum Excess Availability
amount of $6,000,000, plus the Permitted Overadvance; provided
that Administrative Agent, in its reasonable credit judgment, can decrease the
advance rates from time to time, and provided further that
notwithstanding the foregoing, in no event shall, at any time (i) the aggregate
borrowing availability against (b), (c) and (d) in this subsection
2.1B(2) exceed (x) $100,000,000 for the period beginning on the Effective
Date and ending on September 29, 2002, (y) $90,000,000 for the period beginning
on September 30, 2002 and ending on October 30, 2002 and (z) $80,000,000 for the
period beginning on October 31, 2002 and at all times thereafter and (ii) the
borrowing availability against (d) in this subsection 2.1B(2), exceed
$10,000,000.";
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(c) The chart included in Section 2.2(A) of the Loan Agreement is hereby amended
and restated in its entirety as follows:
| Loan Type |
Base Rate Plus |
LIBOR Plus |
| Revolver |
3.25% |
2.75% |
| Term Loan A |
3.50% |
3.00% |
| Term Loan B |
5.50% |
5.00% |
| Term Loan C |
3.00% |
N/A |
(d) Section 2.3(B) of the Loan Agreement is hereby amended and restated in its
entirety as follows:
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"Letter of Credit Fees. Borrowers shall pay to Administrative Agent a fee
with respect to the Lender Letters of Credit for the benefit of Revolving Loan
Lenders in the amount of the average daily amount of Letter of Credit Liability
outstanding during such month multiplied by 4.0% per annum. Such fee will be
calculated on the basis of a 360 day year for the actual number of days elapsed
and will be payable monthly in arrears on the first day of each month. Borrowers
shall also reimburse Administrative Agent for any and all fees and expenses, if
any, paid by Administrative Agent or any Revolving Loan Lender to the issuer of
any Bank Letter of Credit."
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(e) Section 2.3(C) of the Loan Agreement is hereby amended by (i) deleting the
comma at the end of the proviso in subsection (a) thereof and inserting
the word "or" immediately after the word "borrowing" and (ii) deleting the
phrase "or (c) the proceeds of the InterAct International IPO" in its
entirety;
(f) Section 2.4(B)(6) of the Loan Agreement is hereby deleted in its entirety
and substituted with the following:
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"Prepayments from Proceeds of the sale of InterAct International and any
other Non-Strategic Asset. Immediately upon receipt by Borrowers of the Net
Proceeds of the sale of each of, the stock or assets of InterAct International
(and any Subsidiary thereof) and any other Non-Strategic Asset, such Net
Proceeds shall be applied (i) to prepay the outstanding Revolving Loan to the
extent of the amount of Borrowing Base availability generated from the sale of
such assets (with a corresponding permanent reduction in the Revolving Loan
Commitment by an equal amount), (ii) to prepay the outstanding Revolving Loan
and to permanently reduce the Permitted Overadvance (with a corresponding
permanent reduction in the Revolving Loan Commitment by an equal amount), and
(iii) in the order set forth under subsection 2.4(B)(2). To the extent
there is any additional amount (the "Surplus"), following application by
the Borrowers of the proceeds from the sale of each of, the stock or assets of
InterAct International (and any Subsidiary thereof) and any other Non-Strategic
Asset in the order set forth under items (i) and (ii) in the immediately
preceding sentence and so long as there is no Default or Event of Default, an
amount equal to 85% of the Surplus shall be applied in the order set forth under
subsection 2.4(B)(2) and an amount equal to 15% of the Surplus shall be
applied in payment of the Revolving Loan without permanently reducing the
Revolving Loan Commitment. After the consummation of each asset sale
contemplated in this subsection 2.4(B)(6) and after giving effect to the
mandatory prepayments hereunder, the Borrowers shall deliver a certificate to
the Administrative Agent showing in reasonable detail the Borrowers' compliance
with the provisions of this subsection 2.4(B)(6).";
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(g) Each of Section A (Consolidated Tangible Net Worth), Section B (Minimum
EBITDA), Section D (Fixed Charges Coverage) and Section E (Minimum InterAct
EBITDA) of the Financial Covenants Rider to the Loan Agreement is hereby amended
and restated in its entirety as follows:
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"A. Consolidated Tangible Net Worth. Recoton and its Subsidiaries shall
attain a Consolidated Tangible Net Worth in the amounts set forth below at the
end of each quarter of a Fiscal Year set forth below:
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Fiscal Quarter Ending Amount
--------------------- ------
December 31, 2000 $76,500,000
March 31, 2001 $74,900,000
June 30, 2001 $73,800,000
September 30, 2001 $76,100,000
December 31, 2001 $76,300,000
March 31, 2002 $71,100,000
June 30, 2002 $72,100,000
September 30, 2002 $73,100,000
December 31, 2002 $52,000,000
March 31, 2003 $49,000,000
June 30, 2003 $45,000,000
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B. Minimum EBITDA. Recoton and its Subsidiaries, on a consolidated basis,
shall attain a minimum EBITDA in the amounts set forth below for each quarter of
a Fiscal Year and for any trailing four quarters period ending on the last day
of each quarter during the periods set forth below:
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Amount for Amount for Trailing
Fiscal Quarter Ending Fiscal Quarter Four Quarters
--------------------- -------------- -------------
December 31, 2000 $21,000,000 $45,000,000
March 31, 2001 $ 3,500,000 $41,500,000
June 30, 2001 $ 6,000,000 $40,500,000
September 30, 2001 $12,250,000 $43,500,000
December 31, 2001 $10,400,000 $33,800,000
March 31, 2002 $ 2,750,000 $30,050,000
June 30, 2002 $10,100,000 $33,875,000
September 30, 2002 $11,325,000 $34,600,000
December 31, 2002 $15,600,000 $26,400,000
March 31, 2003 $ 4,500,000 $28,000,000
June 30, 2003 $ 2,000,000 $28,000,000
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Notwithstanding anything to the contrary contained herein, if the actual result
for an individual Fiscal Quarter ending March 31, June 30, or September 30 does
not meet the required minimum for such Fiscal Quarter but the Fiscal
Year-To-Date EBITDA results as of the Fiscal Quarter then ended meets or exceeds
the required minimum EBITDA for the Fiscal Year-To-Date including that same
period, as outlined above, the Borrowers will remain in compliance with respect
to the column headed "Amount For Fiscal Quarter". Under no circumstance,
however, shall Recoton and its Subsidiaries, on a consolidated basis, fail to
attain a minimum EBITDA of $21,000,000 for Fiscal Quarter ending December 31,
2000, $10,400,000 for Fiscal Quarter ending December 31, 2001 and $15,600,000
for Fiscal Quarter ending December 31, 2002.
