EXHIBIT 5
AMENDMENT AGREEMENT
AMENDMENT AGREEMENT (this "AGREEMENT"), dated as of December 31, 1998,
to the Note Purchase Agreement (as amended and in effect prior to the amendments
effected hereby, the "EXISTING NOTE AGREEMENT" and, immediately after giving
effect to the such amendments, the "AMENDED NOTE AGREEMENT"), dated as of
September 1, 1998, between Recoton Corporation, a New York corporation (the
"COMPANY"), and the purchaser (together with its successors and assigns, the
"NOTEHOLDER") of the Adjustable Rate Senior Notes Due September 1, 2008 issued
thereunder, is entered into as of December 31, 1998 by the Company and the
Noteholder.
PRELIMINARY STATEMENT:
Certain Events of Default may exist as of the date hereof
(collectively, the ""EXISTING EVENTS OF DEFAULT"). As a result of any such
Existing Events of Default, the Required Holders would have the right under the
Existing Note Agreement to exercise various rights and remedies, including,
without limitation, the right to declare all of the Notes to be immediately due
and payable, together with interest accrued thereon and the Yield-Maintenance
Amount, if any, with respect to each Note. The Company has requested that the
Noteholder consent to the amendment of certain provisions of the Existing Note
Agreement (to become retroactively effective as of December 31, 1998) in order
to eliminate any such Existing Events of Default. Subject to the terms and
conditions of this Agreement, the Noteholder is willing to amend the Existing
Note Agreement as set forth herein.
AGREEMENT:
1. DEFINED TERMS.
All capitalized terms used but not specifically defined in this
Agreement have the respective meanings assigned to them in, or pursuant to the
provisions of, the Existing Note Agreement. As used in this Agreement, the term
"TRANSACTION DOCUMENTS" means, collectively, each of this Agreement, the Amended
Note Agreement, the Notes and the Subsidiary Guaranty.
2. REPRESENTATIONS AND WARRANTIES.
The Company warrants and represents to the Noteholder that as of the
Effective Date (as defined below):
2.1 ORGANIZATION; POWER AND AUTHORITY. The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
State of New York, and is duly qualified as a foreign corporation and is in good
standing in each jurisdiction in which such qualification is required by law,
other than those jurisdictions as to which the failure to be so qualified or in
good standing could not, individually or in the aggregate, reasonably be
expected to have a material adverse effect on the business, condition (financial
or otherwise) or operations of the Company and the Subsidiaries taken as a
whole. The Company has the corporate power and authority to own or hold under
lease the properties it purports to own or hold under lease, to transact the
business it transacts and proposes to transact, to execute and deliver this
Agreement and to perform the provisions of the Transaction Documents.
2.2 AUTHORIZATION, ETC. This Agreement has been duly authorized by all
necessary corporate action on the part of the Company, and each of the
Transaction Documents constitutes a legal, valid and binding obligation of the
Company and each of the Subsidiaries party thereto, enforceable against the
Company and such Subsidiaries, as the case may be, in accordance with its terms,
except as such enforceability may be limited by (a) applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights generally and (b) general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).
2.3 DISCLOSURE. None of the written statements, documents or other
written materials (including, without limitation, the financial statements and
related certificates most recently provided to the Noteholder pursuant to
paragraph 5A of the Existing Note Agreement) furnished by, or on behalf of, the
Company to the Noteholder in connection with the negotiation, execution and
delivery of this Agreement contain any untrue statement of a material fact or
omit a material fact necessary to make the statements contained therein or
herein not misleading in light of the circumstances in which they were made.
There is no fact which the Company has not disclosed to the Noteholder which
materially affects adversely or, so far as the Company can now foresee, will
materially affect adversely the business, prospects, profits, Properties or
condition (financial or otherwise) of the Company and its Subsidiaries, taken as
a whole, or the ability of the Company to perform its obligations set forth in
the Transaction Documents.
2.4 COMPLIANCE WITH LAWS, OTHER INSTRUMENTS, ETC. The execution,
delivery and performance by the Company of this Agreement will not:
(a) contravene, result in any breach of, or constitute a default
under, or result in the creation of any Lien in respect of any
Property of the Company or any Subsidiary under, any indenture,
mortgage, deed of trust, loan, purchase or credit agreement, lease,
corporate charter or by-laws, or any other agreement or instrument to
which the Company or any Subsidiary is bound or by which the Company
or any Subsidiary or any of their respective properties may be bound
or affected;
(b) conflict with or result in a breach of any of the terms,
conditions or provisions of any order, judgment, decree, or ruling of
any court, arbitrator or governmental body applicable to the Company
or any Subsidiary; or
(c) violate any provision of any statute or other rule or
regulation of any governmental body applicable to the Company or any
Subsidiary.
Neither the Company nor any of the Subsidiaries is a party to, or
otherwise subject to any provision contained in, any instrument evidencing Debt
of the Company or such Subsidiary, any agreement relating thereto or any other
contract or agreement (including its charter) which limits the amount of, or
otherwise imposes restrictions on the incurring of, Debt of the Company of the
type to be evidenced by the Notes except as set forth in the agreements listed
in ANNEX 1 hereto.
2.5 GOVERNMENTAL AUTHORIZATIONS, ETC. No consent, approval or
authorization of, or registration, filing or declaration with, any court or
administrative or governmental body is required in connection with the
execution, delivery or performance by the Company of this Agreement.
2.6 LITIGATION; OBSERVANCE OF AGREEMENTS, STATUTES AND ORDERS.
(a) Except as set forth on ANNEX 2, there are no actions, suits
or proceedings pending or, to the knowledge of the Company, threatened
against or affecting the Company or any Subsidiary or any Property of
the Company or any Subsidiary in any court or before any arbitrator of
any kind or before or by any governmental body that, individually or
in the aggregate, could reasonably be expected to have a material
adverse effect on the business, condition (financial or otherwise) or
operations of the Company and the Subsidiaries taken as a whole.
(b) After giving effect to the amendments to be effected by
Section 4, neither the Company nor any Subsidiary is in default under
any term of any agreement or instrument to which it is a party or by
which it is bound (except for any defaults that may exist under the
agreements listed in Annex 1 hereto, which will be cured or waived on
the Effective Date), or any order, judgment, decree or ruling of any
court, arbitrator or governmental body or is in violation of any
applicable law, ordinance, rule or regulation (including, without
limitation, all federal, state, local and regional statutes, laws,
ordinances and judicial or administrative orders, judgments, rulings
and regulations relating to the protection of the environment) of any
court or administrative or governmental body, which default or
violation, individually or in the aggregate, could reasonably be
expected to have a material adverse effect on the business, condition
(financial or otherwise) or operations of the Company and the
Subsidiaries taken as a whole.
