SECOND AMENDMENT, dated as of February 9, 1996 (this
"Amendment"), to the Second Amended and Restated Credit
Agreement, dated as of May 5, 1995 (as amended pursuant to the
First Amendment thereto, dated as of December 22, 1995 and this
Amendment and as the same may be further amended, supplemented or
otherwise modified from time to time, the "Credit Agreement"),
among AUDIOVOX CORPORATION, a Delaware corporation (the
"Borrower"), the several banks and other financial institutions
from time to time parties thereto (collectively, the "Lenders";
individually, a "Lender") and CHEMICAL BANK, a New York banking
corporation, as administrative and collateral agent for the
Lenders (in such capacity, the "Agent").
W I T N E S S E T H :
WHEREAS, the Borrower, the Lenders and the Agent are
parties to the Credit Agreement;
WHEREAS, the Borrower has requested that the Lenders
amend the Credit Agreement in the manner provided for herein; and
WHEREAS, the Agent and the Lenders are willing to agree
to the requested amendment but only on the terms and conditions
provided for herein;
NOW, THEREFORE, in consideration of the premises
contained herein, the parties hereto agree as follows:
1. Defined Terms. Unless otherwise defined herein,
terms which are defined in the Credit Agreement and used herein
as defined terms are so used as so defined.
2. Amendment of Subsection 1.1. Subsection 1.1 of the
Credit Agreement is hereby amended as follows:
(a) by deleting in its entirety the definition of
"Applicable Margin" contained therein and substituting in
lieu thereof the following new definition in the proper
alphabetical order:
"Applicable Margin": for each Type of Loan, the
rate per annum set forth under the relevant column
heading below:
Chemical Rate Loans Eurodollar Loans
0.50% 2.75%
provided that, the Applicable Margin shall be adjusted
on each Adjustment Date to occur after February 9, 1996
(each such adjustment being effective until the next
Adjustment Date) to 0.25% for Chemical Rate Loans and
2.00% for Eurodollar Loans with respect to which
Consolidated Net Income for the period of four
consecutive fiscal quarters ended on the last day of
the fiscal period covered by the financial statements
relating to such Adjustment Date is greater than
$5,000,000 as determined from such financial
statements, provided, further, that (a) if Consolidated
Net Income for the period of four consecutive fiscal
quarters ended on the last day of the fiscal period
covered by the financial statements relating to any
Adjustment Date is less than or equal to $5,000,000 as
determined from such financial statements, the
Applicable Margin shall be 0.50% for Chemical Rate
Loans and 2.75% for Eurodollar Loans until subsequently
adjusted in accordance with the immediately preceding
proviso, (b) if on any Adjustment Date an Event of
Default shall have occurred and be continuing, no
adjustment of the Applicable Margin shall be made on
such Adjustment Date which decreases the Applicable
Margin then in effect and any such decrease shall not
be effective unless and until such Event of Default is
cured or waived on or prior to the next succeeding
Adjustment Date and (c) in the event that the financial
statements required to be delivered pursuant to
subsection 8.1(a) or 8.1(b), as applicable, and the
related compliance certificate required pursuant to
subsection 8.2(b), are not delivered when due, then if
such financial statements are delivered after the date
such financial statements were required to be delivered
and the Applicable Margin increases from that
previously in effect as a result of the delivery of
such financial statements, then the Applicable Margin
during the period from the date upon which such
financial statements were required to be delivered
until two Business Days following the date upon which
they actually are delivered shall be the Applicable
Margin as so increased.
(b) by deleting the reference to the amount
"$25,000,000" appearing in the definition of "Borrowing
Base" and substituting in lieu thereof a reference to the
amount "$15,000,000".
(c) by deleting in its entirety the definition of
"Consolidated Net Income" contained therein and substituting
in lieu thereof the following new definition in the proper
alphabetical order:
"Consolidated Net Income": for any period, the
consolidated net income of the Borrower and its
Subsidiaries for such period (taken as a cumulative
whole), determined in conformity with GAAP (but
excluding gains or losses from sale of securities of
any Person (other than a Subsidiary), including,
without limitation, the sale of the Capital Stock of
CellStar). If Consolidated Net Income is less than
zero for any period, it is referred to herein as a
"Consolidated Net Loss".
(d) by adding the following new definitions in the
proper alphabetical order:
"Audiovox Holding Corp. Pledge Agreement": the
Pledge Agreement, dated as of February 9, 1996, made by
Audiovox Holding Corp. in favor of Chemical Bank, as
Pledge Agent, as the same may be amended, supplemented
or otherwise modified from time to time.
"Adjustment Date": the second Business Day
following receipt by the Agent of both (i) the
financial statements required to be delivered pursuant
to subsection 8.1(a) or 8.1(b), as the case may be, for
the most recently completed fiscal period and (ii) the
compliance certificate required to be delivered
pursuant to subsection 8.2(b) with respect to such
fiscal period.
"Consolidated Adjusted Net Worth": at a
particular date, Consolidated Net Worth at such date
minus, to the extent included in the determination of
such Consolidated Net Worth, all unrealized gain as of
such date on the shares of Capital Stock of CellStar
owned by the Borrower and its Subsidiaries.
"Consolidated Pre-Tax Income": for any period,
Consolidated Net Income for such period plus, to the
extent deducted in determining Consolidated Net Income
for such period, Federal, state and local income taxes.
If Consolidated Pre-Tax Income is less than zero for
any period, it is referred to herein as a "Consolidated
Pre-Tax Loss".