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D. Fixed Charges Coverage. Recoton and its Subsidiaries, on a
consolidated basis, shall not permit the Fixed Charges Coverage for any period
ending on the last day of each quarter during the periods set forth below to be
less than the amount set forth below for such periods:
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Ratio for Trailing
Fiscal Quarter Ending Four Quarter Period
--------------------- -------------------
December 31, 2000 1.0 to 1.0
March 31, 2001 1.0 to 1.0
June 30, 2001 1.0 to 1.0
September 30, 2001 1.0 to 1.0
December 31, 2001 0.71 to 1.0
March 31, 2002 0.65 to 1.0
June 30, 2002 0.77 to 1.0
September 30, 2002 0.8 to 1.0
December 31, 2002 0.56 to 1.0
March 31, 2003 0.60 to 1.0
June 30, 2003 0.74 to 1.0
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E. Minimum InterAct EBITDA. InterAct International and its Subsidiaries
on a consolidated basis, shall attain at all times a minimum InterAct EBITDA in
the amounts set forth below for each period ending on the date set forth below:
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Period Amount for Period
------ -----------------
January 1, 2002 - March 31, 2002 $ (4,750,000)
January 1, 2002 - June 30, 2002 $ (2,600,000)
January 1, 2002 - September 30, 2002 $ (100,000)";
(h) Section 7.3(A) of the Loan Agreement is hereby amended and restated in its
entirety as follows:
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"Transfers. Sell, assign (by operation of law or otherwise) or otherwise
dispose of, or grant any option with respect to, any of the Collateral or the
assets of such Person, except that Borrowers and their Subsidiaries may (i) sell
or otherwise dispose of Inventory in the ordinary course of business; (ii) sell,
transfer or discount without recourse, in the ordinary course of business,
accounts receivables arising in the ordinary course of business in connection
with the compromise or collection thereof or in connection with the receipt of
proceeds under credit insurance; provided, that such proceeds are applied
to prepay the Revolving Loans; (iii) sell or otherwise dispose of worn out,
obsolete or surplus equipment and fixtures so long as the Net Proceeds are
applied to the prepayment of the Obligations as provided in subsection
2.4(B); (iv) subject to the provisions of the Collateral Documents,
transfer, sell or assign Collateral or other assets to another Loan Party
(including in connection with the dissolution, liquidation or winding up of any
Subsidiary set forth on Schedule 7.6); (v) make other Asset Dispositions if all
of the following conditions are met: (1) the market value of assets sold or
otherwise disposed of in one or a series of related transactions does not exceed
$250,000 and the aggregate market value of assets sold or otherwise disposed of
in any Fiscal Year does not exceed $1,000,000; (2) the consideration received is
at least equal to the fair market value of such assets; (3) the sole
consideration received is cash; provided, that trade-ins for which the
cash value of such trade-in is applied against the purchase price of new
equipment so purchased shall be deemed to be cash; (4) the Net Proceeds of such
Asset Disposition are applied as required by subsection 2.4(B); (5) after
giving effect to the sale or other disposition of the assets included within the
Asset Disposition and the repayment of the Obligations with the proceeds
thereof, each Borrower is in compliance on a pro forma basis with the covenants
set forth in the Financial Covenant Rider recomputed for the most recently ended
month for which information is available and showing it will be in compliance as
of the date thereof and in the future, and is in compliance with all other terms
and conditions contained in this Agreement; and (6) no Default or Event of
Default shall then exist or result from such sale or other disposition; and (vi)
subject to the provisions of subsection 7.6, consummate the sale of each
of, the stock or assets of InterAct International (and any Subsidiary thereof)
and any other Non-Strategic Asset, provided that (i) the sale price for
each such sale is acceptable to the Requisite Lenders, and (ii) the Net Proceeds
of each such sale shall be applied in accordance with subsection
2.4(B)(6). Notwithstanding anything to the contrary contained herein (x)
Recoton shall be permitted to sell its stock (provided that the proceeds
thereof shall be applied to the Revolving Loan without reducing the Revolving
Loan Commitment) and grant options in accordance with its existing stock option
plans and warrants in its reasonable business judgment, (y) InterAct
International stock may be issued upon exercise of options previously issued to
employees and directors of InterAct International as described in Schedule
11.1(C), and (z) subject to the provisions of the Security Documents any
Subsidiary can sell stock to its parent to the extent permitted by 7.4(c), (g),
(h) and (i).";
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(i) Section 7.6 of the Loan Agreement is hereby amended and restated in its
entirety as follows:
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"Restriction on Fundamental Changes. (a) Enter into any transaction of
merger, amalgamation or consolidation (other than a merger, amalgamation or
consolidation among Loan Parties); (b) other than the Subsidiaries set forth in
Schedule 7.6, liquidate, wind-up or dissolve itself (or suffer any liquidation
or dissolution); (c) convey, sell, lease, sublease, transfer or otherwise
dispose of, in one transaction or a series of transactions, all or any
substantial part of its business or assets (other than the sale of each of, the
assets of InterAct International and any of its Subsidiaries and any other
Non-Strategic Asset), or the capital stock or other equity interest of any of
its Subsidiaries (other than the capital stock of InterAct International and any
of its Subsidiaries and the capital stock of any entity constituting a
Non-Strategic Asset, if any), whether now owned or hereafter acquired other than
pursuant to the establishment of Subsidiaries as described in Schedule 7.11 or
the liquidation, winding up or dissolution of the Subsidiaries set forth on
Schedule 7.6 (provided that, in connection with the transfer of assets or
creation of Subsidiaries in connection with the transactions described on
Schedule 7.11, Agents shall have received (a) such amendments and counterparts
to the Security Documents, Guaranties and the other Loan Documents as may be
requested by Agents to bind newly created Subsidiaries or existing Subsidiaries
to the terms of this Agreement and the Related Agreements and the other
applicable Loan Documents, (b) copies of organizational documents, resolutions
and incumbency certificates of any Persons executing any of the foregoing
amendments or counterparts, and such other documents and instruments in
connection therewith as may be reasonably requested by Senior Agent, and (c) a
favorable opinion of counsel to Loan Parties as to due authorization, execution,
and delivery of such amendments or counterparts, the enforceability thereof and
such other matters as may be reasonably requested by Agents (including as to the
creation and perfection of Liens pursuant to the Security Documents), all of the
foregoing in form and substance reasonably satisfactory to Agents); or (d)
acquire by purchase or otherwise all or any substantial part of the business or
assets of, or stock or other beneficial ownership of, any Person;
provided, however, that any Subsidiary may be merged, amalgamated
or consolidated with or into a Borrower (provided that such Borrower
shall be the continuing or surviving corporation) or with or into any one or
more wholly owned Subsidiaries of the Borrowers that are Guarantors
(provided that the wholly owned Subsidiary or Subsidiaries that are
Guarantors shall be the continuing or surviving corporations). It is understood
and agreed that the sale of each of, the stock or assets of InterAct
International (and any Subsidiary thereof) and any other Non-Strategic Asset
shall be permitted if the following conditions are met:
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(i) the Net Proceeds of the sale of each of, the stock or assets of InterAct
International (and any of its Subsidiaries) and any other Non-Strategic Asset
shall be applied in payment of the Loans pursuant to and, to the extent required
by and in accordance with subsection 2.4(B)(6);
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(ii) Borrowers shall deliver to the Administrative Agent a certificate showing
in reasonable detail compliance with the provisions of subsection
2.4(B)(6) after the sale of each of, the stock or assets of InterAct
International (and any of its Subsidiaries) and any other Non-Strategic Asset
and immediately after giving effect to the mandatory prepayments under
subsection 2.4(B)(6) with respect to each such asset sale; and
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(iii) upon the indefeasible payment in full in cash of the Obligations in
accordance with subsection 2.4(B)(6), each of InterAct International (and
any of its Subsidiaries, as applicable) and the entity or entities constituting
a Non-Strategic Asset, if any, will no longer be a Loan Party and the Collateral
with respect to each of InterAct International (and any if its Subsidiaries, as
applicable) and any such entity or entities shall be released.";
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(j) Section 8.1(F)(iii) of the Loan Agreement is hereby amended and restated in
its entirety as follows:
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"(iii) Recoton ceases to own, directly or indirectly, 100% of the other
Borrowers (other than a Borrower being an entity constituting a Non-Strategic
Asset, if any), Recone or the Canadian Subsidiaries other than with respect to
options to acquire InterAct International stock";
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(k) Section 8.1 of the Loan Agreement is hereby amended by (i) deleting the
period at the end of paragraph (Z) thereof and substituting therefor a
semi-colon and (ii) inserting the following at the end of such
section:
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"(AA) Financial Committee. Effective as of August 19, 2002, there occurs,
for any reason, any alteration of the composition, or reduction of the
responsibilities, of the Financial Committee of Recoton's Board by action of the
Board, undertaken without the prior written approval of the Administrative
Agent.";
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(l) The last sentence of Section 9.1(H)(1) of the Loan Agreement is hereby
amended and restated in its entirety as follows:
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"The Lenders hereby authorize Senior Agent to release any Collateral owned by
each of InterAct International (and any of its Subsidiaries) and any other
entity or entities or asset constituting a Non-Strategic Asset, if any, for
purposes of the consummation of the sale of each of, the stock or assets of
InterAct International (and any Subsidiary thereof) and any such asset or entity
or entities, respectively, in accordance with the terms and conditions under
this Agreement.";
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(m) The following definitions are hereby inserted in Section 11.1 of the Loan
Agreement in their appropriate alphabetical order:
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""Dilution Percentage" means with respect to any period, the percentage
resulting from dividing such period's credits against Eligible Accounts by the
sum of such period's cash collections and credits of Eligible Accounts."