2.7 NO DEFAULTS. No event has occurred and is continuing and no
condition exists which, upon the effectiveness of the amendments provided for in
this Agreement, would constitute a Default or Event of Default.
2.8 YEAR 2000. The Company has reviewed the areas within its business
and operations (and that of the Subsidiaries) which could be adversely affected
by the "Year 2000 Problem" (that is, the risk that computer applications, as
well as embedded microchips in non- computing devices used by the Company and
the Subsidiaries, may be unable to recognize and properly perform date-sensitive
functions involving certain dates prior to and any date after December 31,
1999). The Company has developed or is developing programs to address its "Year
2000 Problem" on a timely basis. Based on such review and program and on current
information available to it, the Company believes that its "Year 2000 Problem"
will not result in a material adverse effect on the business, condition
(financial or otherwise) or operations of the Company and the Subsidiaries taken
as a whole.
3. CONDITIONS PRECEDENT
Each of the amendments to be effected by Section 4 shall become
retroactively effective, as of December 31, 1998, at such time as the Company
and the Noteholder shall have executed and delivered this Agreement (the time
and date of such execution and delivery is referred to herein as the "EFFECTIVE
DATE"); the willingness of the Noteholder to execute and deliver this Agreement
is contingent on the satisfaction of each of the following conditions (which
shall be deemed to have been satisfied upon such execution and delivery;
however, no such deemed satisfaction shall affect the provisions of Section 6.3
hereof):
3.1 CONSENT OF NOTEHOLDER. The Company and the Noteholder shall have
executed and delivered a counterpart of this Agreement.
3.2 WARRANTIES AND REPRESENTATIONS TRUE; COMPLIANCE WITH THIS
AGREEMENT.
(a) WARRANTIES AND REPRESENTATIONS TRUE. The warranties and
representations contained in Section 2 shall be true on the Effective
Date with the same effect as though made on and as of that date.
(b) COMPLIANCE WITH THIS AGREEMENT. The Company shall have
performed and complied with all agreements and conditions contained
herein that are required to be performed or complied with by the
Company on or prior to the Effective Date, and such performance and
compliance shall remain in effect on the Effective Date.
3.3 OPINION OF COUNSEL. The Noteholder shall have received from
Stroock & Stroock & Xxxxx LLP, regular counsel for the Company, a favorable
opinion satisfactory to the Noteholder and substantially in the form of EXHIBIT
A.
3.4 OFFICER'S CERTIFICATES. The Noteholder shall have received:
(a) a certificate dated the Effective Date and signed by a
Responsible Officer, substantially in the form of EXHIBIT B; and
(b) a certificate dated the Effective Date and signed by the
Secretary or an Assistant Secretary of the Company, substantially in
the form of EXHIBIT C.
3.5 SUBSIDIARY CONSENTS. Each of the Subsidiaries party to the
Subsidiary Guaranty shall have executed and delivered a consent to this
Agreement in the form attached hereto as EXHIBIT D.
3.6 BANK AGREEMENT. The Company shall have delivered to the Noteholder
a true and correct copy of the Bank Credit Agreement, as amended and in effect
on the Effective Date, which shall be in form and substance satisfactory to the
Noteholder, and shall include an executed copy of an acceptable waiver of any
violations of covenants contained in the Bank Credit Agreement. No "Default" or
"Event of Default" under, and as defined in, the Bank Credit Agreement shall
exist on the Effective Date.
3.7 1997 NOTE PURCHASE AGREEMENT. The Company shall have delivered to
the Noteholder a true and correct copy of an amendment to the Company's several
Note Purchase Agreements, each dated as of January 6, 1997 (collectively, as
amended, the "1997 NOTE PURCHASE AGREEMENT"), pursuant to which it issued
$75,000,000 in aggregate principal amount of its Adjustable Rate Senior Notes
Due January 6, 2007, which amendment shall be in form and substance satisfactory
to the Noteholder. No "Default" or "Event of Default" under, and as defined in,
the 1997 Note Purchase Agreement shall exist on the Effective Date.
3.8 SUBORDINATED DEBT ISSUANCE. The Company shall have issued
$35,000,000 in aggregate principal amount of its Senior Subordinated Notes due
2004 in a private sale on the Effective Date. The Company shall have delivered
to the Noteholder a true and correct copy of the securities purchase agreement
under which such senior subordinated notes are issued, as in effect on the
Effective Date, which shall be in form and substance satisfactory to the
Noteholder.
3.9 FEE. In consideration of the amendments set forth herein, the
Company shall have paid to the Noteholder a fee in an amount equal to 0.50% of
the outstanding principal amount of the Notes held by the Noteholder as of the
date hereof.
3.10 EXPENSES. All fees and disbursements required to be paid pursuant
to Section 6.2 shall have been paid in full, including, but not limited to, the
statement for reasonable fees and disbursements of Xxxx & Xxxxxx, the
Noteholder's special counsel, presented to the Company on or prior to the
Effective Date.
3.11 PROCEEDINGS SATISFACTORY. All proceedings taken in connection
with the execution and delivery of this Agreement and the transactions
contemplated hereby shall be satisfactory to the Noteholder and its special
counsel; and the Noteholder and its special counsel shall have received copies
of such documents and papers as they may reasonably request in connection
therewith.
4. AMENDMENTS TO EXISTING NOTE AGREEMENT.
Each of the Company and the Noteholder hereby consents and agrees to
the amendments to the Existing Note Agreement set forth in this Section 4.
4.1 PARAGRAPH 4G. Paragraph 4G of the Existing Note Agreement is
hereby amended and restated in its entirety as follows:
"4G. INTEREST PAYMENTS.
Interest (computed on the basis of a 360-day year of twelve
30-day months) shall accrue on the unpaid principal balance of the
Notes, from the date of each Note, and shall be payable to the holders
thereof quarterly on the first day of September, December, March and
June in each year (each an "INTEREST PAYMENT DATE"), commencing with
the Interest Payment Date next succeeding the date of such Note, until
the principal thereof shall have become due and payable, at the rate
of:
(i) PRIOR TO JANUARY 1, 1999 -- if such time is prior to
January 1, 1999, 8.52% per annum, and on any overdue payment
(including any overdue prepayment) of principal, any overdue
payment of interest and any overdue payment of any
Yield-Maintenance Amount at the Applicable Default Interest Rate;
and
(ii) ON AND AFTER JANUARY 1, 1999 -- if such time is on or
after January 1, 1999 and prior to the occurrence of the Rate
Decrease Event,
(a) 9.52% per annum, PROVIDED that the Rate Decrease
Event shall not have occurred, and
(b) if such time is on or after the occurrence of the
Rate Decrease Event, 9.02% per annum,
and on any overdue payment (including any overdue prepayment)
of principal, any overdue payment of interest and any overdue payment
of any Yield-Maintenance Amount at the Applicable Default Interest
Rate. If the Rate Decrease Event shall occur, it shall be effective as
of the date of occurrence of the Rate Decrease Event.