3. Amendment of Subsection 9.1. Subsection 9.1 of the
Credit Agreement is hereby amended by deleting paragraph (a)
thereof in its entirety and substituting in lieu thereof the
following new paragraph:
"(a) Maintenance of Pre-Tax Income. Permit (i)
Consolidated Pre-Tax Income for (A) the period of two
consecutive fiscal quarters ending May 31, 1996 to be less
than $1,500,000, (B) the period of two consecutive fiscal
quarters ending November 30, 1996, to be less than
$2,500,000 or (C) any fiscal year to be less than
$4,000,000, (ii) a Consolidated Pre-Tax Loss to occur in any
two consecutive fiscal quarters or (iii) a Consolidated Pre-Tax
Loss in excess of $500,000 to occur in any fiscal
quarter."
4. Amendment of Subsection 9.1. Subsection 9.1 of the
Credit Agreement is hereby amended by deleting paragraph (b)
thereof in its entirety and substituting in lieu thereof the
following new paragraph:
"(b) Maintenance of Net Worth. Permit (i)
Consolidated Net Worth to be less than $100,000,000 at any
time or (ii) Consolidated Adjusted Net Worth to be less than
$80,000,000 at any time."
5. Amendment of Subsection 9.3. Subsection 9.3 of the
Credit Agreement is hereby amended by deleting paragraph (h)
thereof in its entirety and substituting in lieu thereof the
following new paragraph:
"(h) Liens securing the Borrower's obligations in
respect of the Chemical Standby Letters of Credit granted
pursuant to the Reimbursement and Cash Collateral Agreement,
provided that, concurrently with the release of the Liens on
the Collateral (as defined in the Reimbursement and Cash
Collateral Agreement) granted pursuant to the Reimbursement
and Cash Collateral Agreement, the Borrower and its
Subsidiaries may grant substitute Liens on up to 1,075,000
shares of Capital Stock of CellStar to secure such
obligations pursuant to the Audiovox Holding Corp. Pledge
Agreement;".
6. Representations and Warranties. On and as of the
date hereof, the Borrower hereby confirms, reaffirms and restates
the representations and warranties set forth in Section 6 of the
Credit Agreement mutatis mutandis, except to the extent that such
representations and warranties expressly relate to a specific
earlier date in which case the Borrower hereby confirms,
reaffirms and restates such representations and warranties as of
such earlier date.
7. Effectiveness. This Amendment shall become
effective as of the date first written above upon satisfaction of
the following conditions precedent:
(a) receipt by the Agent of counterparts of this
Amendment duly executed by the Borrower, the Required
Lenders and the Agent;
(b) receipt by the Agent from the Borrower of an
amendment fee of $25,000 to be shared ratably by the
Lenders;
(c) receipt by the Agent of evidence satisfactory to
it that the Consolidated Net Loss for the fiscal year ended
November 30, 1995 does not exceed $9,400,000; and
(d) receipt by the Agent of a Pledge Agreement
substantially in the form attached hereto as Exhibit A duly
executed by Audiovox Holding Corp.
8. Continuing Effect; No Other Amendments. Except as
expressly waived hereby, all of the terms and provisions of the
Credit Agreement are and shall remain in full force and effect.
The amendments provided for herein is limited to the specific
subsection of the Credit Agreement specified herein and shall not
constitute an amendment of, or an indication of the Agent's or
the Lenders' willingness to waive or amend, any other provisions
of the Credit Agreement or the same subsections for any other
date or time period (whether or not such other provisions or
compliance with such subsections for another date or time period
are affected by the circumstances addressed in this Amendment).
9. Expenses. The Borrower agrees to pay and
reimburse the Agent for all its reasonable costs and out-of-pocket expenses
incurred in connection with the preparation and
delivery of this Amendment, including, without limitation, the
reasonable fees and disbursements of counsel to the Agent.
10. Counterparts. This Amendment may be executed in
any number of counterparts by the parties hereto (including by
facsimile transmission), each of which counterparts when so
executed shall be an original, but all the counterparts shall
together constitute one and the same instrument.
11. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED
BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF NEW YORK.
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be executed and delivered by their respective duly
authorized officers as of the date first above written.
AUDIOVOX CORPORATION
By:s/Xxxxxxx X. Xxxxxx
Name: Xxxxxxx X. Xxxxxx
Title: Senior Vice President
CHEMICAL BANK, as Agent and as a
Lender
By:s/Xxxxxx Xxxxxxxx
Name: Xxxxxx Xxxxxxxx
Title: Vice President
NATIONAL WESTMINSTER BANK USA, as a
Lender
By:s/Xxxxxxx X. Xxxxx
Name: Xxxxxxx X. Xxxxx
Title: Vice President
THE CHASE MANHATTAN BANK, N.A., as
a Lender
By:s/Xxxxxx X. Teije
Name: Xxxxxx X. Teije
Title: Vice President
THE FIRST NATIONAL BANK OF BOSTON,
as a Lender
By:s/Xxxxx Xxxx
Name: Xxxxx Xxxx
Title: Director
EUROPEAN AMERICAN BANK,
as a Lender
By:s/Xxxxxx X. Xxxxxx
Name: Xxxxxx X. Xxxxxx
Title: Vice President
ACKNOWLEDGEMENT AND CONSENT
Each of the undersigned corporations (i) as a guarantor
under that certain Amended and Restated Subsidiaries Guarantee,
dated as of March 15, 1994 (as amended and supplemented, the
"Guarantee"), made by each of such corporations in favor of the
Collateral Agent and (ii) as a grantor under that certain Amended
and Restated Security Agreement, dated as of March 15, 1994 (as
amended and supplemented, the "Security Agreement"), made by each
of such corporations in favor of the Collateral Agent, confirms
and agrees that the Guarantee and the Security Agreement are, and
shall continue to be, in full force and effect and are hereby
ratified and confirmed in all respects and the Guarantee and the
Security Agreement and all of the Subsidiaries Collateral (as
defined in the Security Agreement) do, and shall continue to,
secure the payment of all of the Obligations (as defined in the
Guarantee) and the Secured Obligations (as defined in the
Security Agreement), as the case may be, pursuant to the terms of
the Guarantee or the Security Agreement, as the case may be.