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""Dilution Reserve" means the Dilution Percentage in excess of 10% multiplied by
Eligible Accounts."
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""Financial Committee" means, effective as of August 19, 2002, that certain
financial committee of Recoton's Board of Directors (the "Board"),
consisting of no less than three (3) of the directors of Recoton's Board and
comprised only of the then Independent Directors of Recoton's Board and/or of
Independent Directors subsequently elected by Recoton's shareholders, which
Financial Committee shall be established for the purpose of making all decisions
of the Board (to the extent allowed by applicable law) in respect of Recoton's
activities (including, without limitation, the independent financial advisor to
the Borrowers) with regard to financial matters generally, including, without
limitation, activities in relation to (i) any asset sale outside the ordinary
course of business, (ii) revisions of cash management procedures and reporting;
(iii) the 2002-2003 business plan, (iv) evaluation of appropriate corporate
overhead levels, (v) the communication process with the Lenders and the
Subordinated Creditors, (vi) refinancing efforts and (vii) the Inventory
reduction program, but excluding matters traditionally within the purview of a
public company's audit committee and compensation and stock option committees."
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""Independent Director" means any individual serving as a member in Recoton's
Board of Directors who is not otherwise an employee or an officer of Recoton. As
of August 19, 2002 the Independent Directors are: Xxxxx Xxxxx, Xxx X. Xxxxx,
Xxxx Xxxxxx, Xxxxx Xxxxxxxx and Xxxxxx Xxx."
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""Non-Strategic Asset" means any business of Recoton other than Audio, or any of
its Subsidiaries, and Recoton Accessories."
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""Permitted Overadvance" means an overadvance of an amount equal to $13,500,000
which shall be permanently reduced, on a weekly basis, by an amount equal to (i)
$250,000 beginning on August 26, 2002 and on each Monday thereafter up to and
including September 30, 2002, and (ii) $500,000 beginning on October 1, 2002 and
on each Monday thereafter until such date when such overadvance is permanently
reduced to $0 which shall be no later than January 31, 2003.";
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(n) Each of the definitions of "InterAct International IPO" and "Interim
Inventory Reserves" included in Section 11.1 of the Loan Agreement is hereby
deleted in its entirety;
(o) Each of the following definitions included in Section 11.1 of the Loan
Agreement is hereby amended and restated in its entirety as follows:
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""Consolidated Tangible Net Worth" means as of any date of determination, the
excess, if any, of Consolidated Net Worth less Consolidated Intangibles as at
such date subtracting the net write-up or adding back the net write-down since
June 30, 2000 in the book value of assets resulting from the revaluations
arising out of foreign currency valuations in accordance with GAAP, but
excluding from the above calculation any capital gains or capital losses
resulting from the sale of any Non-Strategic Assets for the period beginning on
August 19, 2002 and ending on June 30, 2003."
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""EBITDA" means, for any period, without duplication, the total of the following
for Borrowers and their Subsidiaries on a consolidated basis, each calculated
for such period: (1) net income determined in accordance with GAAP; plus, to the
extent included in the calculation of net income, (2) the sum of (a) income and
franchise taxes paid or accrued; (b) interest expenses, net of interest income,
paid or accrued; (c) amortization and depreciation; (d) other non-cash charges
(excluding accruals for cash expenses made in the ordinary course of business)
and (e) the yield maintenance fee resulting from the repayment of indebtedness
on the Closing Date; less, to the extent included in the calculation of
net income, (3) the sum of (a) the income of any Person (other than
majority-owned Subsidiaries of Borrowers) in which Borrowers or a majority-owned
Subsidiary of Borrowers has an ownership interest except to the extent such
income is received by Borrowers or such majority-owned Subsidiary in a cash
distribution during such period; (b) gains or losses from sales or other
dispositions of assets (other than Inventory in the normal course of business
and other than any Non-Strategic Assets for the period beginning on August 19,
2002 and ending on June 30, 2003); and (c) extraordinary or non-recurring gains,
but not net of extraordinary or non-recurring "cash" losses."
|
|
| |
""Required Minimum Excess Availability" means, for any period after July 31,
2002, an amount equal to $6,000,000."
|
|
| |
""Requisite Lenders" means Lenders (other than a Defaulting Lender) holding or
being responsible for 66.66% or more of the sum of (a) outstanding Loans, (b)
outstanding Letter of Credit Liability and (c) unutilized Commitments of all
Lenders which are not Defaulting Lenders. It is understood that for purposes of
this definition the Term Loan C Lenders shall not be deemed to be "Lenders"
except solely with respect to matters set forth in subsection 9.4(A).";
|
|
(p) Schedule 4.1(A) of the Loan Agreement is hereby revised to read as set forth
in Schedule I attached hereto;
(q) Schedule 4.5 of the Loan Agreement is hereby revised to read as set forth in
Schedule II attached hereto; and
(r) Schedule 7.4(e) of the Loan Agreement is hereby revised to read as set forth
in Schedule III attached hereto.
Section 3. Budget and Other Reports. (a) By September 9, 2002, the
Administrative Borrower shall have delivered to the Administrative Agent a cash
flow budget through November 30, 2002, detailing projected sales, collections
and disbursements, itemized by categories mutually agreed upon by the Borrowers
and the Administrative Agent, in a form acceptable to the Administrative Agent
(the "Rolling Cash Flow Budget"). No later than the first Business Day of
each succeeding calendar month, the Rolling Cash Flow Budget shall be rolled
forward for one additional month. Notwithstanding any provision of the Loan
Agreement or any other Loan Document otherwise, the Borrowers shall not make any
disbursements or payments during any week except pursuant to such week's portion
of the Rolling Cash Flow Budget, as approved by the Administrative Agent (the
"Approved Cash Flow Budget"), provided that: (i) each week's
portion of the Rolling Cash Flow Budget shall be deemed an Approved Cash Flow
Budget for such week, unless and until such time as the Administrative Agent
gives the Borrowers written or electronic notice that such budget is not
approved; and (ii) disbursements shall be deemed to be made pursuant to the
Approved Cash Flow Budget to the extent that the aggregate disbursements for all
line items do not exceed the amounts budgeted by more than 10% on a weekly
basis; provided, however, that to the extent aggregate
disbursements in the weeks prior to any week have been less than 110% of the
amount budgeted in any week, such undisbursed amounts shall be carried over and
may be disbursed in weeks subsequent to such week, in addition to amounts
disbursable pursuant to any Approved Cash Flow Budget for such subsequent week.