The term "RATE DECREASE EVENT" shall mean the receipt by the
Company of not less than $75,000,000 of Net Cash Proceeds from the
issuance and public sale of either or both of (A) its Capital Stock
and (B) not more than $150,000,000 in aggregate principal amount of
subordinated debt securities, pursuant to documentation and upon terms
and conditions satisfactory to each holder of the Notes, as evidenced
by the holders' prior written approval thereof."
4.2 PARAGRAPH 6. Paragraph 6 of the Existing Note Agreement is hereby
amended and restated in its entirety as follows:
6. NEGATIVE COVENANTS.
6A. LINE OF BUSINESS. The Company will not, and will not permit
any Restricted Subsidiary to, engage in any material business if, as a
result thereof, the business and operations of the Company and its
Restricted Subsidiaries would not be in or directly related to the
consumer electronics industry or activities that are ancillary,
incidental or necessary to such business, PROVIDED that the Company
and the Restricted Subsidiaries may acquire businesses that have
operations unrelated to the consumer electronics industry if, with
respect to each such acquisition, (i) the assets in respect of such
unrelated operations (the "UNRELATED ASSETS") constitute less than 50%
of consolidated total assets of any such business and contribute less
than 50% to consolidated operating income of any such business and
(ii) the Investment in such Unrelated Assets shall be permitted by the
provisions of paragraph 6F hereof.
6B. QUICK ASSETS RATIO. The Company will not permit the ratio of
(i) the sum of (a) cash and Cash Equivalents of the Company
and the Restricted Subsidiaries on the last day of any fiscal
quarter of the Company set forth below, PLUS (b) accounts
receivable (less provision for doubtful accounts) of the Company
and the Restricted Subsidiaries on such date, to
(ii) Consolidated Current Liabilities on such date
to be less than the ratio set forth opposite such fiscal
quarter below:
=============================================================================
FISCAL QUARTER ENDING RATIO
=============================================================================
December 31, 1998 0.80 to 1.00
------------------------------------------------------------------------------
March 31 in each year 1.00 to 1.00
------------------------------------------------------------------------------
June 30 in each year 0.80 to 1.00
------------------------------------------------------------------------------
September 30 in each year 0.80 to 1.00
------------------------------------------------------------------------------
December 31 in each year after 1998 1.00 to 1.00
==============================================================================
Notwithstanding the foregoing, if the Rate Decrease Event shall have
occurred, the Company shall not permit the ratio of clause (i) to clause
(ii) above to be less than 1.00 to 1.00 on the last day of any fiscal
quarter of the Company.
6C. DEBT.
(i) TOTAL DEBT. The Company will not permit Consolidated Debt at
any time to exceed the lesser of:
(a) 65% of Consolidated Total Capitalization; and
(b) 500% of Consolidated EBITDA for the period of four
consecutive complete fiscal quarters of the Company then most
recently ended.
(ii) SENIOR DEBT. The Company will not permit Consolidated Senior
Debt at any time to exceed the lesser of:
(a) (1) prior to the Amendment Effective Date, 65% of
Consolidated Total Capitalization at such time, (2) on or
subsequent to the Amendment Effective Date and prior to the Rate
Decrease Event, 55% of Consolidated Total Capitalization at such
time, or (3) on or subsequent to the Rate Decrease Event, 50% of
Consolidated Total Capitalization at such time; and
(b) (1) prior to the 6th day following the occurrence of the
Rate Decrease Event,
(A) for the period commencing on
December 31, 1998 and ending on June 29, 1999,
450% of Consolidated EBITDA for the period of four
consecutive complete fiscal quarters of the
Company then most recently ended,
(B) for the period commencing on June
30, 1999 and ending on December 30, 1999, 425% of
Consolidated EBITDA for the period of four
consecutive complete fiscal quarters of the
Company then most recently ended, and
(C) at all times on and after December
31, 1999, 400% of Consolidated EBITDA for the
period of four consecutive complete fiscal
quarters of the Company then most recently ended,
or
(2) on or after the 6th day following the
occurrence of the Rate Decrease Event, 350% of Consolidated
EBITDA for the period of four consecutive complete fiscal
quarters of the Company then most recently ended.
(iii) PRIORITY DEBT. The Company will not permit Priority
Debt at any time to exceed 15% of Consolidated Tangible Net Worth.
6D. COVERAGE RATIOS.
(i) INTEREST EXPENSE COVERAGE. The Company will not permit the
ratio of
(a) Consolidated Adjusted Cash Flow for any period of four
consecutive complete fiscal quarters of the Company to
(b) Consolidated Interest Expense for such period
to be less than 2.50 to 1.00.
(ii) FIXED CHARGE COVERAGE. The Company will not permit the Fixed
Charge Total Debt Coverage Ratio on the last day of any fiscal quarter
to be less than 1.25 to 1.00.
6E. NET WORTH. The Company will not at any time permit Consolidated
Tangible Net Worth to be less than the sum of
(i) $100,000,000, PLUS
(ii) the sum of the Annual Net Worth Increase Amounts for all
fiscal years ended after December 31, 1998, PLUS
(iii) the amount of Net Cash Proceeds received by the Company at
such time from the issuance of Capital Stock of the Company in
connection with its first public offering of Capital Stock of the
Company subsequent to the Amendment Effective Date to Persons other
than Affiliates, employees or consultants of the Company or any of the
Restricted Subsidiaries, PLUS
(iv) the remainder (but not less than zero) of
(a) the aggregate amount of Net Cash Proceeds from all
issuances of Capital Stock of the Company completed at such time,
other than, and subsequent to, the issuance of Capital Stock
referred to in the preceding clause (iii), MINUS
(b) the portion of such Net Cash Proceeds used by the
Company or any Restricted Subsidiary to acquire Intangible Assets
at or prior to such time (PROVIDED, that in any case where the
Company or any Restricted Subsidiary shall utilize any such Net
Cash Proceeds to finance the acquisition of any Person or
business, the portion of such Net Cash Proceeds used by the
Company or such Restricted Subsidiary to acquire Intangible
Assets shall be deemed to be equal to the amount, if any, of the
increase in Consolidated Intangible Assets directly resulting
from such acquisition).
As used in this paragraph 6E:
"ANNUAL NET WORTH INCREASE AMOUNT" means, for any fiscal year of
the Company ended after December 31, 1998, the greater of (a) 50% of
Consolidated Net Income for such fiscal year and (b) $0.
"CONSOLIDATED INTANGIBLE ASSETS" means, at any time, the net book
value of all Intangible Assets of the Company and its Restricted
Subsidiaries, as such net book value would be reflected on a balance
sheet of the Company prepared at such time on a consolidated basis in
accordance with GAAP.
