CONFORMED COPY
NINTH AMENDMENT, dated as of June 26, 2003 (this "Amendment"), to the
Fourth Amended and Restated Credit Agreement, dated as of July 28, 1999 (as
amended pursuant to the First Amendment and Consent thereto, dated as of October
12, 1999, the Second Amendment thereto, dated as of December 20, 1999, the Third
Amendment thereto, dated as of April 14, 2000, the Fourth Amendment and Waiver
thereto, dated as of June 5, 2001, the Fifth Amendment and Waiver thereto, dated
as of March 14, 2002, the Sixth Amendment and Consent thereto, dated as of May
28, 2002, the Seventh Amendment and Waiver thereto, dated as of March 13, 2003,
and the Eighth Amendment and Waiver thereto, dated as of June 10, 2003, and as
the same may further be 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 JPMorgan Chase Bank (formerly known as The Chase Manhattan 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 certain terms in
the Credit Agreement in the manner provided for herein; and
WHEREAS, the Agent and the Lenders are willing to agree to the requested
amendment, 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 (and in the recitals hereto) as defined
terms are so used as so defined.
2. Decrease in Commitments. The Borrower, the Lenders and the Agent hereby
agree that, on the Ninth Amendment Effective Date, the aggregate Commitments of
the Lenders will be reduced to $150,000,000.
3. Amendments of Subsection 1.1 (Definitions). Subsection 1.1 of the Credit
Agreement is hereby amended as follows:
(a) by adding a new sentence at the end of the definition of
"Borrowing Base" to read in its entirety as follows:
"Notwithstanding the foregoing, (a) in no event shall Eligible
Inventory be included in calculating the Borrowing Base from February
28 of any year through August 31 of such year and (b) the Borrowing
Base shall be reduced by the amount of any outstanding Indebtedness
guaranteed pursuant to subsection 10.4(g)."
Exhibit 99.1
(b) by amending and restating the following defined terms in their entirety
to read as follows:
"Consolidated Pre-Tax Income": for any period, the amount which would
appear opposite the caption "Income (loss) before provision for
(recovery of) income taxes, minority interest, extraordinary item and
cumulative effect of a change in accounting for negative goodwill", on
a consolidated statements of operations of the Borrower and its
Subsidiaries in accordance with GAAP, adjusted (a) to reflect (either
by adding or subtracting) "minority interest" as determined in
accordance with GAAP and set forth on such consolidated statements of
operations and (b) to reflect (by subtracting) extraordinary charges
or expenses of the Borrower and its Subsidiaries as determined on a
consolidated basis in accordance with GAAP. If Consolidated Pre-Tax
Income is less than zero for any period, it is referred to herein as a
"Consolidated Pre-Tax Loss". For purposes of this Agreement,
Consolidated Pre-Tax Income shall not include (i) the effects of any
conversion of any Subordinated Debentures into common stock of the
Borrower or any gains or losses from the sale of Capital Stock of
CellStar or any other extraordinary gains and (ii) any Consolidated
Pre-Tax Income or Consolidated Pre-Tax Loss attributable to the
operations of RG Holdings and its Subsidiaries (including their share
of allocated corporate expenses).
"Foreign Currency Sublimit": $10,000,000.
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(c) by adding thereto the following definitions in their appropriate
alphabetical order:
"AG Holdings": Audiovox German Holdings GmbH, a subsidiary of the
Borrower formed in connection with the effectuation of the Recoton
Acquisition.
"Ninth Amendment": the Ninth Amendment, dated as of June 26, 2003, to
this Agreement.
"Ninth Amendment Effective Date": June 26, 2003.
"Recoton": Recoton Corporation, a New York corporation.
"Recoton Acquisition": the acquisition transaction contemplated by the
Recoton Purchase Agreement.
"Recoton Purchase Agreement": the Stock and Asset Purchase Agreement,
dated as of May 23, 2003, among Recoton Audio Corporation, Recoton
Home Audio, Inc., Recoton Mobile Electronics, Inc., Recoton
International Holdings, Inc., Recoton Corporation, Recoton Canada LTD.
and Jax Assets Corp.