Capitalized terms not otherwise defined herein shall have the
meanings assigned to them in the Credit Agreement referred to in
the Amendment to which this Consent is attached.
QUINTEX COMMUNICATIONS CORP.
By: s/Xxxxxxx X. Xxxxxx
Name: Xxxxxxx X. Xxxxxx
Title: Vice President
QUINTEX MOBILE COMMUNICATIONS CORP.
By: s/Xxxxxxx X. Xxxxxx
Name: Xxxxxxx X. Xxxxxx
Title: Vice President
H & H EASTERN DISTRIBUTORS, INC.
By: s/Xxxxxxx X. Xxxxxx
Name: Xxxxxxx X. Xxxxxx
Title: Secretary
HERMES TELECOMMUNICATIONS INC.
By: s/Xxxxxx Xxxxxxxxxxx
Name: Xxxxxx Xxxxxxxxxxx
Title: Vice President
LENEX CORPORATION
By: s/Xxxxx Xxx Xxxxxxx
Name: Xxxxx Xxx Xxxxxxx
Title: Secretary
AMERICAN RADIO CORP.
By: s/Xxxxxxx X. Xxxxxx
Name: Xxxxxxx X. Xxxxxx
Title: Secretary
AUDIOVOX INTERNATIONAL CORP.
By: s/Xxxxxxx X. Xxxxxx
Name: Xxxxxxx X. Xxxxxx
Title: Vice President
AUDIOVOX HOLDING CORP.
By: s/Xxxxx Xxxxxxxxx
Name: Xxxxx Xxxxxxxxx
Title: President
AUDIOVOX CANADA LIMITED
By: s/Xxxxxxx X. Xxxxxx
Name: Xxxxxxx X. Xxxxxx
Title: Vice President
CELL HOLDING CORPORATION
By: s/Xxxxxxx X. Xxxxxx
Name: Xxxxxxx X. Xxxxxx
Title: President
AUDIOVOX ASIA INC.
By: s/Xxxxxxx X. Xxxxxx
Name: Xxxxxxx X. Xxxxxx
Title: President
AUDIOVOX LATIN AMERICA LTD.
By:s/Xxxxxxx X. Xxxxxx
Name: Xxxxxxx X. Xxxxxx
Title: President
Dated as of February 9, 1996
EXHIBIT A TO
SECOND AMENDMENT
PLEDGE AGREEMENT, dated as of February 9, 1996, made by
AUDIOVOX HOLDING CORP., a New York corporation (the "Pledgor"),
in favor of CHEMICAL BANK, a New York banking corporation, as
pledge agent (in such capacity, the "Pledge Agent") for the
Secured Parties (as hereinafter defined).
W I T N E S S E T H:
WHEREAS, Audiovox Corporation, a Delaware corporation
(the "Borrower"), owns all of the issued and outstanding Capital
Stock of the Pledgor;
WHEREAS, the Borrower is a party to the Reimbursement
and Cash Collateral Agreement, dated as of March 15, 1994 (the
"Reimbursement Agreement"), between the Borrower and Chemical
Bank, a New York banking corporation, as issuing bank (in such
capacity, the "Letter of Credit Bank"), pursuant to which the
Borrower has, among other things, granted a security interest in
the Collateral (as defined in the Reimbursement Agreement) to
secure the Borrower's obligations in respect of the Letters of
Credit (as defined in the Reimbursement Agreement);
WHEREAS, the Borrower has requested that the Letter of
Credit Bank release its security interest in the Collateral (as
defined in the Reimbursement Agreement) in exchange for the grant
by the Pledgor of a security interest in the Pledged Stock (as
hereinafter defined) pursuant to this Agreement;
WHEREAS, the Borrower is also a party to the Second
Amended and Restated Credit Agreement, dated as of May 5, 1995
(as amended, supplemented or otherwise modified from time to
time, the "Credit Agreement"), among the Borrower, the several
banks and other financial institutions from time to time parties
thereto (collectively, the "Lenders"; individually, a "Lender")
and Chemical Bank, a New York banking corporation, as
administrative and collateral agent for the Lenders (in such
capacity, the "Agent");
WHEREAS, the Borrower has requested the Lenders to
amend the Credit Agreement in the manner provided in the Second
Amendment to the Credit Agreement, dated as of the date hereof
(the "Second Amendment");
WHEREAS, it is a condition precedent to the
effectiveness of the Second Amendment that the Pledgor shall have
executed and delivered this Pledge Agreement in order to continue
to secure the payment and performance of the Pledgor's
obligations under that certain Guarantee Assumption Agreement,
dated as of November 29, 1995 (as amended, supplemented or
otherwise modified from time to time, the "Guarantee"), entered
into by the Pledgor with respect to the Subsidiaries Guarantee
(as defined in the Credit Agreement);
NOW, THEREFORE, in consideration of the premises and to
induce the Letter of Credit Bank to release the Collateral (as
defined in the Reimbursement Agreement) and to induce the Agent
and the Lenders to enter into the Second Amendment and to induce
the Lenders to make their respective extensions of credit to the
Borrower under the Credit Agreement, the Pledgor hereby agrees
with the Pledge Agent, for the benefit of the Secured Parties, as
follows:
1. Defined Terms. (a) Unless otherwise defined
herein, terms defined in the Credit Agreement (and in the
recitals hereto) and used herein shall have the meanings given to
them in the Credit Agreement.