6F. RESTRICTED INVESTMENTS AND RESTRICTED PAYMENTS. The Company
will not, and will not permit any Restricted Subsidiary to, make any
Basket Investment, or declare, make, set apart any funds or other
Property for, or incur any liability to make, any Restricted Payment
unless:
(i) immediately after, and after giving effect to such
Basket Investment or such Restricted Payment, the aggregate
amount of all Basket Investments outstanding at such time PLUS
all Restricted Payments declared or made on or after the 1997
Closing Date would not exceed the sum of
(a) $5,000,000, PLUS
(b) 50% (or minus 100% in the case of a loss) of
Consolidated Net Income for the period commencing on January
1, 1997 and ending on and including the last day of the
fiscal quarter of the Company most recently ended as of the
date such Basket Investment is made or such Restricted
Payment is declared or made; and
(ii) immediately before, and after giving effect to,
such Basket Investment or such Restricted Payment and any
concurrent transactions, no Default or Event of Default
exists or would exist.
6G. MERGERS AND CONSOLIDATIONS. The Company will not, and
will not permit any Restricted Subsidiary to, merge or
consolidate with or into any other Person, or convey, transfer,
spin-off or lease all or substantially all of its assets in a
single transaction or series of transactions to any Person,
except that:
(i) any such Restricted Subsidiary may merge or
consolidate with or into, or convey, transfer or spin-off
all or substantially all of its assets to, the Company
(provided that the Company is the continuing or surviving
corporation), another Restricted Subsidiary or any Person
that concurrently with such merger, consolidation,
conveyance, transfer or spin-off becomes a Restricted
Subsidiary, and
(ii) the Company may merge or consolidate with or into,
or convey, transfer or spin-off all or substantially all of
its assets to, another corporation, PROVIDED that
(a) the successor formed by such consolidation or
the survivor of such merger or the Person that acquires by
conveyance, transfer or spin-off all or substantially all of
the assets of the Company as an entirety, as the case may be
(the "SUCCESSOR CORPORATION"), shall be a solvent
corporation organized and existing under the laws of the
United States of America, any state thereof or the District
of Columbia,
(b) if the Company is not the Successor
Corporation, the Successor Corporation shall have executed
and delivered to each holder of Notes its assumption of the
due and punctual performance and observance of each covenant
and condition of this Agreement and the Notes pursuant to
such agreements and instruments as shall be reasonably
satisfactory to the Required Holders, and the Company shall
have caused to be delivered to each holder an opinion, in
form and substance satisfactory to the Required Holders, of
independent counsel reasonably satisfactory to the Required
Holders, to the effect that all agreements or instruments
effecting such assumption are enforceable in accordance with
their terms and comply with the terms hereof, and
(c) immediately after, and immediately after
giving effect to, such transaction, no Default or Event of
Default would exist.
6H. TRANSFERS OF PROPERTY; SUBSIDIARY STOCK.
(i) TRANSFERS OF PROPERTY. The Company will not, and will
not permit any Restricted Subsidiary to, sell, lease as lessor,
transfer or otherwise dispose of any Restricted Subsidiary Stock,
except pursuant to clause (ii) of this paragraph 6H, or any other
Property (collectively, "TRANSFERS") except for:
(a) any Transfer made in compliance with paragraph 6G
hereof or any Transfer of Unrelated Assets;
(b) Transfers of inventory, payments to vendors and
suppliers, payments of compensation (including, without
limitation, salaries, bonuses, options, insurance, benefits,
payments pursuant to employment agreements and other
perquisites), and other similar payments, in each case in
the ordinary course of business of the Company or such
Restricted Subsidiary;
(c) any Transfer of Property by a Restricted Subsidiary
to the Company or any other Restricted Subsidiary;
(d) any other Transfer at any time of any Property to a
Person, other than an Affiliate (whether effected in a
single transaction or in a series of related transactions)
not otherwise permitted under clauses (a) through (c),
inclusive, of this paragraph 6H(i) (for purposes of this
clause (d), a "CURRENT TRANSFER"), if each of the following
conditions would be satisfied with respect to such Transfer:
(1) the consideration received in respect of such
current Transfer is an amount not less than that reasonably
obtainable in a comparable arm's-length transaction or
series of transactions with a Person that is not an
Affiliate of the Company or any Subsidiary, with neither the
seller nor the buyer being under any compulsion to sell or
buy, respectively,
(2) immediately after giving effect to such
current Transfer, no Default or Event of Default would
exist,
(3) the sum of
(A) the net book value of the Property
that is the subject of such current Transfer, PLUS
(B) the aggregate net book value of all
other items of Property of the Company and the
Restricted Subsidiaries that were the subject of
prior Transfers under this clause (d) consummated
during the period beginning on the first day of
the four consecutive complete fiscal quarters of
the Company then most recently ended and ending
immediately prior to the time of such current
Transfer,
would not exceed 20% of Consolidated Total Assets,
determined as at the beginning of such period, and
(4) the sum of
(A) the contribution (expressed as a
percentage and exclusive of losses) to
Consolidated Operating Income of such Property,
plus
(B) the contribution (expressed as a
percentage and exclusive of losses) to
Consolidated Operating Income of all other items
of Property of the Company and the Restricted
Subsidiaries that were the subject of prior
Transfers under this clause (d) consummated during
the period beginning on the first day of the four
consecutive complete fiscal quarters of the
Company then most recently ended and ending
immediately prior to the time of such current
Transfer,
would not exceed 20% of Consolidated Operating Income for
the four consecutive complete fiscal quarters of the Company
then most recently ended;
PROVIDED that the net book value or the contribution to Consolidated
Operating Income of any item of Property shall be excluded for
purposes of clause (3) and clause (4) of this paragraph 6H(i)(d) if,
prior to consummation of any Transfer, the Company gives written
notice (a "REINVESTMENT NOTICE") to all holders of Notes that, within
12 months after such Transfer, the entire proceeds of such Transfer,
net of ordinary and reasonable transaction costs and expenses incurred
in connection with such Transfer, will be applied by the Company or
such Restricted Subsidiary to the purchase of Capital Assets of the
Company or any Restricted Subsidiary to be used in the business of the
Company, as described in paragraph 6A hereof; PROVIDED further that
such exclusions only apply to the extent that the aggregate net book
value of all Property so excluded at any one time shall not exceed 25%
of Consolidated Tangible Net Worth and the sum of the contributions to
Consolidated Operating Income (expressed as a percentage, with each
such contribution being determined as of the date of Transfer of the
Property generating such contribution) of all Property so excluded at
any one time shall not exceed 25%.
If the Company shall fail to apply the proceeds of any Transfer in
accordance with a Reinvestment Notice given in respect thereof, such
failure shall constitute an Event of Default.