On a cumulative basis, during any period from the week ending on September 16,
2002, the Borrowers' cash collections shall not be less than 95% of the cash
collections projected on the consolidated cash flow projection in the Rolling
Cash Flow Budget.
(b) Notwithstanding any provision of the Loan Agreement or any other Loan
Document otherwise, effective as of September 9, 2002, the Borrowers shall
provide the following reports to the Administrative Agent:
(i) a daily report with respect to the Borrowing Base in form reasonably
acceptable to the Administrative Agent;
(ii) no later than 8:00 a.m. (central standard time) each Wednesday, the
Borrowers shall provide to the Administrative Agent a comparison of the
immediately preceding week's Rolling Cash Flow Budget to actual performance,
together with a narrative summary explaining any material variances therefrom
(both positive and negative);
(iii) no later than 8:00 a.m. (central standard time) every second Wednesday,
beginning on September 11, 2002, the Borrowers shall provide to the
Administrative Agent: (A) accounts payable aging or other available reports in a
form reasonably acceptable to the Administrative Agent; (B) accounts receivable
aging or other available reports in a form reasonably acceptable to the
Administrative Agent; and (C) a list of any vendors which have placed the
Borrowers on cash-in-advance ("CIA") or cash-on-delivery ("COD")
terms and a list of any collection actions or other litigation commenced against
any of the Borrowers;
(iv) no later than 3:00 p.m. (central standard time) each Monday, the Borrowers
shall provide the Administrative Agent with a certification by both the
Borrowers' chief financial officer and the Financial Advisor (as defined herein)
that total disbursements and total receipts in the prior week were in compliance
with the budgeting procedures described in Section 3(a) herein.
Section 4. Certain Covenants and Agreements of the Borrowers.
(a) The Borrowers shall at all times have engaged an independent financial
advisor, reasonably satisfactory to the Lenders (the "Financial
Advisor").
(b) The Financial Committee shall have been established by August 19, 2002 and
shall be maintained at all times thereafter. Moreover, at all times each of
Recoton's audit committee and compensation and stock option committee shall
consist only of directors who are either Independent Directors of Recoton's
Board as of the date hereof or Independent Directors subsequently elected by
Recoton's shareholders.
(c) At the Administrative Agent's request, the Borrowers shall pay the
reasonable fees and expenses in connection with the engagement of Xxxxxxx
Consulting, Inc. (the "Consultant") as financial advisor to, and selected
by, the Lenders with respect to ongoing monitoring of the Borrowers and their
operations; and, in connection therewith, the Consultant shall be provided
promptly (i) access to the books and records of the Borrowers and management of
the Borrowers and (ii) such other information as the Consultant may
request.
(d) The Borrowers shall cooperate with the Administrative Agent, the Collateral
Agent and their agents and the Consultant, in connection with the financing
arrangement extended pursuant to the Loan Agreement. In connection with their
obligation to cooperate, the Borrowers shall use their best efforts to furnish
the parties described in the previous sentence with such relevant information as
they may reasonably request.
(e) No later than September 9, 2002, the Borrowers shall deliver to the
Administrative Agent a copy of the business plan, in form, detail and substance
acceptable to the Administrative Agent (the "Business Plan"), for the
Borrowers and their Subsidiaries for the calendar years 2002 and 2003 which
Business Plan contemplates in reasonable detail, among other things, the prompt
sale of the stock or assets of InterAct International and certain other
Non-Strategic Assets.
(f) In furtherance of the Business Plan, the Administrative Borrower shall
deliver to the Administrative Agent with a copy to each Lender (i) an offering
memorandum marketing the sale of InterAct International on or before August 30,
2002, (ii) an executed letter of intent with respect to the sale of InterAct
International, in form and substance reasonably acceptable to the Requisite
Lenders, on or before September 30, 2002, and (iii) an executed definitive
agreement with respect to the sale of InterAct International, in form and
substance reasonably acceptable to the Requisite Lenders, on or before October
30, 2002. The Borrowers shall consummate the sale of InterAct International on
or before November 30, 2002, or shall otherwise effectuate a reduction of the
Commitments by an amount equal to $40,000,000.
(g) Recoton in cooperation with the Financial Advisor shall deliver to the
Administrative Agent and the Consultant, with a copy to each Lender, a monthly
report reflecting in reasonable detail, satisfactory to the Administrative
Agent, Recoton's efforts to effectuate the sale of certain Non-Strategic Assets.
Immediately upon the consummation of each such sale Recoton shall apply all the
Net Proceeds of each such sale in accordance with the provisions of, and in the
order set forth in, Section 2.4(B)(6) of the Loan Agreement; provided,
however, that by no later than December 31, 2002, Recoton shall
effectuate a reduction of the Commitments by an amount not less than $70,000,000
inclusive of all the Net Proceeds of the sales of Non-Strategic Assets applied
pursuant to the provisions of Section 2.4(B)(6) of the Loan Agreement and
resulting in a permanent reduction of the Commitments and also inclusive of any
reduction of the Commitments actually effectuated pursuant to the provisions of
Section 4(f) hereof, but exclusive of, and in addition to, any other reductions
of the Commitments required by the terms of the Loan Agreement as amended
hereby.
(h) Notwithstanding any provision of the Loan Agreement otherwise, effective as
of the Effective Date (as defined herein), the Borrowers agree that (i) each
LIBOR Loan shall automatically convert to a Base Rate Loan at the end of any
applicable Interest Period and (ii) no Loans may be converted to LIBOR
Loans.
(i) Notwithstanding any provision included in Section B of the Reporting Rider
to the Loan Agreement to the contrary, the Administrative Borrower shall deliver
to the Administrative Agent, not later than January 31, 2003, preliminary
financial statements for purposes of enabling the Administrative Agent to
determine compliance by the Borrowers and their Subsidiaries with the financial
covenants included in the Financial Covenants Rider to the Loan Agreement for
the fourth calendar quarter of Fiscal Year 2002.
(j) If the Administrative Agent, within a 30-day period following the Effective
Date, so requires (such 30-day period can be extended by the Administrative
Agent in its sole discretion), the Loan Parties shall pledge 100% of the capital
stock or equity interests of any or all of their direct Foreign Subsidiaries and
shall deliver to the Administrative Agent, no later than 35 days following
receipt by the Loan Parties of the relevant request by the Administrative Agent,
definitive documentation evidencing such pledges in form and substance
satisfactory to the Administrative Agent.
The provisions of this section are in addition to and shall not operate to
modify or waive any right or obligation under the Loan Agreement or the other
Loan Documents.
Section 5. Representations and Warranties. The Loan Parties hereby
represent and warrant to each Agent and each Lender that after giving effect to
this Agreement:
(a) no Default or Event of Default (other than the Existing Defaults and the
Expected Defaults that are the subject of this Agreement) has occurred and is
continuing on and as of the date hereof;
(b) the representations and warranties of the Loan Parties and the other Loan
Parties contained in the Loan Agreement and the other Loan Documents (other than
to the extent of the Existing Defaults and the Expected Defaults only, any
representation and warranty that no Default or Event of Default exists or shall
exist as of September 30, 2002, respectively) are true and correct on and as of
the date hereof as if made on and as of the date hereof, except to the extent
such representations and warranties expressly relate to a different date;
and
(c) the execution and delivery by the Loan Parties of this Agreement and the
performance by the Loan Parties of all of their respective agreements and
obligations under this Agreement and the Loan Agreement as amended hereby,
respectively, are within the power and authority of the Loan Parties and have
been duly authorized by all necessary action on the part of the Loan Parties,
and that the execution and delivery by the Loan Parties, of this Agreement and
the performance by each of the transactions contemplated hereby will not
contravene any term or condition set forth in any material agreement or
instrument to which each is a party or by which each is bound.