(b) The following terms shall have the following
meanings:
"Agreement": this Pledge Agreement, as the same may be
amended, modified or otherwise supplemented from time to
time.
"Code": the Uniform Commercial Code from time to time
in effect in the State of New York.
"Collateral": the Pledged Stock and all Proceeds
thereof.
"Collateral Account": any account established to hold
money Proceeds, maintained under the sole dominion and
control of the Pledge Agent, subject to withdrawal by the
Pledge Agent for the account of the Secured Parties only as
provided in Section 9(a).
"Credit Agreement Obligations": as defined in the
Guarantee, provided that the amount of Credit Agreement
Obligations and Secured Reimbursement Agreement Obligations
secured hereunder shall in no event exceed the maximum
amount which can be guaranteed by the Pledgor under
applicable federal and state laws relating to the insolvency
of debtors.
"Issuer": CellStar.
"Pledged Stock": the shares of Capital Stock listed on
Schedule 1 hereto, together with all stock certificates,
options or rights of any nature whatsoever that may be
issued or granted by the Issuer to the Pledgor in respect of
the Pledged Stock while this Agreement is in effect.
"Proceeds": all "proceeds" as such term is defined in
Section 9-306(1) of the Code in effect on the date hereof of
the Pledged Stock and, in any event, shall include, without
limitation, all dividends or other income from the Pledged
Stock, collections thereon or distributions with respect
thereto.
"Secured Credit Agreement Obligations": collectively,
(a) the Credit Agreement Obligations and (b) all obligations
and liabilities of the Pledgor which may arise under or in
connection with this Agreement or any other Loan Document to
which the Pledgor is a party, whether on account of
reimbursement obligations, fees, indemnities, costs,
expenses or otherwise (including, without limitation, all
fees and disbursements of counsel to the Agent, the
Collateral Agent or to the Lenders that are required to be
paid by the Pledgor pursuant to the terms of this Agreement
or any other Loan Document to which the Pledgor is a party).
"Secured Obligations": collectively, the Secured
Reimbursement Agreement Obligations and the Secured Credit
Agreement Obligations.
"Secured Reimbursement Agreement Obligations": the
"Obligations" under and as defined in the Reimbursement
Agreement, provided that the amount of Secured Reimbursement
Agreement Obligations and Credit Agreement Obligations
secured hereunder shall in no event exceed the maximum
amount which can be guaranteed by the Pledgor under
applicable federal and state laws relating to the insolvency
of debtors.
"Secured Parties": the Letter of Credit Bank, the
Agent, the Lenders and the Pledge Agent.
"Securities Act": the Securities Act of 1933, as
amended.
(c) The words "hereof," "herein" and "hereunder" and
words of similar import when used in this Agreement shall refer
to this Agreement as a whole and not to any particular provision
of this Agreement, and section and paragraph references are to
this Agreement unless otherwise specified.
(d) The meanings given to terms defined herein shall
be equally applicable to both the singular and plural forms of
such terms.
2. Pledge; Grant of Security Interest. The Pledgor
hereby delivers to the Pledge Agent, for the benefit of the
Secured Parties, all the Pledged Stock and hereby grants to
Pledge Agent, for the benefit of the Secured Parties, a first
security interest in the Collateral, as collateral security for
the prompt and complete payment and performance when due (whether
at the stated maturity, by acceleration or otherwise) of the
Secured Obligations.
3. Stock Powers. Concurrently with the delivery to
the Pledge Agent of each certificate representing one or more
shares of Pledged Stock, the Pledgor shall deliver an undated
stock power covering such certificate, duly executed in blank by
the Pledgor with, if the Pledge Agent so requests, signature
guaranteed.
4. Effectiveness; Release. (a) This Agreement shall
become effective upon satisfaction of the following conditions
precedent:
(i) the release of the Collateral (as defined in the
Reimbursement Agreement) by the Letter of Credit Bank; and
(ii) the satisfaction of the conditions set forth in
the Sections 7(a), 7(b) and 7(c) of the Second Amendment.
(b) The Liens and security interests granted pursuant
to this Agreement shall be released upon satisfaction of the
following conditions:
(i) (A) all the Letters of Credit (as defined in the
Reimbursement and Cash Collateral Agreement) shall have been
canceled or expired and (B) all Secured Reimbursement
Agreement Obligations shall have been paid in full;
(ii) the Agent shall have received an audit of the
accounts receivable and inventory of the Borrower and its
Subsidiaries, which audit shall be satisfactory to the
Agent; and
(iii) no Default or Event of Default shall have
occurred and be continuing under the Credit Agreement.
5. Representations and Warranties. The Pledgor
represents and warrants that:
(a) The Pledgor has the corporate power and authority
and the legal right to execute and deliver, to perform its
obligations under, and to grant the security interest in the
Collateral pursuant to, this Agreement and has taken all
necessary corporate action to authorize its execution,
delivery and performance of, and grant of the security
interest in the Collateral pursuant to, this Agreement.
