Document:

EXHIBIT 10.3

Exhibit 10.3

 SECURITY AGREEMENT

           THIS SECURITY
AGREEMENT ("Agreement") is dated as of October 31, 2000 between RECOTON
CANADA LTD., an Ontario corporation ("Debtor"), and HELLER FINANCIAL,
INC., a Delaware corporation, in its capacity as Senior Agent, on behalf of
Agents (as herein defined), Senior Lenders (as herein defined), Subordinated
Agent (as herein defined) and Subordinated Creditors (as herein defined).

W I  T  N E
 S S E T H:

          WHEREAS, Recoton
Corporation, a New York corporation (“Recoton”), Interact
Accessories, Inc., a Delaware corporation (“InterAct”), Recoton
Audio Corporation, a Delaware corporation (“Audio”), AAMP of
Florida, Inc., a Florida corporation (“AAMP”), and Recoton Home
Audio, Inc., a California corporation (“RHAI”), (Recoton,
InterAct, Audio, AAMP, and RHAI are sometimes referred individually as
“Borrower” and collectively, as “Borrowers”),
Guarantors, Agents and Senior Lenders are parties to a Loan Agreement dated as
of October 31, 2000 (as the same may be amended, supplemented, restated or
otherwise modified from time to time, the “Loan Agreement”),
pursuant to which Senior Lenders have agreed to make loans and other financial
accommodations available to Borrowers; 

          WHEREAS,
Borrowers, The Chase Manhattan Bank as administrative agent (the
“Subordinated Agent”) and Subordinated Creditors are
concurrently herewith entering into that certain Credit Agreement (the
“Subordinated Credit Agreement”) of even date herewith pursuant
to which Subordinated Creditors shall extend financial accommodations to
Borrowers; 

          WHEREAS, Senior
Agent, on behalf of Agents, Senior Lenders, Subordinated Agent and Subordinated
Creditors and Loan Parties are parties to a Subordination and Intercreditor
Agreement dated as of October 31, 2000 (as the same may be amended,
supplemented, restated or otherwise modified from time to time, the
“Subordination Agreement”) pursuant to which Subordinated
Agent, Subordinated Creditors, and Senior Agent, on behalf of Agents and Senior
Lenders and Borrowers have agreed on the relative rights and priorities of
Agents, Senior Lenders, Subordinated Lenders and Subordinated Creditors under
the Senior Debt Documents and the Subordinated Debt Documents (each as defined
in the Subordination Agreement); 

          WHEREAS, as an
inducement to Subordinated Creditors to enter into the Subordinated Credit
Agreement and the Subordination Agreement Debtor shall have granted the security
interests contemplated by this Agreement in order to secure the payment and
performance of Debtor’s indebtedness and obligations under the Subordinated
Debt Documents; 

          WHEREAS, Debtor
has executed and delivered to Senior Agent, on behalf of Agents, Senior Lenders,
Subordinated Agent and Subordinated Creditors, the Guarantee, pursuant to which
Debtor has agreed to guarantee for the benefit of Senior Agent, on behalf of
Agents, Senior Lenders, Subordinated Agent and Subordinated Creditors, the
repayment and performance of all of the obligations of Borrowers under the
Senior Debt Documents and Subordinated Debt Documents; and 

          WHEREAS, in
order to secure the payment and performance of Debtor’s obligations under
the Guarantee, Debtor has agreed to grant to Senior Agent, on behalf of Agents,
Senior Lenders, Subordinated Agent and Subordinated Creditors, the security
interests contemplated by this Agreement; 

         NOW, THEREFORE,
in consideration of the premises and in order to induce (i) Senior Lenders to
make the loans and other financial accommodations available to Borrowers under
the Loan Agreement, (ii) Subordinated Creditors to make the loans and other
financial accommodations available to Borrowers under the Subordinated Credit
Agreement, and (iii) Subordinated Creditors to enter into the Subordination
Agreement, Debtor hereby agrees with Senior Agent, on behalf of Agents, Senior
Lenders, Subordinated Agent and Subordinated Creditors, as follows: 

Section 1.    Definitions

            1.1
   Certain Defined Terms. The capitalized terms and the
accounting terms used in this Agreement shall have the meanings set forth in
Defined Terms of this Agreement. Capitalized terms not otherwise defined herein
shall have the respective meanings provided for in the Subordination Agreement.

          1.2    
Other Definition Provisions. References to “Sections”,
“subsections”, “Exhibits” and “Schedules” shall be
to Sections, subsections, Exhibits and Schedules, respectively, of or to this
Agreement unless otherwise specifically provided. Any of the terms defined in
Defined Terms may, unless the context otherwise requires, be used in the
singular or the plural depending on the reference. All references to statutes
and related regulations shall include (unless otherwise specifically provided
herein) any amendments of same and any successor statutes and regulations. 

Section 2.    Grant of Security
Interests

          To secure the
payment and performance of the Secured Obligations, including all renewals,
extensions, restructurings and refinancings of any or all of the Secured
Obligations, Debtor hereby grants, conveys, assigns and pledges to Senior Agent,
on behalf of Agents, Senior Lenders, Subordinated Agent and Subordinated
Creditors, a continuing security interest, lien and mortgage in and to all
right, title and interest of Debtor’s personal property, whether tangible
or intangible, and whether now owned or existing or hereafter acquired or
arising and regardless of where located including, without limitation, (A)
Accounts, and all guarantees and security therefor, and all goods and rights
represented thereby or arising therefrom including the rights of stoppage in
transit, replevin and reclamation; (B) Inventory; (C) General Intangibles; (D)
Documents or other receipts covering, evidencing or representing goods; (E)
Instruments; (F) chattel paper (as defined in the PPSA and the UCC); (G)
Equipment; (H) owned and leased real property; (I) Investment Property
including, without limitation, all securities (certificated and uncertificated),
security accounts, security entitlements, commodity contracts and commodity
accounts; (J) Intellectual Property, except that, with respect to Trade-marks,
any such grant, conveyance, assignment and pledge shall be by way of security
only (and except to the extent such grant would violate the terms of or
constitute a default under any applicable licenses with non-Affiliates with
respect to such Intellectual Property); (K) all deposit accounts of Debtor
maintained with any bank or financial institution; (L) all cash and other monies
and property of Debtor in the possession or under the control of Senior Agent,
Collateral Agent, any Senior Lender or any participant, Subordinated Agent or
any Subordinated Creditor; (M) all books, records, ledger cards, files,
correspondence, computer programs, tapes, disks and related data processing
software that at any time evidence or contain information relating to any of the
property described above or are otherwise necessary or helpful in the collection
thereof or realization thereon; and (N) Proceeds and products of all or any of
the property described above, including, without limitation, the Proceeds of any
insurance policies covering any of the above described property (all being
collectively referred to as the “Collateral”). 

          Notwithstanding
the foregoing, Collateral shall not include (a) the last day of the term of any
lease (but upon the enforcement of Senior Agent’s rights hereunder, Senior
Agent shall stand possessed of such last day in trust to assign the same to any
person acquiring such term) or (b) any Consumer Goods (as such term is defined
in the PPSA). 

          In addition,
notwithstanding anything herein to the contrary, but without limiting the grant
of a security interest pursuant to clause (I) above, in no event shall the
Collateral include, and Debtor shall not be deemed to have granted, a security
interest in any of Debtor’s rights or interests in any contract (other than
with respect to all Accounts that may be or become payable or owing under or in
respect of such contract) to which Debtor is a party (other than any such
contract between or among Debtor and/or its Affiliates only) to the extent, but
only to the extent, that such a grant would, under the terms of such contract,
result in a breach of the terms of, or constitute a default under such contract
(other than to the extent that any such term would be rendered ineffective
pursuant to Section 9-318(4) of the UCC or any similar provision of the PPSA or
any other applicable law (including the Bankruptcy Code and any other Bankruptcy
Laws) or principles of equity); provided, that immediately upon the
ineffectiveness, lapse or termination of any such term, the Collateral shall
include, and Debtor shall be deemed to have granted a security interest in, all
such rights and interests as if such term had never been in effect. 

          
Furthermore, Debtor shall use its best efforts not to enter into agreements
which by their terms prohibit assignments or sub-licenses. Insofar as the terms
of any agreement prohibits the assignment or sublicense of Debtor's rights under
such contract, Debtor shall use its best efforts to obtain a consent to such
assignment or sublicense from the other parties to such contract and if Debtor
fails to obtain such consent, then Debtor shall hold all of its rights in or
under such contract in trust for Senior Agent, on behalf of Agents, Senior
Lenders, Subordinated and Subordinated Creditors.

Section 3.   
 Security for Obligations

          This Agreement
secures the payment and performance of the Debtor’s indebtedness and
obligations under the Guarantee and all indebtedness, liabilities and
obligations of Debtor now existing or hereafter created or arising under this
Agreement, all Subordinated Debt and all renewals, extensions, restructurings
and refinancings of any of the above including, without limitation, any
additional indebtedness which may be extended to Debtor pursuant to any
restructuring or refinancing of Debtor’s indebtedness under the Loan
Agreement, and including any post-petition interest accruing during any
bankruptcy, reorganization or other similar proceeding, regardless of whether
such amounts can be collected during the pendency of such proceedings (all such
indebtedness, liabilities and obligations of Debtor being collectively referred
to herein as the “Secured Obligations”). 

Section 4.    Debtor Remains
Liable

          Anything herein
to the contrary notwithstanding: (a) Debtor shall remain liable under the
contracts and agreements included in the Collateral to the extent set forth
therein to perform all of its duties and obligations thereunder to the same
extent as if this Agreement had not been executed; (b) the exercise by Senior
Agent of any of the rights hereunder shall not release Debtor from any of its
duties or obligations under the contracts and agreements included in the
Collateral; and (c) none of Senior Agent, any Agent, any Senior Lender,
Subordinated Agent or any Subordinated Creditor shall have any obligation or
liability under the contracts and agreements included in the Collateral by
reason of this Agreement, nor shall Senior Agent, any Agent, any Senior Lender,
Subordinated Agent or any Subordinated Creditor be obligated to perform any of
the obligations or duties of Debtor thereunder or to take any action to collect
or enforce any claim for payment assigned hereunder. 

Section 5.    Representations and
Warranties

          In order to
induce Senior Agent to enter into this Agreement, Debtor represents and warrants
to Senior Agent, to each Senior Lender and to Subordinated Agent and each
Subordinated Creditor as follows: 

          5.1   
Authorization; No Conflict. Debtor has the power and authority to incur
the Secured Obligations and to grant security interests in the Collateral. On
the Closing Date, the execution, delivery and performance of the Loan Documents
and the Subordinated Debt Documents by Debtor will have been duly authorized by
all necessary corporate and shareholder or equivalent action. The execution,
delivery and performance by Debtor of each Loan Document Subordinated Debt
Document to which it is a party and the consummation of the transactions
contemplated by the Loan Documents and the Subordinated Debt Documents by Debtor
(i) do not contravene any applicable law, the corporate charter or bylaws (or
equivalent governing and organizational documents) of Debtor or any material
agreement or any order by which Debtor or Debtor’s property is bound, (ii)
do not conflict with or result in the breach or termination of, constitute a
default under or accelerate or permit the acceleration of any performance
required by, any indenture, mortgage, deed of trust, lease, agreement or other
instrument to which Debtor is a party or by which Debtor or any of its property
is bound; (iii) do not result in the creation or imposition of any Lien upon any
of the property of Debtor other than those in favour of Senior Agent, on behalf
of Agents, Senior Lenders, Subordinated Agent and Subordinated Creditors,
pursuant to the Loan Documents; and (iv) do not require the consent or approval
of any Governmental Authority or any other Person, except those which will have
been duly obtained, made or complied with prior to the Closing Date. The Loan
Documents and the Subordinated Debt Documents are the legally valid and binding
obligations of Debtor each enforceable against Debtor in accordance with their
respective terms. Debtor represents and warrants to Senior Agent that the
execution, delivery and performance of this Agreement by Debtor will not violate
or cause a default under any of the Intellectual Property or any agreement in
connection therewith. 

          5.2   
Binding Obligation. This Agreement is the legally valid and binding
obligation of Debtor, enforceable against it in accordance with its terms,
except as enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium, or similar laws or equitable principles relating to or limiting
creditor’s rights generally. 

          5.3   
Account Warranties and Covenants. Except as otherwise disclosed to Senior
Agent in writing, as to each Account that, at the time of its creation, the
Account is a valid, bona fide account, representing an undisputed indebtedness
incurred by the named account debtor for goods actually sold and delivered or
for services completely rendered and such Account is not evidenced by a
judgment, Instrument or chattel paper; there are no setoffs, offsets or
counterclaims, genuine or otherwise, against the Account other than any credit
balances in the ordinary course of business; the Account does not represent a
sale to an Affiliate (other than for sales in the ordinary course of business to
employees or directors in accordance with Section 7.8 of the Loan Agreement) or
a consignment, sale or return or a bill and hold transaction; no agreement
exists permitting any deduction or discount (other than the discount stated on
the invoice) and deductions for allowances in accordance with market expansion
agreements in the ordinary course of business; Debtor lawfully owns the Account
and has the right to assign the same to Senior Agent, for the benefit of Agents,
Senior Lenders, Subordinated Agent and Subordinated Creditors; the Account is
free of all security interests, liens and encumbrances other than those in
favour of Senior Agent, on behalf of Agents, Senior Lenders, Subordinated Agent
and Subordinated Creditors, and the Account is due and payable in accordance
with its terms and the amount of all Accounts set forth on any Collateral report
or invoice delivered to Senior Agent are actually owing to Debtor and not
contingent. No discounts, credits or allowances will be issued, granted or
allowed by Debtor to customers and no returns will be accepted without Senior
Agent’s prior written consent; provided, that until Senior Agent notifies
Debtor to the contrary, Debtor may presume consent. No payment shall be made on
any Account except payment immediately delivered to the applicable Blocked
Account or to Senior Agent. Debtor will promptly notify Senior Agent in the
event that a customer alleges any dispute or claim with respect to an Account or
of any other circumstances known to Debtor that may impair the validity or
collectibility of an Account (it is understood and agreed that notification by
delivery of the Borrowing Base Certificate (as defined in the Loan Agreement)
shall be considered delivery of “prompt” notice). Senior Agent shall
have the right, at any time or times hereafter, to verify the validity, amount
or any other matter relating to an Account, by mail, telephone or in person.
After the occurrence of a Default or an Event of Default, Debtor shall not,
without the prior consent of Senior Agent, adjust, settle or compromise the
amount or payment of any Account, or release wholly or partly any customer or
obligor thereof, or allow any credit or discount thereon. Debtor shall, at its
own expense: (a) cause all invoices evidencing Accounts and all copies thereof
to bear a notice that such invoices are payable to the lockboxes established in
accordance with Section Collection of Accounts and Payments. Debtor shall
establish lockboxes and blocked accounts (collectively, “Blocked
Accounts”) in Debtor’s name with such banks (“Collecting
Banks”) as are reasonably acceptable to Senior Agent (subject to
irrevocable instructions acceptable to Senior Agent as hereinafter set forth) to
which all account debtors shall directly remit all payments on Accounts and in
which Debtor will immediately deposit all payments it otherwise directly
receives for Inventory or other payments constituting proceeds of Collateral in
the identical form in which such payment was made, whether by cash or cheque.
The Collecting Banks shall acknowledge and agree, pursuant to an agreement
substantially in the form of Exhibit A and with such changes which shall be
satisfactory to the Agents, that all payments made to the Blocked Accounts are
the sole and exclusive property of Senior Agent, on behalf of Agents, Senior
Lenders, Subordinated Agent and Subordinated Creditors, and that the Collecting
Banks have no right to setoff against the Blocked Accounts and that all such
payments received will be promptly transferred to the Senior Agent’s
Account. Debtor hereby agrees that all payments made to such Blocked Accounts or
otherwise received by Senior Agent and whether on the Accounts or as proceeds of
other Collateral or otherwise will be the sole and exclusive property of Senior
Agent, on behalf of Agents, Senior Lenders, Subordinated Agent and Subordinated
Creditors. Debtor shall irrevocably instruct each Collecting Bank to promptly
transfer all payments or deposits to the Blocked Accounts into the Senior
Agent’s Account. If Debtor, Loan Parties or any of their Affiliates,
employees, agents or other Person acting for or in concert with Debtor, shall
receive any monies, cheques, notes, drafts or any other payments relating to
and/or proceeds of Accounts or other Collateral, Debtor or such Person shall
hold such instrument or funds in trust for Senior Agent, on behalf of Agents,
Senior Lenders, Subordinated Agent and Subordinated Creditors, and, immediately
upon receipt thereof, shall remit the same or cause the same to be remitted, in
kind, to the Blocked Accounts or to Senior Agent at its address set forth in the
Subordination Agreement. For the purpose of calculating interest on the Secured
Obligations, all proceeds received in the Agent’s Account shall be credited
to the Secured Obligations on the Business Day of Senior Agent’s receipt of
immediately available federal funds. and (b) use its best efforts to assure
prompt payment of all amounts due or to become due under the Accounts. Senior
Agent may at any time after a Default or Event of Default shall have occurred
and be continuing, without prior notice to Debtor, notify account debtors,
parties to all contracts (as defined in the PPSA and UCC) and obligors in
respect of instruments and chattel paper, that the Accounts and the right, title
and interest of Debtor in and under such contracts, instruments and chattel
paper have been assigned to Senior Agent, for the benefit of the Agents and
Senior Lenders, Subordinated Agent and Subordinated Creditors, and that payments
shall be made directly to Senior Agent, for the benefit of the Agents, Senior
Lenders, Subordinated Agent and Subordinated Creditors. Upon the request of
Senior Agent, during the occurrence and continuation of an Event of Default,
Debtor shall so notify account debtors, parties to such contracts and obligors
in respect of instruments and chattel paper. 

          5.4    
Names and Locations. Schedule I sets forth the location of Debtor’s
principal place of business, domicile (as such term is defined in the Civil
Code of Quebec) and chief executive office, the location of Debtor’s
books and records, the location of all other offices of Debtor and all
Collateral locations except for Inventory that is in transit, and such locations
are Debtor’s sole locations for its business and the Collateral. None of
said locations are leased by Debtor as lessee except those designated as such on
Schedule I. Schedule III sets forth, as of the date hereof, all names,
trade names, fictitious names and business names under which Debtor currently
conducts business or has at any time during the past five years conducted
business and the name of any entity which Debtor has acquired in whole or in
part or from whom Debtor has acquired a significant amount of assets within the
past five years. 

          5.5   
Intellectual Property. Debtor owns or has the valid right to use all
material Intellectual Property used or necessary for the conduct of the
business, free and clear of any and all Liens except for Liens permitted under
item (j) of Permitted Encumbrances. All registrations for such Intellectual
Property are in full force and effect and are valid and enforceable. The conduct
of the business of Debtor as currently conducted, including, but not limited to,
all products, processes, or services, made offered or sold by Debtor, does not
infringe upon, violate, misappropriate or dilute any Intellectual Property
Rights of any third party, which infringement could reasonably be expected to
have a Material Adverse Effect. To the best of Debtor’s knowledge, no third
party is infringing upon the Intellectual Property owned or used by Debtor in
any material respect. Except as set forth in Schedule IV, there is no pending
or, to the best of Debtor’s knowledge, threatened claim or litigation
contesting Debtor’s right to own or use any material Intellectual Property
or the validity or enforceability thereof. Schedule IV sets forth a true and
accurate list of (i) all Canadian, United States, provincial, state and foreign
registrations of and applications for Patents, Trade-marks, Industrial Designs
and Copyrights owned by Debtor and (ii) all Patent Licenses, Trade-mark
Licenses, Industrial Design Licenses and Copyright Licenses to which Debtor is a
party or is otherwise bound. 

          5.6   
Bank Accounts. Schedule V sets forth the account numbers and locations of
all bank accounts of Debtor and its Subsidiaries. Debtor shall not establish any
new bank accounts (except for disbursement accounts), or amend or terminate any
Blocked Account or lockbox agreement without Senior Agent’s prior written
consent. 

          5.7   
Collection of Accounts and Payments. Debtor shall establish lockboxes and
blocked accounts (collectively, “Blocked Accounts”) in
Debtor’s name with such banks (“Collecting Banks”) as are
reasonably acceptable to Senior Agent (subject to irrevocable instructions
acceptable to Senior Agent as hereinafter set forth) to which all account
debtors shall directly remit all payments on Accounts and in which Debtor will
immediately deposit all payments it otherwise directly receives for Inventory or
other payments constituting proceeds of Collateral in the identical form in
which such payment was made, whether by cash or cheque. The Collecting Banks
shall acknowledge and agree, pursuant to an agreement substantially in the form
of Exhibit A and with such changes which shall be satisfactory to the Agents,
that all payments made to the Blocked Accounts are the sole and exclusive
property of Senior Agent, on behalf of Agents, Senior Lenders, Subordinated
Agent and Subordinated Creditors, and that the Collecting Banks have no right to
setoff against the Blocked Accounts and that all such payments received will be
promptly transferred to the Senior Agent’s Account. Debtor hereby agrees
that all payments made to such Blocked Accounts or otherwise received by Senior
Agent and whether on the Accounts or as proceeds of other Collateral or
otherwise will be the sole and exclusive property of Senior Agent, on behalf of
Agents, Senior Lenders, Subordinated Agent and Subordinated Creditors. Debtor
shall irrevocably instruct each Collecting Bank to promptly transfer all
payments or deposits to the Blocked Accounts into the Senior Agent’s
Account. If Debtor, Loan Parties or any of their Affiliates, employees, agents
or other Person acting for or in concert with Debtor, shall receive any monies,
cheques, notes, drafts or any other payments relating to and/or proceeds of
Accounts or other Collateral, Debtor or such Person shall hold such instrument
or funds in trust for Senior Agent, on behalf of Agents, Senior Lenders,
Subordinated Agent and Subordinated Creditors, and, immediately upon receipt
thereof, shall remit the same or cause the same to be remitted, in kind, to the
Blocked Accounts or to Senior Agent at its address set forth in the
Subordination Agreement. For the purpose of calculating interest on the Secured
Obligations, all proceeds received in the Agent’s Account shall be credited
to the Secured Obligations on the Business Day of Senior Agent’s receipt of
immediately available federal funds. 

          5.8   
Location of Equipment, Inventory and Fixtures. All of the existing or
hereafter acquired Equipment, Inventory and Fixtures are located and shall be
located at the locations specified on Schedule I.

          5.9    
Ownership of Collateral; Bailees. Except for matters disclosed on
Schedule II, other Permitted Encumbrances and the Security Interests, Debtor
owns the Collateral, and will own all Collateral (including all after-acquired
Collateral), free and clear of any Lien. No effective financing statement or
other form of lien notice covering all or any part of the Collateral is on file
in any recording office, except for (i) those in favour of Senior Agent, on
behalf of Agents, Senior Lenders, Subordinated Agent and Subordinated Creditors,
(ii) those in favour of lenders whose liens and security interests will be
terminated effective with the financing secured hereby and (iii) those disclosed
on Schedule II. Except as disclosed on Schedule II, none of the Collateral
is in the possession of any consignee, bailee, warehouseman, agent or processor.
Debtor does not sell any Inventory to any customer on approval or on any other
basis which entitles the customer to return, or which may obligate Debtor to
repurchase, such Inventory (provided, however, that Debtor is
permitted to have stock balancing programs and consigned inventory programs).

          5.10   
Perfection. Senior Agent, on behalf of Agents, Senior Lenders,
Subordinated Agent and Subordinated Creditors, has a valid, perfected and,
except for the Permitted Encumbrances, first priority security interest in the
Collateral (other than de minimis amounts outside Canada and the United
States), securing the payment of the Secured Obligations, and such Security
Interests are entitled to all of the rights, priorities and benefits afforded by
the PPSA and the UCC or other applicable law as enacted in any relevant
jurisdiction which relates to perfected security interests. 

          5.11   
Inventory. All Inventory (other than Inventory which has been returned or
quality controlled as defective) is of good and merchantable quality, free from
any defects, such Inventory is not subject to any licensing, patent, trade-mark,
trade name, industrial design or copyright agreement with any Person that
restricts Debtor’s ability to manufacture and/or sell the Inventory (other
than those which give any other party to such licensing, patent, trade-mark,
trade name, industrial design or copyright agreement the right to terminate its
obligations thereunder). The sale, completion and manufacturing process of such
Inventory by a Person other than Debtor would be permitted under any contract to
which Debtor is a party or to which the Inventory is subject. 

          5.12   
Accurate Information. All information heretofore, herein or hereafter
supplied to Senior Agent, Agents, Senior Lenders, Subordinated Agent and
Subordinated Creditors by or on behalf of Debtor with respect to the Collateral
is and will be accurate and, taken in conjunction with other information
supplied, complete in all material respects. 