(ii) TRANSFERS OF SUBSIDIARY STOCK. The Company will not,
and will not permit any Restricted Subsidiary to, Transfer any shares
of the stock (or any warrants, rights or options to purchase stock or
other Securities exchangeable for or convertible into stock) of a
Restricted Subsidiary (such stock, warrants, rights, options and other
Securities herein called "RESTRICTED SUBSIDIARY STOCK"), nor will any
Restricted Subsidiary issue, sell or otherwise dispose of any shares
of its own Restricted Subsidiary Stock, PROVIDED that the foregoing
restrictions do not apply to:
(a) the issuance by a Restricted Subsidiary of shares
of its own Restricted Subsidiary Stock to the Company or
another Restricted Subsidiary;
(b) Transfers by the Company or a Restricted Subsidiary
of shares of Restricted Subsidiary Stock to the Company or
another Restricted Subsidiary;
(c) the issuance by a Restricted Subsidiary of
directors' qualifying shares or shares to holders (who hold
for the benefit of the Company or a Restricted Subsidiary)
to meet statutory requirements for domestic holdings or
minimum numbers of stockholders;
(d) the Transfer of all of the Restricted
Subsidiary Stock of a Restricted Subsidiary owned by the
Company and the other Restricted Subsidiaries if:
(1) such Transfer satisfies the
requirement of paragraph 6H(i)(d) hereof (for
purposes of such paragraph, the net book value of
such Restricted Subsidiary Stock being deemed to
be the aggregate net book value of all assets of
such Restricted Subsidiary);
(2) in connection with such Transfer,
the entire investment (whether represented by
stock, Debt, claims or otherwise) of the Company
and the other Restricted Subsidiaries in such
Restricted Subsidiary is Transferred to a Person
other than the Company or a Restricted Subsidiary
not simultaneously being disposed of;
(3) the Restricted Subsidiary being
disposed of has no continuing investment in any
other Restricted Subsidiary not simultaneously
being disposed of or in the Company; and
(4) immediately before and after the
consummation of such Transfer, and after giving
effect thereto, no Default or Event of Default
would exist;
(e) Transfers of Unrelated Assets consisting of
Restricted Subsidiary Stock if the requirements set forth in
subclauses (2), (3) and (4) of the foregoing clause (d) have
been satisfied; and
(f) Transfers by the Company or a Restricted
Subsidiary of shares of Restricted Subsidiary Stock of any
PRC/HK Subsidiaries, PROVIDED such Transfer is made to a
collateral agent in accordance with the provisions of
paragraph 6M hereof.
(iii) NOTICES WITH RESPECT TO Transfers. The Company shall
give written notice to each holder of Notes at least ten days prior to
the consummation of any Transfer that would give rise to a potential
prepayment obligation under paragraph 4E hereof specifying:
(a) the anticipated consummation date of the
related Transfer; and
(b) an estimate of the net proceeds to be received
for the Property subject to such Transfer.
6I. LIENS. The Company will not, and it will not permit any
Restricted Subsidiary to, create, assume or suffer to exist any Lien
upon any of its Property, whether now owned or hereafter acquired,
except:
(i) Liens outstanding on the 1997 Closing Date and listed in
Part 6I(i) of Annex 3 hereto, Liens securing the obligations
evidenced by the Notes and Liens granted by the Company or any
Restricted Subsidiary with respect to any PRC/HK Subsidiaries
pursuant to paragraph 6M hereof;
(ii) Liens incurred or deposits made in the ordinary course
of business,
(a) in connection with workers' compensation,
unemployment insurance, social security and other like laws,
(b) to secure the performance of letters of credit,
bids, tenders, sales contracts, surety and performance bonds
(of a type other than set forth in clause (iv) of this
xxxxxxxxx 0X) and other ordinary course obligations not
incurred in connection with the borrowing of money, the
obtaining of advances or the payment of the deferred
purchase price of Property, and
(c) in respect of statutory obligations or claims or
demands of materialmen, mechanics, carriers, warehousemen,
landlords and other like Persons, PROVIDED that the
obligations secured by such Liens shall not be in default
and the title of the Company or the Restricted Subsidiary,
as the case may be, to, and its right to use, the Property
subject to such Lien, is not materially adversely affected
thereby;
(iii) Liens for taxes not yet due or that are being actively
contested in good faith by appropriate proceedings;
(iv) Liens, arising in connection with court proceedings,
(a) in the nature of attachments, remedies and
judgments, PROVIDED that the execution or other enforcement
of such Liens is effectively stayed and the claims secured
thereby are being actively contested in good faith and by
appropriate proceedings, and
(b) securing appeal bonds, supersedeas bonds and other
similar Liens arising in connection with court proceedings
(including, without limitation, surety bonds and letters of
credit) or any other instrument serving a similar purpose,
PROVIDED that the aggregate amount so secured pursuant to this
clause (iv) shall not at any time exceed $2,500,000;
(v) reservations, exceptions, encroachments, easements,
rights-of-way, covenants, conditions, restrictions and other similar
title exceptions or encumbrances affecting real property, PROVIDED
they do not in the aggregate materially detract from the value of such
real property or materially interfere with their use in the ordinary
conduct of the owning Person's business;
(vi) any Lien on Property that is acquired or constructed by the
Company or any Restricted Subsidiary that secures Debt incurred by the
owner of such Property to pay for all or a portion of the related
purchase price or construction costs of such Property, PROVIDED that
(a) such Lien shall not extend to or cover any Property
other than Property acquired or constructed after the 1997
Closing Date with the proceeds of the Debt secured thereby and
shall not secure Debt other than such Debt,
(b) such Lien shall be created within 12 months after the
acquisition or substantial completion of such Property, and
(c) such Lien shall secure Debt in an amount not exceeding
100% of the lesser of (1) the cost of acquisition or construction
of the Property to which such Debt relates and (2) the Fair
Market Value of the Property to which such Debt relates,
determined as the time of the incurrence of such Debt; and
(vii) Liens securing Debt other than those Liens permitted by
clause (i) through clause (vi) of this paragraph 6I, but only
(a) to the extent that Priority Debt would not exceed 15% of
Consolidated Tangible Net Worth, and
(b) if, immediately before, and after giving effect to, such
Liens and any concurrent transactions, no Default or Event of
Default exists or would exist.
A violation of this paragraph 6I will constitute an Event of Default,
whether or not any provision is made for an equal and ratable Lien
pursuant to paragraph 5G.
6J. PERMITTED INVESTMENTS. The Company will not, nor will it permit
any of its Restricted Subsidiaries to, make any Investment other than a
Permitted Investment or a Basket Investment.