"RG Holdings": Recoton German Holdings GmbH, the subsidiary of Recoton
acquired by the Borrower pursuant to the Recoton Purchase Agreement.
4. Amendment to Subsection 10.2 (Limitation on Indebtedness). Subsection
10.2 of the Credit Agreement is hereby amended by deleting the "and" at the end
of paragraph (h), deleting the
period at the end of paragraph (i) and replacing it with ";" and inserting two
new paragraphs (j) and (k) thereafter as follows:
"(j) (x) Indebtedness of AG Holdings and/or RG Holdings incurred to
finance the purchase of RG Holdings pursuant to the Recoton Purchase
Agreement, provided that the aggregate initial principal amount of
such Indebtedness shall not exceed 15,000,000 Euro Dollars and (y)
Non-recourse Indebtedness of the Borrower or any of its Subsidiaries
arising out of any Lien on the stock of AG Holdings and/or RG Holdings
permitted under subsection 10.3(k); and
(k) existing Indebtedness of RG Holdings assumed in an aggregate
principal amount not exceeding 5,000,000 Euro Dollars in connection
with the Recoton Acquisition."
5. Amendment to Subsection 10.3 (Limitation on Liens). Subsection 10.3 of
the Credit Agreement is hereby amended by deleting the "and" at the end of
paragraph (i), deleting the period at the end of paragraph (j) and replacing it
with "; and" and inserting a new paragraph (k) thereafter as follows:
"(k) Liens on the stock and the assets of AG Holdings and/or RG
Holdings securing Indebtedness of AG Holdings and/or RG Holdings permitted
by subsection 10.2(j)(x)."
6. Amendment to Subsection 10.4 (Limitation on Guarantee Obligations).
Subsection 10.4 of the Credit Agreement is hereby amended by deleting the "and"
at the end of clause (e), deleting the period at the end of clause (f) and
replacing it with "; and" and inserting a new clause (g) thereafter as follows:
"(g) Guarantee Obligations of the Borrower in respect of the
Indebtedness of AG Holdings and/or RG Holdings permitted under subsection
10.2(j) in an aggregate amount not to exceed 3,000,000 Euro Dollars."
7. Amendment to Subsection 10.5 (Limitation on Fundamental Changes).
Subsection 10.5 of the Credit Agreement is hereby amended by deleting the "and"
at the end of clause (b) and replacing it with ",", deleting the period at the
end of clause (c) and replacing it with "and", and inserting a new clause (d)
thereafter as follows:
"(d) AG Holdings may merge with RG Holdings in connection with the
consummation of the Recoton Acquisition."
8. Amendment to Subsection 10.6 (Limitation on Sale of Assets). Subsection
10.6 of the Credit Agreement is hereby amended by deleting the "and" at the end
of paragraph (i), deleting the period at the end of paragraph (j) and replacing
it with ";" and inserting a new paragraph (k) thereafter as follows:
"(k) the sale of accounts receivable by RG Holdings or its
Subsidiaries pursuant to factoring arrangements in the ordinary course
of business."
9. Amendments to Subsection 10.9 (Limitation on Investments, Loans and
Advances). Subsection 10.9 of the Credit Agreement is hereby amended as follows:
(a) by deleting the "and" at the end of paragraph (e), deleting the period
at the end of paragraph (f) and replacing it with ";" and inserting a new
paragraph (g) thereafter as follows:
"(g) the Recoton Acquisition, provided that (i) the aggregate cash
consideration for the Recoton Acquisition shall not exceed $40,000,000
(excluding (x) assumed Indebtedness permitted under subsection 10.2(k) and (y)
fees and expenses related to the Recoton Acquisition and payments in respect of
any working capital adjustments provided under the Recoton Purchase Agreement,
so long as the aggregate of all such amounts described in this clause (y) does
not exceed $4,000,000) and (ii) the Borrower and each Subsidiary shall comply
with the requirements of subsection 9.7 in respect thereof; and"
(b) by inserting a new paragraph (h) at the end of paragraph (g) as
follows:
"(h) Investments by the Borrower in AG Holdings and/or RG Holdings (in
addition to Investments contemplated by subsection 10.4(g)), provided
that (i) such Investments shall consist of equity, subordinated debt
and/or senior loans (which shall not be contractually subordinated to
any other debt and which may be secured or unsecured) only, (ii) the
aggregate amount of such Investments consisting of equity and
subordinated debt shall not exceed 6,000,000 Euro Dollars outstanding
at any time, and (iii) the aggregate amount of such Investments
consisting of senior loans shall not exceed $7,000,000, provided
further that with respect to any Investment made pursuant to this
paragraph, the Borrower and each Subsidiary shall comply with the
requirements of subsection 9.7 in respect thereof."