(b) This Agreement constitutes a legal, valid and
binding obligation of the Pledgor, enforceable in accordance
with its terms, and upon delivery to the Pledge Agent of the
stock certificates evidencing the Pledged Stock, the
security interest created pursuant to this Agreement will
constitute a valid, perfected first priority security
interest in the Collateral, enforceable in accordance with
its terms against all creditors of the Pledgor and any
Persons purporting to purchase any Collateral from the
Pledgor, except in each case as enforceability may be
affected by bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws relating
to or affecting creditors' rights generally, general
equitable principles (whether considered in a proceeding in
equity or at law) and an implied covenant of good faith and
fair dealing.
(c) The execution, delivery and performance of this
Agreement will not violate any provision of any Requirement
of Law or Contractual Obligation of the Pledgor and will not
result in the creation or imposition of any Lien on any of
the properties or revenues of the Pledgor pursuant to any
Requirement of Law or Contractual Obligation of the Pledgor,
except the security interest created by this Agreement.
(d) Except for such consents as have been obtained and
are in full force and effect, no consent or authorization
of, filing with, or other act by or in respect of, any
arbitrator or Governmental Authority and no consent of any
other Person (including, without limitation, any stockholder
or creditor of the Pledgor), is required in connection with
the execution, delivery, performance, validity or
enforceability of this Agreement.
(e) No litigation, investigation or proceeding of or
before any arbitrator or Governmental Authority is pending
or, to the knowledge of the Pledgor, threatened by or
against the Pledgor or against any of its properties or
revenues with respect to this Agreement or any of the
transactions contemplated hereby.
(f) All the shares of the Pledged Stock have been duly
and validly issued and are fully paid and nonassessable.
(g) The Pledgor is the record and beneficial owner of,
and has good and marketable title to, the Pledged Stock,
free of any and all Liens or options in favor of, or claims
of, any other Person, except the security interests created
by this Agreement.
6. Covenants. The Pledgor covenants and agrees with
the Pledge Agent and the Secured Parties that, from and after the
date of this Agreement until this Agreement is terminated and the
security interests created hereby are released:
(a) If the Pledgor shall, as a result of its ownership
of the Pledged Stock, become entitled to receive or shall
receive any stock certificate (including, without
limitation, any certificate representing a stock dividend or
a distribution in connection with any reclassification,
increase or reduction of capital or any certificate issued
in connection with any reorganization), option or rights,
whether in addition to, in substitution of, as a conversion
of, or in exchange for any shares of the Pledged Stock, or
otherwise in respect thereof, the Pledgor shall accept the
same as the agent of the Pledge Agent and the Secured
Parties, hold the same in trust for the Pledge Agent and the
Secured Parties and deliver the same forthwith to the Pledge
Agent in the exact form received, duly indorsed by the
Pledgor to the Pledge Agent, if required, together with an
undated stock power covering such certificate duly executed
in blank by the Pledgor and with, if the Pledge Agent so
requests, signature guaranteed, to be held by the Pledge
Agent, subject to the terms hereof, as additional collateral
security for the Secured Obligations. Any sums paid upon or
in respect of the Pledged Stock upon the liquidation or
dissolution of the Issuer shall be paid over to the Pledge
Agent to be held by it hereunder as additional collateral
security for the Secured Obligations, and in case any
distribution of capital shall be made on or in respect of
the Pledged Stock or any property shall be distributed upon
or with respect to the Pledged Stock pursuant to the
recapitalization or reclassification of the capital of the
Issuer or pursuant to the reorganization thereof, the
property so distributed shall be delivered to the Pledge
Agent to be held by it hereunder as additional collateral
security for the Secured Obligations. If any sums of money
or property so paid or distributed in respect of the Pledged
Stock shall be received by the Pledgor, the Pledgor shall,
until such money or property is paid or delivered to the
Pledge Agent, hold such money or property in trust for the
Secured Parties, segregated from other funds of the Pledgor,
as additional collateral security for the Secured
Obligations.
(b) Without the prior written consent of the Pledge
Agent, the Pledgor will not (i) sell, assign, transfer,
exchange, or otherwise dispose of, or grant any option with
respect to, the Collateral, (ii) create, incur or permit to
exist any Lien or option in favor of, or any claim of any
Person with respect to, any of the Collateral, or any
interest therein, except for the security interests created
by this Agreement or (iii) enter into any agreement or
undertaking restricting the right or ability of the Pledgor
or the Pledge Agent to sell, assign or transfer any of the
Collateral.
(c) The Pledgor shall maintain the security interest
created by this Agreement as a first, perfected security
interest and shall defend such security interest against
claims and demands of all Persons whomsoever. At any time
and from time to time, upon the written request of the
Pledge Agent, and at the sole expense of the Pledgor, the
Pledgor will promptly and duly execute and deliver such
further instruments and documents and take such further
actions as the Pledge Agent may reasonably request for the
purposes of obtaining or preserving the full benefits of
this Agreement and of the rights and powers herein granted.
If any amount payable under or in connection with any of the
Collateral shall be or become evidenced by any promissory
note, other instrument or chattel paper, such note,
instrument or chattel paper shall be immediately delivered
to the Pledge Agent, duly endorsed in a manner satisfactory
to the Pledge Agent, to be held as Collateral pursuant to
this Agreement.
(d) The Pledgor shall pay, and save the Pledge Agent
and the Secured Parties harmless from, any and all
liabilities with respect to, or resulting from any delay in
paying, any and all stamp, excise, sales or other taxes
which may be payable or determined to be payable with
respect to any of the Collateral or in connection with any
of the transactions contemplated by this Agreement.