6K. TRANSACTIONS WITH AFFILIATES. The Company will not, and will not
permit any Restricted Subsidiary to, enter into any transaction, including,
without limitation, the purchase, sale or exchange of Property or the
rendering of any service, with any Affiliate, except in the ordinary course
of and pursuant to the reasonable requirements of the business of the
Company or such Restricted Subsidiary and upon fair and reasonable terms no
less favorable to the Company or such Restricted Subsidiary than would be
obtained in a comparable arm's- length transaction with a Person not an
Affiliate.
6L. DESIGNATION OF SUBSIDIARIES. Each Person which shall become a
Subsidiary for the first time after the Closing Date shall be a Restricted
Subsidiary unless, within 30 days after such Person shall first have become
a Subsidiary, the Company shall give written notice to all holders of the
Notes stating that such Person shall be an Unrestricted Subsidiary. Any
Person so designated as an Unrestricted Subsidiary may not thereafter be
redesignated as a Restricted Subsidiary without the approval of the
Required Holders.
6M. SUBSIDIARY GUARANTY. The Company will cause each Subsidiary that,
after the Closing Date, executes a guaranty of obligations outstanding
under the Bank Financing Agreements, to execute and deliver to each holder
of Notes, simultaneously with its execution and delivery of any such
guaranty of obligations under the Bank Credit Agreement, a copy of the
Joinder Agreement in the form attached to the Subsidiary Guaranty as Annex
2, duly executed by such Subsidiary. If the dissolution process with
respect to any Inactive Subsidiary shall be abandoned or otherwise cease,
the Company shall promptly, but in any event within not less than fifteen
(15) days after such abandonment or cessation, cause such Inactive
Subsidiary to execute and deliver to each holder of Notes a copy of the
Joinder Agreement in the form attached to the Subsidiary Guaranty as Annex
2, duly executed by such Inactive Subsidiary. At such time as the Company
shall have (i) caused 65% of the Capital Stock of each of its PRC/HK
Subsidiaries to have been pledged to a collateral agent acceptable to the
Required Holders to secure all obligations of the Company under this
Agreement, the Notes, the 1997 Note Agreement and the Bank Financing
Agreements pursuant to a pledge agreement in form and substance
satisfactory to the Required Holders, and (ii) taken such action to perfect
such pledge, and delivered such additional documentation, as may be
reasonably required by the Required Holders, the Subsidiaries organized
under the laws of Hong Kong shall be deemed released from their respective
Guarantees previously given under the Subsidiary Guaranty, effective as of
the date given, PROVIDED that such Subsidiaries shall contemporaneously be
released, or be deemed to be released, from their respective Guarantees, if
any, of the obligations of the Company under the 1997 Note Agreement and
the Bank Financing Agreements.
6N. PRC/HK SUBSIDIARIES.
(i) PRC SUBSIDIARIES. The Company will not permit Combined
Adjusted PRC Assets, determined as of the last day of any fiscal
quarter or any fiscal year, to be greater than an amount equal to 20%
of Consolidated Tangible Net Worth determined as of such day.
(ii) PRC/HK SUBSIDIARIES. The Company will not permit Combined
Adjusted PRC/HK Assets, determined as of the last day of any fiscal
quarter or any fiscal year, to be greater than an amount equal to 40%
of Consolidated Tangible Net Worth determined as of such day.
As used in this paragraph 6N:
"COMBINED ADJUSTED PRC ASSETS" means the aggregate value of the assets
(net of reserves) of the PRC Subsidiaries, determined on a combined basis
(but not including intercompany receivables due to any PRC Subsidiary from
the Company or any Subsidiary that is a party to the Subsidiary Guaranty),
as reported in the consolidating financial statements referred to in clause
(i) and clause (ii) of paragraph 5A hereof.
"COMBINED ADJUSTED PRC/HK ASSETS" means the aggregate value of the
assets (net of reserves) of the PRC/HK Subsidiaries, determined on a
consolidated basis (but not including intercompany receivables due to any
PRC/HK Subsidiary from the Company or any Subsidiary that is a party to the
Subsidiary Guaranty but is not a PRC/HK Subsidiary), as reported in the
consolidating financial statements referred to in clause (i) and clause
(ii) of paragraph 5A hereof.
4.3 PARAGRAPH 10B. Paragraph 10B of the Existing Note Agreement is
hereby amended to modify in their entirety or add, each in their proper
alphabetical order, the following defined terms:
"AMENDMENT EFFECTIVE DATE" shall have the meaning assigned to the term
"Effective Date" in the Amendment Agreement, dated as of December 31, 1998,
which amends certain provisions of this Agreement.
"BANK CREDIT AGREEMENT" shall mean the Second Amended and Restated
Credit Agreement, dated as of June 18, 1998, among the Company, The Chase
Manhattan Bank, as administrative agent and as a lender, SunTrust Bank,
Central Florida, National Association, Marine Midland Bank, Xxxxxx Trust
and Savings Bank and First Union National Bank, as may be amended,
supplemented or modified from time to time, and any renewal, extension,
refunding, restructuring, replacement or refinancing thereof (whether with
the original administrative agent and lenders or another administrative
agent or agents and one or more other lenders, and whether provided under
the original Bank Credit Agreement or one or more other credit or other
agreements or indentures), but only to the extent that the aggregate
principal amount of the Debt incurred thereunder and the undrawn face
amount of all letters of credit issued thereunder do not exceed
$101,500,000 at any one time outstanding.
"BANK FINANCING AGREEMENTS" shall mean, collectively:
(a) the Bank Credit Agreement; and
(b) each of (i) the term loan agreement dated as of December 29,
1995, between the Company and The Chase Manhattan Bank ("CHASE"),
relating to an outstanding term loan in a principal amount of not more
than $2,799,880, (ii) the mortgage note and mortgage dated as of July
3, 1991, relating to an outstanding mortgage financing provided by
Chase to the Company in a principal amount of not more than
$1,372,777, (iii) the mortgage note and mortgage dated as of October
4, 1993, relating to an outstanding mortgage financing provided by
Chase to the Company in a principal amount of not more than
$1,286,777, (iv) the loan agreement dated as of December 20, 1995,
between Recoton (Far East) Limited and Chase, relating to a credit
facility provided by Chase to Recoton (Far East) Limited and
guaranteed by the Company in a principal amount of not more than
HK$41,000,000 (which, as of the Amendment Effective Date, is not more
than US$5,300,000) and (v) all other payment obligations, now existing
or hereafter incurred, of the Company to Chase in a principal amount
not to exceed $5,000,000, in each case as such agreement, notes and
mortgages may be amended, supplemented or modified from time to time,
and any renewal, extension, refunding, restructuring, replacement or
refinancing thereof (whether with the original administrative agent
and lenders or another administrative agent or agents and one or more
other lenders, and whether provided under the original instruments and
agreements or one or more other credit or other agreements or
indentures), but only to the extent that the aggregate principal
amount of the Debt incurred thereunder and the undrawn face amount of
all letters of credit issued thereunder do not exceed the sum of
US$10,500,000 PLUS HK$41,000,000 at any one time outstanding.