(c) by deleting the semicolon at the end of paragraph (c) and inserting a
new sentence thereafter as follows:
"and provided that no Acquisitions may be made pursuant to this
paragraph on or after the Ninth Amendment Effective Date;"
(d) by deleting the period at the end of paragraph (f) and replacing it
with "," and inserting a new sentence thereafter as follows:
"provided that no Investments may be made pursuant to this paragraph
on or after the Ninth Amendment Effective Date."
10. Amendment to Section 10. Section 10 is hereby amended by adding the
following new subsection 10.21 in its entirety:
"10.21 Amendments to Recoton Purchase Agreement. Amend, modify or
waive any provision of the Recoton Purchase Agreement without prior
written consent of the Administrative Agent."
11. 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 7 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.
12. Conditions to Effectiveness. This Amendment shall become effective as
of the date first written above (x) upon receipt by the Agent of (i)
counterparts to this Amendment duly executed by
the Borrower and the Required Lenders, (ii) an amendment fee in the amount of
$250,000, for the account of Lenders which have executed and delivered to the
Agent this Amendment prior to 4:00 p.m. on June 26, 2003 (and will be paid to
such Lenders pro rata according to their respective Commitments), (iii) an
Acknowledgement and Consent in the form of Exhibit A hereto duly executed by
each of the Guarantors, (iv) the Administrative Agent shall be satisfied that
the Borrower shall have complied with the requirements of subsection 9.7 in
respect of any new subsidiary formed in connection with the Recoton Acquisition
and (v) an executed copy of the Recoton Purchase Agreement, which shall contain
terms and conditions which are satisfactory to the Administrative Agent and (y)
so long as on the date the conditions in clause (x) above have been satisfied,
no Default or Event of Default shall have occurred and be continuing (after
giving effect to this Amendment).
13. Continuing Effect; No Other Waivers. Except as expressly provided
herein, all of the terms and provisions of the Credit Agreement are and shall
remain in full force and effect. The waiver provided for herein is limited to
the specific subsections of the Credit Agreement specified herein and shall not
constitute a consent, waiver or amendment of, or an indication of the Agent's or
the Lenders' willingness to consent to any action requiring consent under or 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).
14. 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.
15. 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.
16. 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
JPMORGAN CHASE BANK,
as Agent and as a Lender
By: s/ Xxxx Xxxxxxxxx
Name: Xxxx Xxxxxxxxx
Title: Vice President
FLEET NATIONAL BANK, as a Lender
By: s/ Xxxxxx X. Xxxxxxxxxx
Name: Xxxxxx X. Xxxxxxxxxx
Title: Senior Vice President
THE CIT GROUP/BUSINESS CREDIT, INC.,
as a Lender
By: s/ Xxxxx X. Xxxxxx
Name: Xxxxx X. Xxxxxx
Title: Vice President
CITIBANK, N.A., as a Lender
By: s/ Xxxxxxx Xxxxx
Name: Xxxxxxx Xxxxx
Title: Vice President
MELLON BANK, N.A., as a Lender
By: s/ Xxxxx X. XxXxxxx
Name: Xxxxx X. XxXxxxx
Title: Assistant Vice President
GE COMMERCIAL DISTRIBUTION FINANCE
CORPORATION,
as a Lender
By: s/ Xxxxx X. Xxxxx
Name: Xxxxx X. Xxxxx
Title: Vice President - Operations
ISRAEL DISCOUNT BANK OF NEW YORK,
as a Lender
By: s/ Xxxxxx Xxxxxxxx
Name: Xxxxxx Xxxxxxxx
Title: First Vice President
By: s/ Xxxxx Xxxxxxxx
Name: Xxxxx Xxxxxxxx
Title: First Vice President
PNC BUSINESS CREDIT INC., as a Lender
By: _____________________________________
Name:
Title:
WASHINGTON MUTUAL BANK, FA, as a Lender
By: s/ Xxxx Umhaver
Name: Xxxx Umhaver
Title: Vice President
BANK LEUMI USA, as a Lender
By: s/ Xxxx Xxxx Xxxxx X. Xxxxxxxx
Name: Xxxx Xxxx Xxxxx X. Xxxxxxxx
Title: Vice Pres. B.O.