7. Cash Dividends; Voting Rights. Unless an "Event of
Default" shall have occurred and be continuing under the
Reimbursement Agreement (other than under Section 4.1(b) thereof)
or the Credit Agreement and the Pledge Agent shall have given
notice to the Pledgor of the Pledge Agent's intent to exercise
its corresponding rights pursuant to Section 8 below, the Pledgor
shall be permitted to receive all cash dividends paid in the
normal course of business of the Issuer and consistent with past
practice in respect of the Pledged Stock and to exercise all
voting and corporate rights with respect to the Pledged Stock;
provided, however, that no vote shall be cast or corporate right
exercised or other action taken which, in the Pledge Agent's
reasonable judgment, would impair the Collateral or which would
be inconsistent with or result in any violation of any provision
of the Reimbursement Agreement or the Credit Agreement, any
Notes, this Agreement or any other Loan Document.
8. Rights of the Secured Parties and the Pledge Agent.
(a) All money Proceeds received by the Pledge Agent hereunder
shall be held by the Pledge Agent for the benefit of the Secured
Parties in a Collateral Account. All Proceeds while held by the
Pledge Agent in a Collateral Account (or by the Pledgor in trust
for the Pledge Agent and the Secured parties) shall continue to
be held as collateral security for all the Secured Obligations
and shall not constitute payment thereof until applied by the
Pledge Agent to the payment thereof pursuant to Section 9(a) with
any such applications to be made in the following order of
priority: first, to the payment in full of all losses,
liabilities, damages, expenses or other costs of the Pledge Agent
related to or arising out of this Agreement; second, to the
payment in full of the Secured Reimbursement Agreement
Obligations, and third, after payment in full of all Secured
Reimbursement Agreement Obligations, to the payment in full of
the Secured Credit Agreement Obligations. Without limiting the
foregoing, if any of the Secured Obligations are not due and
payable at the time of any such application (including in respect
of the undrawn face amount of any letters of credit), the Pledge
Agent shall hold any amount otherwise distributable in respect
thereof in the Collateral Account to secure such Secured
Obligations until all such Secured Obligations shall have been
paid in full.
(b) If an "Event of Default" shall occur and be
continuing under the Reimbursement Agreement (other than under
Section 4.1(b) thereof) or the Credit Agreement and the Pledge
Agent shall give notice of its intent to exercise such rights to
the Pledgor, (i) the Pledge Agent shall have the right to receive
any and all cash dividends paid in respect of the Pledged Stock
and make application thereof to the Secured Obligations in
accordance with Section 8(a) and (ii) all shares of the Pledged
Stock shall be registered in the name of the Pledge Agent or its
nominee, and the Pledge Agent or its nominee may thereafter
exercise, (A) all voting, corporate and other rights pertaining
to such shares of the Pledged Stock at any meeting of
shareholders of the Issuer or otherwise and (B) any and all
rights of conversion, exchange, subscription and any other
rights, privileges or options pertaining to such shares of the
Pledged Stock as if it were the absolute owner thereof
(including, without limitation, the right to exchange at its
discretion any and all of the Pledged Stock upon the merger,
consolidation, reorganization, recapitalization or other
fundamental change in the corporate structure of the Issuer, or
upon the exercise by the Pledgor or the Pledge Agent of any
right, privilege or option pertaining to such shares of the
Pledged Stock, and in connection therewith, the right to deposit
and deliver any and all of the Pledged Stock with any committee,
depositary, transfer agent, registrar or other designated agency
upon such terms and conditions as the Pledge Agent may
determine), all without liability except to account for property
actually received by it, but the Pledge Agent shall have no duty
to the Pledgor to exercise any such right, privilege or option
and shall not be responsible for any failure to do so or delay in
so doing.
9. Remedies. (a) If an "Event of Default" shall have
occurred and be continuing under the Reimbursement Agreement
(other than under Section 4.1(b) thereof) or the Credit
Agreement, at any time at the Pledge Agent's election, the Pledge
Agent may apply all or any part of Proceeds held in any
Collateral Account in payment of the Secured Obligations in
accordance with Section 8(a).
(b) If an "Event of Default" shall occur and be
continuing under the Reimbursement Agreement (other than under
Section 4.1(b) thereof) or the Credit Agreement, the Pledge
Agent, on behalf of the Secured Parties, may exercise, in
addition to all other rights and remedies granted in this
Agreement and in any other instrument or agreement securing,
evidencing or relating to the Secured Obligations, all rights and
remedies of a secured party under the Code. Without limiting the
generality of the foregoing, the Pledge Agent, without demand of
performance or other demand, presentment, protest, advertisement
or notice of any kind (except any notice required by law referred
to below) to or upon the Pledgor or any other Person (all and
each of which demands, defenses, advertisements and notices are
hereby waived), may in such circumstances forthwith collect,
receive, appropriate and realize upon the Collateral, or any part
thereof, and/or may forthwith sell, assign, give option or
options to purchase or otherwise dispose of and deliver the
Collateral or any part thereof (or contract to do any of the
foregoing), in one or more parcels at public or private sale or
sales, in the over-the-counter market, at any exchange, broker's
board or office of the Pledge Agent or any Secured Party or
elsewhere upon such terms and conditions as it may deem advisable
and at such prices as it may deem best, for cash or on credit or
for future delivery without assumption of any credit risk. The
Pledge Agent or any Secured Party shall have the right upon any
such public sale or sales, and, to the extent permitted by law,
upon any such private sale or sales, to purchase the whole or any
part of the Collateral so sold, free of any right or equity of
redemption in the Pledgor, which right or equity is hereby waived
or released. The Pledge Agent shall apply any Proceeds from time
to time held by it and the net proceeds of any such collection,
recovery, receipt, appropriation, realization or sale, after
deducting all reasonable costs and expenses of every kind
incurred in respect thereof or incidental to the care or
safekeeping of any of the Collateral or in any way relating to
the Collateral or the rights of the Pledge Agent and the Secured
Parties hereunder, including, without limitation, reasonable
attorneys' fees and disbursements of counsel to the Pledge Agent,
to the payment in whole or in part of the Secured Obligations, in
accordance with Section 8(a), and only after such application and
after the payment by the Pledge Agent of any other amount
required by any provision of law, including, without limitation,
Section 9-504(1)(c) of the Code, need the Pledge Agent account
for the surplus, if any, to the Pledgor. To the extent permitted
by applicable law, the Pledgor waives all claims, damages and
demands it may acquire against the Pledge Agent or any Secured
Party arising out of the exercise by them of any rights
hereunder. If any notice of a proposed sale or other disposition
of Collateral shall be required by law, such notice shall be
deemed reasonable and proper if given at least 10 days before
such sale or other disposition.