"CAPITAL STOCK" shall mean any and all shares, interests,
participations or other equivalents (however designated) of capital stock
of a corporation, any and all equivalent ownership interests in a Person
(other than a corporation), and any and all warrants or options to purchase
any of the foregoing.
"CASH EQUIVALENTS" shall mean:
(i) direct obligations of the United States of America or any
agency thereof, maturing within one year of the date of acquisition
thereof;
(ii) commercial paper maturing within 270 days from the date of
acquisition and rated A-1 or P-1 (or the equivalent) or better at the
date of acquisition by Standard & Poor's or Xxxxx'x;
(iii) debt obligations of corporations organized under the laws
of the United States of America or any state thereof or obligations of
any state of the United States of America or any municipality thereof,
in each case maturing within one year from the date of acquisition and
rated AA or Aa (or the equivalent) or better at the date of
acquisition by Standard & Poor's or Xxxxx'x;
(iv) certificates of deposit issued by an Acceptable Bank and, in
each case, maturing within one year of the date of acquisition
thereof, PROVIDED that such certificates of deposit issued by banks
deemed to be "Acceptable Banks" pursuant to the proviso of the
definition of "Acceptable Bank" shall not exceed $2,500,000 in any one
such deemed Acceptable Bank, or $5,000,000 in the aggregate for all
such deemed Acceptable Banks, at any one time;
(v) repurchase obligations of a Bank or any Acceptable Bank,
having a term of not more than 30 days with respect to Securities
issued or fully guaranteed or insured by the United States Government;
(vi) Securities with maturities of one year or less from the date
of acquisition issued or fully guaranteed by any state, commonwealth
or territory of the United States of America, by any political
subdivision or taxing authority of such state, commonwealth or
territory or by any foreign government, the securities of which state,
commonwealth, territory, political subdivision, taxing authority or
foreign government (as the case may be) are rated at least A by
Standard & Poor's or A by Xxxxx'x;
(vii) Securities with maturities of one year or less from the
date of acquisition backed by standby letters of credit issued by any
Bank or Acceptable Bank; and
(viii) shares of money market mutual or similar funds which
invest exclusively in assets satisfying the requirements of clauses
(i) through (vii) of this definition.
As used in this definition,
"ACCEPTABLE BANK" means (i)(a) a commercial bank or trust company
organized in the United States of America and having combined capital,
surplus and undivided profits aggregating at least $500,000,000 or (b)
any other commercial bank having capital, surplus and undivided
profits of at least $1,000,000,000 and (ii) the long-term unsecured
debt obligations of which (or the long-term unsecured debt obligations
of the bank holding company owning all of the Capital Stock of such
bank) are rated "A" or higher by Standard & Poor's or "A2" or higher
by Xxxxx'x, PROVIDED that a commercial bank not organized in the
United States of America that satisfies the requirement set forth in
the foregoing clause (i)(b) but whose long-term unsecured debt
obligations (or the long-term unsecured debt obligations of the bank
holding company owning all of the Capital Stock of such bank) are not
rated by Standard & Poor's or Xxxxx'x shall be deemed to be an
"Acceptable Bank" if the Required Holders shall have consented in
writing to Investments in certificates of deposit issued by such bank.
"CONSOLIDATED ADJUSTED CASH FLOW" shall mean, for any period, the
sum of
(i) Consolidated Operating Income, PLUS
(ii) to the extent, and only to the extent, that such amount was
deducted in the computation of Consolidated Net Income for such
period, the aggregate amount of depreciation and amortization of the
Company and the Restricted Subsidiaries, determined on a consolidated
basis for such Persons.
"CONSOLIDATED CAPITAL EXPENDITURES" shall mean, for any period,
all expenditures by the Company and the Restricted Subsidiaries in
respect of the purchase or acquisition of fixed or capital assets
during such period, determined on a consolidated basis for such
Persons.
"CONSOLIDATED CURRENT LIABILITIES" shall mean, at any time, all
Current Liabilities of the Company and the Restricted Subsidiaries,
determined at such time on a consolidated basis for such Persons.
"CONSOLIDATED DEBT" shall mean, at any time, all Debt of the
Company and the Restricted Subsidiaries, determined at such time on a
consolidated basis for such Persons.
"CONSOLIDATED EBITDA" shall mean, for any period,
(i) Consolidated Net Income for such period, PLUS
(ii) without duplication and only to the extent deducted
from revenues in the determination of Consolidated Net Income for
such period, the sum of (a) income tax expense, (b) interest
expense, amortization or writeoffs of debt discount and debt
issuance costs and commissions, discounts and other fees and
charges associated with the issuance of Debt (including the
Notes), (c) depreciation and amortization expense and (d)
amortization of intangibles (including, but not limited to,
goodwill) and organization costs, MINUS
(iii) only to the extent included in the determination of
Consolidated Net Income for such period, the sum of (a) interest
income and (b) income tax credits, all determined on a
consolidated basis.
"CONSOLIDATED FIXED CHARGES" shall mean, for any period, the sum
of
(i) Consolidated Interest Expense for such period, PLUS
(ii) Consolidated Lease Expense for such period, PLUS
(iii) required amortization of Debt for such period and
discount or premium relating to any such Debt for such period,
whether expensed or capitalized.
"CONSOLIDATED LEASE EXPENSE" shall mean, for any period, the
aggregate amount of fixed and contingent rentals payable by the
Company and the Restricted Subsidiaries during such period with
respect to leases of real and personal property (excluding Capitalized
Lease Obligations), determined on a consolidated basis for such
Persons.
"CONSOLIDATED NET WORTH" shall mean, at any time, all amounts
which would be included under shareholders' equity on a consolidated
balance sheet of the Company and the Restricted Subsidiaries
determined on a consolidated basis in accordance with GAAP at such
time.
"CONSOLIDATED SENIOR DEBT" shall mean, at any time, all Senior
Debt of the Company and the Restricted Subsidiaries, determined at
such time on a consolidated basis for such Persons.
"CONSOLIDATED TOTAL CAPITALIZATION" shall mean, at any time, the
sum of (a) Consolidated Net Worth PLUS (b) Consolidated Debt at such
time.
"CURRENT LIABILITIES" shall mean, with respect to any Person at
any date of determination, an amount equal to the sum of (a) all
liabilities of such Person which, in accordance with GAAP, would be
classified on a consolidated balance sheet of such Person as current
liabilities, PLUS (b) without duplication, all Debt of such Person for
borrowed money outstanding under a revolving credit or similar
agreement, notwithstanding that it obligates the lender or lenders to
extend credit over a period of more than one year.
"DOLLARS"; "$"; and "US$" means, in each case, the lawful money
of the United States of America.