Section 6. Effectiveness and Conditions Precedent. This Agreement shall
become effective as of August 19, 2002 (the "Effective Date"), upon the
satisfaction of all of the following conditions precedent:
(a) (i) the Lenders shall have executed and delivered a counterpart of this
Agreement and received duly executed counterparts of this Agreement from the
Borrowers and Guarantors (which aforesaid executions and deliveries may be
effected by delivery and receipt by facsimile transmission) and (ii) the
Borrowers shall have performed all covenants and agreements required to have
been performed as of the Effective Date;
(b) the Administrative Borrower shall have paid (and the Administrative Borrower
hereby covenants and agrees to pay, subject to and simultaneously with the
effectiveness of the applicable provisions of this Agreement) to the Senior
Agent and Administrative Agent, for the respective accounts of the Lenders, on a
pro rata basis, a non-refundable waiver fee (the "Waiver
Fee") in immediately available funds, which shall be equal to 1% (one
percent) of the sum of the outstanding Term Loans (other than the Term Loan C)
and the Revolving Loan Commitment, or $1,933,750. The Waiver Fee shall have been
earned in full as of the Effective Date and shall be paid as follows: (i) 25%
(twenty-five percent) of the aggregate amount of the Waiver Fee shall be paid
upon the execution of this Agreement; (ii) 25% (twenty-five percent) of the
aggregate amount of the Waiver Fee shall be paid on September 30, 2002; (iii)
25% (twenty-five percent) of the aggregate amount of the Waiver Fee shall be
paid on October 31, 2002 and (iv) 25% (twenty-five percent) of the aggregate
amount of the Waiver Fee shall be paid on November 30, 2002. In addition, the
Borrowers shall have paid any and all fees that may have been incurred and
deferred under the Waiver, Consent and Amendment No. 5 to the Loan Agreement,
dated as of March 29, 2002, among the Borrowers, the Guarantors, certain Lenders
and the Administrative Agent;
(c) receipt by the Agents of (i) copies of resolutions of any Person executing
this Agreement and (ii) signature and incumbency certificates of the officers of
the Loan Parties;
(d) receipt by the Agents of a favorable opinion of counsel to Loan Parties as
to due authorization, execution, and delivery of this Agreement, the
enforceability thereof and such other matters as may be reasonably requested by
Agents;
(e) the Borrowers and/or Recoton, as applicable, and all the holders of the
Subordinated Debt shall have entered into agreements reasonably satisfactory to
the Administrative Agent providing for the deferral of any and all cash payments
with respect to the Subordinated Debt until after January 31, 2003;
(f) the Administrative Agent shall have received payment in full of all accrued
and unpaid interest due under the Loan Agreement and all fees and expenses due
to the Administrative Agent and the Lenders (including the reasonable fees and
expenses of its legal counsel) under the Loan Agreement and in connection with
this Agreement; and
(g) all proceedings in connection with the transactions contemplated by this
Agreement and all other documents incident thereto shall be reasonably
satisfactory in substance and in form to the Agents, and the Agents shall have
received all such material information and all such counterpart originals or
certified or other copies of such documents as the Agents may reasonably
request.
Section 7. Status of Loan Documents; Additional Representations and
Warranties.
(a) This Agreement is limited solely for the purposes and to the extent
expressly set forth herein, and, except as expressly provided hereby, (i) the
terms, provisions and conditions of the Loan Documents and (ii) the Liens
granted under the Loan Documents shall continue in full force and effect and are
hereby ratified and confirmed in all respects.
(b) No waiver or amendment of any terms or provisions of the Loan Agreement made
hereunder shall relieve the Loan Parties from complying with any other term or
provision of the Loan Agreement or any other Loan Document.
(c) No action taken by any Lender, the Administrative Agent or the Collateral
Agent prior to, on or after the date hereof shall constitute a waiver of or
modification of any term or condition of any of the Loan Documents, except as
specifically set forth herein, or prejudice any rights which the Administrative
Agent, the Collateral Agent or any of the Lenders may now have as of the date
hereof or may have in the future under or in connection with the Loan Documents,
including without limitation all rights and remedies in connection with
Defaults, Events of Default and failures of conditions precedent to the making
of Loans and the issuance of Lender Letters of Credit that have occurred and are
continuing, all of which rights and remedies each Lender, the Administrative
Agent and the Collateral Agent hereby expressly reserve.
(d) The Loan Parties represent and warrant to each of the other parties hereto
that except as heretofore disclosed in writing by the Loan Parties to the
Lenders, as of the date hereof, there is no pending or, to the knowledge of the
Loan Parties, threatened action, suit, proceeding, governmental investigation or
arbitration against or affecting any of the Loan Parties or any property of any
of the Loan Parties that is likely to have a Material Adverse Effect.
Section 8. Miscellaneous.
(a) No Waiver, Cumulative Remedies. No failure or delay or course of
dealing on the part of any Agent or any Lender in exercising any right, power or
privilege hereunder shall operate as an express or implied waiver thereof, nor
shall any single or partial exercise of any such right, power or privilege
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege hereunder. The rights, powers and remedies herein
expressly provided are cumulative and not exclusive of any rights, powers or
remedies which the Lenders would otherwise have. No notice to or demand on the
Borrowers or Guarantors in any case shall entitle the Borrowers or Guarantors to
any other or further notice or demand in similar or other circumstances or
constitute a waiver of the rights of the Lenders to any other or further action
in any circumstances without notice or demand.
(b) Ratification, Etc. Except as expressly provided for herein, the Loan
Agreement and all documents, instruments and agreements related thereto,
including but not limited to, the Security Documents, are hereby ratified and
confirmed in all respects and shall continue in full force and effect. The Loan
Agreement and this Agreement shall be read and construed as a single agreement.
This Agreement shall constitute one of the Loan Documents and the obligations of
the Borrowers and Guarantors under this Agreement shall constitute Obligations
for all purposes of the Loan Documents. All references in the Loan Agreement,
the Loan Documents or any related agreement or instrument to the Loan Agreement
shall hereafter refer to the Loan Agreement as amended hereby.
(c) Expenses. The Borrowers agree to pay and reimburse the Administrative
Agent and Lenders for all of their costs and expenses (including, without
limitation, costs and expenses of legal counsel) in connection with this
Agreement.
(d) Bankruptcy; Insolvency. The Borrowers represent and warrant that, on
and as of the date hereof, no proceeding has been filed or commenced by or
against the Borrowers for dissolution or liquidation, or by or against the
Borrowers voluntarily or involuntarily terminating or dissolving or being
terminated or dissolved; nor does there exist insolvency of the Borrowers, nor
do the Borrowers fail to pay their debts as they become due in the ordinary
course of business (other than in relation to this Agreement or any other Loan
Document or with respect to the interest due on the Subordinated Debt); nor has
a creditor's committee been appointed for the business of the Borrowers; nor
have the Borrowers made an assignment for the benefit of creditors, or filed a
petition in bankruptcy or for reorganization or to effect a plan of arrangement
with creditors; nor have the Borrowers applied for or permitted the appointment
of a receiver or trustee for any or all of their property, assets or rights; nor
are the Borrowers aware of any such receiver or trustee being appointed for any
or all of their property, assets or rights; nor has any of the above actions or
proceedings whatsoever been commenced by or against any other party liable for
the Obligations.