Section 6.    Further Assurances;
Covenants

          6.1   
Other Documents and Actions. Debtor will, from time to time, at its
expense, promptly execute and deliver all further Instruments and Documents and
take all further action that may be necessary or desirable, or that Senior
Agent, on behalf of Agents, Senior Lenders, Subordinated Agent and Subordinated
Creditors, may request, in order to create, perfect and protect any security
interests granted or purported to be granted hereby or pursuant to any other
Loan Document or to enable Senior Agent, on behalf of Agents, Senior Lenders,
Subordinated Agent and Subordinated Creditors, to exercise and enforce its
rights and remedies hereunder, or under any other Loan Document with respect to
any Collateral. Without limiting the generality of the foregoing, Debtor will:
(a) execute and file such financing or continuation statements, or financing
change statements or amendments thereto, and such other Instruments, Documents
or notices, as may be necessary or desirable, or as Senior Agent, on behalf of
Agents, Senior Lenders, Subordinated Agent and Subordinated Creditors, may
request, in order to create, perfect and preserve the security interests granted
or purported to be granted hereby or pursuant to any other Loan Document; (b) at
any reasonable time (but in no event more than four times per calendar year
unless an Event of Default has occurred and is continuing), upon demand by
Senior Agent, on behalf of Agents, Senior Lenders, Subordinated Agent and
Subordinated Creditors, exhibit the Collateral to allow inspection of the
Collateral by Senior Agent, on behalf of Agents, Senior Lenders, Subordinated
Agent and Subordinated Creditors, or Persons designated by Senior Agent and to
examine and make copies of the records of Debtor related thereto, and to discuss
the Collateral and the records of Debtor with respect thereto with, and to be
advised as to the same by, an executive officer of Debtor and, after the
occurrence and during the continuance of an Event of Default, in the case of the
Accounts, Documents, General Intangibles, Instruments and Investment Property
with any Person which is or may be obligated thereon; (c) upon request of Senior
Agent appear in and defend any action or proceeding that may affect
Debtor’s title to or security interest of Senior Agent, on behalf of
Agents, Senior Lenders, Subordinated Agent and Subordinated Creditors, in the
Collateral and (d) transfer Collateral to Senior Agent’s possession (for
the benefit of Agents, Senior Lenders, Subordinated Agent and Subordinated
Creditors) if such Collateral consists of chattel paper or Instruments or if a
Lien on such Collateral can be perfected only by possession, or if requested by
Senior Agent in writing. It is understood and agreed that in making such
request, Administrative Agent shall take into account the effect the laws, rules
and regulations of Canada and foreign countries may have on the granting of
security, pledging of assets and entering into guaranties and that
Administrative Agent shall not knowingly request any of the foregoing which
would cause a Material Adverse Effect on the Loan Parties and their
Subsidiaries. 

          6.2    
Senior Agent Authorized. Debtor hereby authorizes Senior Agent, on behalf
of Agents, Senior Lenders, Subordinated Agent and Subordinated Creditors, to
file one or more financing or continuation statements, and financing change
statements and amendments thereto (or similar Documents required by any laws of
any applicable jurisdiction), relating to all or any part of the Collateral
without the signature of Debtor where permitted by law. 

          6.3    
Corporate or Name or Location Changes. Debtor will give Senior Agent at
least thirty (30) days (or such shorter notice period as is acceptable to the
Senior Agent) advance written notice of: (a) any change of name or of any new
trade name or fictitious business name, (b) change of principal place of
business, (c) any change in the chief executive office or domicile (as such term
is defined in the Civil Code of Quebec) or in the location or new
location of Debtor’s books and records or (d) any new location for
Debtor’s Collateral. With respect to any such change, Debtor will promptly
execute and deliver such Documents and take such actions as Senior Agent deems
necessary or desirable to create, perfect and preserve the security interests of
Senior Agent, on behalf of Agents, Senior Lenders, Subordinated Agent and
Subordinated Creditors, in the Collateral.

          6.4   
[Reserved.]

          6.5   
Bailees.  No Collateral, or negotiable bills of lading, shall at any time
be in the possession or control of any warehouseman, bailee, freight forwarder,
packager, customs agent or any of Debtor’s agents or processors without
prior written consent of Senior Agent and unless Senior Agent, if Senior Agent
has so requested, has received warehouse receipts or bailee lien waivers
satisfactory to Senior Agent, prior to the commencement of such storage. Debtor
shall, upon the request of Senior Agent, on behalf of Agents, Senior Lenders,
Subordinated Agent and Subordinated Creditors, notify any such warehouseman,
bailee, freight forwarder, packager, agent or processor of the Security
Interests created hereby and shall instruct such Person to hold all such
Collateral for account of Senior Agent, on behalf of Agents, Senior Lenders,
Subordinated Agent and Subordinated Creditors, subject to instructions of Senior
Agent. 

          6.6   
Instruments and Chattel Paper. Debtor will deliver and pledge, and cause
its account debtors to deliver, to Senior Agent, on behalf of Agents, Senior
Lenders, Subordinated Agent and Subordinated Creditors, all Instruments duly
endorsed and accompanied by duly executed Instruments of transfer or assignment,
all in form and substance satisfactory to Senior Agent. Debtor will also deliver
to Senior Agent, on behalf of Agents, Senior Lenders, Subordinated Agent and
Subordinated Creditors, all security agreements securing any Instruments and
execute PPSA and UCC-3 financing statements assigning to Senior Agent, on behalf
of Agents, Senior Lenders, Subordinated Agent and Subordinated Creditors, any
PPSA or UCC financing statements filed by Debtor in connection with such
security agreements. Debtor will mark conspicuously all chattel paper with a
legend, in form and substance satisfactory to Senior Agent, indicating that such
chattel paper is subject to the Security Interests. If applicable, Debtor shall
take all steps necessary to grant the Senior Agent control of all electronic
chattel paper in accordance with the UCC as revised effective July 1, 2001.

          6.7    
Filing Requirements. None of the Equipment (other than motor vehicles not
having a book value in excess of $100,000 in the aggregate) is covered by any
certificate of title. Upon request of Senior Agent, Debtor shall promptly
deliver to Senior Agent, on behalf of Agents, Senior Lenders, Subordinated Agent
and Subordinated Creditors, any and all certificates of title, applications for
title or similar evidence of ownership of all Equipment and shall cause Senior
Agent, on behalf of Agents, Senior Lenders, Subordinated Agent and Subordinated
Creditors, to be named as lienholder on any such certificate of title or other
evidence of ownership. None of the Collateral is of a type in which security
interests or Liens may be registered, recorded or filed under, or notice thereof
given under, any provincial or federal statute or regulation except for
Collateral described in Schedule IV hereof. Debtor shall promptly notify Senior
Agent, on behalf of Agents, Senior Lenders, Subordinated Agent and Subordinated
Creditors, in writing upon acquiring any material interest hereafter in
Collateral that is of a type where a security interest or lien may be
registered, recorded of filed under, or notice thereof given under, any federal
statute or regulation. Debtor shall promptly inform Senior Agent, on behalf of
Agents, Senior Lenders, Subordinated Agent and Subordinated Creditors, of any
additions to or deletions (other than Asset Dispositions permitted by and as
defined in the Loan Agreement) from the Equipment and shall not permit any such
items to become Fixtures to real estate other than real estate subject to
mortgages or deeds of trust in favour of Senior Agent, on behalf of Agents,
Senior Lenders, Subordinated Agent and Subordinated Creditors. The legal
description and street address of the property on which any Fixtures are located
is set forth on Schedule I, together with the name and common address of
the record owner of each such property.

          6.8   
Investment Property Covenants. Subject to the provisions of Grant of
Security Interests and Other Documents and Actions. Debtor will, from
time to time, at its expense, promptly execute and deliver all further
Instruments and Documents and take all further action that may be necessary or
desirable, or that Senior Agent, on behalf of Agents, Senior Lenders,
Subordinated Agent and Subordinated Creditors, may request, in order to create,
perfect and protect any security interests granted or purported to be granted
hereby or pursuant to any other Loan Document or to enable Senior Agent, on
behalf of Agents, Senior Lenders, Subordinated Agent and Subordinated Creditors,
to exercise and enforce its rights and remedies hereunder, or under any other
Loan Document with respect to any Collateral. Without limiting the generality of
the foregoing, Debtor will: (a) execute and file such financing or continuation
statements, or financing change statements or amendments thereto, and such other
Instruments, Documents or notices, as may be necessary or desirable, or as
Senior Agent, on behalf of Agents, Senior Lenders, Subordinated Agent and
Subordinated Creditors, may request, in order to create, perfect and preserve
the security interests granted or purported to be granted hereby or pursuant to
any other Loan Document; (b) at any reasonable time (but in no event more than
four times per calendar year unless an Event of Default has occurred and is
continuing), upon demand by Senior Agent, on behalf of Agents, Senior Lenders,
Subordinated Agent and Subordinated Creditors, exhibit the Collateral to allow
inspection of the Collateral by Senior Agent, on behalf of Agents, Senior
Lenders, Subordinated Agent and Subordinated Creditors, or Persons designated by
Senior Agent and to examine and make copies of the records of Debtor related
thereto, and to discuss the Collateral and the records of Debtor with respect
thereto with, and to be advised as to the same by, an executive officer of
Debtor and, after the occurrence and during the continuance of an Event of
Default, in the case of the Accounts, Documents, General Intangibles,
Instruments and Investment Property with any Person which is or may be obligated
thereon; (c) upon request of Senior Agent appear in and defend any action or
proceeding that may affect Debtor’s title to or security interest of Senior
Agent, on behalf of Agents, Senior Lenders, Subordinated Agent and Subordinated
Creditors, in the Collateral and (d) transfer Collateral to Senior Agent’s
possession (for the benefit of Agents, Senior Lenders, Subordinated Agent and
Subordinated Creditors) if such Collateral consists of chattel paper or
Instruments or if a Lien on such Collateral can be perfected only by possession,
or if requested by Senior Agent in writing. It is understood and agreed that in
making such request, Administrative Agent shall take into account the effect the
laws, rules and regulations of Canada and foreign countries may have on the
granting of security, pledging of assets and entering into guaranties and that
Administrative Agent shall not knowingly request any of the foregoing which
would cause a Material Adverse Effect on the Loan Parties and their
Subsidiaries., Debtor will take any and all actions required or requested by
Senior Agent, from time to time, to (a) cause Senior Agent to obtain exclusive
Control of any Investment Property owned by Debtor in a manner satisfactory to
Senior Agent, and (b) obtain from any issuers of Investment Property and such
other Persons, for the benefit of Senior Agent, on behalf of Agents, Senior
Lenders, Subordinated Agent and Subordinated Creditors, written confirmation of
Senior Agent’s Control on behalf of Agents, Senior Lenders, Subordinated
Agent and Subordinated Creditors, over such Investment Property. For purposes of
this subsection, Senior Agent, on behalf of Agents, Senior Lenders, Subordinated
Agent and Subordinated Creditors, shall have exclusive Control of Investment
Property if (i) such Investment Property consists of certificated securities and
Debtor delivers such certificated securities to Senior Agent, on behalf of
Agents, Senior Lenders, Subordinated Agent and Subordinated Creditors (with
appropriate endorsements if such certificated securities are in registered
form); (ii) such Investment Property consists of uncertificated securities and
either (x) Debtor delivers such uncertificated securities to Senior Agent, on
behalf of Agents, Senior Lenders, Subordinated Agent and Subordinated Creditors,
or (y) the issuer thereof agrees, pursuant to documentation in form and
substance satisfactory to Senior Agent, that it will comply with instructions
originated by Senior Agent, without further consent by Debtor; and (iii) such
Investment Property consists of security entitlements and either (x) Senior
Agent, on behalf of Agents, Senior Lenders, Subordinated Agent and Subordinated
Creditors, becomes the entitlement holder thereof or (y) the appropriate
securities intermediary agrees, pursuant to documentation in form and substance
satisfactory to Senior Agent, that it will comply with entitlement orders
originated by Senior Agent without further consent by Debtor.

          6.9    
Account Covenants. Except as otherwise provided in this subsection,
Debtor shall continue to collect, at its own expense, all amounts due or to
become due Debtor under the Accounts and apply such amounts as are so collected
to the outstanding balances thereof. In connection with such collections, Debtor
may take (and, at the direction of Senior Agent shall take during the occurrence
and continuance of an Event of Default) such action Debtor or Senior Agent may
deem necessary or advisable to enforce collection of the Accounts;
provided that Senior Agent shall have the right at any time after the
occurrence and during the continuance of an Event of Default to: (a) notify the
customers or obligors under any Accounts of the assignment of such Accounts to
Senior Agent, on behalf of Agents, Senior Lenders, Subordinated Agent and
Subordinated Creditors, and to direct such customers or obligors to make payment
of all amounts due or to become due directly to Senior Agent, on behalf of
Agents, Senior Lenders, Subordinated Agent and Subordinated Creditors; (b)
enforce collection, in each case in accordance with the terms of this Agreement,
of any such Accounts; and (c) adjust, settle or compromise the amount or payment
of such Accounts. After the occurrence and during the continuance of an Event of
Default (i) all amounts and Proceeds received by Debtor with respect to the
Accounts shall be received in trust for the benefit of Senior Agent, on behalf
of Agents, Senior Lenders, Subordinated Agent and Subordinated Creditors, shall
be segregated from other funds of Debtor and shall be forthwith paid over to
Senior Agent, on behalf of Agents, Senior Lenders, Subordinated Agent and
Subordinated Creditors, in the same form as so received (with any necessary
endorsement) to be held in the Depository Account pursuant to
Section Collection of Accounts and Payments. Debtor shall establish
lockboxes and blocked accounts (collectively, “Blocked
Accounts”) in Debtor’s name with such banks (“Collecting
Banks”) as are reasonably acceptable to Senior Agent (subject to
irrevocable instructions acceptable to Senior Agent as hereinafter set forth) to
which all account debtors shall directly remit all payments on Accounts and in
which Debtor will immediately deposit all payments it otherwise directly
receives for Inventory or other payments constituting proceeds of Collateral in
the identical form in which such payment was made, whether by cash or cheque.
The Collecting Banks shall acknowledge and agree, pursuant to an agreement
substantially in the form of Exhibit A and with such changes which shall be
satisfactory to the Agents, that all payments made to the Blocked Accounts are
the sole and exclusive property of Senior Agent, on behalf of Agents, Senior
Lenders, Subordinated Agent and Subordinated Creditors, and that the Collecting
Banks have no right to setoff against the Blocked Accounts and that all such
payments received will be promptly transferred to the Senior Agent’s
Account. Debtor hereby agrees that all payments made to such Blocked Accounts or
otherwise received by Senior Agent and whether on the Accounts or as proceeds of
other Collateral or otherwise will be the sole and exclusive property of Senior
Agent, on behalf of Agents, Senior Lenders, Subordinated Agent and Subordinated
Creditors. Debtor shall irrevocably instruct each Collecting Bank to promptly
transfer all payments or deposits to the Blocked Accounts into the Senior
Agent’s Account. If Debtor, Loan Parties or any of their Affiliates,
employees, agents or other Person acting for or in concert with Debtor, shall
receive any monies, cheques, notes, drafts or any other payments relating to
and/or proceeds of Accounts or other Collateral, Debtor or such Person shall
hold such instrument or funds in trust for Senior Agent, on behalf of Agents,
Senior Lenders, Subordinated Agent and Subordinated Creditors, and, immediately
upon receipt thereof, shall remit the same or cause the same to be remitted, in
kind, to the Blocked Accounts or to Senior Agent at its address set forth in the
Subordination Agreement. For the purpose of calculating interest on the Secured
Obligations, all proceeds received in the Agent’s Account shall be credited
to the Secured Obligations on the Business Day of Senior Agent’s receipt of
immediately available federal funds. or applied pursuant to Application of
Proceeds. During the occurrence and continuance of an Event of Default, Debtor
shall not adjust, settle or compromise the amount or payment of any Account, or
release wholly or partly any customer or obligor thereof, or allow any credit or
discount thereon (other than credits and discounts in the ordinary course of
business and in amounts which are not material to Debtor) without the prior
written consent of Senior Agent.

          6.10   
Intellectual Property Covenants.

	 	(i)	Affirmative Covenants 

	 	(a) 	
Debtor shall concurrently herewith deliver to Senior Agent, on behalf of Agents,
Senior Lenders, Subordinated Agent and Subordinated Creditors, all Documents,
Instruments and other items as may be necessary for Senior Agent, on behalf of
Agents, Senior Lenders, Subordinated Agent and Subordinated Creditors, to file
such agreements with the Canadian Intellectual Property Office, the U.S.
Copyright Office and the U.S. Patent and Trademark Office, as applicable.

	(b)	 	
Debtor shall, within thirty (30) days of the creation or acquisition of any work
susceptible of copyright protection which is material to the business of Debtor,
apply to register the Copyright in the Canadian Intellectual Property Office or
the United States Copyright Office, as applicable.

	(c)	 	
Debtor shall promptly notify Senior Agent if it knows or has reason to know that
any item of the Intellectual Property that is material to the business of Debtor
may become (a) abandoned or dedicated to the public or placed in the public
domain other than through normal expiration of rights with respect to Patents,
(b) invalid or unenforceable, or (c) subject to any adverse determination or
development (including the institution of proceedings) in any action or
proceeding in the Canadian Intellectual Property Office, the United States
Patent and Trademark Office, the United States Copyright Office, any provincial
or state registry, any foreign counterpart of the foregoing, or any court.

	(d)	 	
Debtor shall take all commercially reasonable steps in the Canadian Intellectual
Property Office, the United States Patent and Trademark Office, the United
States Copyright Office, any provincial or state registry or any foreign
counterpart of the foregoing, to pursue each application and maintain each
registration of each Trade-mark, Patent, Industrial Design and Copyright owned
by Debtor and material to its business which is now or shall become included in
the Intellectual Property pledged to the Senior Agent hereunder including, but
not limited to, those items on Schedule IV.

	(e)	 	
In the event that any Intellectual Property owned by or exclusively licensed to
Debtor which is material to its business is infringed, misappropriated, or
diluted by a third party, Debtor shall promptly take all reasonable actions to
stop such infringement, misappropriation, or dilution and protect its exclusive
rights in such Intellectual Property including, but not limited to, the
initiation of a suit for injunctive relief and to recover damages. Debtor shall
use its best efforts to obtain any consents, waivers or agreements necessary to
enable Senior Agent, on behalf of Agents, Senior Lenders, Subordinated Agent and
Subordinated Creditors, to exercise its remedies with respect to the
Intellectual Property.

	(f)	 	
Debtor shall within thirty (30) days after the end of each calendar quarter
report to Senior Agent (i) the filing of any application to register any
Intellectual Property with the Canadian Intellectual Property Office, the United
States Patent and Trademark Office, the United States Copyright Office, or any
provincial or state registry or foreign counterpart of the foregoing (whether
such application is filed by Debtor or through any agent, employee, licensee, or
designee thereof) and (ii) the registration of any Intellectual Property by any
such office. Debtor on a quarterly basis shall amend the schedules to the
respective security agreements to include any such new Patents, Trade-marks,
Industrial Designs or federally registered Copyrights and indicate therein if
any have expired. Debtor hereby authorizes Senior Agent to modify this Agreement
by amending Schedule IV and will otherwise cooperate with Senior Agent in
effecting any such amendment to include any item Intellectual Property which
shall become part of the Intellectual Property pledged to Senior Agent hereunder
after the date hereof.

	(g)	 	
Debtor shall, promptly upon the reasonable request of Senior Agent, execute and
deliver to Senior Agent any document required to acknowledge, confirm, register,
record, or perfect Senior Agent's interest in any part of the Intellectual
Property, whether now owned or hereafter acquired.

		(ii) 	Negative Covenants
 

	(a)	 	
Debtor shall not do or omit to do any act whereby any of the Intellectual
Property which is material to the business of Debtor may lapse prior to its
scheduled termination (to the extent that the Intellectual Property has a
scheduled termination date), or become abandoned, dedicated to the public, or
unenforceable, or which would adversely affect the validity, grant, or
enforceability of the security interest granted in any Intellectual Property.

	(b)	 	
Debtor shall not, with respect to any Trade-marks which are material to the
business of Debtor, cease the use of any of such Trade-marks or fail to maintain
the level of the quality of products sold and services rendered under any of
such Trade-mark at a level at least substantially consistent with the quality of
such products and services as of the date hereof, and Debtor shall take all
steps necessary to insure that licensees of such Trade-marks use such consistent
standards of quality.

	(c)	 	
Except with the prior consent of Senior Agent or as permitted under this
Agreement, Debtor will not execute, and there will not be on file in any public
office, any financing statement or other document or instruments with respect to
Intellectual Property pledged to Senior Agent hereunder, except financing
statements or other documents or instruments filed or to be filed in favour of
Senior Agent, on behalf of Agents, Senior Lenders, Subordinated Agent and
Subordinated Creditors, and Debtor will not sell, assign, transfer, license,
grant any option, or create or suffer to exist any Lien upon or with respect to
such Intellectual Property, except for the Lien created by and under this
Agreement.

          6.11   
Equipment Covenants. Debtor shall cause the Equipment to be maintained
and preserved in the same condition, repair and working order as when new,
ordinary wear and tear excepted, and in accordance with any manufacturer’s
manual, and shall promptly make or cause to be made all repairs, replacements,
and other improvements in connection therewith that are commercially reasonable
and necessary or desirable to such end. 

          6.12   
Protection of Collateral; Insurance. Debtor will do nothing to impair the
rights of Senior Agent, on behalf of Agents, Senior Lenders, Subordinated Agent
and Subordinated Creditors, in the Collateral. Debtor shall at all times
maintain insurance with respect to the Collateral in compliance with the
requirements of the Loan Agreement. Debtor assumes all liability and
responsibility in connection with the Collateral acquired by it, and the
liability of Debtor to pay the Secured Obligations shall in no way be affected
or diminished by reason of the fact that such Collateral may be lost, stolen,
damaged, or for any reason whatsoever unavailable to Debtor. 

          6.13    
Taxes and Claims. Debtor will pay when due all property and other taxes,
assessments and governmental charges imposed upon, and all claims against, the
Collateral (including claims for labour, materials and supplies); provided that
no such tax, assessment or charge need be paid if Debtor is contesting the same
in good faith by appropriate proceedings promptly instituted and diligently
conducted and if Debtor has established such reserve or other appropriate
provision, if any, as shall be required in conformity with GAAP; and provided
further that the same can be contested without risk of loss or forfeiture or
material impairment of the Collateral or the use thereof. 

          6.14   
Collateral Description. Debtor will furnish to Senior Agent from time to
time upon request, statements and schedules further identifying and describing
the Collateral and such other information, reports and evidence concerning the
Collateral (and in particular the Accounts) as Senior Agent may reasonably
request, all in reasonable detail. 

          6.15    
Use of Collateral. Debtor will not use or permit any Collateral to be
used in violation of any policy of insurance covering the Collateral or any
provision of applicable laws, rules, regulations and orders of any Governmental
Authority as now in effect and which may be imposed in the future in all
jurisdictions in which Debtor or any of its Subsidiaries is now doing business
or may hereafter be doing business, other than those laws the non-compliance
with which could not reasonably be expected to have a Material Adverse Effect.

          6.16    
Records of Collateral. Debtor shall keep full and accurate books and
records relating to the Collateral. Upon the reasonable request of
Administrative Agent, Debtor shall mark such negotiable instruments, invoices
and other instruments or documents relating to the Collateral, to indicate
Administrative Agent’s security interests in the Collateral, for the
benefit of Agents, Senior Lenders, Subordinated Agent and Subordinated
Creditors. 

          6.17    
Federal Claims. Debtor shall notify Senior Agent of any Collateral which
constitutes a claim against the Canadian government or the United States
government or any instrumentality or agency thereof, the assignment of which
claim is restricted by federal law. Upon the request of Senior Agent, on behalf
of Agents, Senior Lenders, Subordinated Agent and Subordinated Creditors, Debtor
shall take such steps as may be necessary to comply with any applicable federal
assignment of claims laws and other comparable laws. 

Section 7.    Senior Agent, on behalf of Agents, Senior
Lenders and Subordinated Creditors, Appointed Attorney-in-Fact

          Debtor hereby
irrevocably appoints Senior Agent, on behalf of Agents, Senior Lenders,
Subordinated Agent and Subordinated Creditors, as Debtor’s
attorney-in-fact, with full authority in the place and stead of Debtor and in
the name of Debtor, Senior Agent, on behalf of Agents, Senior Lenders,
Subordinated Agent and Subordinated Creditors, or otherwise, from time to time
while an Event of Default is continuing (except that the Administrative Agent
shall at all times be able to file under the PPSA and Uniform Commercial Code
financing statements in the name of Debtor, and record in any intellectual
property registry, appropriate evidence of the lien and security interest
granted herein in the Intellectual Property in the name of Debtor as assignor),
in the sole discretion of Senior Agent to take any action and to execute any
instrument that Senior Agent may deem necessary or advisable to accomplish the
purposes of this Agreement, including, without limitation: 

	(a)	 	
to obtain and adjust insurance required to be paid to Senior Agent, on behalf of
Agents, Senior Lenders, Subordinated Agent and Subordinated Creditors;

	(b)	 	
to ask, demand, collect, sue for, recover, compound, receive and give
acquittance and receipts for moneys due and to become due under or in respect of
any of the Collateral;

	(c)	 	
to receive, endorse, and collect any drafts or other Instruments, Documents and
chattel paper, in connection with clauses 0 and 0 above;

	(d)	 	
to file any claims or take any action or institute any proceedings that Senior
Agent may deem necessary or desirable for the collection of any of the
Collateral or otherwise to enforce the rights of Senior Agent, on behalf of
Agents, Senior Lenders, Subordinated Agent and Subordinated Creditors, with
respect to any of the Collateral;

	(e)	 	
to pay or discharge taxes or Liens levied or placed upon or threatened against
the Collateral, the legality or validity thereof and the amounts necessary to
discharge the same to be determined by Senior Agent in its sole discretion, and
such payments made by Senior Agent, on behalf of Agents, Senior Lenders,
Subordinated Agent and Subordinated Creditors, to become obligations of Debtor
to Senior Agent, on behalf of Agents, Senior Lenders, Subordinated Agent and
Subordinated Creditors, due and payable immediately without demand;

	(f)	 	
to sign and endorse any invoices, freight or express bills, bills of lading,
storage or warehouse receipts, assignments, verifications and notices in
connection with Accounts and other Documents relating to the Collateral;

	(g)	 	
to make, endorse, sign, declare or swear to any entry, withdrawal, declaration,
certificate, bill of lading, carnet or other document required by law or
regulation in connection with the importation, transportation or exportation of
any merchandise shipped or consigned by or to Debtor; to perform any act or
condition which may be required by law or regulation in connection with such
merchandise; and to receive any merchandise deliverable to Debtor;

	(h)	 	
to make endorsements on bills of lading conferring authority to transfer title,
make entry or collect drawback and to make, sign, declare or swear to any
statement, supplemental statement, schedule, supplemental schedule, certificate
of delivery, certificate of manufacture, certificate of manufacture and
delivery, abstract of manufacturing records, declaration of proprietor on
drawback entry, declaration of exporter on drawback entry or any other affidavit
or document which may be required by law or regulation for drawback purposes,
regardless of whether such bill of lading, sworn statement, schedule,
certificate, abstract, declaration, or other affidavit or document is intended
for filing in any customs district;.