(c) The Pledgor waives and agrees not to assert any
rights or privileges which it may acquire under Section 9-112 of
the Code. The Pledgor shall remain liable for any deficiency if
the proceeds of any sale or other disposition of Collateral are
insufficient to pay the Secured Obligations and the fees and
disbursements of any attorneys employed by the Pledge Agent or
any other Secured Party to collect such deficiency.
10. Registration Rights; Private Sales. (a) If the
Pledge Agent shall determine to exercise its right to sell any or
all of the Pledged Stock pursuant to Section 9(b) hereof, and if
in the opinion of the Pledge Agent it is necessary or advisable
to have the Pledged Stock, or that portion thereof to be sold,
registered under the provisions of the Securities Act, the
Pledgor will use its best efforts to cause the Issuer to (i)
execute and deliver, and cause the directors and officers of the
Issuer to execute and deliver, all such instruments and
documents, and do or cause to be done all such other acts as may
be, in the opinion of the Pledge Agent, necessary or advisable to
register the Pledged Stock, or that portion thereof to be sold,
under the provisions of the Securities Act, (ii) to use its best
efforts to cause the registration statement relating thereto to
become effective and to remain effective for a period of one year
from the date of the first public offering of the Pledged Stock,
or that portion thereof to be sold, and (iii) to make all
amendments thereto and/or to the related prospectus which, in the
opinion of the Pledge Agent, are necessary or advisable, all in
conformity with the requirements of the Securities Act and the
rules and regulations of the Securities and Exchange Commission
applicable thereto. The Pledgor agrees to use its best efforts
to cause the Issuer to comply with the provisions of the
securities or "Blue Sky" laws of any and all jurisdictions which
the Pledge Agent shall designate and to make available to its
security holders, as soon as practicable, an earnings statement
(which need not be audited) which will satisfy the provisions of
Section 11(a) of the Securities Act.
(b) The Pledgor recognizes that the Pledge Agent may
be unable to effect a public sale of any or all the Pledged
Stock, by reason of certain prohibitions contained in the
Securities Act and applicable state securities laws or otherwise,
and may be compelled to resort to one or more private sales
thereof to a restricted group of purchasers which will be obliged
to agree, among other things, to acquire such securities for
their own account for investment and not with a view to the
distribution or resale thereof. The Pledgor acknowledges and
agrees that any such private sale may result in prices and other
terms less favorable than if such sale were a public sale and,
notwithstanding such circumstances, agrees that any such private
sale shall be deemed to have been made in a commercially
reasonable manner. The Pledge Agent shall be under no obligation
to delay a sale of any of the Pledged Stock for the period of
time necessary to permit the Issuer thereof to register such
securities for public sale under the Securities Act, or under
applicable state securities laws, even if the Issuer would agree
to do so.
(c) The Pledgor further agrees to use its best efforts
to do or cause to be done all such other acts as may be necessary
to make such sale or sales of all or any portion of the Pledged
Stock pursuant to this Section valid and binding and in
compliance with any and all other applicable Requirements of Law.
The Pledgor further agrees that a breach of any of the covenants
contained in this Section will cause irreparable injury to the
Pledge Agent and the other Secured Parties, that the Pledge Agent
and the other Secured Parties have no adequate remedy at law in
respect of such breach and, as a consequence, that each and every
covenant contained in this Section shall be specifically
enforceable against the Pledgor, and the Pledgor hereby waives
and agrees not to assert any defenses against an action for
specific performance of such covenants except for a defense that
no "Event of Default" has occurred under the Reimbursement
Agreement or the Credit Agreement.
11. Irrevocable Authorization and Instruction to
Issuer. The Pledgor hereby authorizes and instructs the Issuer
to comply with any instruction received by it from the Pledge
Agent in writing that (a) states that an "Event of Default" has
occurred under the Reimbursement Agreement or the Credit
Agreement and (b) is otherwise in accordance with the terms of
this Agreement, without any other or further instructions from
the Pledgor, and the Pledgor agrees that the Issuer shall be
fully protected in so complying.
12. Pledge Agent's Appointment as Attorney-in-Fact.
(a) The Pledgor hereby irrevocably constitutes and appoints the
Pledge Agent and any officer or agent of the Pledge Agent, with
full power of substitution, as its true and lawful attorney-in-fact
with full irrevocable power and authority in the place and
stead of the Pledgor and in the name of the Pledgor or in the
Pledge Agent's own name, from time to time in the Pledge Agent's
discretion, for the purpose of carrying out the terms of this
Agreement, to take any and all appropriate action and to execute
any and all documents and instruments which may be necessary or
desirable to accomplish the purposes of this Agreement,
including, without limitation, any financing statements,
endorsements, assignments or other instruments of transfer.