(e) Releases. As of the Effective Date, the Borrowers shall be deemed to
have released each of the Agents and the Lenders party hereto and their
respective officers, directors, employees, agents, attorneys and advisors, from
any and all claims, debts, obligations, rights, suits, damages, actions, causes
of action, remedies, and liabilities of every kind and nature arising from or in
any way related to the negotiation, execution, delivery and performance of this
Agreement or the transactions contemplated hereby.
(f) Headings Descriptive. The headings of the several Sections and
subsections of this Agreement are inserted for convenience only and shall not in
any way affect the meaning or construction of any provision.
(g) Severability. In case any provision in or obligation under this
Agreement shall be invalid, illegal or unenforceable in any jurisdiction, the
validity, legality and enforceability of the remaining provisions or
obligations, or of such provision or obligation in any other jurisdiction, shall
not in any way be affected or impaired thereby.
(h) Counterparts. This Agreement may be executed and delivered in any
number of counterparts and by the different parties hereto on separate
counterparts, each of which when so executed and delivered shall be an original,
but all of which shall together constitute one and the same instrument. A
complete set of counterparts shall be lodged with each of Recoton and the
Administrative Agent.
Section 9. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND SHALL
BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and delivered by their respective duly authorized officers as of the
date first written above.
| BORROWERS: |
RECOTON CORPORATION
By: /s/ Xxxxxx Xxxxxxx
Name: Xxxxxx Xxxxxxx
Title: Executive Vice President - Finance
INTERACT ACCESSORIES, INC.
RECOTON AUDIO CORPORATION
AAMP OF FLORIDA, INC.
RECOTON HOME AUDIO, INC.
RECOTON ACCESSORIES, INC.
RECOTON MOBILE ELECTRONICS, INC.
By: /s/ Xxxxxx Xxxxxxx
Name: Xxxxxx Xxxxxxx
Title: Vice President
|
| GUARANTORS: |
CHRISTIE DESIGN CORPORATION
RECOTON INTERNATIONAL HOLDINGS, INC.
RECOTON JAPAN, INC.
RECONE, INC.
RECOTON CANADA LTD.
INTERACT CANADA, LTD.
INTERACT INTERNATIONAL, INC.
INTERACT HOLDINGS, INC.
INTERACT TECHNOLOGIES, INC.
By: /s/ Xxxxxx Xxxxxxx
Name: Xxxxxx Xxxxxxx
Title: Vice President
|
| LENDERS: |
XXXXXX FINANCIAL, INC.,
individually and as Senior Agent and
Administrative Agent
By:
Name: Xxxx X. Xxxxxx
Title: Senior Vice President
GENERAL ELECTRIC CAPITAL
CORPORATION, individually and as Collateral
Agent and Syndication Agent
By: /s/ Xxxx X. Xxxxxx
Name: Xxxx X. Xxxxxx
Title: Authorized Signatory
BANK OF AMERICA
By: /s/ Xxxx X. Xxxxxxxx
Name: Xxxx X. Xxxxxxxx
Title: Senior Vice President
THE CIT GROUP / BUSINESS CREDIT, INC.
By: /s/ Xxxxxxx Xxxxxxxxx
Name: Xxxxxxx Xxxxxxxxx
Title: Vice President
GUARANTY BUSINESS CREDIT
CORPORATION
By: /s/ Xxxxxxx Xxxxxx
Name: Xxxxxxx Xxxxxx
Title: President and CEO
FOOTHILL CAPITAL
By: /s/ Xxxxxx X. Xxxxxxx
Name: Xxxxxx X. Xxxxxxx
Title: Senior Vice President
CITIZENS BUSINESS CREDIT
By: /s/ Xxxxx X. Xxxxxx
Name: Xxxxx X. Xxxxxx
Title: Vice President
FIRSTAR BANK
By: /s/ Xxx Xxxxxxx
Name: Xxx Xxxxxxx
Title: Vice President
WASHINGTON MUTUAL BANK
By: /s/ Xxxxx X. Xxxx
Name: Xxxxx X. Xxxx
Title: Vice President
SIEMENS FINANCIAL SERVICES, INC.
By: /s/ Xxxxx Xxxxxx
Name: Xxxxx Xxxxxx
Title: Vice President - Credit
GMAC BUSINESS CREDIT LLC
By: /s/.Xxx Xxxxxxx
Name: Xxx Xxxxxxx
Title: Assistant Vice President
U.S. BANK BUSINESS CREDIT
By: /s/ Xxxxxxx Xxxxxx
Name: Xxxxxxx Xxxxxx
Title: Senior Vice President
|
Schedule I
Schedule 4.1(A)
Capitalization
| |
a) |
Authorized Shares: 40,000,000 Common Stock at $0.20 par value; 10,000,000
Preferred Stock
|
| |
b) |
Issued Shares: 13,568,296 (as of 8/6/02)
|
| |
c) |
Treasury Shares: 1,272,532 (as of 8/6/02)
|
| |
d) |
Jurisdiction of Incorporation: New York
|
| 2. |
Recoton Accessories, Inc.
|
| |
a) |
Authorized Shares: 3,000 at $0.01 par value
|
| |
d) |
Jurisdiction of Incorporation: Delaware
|
| 3. |
Christie Design Corporation
|
| |
a) |
Authorized Shares: 3,000 at $0.01 par value
|
| |
d) |
Jurisdiction of Incorporation: Delaware
|
| 4. |
AAMP of Florida Inc., d/b/a AAMP of America, Inc.
|
| |
a) |
Authorized Shares: 200 at $1.00 par value
|
| |
d) |
Jurisdiction of Incorporation: Florida
|
| 5. |
Recoton Audio Corporation
|
| |
a) |
Authorized Shares: 3,000 at $0.01 par value
|
| |
d) |
Jurisdiction of Incorporation: Delaware
|
| |
i) |
Recoton Mobile Electronics, Inc.
|
| |
a) |
Authorized Shares: 3,000 n.p.v.
|
| |
b) |
Issued Shares (Shareholder): 10 (Recoton Audio Corporation)
|
| |
d) |
Jurisdiction of Incorporation: Delaware
|
| |
ii) |
Recoton Home Audio, Inc.
|
| |
a) |
Authorized Shares: 1,000 at no par value
|
| |
b) |
Issued Shares (Shareholder): 100 (Recoton Audio Corporation)
|
| |
d) |
Jurisdiction of Incorporation: California
|
| |
a) |
Authorized Shares: 40,000 at $1.00 par value
|
| |
b) |
Issued Shares (Shareholder): 20,000 Series A (Recoton Audio Corporation)
|
| |
d) |
Jurisdiction of Incorporation: Delaware
|
| 6. |
Recoton International Holdings, Inc.
|
| |
a) |
Authorized Shares: 3,000
|
| |
d) |
Jurisdiction of Incorporation: Delaware
|
| |
a) |
Authorized Shares: 1,000
|
| |
b) |
Issued Shares (Shareholder): 100 (Recoton International Holdings, Inc.)
|
| |
d) |
Jurisdiction of Incorporation: Illinois
|
| |
ii) |
Recoton German Holdings GmbH
|
| |
b) |
Issued Shares (Shareholder): 200,000 DM divided into two share interests
of 50,000 DM and 150,000 DM (Recoton International Holdings, Inc.)