U.S. BANK, N.A., as a
Lender
By: s/ Xxxx X. Xxxxxxx
Name: Xxxx X. Xxxxxxx
Title: Vice President
EXHIBIT A
ACKNOWLEDGMENT 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, supplemented or otherwise modified from time to time, the "Guarantee"),
made by each of such corporations in favor of the Collateral Agent, (ii) as a
grantor under that certain Amended and Restated Security Agreement, dated as of
March 15, 1994 (as amended, supplemented or otherwise modified from time to
time, the "Security Agreement"), made by each of such corporations in favor of
the Collateral Agent, and (iii) in the case of Audiovox Holding Corp., as the
pledgor under that certain Pledge Agreement, dated as of February 9, 1996 (as
amended, supplemented or otherwise modified from time to time, the "Pledge
Agreement"), made by Audiovox Holding Corp. in favor of JPMorgan Chase Bank
(formerly known as The Chase Manhattan Bank), as pledge agent for the secured
parties thereunder, hereby consents to the execution and delivery of the Ninth
Amendment to which this Acknowledgment and Consent is attached and hereby
confirms and agrees that the Guarantee, the Security Agreement and the Pledge
Agreement are, and shall continue to be, in full force and effect and are hereby
ratified and confirmed in all respects and the Guarantee, the Security
Agreement, the Pledge Agreement and all of the Subsidiaries Collateral (as
defined in the Security Agreement) and Collateral (as defined in the Pledge
Agreement) do, and shall continue to, secure the payment of all of the
Obligations (as defined in the Guarantee and the Security Agreement, as the case
may be) pursuant to the terms of the Guarantee or the Security Agreement, as the
case may be, or, in the case of the Pledge Agreement, secure the payment of the
Secured Obligations (as defined in the Pledge Agreement) pursuant to the terms
of the Pledge Agreement. Capitalized terms not otherwise defined herein shall
have the meanings assigned to them in the Credit Agreement referred to in the
Ninth Amendment to which this Acknowledgment and Consent is attached.
QUINTEX MOBILE COMMUNICATIONS CORP.
By: s/ Xxxxxxx X. Xxxxxx
Name: Xxxxxxx X. Xxxxxx
Title: Vice President
AMERICAN RADIO CORP.
By: s/ Xxxxxxx X. Xxxxxx
Name: Xxxxxxx X. Xxxxxx
Title: Vice President
AUDIOVOX INTERNATIONAL CORP.
By: s/ Xxxxxxx X. Xxxxxx
Name: Xxxxxxx X. Xxxxxx
Title: Vice President
AUDIOVOX CANADA LIMITED
By: s/ Xxxxxxx X. Xxxxxx
Name: Xxxxxxx X. Xxxxxx
Title: Vice President
AUDIOVOX HOLDING CORP.
By: s/ Xxxxx Xxxxxx
Name: Xxxxx Xxxxxx
Title: Vice 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
AUDIOVOX COMMUNICATIONS CORP.
By: s/ Xxxxxxx X. Xxxxxx
Name: Xxxxxxx X. Xxxxxx
Title: Secretary
AUDIOVOX ELECTRONICS CORP.
By: s/ Xxxxxxx X. Xxxxxx
Name: Xxxxxxx X. Xxxxxx
Title: Secretary
CODE SYSTEMS, INC.
By: s/ Xxxxxxx X. Xxxxxx
Name: Xxxxxxx X. Xxxxxx
Title: Chief Financial Officer
Dated as of June 26, 2003