(b) The Pledgor hereby ratifies all that said
attorneys shall lawfully do or cause to be done pursuant to the
power of attorney granted in Section 12(a). All powers,
authorizations and agencies contained in this Agreement are
coupled with an interest and are irrevocable until this Agreement
is terminated and the security interests created hereby are
released.
13. Duty of Pledge Agent. The Pledge Agent's sole
duty with respect to the custody, safekeeping and physical
preservation of the Collateral in its possession, under Section
9-207 of the Code or otherwise, shall be to deal with it in the
same manner as the Pledge Agent deals with similar securities and
property for its own account, except that the Pledge Agent shall
have no obligation to invest funds held in any Collateral Account
and may hold the same as demand deposits. Neither the Pledge
Agent, any other Secured Party nor any of their respective
directors, officers, employees or agents shall be liable for
failure to demand, collect or realize upon any of the Collateral
or for any delay in doing so or shall be under any obligation to
sell or otherwise dispose of any Collateral upon the request of
the Pledgor or any other Person or to take any other action
whatsoever with regard to the Collateral or any part thereof.
14. Execution of Financing Statements. Pursuant to
Section 9-402 of the Code, the Pledgor authorizes the Pledge
Agent to file financing statements with respect to the Collateral
without the signature of the Pledgor in such form and in such
filing offices as the Pledge Agent reasonably determines
appropriate to perfect the security interests of the Pledge Agent
under this Agreement. A carbon, photographic or other
reproduction of this Agreement shall be sufficient as a financing
statement for filing in any jurisdiction.
15. Authority of Pledge Agent. The Pledgor
acknowledges that the rights and responsibilities of the Pledge
Agent under this Agreement with respect to any action taken by
the Pledge Agent or the exercise or non-exercise by the Pledge
Agent of any option, voting right, request, judgment or other
right or remedy provided for herein or resulting or arising out
of this Agreement shall, as between the Pledge Agent and the
Secured Parties, be governed by such agreements with respect
thereto as may exist from time to time among them, but, as
between the Pledge Agent and the Pledgor, the Pledge Agent shall
be conclusively presumed to be acting as agent for the Secured
Parties with full and valid authority so to act or refrain from
acting, and neither the Pledgor nor the Issuer shall be under any
obligation, or entitlement, to make any inquiry respecting such
authority.
16. Notices. Notices may be given by hand, by
telecopy, or by nationally recognized overnight courier service,
addressed or transmitted to the Person to which it is being given
at such Person's address or transmission number set forth in the
Reimbursement Agreement, the Credit Agreement or the Guarantee
and shall be effective (a) when delivered by hand, (b) in the
case of a nationally recognized overnight courier service, one
Business Day after delivery to such courier service, and (c) in
the case of telecopy notice when received. The Pledgor may
change its address and transmission number by written notice to
the Pledge Agent, and the Pledge Agent or any Secured Party may
change its address and transmission number by written notice to
the Pledgor and, in the case of a Secured Party, to the Pledge
Agent.
17. Severability. Any provision of this Agreement
which is prohibited or unenforceable in any jurisdiction shall,
as to such jurisdiction, be ineffective to the extent of such
prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
18. Amendments in Writing; No Waiver; Cumulative
Remedies. (a) None of the terms or provisions of this Agreement
may be waived, amended, supplemented or otherwise modified except
by a written instrument executed by the Pledgor and the Pledge
Agent.
(b) Neither the Pledge Agent nor any Secured Party
shall by any act (except by a written instrument pursuant to
Section 18(a) hereof), delay, indulgence, omission or otherwise
be deemed to have waived any right or remedy hereunder or to have
acquiesced in any Default or Event of Default or in any breach of
any of the terms and conditions hereof. No failure to exercise,
nor any delay in exercising, on the part of the Pledge Agent or
any other Secured Party, any right, power or privilege hereunder
shall operate as a waiver thereof. No single or partial exercise
of any right, power or privilege hereunder shall preclude any
other or further exercise thereof or the exercise of any other
right, power or privilege. A waiver by the Pledge Agent or any
Secured Party of any right or remedy hereunder on any one
occasion shall not be construed as a bar to any right or remedy
which the Pledge Agent or such Secured Party would otherwise have
on any future occasion.
(c) The rights and remedies herein provided are
cumulative, may be exercised singly or concurrently and are not
exclusive of any other rights or remedies provided by law.
19. Section Headings. The section headings used in
this Agreement are for convenience of reference only and are not
to affect the construction hereof or be taken into consideration
in the interpretation hereof.
20. Successors and Assigns. This Agreement shall be
binding upon the successors and assigns of the Pledgor and shall
inure to the benefit of the Pledge Agent and the Secured Parties
and their successors and assigns.
21. Governing Law. This Agreement shall be governed
by, and construed and interpreted in accordance with, the law of
the State of New York.
IN WITNESS WHEREOF, the undersigned has caused this
Agreement to be duly executed and delivered as of the date first
above written.
AUDIOVOX HOLDING CORP.
By:s/Xxxxx Xxxxxxxxx
Title President
SCHEDULE 1
TO PLEDGE AGREEMENT
DESCRIPTION OF PLEDGED STOCK
Stock
Class of Certificate No. of
Issuer Stock* No. Shares
CellStar
Corporation 1,075,000
-------------------------------
*Stock is assumed to be common stock unless otherwise
indicated.