	(i)	 	
to sign, seal and deliver for and as the act of Debtor any bond required by law
or regulation in connection with the entry or withdrawal of imported merchandise
or merchandise exported with or without benefit of drawback or in connection
with the entry, clearance, lading, unlading or navigation of any vessel or other
means of conveyance owned or operated by Debtor and any and all bonds which may
be voluntarily given and accepted under applicable laws and regulations,
consignee's and owner's declarations or affidavits in connection with the entry
of merchandise;

	(j)	 	
to authorize customs brokers to act as Debtor's agent; to receive, endorse and
collect cheques issued for Canada Customs or U.S. Customs duty refunds in
Debtor's name drawn on the Treasurer of the United States or Canada to accept
service of process on behalf of Debtor;

	(k)	 	
generally to transact at the customhouses in any district any and all customs
business, including making, signing and filing of protests in which Senior Agent
is or may be concerned or interested and which may properly be transacted or
performed by an agent and attorney, giving to said agent and attorney full power
and authority to do anything whatever requisite and necessary to be done in the
premises as fully as Senior Agent could do if present and acting, hereby
ratifying and confirming all that the said agent and attorney shall lawfully do
by virtue of these presents; and

	(l)	 	
generally to sell, transfer, pledge, make any agreement with respect to or
otherwise deal with any of the Collateral as fully and completely as though
Senior Agent, on behalf of Agents, Senior Lenders, Subordinated Agent and
Subordinated Creditors, were the absolute owner thereof for all purposes, and to
do, at option of Senior Agent, and at Debtor's expense, at any time or from time
to time, all acts and things that Senior Agent deems necessary to protect,
preserve or realize upon the Collateral.

This power, being coupled with an interest, is irrevocable so
long as this Agreement shall remain in force. Debtor hereby ratifies and
approves all acts of Senior Agent, made or taken pursuant to this Senior Agent,
on behalf of Agents, Senior Lenders and Subordinated Creditors, Appointed
Attorney-in-Fact. None of Senior Agent, any Agent, Senior Lender, Subordinated
Agent, Subordinated Creditor or any Person designated by Senior Agent or any of
their respective Affiliates, officers, directors, employees, agents or
representatives, shall be liable for any acts or omissions or for any error of
judgment or mistake of fact or law under any power of attorney or otherwise,
except for its gross negligence and willful misconduct. 

Section 8.   Transfers and Other Liens

           Except as
otherwise permitted herein or by the Loan Agreement, Debtor shall not:

	(a)	 	
sell, assign (by operation of law or otherwise) or otherwise dispose of, or
grant any option with respect to, any of the Collateral; or

	(b)	 	
create or suffer to exist any Lien, security interest or other charge or
encumbrance upon or with respect to any of the Collateral to secure indebtedness
of any Person except for the security interest created by this Agreement.

Section 9.    Remedies

	(a)	 	
If any Event of Default shall have occurred and be continuing, Senior Agent, on
behalf of Agents, Senior Lenders, Subordinated Agent and Subordinated Creditors,
may exercise in respect of the Collateral, in addition to all other rights and
remedies provided for herein or otherwise available to it, all the rights and
remedies of a secured party on default under the PPSA and the UCC (whether or
not the PPSA or the UCC applies to the affected Collateral) and also may: (i)
require Debtor to, and Debtor hereby agrees that it will, at its expense and
upon request of Senior Agent, forthwith, assemble all or part of the Collateral
as directed by Senior Agent, and make it available to Senior Agent at any
reasonable place or places designated by Senior Agent in which event Debtor
shall at its own expense (A) forthwith cause the same to be moved to the place
or places so designated by Senior Agent and thereby delivered to Senior Agent,
on behalf of Agents, Senior Lenders, Subordinated Agent and Subordinated
Creditors, (B) store and keep any Collateral so delivered to Senior Agent, on
behalf of Agents, Senior Lenders, Subordinated Agent and Subordinated Creditors,
at such place or places pending further action by Senior Agent, and (C) while
Collateral shall be so stored and kept, provide such guards and maintenance
services as shall be necessary to protect the same and to preserve and maintain
the Collateral in good condition; (ii) withdraw all cash in the Depository
Accounts and apply such monies in payment of the Secured Obligations; and (iii)
without notice except as specified below, sell, lease or otherwise dispose of
the Collateral or any part thereof in one or more parcels at public or private
sale, and without the necessity of gathering at the place of sale of the
property to be sold, at any of the offices of Senior Agent, or elsewhere, at
such time or times, for cash, on credit or for future delivery, and at such
price or prices and upon such other terms as Senior Agent may deem commercially
reasonable. Debtor agrees that, to the extent notice of sale shall be required
by law, at least ten (10) days notice to Debtor of the time and place of any
public sale or the time after which any private sale is to be made shall
constitute reasonable notification. At any sale of the Collateral, if permitted
by law, Senior Agent, on behalf of Agents, Senior Lenders, Subordinated Agent
and Subordinated Creditors, may bid (which bid may be, in whole or in part, in
the form of cancellation of indebtedness) for the purchase of the Collateral or
any portion thereof for the account of Senior Agent, on behalf of Agents, Senior
Lenders, Subordinated Agent and Subordinated Creditors. Senior Agent, on behalf
of Agents, Senior Lenders, Subordinated Agent and Subordinated Creditors, shall
not be obligated to make any sale of Collateral regardless of notice of sale
having been given. Senior Agent, may adjourn any public or private sale from
time to time by announcement at the time and place fixed therefor, and such sale
may, without further notice, be made at the time and place to which it was so
adjourned. To the extent permitted by law, Debtor hereby specifically waives all
rights of redemption, stay or appraisal which it has or may have under any law
now existing or hereafter enacted.

	(b)	 	
Upon the occurrence and during the continuance of an Event of Default, Senior
Agent, or its agents or legal counsel or shall have the right without notice or
demand or legal process (unless the same shall be required by applicable law),
personally, or by agents or legal counsel, (i) subject to the terms of any
Collateral Access Agreement, to enter upon, occupy and use any premises owned or
leased by Debtor or where the Collateral is located (or is believed to be
located) until the Secured Obligations are paid in full without any obligation
to pay rent to Debtor, to render the Collateral useable or saleable and to
remove the Collateral or any part thereof therefrom to the premises of Senior
Agent, or any agent of Senior Agent, for such time as Senior Agent, may desire
in order to effectively collect or liquidate the Collateral and use in
connection with such removal any and all services, supplies and other facilities
of Debtor; (ii) to take possession of Debtor's original books and records, to
obtain access to Debtor's data processing equipment, computer hardware and
software relating to the Collateral and to use all of the foregoing and the
information contained therein in any manner Senior Agent, deems appropriate; and
(iii) to notify postal authorities to change the address for delivery of
Debtor's mail to an address designated by Senior Agent, and to receive, open and
dispose of all mail addressed to Debtor.

	(c)	 	
Senior Agent may appoint, remove and reappoint any person or persons, including
an employee or agent of Senior Agent, to be a receiver (the "Receiver") which
term shall include an interim receiver and a receiver and manager of, or agent
for, all or any part of the Collateral. Any such Receiver shall, as far as
concerns responsibility for his acts, be deemed to be the agent of Debtor and
not of Senior Agent, Agents, Senior Lenders or Subordinated Creditors, and none
of Senior Agent, Agents, Senior Lenders or Subordinated Creditors shall in any
way be responsible for any misconduct, negligence or non-feasance of such
Receiver, its employees or agents. Except as otherwise directed by Senior Agent,
all money received by such Receiver shall be received in trust for and paid to
Senior Agent on behalf of Agents, Senior Lenders or Subordinated Creditors. Such
Receiver shall have all of the powers and rights of Senior Agent described in
this Remedies. Senior Agent may, either directly or through its agents or
nominees, exercise any or all powers and rights of a Receiver.

	(d)	 	
Debtor shall pay all costs, charges and expenses incurred by Senior Agent,
Agents, Senior Lenders, Subordinated Creditors or any Receiver or any nominee or
agent of Senior Agent, whether directly or for services rendered (including,
without limitation, solicitor's costs on a solicitor and his own client basis,
auditor's costs, other legal expenses and Receiver remuneration) in enforcing
this Agreement or any other Loan Document and in enforcing or the Secured
Obligations and all such expenses together with any money owing as a result of
any borrowing permitted hereby shall be a charge on the proceeds of realization
and shall be secured hereby.

	(e)	 	
Debtor acknowledges and agrees that a breach of any of the covenants contained
in Representations and Warranties, Further Assurances; Covenants, Senior Agent,
on behalf of Agents, Senior Lenders and Subordinated Creditors, Appointed
Attorney-in-Fact and Transfers and Other Liens hereof will cause irreparable
injury to Senior Agent, and that Senior Agent has no adequate remedy at law in
respect of such breaches and therefore agrees, without limiting the right of
Senior Agent to seek and obtain specific performance of other obligations of
Debtor contained in this Agreement, that the covenants of Debtor contained in
the Sections referred to in this Section shall be specifically enforceable
against Debtor.

Section 10.    Assignment of
Intellectual Property

          To the extent
that Intellectual Property is assignable, Debtor hereby assigns, transfers and
conveys to Senior Agent, on behalf of Agents, Senior Lenders, Subordinated Agent
and Subordinated Creditors, effective upon the occurrence of any Event of
Default, all Intellectual Property (with the exception of Trade-marks) owned or
used by Debtor to the extent necessary to enable Senior Agent to realize on the
Collateral and any successor or assign to enjoy the benefits of the Collateral.
This right and assignment shall inure to the benefit of Senior Agent and its
successors, assigns and transferees, whether by voluntary conveyance, operation
of law, assignment, transfer, foreclosure, deed in lieu of foreclosure or
otherwise. Such right and assignment is granted free of charge, without
requirement that any monetary payment whatsoever including, without limitation,
any royalty or license fee, be made to Debtor or any other Person by Senior
Agent, on behalf of Agents, Senior Lenders, Subordinated Agent and Subordinated
Creditors, or by any Lender. 

Section 11.    License of Intellectual Property

          To the extent
that Intellectual Property of Debtor may be licensed or sublicensed, Debtor
hereby grants and conveys to Senior Agent, on behalf of Agents, Senior Lenders,
Subordinated Agent and Subordinated Creditors, effective upon the occurrence of
any Event of Default, an irrevocable non-exclusive royalty-free, worldwide right
and license to use all Intellectual Property owned or used by Debtor to the
extent necessary to enable Senior Agent to exercise its rights and remedies
under this License of Intellectual Property. and to realize on the Collateral
and for any successor or assign to enjoy the benefits of the Collateral subject,
in the case of Trade-marks, to sufficient rights of the quality control and
inspection in favour of the owner of such Trade-mark as is reasonably necessary
to avoid the risk of invalidation of such Trade-marks). This right and license
shall inure to the benefit of all successors, assigns and transferees of Senior
Agent and its successors, assigns and transferees, whether by voluntary
conveyance, operation of law, assignment, transfer, foreclosure, deed in lieu of
foreclosure or otherwise. 

Section 12.    Assigned Agreements

          If an Event of
Default has occurred and is continuing, Debtor hereby irrevocably authorizes and
empowers Senior Agent, without limiting any other authorizations or empowerments
contained in any of the other Loan Documents, to assert, either directly or on
behalf of Debtor, any claims Debtor may have, from time to time, against any
other party to any of the agreements to which Debtor is a party or to otherwise
exercise any right or remedy of Debtor under any such agreements (including,
without limitation, the right to enforce directly against any party to any such
agreement all of Debtor’s rights thereunder, to make all demands and give
all notices and to make all requests required or permitted to be made by Debtor
thereunder). 

Section 13.    Limitation on Duty of Senior Agent with
Respect to Collateral

          Beyond the safe
custody thereof, Senior Agent shall have no duty with respect to any Collateral
in its possession or control (or in the possession or control of any agent or
bailee) or with respect to any income thereon or the preservation of rights
against prior parties or any other rights pertaining thereto. Senior Agent shall
be deemed to have exercised reasonable care in the custody and preservation of
the Collateral in its possession if the Collateral is accorded treatment
substantially equal to that which it accords its own property. Senior Agent
shall not be liable or responsible for any loss or damage to any of the
Collateral, or for any diminution in the value thereof, by reason of the act or
omission of any warehouseman, carrier, forwarding agency, consignee or other
agent or bailee selected by Senior Agent in good faith. Notwithstanding anything
herein to the contrary, the Debtor shall have no indemnity obligations with
respect to any actions taken by the Senior Agent, the Senior Lenders and the
Subordinated Creditors which constitute gross negligence or willful misconduct. 

Section 14.    Application of Proceeds

          Upon the
occurrence and during the continuance of an Event of Default and in the event of
any sale, transfer or other disposition (including a casualty loss or taking
through eminent domain) of all or any part of the Collateral, the Proceeds
resulting therefrom (including insurance proceeds) and any cash held in the
Depository Accounts shall be promptly applied in accordance with the terms of
the Subordination Agreement. 

Section 15.    Expenses

          Debtor shall pay
all costs, fees and expenses of protecting, storing, warehousing, appraising,
insuring, handling, maintaining and shipping the Collateral, all costs, fees and
expenses of creating, perfecting, maintaining and enforcing the Security
Interests, and any and all excise, property, sales and use taxes imposed by any
federal, provincial, state, local or foreign authority on any of the Collateral,
or with respect to periodic appraisals and inspections of the Collateral, or
with respect to the sale or other disposition thereof. If Debtor fails to
promptly pay any portion of the above costs, fees and expenses when due or to
perform any other obligation of Debtor under this Agreement, Senior Agents and
Senior Lenders, at their option may, but shall not be required to, pay or
perform the same and charge Debtor’s account for all fees, costs and
expenses incurred therefor, and Debtor agree to reimburse Senior Agent, or such
Senior Lender or Subordinated Agent therefor on demand. All sums so paid or
incurred by Senior Agent, or any other Senior Lender or Subordinated Agent for
any of the foregoing, any and all other sums for which Debtor may become liable
hereunder and all fees, costs and expenses (including reasonable legal fees,
legal expenses and court costs) incurred by Senior Agent, on behalf of Agents,
Senior Lenders, Subordinated Agent and Subordinated Creditors or by any other
Senior Lender or Subordinated Creditor in enforcing or protecting the Security
Interests or any of their rights or remedies under this Agreement shall be
payable on demand, shall constitute Secured Obligations, shall bear interest
until paid at the highest rate provided in the Loan Agreement and shall be
secured by the Collateral. 

Section 16.    Termination of Security Interests;
Release of Collateral

          Upon the
indefeasible payment in full in cash of all Secured Obligations (other than
unasserted indemnity claims) and the termination of all Commitments under and as
defined in the Loan Agreement and all Lender Letters of Credit and risk
participation agreements under the Loan Agreement, the Security Interests shall
terminate and all rights to the Collateral shall revert to Debtor. Upon such
termination of the Security Interests or release of any Collateral, Senior Agent
will, at the expense of Debtor, execute and deliver to Debtor such Documents as
Debtor shall reasonably request to evidence the termination of the Security
Interests or the release of such Collateral, as the case may be. 

Section 17.    Notices

          Unless otherwise
specifically provided herein, any notice delivered under this Agreement shall be
in writing addressed to the respective party as set forth below and may be
personally served, telecopied or sent by overnight courier service or certified
or registered Canadian or U.S. mail and shall be deemed to have been given (a)
if delivered in person, when delivered; (b) if delivered by telecopy, on the
date of transmission if transmitted on a Business Day before 4:00 p.m. (Toronto
time) or, if not, on the next succeeding business day; (c) if delivered by
overnight courier, one business day after delivery to such courier properly
addressed; or (d) if by Canadian or U.S. mail, four business days after deposit
in the Canadian or U.S. mail, postage prepaid and properly addressed. 

           Notices
shall be addressed as follows:

	 	
                  If to Debtor:

                  c/o Recoton Corporation

                  2950 Lake Emma Road

                  Lake Mary, FL 32746

                  Attn.: Arnold Kezsbom

                  Telecopy No.: (407) 333-8903

                  With a copy to:

                  Stroock & Stroock & Lavan LLP

                  180 Maiden Lane

                  New York, NY 10038

                  Attn.: Theodore S. Lynn

                  Telecopy No.: (212) 806-6006

	

           If to Senior
Agent, on behalf of Agents, Senior Lenders, Subordinated Agent and Subordinated
Creditors:

	 	
         Heller Financial, Inc.

         500 West Monroe Street

         Chicago, Illinois 60661

         Attention:        Account Manager - [Recoton

     Corporation]

                           Corporate Finance

         Telecopy:         (312) 441-7367

         With a copy to:

         Heller Financial, Inc.

         500 West Monroe Street

         Chicago, Illinois 60661

         Attention:        Legal Services

                           Corporate Finance

         Telecopy:         (312) 441-6876

	

-and to-

	 	
         The Chase Manhattan Bank

         380 Madison Avenue, 9th Fl.

         New York, NY 10017

         Attention:        Roger Odell

         Telecopy:         (212) 622-4834

	

or in any case, to such other address as the party addressed
shall have previously designated by written notice to the serving party, given
in accordance with this Notices. 

Section 18.    Successors and Assigns

          This Agreement
is for the benefit of Senior Agent, and for the benefit of Agents, Senior
Lenders, Subordinated Agent and Subordinated Creditors and their respective
successors and assigns, and in the event of an assignment of all or any of the
Secured Obligations, the rights hereunder, to the extent applicable to the
Secured Obligations so assigned, may be transferred with such Secured
Obligations. This Agreement shall be binding on Debtor and its successors and
assigns; provided that Debtor may not delegate its obligations under this
Agreement without prior written consent of Senior Agent, on behalf of Agents,
Senior Lenders, Subordinated Agent and Subordinated Creditors. It is understood
and agreed that Section 21 of the Subordination Agreement is, mutatis
mutandis, incorporated here by reference. 

Section 19.    Changes in Writing

          No amendment,
modification, termination or waiver of any provision of this Agreement shall be
effective unless the same shall be in writing signed by Senior Agent, on behalf
of Agents, Senior Lenders, Subordinated Agent and Subordinated Creditors or as
otherwise permitted by the Loan Agreement. 

Section 20.    Applicable Law

          THIS AGREEMENT
SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH,
THE INTERNAL LAWS OF THE PROVINCE OF ONTARIO AND THE LAWS OF CANADA APPLICABLE
THEREIN. 

Section 21.    CONSENT TO JURISDICTION.

          DEBTOR HEREBY
CONSENTS TO THE NON-EXCLUSIVE JURISDICTION OF THE ONTARIO SUPERIOR COURT OF
JUSTICE AND IRREVOCABLY AGREES THAT, SUBJECT TO SENIOR AGENT’S ELECTION,
ALL ACTIONS OR PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
OTHER LOAN DOCUMENTS SHALL BE LITIGATED IN SUCH COURT. DEBTOR EXPRESSLY SUBMITS
AND CONSENTS TO THE JURISDICTION OF THE AFORESAID COURT AND WAIVES ANY DEFENSE
OF FORUM NON CONVENIENS. DEBTOR HEREBY WAIVES PERSONAL SERVICE OF ANY AND ALL
PROCESS AND AGREES THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE UPON DEBTOR BY
CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED, ADDRESSED TO DEBTOR, AT
THE ADDRESS SET FORTH IN THIS AGREEMENT AND SERVICE SO MADE SHALL BE COMPLETE 10
DAYS AFTER THE SAME HAS BEEN POSTED. IN ANY LITIGATION, TRIAL, ARBITRATION OR
OTHER DISPUTE RESOLUTION PROCEEDING RELATING TO THIS AGREEMENT OR ANY OF THE
OTHER LOAN DOCUMENTS, ALL DIRECTORS, OFFICERS, EMPLOYEES AND AGENTS OF DEBTOR OR
OF ITS AFFILIATES SHALL BE DEEMED TO BE EMPLOYEES OR MANAGING AGENTS OF DEBTOR
FOR PURPOSES OF ALL APPLICABLE LAW OR COURT RULES REGARDING THE PRODUCTION OF
WITNESSES BY NOTICE FOR TESTIMONY (WHETHER IN A DEPOSITION, AT TRIAL OR
OTHERWISE). DEBTOR AGREES THAT ANY AGENT’S, SENIOR LENDER’S,
SUBORDINATED AGENT’S OR SUBORDINATED CREDITOR’S COUNSEL IN ANY SUCH
DISPUTE RESOLUTION PROCEEDING MAY EXAMINE ANY OF THESE INDIVIDUALS AS IF UNDER
CROSS-EXAMINATION AND THAT ANY DISCOVERY DEPOSITION OF ANY OF THEM MAY BE USED
IN THAT PROCEEDING AS IF IT WERE AN EVIDENCE DEPOSITION. DEBTOR IN ANY EVENT
WILL USE ALL COMMERCIALLY REASONABLE EFFORTS TO PRODUCE IN ANY SUCH DISPUTE
RESOLUTION PROCEEDING, AT THE TIME AND IN THE MANNER REQUESTED BY ANY AGENT,
SENIOR LENDER, SUBORDINATED AGENT OR SUBORDINATED CREDITOR, ALL PERSONS,
DOCUMENTS (WHETHER IN TANGIBLE, ELECTRONIC OR OTHER FORM) OR OTHER THINGS UNDER
ITS CONTROL AND RELATING TO THE DISPUTE. 

Section 22.    WAIVER OF JURY TRIAL.

          EACH OF DEBTOR,
SENIOR AGENT, SENIOR LENDERS, SUBORDINATED AGENT AND SUBORDINATED CREDITORS
HEREBY WAIVES ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF
ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.
EACH OF DEBTOR, SENIOR AGENT, SENIOR LENDERS, SUBORDINATED AGENT AND
SUBORDINATED CREDITORS ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO
ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH HAS RELIED ON THE WAIVER IN
ENTERING INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS AND THAT EACH WILL
CONTINUE TO RELY ON THE WAIVER IN THEIR RELATED FUTURE DEALINGS. EACH OF DEBTOR,
SENIOR AGENT, SENIOR LENDERS, SUBORDINATED AGENT AND SUBORDINATED CREDITORS
WARRANTS AND REPRESENTS THAT EACH HAS HAD THE OPPORTUNITY OF REVIEWING THIS JURY
WAIVER WITH LEGAL COUNSEL, AND THAT EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS
JURY TRIAL RIGHTS. 

Section 23.    Failure or
Indulgence Not Waiver; Remedies Cumulative

          No failure or
delay on the part of Senior Agent, or any Senior Lender or Subordinated Creditor
in the exercise of any power, right or privilege hereunder shall impair such
power, right or privilege or be construed to be a waiver of any default or
acquiescence therein, nor shall any single or partial exercise of any such
power, right or privilege preclude other or further exercise thereof or any
other right, power or privilege. All rights and remedies existing under this
Agreement are cumulative to, and not exclusive of, any rights or remedies
otherwise available. 

Section 24.    Headings

          Section and
subsection headings in this Agreement are included herein for convenience of
reference only and shall not constitute a part of this Agreement for any other
purpose or be given any substantive effect. 

Section 25.    Counterparts

          This Agreement
may be executed by facsimile transmission and in any number of counterparts, all
of which taken together shall constitute one and the same instrument and any of
the parties hereto may execute this Agreement by signing any such counterpart. 

Section 26.    Survival

          All
representations and warranties of Debtor contained in this Agreement shall
survive the execution and delivery of this Agreement.

Section 27.    Amendment of Schedules

          Debtor may amend
any one or more of the Schedules referred to in this Agreement (subject to prior
notice to Administrative Agent, as applicable) and any representation, warranty,
or covenant contained herein which refers to any such Schedule shall from and
after the date of any such amendment refer to such Schedule as so amended;
provided however, that in no event shall the amendment of any such Schedule
constitute a waiver by Administrative Agent and Lenders of any existing Default
or Event of Default that exists notwithstanding the amendment of such Schedule. 