|
| |
d) |
Jurisdiction of Incorporation: Germany
|
| |
(1) |
Magnat Audio-Produkte GmbH
|
| |
b) |
Issued Shares (Shareholder): 50,000 DM (Recoton German Holdings GmbH)
|
| |
d) |
Jurisdiction of Incorporation: Germany
|
| |
(2) |
Mac Audio Electronic GmbH
|
| |
a) |
Partners (Percentage Interest): Magnat Audio-Produkte GmbH (99.569%) and HECO
Audio Produckte GmbH (0.431%)
|
| |
b) |
Jurisdiction of Formation: Germany
|
| |
(3) |
HECO Audio-Produkte GmbH
|
| |
b) |
Issued Shares (Shareholder): 50,000 DM (Recoton German Holdings GmbH)
|
| |
d) |
Jurisdiction of Incorporation: Germany
|
| |
(4) |
Recoton Audio Produkte GmbH
|
| |
b) |
Issued Shares (Shareholder): 25,000? (Recoton German Holdings, GmbH)
|
| |
d) |
Jurisdiction of Incorporation: Germany
|
| |
(iii) |
Recoton Italia s.r.l.
|
| |
b) |
Issued Shares (Shareholder): Lt 3,934,813,000 (Recoton International
Holdings, Inc.)
|
| |
d) |
Jurisdiction of Incorporation: Italy
|
| |
a) |
Authorized shares: 35,570,714 ordinary shares at(pound)0.10 each
|
| |
b) |
Issued Shares (Shareholder): 35,569,914 (Recoton Corporation)
|
| |
d) |
Jurisdiction of Incorporation: United Kingdom
|
| |
i) |
Xxxx Consumer Products (H.K.)
|
| |
b) |
Issued Shares (Shareholder): 1000 (998 in name of Recoton (UK) Limited; 2
in name of nominee)
|
| |
d) |
Jurisdiction of Incorporation: Hong Kong
|
| |
a) |
Authorized shares: 1,000 ordinary shares at(pound)1.00 each
|
| |
d) |
Jurisdiction of Incorporation: United Kingdom
|
| 9. |
InterAct International, Inc. ("III"):
|
| |
a) |
Authorized Shares: 51,000,000 at $0.001 par value
|
| |
b) |
Issued Shares (Stockholder): 45,000,000 (Recoton Corporation) with
options to three employees to acquire 4,500,000 shares, exercisable at $1 per
share (subject to standard adjustments), and vesting 40% at grant and 20% in
each of 2002, 2003 and 2004, with options on an additional 1,125,000 shares
vesting in 2009 with such vesting accelerating to 2005 if certain criteria are
met. The optionees would have under certain circumstances the right to put
shares acquired upon exercise of such options to Recoton Corporation six months
after exercise if III has not consummated a public offering of its stock by
December 31, 2003. Such option would expire on the earlier of six months and one
day after exercising the options or June 30, 2004. The price which Recoton would
pay upon exercise of such put would be the lesser of the fair market value of
such shares based on book value at the time of the put or 15% of the cumulative
net after-tax profits of the STD/InterAct companies (as defined) for 2001, 2002
and 2003. Recoton has the right to pay for such shares by issuing Recoton stock.
Recoton/III may lend money to the optionees to exercise the options in a
cashless transaction.
|
| |
i) |
InterAct Holdings, Inc. ("IHI")
|
| |
a) |
Authorized shares: 3,000 at $0.01 par value
|
| |
b) |
Issued Shares (Stockholder): 10 (III)
|
| |
c) |
Jurisdiction of Incorporation: Delaware
|
| |
ii) |
InterAct Technologies, Inc. ("ITI")
|
| |
a) |
Authorized shares: 3,000 at $0.01 par value
|
| |
b) |
Issued Shares (Stockholder): 10 (III)
|
| |
c) |
Jurisdiction of Incorporation: Delaware
|
| |
iii) |
InterAct Accessories, Inc.,
|
| |
a) |
Authorized shares: 3,000 at $0.01 par value
|
| |
b) |
Issued Shares (Stockholder): 10 (IHI)
|
| |
c) |
Jurisdiction of Incorporation: Delaware
|
| |
iv) |
STD Technology Holding, Ltd.
|
| |
a) |
Authorized capital: 10,000 shares at HK$1.00 each
|
| |
b) |
Issued Shares (Stockholder): ITI (999 shares) and Xxxxxxx Xxx (being
changed to Recoton (Far East) Ltd.) as nominee for ITI (1 share)
|
| |
c) |
Jurisdiction of Incorporation: Hong Kong
|
| |
v) |
STD Technology (Shenzhen) Limited
|
| |
b) |
Issued Shares (Stockholder): STD Technology Holding, Ltd.
|
| |
c) |
Jurisdiction of Incorporation: People's Republic of China
|
| |
vi) |
InterAct Canada, Inc.
|
| |
a) |
Authorized capital: unlimited
|
| |
b) |
Issued Shares (Stockholder): 1 (AFLE & Co, as record nominee for
Xxxxxx Financial, Inc. holding pursuant to pledge by IHI)
|
| |
c) |
Jurisdiction of Incorporation: Ontario
|
| |
vii) |
Recoton (Far East) Limited
|
| |
a) |
Authorized shares: 1,000 at HK$10 per share
|
| |
b) |
Issued Shares (Stockholder): IHI (999 shares) and Xxxxxx Xxxxxxxxx as
nominee for IHI (1 share) (as of July 2, 2001; previously shares owned by or for
the benefit of Recoton Corporation)
|
| |
c) |
Jurisdiction of Incorporation: Hong Kong
|
| |
viii) |
STD Holding Limited
|
| |
a) |
Authorized capital: HK$27,733,340 (divided into 7 ordinary shares and
27,733,333 non-voting deferred shares at HK$1.00 per share)
|
| |
b) |
Issued Shares (Stockholder): RFE and a beneficial holder holding for RFE
|
| |
c) |
Jurisdiction of Incorporation: Hong Kong
|
| |
(1) |
STD Electronic International Limited
|
| |
a) |
Authorized Shares: 1,750,000 at HK$1.00 per share
|
| |
b) |
Issued Shares (Shareholder): 1,750,000 (STD Holding Limited owns of
record 1,749,999 shares and 1 share is owned by Recoton (Far East) Limited, as
nominee for STD Holding Limited)
|
| |
d) |
Jurisdiction of Incorporation: Hong Kong
|
| |
(2) |
STD Manufacturing Limited
|
| |
a) |
Authorized Shares: 40,000 at HK$100.00 per share
|
| |
b) |
Issued Shares (Shareholder): 40,000 (STD Holding Limited owns 39,999
shares and 1 share is owned by Recoton (Far East) Limited, as nominee for STD
Holding Limited)
|
| |
d) |
Jurisdiction of Incorporation: Hong Kong
|
| |
(3) |
Eversmart Management Limited