"FIXED CHARGE TOTAL DEBT COVERAGE RATIO" shall mean, as of the
end of each fiscal quarter of the Company, for the period of twelve
consecutive calendar months ending on such date, the ratio of
(i) (a) Consolidated EBITDA for such period, MINUS
(b) an amount equal to the excess, if any, of (1)
Consolidated Capital Expenditures during such period over
(2) the amount by which Consolidated Funded Debt (excluding
Funded Debt in respect of Revolving Credit Loans (as defined
in the Bank Credit Agreement), but including the current
maturities of Consolidated Funded Debt) shall have increased
during such period, to
(ii) Consolidated Fixed Charges for such period.
"NET CASH PROCEEDS" means, in connection with any issuance or
sale of Capital Stock (other than the issuance or sale of Capital
Stock pursuant to the exercise of stock options issued to employees or
consultants of the Company or any of the Restricted Subsidiaries) or
debt securities or instruments, the cash proceeds received from such
issuance, net of attorneys' fees, investment banking fees,
accountants' fees, underwriting discounts and commissions and other
customary fees and expenses actually incurred in connection therewith.
"PRC/HK SUBSIDIARIES" shall mean, collectively, Subsidiaries
organized under the laws of the People's Republic of China and
Subsidiaries organized under the laws of Hong Kong.
"PRIORITY DEBT" shall mean the sum of (a) all Debt secured by
Liens other than Liens permitted by clause (i) through clause (v),
inclusive, of paragraph 6I hereof, PLUS (b) with duplication, all Debt
of Restricted Subsidiaries (other than Debt (i) owing to the Company
or to other Restricted Subsidiaries, or (ii) which constitutes
"Guarantied Obligations" (as defined in the Sharing Agreement) subject
to the intercreditor sharing provisions of the Sharing Agreement).
"RATE DECREASE EVENT" shall have the meaning assigned to it in
paragraph 4G of this Agreement.
"SENIOR DEBT" shall mean, with respect to any Person, at any
time, all Debt of such Person other than Subordinated Debt.
"SHARING AGREEMENT" shall mean, the First Amended and Restated
Sharing Agreement, dated as of September 1, 1998, among the banks
listed on the signature pages thereof, the holders of the Notes listed
on the signature pages thereof, the holder of the Adjustable Rate
Senior Notes Due September 1, 2008 of the Company listed on the
signature pages thereof, and The Chase Manhattan Bank, as
Administrative Agent for the Banks under the Bank Credit Agreement.
"SUBORDINATED DEBT" shall mean, with respect to any Person, at
any time, without duplication: (a) all Debt of such Person which is
subordinated to the prior payment in full of the obligations of (i)
the Company under this Agreement and the Notes and (ii) the Restricted
Subsidiaries under the Subsidiary Guaranty, as the case may be, in
each case in a manner acceptable to the Required Holders as evidenced
by their prior written approval, and all other terms and conditions of
which are satisfactory to the Required Holders as evidenced by their
prior written approval; and (b) not more than $35,000,000 in aggregate
principal amount of the Company's Senior Subordinated Notes due 2004
issued in a private sale on the Amendment Effective Date.
4.4 PARAGRAPH 10B. Paragraph 10B of the Existing Note Agreement is
hereby amended to delete therefrom the following defined terms: "ADJUSTED
CONSOLIDATED CURRENT DEBT"; "BANK DEBT PREPAYMENT DATE"; "EXCESS CURRENT DEBT";
"EXCESS CURRENT DEBT MEASURING PERIOD"; and "CONSOLIDATED CURRENT DEBT".
5. AFFIRMATION OF OBLIGATIONS.
Except as expressly amended by this Agreement, (a) no terms or
provisions of any agreement are modified or changed by this Agreement, (b) the
terms and provisions of the Transaction Documents shall continue in full force
and effect and (c) the terms and provisions of the Transaction Documents are
hereby ratified, confirmed and approved in all respects.
6. MISCELLANEOUS.
6.1 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon, and
shall inure to the benefit of, the successors and assigns of the parties hereto
and the holders from time to time of the Notes.
6.2 FEES AND EXPENSES. On the Effective Date, the Company shall pay
all reasonable costs and expenses of the Noteholder relating to this Agreement,
including, but not limited to, the statement for reasonable fees and
disbursements of the Noteholder's special counsel presented to the Company on or
prior to the Effective Date. The Company will also pay, upon receipt of any
statement thereof, each additional statement for reasonable fees and
disbursements of the Noteholder's special counsel rendered after the Effective
Date in connection with this Agreement. The obligations of the Company under
this Section 6.2 shall survive the termination of this Agreement.
6.3 SURVIVAL. All warranties, representations, certifications and
covenants made by the Company in this Agreement or in any certificate or other
instrument delivered by it or on its behalf under this Agreement shall be
considered to have been relied upon by the Noteholder and shall survive the
execution of this Agreement, regardless of any investigation made by or on
behalf of the Noteholder. All such statements made herein or in any such
certificate or other instrument shall constitute warranties and representations
of the Company under this Agreement and the Amended Note Agreement.
6.4 GOVERNING LAW. This Agreement shall be construed, interpreted and
enforced in accordance with, and governed by, the laws of the State of New York,
excluding choice-of-law principles of the law of such State that would require
the application of the laws of a jurisdiction other than such State.
6.5 SECTION HEADINGS, ETC. The titles of the Sections hereof appear as
a matter of convenience only, do not constitute a part hereof and shall not
affect the construction hereof. The words "herein," "hereof," "hereunder" and
"hereto" refer to this Agreement as a whole and not to any particular Section or
other subdivision. References to Sections are, unless otherwise specified,
references to Sections of this Agreement. References to Annexes and Exhibits
are, unless otherwise specified, references to Annexes and Exhibits attached to
this Agreement.
6.6 DUPLICATE ORIGINALS; EXECUTION IN COUNTERPART. Two or more
duplicate originals of this Agreement may be signed by the parties, each of
which shall be an original but all of which together shall constitute one and
the same instrument. This Agreement may be executed in one or more counterparts
and shall be effective when at least one counterpart shall have been executed by
each party to this Agreement, and each set of counterparts which, collectively,
show execution by each such party to this Agreement shall constitute one
duplicate original.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK. NEXT PAGE IS SIGNATURE PAGE]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed on their behalf by a duly authorized officer or agent thereof, as
the case may be, as of the date first above written.
RECOTON CORPORATION
By /s/ Xxxxxx Xxxxxxx
--------------------------------
Name: Xxxxxx Xxxxxxx
Title: Vice President - Finanical
Planning
THE PRUDENTIAL INSURANCE COMPANY
OF AMERICA
By /s/ Xxxxxxx X. Xxxx
--------------------------------
Name: Xxxxxxx X. Xxxx
Title: Vice President