Section 28.    Events of Defaults

          So long as the
obligations under the Loan Agreement have not been indefeasibly paid in full in
cash, the term Default and Event of Default shall have the meaning assigned to
such term in the Loan Agreement. After the indefeasible payment in full in cash
of the obligations under the Loan Agreement, the term Default and Event of
Default shall have the meaning assigned to such term in the Subordinated Credit
Agreement. 

Section 29.    Judgment Currency

          To the extent
permitted by applicable law, the obligations of Debtor in respect of any amount
due under this Agreement shall, notwithstanding any payment in any other
currency (the “Other Currency”) (whether pursuant to a judgment
or otherwise), be discharged only to the extent of the amount in the currency in
which it is due (the “Agreed Currency”) that a Senior Lender or
Subordinated Creditor may, in accordance with normal banking procedures,
purchase with the sum paid in the Other Currency (after any premium and costs of
exchange) on the Business Day immediately after the day on which such Senior
Lender or Subordinated Creditor receives the payment. If the amount in the
Agreed Currency that may be so purchased for any reason falls short of the
amount originally due, Debtor shall pay all additional amounts, in the Agreed
Currency, as may be necessary to compensate for the shortfall. Any obligation of
Debtor not discharged by that payment shall, to the extent permitted by
applicable law, be due as a separate and independent obligation and, until
discharged as provided in this Section, continue in full force and effect. 

Section 30.    Amalgamation

          Debtor
acknowledges and agrees that, notwithstanding any provision of this Agreement,
in the event it amalgamates with any other company or companies it is the
intention of the parties hereto that the term “Debtor” when used
herein shall apply to each of the amalgamating companies and to the amalgamated
company, such that the security interest granted hereby: 

	(a)	 	
shall extend to "Collateral" (as that term is herein defined) owned by each of
the amalgamating companies and the amalgamated company at the time of
amalgamation and to any "Collateral" thereafter owned or acquired by the
amalgamated company, and

	(b)	 	
shall secure the "Secured Obligations" (as that term is herein defined) of each
of the amalgamating companies and the amalgamated company to Senior Agent at the
time of amalgamation and any "Secured Obligations" of the amalgamated company to
Senior Agent thereafter arising. The Security Interests shall attach to
"Collateral" owned by each company amalgamating with Debtor, and by the
amalgamated company, at the time of the amalgamation, and shall attach to any
"Collateral" thereafter owned or acquired by the amalgamated company when such
becomes owned or is acquired.

Section 31.    Attachment and
Acknowledgment 

          The Security
Interests created hereby are intended to attach when this Agreement is executed
by Debtor and delivered to Senior Agent. Debtor acknowledges receipt of a copy
of this Agreement. 

Section 32.    Defined Terms

           The following
terms used in this Agreement shall have the following meanings:

          “Accounts”
means all “accounts” (as defined in the PPSA and the UCC),
accounts receivable, contract rights and general intangibles relating thereto,
notes, drafts and other forms of obligations owed to or owned by Debtor arising
or resulting from the sale of goods or the rendering of services, whether or not
earned by performance. 

          “Affiliate”
means any Person (other than any Agent, Senior Lenders, Subordinated Agent or
Subordinated Creditors): (a) directly or indirectly controlling, controlled by,
or under common control with, Debtor; (b) directly or indirectly owning or
holding 10% or more of any equity interest in Debtor; (c) 10% or more of whose
stock or other equity interest having ordinary voting power for the election of
directors or the power to direct or cause the direction of management, is
directly or indirectly owned or held by Debtor; or (d) which has a senior
officer who is also a senior officer of Debtor. For purposes of this definition,
“control” (including with correlative meanings, the terms
“controlling”, “controlled by” and
“under common control with”) means the possession directly or
indirectly of the power to direct or cause the direction of the management and
policies of a Person, whether through the ownership of voting securities or
other equity interest, or by contract or otherwise. 

          
“Agent” means the Senior Agent and the Collateral Agent.

          “Asset
Disposition” means the disposition, whether by sale, lease, transfer,
loss, damage, destruction, condemnation or otherwise, of any or all of the
assets of Debtor or any of its Subsidiaries other than sales of Inventory in the
ordinary course of business. 

          
“Bankruptcy Code” means the United States Bankruptcy Code, being Title 11 of the
United States Code, as the same now exists or may from time to time hereafter be
amended, modified, recodified or supplemented, together with all official rules,
regulations and interpretations thereunder or related thereto.

          “Bankruptcy
Laws” means any of the Bankruptcy Code, the Bankruptcy and
Insolvency Act (Canada), the Companies' Creditors Arrangement
Act (Canada) and the Winding-Up and Restructuring Act (Canada) each
as now and hereafter in effect, any successors to such statutes and any other
applicable insolvency or other similar law of any jurisdiction including,
without limitation, any law of any jurisdiction permitting a debtor to obtain a
stay or a compromise of the claims of its creditors against it, and all rules
and regulations promulgated thereunder. 

          “Blocked
Accounts” shall have the meaning assigned to such term in Section
Collection of Accounts and Payments. Debtor shall establish lockboxes and
blocked accounts (collectively, “Blocked Accounts”) in
Debtor’s name with such banks (“Collecting Banks”) as are
reasonably acceptable to Senior Agent (subject to irrevocable instructions
acceptable to Senior Agent as hereinafter set forth) to which all account
debtors shall directly remit all payments on Accounts and in which Debtor will
immediately deposit all payments it otherwise directly receives for Inventory or
other payments constituting proceeds of Collateral in the identical form in
which such payment was made, whether by cash or cheque. The Collecting Banks
shall acknowledge and agree, pursuant to an agreement substantially in the form
of Exhibit A and with such changes which shall be satisfactory to the Agents,
that all payments made to the Blocked Accounts are the sole and exclusive
property of Senior Agent, on behalf of Agents, Senior Lenders, Subordinated
Agent and Subordinated Creditors, and that the Collecting Banks have no right to
setoff against the Blocked Accounts and that all such payments received will be
promptly transferred to the Senior Agent’s Account. Debtor hereby agrees
that all payments made to such Blocked Accounts or otherwise received by Senior
Agent and whether on the Accounts or as proceeds of other Collateral or
otherwise will be the sole and exclusive property of Senior Agent, on behalf of
Agents, Senior Lenders, Subordinated Agent and Subordinated Creditors. Debtor
shall irrevocably instruct each Collecting Bank to promptly transfer all
payments or deposits to the Blocked Accounts into the Senior Agent’s
Account. If Debtor, Loan Parties or any of their Affiliates, employees, agents
or other Person acting for or in concert with Debtor, shall receive any monies,
cheques, notes, drafts or any other payments relating to and/or proceeds of
Accounts or other Collateral, Debtor or such Person shall hold such instrument
or funds in trust for Senior Agent, on behalf of Agents, Senior Lenders,
Subordinated Agent and Subordinated Creditors, and, immediately upon receipt
thereof, shall remit the same or cause the same to be remitted, in kind, to the
Blocked Accounts or to Senior Agent at its address set forth in the
Subordination Agreement. For the purpose of calculating interest on the Secured
Obligations, all proceeds received in the Agent’s Account shall be credited
to the Secured Obligations on the Business Day of Senior Agent’s receipt of
immediately available federal funds. 

          “Business
Day” means any day excluding Saturday, Sunday and any day which is a
legal holiday under the laws of the States of Illinois, Florida or New York and
Province of Ontario, or is a day on which banking institutions located in any
such state or province are closed and any other business day as defined in the
Loan Agreement. 

          "Cleanup”
shall mean all actions required to: (a) cleanup, remove, treat or remediate
Hazardous Materials in the indoor or outdoor environment; (b) prevent the
Release of Hazardous Materials so that they do not migrate, endanger or threaten
to endanger public health or welfare or the indoor or outdoor environment; (c)
perform pre-remedial studies and investigations and post-remedial monitoring and
care; or (d) respond to any government requests for information or documents in
any way relating to cleanup, removal, treatment or remediation or potential
cleanup, removal, treatment or remediation of Hazardous Materials in the indoor
or outdoor environment. 

          
“Closing Date” means October 31, 2000.

          
“Collateral” has the meaning assigned to that term in Grant of Security
Interests. "Collateral Agent" means General Electric Capital
Corporation.

          "Collecting
Banks" shall have the meaning assigned to such term in Section
Collection of Accounts and Payments. Debtor shall establish lockboxes and
blocked accounts (collectively, “Blocked Accounts”) in
Debtor’s name with such banks (“Collecting Banks”) as are
reasonably acceptable to Senior Agent (subject to irrevocable instructions
acceptable to Senior Agent as hereinafter set forth) to which all account
debtors shall directly remit all payments on Accounts and in which Debtor will
immediately deposit all payments it otherwise directly receives for Inventory or
other payments constituting proceeds of Collateral in the identical form in
which such payment was made, whether by cash or cheque. The Collecting Banks
shall acknowledge and agree, pursuant to an agreement substantially in the form
of Exhibit A and with such changes which shall be satisfactory to the Agents,
that all payments made to the Blocked Accounts are the sole and exclusive
property of Senior Agent, on behalf of Agents, Senior Lenders, Subordinated
Agent and Subordinated Creditors, and that the Collecting Banks have no right to
setoff against the Blocked Accounts and that all such payments received will be
promptly transferred to the Senior Agent’s Account. Debtor hereby agrees
that all payments made to such Blocked Accounts or otherwise received by Senior
Agent and whether on the Accounts or as proceeds of other Collateral or
otherwise will be the sole and exclusive property of Senior Agent, on behalf of
Agents, Senior Lenders, Subordinated Agent and Subordinated Creditors. Debtor
shall irrevocably instruct each Collecting Bank to promptly transfer all
payments or deposits to the Blocked Accounts into the Senior Agent’s
Account. If Debtor, Loan Parties or any of their Affiliates, employees, agents
or other Person acting for or in concert with Debtor, shall receive any monies,
cheques, notes, drafts or any other payments relating to and/or proceeds of
Accounts or other Collateral, Debtor or such Person shall hold such instrument
or funds in trust for Senior Agent, on behalf of Agents, Senior Lenders,
Subordinated Agent and Subordinated Creditors, and, immediately upon receipt
thereof, shall remit the same or cause the same to be remitted, in kind, to the
Blocked Accounts or to Senior Agent at its address set forth in the
Subordination Agreement. For the purpose of calculating interest on the Secured
Obligations, all proceeds received in the Agent’s Account shall be credited
to the Secured Obligations on the Business Day of Senior Agent’s receipt of
immediately available federal funds.. 

          
“Commitment” or “Commitments” means the commitment or commitments of Senior
Lenders to make Loans as set forth in subsections 2.1(A) and 2.1(B) of the Loan
Agreement and to provide Lender Letters of Credit as set forth in subsection
2.1(F) of the Loan Agreement. 

          
“Control” shall have the meaning assigned to such term in the Loan Agreement.

          “Copyright
Licenses” means all of Debtor’s right, title and interest in and
to any and all agreements providing for the granting of any right in or to
Copyrights (whether Debtor is the licensor or the licensee thereunder)
including, without limitation, each agreement referred to in Schedule IV hereof. 

          “Copyrights”
means any and all Canadian, United States and foreign copyrights, all mask works
fixed in semi-conductor chip products, whether registered or unregistered, now
or hereafter in force throughout the world, all registrations and applications
therefor including, without limitation, the applications referred to in Schedule
IV of this Agreement, therefor all rights corresponding thereto throughout the
world, all extensions and renewals of any thereof, the right to sue for past
infringements of any of the foregoing, and all Proceeds of the foregoing,
including, without limitation, licenses, royalties, income, payments, claims,
damages, and Proceeds of suit. 

          “Default”
means a condition, act or event that, after notice or lapse of time or both,
would constitute an Event of Default if that condition, act or event were not
cured or removed within any applicable grace or cure period. 

          “Depository
Account” shall mean collectively, one or more depository accounts
established by Senior Agent, on behalf of Agents, Senior Lenders,
Subordinated Agent and Subordinated Creditors, at each Collecting Bank or at a
centrally located Bank. 

          “Documents”
means all “documents of title” (as defined in the PPSA) and
“documents” (as defined in the UCC) or other receipts covering,
evidencing or representing goods of Debtor including, without limitation, all
bills of lading, seaway bills, dock warrants, dock receipts, warehouse receipts
and orders for the delivery of goods, and any other document which in the
regular course of business or financing is treated as adequately evidencing that
the Person in possession of it is entitled to receive, hold and dispose of the
document and the goods it covers. 

          “Environmental
Claim” shall mean any claim, action, cause of action, investigation or
notice (written or oral) by any Person alleging potential liability (including,
without limitation, potential liability for investigatory costs, Cleanup costs,
governmental response costs, natural resources damages, property damages,
personal injuries, or penalties) arising out of, based on or resulting from (a)
the presence, or Release of any Hazardous Materials at any location, whether or
not owned, leased or operated by Debtor or any of its Subsidiaries, or (b)
circumstances forming the basis of any violation, or alleged violation, of any
Environmental Law. 

          “Environmental
Law” shall mean all federal, provincial, state, local and foreign laws
and regulations relating to pollution or protection of human health or the
environment, including, without limitation, laws relating to Releases or
threatened Releases of Hazardous Materials or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, Release,
disposal, transport or handling of Hazardous Materials, laws and regulations
with regard to recordkeeping, notification, disclosure and reporting
requirements respecting Hazardous Materials and laws relating to the management
or use of natural resources. 

          “Equipment”
means all “equipment” (as defined in the PPSA and the UCC), all
furniture, furnishings, Fixtures, machinery, motor vehicles, trucks, trailers,
vessels, aircraft and rolling stock and all parts thereof and all additions and
accessions thereto and replacements therefor. 

          
“ERISA”
means the Employee Retirement Income Security Act of 1974, as amended from time
to time, and any successor statute and all rules and regulations promulgated
thereunder. 

          
“Event of Default” has the meaning assigned to that term in Section 28.

          
“Fixtures”
shall have the meaning assigned to such term in the Loan Agreement and includes,
without limitation, plant fixtures, trade fixtures and business fixtures,
wherever located, and all additions and accessions thereto and replacements
therefor. 

          
“GAAP”
means generally accepted accounting principles set forth in the opinions and
pronouncements of the Accounting Principles Board of the American Institute of
Certified Public Accountants and statements and pronouncements of the Financial
Accounting Standards Board that are applicable to the circumstances as of the
date of determination. 

          “General
Intangibles” shall mean “intangibles” (as defined in the
PPSA) and “general intangibles” as such term is defined in Section
9-106 of the UCC, including, without limitation, rights to the payment of money
(other than receivables), Trade-marks, Copyrights, Patents, Trade Secrets, and
licenses including, without limitation, Copyright Licenses, Patent Licenses,
Trade-mark Licenses, and Trade Secret Licenses, and franchises (except in the
case of licenses and franchises in respect of which the assignor is the licensee
or franchisee if the agreement in respect of such license or franchise prohibits
by its terms any assignment or grant of a security interest), limited and
general partnership interests, limited liability company interests and joint
venture interests, federal, provincial and state income tax refunds, trade
names, distributions on certificated securities and uncertificated securities,
computer programs and other computer software, inventions, designs, goodwill,
proprietary rights, customer lists, supplier contracts, sale orders,
correspondence, advertising materials, payments due in connection with any
requisition, confiscation, condemnation, seizure or forfeiture of any property,
reversionary interests in pension and profit-sharing plans and reversionary,
beneficial and residual interests in trusts, credits with and other claims
against any Person, together with any collateral for any of the foregoing and
the rights under any security agreement granting a security interest in such
collateral. 

          “Governmental
Authority” means any nation or government, any province or state or any
political subdivision of any of the foregoing and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government. 

          
“Guarantors” shall have the meaning assigned to such term in the Loan Agreement.

          “Hazardous
Material” shall mean any of the following: (a) substances that are
defined or listed in, or otherwise classified pursuant to, any Environmental
Laws or regulations as “hazardous substances”, “hazardous
materials”, “hazardous wastes”, “toxic substances” or
any other formulation intended to define, list or classify substances by reason
of deleterious properties such as ignitability, corrosivity, reactivity,
carcinogenicity, or toxicity; (b) oil, petroleum or petroleum derived
substances, natural gas, natural gas liquids or synthetic gas and drilling
fluids, produced waters and other wastes associated with the exploration,
development or production of crude oil, natural gas or geothermal resources; (c)
any flammable substances or explosives or any radioactive materials; and (d)
asbestos in any form or electrical equipment which contains any oil or
dielectric fluid containing polychlorinated biphenyls. 

          “Industrial
Design License” means rights under any written agreement now owned or
hereafter acquired by Debtor granting any right to use any Industrial Design. 

          “Industrial
Designs” means collectively, all of the following now owned or
hereafter created or acquired by Debtor: (a) all industrial designs, design
patents and other designs, (including, without limitation, those listed in
Schedule IV) and all registrations and recordings thereof and all applications
in connection therewith including, without limitation, all registrations,
recordings and applications in the Canadian Industrial Designs Office or any
similar office in any country and all records thereof; (b) all reissues,
extensions or renewals thereof; (c) all income, royalties, damages and payments
now or hereafter due and/or payable under any of the foregoing or with respect
to any of the foregoing, including, without limitation, damages or payments for
past, present or future infringements of any of the foregoing; (d) the right to
sue for past, present and future infringements of any of the foregoing; (e) all
rights corresponding to any of the foregoing throughout the world; and (f) all
goodwill associated with and symbolized by any of the foregoing. 

          “Instruments”
means all “instruments” and “chattel paper” (each as defined
in the PPSA and the UCC) and “letters of credit” (as defined in the
UCC) in which Debtor has any rights including, without limitation, all cheques,
drafts, notes, bonds, debentures and certificates of deposit. 

          “Intellectual
Property” shall mean, collectively, Copyrights, Copyright Licenses,
Patents, Patent Licenses, Trade-marks, Trade-mark Licenses, Industrial Designs,
Industrial Design Licenses, Trade Secrets, and Trade Secret Licenses, and all
memoranda, notes and records with respect to any research and development,
whether now owned or hereafter acquired, all goodwill associated with any of the
foregoing, and Proceeds of all of the foregoing, including, without limitation,
Proceeds of insurance policies thereon. 

          “Inventory”
means all “inventory” (as defined in the PPSA and UCC), including,
without limitation, finished goods, raw materials, work in process and other
materials and supplies used or consumed in a Person’s business, and goods
which are returned or repossessed, including any Inventory in the possession of
any consignee, bailee, warehouseman, agent or processor and/or subject to,
described in or covered by, any Document and, including, without limitation, any
Inventory in transit from one location to another, including on the “high
seas” and otherwise outside Canada or the United States and their
respective territorial waters. 

          “Investment
Property” means any “security” (as defined in the PPSA) and
all “investment property” (as defined in the UCC) of Debtor,
including, without limitation, all securities (certificated and uncertificated),
securities accounts, securities entitlements, commodity contracts and commodity
accounts (as each such term is defined in the UCC). 

          “Lender
Letters of Credit” means (i) the issuance of letters of credit by
Senior Agent; or with Senior Agent’s consent any Senior Lender, or (ii) the
issuance by Senior Agent of risk participations to banks to induce such banks to
issue Bank Letters of Credit for the account of Borrowers. 

          “Lien”
means any lien, claim, hypothec, mortgage, pledge, security interest, charge or
encumbrance of any kind, whether voluntary or involuntary, (including any
conditional sale or other title retention agreement, any lease in the nature
thereof, and any agreement to give any security interest). 

          “Loan”
or “Loans” means an advance or advances under the Term Loan
Commitment or the Revolving Loan Commitment as such terms are defined in the
Loan Agreement. 

          “Loan
Documents” means the Loan Agreement, this Agreement, the Security
Documents and all other documents, instruments and agreements executed by or on
behalf of a Borrower, such Borrower’s Subsidiaries or Debtor and delivered
concurrently herewith or at any time hereafter to or for Senior Agent, any
Agent, Senior Lender or Subordinated Creditor in connection with the Loans, any
Lender Letter of Credit, and any other transaction contemplated by the Loan
Agreement, including, without limitation, the Subordination Agreement, all as
amended, restated, supplemented or modified from time to time. 

          “Material
Adverse Effect” means (i) any material adverse effect on the business,
financial position, results of operations, or prospects of the Borrowers and
their Subsidiaries, considered as a whole, (ii) any material impairment of the
legality, validity and enforceability of the Loan Documents (including without
limitation, the validity, enforceability or priority of security interests to be
granted), or the rights and remedies of all the Agents and Lenders, or (iii) any
material impairment of the Loan Parties’ ability to perform their
obligations under the Loan Documents. 

          “Patent
Licenses” means all of Debtor’s right, title and interest in and
to any and all agreements providing for the granting of any right in or to any
Patents (whether Debtor is the licensor or the licensee thereunder) including,
without limitation, each agreement referred to in Schedule IV hereof. 

          “Patents”
means any and all Canadian, United States and foreign patents and applications
for letters patent throughout the world, including, but not limited to, each
patent and patent application referred to in Schedule IV of this Agreement, all
reissues, divisions, continuations, continuations-in-part, extensions, renewals,
and re-examinations of any of the foregoing, all rights corresponding thereto
throughout the world, and all Proceeds of the foregoing including, without
limitation, licenses, royalties, income, payments, claims, damages, and Proceeds
of suit and the right to sue for past infringements of any of the foregoing. 

          “Permitted
Encumbrances” means the following types of Liens: (a) Liens (other than
Liens relating to Environmental Claims or ERISA) for taxes, assessments or other
governmental charges not yet due and payable or which are being contested in
good faith by appropriate proceedings promptly instituted and diligently
conducted and if Debtor or such Subsidiary has established appropriate reserves
as shall be required in conformity with GAAP in; (b) statutory Liens of
landlords, carriers, warehousemen, mechanics, materialmen and other similar
liens imposed by law, which are incurred in the ordinary course of business for
sums not more than 30 days delinquent and that attach only to Real Estate,
inventory, fixtures and equipment; (c) Liens (other than any Lien imposed by
ERISA) incurred or deposits made in the ordinary course of business in
connection with workers’ compensation, unemployment insurance and other
types of social security, statutory obligations, surety and appeal bonds, bids,
leases, government contracts, trade contracts, performance and return-of-money
bonds and other similar obligations (exclusive of obligations for the payment of
borrowed money) or deposits securing liability to insurance carriers under
insurance or self-insurance arrangements; (d) easements, rights-of-way,
restrictions, and other similar charges or encumbrances not interfering in any
material respect with the ordinary conduct of the business of Debtor or any of
its Subsidiaries; (e) Liens for purchase money obligations, provided that (i)
the Indebtedness secured by any such Lien is permitted under subsection 7.1 of
the Loan Agreement or, after the indefeasible payment in full of the
Subordinated Debt, Section 6.1 of the Subordinated Credit Agreement, and (ii)
such Lien encumbers only the asset so purchased; (f) Liens in favour of Senior
Agent, on behalf of Agents and Senior Lenders, Subordinated Agent and
Subordinated Creditors; (g) Liens on deposits on other property of the Borrowers
or any Subsidiary to secure up to $500,000 of insurance obligations incurred in
the ordinary course of business; (h) Liens on the Inventory of the Borrowers or
any of their Subsidiaries that is consigned in an aggregate amount not to exceed
$500,000 at any one time outstanding; (i) any interest or title of a lessor or
sublessor under any real property lease not prohibited by the Loan Agreement;
and (j) Liens set forth on Schedule 11.1(B) of the Loan Agreement as of the date
hereof; and (k) Liens arising in respect of judgments in an aggregate amount of
less than $2,000,000 or, after the indefeasible payment in full of the
Subordinated Debt, Section 6.1 of the Subordinated Credit Agreement at any one
time outstanding in circumstances not constituting a Default or an Event of
Default. 

          
“PPSA” means the Personal Property Security Act (Ontario) and any other
applicable Canadian or provincial personal property security legislation as all
such legislation now exists or may from time to time hereafter be amended,
modified, recodified, supplemented or replaced, together with all rules,
regulations and interpretations thereunder or related thereto. References to
sections of the PPSA shall be construed to also refer to any successor sections.

          
“Proceeds”
means all “proceeds” (as defined in the PPSA and the UCC) of, and all
other profits, rentals or receipts, in whatever form, arising from the
collection, sale, lease, exchange, assignment, licensing or other disposition
of, or realization upon, any Collateral including, without limitation, all
claims of Debtor against third parties for loss of, damage to or destruction of,
or for Proceeds payable under, or unearned premiums with respect to, policies of
insurance with respect to any Collateral, and any condemnation or requisition
payments with respect to any Collateral, in each case whether now existing or
hereafter arising. 

          
“Real Estate” means all of the real property owned, leased, subleased or used by
Debtor, as listed on Schedule 4.5 to the Loan Agreement.

          “Release”
means any release, spill, emission, leaking, pumping, pouring, injection,
escaping, deposit, disposal, discharge, dispersal, dumping, leaching or
migration of Hazardous Materials into the indoor or outdoor environment
(including, without limitation, the abandonment or disposal of any barrels,
containers or other closed receptacles containing any Hazardous Materials), or
into or out of any property, including the movement of any Hazardous Material
through the air, soil, surface water, groundwater or property. 

          
“Secured Obligations” has the meaning assigned to that term in Security for
Obligations.

          “Security
Interests” means the security interests granted pursuant to Grant of
Security Interests hereof and pursuant to all other security interests created
or assigned as additional security for the Secured Obligations pursuant to the
provisions of this Agreement and the other Loan Documents. 