|
| |
a) |
Authorized Shares: 10,000 at HK$1.00 per share
|
| |
b) |
Issued Shares (Shareholder): 2 (STD Holding Limited owns 1 share and 1 share is
owned by Recoton (Far East) Limited, as nominee for STD Holding Limited)
|
| |
d) |
Jurisdiction of Incorporation: Hong Kong
|
| |
(4) |
STD Industrial (Shenzhen) Limited
|
| |
a) |
Total Investment Amount: US$7,000,000
|
| |
b) |
Registered Capital: US$5,000,000
|
| |
d) |
Jurisdiction of Incorporation: People's Republic of China
|
| |
a) |
Authorized Shares: unrestricted
|
| |
b) |
Issued Shares: 400,440 (AFLE & Co, as record nominee for Xxxxxx
Financial, Inc. holding pursuant to pledge by Recoton)
|
| |
d) |
Jurisdiction of Incorporation: Ontario
|
| 11. |
Recoton (Hong Kong) Limited
|
| |
a) |
Authorized Shares: 1,000
|
| |
b) |
Issued Shares: 1,000 (999 shares have been issued to Recoton Corporation
and one share has been issued to Xxxxxx X. Xxxxxxxxx to hold for the benefit of
Recoton Corporation)
|
| |
d) |
Jurisdiction of Incorporation: Hong Kong
|
Schedule II
Schedule 4.5
Real Estate
(after completion of the InterAct Restructuring
and the Non-InterAct Restructuring)
Entity Address/City/State/Zip County
------ ---------------------- ------
Unless otherwise noted, all locations are leased. If an asterisk appears after
an address, that indicates that the company is not an official lessee of such
space but merely uses space owned by another Recoton company (which allocates a
portion of its rental or other costs to the indicated company)
Recoton Corporation 2900 Xxxx Xxxx Xxxx Xxxxxxxx
Xxxx Xxxx, XX 00000 (owned)
1000 Xxxx Xxxx Xxxxx Xxxxxxxx
Xxxx Xxxx, XX 00000 (owned)
450 Xxxxxxx Xxxxx #000X Xxxxxxxx
Xxxxxxxx, XX 00000
(condo - owned)
450 Xxxxxxx Xxxxx #000X Xxxxxxxx
Xxxxxxxx, XX 00000
(condo - owned)
450 Xxxxxxx Xxxxx, # 000X Xxxxxxxx
Xxxxxxxx, XX 00000
(condo - rented)
450 Xxxxxxx Xxxxx #000X Xxxxxxxx
Xxxxxxxx, XX 00000
(condo - owned)
140 X. 00xx Xxxxxx, 00xx Xxxxx Xxx Xxxx
New York, New York 10022
c/o Unlimited Supplies Nassau
61 Xxx Xxxxxx
Xxxxxxxxxx, XX 00000
Recoton Electronics Outlet Maricopa
Arizona Xxxxx
5000 Xxxxxxx Xxxxx Xxxxxx
Xxxxx, XX 00000
Recoton Accessories, Inc. 2900 Xxxx Xxxx Xxxx Xxxxxxxx
Xxxx Xxxx, XX 00000 *
1000 Xxxx Xxxx Xxxxx Xxxxxxxx
Xxxx Xxxx, XX 00000 *
840 Xxxxxxxx, Xxxxx 000 Xxx Xxxxx
Xxxxxxxxxx, XX 00000*
c/o Unlimited Supplies Nassau
61 Xxx Xxxxxx
Xxxxxxxxxx, XX 00000*
Recoton Electronics Outlet Maricopa
Arizona Xxxxx
5000 Xxxxxxx Xxxxx Xxxxxx
Xxxxx, XX 00000*
530 Xxxxx Xxxx Xxxxxx
Xxxxxxx, XX 00000*
140 X. 00xx Xxxxxx, 00xx Xxxxx Xxx Xxxx
New York, New York 10022*
Christie Design Corporation 2900 Xxxx Xxxx Xxxx Xxxxxxxx
Xxxx Xxxx, XX 00000*
InterAct Accessories, Inc. 330 Xxxxxxxxx Xxxx Xxxxxxxxx
Xxxxxxxxx, XX 00000
2900 Xxxx Xxxx Xxxx Xxxxxxxx
Xxxx Xxxx, XX 00000*
1000 Xxxx Xxxx Xxxxx Xxxxxxxx
Xxxx Xxxx, XX 00000*
Lakefront III Baltimore
150 Xxxxxxxxx Xxxxx
Xxxx Xxxxxx, XX 00000
Bank of North Texas Building Tarrant
8700 Xxxxxxx Xxxxxx Xxxx
Xxxxx, XX
0000-0000 X. Xxxx Xxxx Xxxx. Xxxxxxxx
Xxxxxxx, XX 00000
(Warehouse)
1500 000xx Xxxxxx, XX, Xxxxx 000 Xxxx
Xxxxxxxx, XX 00000
AAMP of Florida, Inc. 13000 00xx Xxxxx, Xxxxx 000 Xxxxxxxx
Xxxxxxxxxx, XX 00000
3000 X. Xxxxxx Xxxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000
540 Xxxxx Xxxxxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000
600 Xxxxxxxx Xxxxxx, Xxxxx 000X Xxxxxx
Xxxxxx, XX 00000
750 Xxxxxxxx Xxxx., Unxxx 000 & 000 Xxxxxx
Xxxxxx, XX 00000
7600 Xxxxxxx Xxxx Xxx Xxxxx
Xxx Xxxxx, XX 00000
Recoton Audio Corporation 2900 Xxxx Xxxx Xxxx Xxxxxxxx
Xxxx Xxxx, XX 00000*
1000 Xxxx Xxxx Xxxxx Xxxxxxxx
Xxxx Xxxx, XX 00000*
43000 Xxxx Xxxx Xxxx Xxxx Xxxxxxx
Xxxxx 000
Xxxx, XX 00000
Recoton Mobile Electronics, 2900 Xxxx Xxxx Xxxx Xxxxxxxx
Xxx. Xxxx Xxxx, XX 00000*
1000 Xxxx Xxxx Xxxxx Xxxxxxxx
Xxxx Xxxx, XX 00000*
43000 Xxxx Xxxx Xxxx Xxxx Xxxxxxx
Xxxxx 000
Xxxx, XX 00000*
ReCone, Inc. 2900 Xxxx Xxxx Xxxx Xxxxxxxx
Xxxx Xxxx, XX 00000*
Recoton Home Audio, Inc. 520 Xxxxx Xxxx Xxxxxx
Xxxxxxx, XX 00000
Rain Tree Business Center Xxxxxx
900X Xxxxx Xxxxxx Xxxx.
Xxxxx 0
Xxxxxxxxxxx, Xxxxxxxx 00000
2900 Xxxx Xxxx Xxxx Xxxxxxxx
Xxxx Xxxx, XX 00000*
1000 Xxxx Xxxx Xxxxx Xxxxxxxx
Xxxx Xxxx, XX 00000*
Recoton International 2900 Xxxx Xxxx Xxxx Seminole
Holdings, Inc. Laxx Xxxx, XX 00000*
Recoton Japan, Inc. Suxxxxxx Xxxx, 0xx Xxxxx XX
Xx. 0-00-00 Xakadanobaba
Shinjuki-ku, Tokyo 160 XXXXX
Dairoku Yamichi Blxx. - 0X XX
0-0-0 Xxxxxxxxxxx-Xxxx Xxxx
Xxx Xxxxx, 0000 Xxxxx
Recoton Canada Ltd. 680 Xxxxxxx Xxxxx XX
Xxxxxxxxx, Xxxxxxx X0X 0X0
Xxxxxx
1800 Xxxxxxxxx Xxxxx XX
Xxxxxxxxx, Xxxxxxx XXX0X0
Xxxxxx
InterAct Canada, Ltd. 680 Xxxxxxx Xxxxx* XX
Xxxxxxxxx, Xxxxxxx X0X 0X0
Xxxxxx
Schedule III
Schedule 7.4(e)
Investment
1.
With respect to AAMP of Florida, Inc., Recoton Canada Ltd., Christie Design
Corporation, Recoton European Holdings, Inc. (renamed Recoton International
Holdings, Inc.), Recoton German Holdings GmbH, InterAct International, Inc.,
Recoton Italia, s.r.l., Recoton Japan Inc., Recoton (Far East), Ltd., Recoton
Corporation (d/b/a Recoton Mobile Electronics), STD Holding Ltd., and Recoton
(UK) Limited, see attached.
2.
With respect to InterAct Canada, Ltd., InterAct Holdings, Inc., InterAct
Technologies, Inc., Recoton (Hong Kong) Limited, Recoton Accessories, Inc. and
Recoton Mobile Electronics, Inc., see attachment hereto.
3.
Investments in other subsidiaries as they exist as of the date hereof cannot be
separately determined at this time.