          
“Senior Agent” means Heller Financial, Inc., a Delaware Corporation and its
successors and assigns pursuant to Section 21 of the Subordination Agreement.

          
“Senior Debt” has the meaning assigned to that term in the Subordination
Agreement.

          
“Senior Lenders” means the holders of the Senior Debt.

          
“Subordinated Creditors” means the Subordinated Creditors as defined in the
Subordination Agreement.

          "Subsidiary"
means, with respect to any Person, any corporation, association or other
business entity of which more than 50% of the total voting power of shares of
stock (or equivalent ownership or controlling interest) entitled (without regard
to the occurrence of any contingency) to vote in the election of directors,
managers or trustees thereof is at the time owned or controlled, directly or
indirectly, by that Person or one or more of the other subsidiaries of that
Person or a combination thereof. 

          “Trade-marks”
means any and all Canadian, United States and foreign trade-marks, trade names,
corporate names, company names, business names, fictitious business names, trade
styles, service marks, certification marks, collective marks, logos, other
source or business identifiers, designs and general intangibles of a like
nature, all registrations and applications for any of the foregoing including,
but not limited to the registrations and applications referred to in Schedule IV
of this Agreement, all extensions or renewals of any of the foregoing; all of
the goodwill of the business connected with the use of and symbolized by the
foregoing; the right to sue for past infringement or dilution of any of the
foregoing or for any injury to goodwill, and all Proceeds of the foregoing,
including, without limitation, license royalties, income, payments, claims,
damages, and Proceeds of suit. 

          “Trademark
Licenses” means all of Debtor’s right, title and interest in and
to any and all agreements providing for the grant of any right in or to any
Trade-marks (whether Debtor is the licensor or the licensee thereunder)
including, without limitation, each agreement referred to in Schedule IV hereof. 

          “Trade
Secrets” means all of Debtor’s right, title and interest in and to
trade secrets and all other confidential or proprietary information and know-how
now or hereafter owned or used in, or contemplated at any time for use in, the
business of Debtor (all of the foregoing being collectively called a
“Trade Secret”), whether or not such Trade Secret has been
reduced to a writing or other tangible form, including all documents and things
embodying, incorporating, or referring in any way to such Trade Secret, the
right to sue for past infringement of any Trade Secret, and all proceeds of the
foregoing, including, without limitation, licenses, royalties, income, payments,
claims, damages and proceeds of suit. 

          “Trade
Secret Licenses” means all of Debtor’s right, title and interest
in and to any and all agreements providing for the granting of any right in or
to any Trade Secrets (whether Debtor is the licensor or the licensee thereunder)
including, without limitation, each agreement referred to in Schedule VI hereof. 

          “UCC”
means the Uniform Commercial Code as in effect from time to time in the State of
New York, provided that if by reason of mandatory provisions of law, the
perfection or the effect of perfection or non-perfection of the Security
Interests in any Collateral or the availability of any remedy hereunder is
governed by the Uniform Commercial Code as in effect on or after the date hereof
in any other jurisdiction, “UCC” means the Uniform Commercial
Code as in effect in such other jurisdiction for purposes of the provisions
hereof relating to such perfection or effect of perfection or non-perfection or
availability of such remedy. 

Section 33.    Subordination

          Notwithstanding
anything to the contrary contained herein, the rights and obligations of the
parties hereto are subject to the terms and provisions of the Subordination
Agreement. In the event of any conflict or inconsistency between the terms,
conditions and provisions of this Agreement and the terms, conditions and
provisions of the Subordination Agreement, the terms, conditions and provisions
of the Subordination Agreement shall prevail. 

 [SIGNATURE PAGE TO FOLLOW]

Witness the due execution hereof by the respective duly authorized officers of
the undersigned as of the date first written above.

	 	
                            RECOTON CANADA LTD.

                            By:   
       
/s/ Arnold Kezsbom       
            
             
            

                            Name:      
Arnold Kezsbom

                            Title:         
Vice President

                            HELLER FINANCIAL, INC., as Senior Agent, 

                            on behalf of Agents, Senior Lenders, Subordinated 

                            Agent and Subordinated Creditors

                            By:   
       
/s/ Dwayne L. Coker       
            
             
            

                            Name:      
Dwayne L. Coker

                            Title:        
Vice PresidentEXHIBIT 10.4

Exhibit 10.4

 FIRST AMENDMENT TO SECURITIES PURCHASE AGREEMENT,

GUARANTY AND REGISTRATION RIGHTS AGREEMENT

           AMENDMENT dated
as of October 31, 2000 (this "Amendment") to (a) SECURITIES PURCHASE
AGREEMENT, dated as of February 4, 1999, (the "Purchase Agreement") among
RECOTON CORPORATION, a New York corporation (the "Company" or
"Recoton"), THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
("Prudential") and ING (U.S.) CAPITAL LLC ("ING"; ING together
with Prudential, individually referred to as a "Purchaser" and
collectively as "Purchasers"); (b) GUARANTY, dated as of November 3, 1999
(the "Guaranty"), by each of the GUARANTORS listed therein in favor of the
Purchasers; and (c) REGISTRATION RIGHTS AGREEMENT, dated as of February 4, 1999
(the "Registration Rights Agreement"), among the Company, Prudential and ING
(U.S.) INVESTMENT CORPORATION. Capitalized terms used herein and not defined
herein shall have the respective meanings set forth for such terms in the
Purchase Agreement.

R E C I T A L S:

           WHEREAS, the
Company and the Purchasers are party to the Purchase Agreement;

           WHEREAS, the
Company and certain of its Subsidiaries, the Purchasers, certain other Existing
Creditors (as defined in the MRA (as defined below)) and The Chase Manhattan
Bank, as collateral agent for the Secured Parties (as defined in the MRA), are
parties to that certain Master Restructuring Agreement dated as of September 8,
1999 (as amended, supplemented, restated or otherwise modified from time to
time, the "MRA");

           WHEREAS, the
Company and certain of its Subsidiaries are entering into a Loan Agreement dated
as of the Closing Date (as amended, supplemented, restated or otherwise modified
from time to time, the "Loan Agreement") with the banks and financial
institutions from time to time party thereto, Heller Financial, Inc., as
administrative agent and General Electric Capital Corporation, as collateral
agent and syndication agent;

           WHEREAS, the
Company is entering into a Term Loan Agreement dated as of the Closing Date (as
amended, supplemented, restated or otherwise modified from time to time, the
"Term Agreement") with the banks and financial institutions from time to time
party thereto and The Chase Manhattan Bank, as administrative agent;

           WHEREAS, it is a
condition precedent to each of the Loan Agreement and the Term Agreement that
the MRA, the 1997 Note Purchase Agreements, the 1998 Note Purchase Agreements,
the Chase Term Loans, the Chase Mortgages and the Related Mortgage Documents,
the Existing Credit Agreement and the LIFO Credit Agreement (each as defined in
the MRA) and all documents related thereto be terminated and that all
obligations in connection therewith shall be terminated and all collateral in
which the Secured Parties were granted a security interest in connection
therewith shall be released; and

           WHEREAS, it is a
condition precedent to each of the Loan Agreement and the Term Agreement that
the Purchase Agreement be amended, as set forth herein;

           WHEREAS, the
Company has requested that the Purchasers agree to amend certain provisions of
the Purchase Agreement, the Guaranty and the Registration Rights Agreement;
and

           WHEREAS, subject
to the terms and provisions of this Amendment, the Required Holders have agreed
to amend certain terms and conditions of the Purchase Agreement, the Guaranty
and the Registration Rights Agreement as specifically set forth in this
Amendment.

           NOW, THEREFORE,
it is agreed as follows:

           Section 1.
  Effect of the MRA. It is understood and agreed that since the MRA has been
terminated, for purposes of the Purchase Agreement and the Guaranty, the terms
and provisions of the MRA except as otherwise restated herein shall have no
force and effect from the Amendment Effective Date (as defined in Section 12
hereof); provided, however, that nothing herein shall affect the re-pricing of
the 1999 Original Warrants pursuant to Section 2.4(b) of the MRA or the issuance
of the "1999 Replacement Warrants".

           Section 2.
  Amendment of Section 4. As of the Amendment Effective Date,
(a) Sections 4A and 4E of the Purchase Agreement and the second paragraph of
Section 4G of the Purchase Agreement are hereby deleted in their entirety and
(b) the first sentence of Section 4G of the Purchase Agreement is amended to
state that the interest rate applicable from the Amendment Effective Date shall
be 16.5%.

           Section 3.
  Amendment of Section 5. As of the Amendment Effective Date, Section 5 of the
Purchase Agreement is hereby amended by deleting it in its entirety and by
substituting therefor the covenants set forth in Appendix A hereto. Terms used
in Appendix A hereto not otherwise defined therein shall have the meaning
assigned to such terms in Appendix D hereto.

           Section 4.
  Amendment of Section 6. As of the Amendment Effective Date,
Section 6 of the Purchase Agreement is hereby amended by deleting it in its
entirety and by substituting therefor the covenants set forth in Appendix B
hereto. Terms used in Appendix B hereto not otherwise defined therein shall have
the meaning assigned to such terms in Appendix D hereto.

           Section 5.
  Amendment of Section 7A. As of the Amendment Effective Date,
Section 7A of the Purchase Agreement hereby is amended by:

            
   (a)  deleting clauses (i) through (xvi), inclusive,
in its entirety and by substituting therefor clauses (i) through (xxv),
inclusive, the Events of Default set forth in Appendix C hereto. Terms used in
Appendix C hereto not otherwise defined therein shall have the meaning assigned
to such terms in Appendix D hereto; and

            
   (b)  deleting the reference to "clause (viii),
clause (ix) or clause (x)" in paragraph (a) and substituting therefor "clause
(vii) or clause (viii)".

          Section 6.  
Amendment of Section 10. As of the Amendment Effective Date, Section 10 of the
Purchase Agreement hereby is amended by:

            
   (a)  deleting the definition of "Bank Credit
Agreement" in its entirety and by substituting therefor the following:

          
"Bank Credit Agreement" shall mean the Loan Agreement dated the Closing Date
among the Company, Interact Accessories, Inc., a Delaware corporation, Recoton
Audio Corporation, a Delaware corporation, AAMP of Florida, Inc., a Florida
corporation, and Recoton Home Audio, Inc., a California corporation, the banks
and financial institutions from time to time party thereto, Heller Financial,
Inc., a Delaware corporation, as administrative agent and senior agent and
General Electric Capital Corporation, a New York corporation, as collateral
agent and as syndication agent, 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 or one or more 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 Debt incurred thereunder and the undrawn face
amount of all letters of credit issues thereunder plus commitments to lend under
the German Facility (as defined in Annex A hereto) plus the principal amount of
loans outstanding under the Bank Financing Agreement do not exceed in the
aggregate $275,000,000 at any one time outstanding)."

            
   (b)  deleting the definition of "Bank Financing
Agreements" in its entirety and by substituting therefor the following:

          
"Bank Financing Agreement" shall mean the Credit Agreement dated the Closing
Date among the Company, the banks and financial institutions from time to time
party thereto and The Chase Manhattan Bank, as administrative agent, 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 or one or more lenders and whether provided under the original Bank
Financing Agreement or one or more other credit or other agreements or
indentures but only to the extent that the aggregate principal amount of Debt
incurred thereunder and the undrawn face amount of all letters of credit issues
thereunder do not exceed in the aggregate $15,000,000 at any one time
outstanding)."

             
  (c) deleting the definition of "GAAP" in its entirety and by
substituting therefor the following:

          
"GAAP" means generally accepted accounting principles set forth in the opinions
and pronouncements of the Accounting Principles Board of the American Institute
of Certified Public Accountants and statements and pronouncements of the
Financial Accounting Standards Board that are applicable to the circumstances as
of the date of determination."

             
  (d)  deleting Section 10B in its entirety and by
substituting therefor the following:

          
"Accounting Terms.  For purposes of this Agreement, all
accounting terms not otherwise defined herein shall have the meanings assigned
to such terms in conformity with GAAP. Financial statements and other
information furnished to Purchasers hereunder shall be prepared in accordance
with GAAP (as in effect at the time of such preparation) on a consistent basis.
In the event any "Accounting Changes" (as defined below) shall occur and such
changes affect financial covenants, standards or terms in this Agreement, then
Company agrees to enter into negotiations in order to amend such provisions of
this Agreement so as to equitably reflect such Accounting Changes with the
desired result that the criteria for evaluating the financial condition of
Company shall be the same after such Accounting Changes as if such Accounting
Changes had not been made, and until such time as such an amendment shall have
been executed and delivered by Company and Purchasers, (A) all financial
covenants, standards and terms in this Agreement shall be calculated and/or
construed as if such Accounting Changes had not been made, and (B) Company shall
prepare footnotes to the financial statements required to be delivered hereunder
that show the differences between the financial statements delivered (which
reflect such Accounting Changes) and the basis for calculating financial
covenant compliance (without reflecting such Accounting Changes). "Accounting
Changes" means: (a) changes in accounting principles required by GAAP and
implemented by Company and (b) changes in accounting principles recommended by
Company' Accountants."

          Section 7.  
Amendment of Section 11. As of the Amendment Effective Date, Section 11C
of the Purchase Agreement is hereby amended by inserting after the last sentence
therein the following:

          "Notwithstanding
the foregoing or anything to the contrary contained herein, until the Senior
Debt has been indefeasibly paid in full in cash in accordance with the terms of
the Bank Credit Agreement and the Bank Financing Agreement and all lending
commitments under the Bank Credit Agreement and the Bank Financing Agreement
have terminated, Purchasers shall not, without the prior written consent of the
Administrative Agent under each of the Bank Credit Agreement and the Bank
Financing Agreement Agent, agree to any amendment, waiver, modification or
supplement to this Agreement or any Guaranty hereunder the effect of which is to
(a) increase the maximum aggregate principal amount of the Notes or the rate of
interest on the Notes, (b) change the dates upon which payments of principal or
interest on the Notes are due, (c) change or add any event of default or any
covenant hereunder, (d) alter the subordination provisions in Section 12 hereof,
or (g) change or amend any other term herein if such change or amendment would
result in a Default under either the Bank Credit Agreement or the Bank Financing
Agreement."

        Section
8.  Amendment of Section 12.  As of the Amendment
Effective Date, Section 12 of the Purchase Agreement is hereby amended by:

             
  (a)  deleting the definition of "Majority Senior Debt
Holders" in its entirety and by substituting therefor the following:

          ""Majority Senior
Debt Holders" shall mean the (i) Required Lenders (as defined in the Bank Credit
Agreement) or (ii) at such time when the Bank Credit Agreement is terminated and
all Senior Debt thereunder is indefeasibly paid in full in cash and all
commitments to lend thereunder have been terminated, Required Lenders (as
defined in the Bank Financing Agreement)."

             
  (b)  deleting clause (i) of the definition of "Senior
Debt" in its entirety; and

             
  (c) deleting from clause (iii) of the definition of "Senior Debt"
the phrase "cash collateralization of letters of credit" and inserting after the
phrase "including Post-petition Interest" the phrase "whether or not
allowed".

          Section 9.  
Certain Waivers and Amendments.  Notwithstanding anything to
the contrary set forth herein or in the Purchase Agreement:

             
  (a)  any amendment, supplement, modification, consent or
waiver in respect of the observance or performance of the covenants (or any
defined term referred to therein) set forth Sections 5, 6 and 7 of the
Senior Loan Agreement (as defined in Appendix D hereto) shall be binding on each
of the parties hereto and shall be deemed an amendment, supplement,
modification, consent or waiver of the corresponding provision of or to Section
5 or 6, as applicable, of the Purchase Agreement, as amended hereby, if such
amendment supplement, modification, consent or waiver is executed and delivered
in accordance with the terms of Section 9.4 of the Senior Loan
Agreement;

             
  (b)  any waiver of the occurrence of a Default or Event of
Default under the Senior Loan Agreement shall be deemed a waiver of the
corresponding Default or Event of Default, as the case may be, as set forth in
Section 7A of the Purchase Agreement, as amended hereby, and shall be
binding on each of the parties hereto and shall be deemed an amendment,
supplement, modification, consent or waiver of or to the Purchase Agreement, as
amended hereby, if such amendment, supplement, modification, consent or waiver
executed and delivered in accordance with the terms of Section 9.4 of the Senior
Loan Agreement, provided that no such waiver shall be effective to waive an
Event of Default in pursuant to Section 7A(i) of the Purchase Agreement, as
amended hereby, without the written consent of the holders of each of the
Notes;

             
  (c)  the Company agrees to give Purchasers notice of any
amendment, supplement, modification, consent, waiver or Event of Default under
the Senior Loan Agreement as contemplated by Section 8(a) and (b) above; and

             
  (d)  upon the occurrence of a Permitted Refinancing (as
defined in the Subordination Agreement (as defined in Appendix D hereto)) the
covenants and Events of Default set forth in the Purchase Agreement, as amended
hereby, shall be modified in a manner consistent with any covenants and events
of default contained in any agreement providing for such refinancing.

          Section 10.  
Amendment of Guaranty; Release of Guarantors.

             
  (a)  As of the Amendment Effective Date, Section 3.1 of
the Guaranty is hereby amended by:

             
       (i)  deleting the proviso to the introductory paragraph in its
entirety; and

             
       (ii)  deleting the definition of "Bank Credit Agreement" in its
entirety.

             
  (b)  As of the Amendment Effective Date, Section 5.15 of
the Guaranty is amended by replacing the references to "paragraph 6G or
Paragraph 6H" with "paragraph 6C or paragraph 6F" and by inserting after the
last sentence therein the following:

          "Without any
action required of any Noteholder, any Guarantor shall be automatically released
from its obligations under this Guaranty if such Guarantor is released from its
obligations under the Guaranties (as defined in the Bank Credit Agreement)."

             
  (c)  As of the Amendment Effective Date, Section 5.16 of
the Guaranty is hereby amended by deleting Section 5.16 in its entirety and
substituting therefor the following:

          "The obligations
of any Guarantor under this Guaranty shall be subordinate and junior in right
and time of payment to such Guarantor's obligations under the Bank Credit
Agreement and the Bank Financing Agreement and any guaranties delivered in
connection therewith and the provisions of Section 12 of the Purchase Agreement
are incorporated herein by reference as if fully set forth herein, mutatis
mutandis, provided that any notice to be provided to any Guarantor in connection
with the subordination provided for herein shall be sufficient if such notice is
provided to Recoton Corporation in accordance with the terms of the Purchase
Agreement, as applicable."

             
  (d) As of the Amendment Effective Date, guarantees issued in favor
of the Purchasers by companies which are not guarantors of the obligations under
the Loan Agreement or the Term Agreement are hereby automatically terminated and
released.

          Section 11.  
Amendment of Registration Rights Agreement. The definition of "Warrants"
in the Registration Rights Agreement is amended to read as follows: "the
Company's Warrants as defined in and issued under the Purchase Agreement and any
Additional Warrants (as defined in the Purchase Agreement, including, without
limitation, the 1999 Replacement Warrants and the Amendment Warrants, as
referenced in an October 31, 2000 Amendment to the Purchase Agreement) to the
extent issued as provided in the Purchase Agreement."

          Section 12.  
Representations and Warranties. Company hereby represents and warrants to
the Purchasers that after giving effect to this Amendment:

             
  (a)  no Default or Event of Default has occurred and is
continuing on and as of the Closing Date under the Purchase Agreement; and

             
  (b)  the representations and warranties of the Company
contained in the Purchase Agreement are true and correct on and as of the date
hereof as if made on and as of the date hereof, except to the extent such
representations and warranties expressly relate to a different date.

          Section 13.  
Effectiveness.  This Amendment shall become effective as of the
date hereof (the "Amendment Effective Date") upon satisfaction of each of
the following conditions:

             
  (a)  the Purchasers shall have executed and delivered a
counterpart of this Amendment and received a duly executed counterpart of this
Amendment as well as a fully executed copy of the Loan Agreement and the Term
Agreement from the Company (which aforesaid executions and deliveries may be
effected by delivery and receipt by facsimile transmission);

             
  (b)  the "Closing Date" shall have occurred under each of
the Loan Agreement and the Term Agreement;

             
  (c)  the Company shall have paid (or made other
arrangements satisfactory to the Purchasers to pay) all of the Purchasers'
out-of-pocket expenses (including, without limitation, the reasonable fees and
disbursements of legal counsel) in connection with this Amendment;

             
  (d)  the Company shall have delivered to the Purchasers
warrants substantially in the form of Exhibit A (the "Amendment Warrants") of
which warrants to purchase 11,429 shares shall have been issued to Prudential
and warrants to purchase 8,571 shares shall have been issued to ING, such
Amendment Warrants having an exercise price equal to the average Market Price
(as defined in the 1999 Replacement Warrants issued to the Purchases pursuant to
the MRA) for the ten Business Days immediately preceding the date of the
issuance thereof and an expiration date on the fifth anniversary of the date of
grant; and

             
  (e)  the Company shall have paid a non-refundable closing
fee to each of Prudential in the amount of $500,000 and ING in the amount of
$375,000.

          Section 14.  
Status of Purchase Agreement.

             
  (a)  This Amendment is limited solely for the purposes and
to the extent expressly set forth herein, and, except as expressly amended
hereby, the terms, provisions and conditions of the Purchase Agreement, the
Guaranty and the Registration Rights Agreement shall continue in full force and
effect and are hereby ratified and confirmed in all respects; and 

             
  (b)  No amendment of any terms or provisions of the
Purchase Agreement, the Guaranty or the Registration Rights Agreement made
hereunder shall relieve the Company from complying with any other term or
provision of the Purchase Agreement, the Guaranty and the Registration Rights
Agreement.

          Section 15.
Miscellaneous.

             
  (a)  No Waiver, Cumulative Remedies.  No
failure or delay or course of dealing on the part of the Purchasers in
exercising any right, power or privilege hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right, power or
privilege preclude any other or further exercise thereof or the exercise of any
other right, power or privilege hereunder. The rights, powers and remedies
herein expressly provided are cumulative and not exclusive of any rights, powers
or remedies which the Purchasers would otherwise have. No notice to or demand on
the Company in any case shall entitle the Company to any other or further notice
or demand in similar or other circumstances or constitute a waiver of the rights
of the Purchasers to any other or further action in any circumstances without
notice or demand.

             
  (b)  Expenses.  Company agrees to pay and
reimburse the Purchasers for all of their reasonable costs and expenses
(including, without limitation, the reasonable fees and disbursements of legal
counsel) in connection with this Amendment.

             
  (c)  Headings Descriptive.  The headings
of the several Sections and subsections of this Amendment are inserted for
convenience only and shall not in any way affect the meaning or construction of
any provision.

             
  (d)  Severability.  In case any provision
in or obligation under this Amendment shall be invalid, illegal or unenforceable
in any jurisdiction, the validity, legality and enforceability of the remaining
provisions or obligations, or of such provision or obligation in any other
jurisdiction, shall not in any way be affected or impaired thereby. 

             
  (e)  Counterparts.  This Amendment may be
executed and delivered in any number of counterparts and by the different
parties hereto on separate counterparts, each of which when so executed and
delivered shall be an original, but all of which shall together constitute one
and the same instrument. A complete set of counterparts shall be lodged with
each of the Company and the Purchasers.

          Section 16.  
Governing Law.  THIS AMENDMENT SHALL BE GOVERNED BY, AND SHALL
BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK,
WITHOUT REGARD TO THE CONFLICTS OF LAW PRINCIPLES THEREOF.

[Remainder of page intentionally left blank]

          IN WITNESS
WHEREOF, the parties hereto have caused this Amendment to be duly executed and
delivered by their respective duly authorized officers as of the date first
written above.

	      
           
           
COMPANY:
	RECOTON CORPORATION

By:        /s/ Arnold Kezsbom
              
              
             

Name:  Arnold Kezsbom

Title:    Senior Vice President - Finance

	      
           
           GUARANTORS:
	INTERACT ACCESSORIES, INC.

RECOTON AUDIO CORPORATION

AAMP OF FLORIDA, INC.

RECOTON HOME AUDIO, INC.

CHRISTIE DESIGN CORPORATION

RECOTON INTERNATIONAL HOLDINGS, INC.

RECOTON EUROPEAN HOLDINGS, INC.

RECOTON JAPAN, INC.

RECOTON CANADA LTD

RECONE, INC.

By:        /s/ Arnold Kezsbom
      
              
         
             

Name:  Arnold Kezsbom

Title:    Vice President

	      
           
           PURCHASERS:
	THE PRUDENTIAL INSURANCE COMPANY OF AMERICA

By:  /s/ Gwendolyn S. Foster   
           
              
             

Name:  Gwendolyn S. Foster

Title:     Vice President

ING (U.S.) CAPITAL LLC

By:  /s/ William B. Redmond      
           
              
             

Name:  William B. Redmond

Title:    Vice President

	AGREED (for purposes of Section 10):
	ING (U.S.) INVESTMENTS CORPORATION

By:  /s/ William B. Redmond           
              
             

Name:   William B. Redmond

Title:    Vice President

Appendix A to the Amendment to

the Securities Purchase Agreement

5.  AFFIRMATIVE COVENANTS

          Company covenants
and agrees that it shall perform, and shall cause each of its Subsidiaries to
perform, all covenants in this Section 5.

          5A.  
Financial Statements and Other Reports.  Recoton will deliver
to Purchasers the financial statements and other reports contained in the
Reporting Rider attached as Schedule 5A hereto (capitalized terms used therein
not otherwise defined shall have the meanings ascribed thereto herein). In
addition to the foregoing, the Company covenants that it will, upon the request
of the holder of any Note, provide such holder, and any qualified institutional
buyer designated by such holder, such financial and other information as such
holder may reasonably determine to be necessary in order to permit compliance
with the information requirements of Rule 144A under the Securities Act in
connection with the resale of the Notes, except at such times as the Company is
subject to the reporting requirements of section 13 or 15(d) of the Exchange
Act. For the purpose of this paragraph, the term "qualified institutional
buyer" shall have the meaning specified in Rule 144A under the Securities
Act. 

          5B.  
Maintenance of Properties.  Each Loan Party will and will cause
each of its Subsidiaries to maintain or cause to be maintained in good repair,
working order and condition all material properties used in the business of each
Loan Party and its Subsidiaries and will make or cause to be made all
appropriate repairs, renewals and replacements thereof. 

          5C.  
Compliance with Laws.  Each Loan Party will, and will cause each of its
Subsidiaries to, comply with the requirements of all applicable laws, rules,
regulations and orders of any Governmental Authority as now in effect and which
may be imposed in the future in all jurisdictions in which such Loan Party or
any of its Subsidiaries is now doing business or may hereafter be doing
business, other than those laws the noncompliance with which could not
reasonably be expected to have a Material Adverse Effect. 

          5D.  
Use of Proceeds and Margin Security.  Company shall use the proceeds of
all Senior Loans for ordinary working capital and general corporate purposes
(and as described in the recitals to the Senior Loan Agreement) consistent with
all applicable laws, statutes, rules and regulations. No portion of the proceeds
of any Senior Loan shall be used by the Company or any of its Subsidiaries for
the purpose of purchasing or carrying margin stock within the meaning of
Regulation U, or in any manner that might cause the borrowing or the application
of such proceeds to violate Regulation T or Regulation X or any other regulation
of the Board of Governors of the Federal Reserve System or to violate the
Exchange Act.

          5E.  
Year 2000.  Company and each of its Subsidiaries has assessed the microchip and
computer-based systems and the software used in its business and has determined
that such systems and software are "Year 2000 Compliant". Company has
not experienced any disruption in its business or any material expense as a
result of its systems and software, and those of its principal vendors,
suppliers, and customers, failing to be Year 2000 Compliant, and the Company is
not aware of any circumstances that would be reasonably likely to result in a
material adverse change in the business or financial condition of the Company or
any of its Subsidiaries as a result of the failure of Company or any of its
Subsidiaries to have become Year 2000 Compliant prior to January 1, 2000. For
purposes of this paragraph, "Year 2000 Compliant" means that all
software, embedded microchips and other processing capabilities utilized by, and
material to the business operations or financial condition of, the Company and
its Subsidiaries are able to interpret, store, transmit, receive and manipulate
data on and involving all calendar dates correctly and without causing any
abnormal ending scenarios in relation to dates in and after the Year 2000.

          5F.  
Environmental Matters.  (i) Each Loan Party shall comply with
all Environmental Laws and shall promptly take any and all necessary Cleanup
action in connection with the Release or threatened Release of any Hazardous
Materials on, under or affecting any real estate in order to comply with all
applicable Environmental Laws and governmental authorizations, unless the
failure to so comply could not reasonably be expected to have a Material Adverse
Effect. In the event a Loan Party undertakes any Cleanup action with respect to
the Release or threatened Release of any Hazardous Materials on or affecting any
real estate, such Loan Party shall conduct and complete such Cleanup action in
material compliance with all applicable Environmental Laws, and in accordance
with the policies, orders and directives of all federal, state and local
governmental authorities except when, and only to the extent that, such Loan
Party’s liability for such presence, handling, storage, use, disposal,
transportation or Release or threatened Release of any Hazardous Materials is
being contested in good faith by such Loan Party. 

             
  (ii)  Each Loan Party shall promptly advise the Purchasers
in writing and in reasonable detail of (a) any Release or threatened Release of
any Hazardous Materials required to be reported to any federal, state, local or
foreign governmental or regulatory agency under any applicable Environmental
Laws, (b) any and all material written communications with respect to any
pending or threatened Environmental Claims or Releases of Hazardous Materials,
in each such case which, individually or in the aggregate, have a reasonable
possibility of giving rise to a Material Adverse Effect; (c) any Cleanup
performed by a Loan Party or any other Person in response to (x) any Hazardous
Materials on, under or about any Real Estate, the existence of which has a
reasonable possibility of resulting in an environmental liability having a
Material Adverse Effect, or (y) any environmental liabilities that could have a
Material Adverse Effect, and (iv) a Loan Party's discovery of any occurrence or
condition on any property that could cause any Real Estate presently owned or
operated by the Loan Party or its Subsidiaries or any part thereof to be subject
to any restrictions on the ownership, occupancy, transferability or use thereof
under any Environmental Laws.

             
  (iii)  Each Loan Party shall promptly notify the
Purchasers of (a) any proposed acquisition of stock, assets, or property by such
Loan Party that could reasonably be expected to expose such Loan Party and (b)
any proposed action to be taken by such Loan Party to commence manufacturing,
industrial or other similar operations that could reasonably be expected to
subject such Loan Party to additional Environmental Laws or governmental
authorizations, that are materially different from the Environmental Laws
applicable to the operations of such Loan Party.

             
  (iv)  Each Loan Party shall, at its own expense, provide
copies of such documents or information as the Purchasers may reasonably request
in relation to any matters disclosed pursuant to this subsection.

          5G.  Financial
Covenants.  Company covenants and agrees that it shall comply with and
shall cause each of its Subsidiaries to comply with all covenants contained in
the Financial Covenant Rider attached hereto as Schedule 5G (capitalized terms
used therein not otherwise defined therein shall have the meanings ascribed
thereto herein). 

          5H.  Notices.
  Company shall promptly give notice to the Purchasers of:

             
  (i)  the occurrence of any Default or Event of Default of
which it is aware under this Agreement, the Senior Loan Agreement or the Term
Loan Agreement;

             
  (ii)  any development or event of which it is aware which
has had or could reasonably be expected to have a Material Adverse Effect.

Each notice pursuant to this subsection shall be accompanied by a statement
of Company’s chief executive officer, chief operating officer or chief
financial officer setting forth details of the occurrence referred to therein
and stating what action the Company proposes to take with respect thereto.

        5I.  Parity with
Senior Lender.  No Person shall deliver a guarantee to the Senior
Agent on behalf of the Senior Lenders to secure payment and performance of the
Obligations (as defined in the Senior Loan Agreement) that is not also granted
to the Purchasers (as subordinated creditors) to secure payment and performance
of the Notes and the other obligations hereunder; provided that any guarantee to
the Purchasers shall be subordinated on terms substantially similar to those in
guarantees issued in favor of the Purchasers on the date hereof. 

          5J.  Inspection
of Property; Books and Records; Discussions.  Company shall keep proper books of
records and account in which full, true and correct entries in conformity with
GAAP and all Requirements of Law shall be made of all material dealing and
transactions in relation to its business and activities; and permit
representatives of any Purchaser to visit and inspect any of its properties and
examine and make abstracts from any of its books and records at any reasonable
time and as often as may reasonably be desired and to discuss the business,
operations, properties and financial and other condition of the Company and its
Subsidiaries with officers of the Company and its Subsidiaries and with its
independent certified public accountants so long as representatives of the
Company are given the opportunity to be present. 

          5K.  Use of
Proceeds.  Company shall use the proceeds of the Senior Loans for ordinary
working capital and general corporate purposes (and as described in the recitals
to the Senior Loan Agreement) consistent with all applicable laws, statutes,
rules and regulations. 

Appendix B to the Amendment to

the Securities Purchase Agreement

6.  NEGATIVE COVENANTS

          Company covenants
and agrees that it shall not and will not permit any of its Subsidiaries to:

          6A.  
Indebtedness and Liabilities.  Directly or indirectly create,
incur, assume, guaranty, or otherwise become or remain directly or indirectly
liable, on a fixed or contingent basis, with respect to any Indebtedness
except:

             
  (i)  Indebtedness under this Agreement and the Notes;

           
    (ii)   Indebtedness (excluding Capital Leases)
not to exceed $1,500,000 in the aggregate at any time outstanding;

             
  (iii)  Indebtedness under Capital Leases (excluding
Capital Leases in connection with the New Information System) in existence as of
the Closing Date plus an additional $1,000,000 outstanding at any time in the
aggregate; provided, however, that amounts of such Indebtedness reduced shall be
allowed to be incurred again;

             
  (iv)  Indebtedness in connection with the New Information
System not to exceed $15,000,000 outstanding at any time in the aggregate;

             
  (v)  (a)  Indebtedness of any Loan Party to any
other Loan Party; (b) Indebtedness of any Foreign Subsidiary to any Loan Party
to the extent permitted under subsection 6D(vi); (c) Indebtedness of any
Foreign Subsidiary to any other Foreign Subsidiary; (d) Indebtedness of any Loan
Party to any Foreign Subsidiary; provided, however, that (1) any
inter company Indebtedness of any Loan Party permitted under this subsection
6A(v) shall be subordinated in right of payment to the Obligations under and
as defined in the Senior Loan Agreement on terms satisfactory to the Senior
Lenders and evidenced by intercompany notes in form and substance satisfactory
to the Purchasers, (2) all such intercompany notes shall be endorsed in blank or
accompanied by note powers endorsed in blank and pledged and delivered to the
Senior Agent, for the benefit of the Agents, Senior Lenders, the Term Loan
Administrative Agent and the Term Loan Lenders, (3) at the time any inter
company Indebtedness is incurred by any Loan Party pursuant to this
subsection 6A(v), and after giving effect thereto, the Loan Parties shall
be Solvent; and (4) no Default or Event of Default exists or would occur and be
continuing after giving effect to any proposed inter company Indebtedness
pursuant to this subsection 6A(v):

             
  (vi)  Indebtedness of Recoton in an amount not to exceed
$5,518,399 plus accrued interest evidenced by a promissory note payable to the
United States of America or an agency thereof delivered in settlement of
obligations of Recoton arising out of the customs investigation discussed in
Recoton's Form 8-K for an event which occurred on July 27, 1999;

             
  (vii) Indebtedness under the Senior Loan Agreement and the Term Loan
Agreement;

             
  (viii)  Indebtedness under the German Facility; provided,
that the terms of the Indebtedness permitted under this subsection 6A(viii) can
not be amended, increased, replaced or terminated without the prior written
consent of the Purchasers;

             
  (ix)  Indebtedness existing on the Closing Date and
identified on Schedule 7.1 to the Senior Loan Agreement;

             
  (x)  Indebtedness of the type described in subsection
2.3(C) of the Senior Loan Agreement with respect to the issuance of debt
securities of Recoton in a public offering or a private placement and which (1)
the Net Securities Proceeds are used to pay down the Senior Debt or the
"Obligations" (as such term is defined in the Term Loan Agreement) as set forth
in subsection 2.5 of the Term Loan Agreement or as otherwise required
pursuant to this Agreement, (2) shall be subordinate to the Senior Loans; (3)
the terms and conditions shall be satisfactory to the Purchasers and (4) the
documentation shall be satisfactory to the Purchasers;

             
  (xi)  Indebtedness incurred by STD and its Subsidiaries to
the extent supported by Lender Letters of Credit (as defined in the Senior Loan
Agreement) and which amount as of the Closing Date is $12,400,000;

             
  (xii)  Indebtedness with respect to the obligations of
Recoton Italy and Recoton UK referred to in subsection 6B(v) and (vi);

             
  (xiii)  Indebtedness of Recoton Italy with respect to
letters of credit that are cash collateralized; and

             
  (xiv)  Senior Debt and any Permitted Refinancing (as
defined in the Subordination Agreement).

Company will not, and will not permit any of its Subsidiaries to, incur any
Liabilities except for Indebtedness permitted herein and trade and other
payables and expenses arising in the ordinary course of business that are paid
in accordance with their prior existing practices.

          6B.  Guaranties.  Guaranty,
endorse, or otherwise in any way become or be responsible for any obligations of
any other Person, whether directly or indirectly by agreement to purchase the
indebtedness of any other Person or through the purchase of goods, supplies or
services, or maintenance of working capital or other balance sheet covenants or
conditions, or by way of stock purchase, capital contribution, advance or loan
or issuance of a letter of credit for the purpose of paying or discharging any
indebtedness or obligation of such other Person or otherwise except for:
endorsements of instruments or items of payment for collection in the ordinary
course of business;

             
  (i)  guaranties in existence on the Closing Date and
listed on Schedule 7.2 to the Senior Loan Agreement;

             
  (ii)  guaranties pursuant to this Agreement, the Senior
Loan Documents or the Term Loan Documents;

             
  (iii)  guaranties of the Indebtedness permitted under
subsections 6A(ii), (iii) and (iv);

             
  (iv)  guaranties made in the ordinary course of business
by a Loan Party with respect to Recoton Italy's obligations not to exceed in the
aggregate $2,000,000 for all of the Loan Parties;

             
  (v)  guaranties made in the ordinary course of business by
a Loan Party with respect to Recoton UK's obligations not to exceed in the
aggregate $2,000,000 for all of the Loan Parties;

             
  (vi)  guaranties made in the ordinary course of business
by (a) a Loan Party with respect to obligations of another Loan Party and (b) a
Foreign Subsidiary with respect to obligations of a Loan Party or any other
Foreign Subsidiary, which obligations in each case are not otherwise prohibited
by this Agreement; and

             
  (vii)  guaranties made by Recoton of the obligations
incurred by Recoton Germany under the German Facility.

          6C.  Transfers, Liens and Related Matters.

             
  (i)  Transfers. Sell, assign (by operation of law
or otherwise) or otherwise dispose of, or grant any option with respect to any
assets of such Person, except that the Company and its Subsidiaries may (a) sell
or otherwise dispose of Inventory in the ordinary course of business; (b) sell,
transfer or discount without recourse, in the ordinary course of business,
accounts receivables arising in the ordinary course of business in connection
with the compromise or collection thereof or in connection with the receipt of
proceeds under credit insurance; provided, that such proceeds are applied to
prepay the Senior Debt in accordance with its terms or as otherwise provided in
Section 2.5 of the Term Loan Agreement; (c) sell or otherwise dispose of worn
out, obsolete or surplus equipment and fixtures, so long as the Net Proceeds are
applied to the prepayment of the Senior Debt in accordance with its terms or as
otherwise provided in Section 2.5 of the Term Loan Agreement; (d) subject to the
provisions of the Senior Loan Documents, transfer, sell or assign any assets to
another Loan Party (including in connection with the dissolution, liquidation or
winding up of any Subsidiary set forth on Schedule 7.6 to the Senior Loan
Agreement); (e) make other Asset Dispositions if all of the following conditions
are met: (1) the market value of assets sold or otherwise disposed of in one or
a series of related transactions does not exceed $250,000 and the aggregate
market value of assets sold or otherwise disposed of in any Fiscal Year does not
exceed $1,000,000; (2) the consideration received is at least equal to the fair
market value of such assets; (3) the sole consideration received is cash;
provided, that trade-ins for which the cash value of such trade-in is applied
against the purchase price of new equipment so purchased shall be deemed to be
cash; (4) the Net Proceeds of such Asset Disposition are applied to the
prepayment of Senior Debt in accordance with its terms or as otherwise provided
in Section 2.5 of the Term Loan Agreement; (5) after giving effect to the sale
or other disposition of the assets included within the Asset Disposition and the
repayments required above with the proceeds thereof, the Company is in
compliance on a pro forma basis with the covenants set forth in the Schedule 5G
recomputed for the most recently ended month for which information is available
and showing it will be in compliance as of the date thereof and in the future,
and is in compliance with all other terms and conditions contained in this
Agreement; and (6) no Default or Event of Default shall then exist or result
from such sale or other disposition; and (f) consummate the InterAct
International IPO. Notwithstanding anything to the contrary contained herein (x)
Recoton shall be permitted to sell its stock (provided that the proceeds
thereof shall be applied to the Senior Debt in accordance with its terms); and
grant options in accordance with its existing stock option plans and warrants in
its reasonable business judgment, (y) InterAct International shall be permitted
to sell its stock in accordance with subsection 2.4(B)(6) of the Senior
Loan Agreement; and options on the stock of InterAct International may be
granted, and stock may be issued upon exercise of such options, to employees and
directors of InterAct International as described in Schedule 11.1(C) of the
Senior Loan Agreement, and (z) any Subsidiary can sell stock to its parent to
the extent permitted by Section 6D(iii), (vii), (viii) and (xiii).

             
  (ii)  Liens.  Except for Permitted
Encumbrances, directly or indirectly create, incur, assume or permit to exist
any Lien on or with respect to any assets of such Person or any proceeds, income
or profits therefrom.

             
  (iii)  No Negative Pledges.  Enter into
or assume any agreement (other than this Agreement, the Term Loan Documents or
the Senior Loan Documents) prohibiting the creation or assumption of any Lien
upon its properties or assets, whether now owned or hereafter acquired.

             
  (iv)  No Restrictions on Subsidiary Distributions to
the Company. Except as provided herein, the Senior Loan Agreement or the Term
Loan Agreement, directly or indirectly create or otherwise cause or suffer to
exist or become effective any consensual encumbrance or restriction of any kind
on the ability of any such Subsidiary to: (1) pay dividends or make any other
distribution on any of such Subsidiary's capital stock or other equity interest
owned by the Company or any Subsidiary of the Company; (2) pay any indebtedness
owed to the Company or any other Subsidiary; (3) make loans or advances to the
Company or any other Subsidiary; or (4) transfer any of its property or assets
to the Company or any other Subsidiary.

          6D.  Investments and Loans.  
Make or permit to exist any Investments in any other Person, except:

             
  (i)  the Company may make and maintain Investments in Cash
Equivalents consistent with the cash management system and subject to securities
account control agreements in form and substance satisfactory to the Senior
Agent;

             
  (ii)  Foreign Subsidiaries may make and maintain
Investments in Cash Equivalents;

             
  (iii)  (a)  the Company and its Subsidiaries
continue loans made to employees and former employees as set forth in Schedule
7.4(c) to the Senior Loan Agreement which loans, after the Closing Date, may not
be increased or reborrowed; (b) InterAct International may make loans to
employees of InterAct International for the purpose of exercising options to
purchase capital stock in InterAct International as described in Schedule
11.1(C) to the Senior Loan Agreement; and (iii) Company and its Subsidiaries may
make and maintain additional loans and advances to employees in an aggregate
outstanding amount not in excess of $2,000,000 at any time;

             
  (iv)  the Company and its Subsidiaries may make and
maintain extensions of trade credit in the ordinary course of business;

             
  (v)  the Company and its Subsidiaries may make and
maintain Investments existing as of the Closing Date in their respective
Subsidiaries as set forth in Schedule 7.4(e) to the Senior Loan Agreement;

             
  (vi)  after the Closing Date, Loan Parties may make and
replenish Investments in:

             
       (a) Recoton UK up to $2,000,000 in the
aggregate (including guaranties);

             
       (b) Recoton Italy up to $2,000,000 in
the aggregate (including guaranties); and

             
       (c)  Recoton Germany up to
$7,000,000 in the aggregate (including guaranties);

             
  (vii)  each Loan Party may make and maintain additional equity Investments in its
Subsidiaries which are Loan Parties;

             
  (viii)  the Company and its Subsidiaries may make
additional equity Investments in existing and new Subsidiaries in connection
with the STD Restructuring to the extent permitted under subsection 6K;

             
  (ix)  Foreign Subsidiaries may make and maintain additional equity Investments in
their respective Subsidiaries;

             
  (x)  the Company and its Subsidiaries may make inter company loans to
the extent permitted pursuant to subsection 6A(v);

             
  (xi)  the Company and its Subsidiaries may make loans and advances to suppliers
for the purchase and preparation of Inventory in the ordinary course of business
not to exceed $2,000,000 at any one time outstanding; provided that no such loan
or advance shall be outstanding for more than 180 days;

             
  (xii)  InterAct International may make loans to employees of InterAct
International for the purpose of exercising options to purchase capital stock in
InterAct International as described in Schedule 11.1(C) to the Senior Loan
Agreement; and

             
  (xiii)  debt held by any Loan Party or any of its
Subsidiaries in a Subsidiary may be converted to equity of that Subsidiary.

          6E.  
Restricted Junior Payments.  (i) Directly or indirectly
declare, order, pay, make or set apart any sum for any Restricted Junior
Payment, except that: (a) Subsidiaries of the Company may make Restricted Junior
Payments with respect to their common stock or other equity interest which
Restricted Junior Payment shall be applied to pay the Senior Debt in accordance
with its terms and, after payment in full thereof, the Term Loans, and after
payment thereof, the Notes and (b) so long as no Default or Event of Default is
occurring or continuing and after giving effect to such payment no Default or
Event of Default results, (x) Recoton may repurchase capital stock issued to its
employees, directors or consultants and the employees, directors or consultants
of its Subsidiaries, in an aggregate amount not to exceed $3,000,000 in cash
during the term of this Agreement. Notwithstanding anything to the contrary
contained herein, Recoton may repurchase shares of its capital stock which are
surrendered by optionees which consideration for repurchase shall be made solely
with the issuance of shares of additional stock issued upon the exercise of
options granted under Recoton’s stock option plans. 

             
  (ii)  Directly or indirectly pay or prepay any account
payables to STD provided, however, so long as no Default or Event of Default has
then occurred or is continuing or would be caused thereby, the account payables
to STD may be paid on a monthly basis, provided that all the following
conditions have been met:

	 
	          
(a)  the payment to STD is within normal and customary terms and shall be payment
for invoices that have remained unpaid for at least 90 days from the date of
issuance;

	 
	          
(b)  the amount to be paid shall not be in excess of
$25,000,000 per month; and

	 
	          
(c)  the amounts to be repaid shall be for account
payables with respect to the purchase of Inventory from STD.

          6F.  Restriction
on Fundamental Changes.  (i)  Enter into any transaction
of merger, amalgamation or consolidation (other than a merger, amalgamation or
consolidation among Loan Parties); (ii) other than the Subsidiaries set forth in
Schedule 7.6 to the Senior Loan Agreement, liquidate, wind-up or dissolve itself
(or suffer any liquidation or dissolution); (iii) convey, sell, lease, sublease,
transfer or otherwise dispose of, in one transaction or a series of
transactions, all or any substantial part of its business or assets, or the
capital stock or other equity interest of any of its Subsidiaries, whether now
owned or hereafter acquired other than pursuant to the establishment of
Subsidiaries as described in Schedule 7.11 to the Senior Loan Agreement or the
liquidation, winding up or dissolution of the Subsidiaries set forth on Schedule
7.6 to the Senior Loan Agreement (provided that, in connection with the
transfer of assets or creation of Subsidiaries in connection with the
transactions described on Schedule 7.11 to the Senior Loan Agreement, Purchasers
shall have received (a) such amendments and counterparts to any guaranties under
the Notes as may be requested by Purchasers to bind newly created Subsidiaries
or existing Subsidiaries to the terms of such guaranties and the other
applicable documents in connection herewith, and (b) copies of organizational
documents, resolutions and incumbency certificates of any Persons executing any
of the foregoing amendments or counterparts, and such other documents and
instruments in connection therewith as may be reasonably requested by
Purchasers; all of the foregoing in form and substance reasonably satisfactory
to Purchaser); or (iv) acquire by purchase or otherwise all or any substantial
part of the business or assets of, or stock or other beneficial ownership of,
any Person; provided, however, that any Subsidiary may be merged, amalgamated or
consolidated with or into the Company (provided that the Company shall be the
continuing or surviving corporation) or with or into any one or more wholly
owned Subsidiaries of the Company that are Guarantors (provided that the wholly
owned Subsidiary or Subsidiaries that are Guarantors shall be the continuing or
surviving corporations). It is understood and agreed that the InterAct
International IPO shall be permitted if the following conditions are met:

	 
	          
(a)  the Net Securities Proceeds of the InterAct International IPO
shall be applied in payment of the Senior Debt pursuant to, and to the extent
required by and in accordance with the Senior Loan Agreement;

	 
	          
(b)  the Company shall deliver a certificate showing pro forma
compliance with the financial covenants and Minimum Excess Availability (as
defined in the Senior Loan Agreement on the Closing Date) after giving effect to
the InterAct International IPO; and

	 
	          
(c)  upon the payment in full in cash of the Senior Debt in accordance
with subsection 2.4(B)(6) of the Senior Loan Agreement, InterAct International
will no longer be a Loan Party.

          6G.  
Changes Relating to Subordinated Debt.  Change or amend the
terms of any Subordinated Debt (including guaranties thereof) if the effect of
such amendment is an attempt to: (i) increase the interest rate on such
Indebtedness; (ii) change the dates upon which payments of principal or interest
are due on such Indebtedness; (iii) change any event of default or add any
covenant with respect to such Indebtedness; (iv) change the payment or amendment
and modification provisions of such Indebtedness; (v) change the subordination
provisions thereof; or (vi) change or amend any other term if such change or
amendment would materially increase the obligations of the obligor or confer
additional material rights on the holder of such Indebtedness in a manner
adverse to the Company, any of its Subsidiaries or the Purchasers. 

          6H.  
Transactions with Affiliates.  Directly or indirectly, enter
into or permit to exist any transaction (including the purchase, sale or
exchange of property or the rendering of any service) with any Affiliate or with
any officer, director or employee of any Loan Party, except for transactions in
the ordinary course of the Company’s business and upon fair and reasonable
terms and except for the transactions set forth in subsection 6D(iii) on terms
which are no less favorable to the Company than it would obtain in a comparable
arm’s length transaction with an unaffiliated Person. 

          6I.  
Conduct of Business. From and after the Closing Date, engage in any
business other than businesses of the type engaged in by the Company or its
Subsidiaries on the Closing Date or those in or directly related to the consumer
electronics industry.

          6J.  
Tax Consolidations.  File or consent to the filing of any
consolidated income tax return with any Person other than any of its
Subsidiaries, or any Guarantor, provided that in the event the Company files a
consolidated return with any such Person, the Company’s contribution with
respect to taxes as a result of the filing of such consolidated return shall not
be greater, nor the receipt of tax benefits less, than they would have been had
the Company not filed a consolidated return with such Person. 

          6K.  
Subsidiaries.  Other than the Subsidiaries set forth on
Schedule 6K, establish, create or acquire any new Subsidiaries.

          6L.  
Fiscal Year; Tax Designation.  Change its Fiscal Year; or elect
to be designated as an entity other than a C corporation as defined in the
IRC.

          6M.  
Sale-Leasebacks.  Engage in any sale-leaseback, synthetic lease
or similar transaction involving any of its assets.

          6N.  
Inactive Subsidiaries.  With respect to each of the Inactive
Subsidiaries (as defined in the Senior Loan Agreement as of the Closing Date),
conduct any business, acquire any assets or otherwise become liable for any
obligation except for nominal amounts as may be required to liquidate, wind-up
or dissolve such Inactive Subsidiaries. 

          6O.  
Parity with Senior Lender.  Neither the Company nor its
Subsidiaries shall grant any security interest in property or deliver a
guarantee to any Purchaser, the Term Loan Administrative Agent, on behalf of the
Term Loan Lenders, or to any Term Loan Lender to secure payment and performance
of the Notes and the obligations thereunder or to Obligations (as defined in the
Term Loan Agreement) that is not also granted to the Senior Agent on behalf of
the Senior Lenders to secure payment and performance of the Obligations (as
defined in the defined in the Senior Loan Agreement). 

Appendix C to the Amendment to

the Securities Purchase Agreement

             
  (i)  Payment.  Failure to make payment of
(x) the principal with respect to any Note within five (5) days after such
amount becomes due in accordance with this Agreement, or (y) interest with
respect to any Note or any other obligation pursuant to this Agreement, any Note
or any Subsidiary Guaranty within fifteen (15) days after such amount becomes
due in accordance with this Agreement, such Note or such Subsidiary Guaranty;
or

             
  (ii)  Default in Other Agreements.  (1)
Failure of the Company or any of its Subsidiaries to pay when due any principal
or interest on any Indebtedness (other than as set forth in subsection 7A(i)
hereof) or (2) breach or default of the Company or any of its Subsidiaries with
respect to any Indebtedness (other than as set forth elsewhere in this
subsection 7A), if such failure to pay, breach or default entitles the holder or
trustee to cause such Indebtedness having an aggregate principal amount in
excess of $1,000,000 to become or be declared due prior to its stated maturity
in each case regardless of whether such default is waived or such right is
exercised by such holder or trustee; or

             
  (iii)  Breach of Certain Provisions. Failure of the
Company to perform or comply with any term or condition contained in paragraphs
(A), (B), (C) and (K) of Schedule 5A or subsections 5B, 5C or 5G or contained in
Section 6 or Schedule 5G; or

             
  (iv)  Breach of Warranty.  Any
representation, warranty, certification or other statement made by any Loan
Party herein or in any statement or certificate at any time given by such Person
in writing pursuant or in connection herewith is false in any material respect
on the date made; or

             
  (v)  Other Defaults.  Any Loan Party
defaults in the performance of or compliance with any term contained in this
Agreement, any Note or any Subsidiary Guaranty and such default is not remedied
or waived within 15 days after receipt by such Loan Party of notice from any
Purchaser of such default (other than occurrences described in other provisions
of this subsection 7A, for which a different grace or cure period is specified,
or, if no grace or cure period is specified, constitute immediate Events of
Default); or

             
  (vi)  Change in Control.  (1) Any Person
(other than Robert L. Borchardt and/or any trust established by him) or "group"
within the meaning of Section 13(d) or 14(d) of the Exchange Act (other than a
group controlled by Robert L. Borchardt or any trust established by him) (a)
shall have acquired beneficial ownership of 20% or more of any outstanding class
of capital stock having ordinary voting power in the election of directors of
Recoton or (b) shall obtain the power (whether or not exercised) to elect a
majority of Recoton's directors, (2) the Board of directors of Recoton shall not
consist of a majority of Continuing Directors ("Continuing Directors" means the
directors of Recoton as of the Closing Date and each other director, if such
director's nomination for election to the Board of Directors of Recoton is
recommended by a majority of then Continuing Directors), (3) Recoton ceases to
own, directly or indirectly, 100% of the other Borrowers (as such term is
defined in the Term Loan Agreement), Recone or Recoton Canada other than with
respect to options to acquire InterAct International stock and (4) Robert L.
Borchardt or any trust established by him shall cease to beneficially own and
control 4% of the outstanding capital stock of Recoton.

             
  (vii)  Involuntary Bankruptcy; Appointment of Receiver,
etc.  (1) A court enters a decree or order for relief with respect
to any Loan Party or any of its Subsidiaries in an involuntary case under any
applicable bankruptcy, reorganization, insolvency, receivership or other similar
law now or hereafter in effect, which decree or order is not stayed or other
similar relief is not granted under any applicable federal, provincial or state
law; or (2) the continuance of any of the following events for 60 days unless
dismissed, bonded or discharged: (a) an involuntary case, petition or proceeding
is commenced against any Loan Party or any of its Subsidiaries, under any
applicable bankruptcy, reorganization, insolvency or other similar law now or
hereafter in effect or under any insolvency, arrangement, reorganization,
moratorium, receivership, readjustment of debt, dissolution or liquidation law
or statute of any jurisdiction now or hereafter in effect (whether at law or
equity); or (b) a receiver, receiver-manager, administrator, manager,
liquidator, sequestrator, trustee, custodian or other fiduciary having similar
powers over any Loan Party or any of its Subsidiaries, or over all or a
substantial part of their respective property, is appointed; or

             
  (viii)  Voluntary Bankruptcy; Appointment of Receiver,
etc.  (1) Any Loan Party or any of its Subsidiaries commences a
voluntary petition, proceeding or case under any applicable bankruptcy,
insolvency or other similar law now or hereafter in effect or under any
insolvency, arrangement, reorganization, moratorium, receivership, readjustment
of debt, dissolution or liquidation law or statute of any jurisdiction now or
hereafter in effect (whether at law or equity), or consents to the entry of an
order for relief in an involuntary case or to the conversion of an involuntary
case to a voluntary case under any such law or consents to the appointment of or
taking possession by a receiver, receiver-manager, administrator, manager,
trustee or other custodian for all or a substantial part of its property; or (2)
any Loan Party or any of its Subsidiaries makes any assignment for the benefit
of creditors; or (3) the board of directors of any Loan Party or any of its
Subsidiaries adopts any resolution or otherwise authorizes action to approve any
of the actions referred to in this subsection 7A(viii); or (4) any Loan Party or
any of its Subsidiaries is unable, or admits in writing its inability to pay its
debts as they mature, or commits any other act of bankruptcy; or

             
  (ix)  Liens.  Any lien, levy or
assessment is filed or recorded with respect to or otherwise imposed upon all or
any assets of any Loan Party or any of its Subsidiaries by the United States or
any foreign government or any department or instrumentality thereof or by any
federal, state, provincial, county, municipality or other governmental agency
(other than Permitted Encumbrances) and such lien, levy or assessment is not
stayed, vacated, paid or discharged within 10 days; or

             
  (x)  Judgment and Attachments.  Any money
judgment, writ or warrant of attachment, or similar process involving (1) an
amount in any individual case in excess of $2,000,000 or (2) an amount in the
aggregate at any time in excess of $2,000,000 (in either case not adequately
covered by insurance as to which the insurance company has acknowledged
coverage) is entered or filed against any Loan Party or any of its Subsidiaries
or any of their respective assets and remains undischarged, unvacated, unbonded
or unstayed for a period of 30 days, but in any event not later than 5 days
prior to the date of any proposed sale thereunder; or

             
  (xi)  Dissolution.  Any order, judgment
or decree is entered against any Loan Party or any of its Subsidiaries decreeing
the dissolution or winding up or split up of such Loan Party or that Subsidiary
and such order remains undischarged or unstayed for a period in excess of 20
days, but in any event not later than 5 days prior to the date of any proposed
dissolution or winding up or split up; or

             
  (xii)  Solvency.  The Loan Parties cease
to be Solvent or admit in writing their present or prospective inability to pay
their debts as they become due; or

             
  (xiii)  Injunction.  Any Loan Party or
any of its Subsidiaries is enjoined, restrained or in any way prevented by the
order of any court or any administrative or regulatory agency (including, but
not limited to, those of any foreign country) from conducting all or any
material part of the business of the Company's and its Subsidiaries, on a
consolidated basis, and such order continues for 30 days or more; or

             
  (xiv)  Invalidity of this Agreement,
Etc.  This Agreement, any Note or any Subsidiary Guaranty for any
reason, other than a partial or full release in accordance with the terms
thereof, ceases to be in full force and effect or is declared to be null and
void, or any Loan Party denies that it has any further liability thereunder, or
gives notice to such effect; or

             
  (xv)  [Intentionally Omitted]; or

             
  (xvi)  Strike, Etc.  Any strike, lockout,
labor dispute, embargo, condemnation, act of God or public enemy, or other
casualty which causes, for more than ten consecutive days beyond the coverage
period of any applicable business interruption insurance, the cessation or
substantial curtailment of revenue producing activities at any facility of any
Loan Party or any of its Subsidiaries if any such event or circumstance could
reasonably be expected to have a Material Adverse Effect; or.

             
  (xvii)  Licenses and Permits.  The loss,
suspension or revocation of, or failure to renew, any license or permit now held
or hereafter acquired by the Company or any of its Subsidiaries, if such loss,
suspension, revocation or failure to renew could reasonably be expected to have
a Material Adverse Effect; or.

             
  (xviii)  [Intentionally Omitted]; or

             
  (xix)  Currency Controls.  There are
controls on payments imposed by a Governmental Authority which interfere with
the payment of obligations hereunder, any Note or any Subsidiary Guaranty;

             
  (xx)  Environmental Matters.  Except as
to any of the following for which such Loan Party has provided timely notice and
has been granted a reasonable period to cure (but only for the duration of such
cure period): (i) Any Environmental Claim shall have been asserted against a
Loan Party which could reasonably be expected to have a Material Adverse Effect,
(ii) any Release or threatened Release of any Hazardous Materials on, under or
affecting any real estate shall have occurred, and such event could reasonably
form the basis of an Environmental Claim against a Loan Party which, if
determined adversely, could reasonably be expected to have a Material Adverse
Effect, or (iii) a Loan Party shall have failed to obtain any governmental
authorization necessary under any Environmental Law for the management, use,
control, ownership or operation of its business or any of the real estate or any
such governmental authorization shall be revoked, terminated, modified, or
otherwise cease to be in full force and effect, in each case, if the existence
of such condition could reasonably be expected to have a Material Adverse
Effect; or

             
  (xxi)  Employee Benefit Plans.  There occurs
one or more ERISA Events which individually or in the aggregate results in or
might reasonably be expected to result in liability of any Loan Party or any of
its ERISA Affiliates in excess of $500,000 during the term of this Agreement; or
there exists, an amount of unfunded benefit liabilities (as defined in Section
4001(a)(18) of ERISA), individually or in the aggregate for all Pension Plans
(excluding for purposes of such computation any Pension Plans with respect to
which assets exceed benefit liabilities) which exceeds $500,000; or

             
  (xxii)  Resignation of Borrowers'
Accountants.  The Company's Accountants shall resign because of
impropriety or irregularity in the conduct of the Loan Parties or their
Subsidiaries.

Appendix D to the Amendment to

the Securities Purchase Agreement

          "Agents":  
the "Agents" as defined in the Senior Loan Agreement on the Closing Date and
their successors and assigns.

          "Affiliate":  
any Person (other than the Purchasers): (a) directly or indirectly controlling,
controlled by, or under common control with, any Loan Party, (b) directly or
indirectly owning or holding 10% or more of any equity interest in the Company;
(c) 10% or more of whose stock or other equity interest having ordinary voting
power for the election of directors or the power to direct or cause the
direction of management, is directly or indirectly owned or held by the Company;
or (d) which has a senior officer who is also a senior officer of the Company.
For purposes of this definition, "control" (including with correlative
meanings, the terms "controlling", "controlled by" and
"under common control with") means the possession directly or
indirectly of the power to direct or cause the direction of the management and
policies of a Person, whether through the ownership of voting securities or
other equity interest, or by contract or otherwise.

          "Asset Disposition":  
the disposition, whether by sale, lease, transfer, loss, damage, destruction,
condemnation or otherwise, of any or all of the assets of the Company or any of
its Subsidiaries other than sales of Inventory in the ordinary course of
business.

          "Capital
Expenditures":  all expenditures (including deposits) for, or
contracts for expenditures (excluding contracts for expenditures under or with
respect to Capital Leases, but including cash down payments for assets acquired
under Capital Leases) with respect to the purchase or acquisition of any fixed
assets or improvements recorded as an asset in conformity with GAAP.

          "Capital
Lease":  any lease of any property (whether real, personal or
mixed) that, in conformity with GAAP, should be accounted for as a capital
lease.

          "Cleanup":  
all actions required to: (a) cleanup, remove, treat or remediate Hazardous
Materials in the indoor or outdoor environment; (b) prevent the Release of
Hazardous Materials so that they do not migrate, endanger or threaten to
endanger public health or welfare or the indoor or outdoor environment; (c)
perform pre-remedial studies and investigations and post-remedial monitoring and
care; or (d) respond to any government requests for information or documents in
any way relating to cleanup, removal, treatment or remediation or potential
cleanup, removal, treatment or remediation of Hazardous Materials in the indoor
or outdoor environment.

          "Closing Date":  October 31, 2000.

          "Commission"  
means the Securities and Exchange Commission, as from time to time constituted,
created under the Exchange Act or, if at any time after the execution of this
Agreement such Commission is not existing and performing the duties now assigned
to it under the Exchange Act, the body performing such duties at such time.

          "Company
Accountants":  means the independent certified public
accountants selected by Company and its Subsidiaries as its auditors and
reasonably acceptable to Purchasers and Senior Agent, which selection shall not
be modified during the term of this Agreement without Purchasers’ and
Senior Agent’s prior written consent. It is understood and agreed that the
"Big Five" independent certified public accountants shall be deemed
acceptable and therefore no such written consent shall be necessary.

          "Consolidated
Intangibles":  as of any date of determination, all assets of the
Company and its Subsidiaries, determined on a consolidated basis at such date,
that are generally classified as intangibles, including without limitation,
goodwill, trademarks, patents and copyrights.

          "Consolidated
Net Worth":  as of any date of determination, all amounts
which would be included under shareholders equity on a balance sheet of the
Company and its Subsidiaries determined on a consolidated basis at such date in
accordance with GAAP.

          "Consolidated
Tangible Net Worth":  as of any date of determination, the
excess, if any, of Consolidated Net Worth less Consolidated Intangibles as at
such date subtracting the net write-up or adding back the net write-down since
June 30, 2000 in the book value of assets resulting from the revaluations
arising out of foreign currency valuations in accordance with GAAP.

          "EBITDA":
for any period, without duplication, the total of the following for Company and
its Subsidiaries on a consolidated basis, each calculated for such period: (1)
net income determined in accordance with GAAP; plus, to the extent included in
the calculation of net income, (2) the sum of (a) income and franchise taxes
paid or accrued; (b) interest expenses, net of interest income, paid or accrued;
(c) amortization and depreciation; (d) other non-cash charges (excluding
accruals for cash expenses made in the ordinary course of business) and (e) the
yield maintenance fee resulting from the repayment of indebtedness on the
Closing Date; less, to the extent included in the calculation of net income, (3)
the sum of (a) the income of any Person (other than majority-owned Subsidiaries
of the Company) in which the Company or a majority-owned Subsidiary of the
Company has an ownership interest except to the extent such income is received
by the Company or such majority-owned Subsidiary in a cash distribution during
such period; (b) gains or losses from sales or other dispositions of assets
(other than Inventory in the normal course of business); and (c) extraordinary
or non-recurring gains, but not net of extraordinary or non-recurring
"cash" losses.

            "Employee
Benefit Plan":  any employee benefit plan within the meaning
of Section 3(3) of ERISA which (a) is maintained for employees of any Loan Party
or any ERISA Affiliate or (b) has at any time within the preceding 6 years been
maintained for the employees of any Loan Party or any current or former ERISA
Affiliate.

          "Environmental
Claim":  any claim, action, cause of action, investigation or
notice (written or oral) by any Person alleging potential liability (including,
without limitation, potential liability for investigatory costs, Cleanup costs,
governmental response costs, natural resources damages, property damages,
personal injuries, or penalties) arising out of, based on or resulting from (a)
the presence, or Release of any Hazardous Materials at any location, whether or
not owned, leased or operated by the Company or any of its Subsidiaries, or (b)
circumstances forming the basis of any violation, or alleged violation, of any
Environmental Law.

          "Environmental
Law":  all federal, state, provincial, local and foreign laws
and regulations relating to pollution or protection of human health or the
environment, including, without limitation, laws relating to Releases or
threatened Releases of Hazardous Materials or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, Release,
disposal, transport or handling of Hazardous Materials, laws and regulations
with regard to record keeping, notification, disclosure and reporting
requirements respecting Hazardous Materials and laws relating to the management
or use of natural resources.

          "ERISA":  the
Employee Retirement Income Security Act of 1974, as amended from time to time,
and any successor statute and all rules and regulations promulgated
thereunder.

          "ERISA
Affiliate":  as applied to any Loan Party, any Person who is
a member of a group which is under common control with any Loan Party, who
together with any Loan Party is treated as a single employer within the meaning
of Section 414(b) and (c) of the Code. Any former ERISA Affiliate of a Loan
Party shall continue to be considered an ERISA Affiliate within the meaning of
this definition with respect to the period such entity was an ERISA Affiliate of
such Loan Party and with respect to liabilities arising after such period for
which such Loan Party could be liable under the Code or ERISA.

          "ERISA
Event":  (i) a "reportable event" within the
meaning of Section 4043 of ERISA and the regulations issued thereunder with
respect to any Pension Plan (excluding those for which the provision for 30-day
notice to the Pension Benefit Guaranty Corporation has been waived by
regulation); (ii) the withdrawal by any Loan Party or any of its ERISA
Affiliates from any Pension Plan with two or more contributing sponsors or the
termination of any such Pension Plan resulting in liability pursuant to Sections
4063 or 4064 of ERISA; (iii) the institution by the Pension Benefit Guaranty
Corporation of proceedings to terminate any Pension Plan, or the occurrence of
any event or condition which might constitute grounds under ERISA for the
termination of, or the appointment of a trustee to administer, any Pension Plan;
(iv) the imposition of liability on any Loan Party or any of its ERISA
Affiliates pursuant to Sections 4062(e) or 4069 of ERISA or by reason of the
application of Section 4212(c) of ERISA; or (v) the assertion of a material
claim (other than routine claims for benefits) against any Employee Benefit Plan
other than a Multiemployer Plan or the assets thereof, or against any Loan Party
or any of its ERISA Affiliates in connection with any Employee Benefit Plan.

          "Exchange
Act" means the Securities Exchange Act of 1934, as amended, and the rules
and regulations promulgated by the Commission thereunder.

          "Fiscal Year":  each twelve month period ending on the last day of December in
each year.

          "Fiscal
Year-To-Date":  all completed fiscal quarters within each Fiscal
Year of any determination date.

          "Fixed Charge
Coverage":  for any period, EBITDA less Capital Expenditures
(excluding expenditures with respect to the New Information System) divided by
Fixed Charges.

          "Fixed
Charges": for any period, and each calculated for such period (without
duplication), (a) Interest Expense of Company and its Subsidiaries; plus (b)
scheduled payments of principal with respect to all Senior Loans of Company and
its Subsidiaries; plus (c) income and franchise taxes paid in cash by
Recoton and its Subsidiaries on a consolidated basis.

          "Foreign
Subsidiary":  any Subsidiary (other than Recoton Canada) that is
not incorporated or organized in the United States of America, any state thereof
or in the District of Columbia.

          "German
Facility":  means the DM 50,000,000 financing arrangement
between Recoton Germany and its Subsidiaries and Heller Bank A.G or, if such
facility is not renewed during the term of this Agreement, a replacement
facility on terms and pursuant to documentation substantially consistent with
those in existence on the date hereof and otherwise reasonably satisfactory to
the Agents and the Requisite Lenders (as defined in the Senior Loan Agreement).

          "Governmental
Authority":  any nation or government, any state, province or any
other political subdivision of any of the foregoing and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.

          "Hazardous
Material":  all substances defined as Hazardous Substances, Oils,
Pollutants or Contaminants in the National Oil and Hazardous Substances
Pollution Contingency Plan, 40 C.F.R.ss.300.5, or defined as such by, or
regulated as such under, any Environmental Law.

          "Hedge
Agreements":  all interest rate swaps, caps or collar
agreements or similar arrangements entered into by the Company or any of its
Subsidiaries providing for protection against fluctuations in interest rates or
currency exchange rates or the exchange of nominal interest obligations, either
generally or under specific contingencies.

          "Indebtedness":  
as applied to any Person, means without duplication: (a) all indebtedness for
borrowed money; (b) obligations under Capital Leases; (c) notes payable and
drafts accepted representing extensions of credit whether or not representing
obligations for borrowed money; (d) any obligation owed for all or any part of
the deferred purchase price of property or services if the purchase price is due
more than six months from the date the obligation is incurred or is evidenced by
a note or similar written instrument; (e) all indebtedness secured by any Lien
on any property or asset owned or held by that Person regardless of whether the
indebtedness secured thereby shall have been assumed by that Person or is non
recourse to the credit of that Person; (f) obligations in respect of letters of
credit; (g) all obligations under Hedge Agreements, including, as of any date of
determination, the net amounts, if any, that would be required to be paid by
such Person if such Hedge Agreements were terminated on such date and (h) any
amounts due to the U.S. Customs Service pursuant to the outstanding note.

          "InterAct International":  InterAct International Inc., a Delaware corporation,
and its Subsidiaries.

          "InterAct International IPO":  an underwritten public offering of common stock
made by InterAct International pursuant to a registration statement filed with
and declared effective by the Commission in accordance with the Securities Act.

          "Interest
Expense":  without duplication, for any period, the following
on a consolidated basis, for the Company and its Subsidiaries each calculated
for such period: interest expenses deducted in the determination of net income
(excluding (i) the amortization of fees and costs with respect to the
transactions contemplated by this Agreement and the Related Agreements (as
defined in the Senior Loan Agreement) which have been capitalized as transaction
costs in accordance with the provisions thereof; and (ii) interest paid in
kind).

          "IRC"  
means the Internal Revenue Code of 1986, as amended from time to time, and any
successor statute and all rules and regulations promulgated thereunder.

          "Lien":  
means any lien, mortgage, pledge, security interest, charge or encumbrance of
any kind, whether voluntary or involuntary, (including any conditional sale or
other title retention agreement, any lease in the nature thereof, and any
agreement to give any security interest).

          "Loan Party":  any
Person party to this Agreement, a Note or a Subsidiary Guaranty.

          "Material
Adverse Effect":  (i) any material adverse effect on the
business, financial position, results of operations or prospects of the Company
and its Subsidiaries, considered as a whole, (ii) any material impairment of the
legality, validity and enforceability of this Agreement, any Note or any
Subsidiary Guaranty, or the rights and remedies of the Purchasers, or (iii) any
material impairment of the Loan Parties’ ability to perform their
obligations under this Agreement, any Note or any Subsidiary Guaranty.

          "Multiemployer
Plan":  any Employee Benefit Plan that is a "multiemployer plan"
as defined in Section 4001(a)(3) of ERISA.

          "Net
Proceeds":  (a) with respect to any Asset Disposition
constituting a casualty or condemnation, the insurance or condemnation proceeds
received in connection therewith net of any expenses, if any, incurred by
Purchasers in the collection or handling thereof and (b) with respect to any
other Asset Disposition, the proceeds received in connection therewith net of
(i) commissions and other reasonable and customary transaction costs, fees and
expenses properly attributable to such transaction and payable by Company or any
of its Subsidiaries in connection therewith (in each case, paid to
non-Affiliates), (ii) transfer taxes, (iii) amounts payable to holders of senior
Liens (to the extent such Liens constitute Permitted Encumbrances hereunder), if
any, and (iv) an appropriate reserve for income taxes in accordance with GAAP in
connection therewith.

          "Net
Securities Proceeds":  the cash proceeds (net of underwriting
discounts and commissions and other reasonable costs and expenses associated
therewith, including reasonable legal fees and expenses) from the issuance of
Securities of or incurrence of Indebtedness by the Company or its Subsidiaries.

          "New Information
System":  the enterprise resource planning system consisting of
licensed software, purchased or leased hardware, consulting services and related
expenses which Recoton and its Subsidiaries are in the process of contracting
for and implementing.

          "1997 Note
Purchase Agreements":  collectively, the separate Note
Purchase Agreements, each dated January 6, 1997, between Recoton and each of the
purchasers named in Annex 1 thereto as amended, supplemented or modified prior
to the closing of the transactions contemplated hereunder.

          "1998 Note
Purchase Agreement":  the Note Purchase Agreement, dated as of
September 1, 1998, between Recoton and the purchaser named in Annex 1 thereto as
amended, supplemented or modified prior to the closing of the transactions
contemplated hereunder.

          "Permitted
Encumbrances":  the following types of Liens: (a) Liens
(other than Liens relating to Environmental Claims or ERISA) for taxes,
assessments or other governmental charges not yet due and payable or which are
being contested in good faith by appropriate proceedings promptly instituted and
diligently conducted and if the Company or such Subsidiary has established
appropriate reserves as shall be required in conformity with GAAP; (b) statutory
Liens of landlords, carriers, warehousemen, mechanics, materialmen and other
similar liens imposed by law, which are incurred in the ordinary course of
business for sums not more than 30 days delinquent and that attach only to Real
Estate, inventory and equipment; (c) Liens (other than any Lien imposed by
ERISA) incurred or deposits made in the ordinary course of business in
connection with workers’ compensation, unemployment insurance and other
types of social security, statutory obligations, surety and appeal bonds, bids,
leases, government contracts, trade contracts, performance and return-of-money
bonds and other similar obligations (exclusive of obligations for the payment of
borrowed money) or deposits securing liability to insurance carriers under
insurance or self-insurance arrangements; (d) easements, rights-of-way, zoning
restrictions, licences and other similar charges or encumbrances affecting the
use of real property not interfering in any material respect with the ordinary
conduct of the business of the Company or any of its Subsidiaries; (e) Liens for
purchase money obligations, provided that (i) the Indebtedness secured by any
such Lien is permitted under subsection 6A, and (ii) such Lien encumbers only
the asset so purchased; (f) Liens in favor of the Senior Agent, on behalf of the
Agents, Senior Lenders, the Term Loan Administrative Agent and the Term Loan
Lenders; (g) Liens on deposits on other property of the Company or any
Subsidiary to secure up to $500,000 of insurance obligations incurred in the
ordinary course of business; (h) Liens on the Inventory of the Company or any of
its Subsidiaries that is consigned in an aggregate amount not to exceed $500,000
at any one time outstanding; (i) any interest or title of a lessor or sublessor
under any real property lease not prohibited by this Agreement; (j) Liens set
forth on Schedule 1.1(B) to the Senior Loan Agreement; and (k) Liens arising in
respect of judgments in an aggregate amount of less than $2,000,000 at any one
time outstanding in circumstances not constituting a Default or an Event of
Default. 

          "Person":  
natural persons, corporations, limited partnerships, general partnerships,
limited liability companies, limited liability partnerships, joint stock
companies, joint ventures, associations, companies, trusts, banks, trust
companies, land trusts, business trusts or other organizations, whether or not
legal entities, and governments and agencies and political subdivisions thereof.

          "Projections":  
the Company’s forecasted: (a) balance sheets; (b) profit and loss
statements; (c) cash flow statement; and (d) statements of shareholders equity
all prepared in accordance with clause L of the Reporting Rider set forth on
Schedule 5A, and based upon good faith estimates and assumptions by the Company
believed to be reasonable at the time made, together with appropriate supporting
details and a statement of underlying assumptions. 

          "Real
Estate":  as such term is defined in subsection 4.5 to the Senior
Loan Agreement.

          "Recoton":  the
Company.

          "Recoton
Canada":  Recoton Canada Ltd., an Ontario corporation.

          "Recoton
Germany":  Recoton German Holdings GmbH, a corporation organized
under the laws of the Federal Republic of Germany.

          "Recoton
Italy":  Recoton Italia s.r.l., a corporation incorporated under the
laws of Italy.

          "Recoton UK":  
Recoton (UK) Limited, a corporation incorporated under the laws of England and
Wales.

          "Regulation
T":  Regulation T of the Board as in effect from time to time.

          "Regulation U":  Regulation U of the Board as in effect from time to time.

          "Regulation X":  Regulation X of the Board as in effect from time to time.

          "Release":  
any release, spill, emission, leaking, pumping, pouring, injection, escaping,
deposit, disposal, discharge, dispersal, dumping, leaching or migration of
Hazardous Materials into the indoor or outdoor environment (including, without
limitation, the abandonment or disposal of any barrels, containers or other
closed receptacles containing any Hazardous Materials), or into or out of any
property, including the movement of any Hazardous Material through the air,
soil, surface water, groundwater or property.

          "Restricted
Junior Payment":  (a) any dividend or other distribution,
direct or indirect, on account of any shares of any class of stock or other
equity interest of the Company or any of its Subsidiaries now or hereafter
outstanding, except a dividend payable solely with shares of the class of stock
on which such dividend is declared or any properly and legally declared dividend
which is not paid in cash; (b) any payment or prepayment of principal of,
premium, if any, or interest on, or any redemption, conversion, exchange,
retirement, defeasance, sinking fund or similar payment, purchase or other
acquisition for value, direct or indirect, of any Subordinated Debt or any
shares of any class of stock of the Company or any of its Subsidiaries now or
hereafter outstanding, or the issuance of a notice of an intention to do any of
the foregoing; (c) any payment made to retire, or to obtain the surrender of,
any outstanding warrants, options or other rights to acquire shares of any class
of stock of the Company or any of its Subsidiaries now or hereafter outstanding;
and (d) any payment by the Company or any of its Subsidiaries of any management,
consulting or similar fees to any Affiliate other than a Loan Party, whether
pursuant to a management agreement or otherwise in excess of $100,000 as to any
Person per Fiscal Year, or in excess of $250,000 in the aggregate in any Fiscal
Year (it being understood that fees paid to directors of Recoton for services as
directors or on committees of the Board are not considered as management,
consulting or similar fees). 

          "Securities":  
stock, shares, partnership interests, voting trust certificates, certificates of
interest or participation in any profit-sharing agreement or arrangement,
options, warrants, bonds, debentures, notes, or other evidences of indebtedness,
secured or unsecured, convertible, subordinated or otherwise, or in general any
instruments commonly known as "securities" or any certificates of
interest, shares or participations in temporary or interim certificates for the
purchase or acquisition of, or any right to subscribe to, purchase or acquire,
any of the foregoing. 

          "Securities
Act"  means (i) the Securities Act of 1933, as amended, and
the rules and regulations promulgated by the Commission thereunder and (ii) the
Securities Act (Ontario), as amended, and the rules and regulations promulgated
thereunder. 

          "Senior
Agent":  Heller Financial, Inc. and its successors and
assigns.

          "Senior Lenders":  
the financial institutions from time to time party to the Senior Loan
Agreement.

          "Senior
Loan Agreement":  the Loan Agreement dated as of the Closing
Date, among Recoton and the other Borrowers (as defined therein), Heller
Financial, Inc. and General Electric Capital Corporation as agents and the
financial institutions from time to time party thereto, as the same may be
amended, supplemented or otherwise modified from time to time in accordance with
its terms and the terms of the Subordination Agreement. 

          "Senior Loan
Documents":  the "Loan Documents" as defined in the Senior Loan
Agreement.

          "Senior Loans":  
the "Loans" as defined in the Senior Loan Agreement.

          "Solvent":  
with respect to the Loan Parties on a consolidated basis that they (a) own
assets the fair salable value of which are greater than the total amount of
their liabilities (including contingent liabilities); (b) have capital that is
not unreasonably small in relation to their business as presently conducted or
any contemplated or undertaken transaction; and (c) do not intend to incur and
do not believe that they will incur debts beyond their ability to pay such debts
as they become due. 

          "STD":  STD
Holdings Limited, a corporation organized under the laws of Hong Kong.

          "STD
Restructuring":  the restructuring of InterAct International and
the subsidiaries of STD as set forth in Schedule 11.1(C) to the Senior Loan
Agreement.

          "Subordinated
Debt":  any debt which by its terms is subordinate and junior in right of
payment to the Notes.

          "Subordination
Agreement":  means that certain Subordination and Intercreditor
Agreement, dated as of the date hereof, among the Loan Parties, Heller
Financial, Inc. in its capacity as administrative agent on behalf of Agents and
Senior Lenders, Senior Agent and the Term Loan Lenders (as Subordinated
Creditors).

          "Subsidiary":  
means, with respect to any Person, any corporation, association or other
business entity of which more than 50% of the total voting power of shares of
stock (or equivalent ownership or controlling interest) entitled (without regard
to the occurrence of any contingency) to vote in the election of directors,
managers or trustees thereof is at the time owned or controlled, directly or
indirectly, by that Person or one or more of the other subsidiaries of that
Person or a combination thereof. 

          "Term Loan
Agreement":  the Term Loan Agreement dated as of the Closing
Date, as amended, supplemented, restated or otherwise modified from time to
time, among the Company, the banks and financial institutions from time to time
party thereto and The Chase Manhattan Bank, as administrative agent. 

          "Term Loan
Administrative Agent":  the "Administrative Agent" as such term is
defined in the Term Loan Agreement.

          "Term Loan
Lenders":  the "Lenders" as such term is defined in the Term Loan
Agreement.

Schedule 5A to the Amendment to

the Securities Purchase Agreement

REPORTING RIDER

             
  (A)  Monthly Financials.  (i) As soon as
available and in any event no later than thirty (30) days after the end of each
April, May, July, August, October and November, Company will deliver to
Purchasers (1) the consolidated and consolidating balance sheet of Company and
its Subsidiaries as at the end of such month and the related consolidated and
consolidating statements of income for such month and for the period from the
beginning of the then current Fiscal Year to the end of such month, and (2) a
schedule of the consolidated outstanding Indebtedness for borrowed money of
Company and its Subsidiaries describing in reasonable detail each such debt
issue or loan outstanding and the principal amount and amount of accrued and
unpaid interest with respect to each such debt issue or loan.

             
       (ii)  As soon as available and in any event no later than
sixty (60) days after the end of each January and February, Company will deliver
to Purchasers (1) the consolidated and consolidating balance sheet of Company
and its Subsidiaries as at the end of such month and the related consolidated
and consolidating statements of income for such month and for the period from
the beginning of the then current Fiscal Year to the end of such month, and (2)
a schedule of the consolidated outstanding Indebtedness for borrowed money of
Company and its Subsidiaries describing in reasonable detail each such debt
issue or loan outstanding and the principal amount and amount of accrued and
unpaid interest with respect to each such debt issue or loan.

             
       (iii)  No later than ten (10) days after the submission of
the monthly financial statements required under clauses A (i) and A (ii) above,
Company will deliver to Purchasers a statement of cash flow from the beginning
of the then current Fiscal Year to the end of such month. Unless otherwise
requested by the Purchasers there will not be a required submission of monthly
financials for any month that ends on a calendar quarter.

             
  (B)  Quarterly Financials.  (i) As soon
as available and in any event no later than forty-six (46) days (or if the 45th
day is not a Business Day, the day immediately succeeding the date on which the
SEC filing for such period is due) after the end of each of the first three
calendar quarters of a Fiscal Year, Company will deliver to Purchasers (1) the
consolidated and consolidating balance sheet of Company and its Subsidiaries as
at the end of such period and the related consolidated and consolidating
statements of income, stockholders' equity and cash flow for such quarter of a
Fiscal Year and for the period from the beginning of the then current Fiscal
Year to the end of such quarter of a Fiscal Year, and (2) a schedule of the
consolidated outstanding Indebtedness for borrowed money of Company and its
Subsidiaries describing in reasonable detail each such debt issue or loan
outstanding and the principal amount and amount of accrued and unpaid interest
with respect to each such debt issue or loan.

             
       (ii)  As soon as available and in any event no later than
sixty-five (65) days after the end of the fourth calendar quarter of a Fiscal
Year, Company will deliver to Purchasers the consolidated and consolidating
balance sheet of Company and its Subsidiaries as at the end of such period and
the related consolidated and consolidating statements of income, stockholders'
equity and cash flow from the beginning of the then current Fiscal Year to the
end of such quarter of a Fiscal Year, and (2) a schedule of the consolidated
outstanding Indebtedness for borrowed money of Company and its Subsidiaries
describing in reasonable detail each such debt issue or loan outstanding and the
principal amount and amount of accrued and unpaid interest with respect to each
such debt issue or loan.

             
       (iii)  Together with the delivery of all financial
statements pursuant to clause (B)(i), Company shall deliver an officer's
certificate executed by the chief executive officer, the chief financial officer
or the chief operating officer certifying that Borrowers' Accountants (as such
term is defined in the Senior Loan Agreement) have reviewed all such Quarterly
Financials.

             
  (C)  Year-End Financials.  As soon as
available and in any event no later than ninety-one (91) days (or if the 90th
day is not a Business Day, the day immediately succeeding the date on which the
SEC filing for such period is due) after the end of each Fiscal Year, Company
will deliver to Purchasers: (1) the consolidated balance sheet of Company and
its Subsidiaries as at the end of such year and the related consolidated
statements of income, stockholders' equity and cash flow for such Fiscal Year;
(2) a schedule of the consolidated outstanding Indebtedness of Company and its
Subsidiaries describing in reasonable detail each such debt issue or loan
outstanding and the principal amount and amount of accrued and unpaid interest
with respect to each such debt issue or loan; and (3) a report with respect to
the financial statements from Borrowers' Accountants, which report shall be
unqualified as to going concern and scope of audit of Company and its
Subsidiaries and shall state that (a) such consolidated financial statements
present fairly the consolidated financial position of Company and its
Subsidiaries as at the dates indicated and the results of their operations and
cash flow for the periods indicated in conformity with accounting principles
generally accepted in the United States of America and (b) that the examination
by Borrowers' Accountants in connection with such consolidated financial
statements has been made in accordance with generally accepted auditing
standards; and (4) copies of the consolidating financial statements of Company
and its Subsidiaries, including (a) consolidating balance sheets of Company and
its Subsidiaries as at the end of such Fiscal Year showing inter company
eliminations and (b) related consolidating statements of income of Company and
its Subsidiaries showing inter company eliminations.

             
  (D)  Accountants' Certification and
Reports.  Together with each delivery of consolidated financial
statements of Company and its Subsidiaries pursuant to paragraph (C) above,
Company will deliver a written statement by Borrowers' Accountants stating
whether, in connection with the examination, any condition or event that
constitutes a Default or an Event of Default has come to their attention and, if
such a condition or event has come to their attention, specifying the nature and
period of existence thereof. Promptly upon receipt thereof, Company will deliver
to Purchasers copies of all significant reports submitted to the Company by
Borrowers' Accountants in connection with each annual, interim or special audit
of the financial statements of the Company made by Borrowers' Accountants,
including the comment letter submitted by Borrowers' Accountants to management
in connection with their annual audit.

             
  (E)  Compliance Certificate.  (i)
Together with the delivery of each set of financial statements referenced in
clauses (B)(i) and (C) above, Company will deliver to Purchasers a Compliance
Certificate in substantially the form attached to the Senior Loan Agreement and
addressed to each of the purchasers (the "Compliance Certificate"), including
copies of the calculations and work-up employed to determine the Company's
compliance or noncompliance with the financial covenants set forth in the
Financial Covenants Rider. Together with the delivery of each set of financial
statements referenced in clauses (A), (B)(i) and (C) above, Company will confirm
in the Compliance Certificate that the accounts payables to third parties have
been paid for the last ninety (90) days in the ordinary course of business
consistent with historical customary payment practices and that the Company is
in compliance with all other covenants in the Loan Agreement.

             
  (F)  [Intentionally Omitted].

             
  (G)  [Intentionally Omitted].

             
  (H)  Management Report.  Together with
each delivery of financial statements of Company and its Subsidiaries pursuant
to paragraphs (B) and (C) above, Company will deliver to Purchasers the
corresponding form 10-Q or 10-K, as the case may be, which forms will include
management's analysis of the Company's financial performance on both a
consolidated basis and by business segment. Management will also provide a
report comparing the financial results for the quarter than ended to the
corresponding figures from the most recent Projections for the current Fiscal
Year delivered to Purchasers pursuant to paragraph (L) below and discuss the
reasons for any significant variations. The information above shall be certified
by the chief financial officer, chief operating officer or chief executive
officer of Company and shall be presented in summary comparison form on a
consolidated basis setting forth the differences in actual and projected
revenue, gross profit, operating expenses and net income for such period. At the
request of the Purchasers, Company will provide a detailed comparison of the
foregoing information within thirty (30) days of such request.

             
  (I)  [Intentionally Omitted].

             
  (J)  Government Notices.  Promptly after
the receipt thereof, Company will deliver to Purchasers copies of all notices,
requests, subpoenas, inquiries or other writings received from any governmental
agency concerning any Employee Benefit Plan, the violation or alleged violation
of any Environmental Laws, the storage, use or disposal of any Hazardous
Material, the violation or alleged violation of the Fair Labor Standards Act or
the Company's or non-payment of any taxes including any tax audit if the failure
to timely comply or respond to any such notices, requests, subpoenas, inquiries
or other writings would give such governmental agency the right to seek to
impose a lien on or take other action with respect to any of the Company's
assets.

             
  (K)  Events of Default, etc.  Promptly
upon an executive officer of Company obtaining knowledge of any of the following
events or conditions, Company shall deliver to Purchasers a certificate of
Company's chief executive officer, chief operating officer or chief financial
officer specifying the nature and period of existence of such condition or event
and what action the Company has taken, is taking and proposes to take with
respect thereto: (1) any condition or event that constitutes an Event of Default
or Default; or (2) any Material Adverse Effect.

             
  (L)  Debt and Equity Notices.  As soon as
practicable, Company will deliver to Purchasers copies of all material written
notices given or received by any Loan Party with respect to any Debt or capital
stock or equity interest of such Loan Party, and, within two Business Days after
any Loan Party obtains knowledge of any matured or unmatured event of default
with respect to any Debt, notice of such event of default.

             
  (M)  Projections.  As soon as available
and in any event no later than the end of each Fiscal Year of the Company,
Company will deliver to Purchasers Projections for the Company and its
Subsidiaries for the forthcoming Fiscal Year. Projections for the forthcoming
Fiscal Year shall be on a month by month basis and on a consolidated and
consolidating bases. As soon as available and in any event no later than thirty
(30) days after the end of each Fiscal Year of the Company, Company will deliver
to Purchasers Projections for the remaining Fiscal Years through the maturity of
the Loans which Projections shall be on consolidated, annual, and year by year
bases.

             
  (N)  Litigation.  Promptly upon learning
thereof, Company will deliver to Purchasers in writing notice of any litigation
commenced or threatened against any Loan Party that (i) seeks damages in excess
of $2,000,000,(ii) seeks injunctive relief, (iii) is asserted or instituted
against any Employee Benefit Plan, its fiduciaries or its assets or against any
Loan Party or ERISA Affiliate in connection with any Employee Benefit Plan, (iv)
alleges criminal misconduct by any Loan Party, (v) alleges the violation of any
law regarding, or seeks remedies in connection with, any Environmental Claims or
(vi) involves any product recall.

             
  (O)  [Intentionally Omitted].

             
  (P)  SEC Filings and Press Releases.  Promptly upon their becoming available, Company will
deliver to Purchasers copies of: (i) all financial statements, reports, notices
and proxy statements made publicly available by any Loan Party to its security
holders; (ii) all regular and periodic reports and all registration statements
and prospectuses, if any, filed by any Loan Party with any securities exchange
or with the Securities and Exchange Commission or any governmental or private
regulatory authority; and (iii) all press releases and other statements made
available by any Loan Party to the public concerning material changes or
developments in the business of any such Person.

             
  (Q)  Other Information.  With reasonable
promptness, Company will deliver to Purchasers such other information and data
as Purchasers may reasonably request from time to time.

             
  (R)  [Intentionally Omitted].

             
  (S)  ERISA Matters.  Promptly upon becoming
aware of the occurrence of or forthcoming occurrence of any ERISA Event, Company
will deliver to Purchasers a written notice specifying the nature thereof, what
action any Loan Party or any of its ERISA Affiliates has taken, is taking or
proposes to take with respect thereto, and, when known, any action taken or
threatened by the Internal Revenue Service, the Department of Labor or the
Pension Benefit Guaranty Corporation with respect thereto.

             
  (T)  Inspection.  Company shall permit
Purchasers and any authorized representatives designated by Purchasers to visit
and inspect any of the properties of Company and its Subsidiaries, including
their financial and accounting records, and, in conjunction with such
inspection, to make copies and take extracts therefrom, at such reasonable times
during normal business hours and as often as may be reasonably requested.

Schedule 5G to the Amendment to

the Securities Purchase Agreement

FINANCIAL COVENANTS RIDER

          A.  Consolidated
Tangible Net Worth.  Recoton and its Subsidiaries shall attain a
Consolidated Tangible Net Worth in the amounts set forth below at the end of
each quarter of a Fiscal Year set forth below:

          Fiscal Quarter Ending                   Amount
          December 31, 2000                  $76,500,000
          March 31, 2001                     $76,750,000
          June 30, 2001                      $75,000,000
          September 30, 2001                 $76,500,000
          December 31, 2001                  $92,500,000
          March 31, 2002                     $90,000,000
          June 30, 2002                      $87,500,000
          September 30, 2002                 $89,000,000
          December 31, 2002                 $110,250,000
          March 31, 2003                    $107,750,000
          June 30, 2003                     $105,250,000

          B.  Minimum
EBITDA.  Recoton and its Subsidiaries, on a consolidated basis,
shall attain a minimum EBITDA in the amounts set forth below for each quarter of
a Fiscal Year and for any trailing four quarters period ending on the last day
of each month during the periods set forth below: 

                                    Amount for              Amount for Trailing
         Fiscal Quarter Ending      Fiscal Quarter            Four Quarters
         December 31, 2000          $21,000,000               $45,000,000
         March 31, 2001             $3,500,000                $41,500,000
         June 30, 2001              $6,000,000                $40,500,000
         September 30, 2001        $12,250,000                $43,500,000
         December 31, 2001         $29,250,000                $51,500,000
         March 31, 2002             $4,000,000                $51,750,000
         June 30, 2002              $6,750,000                $52,500,000
         September 30, 2002        $13,500,000                $53,500,000
         December 31, 2002         $32,250,000                $56,500,000
         March 31, 2003             $4,000,000                $56,750,000
         June 30, 2003              $7,000,000                $57,000,000

	 
	Notwithstanding anything to the contrary contained herein, if
the actual result for an individual Fiscal Quarter ending March 31, June 30, or
September 30 does not meet the required minimum for such Fiscal Quarter but the
Fiscal Year-To-Date EBITDA results as of the Fiscal Quarter then ended meets or
exceeds the required minimum EBITDA for the Fiscal Year-To-Date including that
same period, as outlined above, the Company will remain in compliance with
respect to the column headed "Amount For Fiscal Quarter". Under no
circumstance, however, shall Recoton and its Subsidiaries, on a consolidated
basis, fail to attain a minimum EBITDA of $21,000,000 for Fiscal Quarter ending
December 31, 2000, $29,250,000 for Fiscal Quarter ending December 31, 2001 and
$32,250,000 for Fiscal Quarter ending December 31, 2002.

          C.  Capital
Expenditure Limits.  The aggregate amount of all Capital
Expenditures (excluding expenditures with respect to the New Information
System), Capital Leases with respect to fixed assets of Company and its
Subsidiaries (which shall be considered to be expended in full on the date such
Capital Leases are entered into) and other contracts with respect to fixed
assets initially capitalized on the Company’s or any Subsidiary’s
balance sheet prepared in accordance with GAAP (which shall be considered to be
expended in full on the date such contract is entered into) (excluding, in each
case, expenditures for trade-ins and replacement of assets to the extent funded
with casualty insurance proceeds) will not exceed the amount set forth below for
each period set forth below. The amounts set forth below not made in any period
set forth below may be carried over for one year only to the next period
provided, however, any carried-over amount will be deemed used only after all
otherwise permitted amounts for that period have been used: 

        Period                                                  Amount
        October 31, 2000 to December 31, 2000                $3,000,000
        January 1, 2001 to December 31, 2001                 $8,000,000
        January 1, 2002 to December 31, 2002                 $8,000,000
        January 1, 2002 to December 31, 2003                 $8,000,000

          D.  Fixed
Charges Coverage.  Recoton and its Subsidiaries, on a consolidated
basis, shall not permit the Fixed Charges Coverage for any period ending on the
last day of each quarter during the periods set forth below to be less than the
amount set forth below for such periods:

                                            Ratio for Trailing
         Fiscal Quarter Ending              Four Quarter Period
         December 31, 2000                     1.0 to 1.0
         March 31, 2001                        1.0 to 1.0
         June 30, 2001                         1.0 to 1.0
         September 30, 2001                    1.0 to 1.0
         December 31, 2001                     1.1 to 1.0
         March 31, 2002                        1.1 to 1.0
         June 30, 2002                         1.1 to 1.0
         September 30, 2002                    1.0 to 1.0
         December 31, 2002                     1.0 to 1.0
         March 31, 2003                        1.0 to 1.0
         June 30, 2003                         1.0 to 1.0

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